In a recent move to restructure its capital, Ashford Hospitality (NYSE:AHT) Trust Inc. has announced the exchange of approximately 135,002 shares of its Preferred Stock for roughly 2.46 million shares of Common Stock. The exchange, which took place between July 17 and August 22, involved multiple series of the company's Preferred Stock, including Series D, F, G, H, and I.
Ashford (NYSE:AINC) Hospitality Trust, a Maryland-incorporated Real Estate Investment Trust (REIT) listed on the New York Stock Exchange under the ticker NYSE:AHT, engaged in these transactions privately, negotiating directly with certain holders of its Preferred Stock.
The Preferred Stock that was exchanged has been retired and cancelled by the company. This action did not generate any cash proceeds for Ashford Hospitality Trust, as it was strictly a securities exchange.
The new shares of Common Stock issued are also exempt from registration under the same securities laws, due to the nature of the transaction being an exchange with existing security holders.
In other recent news, Ashford Hospitality Trust reported robust performance in its second-quarter 2024 earnings call. The company posted a net income of $44.3 million and adjusted funds from operations (AFFO) per diluted share of $0.27.
The company also highlighted its operational achievements, such as increased hotel revenue and cost-saving measures, notably a restructured referral program that resulted in a substantial improvement in departmental profit margin.
Ashford Hospitality Trust has demonstrated strategic acumen by selling seven assets for over $310 million and raising approximately $147 million through non-traded preferred stock offerings. In addition, the company reported increases in comparable hotel revenue per available room (RevPAR), ancillary revenue, and group revenue pace.
The company's outlook includes plans to continue capital expenditures, with guest room renovations and other strategic initiatives scheduled for the latter half of the year. They are also exploring strategic brand conversions, partnerships, and high-yield renovations to enhance the portfolio.
Despite potential challenges in asset sales indicated by a wide bid-ask spread, Ashford Hospitality Trust's focus remains on selling lower-end, non-core assets in the coming years, depending on market conditions.
InvestingPro Insights
As Ashford Hospitality Trust Inc . (NYSE:AHT) navigates through its capital restructuring, current and prospective investors may find value in the latest metrics and insights from InvestingPro. Notably, Ashford Hospitality Trust is trading at a low earnings multiple, which could indicate a potential undervaluation of the company's earnings capacity. Additionally, the company's net income is expected to grow this year, suggesting a positive outlook on profitability.
However, the company is not without its challenges. Analysts anticipate a sales decline in the current year, and the company suffers from weak gross profit margins, which are reflected in a gross profit margin of 23.08% for the last twelve months as of Q2 2024. Moreover, Ashford Hospitality Trust has experienced significant price declines, with a one-year price total return of -64.4% and a 6-month price total return of -39.75%.
Investors evaluating the company's liquidity position will note that Ashford's liquid assets exceed its short-term obligations, which could provide some financial flexibility in the near term. For those interested in further analysis and additional InvestingPro Tips, there are 14 more tips available that delve deeper into the company's financials and market performance.
These insights, including the InvestingPro Fair Value estimate of 1.26 USD, compared to the current price of 0.94 USD, can help inform investment decisions in the context of the company's recent preferred for common stock exchange. Visit InvestingPro for a comprehensive analysis and a complete list of tips to guide your investment strategy in Ashford Hospitality Trust.
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