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What changed in ASHFORD HOSPITALITY TRUST INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ASHFORD HOSPITALITY TRUST INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+386 added−388 removedSource: 10-K (2024-03-14) vs 10-K (2023-03-10)

Top changes in ASHFORD HOSPITALITY TRUST INC's 2023 10-K

386 paragraphs added · 388 removed · 292 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

36 edited+9 added−10 removed49 unchanged
Biggest changeAs of December 31, 2022, our portfolio consisted of 100 consolidated hotel properties, 93 of which operated under the following franchise licenses or brand management agreements: Embassy Suites and/or Embassy Suites by Hilton, which are registered trademarks of Hilton International Holding LLC Hilton, which is a registered trademark of Hilton International Holding LLC Hilton Garden Inn, which is a registered trademark of Hilton International Holding LLC Hampton Inn and/or Hampton Inn & Suites, which are registered trademarks of Hilton International Holding LLC Marriott, which is a registered trademark of Marriott International, Inc.
Biggest changeAs of December 31, 2023, our portfolio consisted of 94 consolidated operating hotel properties, 87 of which operated under franchise licenses or brand management agreements, which provided for the right to operate each hotel under the applicable brand. See Item 2 Properties, below for a complete listing of all hotels by brand.
Our corporate charter allows us to issue preferred stock with a preference on distributions, such as our 8.45% Series D Cumulative Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”), 7.375% Series F Cumulative Preferred Stock, par value $0.01 per share (the “Series F Preferred Stock”), 7.375% Series G Cumulative Preferred Stock, par value $0.01 per share (the “Series G Preferred Stock”), 7.50% Series H Cumulative Preferred Stock, par value $0.01 per share (the “Series H Preferred Stock”), 7.50% Series I Cumulative Preferred Stock, par value $0.01 per share (the “Series I Preferred Stock,”) 8.0% Series J Redeemable Preferred Stock, par value $0.01 per share (the “Series J Preferred Stock”), Series K Redeemable Preferred Stock, par value $0.01 per share (the “Series K Preferred Stock,”) (together the “Preferred Stock”).
Our corporate charter allows us to issue preferred stock with a preference on distributions, such as our 8.45% Series D Cumulative Preferred Stock, par value $0.01 per share (the “Series D Preferred Stock”), 7.375% Series F Cumulative Preferred Stock, par value $0.01 per share (the “Series F Preferred Stock”), 7.375% Series G Cumulative Preferred Stock, par value $0.01 per share (the “Series G Preferred Stock”), 7.50% Series H Cumulative Preferred Stock, par value $0.01 per share (the “Series H Preferred Stock”), 7.50% Series I Cumulative Preferred Stock, par value $0.01 per share (the “Series I Preferred Stock”) 8.0% Series J Redeemable Preferred Stock, par value $0.01 per share (the “Series J Preferred Stock”), Series K Redeemable Preferred Stock, par value $0.01 per share (the “Series K Preferred Stock,”) (together the “Preferred Stock”).
We also experience competition from alternative types of accommodations such as home sharing companies and apartment operators offering short-term rentals. EMPLOYEES We have no employees. Our appointed officers are provided by Ashford LLC, a subsidiary of Ashford Inc. (collectively, our “advisor”).
We also experience competition from alternative types of accommodations such as home sharing companies and apartment operators offering short-term rentals. 6 EMPLOYEES We have no employees. Our appointed officers are provided by Ashford LLC, a subsidiary of Ashford Inc. (collectively, our “advisor”).
Such Phase I environmental assessments included: • historical reviews of the properties; • reviews of certain public records; • preliminary investigations of the sites and surrounding properties; • screening for the presence of hazardous substances, toxic substances, and underground storage tanks; and 7 • the preparation and issuance of a written report.
Such Phase I environmental assessments included: • historical reviews of the properties; • reviews of certain public records; • preliminary investigations of the sites and surrounding properties; • screening for the presence of hazardous substances, toxic substances, and underground storage tanks; and • the preparation and issuance of a written report.
Neither we nor, to our knowledge, any of the former owners of our properties have been notified by any governmental authority of any material noncompliance, liability, or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our properties.
Neither we nor, to our knowledge, any of 7 the former owners of our properties have been notified by any governmental authority of any material noncompliance, liability, or claim relating to hazardous or toxic substances or other environmental matters in connection with any of our properties.
We believe that as supply, demand, and capital market cycles change, we will be able to shift our investment strategy to take advantage of new lodging-related 4 investment opportunities as they may develop.
We believe that as supply, demand, and capital market cycles change, we will be able to shift our investment strategy to take advantage of new lodging-related investment opportunities as they may develop.
However, we cannot make any assurances that we will make distributions in the future. ACCESS TO REPORTS AND OTHER INFORMATION We maintain a website at www.ahtreit.com.
However, we cannot make any assurances that we will make distributions in the future. 8 ACCESS TO REPORTS AND OTHER INFORMATION We maintain a website at www.ahtreit.com.
Advisory services which would otherwise be provided by employees are provided by subsidiaries of Ashford Inc. and by our appointed officers. Subsidiaries of Ashford Inc. have approximately 102 full-time employees who provide advisory services to us.
Advisory services which would otherwise be provided by employees are provided by subsidiaries of Ashford Inc. and by our appointed officers. Subsidiaries of Ashford Inc. have approximately 105 full-time employees who provide advisory services to us.
The contents of our website are not, however, a part of this report. 9
The contents of our website are not, however, a part of this report.
Distributions to our stockholders are generally taxable to our stockholders as ordinary income. However, since a portion of our investments are equity ownership interests in hotels, which result in depreciation and non-cash charges against our income, a portion of our distributions may constitute a non-taxable return of capital, to the extent of a stockholder’s tax basis in the stock.
However, since a portion of our investments are equity ownership interests in hotels, which result in depreciation and non-cash charges against our income, a portion of our distributions may constitute a non-taxable return of capital, to the extent of a stockholder’s tax basis in the stock.
To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity. On December 6, 2022, our board of directors reviewed and approved our 2023 dividend policy.
To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity. On December 5, 2023, our board of directors reviewed and approved our 2024 dividend policy.
BUSINESS STRATEGIES Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things: • acquisition of hotel properties, in whole or in part, that we expect will be accretive to our portfolio; • disposition of non-core hotel properties; • pursuing capital market activities to enhance long-term stockholder value; • preserving capital and enhancing liquidity; • implementing selective capital improvements designed to increase profitability and to maintain the quality of our assets; • implementing effective asset management strategies to minimize operating costs and increase revenues; • financing or refinancing hotels on competitive terms; • modifying or extending property-level indebtedness; • utilizing hedges, derivatives and other strategies to mitigate risks; • accessing cost effective capital, including through the issuance of non-traded preferred securities; and • making other investments or divestitures that our board of directors deems appropriate.
BUSINESS STRATEGIES Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things: • preserving capital and maintaining significant cash and cash equivalents liquidity; • disposition of non-core hotel properties; • acquisition of hotel properties, in whole or in part, that we expect will be accretive to our portfolio; • pursuing capital market activities and implementing strategies to enhance long-term stockholder value; • accessing cost effective capital, including through the issuance of non-traded preferred securities; • opportunistically exchanging preferred stock into common stock; • implementing selective capital improvements designed to increase profitability and maintain the quality of our assets; • implementing effective asset management strategies to minimize operating costs and increase revenues; • financing or refinancing hotels on competitive terms; • modifying or extending property-level indebtedness; • utilizing hedges, derivatives and other strategies to mitigate risks; • pursuing opportunistic value-add additions to our hotel portfolio; and • making other investments or divestitures that our board of directors deems appropriate.
As of December 31, 2022, the Company had a deficit in stockholders’ equity of approximately $150.4 million and had not generated current earnings from which a dividend is potentially payable since the year ended December 31, 2015.
As of December 31, 2023, the Company had a deficit in stockholders’ equity of approximately $345.9 million and had not generated current earnings from which a dividend is potentially payable since the year ended December 31, 2015.
Our assessment of market conditions will determine asset reallocation strategies. While we seek to capitalize on favorable market fundamentals, conditions beyond our control may have an impact on overall profitability, our investment opportunities and our investment returns. We will continue to seek ways to benefit from the cyclical nature of the hotel industry.
Our assessment of market conditions will determine asset reallocation strategies. While we seek to capitalize on favorable market fundamentals, conditions beyond our control may have an impact on overall profitability, our investment opportunities and our investment returns.
Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,145,385 shares of Ashford Inc. common stock, which if converted would have increased the Bennetts’ ownership interest in Ashford Inc. to 65.5%, provided that prior to August 8, 2023, the voting power of the holders of the Ashford Inc.
Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,229,668 shares of Ashford Inc. common stock, which if converted as of December 31, 2023, would have increased the Bennetts’ ownership interest in Ashford Inc. to 65.0%.
One Ocean, which is a registered trademark of Remington Hotels, LLC Our management companies, including Remington Hotels, must operate each hotel pursuant to the terms of the related franchise or brand management agreement and must use their best efforts to maintain the right to operate each hotel pursuant to such terms.
Our management companies, including Remington Hospitality, must operate each hotel pursuant to the terms of the related franchise or brand management agreement and must use their best efforts to maintain the right to operate each hotel pursuant to such terms.
Declaration of dividends in 2023 on our preferred stock may require a determination by our board of directors, at the time of any determination, that the Company would continue to have positive equity on a fair value basis, among other considerations.
Declaration of dividends in 2024 on our preferred stock may require a determination by our board of directors, at the time of any determination, that the Company would continue to have positive equity on a fair value basis, among other considerations. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.
Third-party management companies manage the remaining hotel properties. Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest.
Remington Hospitality, a subsidiary of Ashford Inc., manages 61 of our 90 hotel properties and three of the four Stirling OP hotel properties. Third-party management companies manage the remaining hotel properties. Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest.
All of the services that might be provided by employees are provided to us by Ashford LLC. 3 We do not operate any of our hotel properties directly; instead, we employ hotel management companies to operate them for us under management contracts. Remington Hotels, a subsidiary of Ashford Inc., manages 68 of our 100 hotel properties and WorldQuest.
All of the services that might be provided by employees are provided to us by Ashford LLC. 3 We do not operate any of our hotel properties directly; instead, we contractually engage hotel management companies to operate them for us under management contracts.
Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership. This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business conditions.
This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business conditions. Distributions to our stockholders are generally taxable to our stockholders as ordinary income.
In addition, we may invest in properties or loans subject to existing loans secured by mortgages or similar liens on the properties, or we may refinance properties acquired on a leveraged basis. 5 We may use the proceeds from any borrowings for working capital, consistent with industry practice, to: • purchase interests in partnerships or joint ventures; • finance the origination or purchase of debt investments; or • finance acquisitions, expand, redevelop or improve existing properties, or develop new properties or other uses.
We may use the proceeds from any borrowings for working capital, consistent with industry practice, to: • purchase interests in partnerships or joint ventures; • finance the origination or purchase of debt investments; or • finance acquisitions, expand, redevelop or improve existing properties, or develop new properties or other uses.
Our board of directors may change any or all of these strategies at any time without stockholder approval or notice. Direct Hotel Investments —In selecting hotels to acquire, we target hotels that offer either a high current return or the opportunity to increase in value through repositioning, capital investments, market-based recovery, or improved management practices.
Direct Hotel Investments —In selecting hotels to acquire, we target hotels that offer either a high current return or the opportunity to increase in value through repositioning, capital investments, market-based recovery, or improved management practices.
Competition is based on a number of factors, most notably convenience of location, availability of rooms, brand affiliation, price, range of services, guest amenities or accommodations offered, and quality of customer service. Competition is often specific to the individual markets in which our properties are located and includes competition from existing and new hotels.
COMPETITION The hotel industry is highly competitive, and the hotels in which we invest are subject to competition from other hotels for guests. Competition is based on a number of factors, most notably convenience of location, availability of rooms, brand affiliation, price, range of services, guest amenities or accommodations offered, and quality of customer service.
These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance claims services, hypoallergenic premium rooms, broker-dealer and distribution services, mobile key technology and cash management services. See note 17 to our consolidated financial statements. As of December 31, 2022, Mr.
These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory and brokerage services, insurance policies covering general liability, workers’ compensation and business automobile claims, insurance claims services, hypoallergenic premium rooms, broker-dealer and distribution services, mobile key technology and cash management services.
There is no expectation that a dividend on our common stock can or would be considered or declared at any time in the foreseeable future.
There is no expectation that a dividend on our common stock can or would be considered or declared at any time in the foreseeable future. Distributions are authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors.
As of December 31, 2022, our 100 hotel properties were leased or owned by our wholly-owned subsidiaries that are treated as taxable REIT subsidiaries for U.S. federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”). Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts.
As of December 31, 2023, our 90 hotel properties and four Stirling OP hotel properties were leased or owned by our wholly owned or majority owned subsidiaries that are treated as taxable REIT subsidiaries for U.S. federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”).
To take full advantage of future investment opportunities in the lodging industry, we intend to seek our investment opportunities according to the asset allocation strategies described below. However, due to ongoing changes in market conditions, we will continually evaluate the appropriateness of our investment strategies.
We will continue to seek ways to benefit from the cyclical nature of the hotel industry. 4 To take full advantage of future investment opportunities in the lodging industry, we intend to seek our investment opportunities according to the asset allocation strategies described below.
Our failure to obtain future financing under favorable terms could adversely impact our ability to execute our business strategy. In addition, we may selectively pursue debt financing on our individual properties and debt investments.
Our failure to obtain future financing under favorable terms could adversely impact our ability to execute our business strategy.
The issuance of these series of Preferred Stock and units together with any similar issuance in the future, given the dividend preference on such stock or units, could limit our ability to make a dividend distribution to our common stockholders. 6 COMPETITION The hotel industry is highly competitive, and the hotels in which we invest are subject to competition from other hotels for guests.
The partnership agreement of our operating partnership also allows the operating partnership to issue units with a preference on distributions. The issuance of these series of Preferred Stock and units together with any similar issuance in the future, given the dividend preference on such stock or units, could limit our ability to make a dividend distribution to our common stockholders.
Hotel operating results related to these properties are included in the consolidated statements of operations. We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees.
All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees.
Monty J. Bennett and Mr. Archie Bennett, Jr. together owned approximately 610,246 shares of Ashford Inc. common stock, which represented an approximate 19.6% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc.
As of December 31, 2023, the Bennetts owned approximately 610,261 shares of Ashford Inc. common stock, which represented an approximate 19.0% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc.
We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2023 and expect to pay dividends on our outstanding Preferred Stock during 2023. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.
We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2024 and expect to pay dividends on our outstanding Preferred Stock (as defined below) during 2024.
Liquidity As of December 31, 2022, the Company held cash and cash equivalents of $417.1 million and restricted cash of $142.0 million. The vast majority of the restricted cash comprises lender and manager held reserves.
The vast majority of the restricted cash comprises lender and manager held reserves.
If recourse, such recourse may include our general assets or be limited to the particular investment to which the indebtedness relates.
If recourse, such recourse may include our general assets or be limited to the particular investment to which the indebtedness relates. In addition, we may invest in properties or loans subject to existing loans secured by mortgages or similar liens on the properties, or we may refinance properties acquired on a leveraged basis.
DISTRIBUTION POLICY No dividends can be paid on our common stock unless and until all accumulated and unpaid dividends on our outstanding preferred stock have been declared and paid. As of March 8, 2023, the Company had no accumulated unpaid dividends on its outstanding preferred stock.
In addition, we may selectively pursue debt financing on our individual properties and debt investments. 5 DISTRIBUTION POLICY No dividends can be paid on our common stock unless and until all accumulated and unpaid dividends on our outstanding preferred stock have been declared and paid or set aside for payment.
Distributions are authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors. The board of directors will continue to review our distribution policy on at least a quarterly basis.
The board of directors will continue to review our distribution policy on at least a quarterly basis. Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership.
Removed
As of December 31, 2022, we held interests in the following assets: • 100 consolidated hotel properties, which represent 22,316 total rooms; • 79 hotel condominium units at WorldQuest Resort in Orlando, Florida (“WorldQuest”); • 15.1% ownership in OpenKey with a carrying value of $2.1 million; • 32.5% ownership in 815 Commerce Managing Member, LLC (“815 Commerce MM”), which is developing the Le Meridien Fort Worth, with a carrying value of approximately $8.5 million; and • an investment in an entity that owns two resorts in Napa, CA, with a carrying value of approximately $9.0 million.
Added
As of December 31, 2023, we held interests in the following assets: • 90 consolidated hotel properties, which represent 20,549 total rooms; • Four consolidated operating hotel properties, which represent 405 total rooms owned through a 99.4% ownership interest in Stirling REIT OP, LP (“Stirling OP”), which was formed by Stirling Hotels & Resorts, Inc.
Removed
Series D Convertible Preferred Stock is limited to 40% of the combined voting power of all of the outstanding voting securities of Ashford Inc. entitled to vote on any given matter. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 362,959 shares owned by trusts.
Added
(“Stirling Inc.”) to acquire and own a diverse portfolio of stabilized income-producing hotels and resorts.
Removed
On January 11, 2023, the Company announced that its board of directors declared cash dividends on the Company’s 8.45% Series D Cumulative Preferred Stock, 7.375% Series F Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock, 7.50% Series H Cumulative Preferred Stock, and 7.50% Series I Cumulative Preferred Stock for the first quarter ending March 31, 2023.
Added
See note 4 to our consolidated financial statements; • one consolidated hotel property under development through a 32.5% owned investment in a consolidated entity; • 15.1% ownership in OpenKey with a carrying value of $1.6 million; and • an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage (the “Meritage Investment”) in Napa, CA, with a carrying value of approximately $8.4 million.
Removed
The Company also announced that its board of directors declared cash dividends on the Company’s Series J Redeemable Preferred Stock equal to a quarterly rate of $0.50 per share, payable as follows: $0.1666 per share was paid on February 15, 2023 to stockholders of record as of January 31, 2023; $0.1666 per share will be paid on March 15, 2023 to stockholders of record as of February 28, 2023; and $0.1666 per share will be paid on April 17, 2023 to stockholders of record as of March 31, 2023; and declared a monthly cash dividend for the Company's Series K Redeemable Preferred Stock equal to a quarterly rate of $0.5125 per share, payable as follows: $0.1708 per share was paid on February 15, 2023 to stockholders of record as of January 31, 2023; $0.1708 per share will be paid on March 15, 2023 to stockholders of record as of February 28, 2023; and $0.1708 per share will be paid on April 17, 2023 to stockholders of record as of March 31, 2023.
Added
Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts. Hotel operating results related to these properties are included in the consolidated statements of operations. We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement.
Removed
The Company has continued the suspension of its common stock dividend into 2023.
Added
See note 17 to our consolidated financial statements. Mr. Monty J. Bennett is chairman and chief executive officer of Ashford Inc. and, together with his father Mr. Archie Bennett, Jr., as of December 31, 2023, holds a controlling interest in Ashford Inc.
Removed
The partnership agreement of our operating partnership also allows the operating partnership to issue units with a preference on distributions.
Added
The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Liquidity As of December 31, 2023, the Company held cash and cash equivalents of $165.2 million and restricted cash of $146.3 million (including amounts held for sale).
Removed
SpringHill Suites and/or SpringHill Suites by Marriott, which are registered trademarks of Marriott International, Inc. Residence Inn and/or Residence Inn by Marriott, which are registered trademarks of Marriott International, Inc. Courtyard and/or Courtyard by Marriott, which are registered trademarks of Marriott International, Inc. Fairfield Inn & Suites by Marriott, which is a registered trademark of Marriott International, Inc.
Added
However, due to ongoing changes in market conditions, we will continually evaluate the appropriateness of our investment strategies. Our board of directors may change any or all of these strategies at any time without stockholder approval or notice.
Removed
TownePlace Suites by Marriott, which is a registered trademark of Marriott International, Inc. Renaissance, which is a registered trademark of Renaissance Hotel Holdings, Inc. The Ritz-Carlton, which is a registered trademark of The Ritz-Carlton Hotel Company, L.L.C.
Added
As of March 12, 2024, the Company had no accumulated unpaid dividends on its outstanding preferred stock.
Removed
Hyatt Regency, which is a registered trademark of Hyatt Corporation 8 Sheraton, which is a registered trademark of The Sheraton LLC W Hotels, which is a registered trademark of Starwood Hotels & Resorts Worldwide, LLC Westin, which is a registered trademark of Westin Hotel Management, L.P. Crowne Plaza, which is a registered trademark of Six Continents Hotels, Inc.
Added
Competition is often specific to the individual markets in which our properties are located and includes competition from existing and new hotels.
Removed
Hotel Indigo, which is a registered trademark of Six Continents Hotels, Inc.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese officers and directors of ours may influence us to sell, not sell, or refinance certain properties, even if such actions or inactions might be financially advantageous to our stockholders, or to enter into tax deferred exchanges with the proceeds of such sales when such a reinvestment might not otherwise be in our best interest.
Biggest changeThese officers and directors of ours may influence us to sell, not sell, or refinance certain properties, even if such actions or inactions might be financially advantageous to our stockholders, or to enter into tax deferred exchanges with the proceeds of such sales when such a reinvestment might not otherwise be in our best interest. 23 We are a party to a master hotel management agreement and a hotel management exclusivity agreement with Remington Hospitality and a master project management agreement and a project management exclusivity agreement with Premier, which describes the terms of Remington Hospitality’s and Premier’s, respectively, services to our hotels, as well as any future hotels we may acquire that may or may not be property managed by Remington Hospitality or project managed by Premier.
Pursuant to the Investor Agreement, we are not permitted to elect to be subject to, or publicly recommend any charter amendment to our stockholders that would permit our board of directors to elect to be subject to, the business combination/moratorium provisions or share control provisions of Maryland law or any similar state anti-takeover law, except to the extent Oaktree and its affiliates are expressly exempted.
Pursuant to the Investor Agreement, we are not permitted to elect to be subject to, or publicly recommend any charter amendment to our stockholders that would permit our board of directors to elect to be subject to, the business combination/moratorium provisions or control share provisions of Maryland law or any similar state anti-takeover law, except to the extent Oaktree and its affiliates are expressly exempted.
These provisions include: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special stockholder voting requirements on these business combinations, unless certain fair price requirements set forth in the MGCL are satisfied; and • “control share” provisions that provide that “control shares” of our company (defined as shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
These provisions include: • “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose special stockholder voting requirements on these business combinations, unless certain fair price requirements set forth in the MGCL are satisfied; and • “control share” provisions that provide that “control shares” of our company (defined as outstanding shares which, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of outstanding “control shares”) have no voting rights except to the 37 extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Such renovation and development involves substantial risks, including: • construction cost overruns and delays; • the disruption of operations at, displacement of revenue at and damage to our operating hotels, including revenue lost while rooms, restaurants or meeting space under renovation are out of service; • increases in operating costs at our hotels, to the extent they rely on portions of development sites for hotel operations; • the cost of funding renovations or developments and inability to obtain financing on attractive terms; • the return on our investment in these capital improvements or developments failing to meet expectations; 19 • governmental restrictions on the nature or size of a project; • inability to obtain all necessary zoning, land use, building, occupancy, and construction permits; • loss of substantial investment in a development project if a project is abandoned before completion; • acts of God such as earthquakes, hurricanes, floods or fires that could adversely affect a project; • environmental problems; • disputes with franchisors or hotel managers regarding compliance with relevant franchise agreements or management agreements; and • development-related liabilities, such as claims for design/construction defects.
Such renovation and development involves substantial risks, including: • construction cost overruns and delays; • the disruption of operations at, displacement of revenue at and damage to our operating hotels, including revenue lost while rooms, restaurants or meeting space under renovation are out of service; • increases in operating costs at our hotels, to the extent they rely on portions of development sites for hotel operations; • the cost of funding renovations or developments and inability to obtain financing on attractive terms; • the return on our investment in these capital improvements or developments failing to meet expectations; • governmental restrictions on the nature or size of a project; • inability to obtain all necessary zoning, land use, building, occupancy, and construction permits; • loss of substantial investment in a development project if a project is abandoned before completion; • acts of God such as earthquakes, hurricanes, floods or fires that could adversely affect a project; • environmental problems; • disputes with franchisors or hotel managers regarding compliance with relevant franchise agreements or management agreements; and • development-related liabilities, such as claims for design/construction defects.
Our charter requires us to indemnify our directors and officers and to advance expenses prior to the final disposition of a proceeding to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was either committed in bad 40 faith or was the result of active and deliberate dishonesty, the director or officer actually received an improper personal benefit in money, property or services, or, in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
Our charter requires us to indemnify our directors and officers and to advance expenses prior to the final disposition of a proceeding to the maximum extent permitted by Maryland law for liability actually incurred in connection with any proceeding to which they may be made, or threatened to be made, a party, except to the extent that the act or omission of the director or officer was material to the matter giving rise to the proceeding and was either committed in bad faith or was the result of active and deliberate dishonesty, the director or officer actually received an improper personal benefit in money, property or services, or, in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.
A TRS lessee will not be treated as a “related party tenant,” and will not be treated as directly operating a lodging facility, which is prohibited, to the extent the TRS lessee leases properties from us that are managed by an “eligible independent contractor.” 33 We believe that the rent paid by our TRS lessees is qualifying income for purposes of the REIT gross income tests and that our TRSs qualify to be treated as TRSs for U.S. federal income tax purposes, but there can be no assurance that the IRS will not challenge this treatment or that a court would not sustain such a challenge.
A TRS lessee will not be treated as a “related party tenant,” and will not be treated as directly operating a lodging facility, which is prohibited, to the extent the TRS lessee leases properties from us that are managed by an “eligible independent contractor.” We believe that the rent paid by our TRS lessees is qualifying income for purposes of the REIT gross income tests and that our TRSs qualify to be treated as TRSs for U.S. federal income tax purposes, but there can be no assurance that the IRS will not challenge this treatment or that a court would not sustain such a challenge.
If Braemar failed to qualify, we would have failed our 2013 REIT income tests, which would either result in our loss of our REIT status for 2013 36 and the following four taxable years or result in a significant tax in 2013 that has not been accrued or paid and thereby would materially negatively impact our business, financial condition and potentially impair our ability to continue operating in the future.
If Braemar failed to qualify, we would have failed our 2013 REIT income tests, which would either result in our loss of our REIT status for 2013 and the following four taxable years or result in a significant tax in 2013 that has not been accrued or paid and thereby would materially negatively impact our business, financial condition and potentially impair our ability to continue operating in the future.
Under such statutory provisions and the CFTC’s rules, we must clear on a derivatives clearing organization any 26 over-the-counter swap we enter into that is within a class of swaps designated for clearing by CFTC rule and execute trades in such cleared swap on an exchange if the swap is accepted for trading on the exchange unless such swap is exempt from such mandatory clearing and trade execution requirements.
Under such statutory provisions and the CFTC’s rules, we must clear on a derivatives clearing organization any over-the-counter swap we enter into that is within a class of swaps designated for clearing by CFTC rule and execute trades in such cleared swap on an exchange if the swap is accepted for trading on the exchange unless such swap is exempt from such mandatory clearing and trade execution requirements.
Our third party managers may also be unable to hire quality personnel to adequately staff hotel departments, which could result in a sub-standard level of service to hotel guests and hotel operations. 21 Hotels where our managers have collective bargaining agreements with their employees are more highly affected by labor force activities than others.
Our third party managers may also be unable to hire quality personnel to adequately staff hotel departments, which could result in a sub-standard level of service to hotel guests and hotel operations. Hotels where our managers have collective bargaining agreements with their employees are more highly affected by labor force activities than others.
If our hotel managers, including Ashford Hospitality Services LLC and its subsidiaries (including Remington Hotels) do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT. Rent paid by a lessee that is a “related party tenant” of ours is not qualifying income for purposes of the two gross income tests applicable to REITs.
If our hotel managers, including Ashford Hospitality Services LLC and its subsidiaries (including Remington Hospitality) do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT. Rent paid by a lessee that is a “related party tenant” of ours is not qualifying income for purposes of the two gross income tests applicable to REITs.
In making this determination, our advisor, using substantial discretion, will consider the investment strategy and guidelines of each entity with respect to acquisition of properties, portfolio concentrations, tax consequences, regulatory restrictions, liquidity requirements and other factors deemed appropriate. In making the allocation determination, our advisor has no obligation to make any such investment opportunity available to us.
In making this determination, our advisor, using substantial discretion, will consider the investment strategy and guidelines of each entity with respect to acquisition of properties, portfolio concentrations, tax consequences, regulatory restrictions, liquidity requirements and other factors deemed appropriate. In making the allocation 22 determination, our advisor has no obligation to make any such investment opportunity available to us.
Remington Hotels will have significant influence over the determination of the competitive set for any of our hotels managed by Remington Hotels, and as such could artificially enhance the perception of the performance of a hotel by selecting a competitive set that is not performing well or is not comparable to the Remington Hotels-managed hotel, thereby making it more difficult for us to elect not to use Remington Hotels for future hotel management.
Remington Hospitality will have significant influence over the determination of the competitive set for any of our hotels managed by Remington Hospitality, and as such could artificially enhance the perception of the performance of a hotel by selecting a competitive set that is not performing well or is not comparable to the Remington Hospitality-managed hotel, thereby making it more difficult for us to elect not to use Remington Hospitality for future hotel management.
Because U.S. federal income tax laws restrict REITs and their subsidiaries from operating or managing hotels, third parties must operate our hotels. A REIT may lease its hotels to taxable REIT subsidiaries in which the REIT can own up to a 100% interest. A taxable REIT subsidiary (“TRS”) pays corporate-level income tax and may retain any after-tax income.
Because U.S. federal income tax laws restrict REITs and their subsidiaries from operating or managing hotels, third parties must operate our hotels. A REIT may lease its hotels to taxable REIT subsidiaries in which the REIT can own up to a 100% 12 interest. A taxable REIT subsidiary (“TRS”) pays corporate-level income tax and may retain any after-tax income.
However, it is possible that these changes could 34 increase the U.S. federal income tax, interest, and/or penalties otherwise borne by us in the event of a U.S. federal income tax audit of a subsidiary partnership (such as our operating partnership). Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.
However, it is possible that these changes could increase the U.S. federal income tax, interest, and/or penalties otherwise borne by us in the event of a U.S. federal income tax audit of a subsidiary partnership (such as our operating partnership). Complying with REIT requirements may cause us to forgo otherwise attractive opportunities.
We may offer more flexible terms on our mortgage loans than some providers of commercial mortgage loans, and as a result, we may have more difficulty selling or participating our loans to secondary purchasers than would these more traditional lenders. We may be required to expend funds to correct defects or to make improvements before a property can be sold.
We may offer more flexible terms on our mortgage loans than some providers of commercial mortgage loans, and as a result, we may have more difficulty selling or participating our loans to secondary purchasers than would these more traditional lenders. 28 We may be required to expend funds to correct defects or to make improvements before a property can be sold.
However the receipt of a transfer pricing study does not prevent the IRS from challenging the arm’s length nature of the lease terms between a REIT and its TRS lessees. Consequently, there can be no assurance that we will be able to avoid application of the 100% excise tax discussed above.
However the receipt of a transfer pricing study does not prevent the IRS from challenging the arm’s length nature of the lease terms between a REIT and its TRS 32 lessees. Consequently, there can be no assurance that we will be able to avoid application of the 100% excise tax discussed above.
In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. Our business strategy depends on our continued growth. We may fail to integrate recent and additional investments into our operations or otherwise manage our future growth, which may adversely affect our operating results.
In addition, we may in certain circumstances be liable for the actions of our third-party partners or co-venturers. 11 Our business strategy depends on our continued growth. We may fail to integrate recent and additional investments into our operations or otherwise manage our future growth, which may adversely affect our operating results.
The changes enacted that have increased our state and local income tax burden include the taxation of modified gross receipts (as opposed to net taxable income), the suspension of and/or limitation on the use of net operating loss deductions, increases in tax rates and fees, the addition of surcharges, and the taxation of our partnership income at the entity level.
The 31 changes enacted that have increased our state and local income tax burden include the taxation of modified gross receipts (as opposed to net taxable income), the suspension of and/or limitation on the use of net operating loss deductions, increases in tax rates and fees, the addition of surcharges, and the taxation of our partnership income at the entity level.
Adverse conditions in the hotel industry will have a material adverse effect on our operating and investment revenues and cash available for distribution to our stockholders. Our reliance on Remington Hotels, a subsidiary of Ashford Inc., and on third party hotel managers to operate our hotels and for a substantial majority of our cash flow may adversely affect us.
Adverse conditions in the hotel industry will have a material adverse effect on our operating and investment revenues and cash available for distribution to our stockholders. Our reliance on Remington Hospitality, a subsidiary of Ashford Inc., and on third party hotel managers to operate our hotels and for a substantial majority of our cash flow may adversely affect us.
When we enter into or acquire properties subject to any such 13 management agreements, we may be precluded from taking actions in our best interest and could incur substantial expense as a result of the agreements. If we cannot obtain additional capital, our growth will be limited.
When we enter into or acquire properties subject to any such management agreements, we may be precluded from taking actions in our best interest and could incur substantial expense as a result of the agreements. If we cannot obtain additional capital, our growth will be limited.
These instruments may also generate income that may not be treated as qualifying REIT income. In 17 addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs.
These instruments may also generate income that may not be treated as qualifying REIT income. In addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs.
Although our 28 management team has experience and has had success in making investments in real estate-related lodging debt and hotel assets, the past performance of these investments is not necessarily indicative of the results of our future investments. Our investment portfolio will contain investments concentrated in a single industry and will not be fully diversified.
Although our management team has experience and has had success in making investments in real estate-related lodging debt and hotel assets, the past performance of these investments is not necessarily indicative of the results of our future investments. Our investment portfolio will contain investments concentrated in a single industry and will not be fully diversified.
Additionally, activist investors have, and in the future, may commence campaigns seeking to influence other entities advised by our advisor to take particular actions favored by the activist or gain representation on the board of directors of such entities, which could result in 23 additional disruption and diversion of management’s attention.
Additionally, activist investors have, and in the future, may commence campaigns seeking to influence other entities advised by our advisor to take particular actions favored by the activist or gain representation on the board of directors of such entities, which could result in additional disruption and diversion of management’s attention.
We suffered significant impairment charges with respect to our investments in mortgage loans in 2009 and 2010. The value and the price of our securities may be adversely affected. 27 We may invest in non-recourse loans, which will limit our recovery to the value of the mortgaged property. Our mortgage and mezzanine loan assets have typically been non-recourse.
We suffered significant impairment charges with respect to our investments in mortgage loans in 2009 and 2010. The value and the price of our securities may be adversely affected. We may invest in non-recourse loans, which will limit our recovery to the value of the mortgaged property. Our mortgage and mezzanine loan assets have typically been non-recourse.
Provisions in the partnership agreement of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving 37 an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable.
Provisions in the partnership agreement of our operating partnership may delay or make more difficult unsolicited acquisitions of us or changes in our control. These provisions could discourage third parties from making proposals involving an unsolicited acquisition of us or change of our control, although some stockholders might consider such proposals, if made, desirable.
In addition, the presence of significant mold could expose us or our borrowers to liability from hotel guests, hotel employees, and others if property damage or health concerns arise. 30 Compliance with the ADA and fire, safety, and other regulations may require us or our borrowers to incur substantial costs.
In addition, the presence of significant mold could expose us or our borrowers to liability from hotel guests, hotel employees, and others if property damage or health concerns arise. Compliance with the ADA and fire, safety, and other regulations may require us or our borrowers to incur substantial costs.
A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent 35 that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock.
A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. To the extent that distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock.
Because our advisor’s key employees have duties to Braemar and Ashford Inc., as well as to our company, we do not have their undivided attention and they face conflicts in allocating their time and resources between our company, Braemar and Ashford Inc. Our advisor may also manage other entities in the future.
Because our advisor’s key employees have duties to Stirling Inc., Braemar and Ashford Inc., as well as to our company, we do not have their undivided attention and they face conflicts in allocating their time and resources between our company, Stirling Inc., Braemar and Ashford Inc. Our advisor may also manage other entities in the future.
Ashford Inc.’s ability to exercise significant influence over the determination of the competitive set for any hotels managed by Remington Hotels could artificially enhance the perception of the performance of a hotel, making it more difficult to use managers other than Remington Hotels for future properties.
Ashford Inc.’s ability to exercise significant influence over the determination of the competitive set for any hotels managed by Remington Hospitality could artificially enhance the perception of the performance of a hotel, making it more difficult to use managers other than Remington Hospitality for future properties.
Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our financial condition, results of operations, the market price of our stock and our ability to make distributions to our stockholders. Our rights and the rights of our stockholders to take action against our directors and officers are limited.
Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our financial condition, results of operations, the market price of our stock and our ability to make distributions to our stockholders. 39 Our rights and the rights of our stockholders to take action against our directors and officers are limited.
We cannot assure you that our hedging strategy and the instruments that we use will adequately offset the risk of interest rate volatility or other risks or that our hedging transactions will not result in losses that may reduce the overall return on your investment.
We cannot assure you that our hedging strategy and the instruments that we use 17 will adequately offset the risk of interest rate volatility or other risks or that our hedging transactions will not result in losses that may reduce the overall return on your investment.
If an underlying entity cannot generate adequate cash flow to meet such entity’s debt obligations (which may include leveraged obligations in excess of its aggregate assets), it may default on its loan agreements or be forced into bankruptcy.
If an underlying entity cannot generate adequate cash 25 flow to meet such entity’s debt obligations (which may include leveraged obligations in excess of its aggregate assets), it may default on its loan agreements or be forced into bankruptcy.
The loss of services of one or more members of our advisor’s management team could harm our business and our prospects. We do not have any employees, and rely on our hotel managers to employ the personnel required to operate the hotels we own.
The loss of services of one or more members of our advisor’s management team could harm our business and our prospects. 10 We do not have any employees, and rely on our hotel managers to employ the personnel required to operate the hotels we own.
We may not recover some or all of our investment in these loans. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans resulting in less equity in the property and increasing the risk of loss of principal.
We may not recover 27 some or all of our investment in these loans. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans resulting in less equity in the property and increasing the risk of loss of principal.
Operating expenses at our hotels could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, our hotel properties and properties underlying our loan assets may be subject 29 to environmental liabilities.
Operating expenses at our hotels could be higher than anticipated due to the cost of complying with existing or future environmental laws and regulations. In addition, our hotel properties and properties underlying our loan assets may be subject to environmental liabilities.
Similarly, we are required to make minimum base hotel management fee payments under our hotel management agreements with Remington Hotels, a subsidiary of Ashford Inc., which must be paid even if revenues at our hotels decline significantly.
Similarly, we are required to make minimum base hotel management fee payments under our hotel management agreements with Remington Hospitality, a subsidiary of Ashford Inc., which must be paid even if revenues at our hotels decline significantly.
The market price of our 39 securities is likely based on the earnings and return that we derive from our investments, income with respect to our properties, and our related distributions to stockholders and not necessarily from the market value or underlying appraised value of the properties or investments themselves.
The market price of our securities is likely based on the earnings and return that we derive from our investments, income with respect to our properties, and our related distributions to stockholders and not necessarily from the market value or underlying appraised value of the properties or investments themselves.
In addition, unless we can purchase the fee simple interest in the underlying land and improvements or extend the terms of these ground leases before their expiration, we will lose our right to operate these properties and our interest in the improvements upon expiration of the ground leases.
In addition, unless we can purchase the fee simple interest in the underlying land and improvements or extend the terms of these ground leases before their expiration, we will lose our right to operate these properties and our interest in the improvements upon expiration of the ground 18 leases.
Because each of our executive officers are also key employees of our advisor, Ashford LLC, a subsidiary of Ashford Inc. and have ownership interests in Ashford Inc. and because the chairman of our board of directors has an ownership interest in Ashford Inc., our advisory agreement, our master hotel management agreement and hotel management mutual exclusivity agreement with Remington Hotels, a subsidiary of Ashford Inc., and our master project management agreement and project management mutual exclusivity agreement with Premier, a subsidiary of Ashford Inc., among other agreements between us and subsidiaries of Ashford Inc. were not negotiated on an arm’s-length basis, and we did not have the benefit of arm’s-length negotiations of the type normally conducted with an unaffiliated third party.
Because each of our executive officers are also key employees of our advisor, Ashford LLC, a subsidiary of Ashford Inc. and have ownership interests in Ashford Inc. and because the chairman of our board of directors has an ownership interest in Ashford Inc., our advisory agreement, our master hotel management agreement and hotel management mutual exclusivity agreement with Remington Hospitality, a subsidiary of Ashford Inc., and our master project management agreement and project management mutual exclusivity agreement with Premier, a subsidiary of Ashford Inc., among other agreements between us and subsidiaries of Ashford Inc. were not negotiated on an arm’s-length basis, and we did not have the benefit of arm’s-length negotiations of the type normally conducted with an unaffiliated third party.
Maryland statutory law provides that an act of a director relating to or affecting an acquisition or a potential acquisition of control of a corporation may not be subject to a higher duty or greater scrutiny than is applied to any other act of a director.
Maryland statutory law provides that an act of a director relating to or affecting an acquisition or a potential acquisition of control of a corporation may not be subject to a higher duty or greater scrutiny than is applied to any other act of a director or determination not to act.
For each hotel managed by Remington Hotels, its competitive set will consist of a small group of hotels in the relevant market that we and Remington Hotels believe are comparable for purposes of benchmarking the performance of such hotel.
For each hotel managed by Remington Hospitality, its competitive set will consist of a small group of hotels in the relevant market that we and Remington Hospitality believe are comparable for purposes of benchmarking the performance of such hotel.
To 32 the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
To the extent that we satisfy this distribution requirement, but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
If our hotel managers, including Ashford Hospitality Services LLC (“AHS”) and its subsidiaries (including Remington Hotels), do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT.
If our hotel managers, including Ashford Hospitality Services LLC (“AHS”) and its subsidiaries (including Remington Hospitality), do not qualify as “eligible independent contractors,” we would fail to qualify as a REIT.
In addition, in periods of weak demand, as may occur during a general economic recession, profitability is negatively affected by the fixed costs of operating hotels. We also face competition from services such as home sharing companies and apartment operators offering short-term rentals. We did not pay dividends on our common stock in fiscal year 2022.
In addition, in periods of weak demand, as may occur during a general economic recession, profitability is negatively affected by the fixed costs of operating hotels. We also face competition from services such as home sharing companies and apartment operators offering short-term rentals. We did not pay dividends on our common stock in fiscal year 2023.
To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income.
To the extent that we satisfy the distribution requirement, but distribute less than 100% 34 of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income.
Our managers, including Remington Hotels, a subsidiary of Ashford Inc., and unaffiliated third-party managers are responsible for hiring and maintaining the labor force at each of our hotels.
Our managers, including Remington Hospitality, a subsidiary of Ashford Inc., and unaffiliated third-party managers are responsible for hiring and maintaining the labor force at each of our hotels.
Additionally, we and AHS and its subsidiaries, including Remington Hotels, must comply with the provisions of the private letter ruling we obtained from the IRS in connection with Ashford Inc.’s acquisition of Remington Hotels to ensure that AHS and its subsidiaries, including Remington Hotels, continue to qualify as “eligible independent contractors.” Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Additionally, we and AHS and its subsidiaries, including Remington Hospitality, must comply with the provisions of the private letter ruling we obtained from the IRS in connection with Ashford Inc.’s acquisition of Remington Hospitality to ensure that AHS and its subsidiaries, including Remington Hospitality, continue to qualify as “eligible independent contractors.” Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
We and our stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.
We and our 35 stockholders could be adversely affected by any such change in the U.S. federal income tax laws, regulations or administrative interpretations.
These actions can be taken without obtaining stockholder approval. Our issuance of additional classes of common stock or preferred stock could substantially dilute the interests of the holders of our common stock.
These actions can be taken without 36 obtaining stockholder approval. Our issuance of additional classes of common stock or preferred stock could substantially dilute the interests of the holders of our common stock.
RISKS RELATED TO CONFLICTS OF INTEREST Our agreements with our external advisor and its subsidiaries, as well as our mutual exclusivity agreement and management agreements with Remington Hotels and Premier, subsidiaries of Ashford Inc., were not negotiated on an arm’s-length basis, and we may pursue less vigorous enforcement of their terms because of conflicts of interest with certain of our executive officers and directors and key employees of our advisor.
RISKS RELATED TO CONFLICTS OF INTEREST Our agreements with our external advisor and its subsidiaries, as well as our mutual exclusivity agreement and management agreements with Remington Hospitality and Premier, subsidiaries of Ashford Inc., were not negotiated on an arm’s-length basis, and we may pursue less vigorous enforcement of their terms because of conflicts of interest with certain of our executive officers and directors and key employees of our advisor.
Maryland law permits these determinations to be made by our board of directors based on 10 either a book value basis or a reasonable fair value basis.
Maryland law permits these determinations to be made by our board of directors based on either a book value basis or a reasonable fair value basis.
Our hotel management mutual exclusivity agreement with Remington requires us to engage Remington Hotels to manage all future properties that we acquire, to the extent we have the right or control the right to direct such matters, unless our 24 independent directors either: (i) unanimously vote not to hire Remington Hotels or (ii) based on special circumstances or past performance, by a majority vote, elect not to engage Remington Hotels because they have determined, in their reasonable business judgment, that it would be in our best interest not to engage Remington Hotels or that another manager or developer could perform the duties materially better.
Our hotel management mutual exclusivity agreement with Remington requires us to engage Remington Hospitality to manage all future properties that we acquire, to the extent we have the right or control the right to direct such matters, unless our independent directors either: (i) unanimously vote not to hire Remington Hospitality or (ii) based on special circumstances or past performance, by a majority vote, elect not to engage Remington Hospitality because they have determined, in their reasonable business judgment, that it would be in our best interest not to engage Remington Hospitality or that another manager or developer could perform the duties materially better.
We are increasingly dependent on information technology, and potential cyber-attacks, security problems or other disruption and expanding social media vehicles present new risks.
We are increasingly dependent on information technology, and cyber-attacks, security problems or other disruption and expanding social media vehicles present new risks.
If the market value or income potential of real estate-related investments declines as a result of increased interest rates or other factors, we may need to increase our real estate-related investments and income or liquidate our non-qualifying assets in order to maintain our REIT qualification or exemption from the Investment Company Act of 1940 (the “Investment Company Act”).
If the market value or income potential of real estate-related investments declines as a result of changes in interest rates or other factors, we may need to increase our real estate-related investments and income or liquidate our non-qualifying assets in order to maintain our REIT qualification or exemption from the Investment Company Act of 1940 (the “Investment Company Act”).
Conflicts of interest in general and specifically relating to Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hotels and Premier) may lead to management decisions that are not in the stockholders’ best interest. The chairman of our board of directors, Mr. Monty J. Bennett, is the chairman, chief executive officer and a significant stockholder of Ashford Inc. and Mr.
Conflicts of interest in general and specifically relating to Ashford Inc. and its subsidiaries (including Ashford LLC, Remington Hospitality and Premier) may lead to management decisions that are not in the stockholders’ best interest. The chairman of our board of directors, Mr. Monty J. Bennett, is the chairman, chief executive officer and a significant stockholder of Ashford Inc. and Mr.
Pursuant to the terms of our hotel management mutual exclusivity agreement with Remington Hotels, if investment opportunities that satisfy our investment criteria are identified by Remington Hotels or its affiliates, Remington Hotels will give us a written notice and description of the investment opportunity. We will have 10 business days to either accept or reject the investment opportunity.
Pursuant to the terms of our hotel management mutual exclusivity agreement with Remington Hospitality, if investment opportunities that satisfy our investment criteria are identified by Remington Hospitality or its affiliates, Remington Hospitality will give us a written notice and description of the investment opportunity. We will have 10 business days to either accept or reject the investment opportunity.
If we were to reject such an investment opportunity, either Braemar or Remington Hotels could pursue the opportunity and compete with us. In such a case, Mr. Monty J. Bennett, our chairman, in his capacity as chairman of Braemar or chief executive officer of Ashford Inc. could be in a position of directly competing with us.
If we were to reject such an investment opportunity, either Braemar or Remington Hospitality could pursue the opportunity and compete with us. In such a case, Mr. Monty J. Bennett, our chairman, in his capacity as chairman of Braemar or chief executive officer of Ashford Inc. could be in a position of directly competing with us.
Our board of directors has adopted a policy that requires all material approvals, actions or decisions to which we have the right to make under the master hotel management agreement with Remington Hotels and the master project management agreement with Premier be approved by a majority or, in certain circumstances, all of our independent directors.
Our board of directors has adopted a policy that requires all material approvals, actions or decisions to which we have the right to make under the master hotel management agreement with Remington Hospitality and the master project management agreement with Premier be approved by a majority or, in certain circumstances, all of our independent directors.
We intend to operate in a manner that allows us to continue to qualify as a REIT for U.S. federal income tax purposes.
We intend to operate in a manner that allows us to qualify as a REIT for U.S. federal income tax purposes.
The leveraged capital structure of the hospitality entities underlying our investments will increase their exposure to adverse economic factors (such as rising interest rates, competitive pressures, downturns in the economy or deterioration in the condition of the real estate industry) and to the risk of unforeseen events.
The leveraged capital structure of the hospitality entities underlying our investments will increase their exposure to adverse economic factors (such as changes in interest rates, competitive pressures, downturns in the economy or deterioration in the condition of the real estate industry) and to the risk of unforeseen events.
If we reject the opportunity, Remington Hotels may then pursue such investment opportunity, subject to a right of first refusal in favor of Braemar, pursuant to an existing agreement between Braemar and Remington Hotels, on materially the same terms and conditions as offered to us.
If we reject the opportunity, Remington Hospitality may then pursue such investment opportunity, subject to a right of first refusal in favor of Braemar, pursuant to an existing agreement between Braemar and Remington Hospitality, on materially the same terms and conditions as offered to us.
Archie Bennett, Jr., who is our chairman emeritus, is a significant stockholder of Ashford Inc. Prior to its acquisition by Ashford Inc. on November 6, 2019, Messrs. Archie Bennett, Jr. and Monty J. Bennett beneficially owned 100% of Remington Hotels.
Archie Bennett, Jr., who is our chairman emeritus, is a significant stockholder of Ashford Inc. Prior to its acquisition by Ashford Inc. on November 6, 2019, Messrs. Archie Bennett, Jr. and Monty J. Bennett beneficially owned 100% of Remington Hospitality.
The exclusivity agreements requires us to engage Remington Hotels for hotel management and Premier for design and construction services, respectively, unless, in each case, our independent directors either: (i) unanimously vote to hire a different manager or developer; or (ii) by a majority vote, elect not to engage Remington Hotels or Premier, as the case may be, because they have determined that special circumstances exist or that, based on Remington Hotels’ or Premier’s prior performance, another manager or developer could perform the duties materially better.
The exclusivity agreements requires us to engage Remington Hospitality for hotel management and Premier for design and construction services, respectively, unless, in each case, our independent directors either: (i) unanimously vote to hire a different manager or developer; or (ii) by a majority vote, elect not to engage Remington Hospitality or Premier, as the case may be, because they have determined that special circumstances exist or that, based on Remington Hospitality’s or Premier’s prior performance, another manager or developer could perform the duties materially better.
In addition, we may be less likely to take aggressive actions (such as delaying payments owed to our hotel managers) in order to influence the staffing decisions made by Remington Hotels, which is our affiliate.
In addition, we may be less likely to take aggressive actions (such as delaying payments owed to our hotel managers) in order to influence the staffing decisions made by Remington Hospitality, which is our affiliate.
We do not expect to pay dividends on our common stock for the foreseeable future. We did not pay dividends on our common stock in fiscal year 2022. We do not expect to pay dividends on our common stock for the foreseeable future. We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2023.
We do not expect to pay dividends on our common stock for the foreseeable future. We did not pay dividends on our common stock in fiscal year 2023. We do not expect to pay dividends on our common stock for the foreseeable future. We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2024.
Our advisor and its key employees, most of whom are Braemar’s, Ashford Inc.’s and our executive officers, face competing demands relating to their time and this may adversely affect our operations. We rely on our advisor and its employees for the day-to-day operation of our business. Certain key employees of our advisor are executive officers of Braemar and Ashford Inc.
Our advisor and its key employees, most of whom are Stirling Inc.’s, Braemar’s, Ashford Inc.’s and our executive officers, face competing demands relating to their time and this may adversely affect our operations. We rely on our advisor and its employees for the day-to-day operation of our business.
Under our master hotel management agreement with Remington Hotels, we have the right to terminate Remington Hotels based on the performance of the applicable hotel, subject to the payment of a termination fee.
Under our master hotel management agreement with Remington Hospitality, we have the right to terminate Remington Hospitality based on the performance of the applicable hotel, subject to the payment of a termination fee.
During 2022, approximately 11% of our total hotel revenue was generated from nine hotels located in the Washington D.C. area, one of several key U.S. markets considered vulnerable to terrorist attack. Our financial and operating performance may be adversely affected by potential terrorist attacks. Terrorist attacks in the future may cause our results to differ materially from anticipated results.
During 2023, approximately 12% of our total hotel revenue was generated from nine hotels located in the Washington D.C. area, one of several key U.S. markets considered vulnerable to terrorist attack. Our financial and operating performance may be adversely affected by potential terrorist attacks. Terrorist attacks in the future may cause our results to differ materially from anticipated results.
As of December 31, 2022, 79% of our hotels are in cash traps. There is refinancing risk associated with our debt. We finance our long-term growth and liquidity needs with debt financings having staggered maturities, and use variable-rate debt or a mix of fixed and variable-rate debt as appropriate based on favorable interest rates, principal amortization and other terms.
As of December 31, 2023, 26 of our hotels are in cash traps. There is refinancing risk associated with our debt. We finance our long-term growth and liquidity needs with debt financings having staggered maturities, and use variable-rate debt or a mix of fixed and variable-rate debt as appropriate based on favorable interest rates, principal amortization and other terms.
Under the terms of our hotel management mutual exclusivity agreement with Remington Hotels, Remington Hotels may be able to pursue lodging investment opportunities that compete with us.
Under the terms of our hotel management mutual exclusivity agreement with Remington Hospitality, Remington Hospitality may be able to pursue lodging investment opportunities that compete with us.
As a result, even if revenues at our hotels decline significantly, we will still be required to make minimum monthly payments to Remington Hotels equal to 11 approximately $16,000 per hotel (increased annually based on consumer price index adjustments), which could adversely impact our liquidity and financial condition.
As a result, even if revenues at our hotels decline significantly, we will still be required to make minimum monthly payments to Remington Hospitality equal to approximately $17,000 per hotel (increased annually based on consumer price index adjustments), which could adversely impact our liquidity and financial condition.
However, given the authority and/or operational latitude provided to Remington Hotels under the master hotel management agreement and to Premier under the master project management agreement, and Mr. Monty J.
However, given the authority and/or operational latitude provided to Remington Hospitality under the master hotel management agreement and to Premier under the master project management agreement, and Mr. Monty J.
If we fail to qualify as a REIT in any tax year, then: • we would be taxed as a regular domestic corporation, which, among other things, means being unable to deduct distributions to our stockholders in computing taxable income and being subject to U.S. federal income tax on our taxable income at regular corporate rates; • we would also be subject to federal alternative minimum tax for taxable years beginning before January 1, 2018, and, possibly, increased state and local income taxes; • any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to stockholders; and • unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the subsequent four taxable years following the year that we lost our qualification, and, thus, our cash available for distribution to stockholders could be reduced for each of the years during which we did not qualify as a REIT.
If we fail to qualify as a REIT in any tax year, then: • we would be taxed as a regular domestic corporation, which, among other things, means being unable to deduct distributions to our stockholders in computing taxable income and being subject to U.S. federal income tax on our taxable income at regular corporate rates; • we would also be subject to increased state and local income taxes; • any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to stockholders; and • unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the subsequent four taxable years following the year that we lost our qualification, and, thus, our cash available for distribution to stockholders could be reduced for each of the years during which we did not qualify as a REIT.
If we terminate the advisory agreement without cause or upon a change of control, we will be required to pay our advisor a termination fee equal to: • (A) 1.1 multiplied by the greater of (i) 12 times the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; (ii) the earnings multiple (calculated as our advisor’s total enterprise value on the trading day immediately preceding the day the termination notice is given to our advisor divided by our advisor’s most recently reported adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”)) for our advisor’s common stock for the 12 month period preceding the termination date of the advisory agreement multiplied by the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; or (iii) the simple average of the earnings multiples for each of the three fiscal years preceding the termination of the advisory agreement (calculated as our advisor’s total enterprise value on the last trading day of each of the three preceding fiscal years divided by, in each case, our advisor’s Adjusted EBITDA for the same periods), multiplied by the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; plus • (B) an additional amount such that the total net amount received by our advisor after the reduction by state and U.S. federal income taxes at an assumed combined rate of 40% on the sum of the amounts described in (A) and (B) shall equal the amount described in (A). 22 Any such termination fee will be payable on or before the termination date.
If we terminate the advisory agreement without cause or upon a change of control, we will be required to pay our advisor a termination fee equal to: • (A) 1.1 multiplied by the greater of (i) 12 times the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; (ii) the earnings multiple (calculated as our advisor’s total enterprise value on the trading day immediately preceding the day the termination notice is given to our advisor divided by our advisor’s most recently reported adjusted earnings before interest, tax, depreciation and amortization (“Adjusted EBITDA”)) for our advisor’s common stock for the 12 month period preceding the termination date of the advisory agreement multiplied by the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; or (iii) the simple average of the earnings multiples for each of the three fiscal years preceding the termination of the advisory agreement (calculated as our advisor’s total enterprise value on the last trading day of each of the three preceding fiscal years divided by, in each case, our advisor’s Adjusted EBITDA for the same periods), multiplied by the net earnings of our advisor for the 12 month period preceding the termination date of the advisory agreement; plus • (B) an additional amount such that the total net amount received by our advisor after the reduction by state and U.S. federal income taxes at an assumed combined rate of 40% on the sum of the amounts described in (A) and (B) shall equal the amount described in (A); provided, that, the minimum amount of any termination fee calculated as of any date of determination shall be the greater of (i) the fee that would have been payable had such termination fee been calculated as of December 31, 2023 and (ii) the fee calculated as of such date of determination.
Similarly, pursuant to our hotel management agreement with Remington Hotels, a subsidiary of Ashford Inc., we pay Remington Hotels monthly base hotel management fees on a per hotel basis equal to the greater of approximately $16,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues.
Similarly, pursuant to our hotel management agreement with Remington Hospitality, a subsidiary of Ashford Inc., we pay Remington Hospitality monthly base hotel management fees on a per hotel basis equal to the greater of approximately $17,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues.
Our advisor and our various hotel managers rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data.
Ashford LLC and our hotel managers rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data.
The laws and regulations governing our business or the regulatory or enforcement environment at the federal level or in any of the states in which we operate may change at any time and may have an adverse effect on our business.
Changes in laws, regulations, or policies may adversely affect our business. The laws and regulations governing our business or the regulatory or enforcement environment at the federal level or in any of the states in which we operate may change at any time and may have an adverse effect on our business.
Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. Some of the properties in our portfolio may contain microbial matter such as mold and mildew.
Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. Some of the properties in our portfolio may contain microbial matter such as mold and mildew.
Our advisor’s and our hotel managers’ networks and storage applications may be subject to unauthorized access by hackers or others (through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means) or may be breached due to operator error, malfeasance or other system disruptions.
Ashford LLC’s and hotel managers’ networks and storage applications could be subject to unauthorized access by hackers or others through cyber-attacks, which are rapidly evolving and becoming increasingly sophisticated, or by other means, or may be breached due to operator error, malfeasance or other system disruptions.
Such issuances could also have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests. Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.
Such issuances could also have the effect of delaying or preventing someone from taking control of us, even if our stockholders’ deemed a change of control to be in their best interests. Certain provisions in the partnership agreement of our operating partnership may delay or prevent unsolicited acquisitions of us.

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Item 2. Properties

Properties — owned and leased real estate

7 edited+3 added−1 removed0 unchanged
Biggest changeWorth, TX Full service 294 100 294 59.11 % $ 183.76 $ 108.62 Hampton Inn Lawrenceville, GA Select service 85 100 85 77.25 % $ 118.51 $ 91.55 Hampton Inn Evansville, IN Select service 140 100 140 57.02 % $ 116.34 $ 66.34 Hampton Inn Parsippany, NJ Select service 152 100 152 55.32 % $ 137.33 $ 75.97 Hampton Inn Buford, GA Select service 92 100 92 80.43 % $ 139.15 $ 111.92 Marriott Beverly Hills, CA Full service 260 100 260 89.34 % $ 249.28 $ 222.70 Marriott Durham, NC Full service 225 100 225 70.01 % $ 138.70 $ 97.11 Marriott Arlington, VA Full service 701 100 701 68.56 % $ 192.23 $ 131.80 Marriott Bridgewater, NJ Full service 349 100 349 58.16 % $ 182.95 $ 106.40 Marriott Dallas, TX Full service 265 100 265 66.23 % $ 137.83 $ 91.29 Marriott Fremont, CA Full service 357 100 357 55.61 % $ 152.26 $ 84.67 Marriott Memphis, TN Full service 232 100 232 67.93 % $ 151.06 $ 102.61 Marriott Irving, TX Full service 499 100 499 76.02 % $ 150.01 $ 114.05 Marriott Omaha, NE Full service 300 100 300 53.10 % $ 133.29 $ 70.78 Marriott Sugarland, TX Full service 300 100 300 73.95 % $ 142.50 $ 105.38 SpringHill Suites by Marriott Baltimore, MD Select service 133 100 133 65.41 % $ 110.25 $ 72.11 SpringHill Suites by Marriott Kennesaw, GA Select service 90 100 90 67.10 % $ 126.26 $ 84.71 SpringHill Suites by Marriott Buford, GA Select service 97 100 97 71.55 % $ 123.38 $ 88.28 SpringHill Suites by Marriott Manhattan Beach, CA Select service 164 100 164 72.38 % $ 141.03 $ 102.08 SpringHill Suites by Marriott Plymouth Meeting, PA Select service 199 100 199 52.56 % $ 109.34 $ 57.47 Fairfield Inn by Marriott Kennesaw, GA Select service 86 100 86 62.47 % $ 120.95 $ 75.55 Courtyard by Marriott Bloomington, IN Select service 117 100 117 58.29 % $ 143.10 $ 83.42 Courtyard by Marriott - Tremont Boston, MA Select service 315 100 315 67.89 % $ 249.18 $ 169.16 Courtyard by Marriott Columbus, IN Select service 90 100 90 52.76 % $ 104.70 $ 55.25 Courtyard by Marriott Denver, CO Select service 202 100 202 86.27 % $ 150.58 $ 129.90 Courtyard by Marriott Gaithersburg, MD Select service 210 100 210 60.23 % $ 153.67 $ 92.56 Courtyard by Marriott Crystal City, VA Select service 272 100 272 74.89 % $ 151.34 $ 113.35 Courtyard by Marriott Overland Park, KS Select service 168 100 168 49.26 % $ 122.50 $ 60.34 Courtyard by Marriott Foothill Ranch, CA Select service 156 100 156 72.47 % $ 145.92 $ 105.75 Courtyard by Marriott Alpharetta, GA Select service 154 100 154 59.31 % $ 114.62 $ 67.98 Courtyard by Marriott Oakland, CA Select service 156 100 156 78.22 % $ 131.73 $ 103.04 Courtyard by Marriott Scottsdale, AZ Select service 180 100 180 80.03 % $ 156.11 $ 124.93 Courtyard by Marriott Plano, TX Select service 153 100 153 52.43 % $ 125.24 $ 65.66 Courtyard by Marriott Newark, CA Select service 181 100 181 66.45 % $ 126.46 $ 84.03 Courtyard by Marriott Manchester, CT Select service 90 100 90 80.89 % $ 141.11 $ 114.15 Courtyard by Marriott Basking Ridge, NJ Select service 235 100 235 42.42 % $ 147.37 $ 62.52 Marriott Residence Inn Evansville, IN Select service 78 100 78 73.66 % $ 109.50 $ 80.65 Marriott Residence Inn Orlando, FL Select service 350 100 350 73.32 % $ 146.42 $ 107.35 Marriott Residence Inn Falls Church, VA Select service 159 100 159 76.10 % $ 144.09 $ 109.66 Marriott Residence Inn San Diego, CA Select service 150 100 150 88.30 % $ 195.20 $ 172.36 Marriott Residence Inn Salt Lake City, UT Select service 144 100 144 59.08 % $ 138.67 $ 81.92 Marriott Residence Inn Las Vegas, NV Select service 256 100 256 78.59 % $ 149.60 $ 117.57 Marriott Residence Inn Phoenix, AZ Select service 200 100 200 61.60 % $ 119.63 $ 73.69 Marriott Residence Inn Plano, TX Select service 126 100 126 62.93 % $ 93.27 $ 58.69 Marriott Residence Inn Newark, CA Select service 168 100 168 72.75 % $ 140.58 $ 102.27 Marriott Residence Inn Manchester, CT Select service 96 100 96 83.92 % $ 145.74 $ 122.30 Marriott Residence Inn Jacksonville, FL Select service 120 100 120 78.33 % $ 131.61 $ 103.09 TownePlace Suites by Marriott Manhattan Beach, CA Select service 143 100 143 76.37 % $ 146.92 $ 112.20 One Ocean Atlantic Beach, FL Full service 193 100 193 64.61 % $ 284.52 $ 183.82 Sheraton Hotel Langhorne, PA Full service 186 100 186 60.71 % $ 152.13 $ 92.35 42 Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2022 Occupancy ADR RevPAR Sheraton Hotel Minneapolis, MN Full service 220 100 220 44.71 % $ 125.32 $ 56.03 Sheraton Hotel Indianapolis, IN Full service 378 100 378 52.30 % $ 162.40 $ 84.93 Sheraton Hotel Anchorage, AK Full service 370 100 370 68.80 % $ 173.25 $ 119.20 Sheraton Hotel San Diego, CA Full service 260 100 260 72.27 % $ 149.17 $ 107.80 Hyatt Regency Coral Gables, FL Full service 254 100 254 77.87 % $ 234.17 $ 182.34 Hyatt Regency Hauppauge, NY Full service 358 100 358 54.92 % $ 160.09 $ 87.92 Hyatt Regency Savannah, GA Full service 351 100 351 91.08 % $ 222.72 $ 202.85 Renaissance Nashville, TN Full service 673 100 673 82.59 % $ 260.19 $ 214.89 Annapolis Historic Inn Annapolis, MD Full service 124 100 124 59.25 % $ 195.32 $ 115.72 Lakeway Resort & Spa Austin, TX Full service 168 100 168 58.93 % $ 269.50 $ 158.81 Silversmith Chicago, IL Full service 144 100 144 49.43 % $ 205.46 $ 101.56 The Churchill Washington, D.C.
Biggest changeWorth, TX Full service 294 100 294 67.20 % $ 182.03 $ 122.33 Hampton Inn (7) Buford, GA Select service 92 100 92 86.46 % $ 152.79 $ 132.10 Hampton Inn Lawrenceville, GA Select service 85 100 85 79.70 % $ 120.19 $ 95.78 Hampton Inn Evansville, IN Select service 140 100 140 55.10 % $ 125.96 $ 69.41 Hampton Inn Parsippany, NJ Select service 152 100 152 65.80 % $ 139.06 $ 91.49 Marriott Beverly Hills, CA Full service 260 100 260 86.70 % $ 267.52 $ 231.92 Marriott Arlington, VA Full service 703 100 703 75.30 % $ 208.99 $ 157.40 Marriott Dallas, TX Full service 265 100 265 73.80 % $ 145.33 $ 107.25 Marriott Fremont, CA Full service 357 100 357 67.90 % $ 156.62 $ 106.29 Marriott Memphis, TN Full service 232 100 232 74.40 % $ 165.76 $ 123.28 Marriott Irving, TX Full service 499 100 499 77.50 % $ 162.11 $ 125.59 Marriott Omaha, NE Full service 300 100 300 56.40 % $ 142.15 $ 80.21 Marriott Sugarland, TX Full service 300 100 300 81.90 % $ 153.70 $ 125.84 SpringHill Suites by Marriott Baltimore, MD Select service 133 100 133 73.00 % $ 108.03 $ 78.91 SpringHill Suites by Marriott Kennesaw, GA Select service 90 100 90 71.50 % $ 135.96 $ 97.27 SpringHill Suites by Marriott Manhattan Beach, CA Select service 164 100 164 76.60 % $ 142.07 $ 108.84 SpringHill Suites by Marriott Plymouth Meeting, PA Select service 199 100 199 47.20 % $ 116.10 $ 54.83 SpringHill Suites by Marriott (7) Buford, GA Select service 97 100 97 70.19 % $ 137.67 $ 96.56 Fairfield Inn by Marriott Kennesaw, GA Select service 86 100 86 65.10 % $ 124.67 $ 81.10 Courtyard by Marriott Bloomington, IN Select service 117 100 117 69.60 % $ 146.49 $ 102.01 Courtyard by Marriott - Tremont Boston, MA Select service 315 100 315 76.80 % $ 273.59 $ 210.02 Courtyard by Marriott Columbus, IN Select service 90 100 90 39.70 % $ 104.60 $ 41.56 Courtyard by Marriott Denver, CO Select service 202 100 202 88.00 % $ 155.43 $ 136.71 Courtyard by Marriott Manchester, CT Select service 90 100 90 76.10 % $ 147.34 $ 112.16 Courtyard by Marriott Gaithersburg, MD Select service 210 100 210 69.00 % $ 168.43 $ 116.19 Courtyard by Marriott Crystal City, VA Select service 272 100 272 78.70 % $ 176.75 $ 139.19 Courtyard by Marriott Overland Park, KS Select service 168 100 168 56.80 % $ 134.03 $ 76.17 Courtyard by Marriott Foothill Ranch, CA Select service 156 100 156 76.80 % $ 151.48 $ 116.41 Courtyard by Marriott Alpharetta, GA Select service 154 100 154 62.10 % $ 125.41 $ 77.92 Courtyard by Marriott Oakland, CA Select service 156 100 156 74.40 % $ 135.58 $ 100.81 Courtyard by Marriott Scottsdale, AZ Select service 180 100 180 72.30 % $ 183.17 $ 132.40 Courtyard by Marriott Plano, TX Select service 153 100 153 51.60 % $ 146.29 $ 75.43 Courtyard by Marriott Newark, CA Select service 181 100 181 71.70 % $ 125.72 $ 90.17 Courtyard by Marriott Basking Ridge, NJ Select service 235 100 235 51.80 % $ 160.00 $ 82.83 Marriott Residence Inn Evansville, IN Select service 78 100 78 80.20 % $ 111.23 $ 89.18 Marriott Residence Inn Orlando, FL Select service 350 100 350 75.30 % $ 143.89 $ 108.29 Marriott Residence Inn Falls Church, VA Select service 159 100 159 81.40 % $ 161.83 $ 131.65 Marriott Residence Inn San Diego, CA Select service 150 100 150 82.60 % $ 197.08 $ 162.84 Marriott Residence Inn Salt Lake City, UT Select service 144 100 144 54.70 % $ 149.29 $ 81.61 Marriott Residence Inn Las Vegas, NV Select service 256 100 256 80.40 % $ 175.13 $ 140.87 Marriott Residence Inn Phoenix, AZ Select service 200 100 200 67.70 % $ 138.05 $ 93.52 Marriott Residence Inn Plano, TX Select service 126 100 126 58.70 % $ 104.10 $ 61.06 Marriott Residence Inn Newark, CA Select service 168 100 168 79.50 % $ 140.55 $ 111.73 Marriott Residence Inn (7) Jacksonville, FL Select service 120 100 120 71.66 % $ 138.54 $ 99.27 Marriott Residence Inn (7) Manchester, CT Select service 96 100 96 79.84 % $ 155.64 $ 124.26 TownePlace Suites by Marriott Manhattan Beach, CA Select service 143 100 143 78.00 % $ 150.42 $ 117.26 One Ocean Atlantic Beach, FL Full service 193 100 193 67.30 % $ 266.40 $ 179.30 Sheraton Hotel Minneapolis, MN Full service 220 100 220 53.20 % $ 135.30 $ 72.03 Sheraton Hotel Indianapolis, IN Full service 378 100 378 56.40 % $ 163.30 $ 92.05 42 Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2023 Occupancy ADR RevPAR Sheraton Hotel Anchorage, AK Full service 370 100 370 70.20 % $ 188.57 $ 132.32 Sheraton Hotel San Diego, CA Full service 260 100 260 83.30 % $ 159.38 $ 132.71 Hyatt Regency Coral Gables, FL Full service 254 100 254 73.20 % $ 242.70 $ 177.64 Hyatt Regency Hauppauge, NY Full service 358 100 358 60.60 % $ 163.48 $ 99.03 Hyatt Regency Savannah, GA Full service 351 100 351 91.40 % $ 225.61 $ 206.11 Renaissance Nashville, TN Full service 674 100 674 83.10 % $ 277.31 $ 230.33 Annapolis Historic Inn Annapolis, MD Full service 124 100 124 64.40 % $ 190.95 $ 122.92 Lakeway Resort & Spa Austin, TX Full service 168 100 168 54.30 % $ 246.52 $ 133.90 Silversmith Chicago, IL Full service 144 100 144 58.70 % $ 194.88 $ 114.45 The Churchill Washington, D.C.
(2) The Company entered into a new franchise agreement with Marriott to convert the Crowne Plaza La Concha Key West Hotel in Key West, Florida to an Autograph Collection property. The agreement with Marriott calls for the Hotel to be converted to an Autograph property by July 1, 2023.
The agreement with Marriott calls for the hotel to be converted to a Tribute Portfolio property by December 31, 2024. (2) The ground lease expires in 2084. (3) The Company entered into a franchise agreement with Marriott to convert the La Concha Key West Hotel in Key West, Florida to an Autograph Collection property.
Item 2. Properties OFFICES. We lease our headquarters located at 14185 Dallas Parkway, Suite 1200, Dallas, Texas 75254. HOTEL PROPERTIES. As of December 31, 2022, our portfolio consisted of 100 consolidated hotel properties that were included in our consolidated operations. Currently, all of our hotel properties are located in the United States.
Item 2. Properties OFFICES. We lease our headquarters located at 14185 Dallas Parkway, Suite 1200, Dallas, Texas 75254. HOTEL PROPERTIES. As of December 31, 2023, our portfolio consisted of 90 hotel properties, four Stirling OP hotel properties and one hotel property under development that were included in our consolidated operations.
The following table presents certain information related to our hotel properties: Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2022 Occupancy ADR RevPAR Fee Simple Properties Embassy Suites Austin, TX Full service 150 100 150 71.83 % $ 167.00 $ 119.96 Embassy Suites Dallas, TX Full service 150 100 150 62.29 % $ 133.16 $ 82.94 Embassy Suites Herndon, VA Full service 150 100 150 72.20 % $ 153.79 $ 111.04 Embassy Suites Las Vegas, NV Full service 220 100 220 76.11 % $ 161.54 $ 122.95 Embassy Suites Flagstaff, AZ Full service 119 100 119 80.05 % $ 166.72 $ 133.46 Embassy Suites Houston, TX Full service 150 100 150 65.94 % $ 148.01 $ 97.60 Embassy Suites West Palm Beach, FL Full service 160 100 160 77.50 % $ 187.42 $ 145.25 Embassy Suites Philadelphia, PA Full service 263 100 263 75.45 % $ 160.31 $ 120.95 Embassy Suites Walnut Creek, CA Full service 249 100 249 82.59 % $ 170.40 $ 140.73 Embassy Suites Arlington, VA Full service 269 100 269 74.96 % $ 195.94 $ 146.87 Embassy Suites Portland, OR Full service 276 100 276 55.38 % $ 173.18 $ 95.91 Embassy Suites Santa Clara, CA Full service 258 100 258 63.05 % $ 212.37 $ 133.90 Embassy Suites Orlando, FL Full service 174 100 174 87.81 % $ 163.13 $ 143.24 Hilton Garden Inn Jacksonville, FL Select service 119 100 119 73.08 % $ 137.72 $ 100.65 Hilton Garden Inn Austin, TX Select service 254 100 254 66.00 % $ 200.85 $ 132.56 Hilton Garden Inn Baltimore, MD Select service 158 100 158 74.41 % $ 125.41 $ 93.31 Hilton Garden Inn Virginia Beach, VA Select service 176 100 176 81.62 % $ 149.50 $ 122.02 Hilton Houston, TX Full service 242 100 242 60.98 % $ 129.60 $ 79.04 Hilton St.
The following table presents certain information related to our hotel properties: Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2023 Occupancy ADR RevPAR Fee Simple Properties Embassy Suites Austin, TX Full service 150 100 150 72.60 % $ 162.03 $ 117.66 Embassy Suites Dallas, TX Full service 150 100 150 66.30 % $ 137.94 $ 91.49 Embassy Suites Herndon, VA Full service 150 100 150 73.90 % $ 171.17 $ 126.45 Embassy Suites Las Vegas, NV Full service 220 100 220 83.90 % $ 169.31 $ 142.05 Embassy Suites Houston, TX Full service 150 100 150 68.10 % $ 152.16 $ 103.60 Embassy Suites West Palm Beach, FL Full service 160 100 160 76.90 % $ 188.13 $ 144.69 Embassy Suites Philadelphia, PA Full service 263 100 263 73.90 % $ 163.71 $ 120.93 Embassy Suites Arlington, VA Full service 269 100 269 77.80 % $ 216.80 $ 168.74 Embassy Suites Portland, OR Full service 276 100 276 56.90 % $ 166.44 $ 94.71 Embassy Suites Santa Clara, CA Full service 258 100 258 59.80 % $ 227.67 $ 136.21 Embassy Suites Orlando, FL Full service 174 100 174 86.90 % $ 169.13 $ 146.97 Hilton Garden Inn Jacksonville, FL Select service 119 100 119 73.70 % $ 139.91 $ 103.15 Hilton Garden Inn Austin, TX Select service 254 100 254 59.80 % $ 214.69 $ 128.39 Hilton Garden Inn Baltimore, MD Select service 158 100 158 73.60 % $ 124.66 $ 91.70 Hilton Garden Inn Virginia Beach, VA Select service 176 100 176 75.70 % $ 163.04 $ 123.49 Hilton Houston, TX Full service 242 100 242 64.80 % $ 133.34 $ 86.39 Hilton St.
Petersburg, FL Full service 333 100 333 64.87 % $ 199.34 $ 129.32 Hilton Santa Fe, NM Full service 158 100 158 71.17 % $ 217.50 $ 154.80 Hilton Bloomington, MN Full service 300 100 300 52.70 % $ 132.40 $ 69.78 41 Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2022 Occupancy ADR RevPAR Hilton Costa Mesa, CA Full service 486 100 486 74.18 % $ 143.22 $ 106.24 Hilton Boston, MA Full service 390 100 390 79.05 % $ 269.46 $ 213.02 Hilton Parsippany, NJ Full service 353 100 353 41.58 % $ 157.90 $ 65.66 Hilton Tampa, FL Full service 238 100 238 75.76 % $ 158.99 $ 120.45 Hilton Alexandria, VA Full service 252 100 252 61.07 % $ 193.34 $ 118.08 Hilton Santa Cruz, CA Full service 178 100 178 70.08 % $ 196.31 $ 137.56 Hilton Ft.
Petersburg, FL Full service 333 100 333 71.20 % $ 198.33 $ 141.28 Hilton Santa Fe, NM Full service 158 100 158 77.30 % $ 224.16 $ 173.31 41 Hotel Property Location Service Type Total Rooms % Owned Owned Rooms Year Ended December 31, 2023 Occupancy ADR RevPAR Hilton Bloomington, MN Full service 300 100 300 57.10 % $ 131.91 $ 75.25 Hilton Costa Mesa, CA Full service 486 100 486 79.80 % $ 152.34 $ 121.61 Hilton Boston, MA Full service 390 100 390 90.90 % $ 290.84 $ 264.27 Hilton Parsippany, NJ Full service 353 100 353 42.70 % $ 167.58 $ 71.60 Hilton Tampa, FL Full service 238 100 238 81.20 % $ 175.67 $ 142.73 Hilton Alexandria, VA Full service 252 100 252 65.10 % $ 210.87 $ 137.27 Hilton Santa Cruz, CA Full service 178 100 178 76.90 % $ 182.98 $ 140.67 Hilton Ft.
Full service 173 100 173 62.24 % $ 176.93 $ 110.12 The Melrose Washington, D.C. Full service 240 100 240 66.33 % $ 195.67 $ 129.80 Le Pavillon New Orleans, LA Full service 226 100 226 45.78 % $ 185.23 $ 84.80 The Ashton Ft.
Full service 173 100 173 66.70 % $ 194.98 $ 130.04 The Melrose Washington, D.C. Full service 240 100 240 74.40 % $ 200.33 $ 148.99 Le Pavillon (1) New Orleans, LA Full service 226 100 226 45.80 % $ 157.69 $ 72.28 The Ashton Ft.
(3) The ground lease expires in 2059 with one 25-year extension option. (4) The lease expires in 2054 and includes the lease of the land, hotel and conference center (including the building, improvements, furniture, fixtures and equipment).
(5) The lease expires in 2054 and includes the lease of the land, hotel and conference center (including the building, improvements, furniture, fixtures and equipment). (6) The lease expires in 2120 and includes the lease of the land and building. The property is under development. (7) Property owned by Stirling OP, but consolidated by the Company.
Removed
Worth, TX Full service 39 100 39 66.95 % $ 174.86 $ 117.06 Westin Princeton, NJ Full service 296 100 296 62.89 % $ 165.13 $ 103.86 W Atlanta, GA Full service 237 100 237 64.37 % $ 244.68 $ 157.50 Hotel Indigo Atlanta, GA Full service 141 100 141 58.49 % $ 151.86 $ 88.82 Ritz-Carlton Atlanta, GA Full service 444 100 444 61.15 % $ 287.76 $ 175.96 La Posada de Santa Fe Santa Fe, NM Full service 157 100 157 81.36 % $ 283.18 $ 230.40 Ground Lease Properties Crowne Plaza (1) (2) Key West, FL Full service 160 100 160 75.92 % $ 389.04 $ 295.38 Renaissance (3) Palm Springs, CA Full service 410 100 410 66.49 % $ 187.27 $ 124.52 Hilton (4) Marietta, GA Full service 200 100 200 49.56 % $ 129.46 $ 64.16 Total 22,316 22,316 67.61 % $ 176.77 $ 119.51 ________ (1) The ground lease expires in 2084.
Added
Currently, all of our hotel properties are located in the United States.
Added
Worth, TX Full service 39 100 39 61.10 % $ 182.91 $ 111.84 Westin Princeton, NJ Full service 296 100 296 69.20 % $ 181.29 $ 125.46 Hotel Indigo Atlanta, GA Full service 141 100 141 59.10 % $ 164.20 $ 96.99 Ritz-Carlton Atlanta, GA Full service 444 100 444 66.20 % $ 293.99 $ 194.61 La Posada de Santa Fe Santa Fe, NM Full service 157 100 157 77.90 % $ 284.32 $ 221.44 Leasehold Properties La Concha Key West (2) (3) Key West, FL Full service 160 100 160 67.70 % $ 352.12 $ 238.26 Renaissance (4) Palm Springs, CA Full service 410 100 410 70.40 % $ 196.15 $ 138.13 Hilton (5) Marietta, GA Full service 200 100 200 66.60 % $ 172.19 $ 114.72 Le Meridien (6) Fort Worth, TX Full service 188 33 61 N/A N/A N/A Total 21,142 21,015 70.71 % $ 184.53 $ 130.48 ________ (1) The Company entered into a new franchise agreement with Marriott to convert the Le Pavillon in New Orleans, Louisiana to a Tribute Portfolio property.
Added
The agreement with Marriott calls for the hotel to operate under Marriott White Label beginning on November 15, 2023 and to be converted to an Autograph property by April 1, 2025. (4) The ground lease expires in 2083.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeHowever, our assessment may change depending upon the development of these legal proceedings, and the final results of these legal proceedings cannot be predicted with certainty.
Biggest changeOur assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty.
If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods. ITEM 4. MINE SAFETY DISCLOSURES None. PART II
If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods. ITEM 4. Mine Safety Disclosures None. PART II
The court has entered an order granting class certification with respect to: (1) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (2) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment.
The court has entered an order granting class certification with respect to: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment.
On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects nine hotels owned by subsidiaries of the Company.
Item 3. Legal Proceedings On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects nine hotels owned by subsidiaries of the Company.
As of December 31, 2022, no amounts have been accrued. We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated.
As of December 31, 2023, no amounts have been accrued. 43 We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated.
Removed
Item 3. Legal Proceedings Litigation — Palm Beach Florida Hotel and Office Building Limited Partnership, et al. v. Nantucket Enterprises, Inc. This litigation involves a landlord tenant dispute from 2008. The litigation was resolved in 2017 with the determination and reimbursement of attorneys’ fees being the only remaining dispute.
Added
The opt out period has been extended until such time that discovery has concluded. In May 2023 the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified. After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon.
Removed
On July 26, 2018, we paid $544,000 as part of a settlement on certain legal fees. The negotiations relating to the potential payment of the remaining attorney’s fees are still ongoing, pending the appeal of a contempt order against the Maraist Law Firm for failing to produce their fee records.
Added
On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks.
Removed
As of December 31, 2022, we have accrued approximately $504,000 in legal fees, which represents the Company’s estimate of the amount of potential remaining legal fees that could be owed. On December 4, 2015, Pedro Membrives filed a class action lawsuit against HHC TRS FP Portfolio LLC, Remington Lodging & Hospitality, LLC, Remington Holdings LLC, Mark A.
Added
During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain employee personal information. We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed. All systems have been restored.
Removed
Sharkey, Archie Bennett, Jr., Monty J. Bennett, Christopher Peckham, and any other related entities in the Supreme Court of New York, Nassau County, Commercial Division. On August 30, 2016, the complaint was amended to add Michele Spero as a Plaintiff and Remington Long Island Employers, LLC as a defendant.
Added
We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial. In February of 2024, two class action lawsuits were filed related to the cyber incident. The suits are currently pending in the U.S. District Court for the Northern District of Texas.
Removed
The lawsuit is captioned Pedro Membrives and Michele Spero, individually and on behalf of others similarly situated v. HHC TRS FP Portfolio LLC, Remington Lodging & Hospitality, LLC, Remington Holdings LLC, Remington Long Island Employers, LLC, et al., Index No. 607828/2015 (Sup. Ct. Nassau Cty.) .
Added
We intend to vigorously defend these matters and do not believe that any potential loss is reasonably estimable at this time. It is reasonably possible that the Company may incur additional costs related to the matter, but we are unable to predict with certainty the ultimate amount or range of potential loss.
Removed
The plaintiffs allege that the owner and management company of the Hyatt Regency Long Island hotel violated New York law by improperly retaining service charges rather than distributing them to employees. In 2017, the class was certified. On July 24, 2018, the trial court granted the plaintiffs’ motion for summary judgment on liability.
Removed
The defendants appealed the summary judgment to the New York State Appellate Division, Second Department (the “Second Department”). The Second Department heard oral arguments in this matter on April 20, 2021, and on July 14, 2021, affirmed in part, and modified in part, the trial court’s summary judgment in favor of the plaintiffs.
Removed
Due to the Second Department’s holding, all information produced during discovery, and the continuing cost and risk, to both sides, a settlement was reached, signed by the parties and approved by the Court in June 2022.
Removed
The 43 settlement required the Company to establish a settlement fund that will be used to pay plaintiffs that opted in by November 10, 2022 and are entitled to receive payment, and to fund administrative expenses. The Company previously recorded an accrual of approximately $4.2 million and paid a $100,000 deposit.
Removed
On December 1, 2022, the Court issued a final award of approximately $7.0 million. The settlement amount was prepared by the plaintiff’s expert which was confirmed by the Estate Administrator, all in accordance with the settlement agreement and based on a generally accepted methodology.
Removed
The Company agreed to the settlement amount of approximately $7.0 million, subject to its right to recover $263,000 that is being held in reserve. On December 7, 2022, the Company remitted payment of $6.9 million, net of the $100,000 deposit and recorded additional expense of approximately $2.8 million, which is in addition to the $4.2 million expense previously recorded.
Removed
The opt out period has been extended until such time that discovery has concluded.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+1 added−2 removed4 unchanged
Biggest changeDistributions paid per share were characterized as follows for the following fiscal years: 2022 2021 2020 Amount % Amount % Amount % Common Stock (cash): Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital — — — — 0.6000 (1) 100.0000 Total $ — — % $ — — % $ 0.6000 100.0000 % Preferred Stock – Series D: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 2.1125 (1) 100.0000 3.1686 (1) 100.0000 1.0562 (1) 100.0000 Total $ 2.1125 100.0000 % $ 3.1686 100.0000 % $ 1.0562 100.0000 % Preferred Stock – Series F: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 1.8438 (1) 100.0000 2.7654 (1) 100.0000 0.9218 (1) 100.0000 Total $ 1.8438 100.0000 % $ 2.7654 100.0000 % $ 0.9218 100.0000 % Preferred Stock – Series G: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 1.8438 (1) 100.0000 2.7654 (1) 100.0000 0.9218 (1) 100.0000 Total $ 1.8438 100.0000 % $ 2.7654 100.0000 % $ 0.9218 100.0000 % Preferred Stock – Series H: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 1.8750 (1) 100.0000 2.8125 (1) 100.0000 0.9375 (1) 100.0000 Total $ 1.8750 100.0000 % $ 2.8125 100.0000 % $ 0.9375 100.0000 % Preferred Stock – Series I: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 1.8750 (1) 100.0000 2.8125 (1) 100.0000 0.9375 (1) 100.0000 Total $ 1.8750 100.0000 % $ 2.8125 100.0000 % $ 0.9375 100.0000 % Preferred Stock – Series J: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — — — — — Return of capital 0.1666 (1) 100.0000 — — — — Total $ 0.1666 100.0000 % $ — — % $ — — % ____________________ (1) The fourth quarter 2019 preferred and common distributions paid January 16, 2020 are treated as 2020 distributions for tax purposes.
Biggest changeDistributions paid per share were characterized as follows for the following fiscal years: 2023 2022 2021 Amount % Amount % Amount % Preferred Stock – Series D: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 2.1125 100.0000 % 2.1125 100.0000 % 3.1686 100.0000 % Total $ 2.1125 (1) 100.0000 % $ 2.1125 (1) 100.0000 % $ 3.1686 (1) 100.0000 % Preferred Stock – Series F: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.8438 100.0000 % 1.8438 100.0000 % 2.7654 100.0000 % Total $ 1.8438 (1) 100.0000 % $ 1.8438 (1) 100.0000 % $ 2.7654 (1) 100.0000 % Preferred Stock – Series G: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.8438 100.0000 % 1.8438 100.0000 % 2.7654 100.0000 % Total $ 1.8438 (1) 100.0000 % $ 1.8438 (1) 100.0000 % $ 2.7654 (1) 100.0000 % Preferred Stock – Series H: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.8750 100.0000 % 1.8750 100.0000 % 2.8125 100.0000 % Total $ 1.8750 (1) 100.0000 % $ 1.8750 (1) 100.0000 % $ 2.8125 (1) 100.0000 % Preferred Stock – Series I: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.8750 100.0000 % 1.8750 100.0000 % 2.8125 100.0000 % Total $ 1.8750 (1) 100.0000 % $ 1.8750 (1) 100.0000 % $ 2.8125 (1) 100.0000 % Preferred Stock – Series J: Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.9998 100.0000 % 0.1666 100.0000 % — — % Total $ 1.9998 (1) (4) 100.0000 % $ 0.1666 (1) (5) 100.0000 % $ — — % Preferred Stock – Series K (2) : Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 2.0540 100.0000 % — — % — — % Total $ 2.0540 (1) (4) 100.0000 % $ — — % $ — — % Preferred Stock – Series K (3) : Ordinary taxable dividend $ — — % $ — — % $ — — % Capital gain distribution — — % — — % — — % Return of capital 1.8790 100.0000 % — — % — — % Total $ 1.8790 (1) (4) 100.0000 % $ — — % $ — — % ____________________ (1) The fourth quarter 2021 preferred distributions paid January 14, 2022 to stockholders of record as of December 31, 2021 are treated as 2022 distributions for tax purposes.
This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect, wholly-owned subsidiaries of our operating partnership and the management of our properties by our hotel managers and general business conditions. Characterization of Distributions For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.
This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect, wholly owned subsidiaries of our operating partnership and the management of our properties by our hotel managers and general business conditions. 44 Characterization of Distributions For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof.
The number of shares subject to issuance under the PSUs (if any) will depend on the ultimate actual performance level, and the Company in its discretion may settle the 2022 PSUs in cash rather than shares of common stock.
The number of shares subject to issuance under the PSUs (if any) will depend on the ultimate actual performance level, and the Company in its discretion may settle the 2022 and 2023 PSUs in cash rather than shares of common stock.
Distributions will be authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors. Our ability to pay distributions to our stockholders will depend, in part, upon our receipt of distributions from our 44 operating partnership.
Distributions will be authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors. Our ability to pay distributions to our stockholders will depend, in part, upon our receipt of distributions from our operating partnership.
For the year ended December 31, 2022 we did not declare or pay common stock dividends. On December 6, 2022, the board of directors approved our dividend policy for 2023, which continued the suspension of the Company’s common stock dividend into 2023. The board of directors will continue to review our dividend policy and make future announcements with respect thereto.
For the year ended December 31, 2023 we did not declare or pay common stock dividends. On December 5, 2023, the board of directors approved our dividend policy for 2024, which continued the suspension of the Company’s common stock dividend into 2024. The board of directors will continue to review our dividend policy and make future announcements with respect thereto.
Performance Graph The following graph compares the percentage change in the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Stock Index and the FTSE NAREIT Lodging & Resorts Index for the period from December 31, 2017 through December 31, 2022, assuming an initial investment of $100 in stock on December 31, 2017 with reinvestment of dividends.
Performance Graph The following graph compares the percentage change in the cumulative total stockholder return on our common stock with the cumulative total return of the S&P 500 Stock Index and the FTSE NAREIT Lodging & Resorts Index for the period from December 31, 2018 through December 31, 2023, assuming an initial investment of $100 in stock on December 31, 2018 with reinvestment of dividends.
(2) As of December 31, 2022, there were approximately 86,000 shares of our common stock, or securities convertible into approximately 86,000 shares of our common stock that remained available for issuance under our 2021 Stock Incentive Plan.
(2) As of December 31, 2023, there were approximately 649,000 shares of our common stock, or securities convertible into approximately 649,000 shares of our common stock that remained available for issuance under our 2021 Stock Incentive Plan.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters Market Price and Dividend Information Our common stock is listed and traded on the New York Stock Exchange under the symbol “AHT.” On March 8, 2023, there were 170 registered holders of record of our common stock.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities (a) Market Price of and Dividends on Registrant’s Common Equity and Related Stockholder Matters Market Price and Dividend Information Our common stock is listed and traded on the New York Stock Exchange under the symbol “AHT.” On March 12, 2024, there were 472 registered holders of record of our common stock.
The fourth quarter 2022 preferred distributions paid January 17, 2023 are treated as 2023 distributions for tax purposes. 45 Equity Compensation Plan Information The following table sets forth certain information with respect to securities authorized and available for issuance under our equity compensation plans as of December 31, 2022: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted-Average Exercise Price Of Outstanding Options, Warrants, And Rights Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by security holders 211,000 N/A 86,000 (2) Equity compensation plans not approved by security holders None N/A None Total 211,000 N/A 86,000 ____________________ (1) Consists of rights to acquire our common stock subject to the satisfaction of service and or performance vesting conditions (with the amount shown assuming the maximum level of performance under the 2021 and 2022 PSU awards).
(5) Distributions per share reflects the annual rate per share for distributions reportable in 2022. 45 Equity Compensation Plan Information The following table sets forth certain information with respect to securities authorized and available for issuance under our equity compensation plans as of December 31, 2023: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted-Average Exercise Price Of Outstanding Options, Warrants, And Rights Number of Securities Remaining Available for Future Issuance Equity compensation plans approved by security holders 497,000 N/A 649,000 (2) Equity compensation plans not approved by security holders None N/A None Total 497,000 N/A 649,000 ____________________ (1) Consists of rights to acquire our common stock subject to the satisfaction of service and or performance vesting conditions (with the amount shown assuming the maximum level of performance under the 2022 and 2023 PSU awards).
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Ashford Hospitality Trust, Inc., the S&P Index and the FTSE NAREIT Lodging & Resorts Index Purchases of Equity Securities by the Issuer The following table provides the information with respect to purchases of shares of our common stock during each of the months in the fourth quarter of 2022 : Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (1) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan (1) Common stock: October 1 to October 31 706 $ — (2) — $ 200,000,000 November 1 to November 30 70 — (2) — 200,000,000 December 1 to December 31 3,032 (3) 5.25 (2) — 200,000,000 Total 3,808 $ 5.25 — ____________________ (1) On April 6, 2022 the board of directors approved a stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock and preferred stock having an aggregate value of up to $200 million.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN Among Ashford Hospitality Trust, Inc., the S&P Index and the FTSE NAREIT Lodging & Resorts Index Purchases of Equity Securities by the Issuer The following table provides the information with respect to purchases of shares of our common stock during each of the months in the fourth quarter of 2023 : Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plan (1) Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan (1) Common stock: October 1 to October 31 61 $ — — $ 200,000 November 1 to November 30 211 — — 200,000 December 1 to December 31 26 — — 200,000 Total 298 $ — — ____________________ (1) There is no cost associated with the forfeiture of 61, 211 and 26 restricted shares of our common stock in October, November and December, respectively.
The fourth quarter 2021 preferred distributions paid January 14, 2022 are treated as 2022 distributions for tax purposes.
The fourth quarter 2022 preferred distributions paid January 17, 2023 to stockholders of record as of December 30, 2022 are treated as 2023 distributions for tax purposes. The fourth quarter 2023 preferred distributions paid January 16, 2024 to stockholders of record as of December 29, 2023 are treated as 2024 distributions for tax purposes.
Removed
The board of directors’ authorization replaced the previous repurchase authorization that the board of directors authorized in December 2017. (2) There is no cost associated with the forfeiture of 706, 70 and 1,720 restricted shares of our common stock in October, November and December, respectively.
Added
(2) Preferred Stock - Series K: (CUSIP #04410D867) (3) Preferred Stock - Series K: (CUSIP #04410D792, 04410D727, 04410D651, and 04410D578) (4) Distributions per share reflects the annual rate per share for distributions reportable in 2023.
Removed
(3) Includes 1,312 shares in December that were withheld to cover tax-withholding requirements related to the vesting of restricted shares of our common stock issued to employees of our advisor pursuant to the Company’s stockholder-approved stock incentive plan. 47 Item 6. Reserved

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

93 edited+47 added−37 removed70 unchanged
Biggest changeHowever, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements. 61 The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2022 2021 2020 Net income (loss) $ (141,058) $ (271,048) $ (633,222) (Income) loss attributable to noncontrolling interest in consolidated entities — 73 338 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,233 3,970 89,008 Preferred dividends (12,433) (252) (32,117) Deemed dividends on redeemable preferred stock (946) — — Gain (loss) on extinguishment of preferred stock — (607) 55,477 Net income (loss) attributable to common stockholders (153,204) (267,864) (520,516) Depreciation and amortization of real estate 201,797 218,708 252,590 (Gain) loss on disposition of assets and hotel properties (300) (449) 36,680 Net income (loss) attributable to redeemable noncontrolling interests in operating partnership (1,233) (3,970) (89,008) Equity in (earnings) loss of unconsolidated entities 804 558 448 Impairment charges on real estate — — 91,721 Company’s portion of FFO of unconsolidated entities (771) (556) (449) FFO available to common stockholders and OP unitholders 47,093 (53,573) (228,534) Deemed dividends on redeemable preferred stock 946 — — (Gain) loss on extinguishment of preferred stock — 607 (55,477) Write-off of premiums, loan costs and exit fees 3,536 10,612 13,867 (Gain) loss on extinguishment of debt — (11,896) (90,349) (Gain) loss on insurance settlements (342) — (625) Other (income) expense, net (412) (1,760) 17,029 Transaction and conversion costs (2,300) 3,407 16,309 Legal, advisory and settlement costs 1,936 7,371 1,409 Unrealized (gain) loss on marketable securities — — 1,467 Unrealized (gain) loss on derivatives (10,781) (14,493) (19,950) Dead deal costs — 689 923 Uninsured remediation costs — 341 — Stock/unit-based compensation 5,998 10,095 10,746 Amortization of term loan exit fee 11,948 7,076 — Amortization of loan costs 9,672 12,597 16,517 Company’s portion of adjustments to FFO of unconsolidated entities 16 16 17 Adjusted FFO available to common stockholders and OP unitholders $ 67,310 $ (28,911) $ (316,651) 62
Biggest changeHowever, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements. 63 The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ (180,734) $ (141,058) $ (271,048) (Income) loss attributable to noncontrolling interest in consolidated entities 6 — 73 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 2,239 1,233 3,970 Preferred dividends (15,921) (12,433) (252) Deemed dividends on redeemable preferred stock (2,673) (946) — Gain (loss) on extinguishment of preferred stock 3,390 — (607) Net income (loss) attributable to common stockholders (193,693) (153,204) (267,864) Depreciation and amortization of real estate 187,807 201,797 218,708 (Gain) loss on consolidation of VIE and disposition of assets (11,488) (300) (449) Net income (loss) attributable to redeemable noncontrolling interests in operating partnership (2,239) (1,233) (3,970) Equity in (earnings) loss of unconsolidated entities 1,134 804 558 Company’s portion of FFO of unconsolidated entities (668) (771) (556) FFO available to common stockholders and OP unitholders (19,147) 47,093 (53,573) Deemed dividends on redeemable preferred stock 2,673 946 — (Gain) loss on extinguishment of preferred stock (3,390) — 607 Transaction and conversion costs 3,856 (2,300) 3,407 Write-off of premiums, loan costs and exit fees 3,469 3,536 10,612 Unrealized (gain) loss on derivatives 44,041 (10,781) (14,493) Stock/unit-based compensation 4,027 5,998 10,095 Legal, advisory and settlement costs 1,181 1,936 7,371 Other (income) expense, net (310) (412) (1,760) Amortization of term loan exit fee 18,616 11,948 7,076 Amortization of loan costs 12,735 9,672 12,597 Uninsured remediation costs — — 341 (Gain) loss on extinguishment of debt (53,386) — (11,896) Dead deal costs — — 689 Default interest and late fees 12,553 — — (Gain) loss on insurance settlements (505) (342) — Company’s portion of adjustments to FFO of unconsolidated entities 2 16 16 Adjusted FFO available to common stockholders and OP unitholders $ 26,415 $ 67,310 $ (28,911) 64
Beginning in 2020, the COVID-19 pandemic had a direct impact on demand but we have seen demand recover in 2022. Supply —The development of new hotels is driven largely by construction costs, the availability of financing and expected performance of existing hotels. Short-term supply is also expected to be below long-term averages.
Beginning in 2020, the COVID-19 pandemic had a direct impact on demand but we have seen demand recover beginning in 2022. 50 Supply —The development of new hotels is driven largely by construction costs, the availability of financing and expected performance of existing hotels. Short-term supply is also expected to be below long-term averages.
Occupancy and the type of customer staying at the hotel (i.e., catered functions generally are more profitable than restaurant, bar or other on-property food and beverage outlets) are the major drivers of food and beverage expense, which correlates closely with food and beverage revenue. 50 • Management fees: Base management fees are computed as a percentage of gross revenue.
Occupancy and the type of customer staying at the hotel (i.e., catered functions generally are more profitable than restaurant, bar or other on-property food and beverage outlets) are the major drivers of food and beverage expense, which correlates closely with food and beverage revenue. • Management fees: Base management fees are computed as a percentage of gross revenue.
In accordance with authoritative accounting guidance, we account for income taxes related to Ashford TRS using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
In accordance with authoritative accounting guidance, we account for income taxes related to Ashford TRS using the 60 asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
However, we have no formal commitment or understanding to invest in additional assets, and there can be no assurance that we will successfully make additional investments. We may, when conditions are suitable, consider additional capital raising opportunities. Our existing hotel properties are mostly located in developed areas with competing hotel properties.
However, we have no formal commitment or understanding to invest in additional assets, and there can be no 56 assurance that we will successfully make additional investments. We may, when conditions are suitable, consider additional capital raising opportunities. Our existing hotel properties are mostly located in developed areas with competing hotel properties.
On February 9, 2023, the Company amended its JP Morgan Chase – 8 hotel mortgage loan, which had a current maturity in February 2023. As part of the amendment, the Company repaid $50.0 million in principal, exercised the 2023 loan extension and reduced the 2024 debt yield extension test from 9.25% to 8.50%.
Debt Transactions On February 9, 2023, the Company amended its JP Morgan Chase – 8 hotel mortgage loan, which had a current maturity in February 2023. As part of the amendment, the Company repaid $50.0 million in principal, exercised the 2023 loan extension and reduced the 2024 debt yield extension test from 9.25% to 8.50%.
Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership. This, in turn, may depend upon receipt of lease payments with respect to our 57 properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business conditions.
Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership. This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business conditions.
RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees. 49 RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR.
RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees. RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR.
In January 2021, the FASB issued 2021-01, Reference Rate Reform (Topic 848), Scope, which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848.
Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotels decline below a threshold. When these provisions are triggered, substantially all of the profit generated by our hotels is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders.
Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotels declines below a threshold. When these provisions are triggered, substantially all of the profit generated by our hotels is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders.
Discussions of 2021 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Discussions of 2022 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
The board of directors’ authorization replaced the 2017 Repurchase Program that the board of directors’ authorized in December 2017. No shares have been repurchased under the Repurchase Program.
The board of directors’ authorization replaced the 2017 Repurchase Program that the board of directors authorized in December 2017. No shares have been repurchased under the Repurchase Program.
We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2023 and expect to pay dividends on our outstanding Preferred Stock during 2023. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.
We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2024 and expect to pay dividends on our outstanding Preferred Stock during 2024. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.
Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the years ended December 31, 2022 and 2021. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties.
Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the years ended December 31, 2023 and 2022. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties.
In 2022, the advisory services fee was comprised of a base advisory fee of $34.8 million, equity-based compensation of $5.2 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $9.9 million.
In 2022, the advisory services fee was comprised of a base advisory fee of $34.8 million, equity-based compensation of $5.2 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $9.9 million. Corporate, General and Administrative.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations This section of this Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets and hotel properties, plus depreciation and amortization of real estate assets, impairment charges on real estate assets, and after adjustments for unconsolidated entities and noncontrolling interests in the operating partnership.
FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on consolidation of VIE and disposition of assets, plus depreciation and amortization of real estate assets, impairment charges on real estate assets, and after adjustments for unconsolidated entities and noncontrolling interests in the operating partnership.
We then further adjust EBITDAre to exclude certain additional items such as gain/loss on insurance settlements, write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, advisory services incentive fee and stock/unit-based compensation and non-cash items such as amortization of 59 unfavorable contract liabilities, gain/loss on extinguishment of debt, unrealized gains/losses on marketable securities and derivative instruments, as well as our portion of adjustments to EBITDAre of unconsolidated entities.
We then further adjust EBITDAre to exclude certain additional items such as write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, advisory services incentive fee, gains/losses on insurance settlements and stock/unit-based compensation and non-cash items such as amortization of unfavorable contract liabilities, realized and unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt, as well as our portion of adjustments to EBITDAre of unconsolidated entities.
We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and cities. Tax years 2018 through 2022 remain subject to potential examination by certain federal and state taxing authorities.
We classify interest and penalties related to underpayment of income taxes as income tax expense. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and cities. Tax years 2019 through 2023 remain subject to potential examination by certain federal and state taxing authorities.
The remainder was generated after December 31, 2017 and is not subject to expiration under the Tax Cuts and Jobs Act. The “Income Taxes” topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.
The remainder were generated after December 31, 2017 and are not subject to expiration under the Tax Cuts and Jobs Act. The “Income Taxes” topic of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification addresses the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements.
In 2022, we recorded an unrealized gain of $4.2 million from the revaluation of the embedded debt derivative in the Oaktree Credit Agreement, an unrealized gain of $6.6 million from interest rate caps. and a realized gain of $4.4 million related to payments from counterparties on interest rate caps.
In 2022, we recorded an unrealized gain of $4.2 million from the revaluation of the embedded debt derivative in the Oaktree Credit Agreement, an unrealized gain of $6.6 million from interest rate caps and a realized gain of $4.4 million related to payments from counterparties on interest rate caps. Income Tax (Expense) Benefit.
To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity. On December 6, 2022, our board of directors reviewed and approved our 2023 dividend policy.
To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity. On December 5, 2023, our board of directors reviewed and approved our 2024 dividend policy.
In addition, the analysis utilized by us in determining our deferred tax asset valuation allowance involves considerable management judgment and assumptions. See note 20 to our consolidated financial statements. At December 31, 2022 and 2021, we recorded a valuation allowance of $31.2 million and $38.8 million, respectively on the net deferred tax assets of our taxable REIT subsidiaries.
In addition, the analysis utilized by us in determining our deferred tax asset valuation allowance involves considerable management judgment and assumptions. See note 20 to our consolidated financial statements. At December 31, 2023 and 2022, we recorded a valuation allowance of $29.3 million and $31.2 million, respectively on the net deferred tax assets of our taxable REIT subsidiaries.
Based on our current level of operations, our cash flow from operations and our existing cash balances should be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity payments), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes.
Based on our current level of operations, our cash flow from operations, capital market activities, asset sales and our existing cash balances should be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes.
Net cash flows provided by (used in) operating activities, pursuant to our consolidated statements of cash flows, which includes changes in balance sheet items, were $39.2 million and $(144.2) million for the years ended December 31, 2022 and 2021, respectively.
Net cash flows provided by operating activities, pursuant to our consolidated statements of cash flows, which includes changes in balance sheet items, were $14.4 million and $39.2 million for the years ended December 31, 2023 and 2022, respectively.
We recorded impairment charges of $0, $0 and $91.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. See note 5 to our consolidated financial statements. Income Taxes —As a REIT, we generally are not subject to federal corporate income tax on the portion of our net income (loss) that does not relate to taxable REIT subsidiaries.
We recorded no impairment charges for the years ended December 31, 2023, 2022 and 2021. See note 5 to our consolidated financial statements. Income Taxes —As a REIT, we generally are not subject to federal corporate income tax on the portion of our net income (loss) that does not relate to taxable REIT subsidiaries.
Our estimated future obligations as of December 31, 2022 include both current and long-term obligations. With respect to our indebtedness, as discussed in note 7 to our consolidated financial statements, we have current obligations of $3.3 billion and long-term obligations of $547.6 million.
Our estimated future obligations as of December 31, 2023 include both current and long-term obligations. With respect to our indebtedness, as discussed in note 7 to our consolidated financial statements, we have current obligations of $3.1 billion and long-term obligations of $316.3 million.
In addition, we exclude impairment charges on real estate, and gain/loss on disposition of assets and hotel properties and gain/loss of unconsolidated entities to calculate EBITDAre, as defined by NAREIT.
In addition, we exclude impairment on real estate, gain/loss on consolidation of VIE and disposition of assets and gain/loss of unconsolidated entities to calculate EBITDAre, as defined by NAREIT.
We use occupancy to measure demand at a specific hotel or group of hotels in a given period. • ADR —ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period.
Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period. • ADR —ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period.
As of December 31, 2022, $22.5 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At December 31, 2022, our net debt to gross assets was 68.7%.
As of December 31, 2023, $21.7 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At December 31, 2023, our net debt to gross assets was 70.2%.
Cash flows provided by (used in) operations were impacted by the COVID-19 pandemic, changes in hotel operations, our hotel dispositions in 2021 and 2022, our hotel acquisition in 2022 as well as the timing of collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers.
Cash flows provided by operations were impacted by changes in hotel operations, our hotel dispositions in 2022 and 2023, our hotel acquisition in 2022 as well as the timing of collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers. Net Cash Flows Provided by (Used in) Investing Activities.
The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. The Company applied the optional expedient in evaluating debt modifications converting from LIBOR to SOFR.
The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate.
Our calculation of Adjusted FFO excludes gain/loss on extinguishment of debt, gain/loss on extinguishment of preferred stock, write-off of premiums, loan costs and exit fees, other income/expense, net transaction and conversion costs, legal, advisory and settlement costs, stock/unit-based compensation, gain/loss on insurance settlements and non-cash items such as deemed dividends on redeemable preferred stock, amortization of loan costs, amortization of the term loan discount, unrealized gains/losses on marketable securities and derivative instruments, as well as our portion of adjustments to FFO related to unconsolidated entities.
Our calculation of Adjusted FFO excludes write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, stock/unit-based compensation, gains/losses on insurance settlements and non-cash items such as deemed dividends on redeemable preferred stock, amortization of loan costs, amortization of credit facility exit fee, default interest and late fees, unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt, and our portion of adjustments to FFO related to unconsolidated entities.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting.
RECENTLY ADOPTED ACCOUNTING STANDARDS In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Updates (“ASU”) 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”), which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting.
Equity Transactions On September 9, 2021, the Company and M3A LP (“M3A”) entered into a purchase agreement (the “M3A Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to M3A up to approximately 6.0 million shares of common stock, from time to time during the term of the M3A Purchase Agreement.
The Company repaid approximately $19 million of principal on its mortgage loan partially secured by the hotel property. 58 Equity Transactions On September 9, 2021, the Company and M3A LP (“M3A”) entered into a purchase agreement (the “M3A Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to M3A up to approximately 6.0 million shares of common stock, from time to time during the term of the M3A Purchase Agreement.
Utilization of the REIT NOLs subject to Section 382 are limited to approximately $37.2 million per year through 2025, and $9.4 million per year thereafter. $426.1 million of our net operating loss carryforward will begin to expire in 2023 and is available to offset future taxable income, if any, through 2036.
Utilization of the REIT NOLs subject to Section 382 are limited to approximately $37.2 million per year through 2025, and $9.4 million per year thereafter. $425.2 million of our NOLs will begin to expire in 2024 and are available to offset future taxable income, if any, through 2036.
Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things: • maintain significant cash and cash equivalents liquidity; • opportunistically exchange preferred stock into common stock; • disposition of non-core hotel properties; • pursuing capital market activities to enhance long-term stockholder value; • implementing selective capital improvements designed to increase profitability; • implementing effective asset management strategies to minimize operating costs and increase revenues; • financing or refinancing hotels on competitive terms; • modifying or extending property-level indebtedness; • utilizing hedges and derivatives to mitigate risks; • pursue opportunistic value-add additions to our hotel portfolio: and • making other investments or divestitures that our board of directors deems appropriate.
Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things: • preserving capital and maintaining significant cash and cash equivalents liquidity; • disposition of non-core hotel properties; • acquisition of hotel properties, in whole or in part, that we expect will be accretive to our portfolio; • pursuing capital market activities and implementing strategies to enhance long-term stockholder value; • accessing cost effective capital, including through the issuance of non-traded preferred securities; • opportunistically exchanging preferred stock into common stock; • implementing selective capital improvements designed to increase profitability and maintain the quality of our assets; • implementing effective asset management strategies to minimize operating costs and increase revenues; • financing or refinancing hotels on competitive terms; • modifying or extending property-level indebtedness; • utilizing hedges, derivatives and other strategies to mitigate risks; • pursuing opportunistic value-add additions to our hotel portfolio; and • making other investments or divestitures that our board of directors deems appropriate.
At December 31, 2022, we had TRS net operating loss carryforwards (“NOLs") for U.S. federal income tax purposes of $90.3 million, however our utilization of such NOLs to offset TRS taxable income is limited to approximately $7.3 million per year through 2025, and $1.2 million per year thereafter under Section 382 of the Internal Revenue Code.
At December 31, 2023, we had TRS net operating loss carryforwards (“NOLs") for U.S. federal income tax purposes of $94.2 million, however $90.2 million of our NOLs are subject to limitation in the amount of approximately $7.3 million per year through 2025, and $1.2 million per year thereafter under Section 382 of the Internal Revenue Code.
We wrote off unamortized loan costs of $265,000 and a pro-rata write-off of the Oaktree loan discount in the amount of $514,000 upon making a $4.0 million pay down on the Oaktree loan. Additionally, we incurred third-party fees of $1.1 million.
We wrote off unamortized loan costs of $265,000 and a pro-rata write-off of the Oaktree loan discount in the amount of $514,000 upon making a $4.0 million pay down on the Oaktree loan. Gain (loss) on extinguishment of deb t.
NOLs become subject to an annual limitation in the event of certain cumulative changes in the ownership of significant shareholders over a three-year 58 period in excess of 50%, as defined under Section 382 of the Internal Revenue Code. Also in total $9.9 million of our TRS NOLs are subject to expiration and will begin to expire in 2023.
NOLs become subject to an annual limitation in the event of certain cumulative changes in the ownership of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 of the Internal Revenue Code. The remaining $4.0 million of our TRS NOLs are not subject to the limitations of Section 382.
As of March 8, 2023, the Company issued approximately 202,000 shares of Series J Preferred Stock and received net proceeds of approximately $4.5 million and the Company issued approximately 5,000 shares of Series K Preferred Stock and received net proceeds of approximately $131,000.
As of March 12, 2024, the Company has issued approximately 4.1 million shares of Series J Preferred Stock and received net proceeds of approximately $91.3 million and approximately 240,000 shares of Series K Preferred Stock and received net proceeds of approximately $5.8 million.
As of December 31, 2022, 79% of our hotels were in cash traps and approximately $33.7 million of our restricted cash was subject to these cash traps. Our loans may remain subject to cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT.
Our loans currently in cash traps may remain subject to cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT.
In 2021, the advisory services fee was comprised of a base advisory fee of $36.2 million, equity-based compensation of $9.1 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $6.9 million. Corporate, General and Administrative.
In 2023, the advisory services fee was comprised of a base advisory fee of $33.2 million, equity-based compensation of $3.3 million associated with equity grants of our common stock, PSUs, LTIP units and Performance LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $12.5 million.
For the year ended December 31, 2021, net cash flows used in investing activities were $34.0 million. Cash outflows primarily consisted of $36.7 million for capital improvements made to various hotel properties and $9.0 million of investments in unconsolidated entities.
For the year ended December 31, 2022, net cash flows used in investing activities were $70.3 million. Cash outflows primarily consisted of $103.8 million for capital improvements made to various hotel properties, $9.1 million investment in unconsolidated entities.
This increase is attributable to higher rooms revenue of $319.7 million at our comparable hotel properties and WorldQuest as our hotel properties recover from the effects of the COVID-19 pandemic, an increase of $205,000 from our Hotel Acquisitions and a decrease of $975,000 from our Hotel Dispositions.
This increase is attributable to higher rooms revenue of $84.7 million at our comparable hotel properties as our hotel properties recover from the effects of the COVID-19 pandemic and an increase of $8.2 million from our Hotel Acquisition partially offset by a decrease of $7.6 million from our Hotel Dispositions and $85,000 from the Stirling hotel properties.
Direct expenses were 30.8% of total hotel revenue for 2022 and 29.9% for 2021.
Direct expenses were 31.0% of total hotel revenue for 2023 and 30.8% for 2022.
We may incur indebtedness to meet distribution requirements imposed on REITs under the Code to the extent that working capital and cash flow from our investments are insufficient to fund required distributions.
We may incur indebtedness to meet distribution requirements imposed on REITs under the Code to the extent that working capital and cash flow from our investments are insufficient to fund required distributions. INFLATION We rely entirely on the performance of our hotel properties and the ability of the hotel properties’ managers to increase revenues to keep pace with inflation.
The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands): Year Ended December 31, 2022 2021 2020 Net income (loss) $ (141,058) $ (271,048) $ (633,222) Interest expense and amortization of discounts and loan costs 226,995 156,119 247,381 Depreciation and amortization 201,797 218,851 252,765 Income tax expense (benefit) 6,336 5,948 (1,335) Equity in (earnings) loss of unconsolidated entities 804 558 448 Company’s portion of EBITDA of unconsolidated entities (674) (554) (446) EBITDA 294,200 109,874 (134,409) Impairment charges on real estate — — 91,721 (Gain) loss on disposition of assets and hotel properties (300) (449) 36,680 EBITDAre 293,900 109,425 (6,008) Amortization of unfavorable contract liabilities 181 211 227 (Gain) loss on insurance settlements (342) — (625) Write-off of premiums, loan costs and exit fees 3,536 10,612 13,867 (Gain) loss on extinguishment of debt — (11,896) (90,349) Other (income) expense, net (4,797) (1,760) 17,029 Transaction and conversion costs (2,300) 3,033 16,309 Legal, advisory and settlement costs 1,936 7,371 1,409 Unrealized (gain) loss on marketable securities — — 1,467 Unrealized (gain) loss on derivatives (10,781) (14,493) (19,950) Dead deal costs — 689 923 Uninsured remediation costs — 341 — Stock/unit-based compensation 5,998 10,095 10,746 Company’s portion of adjustments to EBITDAre of unconsolidated entities 16 16 28 Adjusted EBITDAre $ 287,347 $ 113,644 $ (54,927) 60 We calculate FFO and Adjusted FFO in the following table.
The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ (180,734) $ (141,058) $ (271,048) Interest expense and amortization of discounts and loan costs 366,148 226,995 156,119 Depreciation and amortization 187,807 201,797 218,851 Income tax expense (benefit) 900 6,336 5,948 Equity in (earnings) loss of unconsolidated entities 1,134 804 558 Company’s portion of EBITDA of unconsolidated entities 231 (674) (554) EBITDA 375,486 294,200 109,874 (Gain) loss on consolidation of VIE and disposition of assets (11,488) (300) (449) EBITDAre 363,998 293,900 109,425 Amortization of unfavorable contract liabilities (15) 181 211 Transaction and conversion costs 3,856 (2,300) 3,033 Write-off of premiums, loan costs and exit fees 3,469 3,536 10,612 Realized and unrealized (gain) loss on derivatives 2,200 (10,781) (14,493) Stock/unit-based compensation 4,027 5,998 10,095 Legal, advisory and settlement costs 1,181 1,936 7,371 Other (income) expense, net (310) (4,797) (1,760) Dead deal costs — — 689 (Gain) loss on insurance settlements (505) (342) — (Gain) loss on extinguishment of debt (53,386) — (11,896) Uninsured remediation costs — — 341 Company’s portion of adjustments to EBITDAre of unconsolidated entities 2 16 16 Adjusted EBITDAre $ 324,517 $ 287,347 $ 113,644 62 We calculate FFO and Adjusted FFO in the following table.
Net Cash Flows Provided by (Used in) Investing Activities. For the year ended December 31, 2022, net cash flows used in investing activities were $70.3 million.
For the year ended December 31, 2023, net cash flows used in investing activities were $89.8 million.
The following table summarizes the changes in key line items from our consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 (in thousands): Year Ended December 31, Favorable (Unfavorable) Change 2022 2021 2020 2022 to 2021 2021 to 2020 Total revenue $ 1,240,859 $ 805,411 $ 508,238 $ 435,448 $ 297,173 Total hotel expenses (835,993) (576,806) (434,672) (259,187) (142,134) Property taxes, insurance and other (67,338) (67,904) (79,669) 566 11,765 Depreciation and amortization (201,797) (218,851) (252,765) 17,054 33,914 Impairment charges — — (91,721) — 91,721 Advisory service fee (49,897) (52,313) (50,050) 2,416 (2,263) Corporate, general and administrative (9,879) (16,153) (28,048) 6,274 11,895 Gain (loss) on disposition of assets and hotel properties 300 1,449 (36,680) (1,149) 38,129 Operating income (loss) 76,255 (125,167) (465,367) 201,422 340,200 Equity in earnings (loss) of unconsolidated entities (804) (558) (448) (246) (110) Interest income 4,777 207 672 4,570 (465) Other income (expense) 415 760 (16,998) (345) 17,758 Interest expense and amortization of discounts and loan costs (226,995) (156,119) (247,381) (70,876) 91,262 Write-off of premiums, loan costs and exit fees (3,536) (10,612) (13,867) 7,076 3,255 Gain (loss) on extinguishment of debt — 11,896 90,349 (11,896) (78,453) Unrealized gain (loss) on marketable securities — — (1,467) — 1,467 Realized and unrealized gain (loss) on derivatives 15,166 14,493 19,950 673 (5,457) Income tax benefit (expense) (6,336) (5,948) 1,335 (388) (7,283) Net income (loss) (141,058) (271,048) (633,222) 129,990 362,174 (Income) loss from consolidated entities attributable to noncontrolling interests — 73 338 (73) (265) Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 1,233 3,970 89,008 (2,737) (85,038) Net income (loss) attributable to the Company $ (139,825) $ (267,005) $ (543,876) $ 127,180 $ 276,871 51 Comparison of Year Ended December 31, 2022 with Year Ended December 31, 2021 All hotel properties owned during the years ended December 31, 2022 and 2021 have been included in our results of operations during the respective periods in which they were owned.
Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy. 51 The following table summarizes the changes in key line items from our consolidated statements of operations for the years ended December 31, 2023 and 2022 (in thousands): Year Ended December 31, Favorable (Unfavorable) Change 2023 2022 2021 2023 to 2022 2022 to 2021 Total revenue $ 1,367,533 $ 1,240,859 $ 805,411 $ 126,674 $ 435,448 Total hotel expenses (925,437) (835,993) (576,806) (89,444) (259,187) Property taxes, insurance and other (70,226) (67,338) (67,904) (2,888) 566 Depreciation and amortization (187,807) (201,797) (218,851) 13,990 17,054 Advisory service fee (48,927) (49,897) (52,313) 970 2,416 Corporate, general and administrative (16,181) (9,879) (16,153) (6,302) 6,274 Gain (loss) on consolidation of VIE and disposition of assets 11,488 300 1,449 11,188 (1,149) Operating income (loss) 130,443 76,255 (125,167) 54,188 201,422 Equity in earnings (loss) of unconsolidated entities (1,134) (804) (558) (330) (246) Interest income 8,978 4,777 207 4,201 4,570 Other income (expense) 310 415 760 (105) (345) Interest expense and amortization of discounts and loan costs (366,148) (226,995) (156,119) (139,153) (70,876) Write-off of premiums, loan costs and exit fees (3,469) (3,536) (10,612) 67 7,076 Gain (loss) on extinguishment of debt 53,386 — 11,896 53,386 (11,896) Realized and unrealized gain (loss) on derivatives (2,200) 15,166 14,493 (17,366) 673 Income tax benefit (expense) (900) (6,336) (5,948) 5,436 (388) Net income (loss) (180,734) (141,058) (271,048) (39,676) 129,990 (Income) loss from consolidated entities attributable to noncontrolling interests 6 — 73 6 (73) Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 2,239 1,233 3,970 1,006 (2,737) Net income (loss) attributable to the Company $ (178,489) $ (139,825) $ (267,005) $ (38,664) $ 127,180 52 Comparison of Year Ended December 31, 2023 with Year Ended December 31, 2022 All hotel properties owned during the years ended December 31, 2023 and 2022 have been included in our results of operations during the respective periods in which they were owned.
Our comparable hotel properties experienced an increase of 23.1% in room rates and an increase of 1,186 basis points in occupancy. Food and beverage revenue increased $101.8 million, or 107.2%, to $196.7 million in 2022 compared to 2021.
Our comparable hotel properties experienced an increase of 4.3% in room rates and an increase of 325 basis points in occupancy. Food and beverage revenue increased $36.2 million, or 18.4%, to $232.8 million in 2023 compared to 2022.
Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, increased $14.2 million, or 26.7%, to $67.3 million in 2022 compared to 2021.
Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, increased $5.4 million, or 8.1%, to $72.7 million in 2023 compared to 2022.
Hotel operating expenses increased $259.2 million, or 44.9%, to $836.0 million in 2022 compared to 2021. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees.
Other revenue decreased $83,000, or 2.9%, to $2.8 million in 2023 compared to 2022. Hotel Operating Expenses. Hotel operating expenses increased $89.4 million, or 10.7%, to $925.4 million in 2023 compared to 2022. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees.
Advisory services fee decreased $2.4 million, or 4.6%, to $49.9 million in 2022 compared to 2021. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company.
Advisory Services Fee. Advisory services fee decreased $970,000, or 1.9%, to $48.9 million in 2023 compared to 2022. The advisory services fee represents fees incurred in connection with the advisory agreements between Ashford Inc. and the Company and between Ashford Inc. and Stirling OP.
The increase was primarily due to a $49.5 million increase in interest expense at our comparable hotel properties primarily due to higher LIBOR rates, $5.3 million attributable to amortization of the embedded debt derivative in the Oaktree Credit Agreement as a result of it being outstanding for all of 2022 and lower credits to interest expense of $16.7 million related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default.
The increase was primarily due to a $110.3 million increase in interest expense at our comparable hotel properties primarily due to higher interest rates on our variable rate debt, lower credits to interest expense of $18.7 million related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default, $6.0 million primarily attributable to the amortization of the Oaktree debt discount and higher interest expense in 2023 of $4.5 million from our Hotel Dispositions primarily attributable default interest and late charges.
Corporate, general and administrative expense decreased $6.3 million, or 38.8%, to $9.9 million in 2022 compared to 2021.
Corporate, general and administrative expense increased $6.3 million, or 63.8%, to $16.2 million in 2023 compared to 2022.
On December 31, 2021, the Company acquired the remaining interest in the consolidated entities. Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of $1.2 million and $4.0 million in 2022 and 2021, respectively.
Our noncontrolling interest partners in consolidated entities were allocated a loss of $6,000 in 2023. Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of $2.2 million and $1.2 million in 2023 and 2022, respectively.
The remainder was generated after December 31, 2017 and is not subject to expiration under the Tax Cuts and Jobs Act. At December 31, 2022, Ashford Hospitality Trust, Inc., our REIT, had NOLs for U.S. federal income tax purposes of $1.1 billion based on the latest filed tax returns.
At December 31, 2023, Ashford Hospitality Trust, Inc., our REIT, had NOLs for U.S. federal income tax purposes of $1.2 billion based on the latest filed tax returns.
The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of March 8, 2023, the Company has not issued any common stock pursuant to the Virtu Equity Distribution Agreement.
We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale.
Our general and administrative costs, real estate and personal property taxes, property and casualty insurance, labor costs and utilities are subject to inflation as well. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our significant accounting policies are fully described in note 2 to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our significant accounting policies are fully described in note 2 to our consolidated financial statements included in Item 8. Financial Statements and Supplementary Data.
For the year ended December 31, 2021, net cash flows provided by financing activities were $702.6 million.
For the year ended December 31, 2023, net cash flows used in financing activities were $172.1 million.
As of March 8, 2023, the Company has issued approximately 900,000 shares of common stock for gross proceeds of approximately $12.9 million under the M3A Purchase Agreement. On March 1, 2022, the Company filed a new universal shelf registration statement on Form S-3 with the SEC.
As of March 12, 2024, the Company has issued approximately 900,000 shares of common stock for gross proceeds of approximately $12.9 million under the M3A Purchase Agreement.
Direct expenses increased $141.3 million in 2022 compared to 2021, comprised of an increase of $141.4 million from our comparable hotel properties and WorldQuest as our hotel properties continue to recover from the effects of the COVID-19 pandemic and an increase of $60,000 from our Hotel Acquisitions, partially offset by a decrease of $98,000 from our Hotel Dispositions.
Direct expenses increased $41.4 million in 2023 compared to 2022, comprised of an increase of $40.0 million from our comparable hotel properties and an increase of $3.4 million from our Hotel Acquisition, partially offset by a decrease of $1.9 million from our Hotel Dispositions and $126,000 from the Stirling hotel properties.
We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns.
We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include: • Occupancy —Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available.
As discussed in note 19 to our consolidated financial statements, under our operating and finance leases we have current obligations of $5.4 million and long-term obligations of $252.8 million.
We have amortization payments of approximately $2.2 million due in the next twelve months. As discussed in note 19 to our consolidated financial statements, under our operating and finance leases we have current obligations of $5.5 million and long-term obligations of $253.3 million. Additionally, we have short-term capital commitments of $59.7 million.
As of December 31, 2022, we have $98.5 million of mortgage loans that have final maturities in 2023. We hold extension options for the remaining mortgage loans due in the next twelve months. We have amortization payments of approximately $3.2 million due in the next twelve months.
As of December 31, 2023, we have $824.2 million of mortgage loans that have final maturities in 2024 (of which $180.7 million relates to KEYS Pool A and $174.4 million relates to KEYS Pool B). We hold extension options for the remaining mortgage loans due in the next twelve months.
Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $566,000 or 0.8%, to $67.3 million in 2022 compared to 2021, which was primarily due to a decrease of $341,000 from our comparable hotel properties and WorldQuest and a decrease of $229,000 from our Hotel Dispositions. Depreciation and Amortization.
Property taxes, insurance and other expense increased $2.9 million or 4.3%, to $70.2 million in 2023 compared to 2022, which was primarily due to an increase of $3.2 million from our comparable hotel properties, $55,000 from the Stirling hotel properties and $135,000 from our Hotel Acquisition partially offset by a decrease of $497,000 from our Hotel Dispositions. Depreciation and Amortization.
Net loss attributable to the Company decreased $127.2 million from $267.0 million for the year ended December 31, 2021 (“2021”) to $139.8 million for the year ended December 31, 2022 (“2022”) as a result of the factors discussed below. Revenue.
Net loss attributable to the Company increased $38.7 million from $139.8 million for the year ended December 31, 2022 (“2022”) to $178.5 million for the year ended December 31, 2023 (“2023”) as a result of the factors discussed below. 53 Revenue. Rooms revenue from our hotel properties increased $85.2 million, or 8.7%, to $1.1 billion in 2023 compared to 2022.
These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data.
RESULTS OF OPERATIONS Key Indicators of Operating Performance We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures.
This increase is attributable to higher sales of food and beverage of $101.4 million at our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic, an increase of $123,000 from our Hotel Acquisitions and an increase of $268,000 from our Hotel Dispositions.
This increase is attributable to higher sales of food and beverage of $33.3 million at our comparable hotel properties and an increase of $3.2 million from our Hotel Acquisition partially offset by a decrease of $245,000 from our Hotel Dispositions.
This increase was primarily due to an increase in the profitability of our Ashford TRS entities due to the continued recovery from the COVID-19 pandemic in 2022 compared to 2021. (Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partner in consolidated entities was allocated a loss of $73,000 in 2021.
Income tax expense decreased $5.4 million, from $6.3 million in 2022 to $900,000 in 2023. This decrease was primarily due to a decrease in the profitability of our Ashford TRS entities in 2023 compared to 2022. (Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests .
These increases were partially offset by a decrease of $571,000 from our Hotel Dispositions. The average LIBOR rates in 2022 and 2021 were 1.91% and 0.10%, respectively. 53 Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees decreased $7.1 million to $3.5 million in 2022 compared to 2021.
These increases were partially offset by a decrease of $283,000 from the Stirling hotel properties. The average SOFR rates in 2023 and 2022 were 4.91% and 1.58%, respectively. LIBOR ceased to be published after June 30, 2023. The average LIBOR rate for 2022 was 1.91%. Write-off of Premiums, Loan Costs and Exit Fees.
EXECUTIVE OVERVIEW General As of December 31, 2022, our portfolio consisted of 100 consolidated hotel properties which represents 22,316 total rooms. Currently, all of our hotel properties are located in the United States.
EXECUTIVE OVERVIEW General As of December 31, 2023, our portfolio consisted of 90 consolidated operating hotel properties which represents 20,549 total rooms.
Cash outflows consisted of $103.8 million for capital improvements made to various hotel properties and a $9.1 million investment in unconsolidated entities partially offset by cash inflows of $35.0 million from proceeds received from the sale of the Sheraton Ann Arbor and six WorldQuest condominium units, $1.9 million of net cash acquired in the acquisition of Marietta Leasehold LP, $1.6 million of proceeds from property insurance and proceeds of $4.0 million from the payment of a note receivable.
Cash outflows were partially offset by cash inflows of $35.0 million from proceeds received from the sale of Sheraton Ann Arbor and six WorldQuest condominium units, $1.6 million of proceeds from property insurance and $4.0 million of proceeds from notes receivable. 59 Net Cash Flows Provided by (Used in) Financing Activities.
Indirect expenses and management fees increased $117.9 million in 2022 compared to 2021, comprised of an increase of $118.8 million from our comparable hotel properties and WorldQuest as our hotel properties continue to recover from the effect of the COVID-19 pandemic and an increase of $149,000 from our Hotel Acquisitions, partially offset by a decrease of $1.1 million from our Hotel Dispositions.
Indirect expenses and management fees increased $48.1 million in 2023 compared to 2022, comprised of an increase of $45.9 million from our comparable hotel properties and $4.7 million from our Hotel Acquisition partially offset by $2.4 million from our Hotel Dispositions and $101,000 from the Stirling hotel properties. Property Taxes, Insurance and Other.
There was no material impact as a result of this adoption. NON-GAAP FINANCIAL MEASURES The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.
We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. NON-GAAP FINANCIAL MEASURES The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.
Cash inflows primarily consisted of $377.5 million from borrowings on indebtedness, net of commitment fee and $562.8 million of net proceeds from issuances of common stock, partially offset by cash outflows of $189.6 million for repayments of indebtedness, $27.8 million for payments of loan costs and exit fees, $18.6 million of payments for preferred dividends, $1.5 million of payments for derivatives and $200,000 for the acquisition of the remaining 15% noncontrolling interest in consolidated entities.
Cash outflows primarily consisted of $396.9 million for repayments of indebtedness, $13.2 million for payments of loan costs and exit fees, $14.9 million of payments for preferred dividends and $28.3 million of payments for derivatives, partially offset by cash inflows of $134.8 million from borrowings on indebtedness, $79.6 million of net proceeds from preferred stock offerings, $1.0 million of net proceeds from common stock offerings, $6.9 million of contributions from noncontrolling interest in consolidating entities and $59.4 million from counterparty payments primarily comprised of $41.8 million from in-the-money interest rate caps and $17.7 million from sales of interest rate caps.
Depreciation and amortization decreased $17.1 million or 7.8%, to $201.8 million in 2022 compared to 2021, which consisted of lower depreciation of $1.4 million from our Hotel Dispositions and lower depreciation of $15.7 million at our comparable hotel properties and WorldQuest primarily due to fully depreciated assets. Advisory Services Fee.
Depreciation and amortization decreased $14.0 million or 6.9%, to $187.8 million in 2023 compared to 2022, which consisted of lower depreciation of $9.7 million from our comparable hotel properties primarily related to fully depreciated assets, $246,000 from the Stirling hotel properties and $4.5 million from our Hotel Dispositions partially offset by an increase of $512,000 from our Hotel Acquisition.
On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold.
The ability to make repurchases under the Repurchase Program is subject to the same financial factors that must be taken into account in declaring a dividend as discussed herein under “Distribution Policy.” On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives increased $673,000 from $14.5 million in 2021 to $15.2 million in 2022.
Gain (Loss) on Consolidation of VIE and Disposition of Assets. Gain on consolidation of VIE and disposition of assets increased $11.2 million, from $300,000 in 2022 to $11.5 million in 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAt December 31, 2022, our total indebtedness of $3.8 billion included $3.5 billion of variable-rate debt. The impact on our results of operations of a 25-basis point change in interest rate on the outstanding balance of variable-rate debt at December 31, 2022 would be approximately $8.8 million per year.
Biggest changeAt December 31, 2023, our total indebtedness of $3.4 billion included $3.1 billion of variable-rate debt. The impact on our results of operations of a 25-basis point change in interest rate on the outstanding balance of variable-rate debt at December 31, 2023 would be approximately $7.7 million per year.
As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies in place at the time, and the related interest rates. 63
As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies in place at the time, and the related interest rates. 65
As the information presented above includes only those exposures that existed at December 31, 2022, it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value.
As the information presented above includes only those exposures that existed at December 31, 2023, it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value.
However, we currently have various interest rate caps in place that limit this exposure. Interest rate changes have no impact on the remaining $321.1 million of fixed-rate debt. The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure.
However, we currently have various interest rate caps in place that limit this exposure. Interest rate changes have no impact on the remaining $338.8 million of fixed-rate debt. The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure.

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