e10vk
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form 10-K
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(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended
December 31, 2007
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number: 001-31775
ASHFORD HOSPITALITY TRUST,
INC.
(Exact name of registrant as
specified in its charter)
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Maryland
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86-1062192
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(State or other jurisdiction
of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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14185 Dallas Parkway,
Suite 1100, Dallas, Texas
(Address of principal
executive offices)
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75254
(Zip Code)
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(Registrants telephone number, including area code)
(972) 490-9600
Securities registered pursuant to Section 12(b) of the
Act:
Common Stock, $0.01 PAR
Preferred Stock, Series A, $0.01 PAR
Preferred Stock, Series D, $0.01 PAR
Securities registered pursuant to Section 12(g) of the
Act:
None
Indicate by check mark if the registrant is a well-known
seasoned issuer (as defined by Rule 405 of the Securities
Exchange
Act). Yes þ No o
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the
Securities Exchange
Act. Yes o No þ
Indicate by check mark whether the registrant (i) has filed
all reports required to be filed by Section 13 or 15
(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (ii) has
been subject to such filing requirements for the past
90 days. Yes þ No o
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of
Regulation S-K
is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or
information statements incorporated by reference in
Part III of this
Form 10-K
or any amendment to this
Form 10-K. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated
filer o
(Do not check if a smaller reporting company)
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Smaller reporting
company o
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Indicate by check mark whether the registrant is a shell company
(as defined in
Rule 12b-2
of the Securities Exchange
Act). Yes o No þ
The aggregate market value of the common stock of the registrant
held by non-affiliates of the registrant, computed by reference
to the price at which the registrants common stock was
last sold on the last business day of the registrants most
recently completed second fiscal quarter, was approximately
$1.4 billion. As of February 27, 2008, the registrant
had issued and outstanding 120,376,055 shares of common
stock.
DOCUMENTS
INCORPORATED BY REFERENCE
The registrants definitive Proxy Statement pertaining to
the 2008 Annual Meeting of Stockholders (the Proxy
Statement), filed or to be filed not later than
120 days after the end of the fiscal year pursuant to
Regulation 14A, is incorporated herein by reference into
Part III.
Forward-Looking
Statements
Throughout this
Form 10-K
and documents incorporated herein by reference, we make
forward-looking statements that are subject to risks and
uncertainties. These forward-looking statements include
information about possible or assumed future results of our
business, financial condition, liquidity, results of operations,
plans, and objectives. Statements regarding the following
subjects are forward-looking by their nature:
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our business and investment strategy;
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our projected operating results;
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completion of any pending transactions;
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our ability to obtain future financing arrangements;
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our understanding of our competition;
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market trends;
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projected capital expenditures; and
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the impact of technology on our operations and business.
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Such forward-looking statements are based on our beliefs,
assumptions, and expectations of our future performance taking
into account all information currently known to us. These
beliefs, assumptions, and expectations can change as a result of
many potential events or factors, not all of which are known to
us. If a change occurs, our business, financial condition,
liquidity, results of operations, plans, and other objectives
may vary materially from those expressed in our forward-looking
statements. Additionally, the following factors could cause
actual results to vary from our forward-looking statements:
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factors discussed in this
Form 10-K,
including those set forth under the sections titled Risk
Factors, Managements Discussion and Analysis
of Financial Condition and Results of Operations,
Business, and Properties;
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general volatility of the capital markets and the market price
of our common stock;
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changes in our business or investment strategy;
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availability, terms, and deployment of capital;
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availability of qualified personnel;
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changes in our industry and the market in which we operate,
interest rates, or the general economy; and
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the degree and nature of our competition.
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When we use words or phrases such as will likely
result, may, anticipate,
estimate, should, expect,
believe, intend, or similar expressions,
we intend to identify forward-looking statements. You should not
place undue reliance on these forward-looking statements. We are
not obligated to publicly update or revise any forward-looking
statements, whether as a result of new information, future
events, or otherwise.
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PART I
OUR
COMPANY
Ashford Hospitality Trust, Inc. and subsidiaries (the
Company or we or our) is a
self-advised real estate investment trust (REIT),
which commenced operations on August 29, 2003 when it
completed its initial public offering (IPO) and
concurrently consummated certain other formation transactions,
including the acquisition of six hotels (initial
properties). The Company owns its lodging investments and
conducts its business through Ashford Hospitality Limited
Partnership, its operating partnership. Ashford OP General
Partner LLC, its wholly-owned subsidiary, serves as the sole
general partner of the Companys operating partnership.
As of December 31, 2007, the Company owned interest in 112
hotel properties, which includes direct ownership in 106 hotel
properties and between
75-89%
interest in six hotel properties through equity investments with
joint venture partners. These hotel properties represent 26,553
total rooms or 26,211 net rooms excluding those
attributable to joint venture partners. Of the total 112 hotel
properties, 111 are located in the United States and one is
located in Canada. As of December 31, 2007, the Company
also owned approximately $94.2 million of mezzanine or
first-mortgage loans receivable.
For federal income tax purposes, the Company elected to be
treated as a REIT, which imposes limitations related to
operating hotels. As of December 31, 2007, 111 of the
Companys hotel properties were leased or owned by
wholly-owned subsidiaries of the Company that are treated as
taxable REIT subsidiaries for federal income tax purposes
(collectively, such 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. Hotel operating results related to
these properties are included in the consolidated results of
operations. As of December 31, 2007, the remaining hotel
property was leased on a
triple-net
lease basis to a third-party tenant who operates the hotel.
Rental income from this operating lease is included in the
consolidated results of operations.
Remington Lodging & Hospitality, L.P. and Remington
Management, L.P. (collectively, Remington Lodging),
both primary property managers for the Company, are beneficially
wholly owned by Mr. Archie Bennett, Jr., the
Companys Chairman, and Mr. Montgomery J. Bennett, the
Companys President and Chief Executive Officer. As of
December 31, 2007, Remington Lodging managed 43 of the
Companys 112 hotel properties while third-party management
companies managed the remaining 69 hotel properties.
As of December 31, 2007, 120,376,055 shares of common
stock, 2,300,000 shares of Series A preferred stock,
7,447,865 shares of Series B preferred stock,
8,000,000 shares of Series D preferred stock, and
13,346,843 units of limited partnership interest held by
entities other than the Company were outstanding and
2,389,636 shares of common stock were held as treasury
stock. During the year ended December 31, 2007, the Company
completed the following transactions:
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On March 27, 2007, the Company issued 838,500 shares
of restricted common stock to its executive officers and certain
employees.
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On April 11, 2007, the Company issued 8,000,000 shares
of Series C cumulative redeemable preferred stock to a
financial institution.
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On April 24, 2007, the Company issued
48,875,000 shares of common stock in a follow-on public
offering.
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On May 15, 2007, the Company issued 16,000 shares of
common stock to its directors as compensation for serving on the
Board of Directors through May 2008.
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On July 18, 2007, the Company publicly issued
8,000,000 shares of Series D cumulative preferred
stock.
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On July 18, 2007, the Company redeemed
8,000,000 shares of Series C cumulative redeemable
preferred stock.
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During the year ended December 31, 2007, the Company
acquired 60,177 shares of treasury stock in connection with
the Companys incentive stock plan, which allows employees
to tender vested shares of
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restricted common stock to the Company at current market prices
to cover individual federal income taxes withheld on such shares
as such shares vest, of which 36,841 shares were reissued
in connection with the aforementioned common stock grants.
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During the year ended December 31, 2007, the Company
acquired 2,366,300 shares of treasury stock in connection
with its stock repurchase program.
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During the year ended December 31, 2007, 35,391 unvested
shares of restricted common stock were forfeited.
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During the year ended December 31, 2007, the Company issued
165,582 shares of common stock in exchange for
165,582 units of limited partnership interest.
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We maintain a website at www.ahtreit.com. On our website,
we make available
free-of-charge
our annual reports on
Form 10-K,
quarterly reports on
Form 10-Q,
current reports on
Form 8-K,
and other reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities and Exchange Act
of 1934, as amended, as soon as reasonably practicable after we
electronically file such material with the Securities and
Exchange Commission. In addition, our Code of Business Conduct
and Ethics, Code of Ethics for the Chief Executive Officer,
Chief Financial Officer, and Chief Accounting Officer, Corporate
Governance Guidelines, and Board Committee Charters are also
available
free-of-charge
on our website or can be made available in print upon request.
All reports filed with the Securities and Exchange Commission
may also be read and copied at the SECs Public Reference
Room at 450 Fifth Street, NW, Washington, DC 20549. Further
information regarding the operation of the Public Reference Room
may be obtained by calling
1-800-SEC-0330.
In addition, all of our filed reports can be obtained at the
SECs website at www.sec.gov.
OUR
BUSINESS STRATEGIES
We currently focus our investment strategies on the upscale and
upper-upscale
segments within the lodging industry. However, we also believe
that as supply, demand, and capital market cycles change, we
will be able to shift our investment strategies to take
advantage of newly created lodging-related investment
opportunities as they develop. Currently, we do not limit our
acquisitions to any specific geographical market. While our
current investment strategies are well defined, our Board of
Directors may change our investment policies at any time without
stockholder approval.
We intend to continue to invest in a variety of lodging-related
assets based upon our evaluation of diverse market conditions.
These investments may include: (i) direct hotel
investments; (ii) mezzanine financing through origination
or acquisition in secondary markets; (iii) first-lien
mortgage financing through origination or acquisition in
secondary markets; and (iv) sale-leaseback transactions.
Our strategy is designed to take advantage of current lodging
industry conditions and adjust to changes in market conditions
over time. In the current market, we believe we can continue to
purchase assets at discounts and acquire or originate debt
positions with attractive relative yields. Over time, 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 and our investment
returns.
Our business strategy of combining lodging-related equity and
debt investments seeks, among other things, to:
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capitalize on both current yield and price appreciation, while
simultaneously offering diversification of types of assets
within the hospitality industry;
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vary investments across an array of hospitality assets to take
advantage of market cycles for each asset class; and
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offer an attractive liquidity alternative to asset sales
(through structure and tax deferral) and traditional financing
(due to rate, structure,
loan-to-value,
and asset class).
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Our investment strategy primarily targets limited and
full-service hotels in primary, secondary, and resort markets
throughout the United States. To take full advantage of current
and future investment opportunities in the
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lodging industry, we will invest according to the asset
allocation strategies described below. 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.
Direct Hotel Investments In selecting hotels
to acquire, we target hotels that either offer a high current
return or have the opportunity to increase in value through
repositioning, capital investments, market-based recovery, or
improved management practices. We intend to continue to acquire
existing hotels and, under appropriate market conditions, may
develop new hotels. Our direct hotel acquisition strategy will
continue to follow similar investment criteria and will seek to
achieve both current income and income from appreciation. In
addition, we will continue to assess our existing hotel
portfolio and make strategic decisions to sell certain
under-performing or smaller hotels that do not fit our
investment strategy or criteria.
Mezzanine Financing Subordinated loans, or
mezzanine loans, that we acquire or originate relate to upscale,
upper-upscale
and luxury hotels with reputable managers that are located in
established or emerging
sub-markets.
These mezzanine loans are secured by junior mortgages on hotels
or pledges of equity interests in entities owning hotels. We
intend to continue to acquire or originate mezzanine loans.
Mezzanine loans that we acquire in the future may be secured by
individual assets as well as cross-collateralized portfolios of
assets. Although these types of loans generally have greater
repayment risks than first mortgages due to the subordinated
nature of the loans, we have a disciplined approach in
underwriting the value of these assets. We expect this asset
class to provide us with attractive returns.
First Mortgage Financing From time to time,
we acquire or originate junior participations in first
mortgages, which we often refer to as mezzanine loans. As
interest rates increase and the dynamics in the hotel industry
make first-mortgage investments more attractive, we intend to
acquire, potentially at a discount to par, or originate loans
secured by first priority mortgages on hotels. Related to
commercial mortgage lenders, we may be subject to certain
state-imposed licensing regulations with which we intend to
comply. However, because we are not a bank or a federally
chartered lending institution, we are not subject to state and
federal regulatory constraints imposed on such entities. Also,
we expect we will be able to offer more flexible terms than
commercial lenders who contribute loans to securitized mortgage
pools.
Sale-Leaseback Transactions To date, we have
not participated in any sale-leaseback transactions. However, if
the lodging industry fundamentals shift such that sale-leaseback
transactions become more attractive investments, we intend to
purchase hotels and lease them back to their existing hotel
owners.
OUR
OPERATING SEGMENTS
As addressed in Item 15, Financial Statements Schedules, we
currently operate in two business segments within the hotel
lodging industry: direct hotel investments and hotel financing.
These operating segments are described above along with
additional operating segments where we anticipate future
participation.
OUR
FINANCING STRATEGY
We utilize our borrowing power to leverage future investments.
When evaluating our future level of indebtedness and making
decisions regarding the incurrence of indebtedness, our Board of
Directors considers a number of factors, including:
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the purchase price of our investments to be acquired with debt
financing;
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the estimated market value of our investments upon
refinancing; and
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the ability of particular investments, and our Company as a
whole, to generate cash flow to cover expected debt service.
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We may incur debt in the form of purchase money obligations to
the sellers of properties, publicly or privately placed debt
instruments, or financing from banks, institutional investors,
or other lenders. Any such indebtedness may be secured or
unsecured by mortgages or other interests in our properties or
mortgage loans. This indebtedness may be recourse, non-recourse,
or cross-collateralized. 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
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loans subject to existing loans secured by mortgages or similar
liens on the properties, or we may refinance properties acquired
on a leveraged basis. We may use the proceeds from any
borrowings for working capital to:
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purchase interests in partnerships or joint ventures;
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refinance existing indebtedness;
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finance the origination or purchase of mortgage
investments; or
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finance acquisitions, expand, redevelop or improve existing
properties, or develop new properties.
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In addition, if we do not have sufficient cash available, we may
need to borrow to meet taxable income distribution requirements
under the Internal Revenue Code. No assurances can be given that
we will obtain additional financings or, if we do, what the
amount and terms will be. 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 mortgage financing on our individual properties and
mortgage investments.
OUR
DISTRIBUTION POLICY
To maintain our qualification as a REIT, we make annual
distributions to our stockholders of at least 90% of our REIT
taxable income (which does not necessarily equal net income as
calculated in accordance with generally accepted accounting
principles). Distributions are authorized by our Board of
Directors and declared by us based upon a variety of factors
deemed relevant by our directors. No assurance can be given that
our dividend policy will not change in the future. Our ability
to pay distributions to our 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,
wholly-owned subsidiaries of our operating partnership and the
management of our properties by our property managers.
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 tax-free return
of capital. To the extent that it is consistent with maintaining
our REIT status, we may maintain accumulated earnings of Ashford
TRS in that entity.
Our charter allows us to issue preferred stock with a preference
on distributions. The partnership agreement of our operating
partnership also allows the operating partnership to issue units
with a preference on distribution. Such issuance of preferred
stock or preferred units, given the dividend preference on this
stock or units, could limit our ability to make a dividend
distribution to our common stockholders.
OUR
RECENT DEVELOPMENTS
During the year ended December 31, 2007, we completed the
following significant transactions:
Business
Combinations:
On April 11, 2007, the Company acquired a 51-property hotel
portfolio (CNL Portfolio) from CNL Hotels and
Resorts, Inc. (CNL) for approximately
$2.4 billion plus closing costs of approximately
$96.0 million. The Company acquired 100% of 33 properties
and 70%-89% of 18 properties through existing joint ventures. To
fund this acquisition, the Company utilized several sources as
follows: a) borrowings of approximately $928.5 million
of ten-year, fixed-rate debt at an average blended interest rate
of 5.95%, approximately $555.1 million of two-year,
variable-rate debt with three one-year extension options at an
interest rate of LIBOR plus 1.65%, and approximately
$325.0 million of one-year, variable-rate debt with two
one-year extension options at an interest rate of LIBOR plus
1.5%, b) the sale of 8.0 million shares of
Series C Cumulative Redeemable Preferred Stock for
approximately $200.0 million less a commitment fee of
approximately $6.3 million at a dividend rate of LIBOR plus
2.5%, c) assumed fixed-rate debt of approximately
$562.1 million (or approximately $432.3 million net of
debt attributable to joint venture partners), representing
eleven fixed-rate loans with an average blended interest rate of
6.01% and expiration dates ranging from 2008 to 2027, and
d) a $50.0 million draw on a newly executed
$200.0 million credit facility with an interest rate of
LIBOR plus a range of 1.55% to 1.95% depending on the
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loan-to-value
ratio, which matures April 9, 2010 with two one-year
extension options, and requires interest-only payments through
maturity.
On April 11, 2007, the Company acquired the remaining 15%
joint venture interest in the Hyatt Regency Dearborn in Detroit,
Michigan, for approximately $7.5 million, which represents
approximately $2.9 million in cash and assumed debt of
approximately $4.6 million. The Company acquired the other
85% interest pursuant to its acquisition of the CNL Portfolio,
which was consummated April 11, 2007, as discussed above.
On May 21, 2007, the Company acquired a Marriott Residence
Inn and a Hampton Inn, both in Jacksonville, Florida, from MS
Resort Holdings LLC for approximately $35.8 million in
cash. The acquisition of these hotel properties, which were
previously owned by CNL, related to the Companys
acquisition of the CNL Portfolio on April 11, 2007. The
Company used proceeds from its sale of seven hotels on
May 18, 2007 and cash on hand to fund this acquisition.
On December 15, 2007, the Company completed an asset swap
with Hilton Hotels Corporation (Hilton), its partner
in two joint ventures which were simultaneously dissolved,
whereby the Company surrendered its majority ownership interest
in two hotel properties in exchange for the joint venture
partners minority ownership interest in nine hotel
properties. In connection with this asset swap, the Company
assumed $41.9 million of debt previously attributable to
the joint venture partners minority ownership in the nine
acquired hotel properties that secured such debt and ceded
$109.5 million of debt, of which $80.1 million was
attributable to its majority ownership in the two surrendered
hotel properties that secured such debt and the remainder
attributable to the joint venture partners former minority
ownership. In addition, the Company will be reimbursed
$2.0 million by Hilton for expenses incurred.
Capital
Stock:
On April 11, 2007, the Company issued 8.0 million
shares of Series C cumulative redeemable preferred stock at
$25 per share for approximately $200.0 million less a
commitment fee of approximately $6.3 million. On
July 18, 2007, with proceeds received from the issuance of
Series D preferred stock discussed below, the Company
redeemed its 8.0 million shares of Series C preferred
stock for approximately $200.0 million and received a
refund of related commitment fees of approximately
$4.3 million.
On April 24, 2007, in a follow-on public offering, the
Company issued 48,875,000 shares of its common stock at
$11.75 per share, which generated gross proceeds of
approximately $574.3 million. However, the aggregate
proceeds to the Company, net of underwriters discount and
offering costs, was approximately $548.2 million. The
48,875,000 shares issued include 6,375,000 shares sold
pursuant to an over-allotment option granted to the
underwriters. These net proceeds along with cash on hand were
used to pay-down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, payoff the $325.0 million variable-rate loan, due
April 9, 2008, and pay-down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively.
On July 18, 2007, the Company issued 8.0 million
shares of 8.45% Series D cumulative preferred stock at $25
per share for approximately $200.0 million less
underwriting discounts and commissions of approximately
$6.3 million.
During the year ended December 31, 2007, the Company
acquired 60,177 shares of treasury stock for approximately
$728,000 in connection with the Companys Incentive Stock
Plan (Stock Plan), which allows employees to tender
vested shares of restricted common stock to the Company at
current market prices to cover individual federal income taxes
withheld on such shares as such shares vest. During the year
ended December 31, 2007, the Company reissued 36,841
treasury shares under its Stock Plan as common stock granted to
its executives, certain employees, and directors.
During the year ended December 31, 2007, the Company
acquired 2,366,300 shares of treasury stock for
approximately $18.2 million in connection with its stock
repurchase program.
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Discontinued
Operations:
On February 6, 2007, the Company sold its Marriott located
in Trumbull, Connecticut, for approximately $28.3 million.
As the Company acquired this property on December 7, 2006,
no gain or loss was recognized on the sale.
On February 8, 2007, the Company sold its Fairfield Inn in
Princeton, Indiana, for approximately $3.2 million. In
connection with this sale, the Company recognized a gain of
approximately $1.4 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On April 24, 2007, the Company sold its Radisson Hotel in
Indianapolis, Indiana, for approximately $5.4 million. In
connection with this sale, the Company recognized a gain of
approximately $2.7 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On April 26, 2007, the Company sold its Fairfield Inn in
Evansville, Indiana, for approximately $5.5 million. In
connection with this sale, the Company recognized a gain of
approximately $531,000, of which related income tax gains were
deferred through a 1031 like-kind exchange.
On April 27, 2007, the Company sold its Embassy Suites in
Phoenix, Arizona, for approximately $25.0 million. In
connection with this sale, the Company recognized a gain of
approximately $8.5 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On May 2, 2007, the Company sold its Radisson Hotel in
Covington, Kentucky, and an office building for approximately
$22.4 million. In connection with this sale, the Company
recognized a gain of approximately $3.4 million, of which
related income tax gains were deferred through a 1031 like-kind
exchange.
On May 18, 2007, the Company sold its portfolio of seven
TownePlace Suites hotels for approximately $57.5 million.
In connection with this sale, the Company recognized a gain of
approximately $18.3 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On July 2, 2007, the Company sold its Hampton Inn in Horse
Cave, Kentucky, for approximately $3.5 million. In
connection with this sale, the Company recognized a gain of
approximately $363,000.
On September 27, 2007, the Company sold its Doubletree
Guest Suites in Dayton, Ohio, for approximately
$6.5 million. In connection with this sale, the Company
recognized a gain of approximately $168,000.
On October 2, 2007, the Company sold its Hilton in
Birmingham, Alabama, for approximately $25.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on the sale. In connection with this
sale, the Company paid down its $375.0 million mortgage
loan, due May 9, 2009, by approximately $23.7 million.
On November 2, 2007, the Company sold two Residence Inns in
Torrance, California, and Atlanta, Georgia, for approximately
$61.5 million. As the Company acquired these properties on
April 11, 2007, no gain or loss was recognized on the sale.
In connection with this sale and using corporate funds, the
Company paid down its $375.0 million mortgage loan, due
May 9, 2009, by approximately $67.7 million.
On November 20, 2007, the Company sold its Residence Inn in
Kansas City, Missouri, for approximately $7.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale. In connection with
this sale and using corporate funds, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $7.4 million.
On November 30, 2007, the Company sold its Marriott in
Baltimore, Maryland, for approximately $61.5 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale. In connection with
this sale, the Company paid down its $375.0 million
mortgage loan, due May 9, 2009, by approximately
$62.4 million.
Notes
Receivable:
On February 6, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due February 2007.
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On May 8, 2007, the Company received approximately
$8.6 million related to all principal and interest due
under its $8.5 million note receivable, due June 2007.
On June 11, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due May 2010.
On June 18, 2007, the Company received approximately
$5.7 million related to all principal and interest due
under its $5.6 million note receivable, due July 2008.
On December 5, 2007, the Company originated a
$21.5 million mezzanine loan receivable, due January 2018.
Indebtedness:
On January 30, 2007, the Company completed a
$20.0 million draw on its $150.0 million credit
facility, due August 16, 2008.
On February 6, 2007, in connection with the Companys
sale of its Marriott located in Trumbull, Connecticut, for
approximately $28.3 million, the Company paid down its
$212.0 million mortgage note payable, due December 11,
2009, by approximately $28.0 million. Consequently, the
$212.0 million mortgage loan secured by seven hotels
outstanding at December 31, 2006 became the
$184.0 million mortgage loan secured by six hotels
outstanding at December 31, 2007.
On March 8, 2007, the Company terminated its
$100.0 million credit facility, due December 23, 2008.
This credit facility never had an outstanding balance.
On April 9, 2007, the Company drew $45.0 million on
its $47.5 million credit facility, due October 10,
2008.
On April 10, 2007, the Company repaid its
$45.0 million outstanding balance on its
$150.0 million credit facility, due August 16, 2008,
and terminated the facility.
On April 11, 2007, in connection with its acquisition of
the CNL Portfolio for approximately $2.4 billion plus
closing costs of approximately $96.0 million, the Company
executed a $928.5 million, ten-year, fixed-rate loan at an
average blended interest rate of 5.95%, a $555.1 million,
two-year, variable-rate loan with three one-year extension
options at an interest rate of LIBOR plus 1.65%, and a
$325.0 million, one-year, variable-rate loan with two
one-year extension options at an interest rate of LIBOR plus
1.5%, and assumed fixed-rate debt of approximately
$562.1 million (or approximately $432.3 million net of
debt attributable to joint venture partners), representing
eleven fixed-rate loans with an average blended interest rate of
6.01% and expiration dates ranging from 2008 to 2027. In
addition, the Company executed a $200.0 million credit
facility with an interest rate of LIBOR plus a range of 1.55% to
1.95% depending on the
loan-to-value
ratio, which matures April 9, 2010 with two one-year
extension options, requires interest-only payments through
maturity, and requires quarterly commitment fees ranging from
0.125% to 0.20% of the average undrawn balance during the
quarter. To fund this acquisition, the Company drew
approximately $50.0 million on this credit facility.
On April 11, 2007, in connection with its acquisition of
the remaining 15% joint venture interest in the Hyatt Regency
Dearborn in Detroit, Michigan, for approximately
$7.5 million, the Company assumed debt attributable to the
joint venture partner of approximately $4.6 million. The
Company acquired the other 85% interest pursuant to its
acquisition of the CNL portfolio on April 11, 2007, as
discussed above.
On April 16, 2007, the Company drew $25.0 million on
its $200.0 million credit facility, due April 9, 2010.
On April 24 and 25, 2007, with proceeds received from its
follow-on public offering completed April 24, 2007, the
Company paid down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, paid off the $325.0 million variable-rate loan, due
April 9, 2008, and paid down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively.
On May 3, 2007, the Company repaid $25.0 million on
its $200.0 million credit facility, due April 9, 2010.
On May 18, 2007, in connection with the Companys sale
of its portfolio of seven TownePlace Suites hotels for
approximately $57.5 million, the Company paid down
approximately $32.0 million related to its mortgage loan
due
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July 1, 2015. Consequently, the $487.1 million
mortgage loan secured by 32 hotels outstanding at
December 31, 2006 became the $455.1 million mortgage
loan secured by 25 hotels outstanding at December 31, 2007.
On May 22, 2007, the Company modified its
$200.0 million credit facility, due April 9, 2010, to
increase its capacity to $300.0 million.
On October 2, 2007, in connection with the sale of its
Hilton in Birmingham, Alabama, for approximately
$25.0 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $23.7 million.
On October 9, 2007, the Company drew approximately
$47.5 million on its $47.5 million credit facility,
and used the proceeds to repay $20.0 million on its
$300.0 million credit facility, due April 9, 2010. On
October 11, 2007, the revolving period on this
$47.5 million credit facility expired and the outstanding
balance converted to a $47.5 million mortgage loan, due
October 10, 2008, at an interest rate of LIBOR plus 2%,
requiring monthly interest-only payments through maturity, with
three one-year extension options.
On October 9, 2007, the Company repaid $20.0 million
on its $300.0 million credit facility, due April 9,
2010.
On November 2, 2007, in connection with the sale of two
Residence Inns in Torrance, California, and Atlanta, Georgia,
for approximately $61.5 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $67.7 million pursuant to the loan agreement,
with proceeds from the sale and corporate cash.
On November 20, 2007, in connection with the sale of its
Residence Inn in Kansas City, Missouri, for approximately
$7.0 million, the Company paid down its $375.0 million
mortgage loan, due May 9, 2009, by approximately
$7.4 million.
On November 30, 2007, in connection with the sale of its
Marriott in Baltimore, Maryland, for approximately
$61.5 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $62.4 million.
On December 4, 2007, the Company drew $25.0 million on
its $300.0 million credit facility, due April 9, 2010.
On December 15, 2007, in connection with an asset swap with
a joint venture partner, the Company assumed $41.9 million
of mortgage debt previously attributable to the joint venture
partners minority ownership in nine acquired hotel
properties that secured such debt and ceded $109.5 million
of mortgage debt, of which $80.1 million was attributable
to its majority ownership in the two surrendered hotel
properties that secured such debt and the remainder attributable
to the joint venture partners former minority ownership.
Such ceded debt had maturities ranging from 2010 to 2011.
On December 15, 2007, in connection with the aforementioned
asset swap, the Company repaid an additional $8.7 million
of mortgage debt attributable to its majority ownership in such
joint ventures, which was secured by hotels involved in the
asset swap and had maturities ranging from 2010 to 2011.
On December 20, 2007, the Company drew $10.0 million
on its $300.0 million credit facility, due April 9,
2010.
Dividends:
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $100.4 million, or
$0.21 per share per quarter, related to both common stockholders
and common unit holders, of which approximately
$92.3 million and $8.1 million related to each,
respectively. During the year ended December 31, 2007, the
Company declared cash dividends of approximately
$2.9 million, or $0.19 per share per quarter, related to
Class B unit holders.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $4.9 million, or
$0.5344 per share per quarter, related to Series A
preferred stockholders.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $6.3 million, or
$0.21 per share per quarter, related to Series B preferred
stockholders.
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During the year ended December 31, 2007, the Company
declared cash dividends of approximately $4.3 million,
based on LIBOR plus 2.5% for the period outstanding, related to
Series C preferred stockholders. In addition, the Company
recognized non-cash preferred dividends of approximately
$845,000 related to the amortization of the discount
attributable to the increasing-rate preferred dividend clause
effective 18 months after issuance.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $7.7 million, or
$0.5281 per share per quarter prorated for the period
outstanding, related to Series D preferred stockholders.
OUR
COMPETITION
The hotel industry is highly competitive. All of our hotels are
located in developed areas that include other hotel properties.
Accordingly, our hotels compete for guests with other
full-service or limited-service hotels in their immediate
vicinities and, secondarily, with hotels in their geographic
markets. The future occupancy, ADR, and RevPAR of any hotel
could be materially and adversely affected by an increase in the
number or quality of competitive hotel properties in its market
area. We believe that brand recognition, location, quality of
the hotel and the services provided, and price are the principal
competitive factors affecting our hotels.
OUR
EMPLOYEES
At December 31, 2007, we had 66 full-time employees.
Such employees perform directly or through our operating
partnership various acquisition, development, redevelopment, and
corporate management functions. All persons employed in the
day-to-day
operations of our hotels are employees of the management
companies rather than employees of ours.
OUR
ENVIRONMENTAL MATTERS
Under various federal, state, and local laws and regulations, an
owner or operator of real estate may be liable for the costs of
removal or remediation of certain hazardous or toxic substances
on such property. These laws often impose liability without
regard to whether the owner knew of, or was responsible for, the
presence of hazardous or toxic substances. Furthermore, a person
who arranges for the disposal of a hazardous substance or
transports a hazardous substance for disposal or treatment from
property owned by another may be liable for the costs of removal
or remediation of hazardous substances released into the
environment at that property. The costs of remediation or
removal of such substances may be substantial, and the presence
of such substances, or the failure to promptly remediate such
substances, may adversely affect the owners ability to
sell the affected property or to borrow using the affected
property as collateral. In connection with the ownership and
operation of our properties, we, our operating partnership, or
Ashford TRS may be potentially liable for any such costs. In
addition, the value of any lodging property loan we originate or
acquire would be adversely affected if the underlying property
contained hazardous or toxic substances.
Phase I environmental assessments, which are intended to
identify potential environmental contamination for which our
properties may be responsible, have been obtained on each of our
properties. Phase I environmental assessments included:
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historical reviews of the properties,
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reviews of certain public records,
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preliminary investigations of the sites and surrounding
properties,
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screening for the presence of hazardous substances, toxic
substances, and underground storage tanks, and
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the preparation and issuance of a written report.
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Phase I environmental assessments did not include invasive
procedures, such as soil sampling or ground water analysis.
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Phase I environmental assessments have not revealed any
environmental liability that we believe would have a material
adverse effect on our business, assets, results of operations,
or liquidity, and we are not aware of any such liability. To the
extent Phase I environmental assessments reveal facts that
require further investigation, we would perform a Phase II
environmental assessment. However, it is possible that these
environmental assessments will not reveal all environmental
liabilities. There may be material environmental liabilities of
which we are unaware, including environmental liabilities that
may have arisen since the environmental assessments were
completed or updated. No assurances can be given that
(i) future laws, ordinances, or regulations will not impose
any material environmental liability, or (ii) the current
environmental condition of our properties will not be affected
by the condition of properties in the vicinity (such as the
presence of leaking underground storage tanks) or by third
parties unrelated to us.
We believe our properties are in compliance in all material
respects with all federal, state, and local ordinances and
regulations regarding hazardous or toxic substances and other
environmental matters. 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.
OUR
INSURANCE
We maintain comprehensive insurance, including liability,
property, workers compensation, rental loss,
environmental, terrorism, and, when available on reasonable
commercial terms, flood and earthquake insurance, with policy
specifications, limits, and deductibles customarily carried for
similar properties. Certain types of losses (for example,
matters of a catastrophic nature such as acts of war or
substantial known environmental liabilities) are either
uninsurable or require substantial premiums that are not
economically feasible to maintain. Certain types of losses, such
as those arising from subsidence activity, are insurable only to
the extent that certain standard policy exceptions to
insurability are waived by agreement with the insurer. We
believe, however, that our properties are adequately insured,
consistent with industry standards.
OUR
FRANCHISE LICENSES
We believe that the publics perception of quality
associated with a franchisor is an important feature in the
operation of a hotel. Franchisors provide a variety of benefits
for franchisees, which include national advertising, publicity,
and other marketing programs designed to increase brand
awareness, training of personnel, continuous review of quality
standards, and centralized reservation systems. As of
December 31, 2007, the Company owned interest in 112
hotels, 110 of which operated under the following franchise
licenses or brand management agreements:
Embassy Suites is a registered trademark of Hilton Hospitality,
Inc.
Doubletree is a registered trademark of Hilton Hospitality, Inc.
Hilton is a registered trademark of Hilton Hospitality, Inc.
Hilton Garden Inn is a registered trademark of Hilton
Hospitality, Inc.
Homewood Suites by Hilton is a registered trademark of Hilton
Hospitality, Inc.
Hampton Inn is a registered trademark of Hilton Hospitality, Inc.
Radisson is a registered trademark of Radisson Hotels
International, Inc.
Marriott is a registered trademark of Marriott International,
Inc.
JW Marriott is a registered trademark of Marriott International,
Inc.
SpringHill Suites is a registered trademark of Marriott
International, Inc.
Residence Inn by Marriott is a registered trademark of Marriott
International, Inc.
Courtyard by Marriott is a registered trademark of Marriott
International, Inc.
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Fairfield Inn by Marriott is a registered trademark of Marriott
International, Inc.
TownePlace Suites is a registered trademark of Marriott
International, Inc.
Renaissance is a registered trademark of Marriott International,
Inc.
Hyatt Regency is a registered trademark of Hyatt Corporation.
Sheraton is a registered trademark of Sheraton Hotels and
Resorts, a division of Starwood Hotels and Resorts Worldwide,
Inc.
Westin is a registered trademark of Westin Hotels and Resorts, a
division of Starwood Hotels and Resorts Worldwide, Inc.
Crowne Plaza is a registered trademark of InterContinental
Hotels Group.
Our management companies, including Remington Lodging, 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 as such. In
the event of termination of a particular franchise or brand
management agreement, our management companies must operate any
affected hotels under another franchise or brand management
agreement, if any, that we enter into. We anticipate that most
of the additional hotels we acquire will be operated under
franchise licenses or brand management agreements as well.
Our franchise licenses and brand management agreements generally
specify certain management, operational, recordkeeping,
accounting, reporting, and marketing standards and procedures
with which the franchisee or brand operator must comply,
including requirements related to:
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training of operational personnel;
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safety;
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maintaining specified insurance;
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types of services and products ancillary to guestroom services
that may be provided;
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display of signage; and
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type, quality, and age of furniture, fixtures, and equipment
included in guestrooms, lobbies, and other common areas.
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OUR
SEASONALITY MATTERS
Our properties operations historically have been seasonal
as certain properties maintain higher occupancy rates during the
summer months and some during the winter months. This
seasonality pattern can cause fluctuations in our quarterly
lease revenue under our percentage leases. We anticipate that
cash flow from the operations of our properties will be
sufficient to enable us to make quarterly distributions to
maintain our REIT status. To the extent that cash flow from
operations is insufficient during any quarter due to temporary
or seasonal fluctuations in lease revenue, we expect to utilize
other cash on hand or borrowings to make required distributions.
However, we cannot make any assurances that we will make
distributions in the future.
Risks
Related to Our Business
Our
business strategy depends on our continued growth. We may fail
to integrate recent and additional investments into our
operations or otherwise manage our planned growth, which may
adversely affect our operating results.
Our business plan contemplates a period of continued growth in
the next several years. We cannot assure you that we will be
able to adapt our management, administrative, accounting, and
operational systems, or hire and retain sufficient operational
staff to successfully integrate our recent investments into our
portfolio and manage any future acquisitions of additional
assets without operating disruptions or unanticipated costs.
Acquisitions of any
14
additional portfolios of properties or mortgages would generate
additional operating expenses that we will be required to pay.
As we acquire additional assets, we will be subject to the
operational risks associated with owning new lodging properties.
Our failure to successfully integrate our recent acquisitions as
well as any future acquisitions into our portfolio could have a
material adverse effect on our results of operations and
financial condition and our ability to pay dividends to
stockholders.
We may
be unable to identify additional real estate investments that
meet our investment criteria or to acquire the properties we
have under contract.
We cannot assure you that we will be able to identify real
estate investments that meet our investment criteria, that we
will be successful in completing any investment we identify, or
that any investment we complete will produce a return on our
investment. Moreover, we will have broad authority to invest in
any real estate investments that we may identify in the future.
We also cannot assure you that we will acquire properties we
currently have under firm purchase contracts, if any, or that
the acquisition terms we have negotiated will not change.
Conflicts
of interest could result in our management acting other than in
our stockholders best interest.
Conflicts of interest relating to Remington Lodging may lead to
management decisions that are not in the stockholders best
interest. The Chairman of our Board of Directors,
Mr. Archie Bennett, Jr., serves as the Chairman of the
Board of Directors of Remington Lodging, and our Chief Executive
Officer and President, Mr. Montgomery Bennett, serves as
the Chief Executive Officer and President of Remington Lodging.
Messrs. Archie and Montgomery Bennett own 100% of Remington
Lodging, which, as of December 31, 2007, manages 43 of our
112 properties and provides related services, including property
management services and project management services.
Messrs. Archie and Montgomery Bennetts ownership
interests in and management obligations to Remington Lodging
present them with conflicts of interest in making management
decisions related to the commercial arrangements between us and
Remington Lodging and will reduce the time and effort they each
spend managing us. Our Board of Directors has adopted a policy
that requires all approvals, actions or decisions to which the
Company has the right to make under the management agreements
with Remington Lodging be approved by a majority or, in certain
circumstances, all of our independent directors. However, given
the authority and/or operational latitude to Remington Lodging
under the management agreements to which the Company is a party,
Messrs. Archie Bennett and Montgomery Bennett, as officers of
Remington Lodging, could take actions or make decisions that are
not in the stockholders best interest or that are
otherwise consistent with their obligations under the management
agreements or the Companys obligations under the
applicable franchise agreements.
Holders of units in our operating partnership, including members
of our management team, may suffer adverse tax consequences upon
our sale of certain properties. Therefore, holders of units,
either directly or indirectly, including Messrs. Archie and
Montgomery Bennett, Mr. David Brooks, our Chief Legal
Officer, Mr. David Kimichik, our Chief Financial
Officer, Mr. Mark Nunneley, our Chief Accounting Officer,
and Mr. Martin L. Edelman (or his family members), one of
our directors, may have different objectives regarding the
appropriate pricing and timing of a particular propertys
sale. These officers and directors of ours may influence us not
to sell or refinance certain properties, even if such sale or
refinancing 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. In addition, we have agreed
to indemnify contributors of properties contributed to us in
exchange for operating partnership units, including (indirectly)
Messrs. Archie and Montgomery Bennett, Brooks, Kimichik,
Nunneley, and Edelman (or his family members), against the
income tax they may incur if we dispose of the specified
contributed properties. Because of this indemnification, our
indemnified management team members may make decisions about
selling any of these properties that are not in our
stockholders best interest.
We are a party to a master hotel management agreement and an
exclusivity agreement with Remington Lodging, which describes
the terms of Remington Lodgings management of our hotels,
as well as any future hotels we may acquire that will be managed
by Remington Lodging. If we terminate the management agreement
as to any of the remaining five hotels we acquired in connection
with our initial public offering, which are all subject to the
management agreement, because we elect to sell those hotels, we
will be required to pay Remington Lodging a
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substantial termination fee. Remington Lodging may agree to
waive the termination fee if a replacement hotel is substituted
but is under no contractual obligation to do so. The exclusivity
agreement requires us to engage Remington Lodging, unless 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 Lodging because they have
determined that special circumstances exist or that, based on
Remington Lodgings prior performance, another manager or
developer could perform the duties materially better. As the
sole owners of Remington Lodging, which would receive any
development, management, and management termination fees payable
by us under the management agreement, Messrs. Archie and
Montgomery Bennett may influence our decisions to sell, acquire,
or develop hotels when it is not in the best interests of our
stockholders to do so.
In addition, Ashford Financial Corporation, an affiliate,
contributed certain asset management and consulting agreements
to us in connection with our initial public offering relating to
management and consulting services that Ashford Financial
Corporation agreed to perform for hotel property managers with
respect to 27 identified hotel properties in which
Messrs. Archie and Montgomery Bennett held a minority
interest. Ashford Financial Corporation is 100% owned by
Messrs. Archie and Montgomery Bennett. The agreements
provided for annual payments to us, as the assignee of Ashford
Financial Corporation, in consideration for our performance of
certain asset management and consulting services. The exact
amount of the consideration due to us under the remaining asset
management and consulting agreements was initially contingent
upon the revenue generated by the hotels underlying the asset
management and consulting agreements. Ashford Financial
Corporation guaranteed a minimum payment to us of
$1.2 million per year, subject to adjustments based on the
consumer price index, through December 31, 2008. All of the
27 hotel properties for which we previously provided the asset
management and consulting services have been sold, including our
acquisition of 21 of the hotel properties in March 2005.
Accordingly, we anticipate collecting the balance of the
guaranteed minimum payment of $1.2 million per year from
Ashford Financial Corporation under its guarantee.
Tax
indemnification obligations that apply in the event that we sell
certain properties could limit our operating
flexibility.
If we dispose of the four remaining properties that were
contributed to us in exchange for units in our operating
partnership in connection with our initial public offering, we
may be obligated to indemnify the contributors, including
Messrs. Archie and Monty Bennett whom have substantial
ownership interests, against the tax consequences of the sale.
In addition, under the tax indemnification agreements, we have
agreed for a period of 10 years to use commercially
reasonable efforts to maintain non-recourse mortgage
indebtedness in the amount of at least $16.0 million, which
will allow the contributors to defer recognition of gain in
connection with the contribution of the Las Vegas hotel property
as part of our formation.
Additionally, for certain periods of time, we are prohibited
from selling or transferring the Sea Turtle Inn in Atlantic
Beach, Florida, and the Marriott Crystal Gateway in Arlington,
Virginia, if as a result, the entity from which we acquired the
property would recognize gain for federal tax purposes.
Further, in connection with our acquisition of certain
properties in March 2005 that were contributed to us in exchange
for units in our operating partnership, we agreed to certain tax
indemnities with respect to 11 additional properties. If we
dispose of any of these 11 properties or reduce the debt on
these properties in a transaction that results in a taxable gain
to the contributors, we may be obligated to indemnify the
contributors or their specified assignees against the tax
consequences of the transaction.
In general, our tax indemnities will be equal to the amount of
the federal, state, and local income tax liability the
contributor or its specified assignee incurs with respect to the
gain allocated to the contributor. The terms of the contribution
agreements also generally require us to gross up tax indemnity
payments for the amount of income taxes due as a result of the
tax indemnity.
While the tax indemnities generally do not contractually limit
our ability to conduct our business in the way we desire, we are
less likely to sell any of the contributed properties for which
we have agreed to the tax indemnities described above in a
taxable transaction during the applicable indemnity period.
Instead, we would either hold the property for the entire
indemnity period or seek to transfer the property in a
tax-deferred like-kind exchange. In addition, a condemnation of
one of our properties could trigger our tax indemnification
obligations.
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Hotel
franchise requirements could adversely affect distributions to
our stockholders.
We must comply with operating standards, terms, and conditions
imposed by the franchisors of the hotel brands under which our
hotels operate. Franchisors periodically inspect their licensed
hotels to confirm adherence to their operating standards. The
failure of a hotel to maintain standards could result in the
loss or cancellation of a franchise license. With respect to
operational standards, we rely on our property managers to
conform to such standards. Franchisors may also require us to
make certain capital improvements to maintain the hotel in
accordance with system standards, the cost of which can be
substantial. It is possible that a franchisor could condition
the continuation of a franchise based on the completion of
capital improvements that our management or Board of Directors
determines is too expensive or otherwise not economically
feasible in light of general economic conditions or the
operating results or prospects of the affected hotel. In that
event, our management or Board of Directors may elect to allow
the franchise to lapse or be terminated, which could result in a
change in brand franchising or operation of the hotel as an
independent hotel.
In addition, when the term of a franchise expires, the
franchisor has no obligation to issue a new franchise. The loss
of a franchise could have a material adverse effect on the
operations or the underlying value of the affected hotel because
of the loss of associated name recognition, marketing support,
and centralized reservation systems provided by the franchisor.
The loss of a franchise could also have a material adverse
effect on cash available for distribution to stockholders.
Future
terrorist attacks similar in nature to the events of
September 11, 2001 may negatively affect the
performance of our properties, the hotel industry in general,
and our future results of operations and financial
condition.
The terrorist attacks of September 11, 2001, their
after-effects, and the resulting
U.S.-led
military action in Iraq substantially reduced business and
leisure travel throughout the United States and hotel industry
revenue per available room, or RevPAR, generally during the
period following September 11, 2001. We cannot predict the
extent to which additional terrorist attacks, acts of war, or
similar events may occur in the future or how such events would
directly or indirectly impact the hotel industry or our
operating results.
Future terrorist attacks, acts of war, or similar events could
have further material adverse effects on the hotel industry at
large and our operations in particular.
Our
investments will be concentrated in particular segments of a
single industry.
Our entire business is hotel related. Our current investment
strategy is to acquire or develop upscale to
upper-upscale
hotels, acquire first mortgages on hotel properties, invest in
other mortgage-related instruments such as mezzanine loans to
hotel owners and operators, and participate in hotel
sale-leaseback transactions. 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.
We
rely on third party property managers, including Remington
Lodging, to operate our hotels and for a significant majority of
our cash flow.
For us to continue to qualify as a REIT, 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, or TRS, pays corporate-level income tax
and may retain any after-tax income. A REIT must satisfy certain
conditions to use the TRS structure. One of those conditions is
that the TRS must hire, to manage the hotels, an eligible
independent contractor (EIC) that is actively
engaged in the trade or business of managing hotels for parties
other than the REIT. An EIC cannot (i) own more than 35% of
the REIT, (ii) be owned more than 35% by persons owning
more than 35% of the REIT, or (iii) provide any income to
the REIT (i.e., the EIC cannot pay fees to the REIT, and the
REIT cannot own any debt or equity securities of the EIC).
Accordingly, while we may lease hotels to a TRS that we own, the
TRS must engage a third-party operator to manage the hotels.
Thus, our ability to direct and control how our hotels are
operated is less than if we were able to manage our hotels
directly. We have entered into management agreements with
Remington Lodging, which is
17
owned 100% by Messrs. Archie and Montgomery Bennett, to
manage 43 of our 112 lodging properties owned as of
December 31, 2007 and have hired unaffiliated
third party property managers to manage our
remaining properties. We do not supervise any of the property
managers or their respective personnel on a
day-to-day
basis, and we cannot assure you that the property managers will
manage our properties in a manner that is consistent with their
respective obligations under the applicable management agreement
or our obligations under our hotel franchise agreements. We also
cannot assure you that our property managers will not be
negligent in their performance, will not engage in other
criminal or fraudulent activity, or will not otherwise default
on their respective management obligations to us. If any of the
foregoing occurs, our relationships with the franchisors may be
damaged, we may be in breach of the franchise agreement, and we
could incur liabilities resulting from loss or injury to our
property or to persons at our properties. Any of these
circumstances could have a material adverse effect on our
operating results and financial condition, as well as our
ability to pay dividends to stockholders.
If we
cannot obtain additional financing, our growth will be
limited.
We are required to distribute to our stockholders at least 90%
of our REIT taxable income, excluding net capital gains, each
year to continue to qualify as a REIT. As a result, our retained
earnings available to fund acquisitions, development, or other
capital expenditures are nominal. As such, we rely upon the
availability of additional debt or equity capital to fund these
activities. Our long-term ability to grow through acquisitions
or development of hotel-related assets will be limited if we
cannot obtain additional financing. Market conditions may make
it difficult to obtain financing, and we cannot assure you that
we will be able to obtain additional debt or equity financing or
that we will be able to obtain it on favorable terms.
We may
be unable to generate sufficient revenue from operations to pay
our operating expenses and to pay dividends to our
stockholders.
As a REIT, we are required to distribute at least 90% of our
REIT taxable income each year to our stockholders. We intend to
distribute to our stockholders all or substantially all of our
taxable income each year so as to qualify for the tax benefits
accorded to REITs, but our ability to make distributions may be
adversely affected by the risk factors described herein. We
cannot assure you that we will be able to make distributions in
the future. In the event of continued or future downturns in our
operating results and financial performance, unanticipated
capital improvements to our hotels, or declines in the value of
our mortgage portfolio, we may be unable to declare or pay
distributions to our stockholders. The timing and amount of
distributions are in the sole discretion of our Board of
Directors, which will consider, among other factors, our
financial performance, debt service obligations applicable debt
covenants, and capital expenditure requirements.
We are
subject to various risks related to our use of, and dependence
on, debt.
The interest we pay on variable rate debt increases
as interest rates increase, which may decrease cash available
for distribution to stockholders. We cannot assure you that we
will be able to meet our debt service obligations. If we do not
meet our debt service obligations, we risk the loss of some or
all of our assets to foreclosure. Changes in economic conditions
or our financial results or prospects could (i) result in
higher interest rates on variable rate debt,
(ii) reduce the availability of debt financing generally or
debt financing at favorable rates, (iii) reduce cash
available for distribution to stockholders, and
(iv) increase the risk that we could be forced to liquidate
assets to repay debt, any of which could have a material adverse
affect on us.
If we violate covenants in any debt agreements, we could be
required to repay all or a portion of our indebtedness before
maturity at a time when we might be unable to arrange financing
for such repayment on attractive terms, if at all. Violations of
certain debt covenants may prohibit us from borrowing unused
amounts under our lines of credit, even if repayment of some or
all the borrowings is not required. In any event, financial
covenants under our current or future debt obligations could
impair our planned business strategies by limiting our ability
to borrow beyond certain amounts or for certain purposes. Our
governing instruments do not contain any limitation on our
ability to incur indebtedness.
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We
compete with other hotels for guests. We also face competition
for acquisitions of lodging properties and of desirable mortgage
investments.
The mid, upscale, and
upper-upscale
segments of the hotel business are competitive. Our hotels
compete on the basis of location, room rates, quality, service
levels, reputation, and reservation systems, among many other
factors. New hotels may be constructed and these additions to
supply create new competitors, in some cases without
corresponding increases in demand for hotel rooms. The result in
some cases may be lower revenue, which would result in lower
cash available for distribution to stockholders.
We compete for hotel acquisitions with entities that have
similar investment objectives as we do. This competition could
limit the number of suitable investment opportunities offered to
us. It may also increase the bargaining power of property owners
seeking to sell to us, making it more difficult for us to
acquire new properties on attractive terms or on the terms
contemplated in our business plan.
We also compete for mortgage asset investments with numerous
public and private real estate investment vehicles, such as
mortgage banks, pension funds, other REITs, institutional
investors, and individuals. Mortgages and other investments are
often obtained through a competitive bidding process. In
addition, competitors may seek to establish relationships with
the financial institutions and other firms from which we intend
to purchase such assets. Competition may result in higher prices
for mortgage assets, lower yields, and a narrower spread of
yields over our borrowing costs.
Some of our competitors are larger than us, may have access to
greater capital, marketing, and other resources, may have
personnel with more experience than our officers, may be able to
accept higher levels of debt or otherwise may tolerate more risk
than us, may have better relations with hotel franchisors,
sellers, or lenders, and may have other advantages over us in
conducting certain business and providing certain services.
We may
engage in hedging transactions, which can limit our gains and
increase exposure to losses.
We may enter into hedging transactions to protect (i) us
from the effects of interest rate fluctuations on
floating rate debt and (ii) our portfolio of
mortgage assets from interest rate and prepayment rate
fluctuations. Our hedging transactions may include entering into
interest rate swap agreements or interest rate cap or floor
agreements, purchasing or selling futures contracts, purchasing
put and call options on securities or securities underlying
futures contracts, or entering into forward rate agreements.
Hedging activities may not have the desired beneficial impact on
our results of operations or financial condition. No hedging
activity can completely insulate us from the risks associated
with changes in interest rates and prepayment rates. Moreover,
interest rate hedging could fail to protect us or adversely
affect us because, among other things:
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Available interest rate hedging may not correspond directly with
the interest rate risk for which protection is sought.
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The duration of the hedge may not match the duration of the
related liability.
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The party owing money in the hedging transaction may default on
its obligation to pay.
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The credit quality of the party owing money on the hedge may be
downgraded to such an extent that it impairs our ability to sell
or assign our side of the hedging transaction.
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The value of derivatives used for hedging may be adjusted from
time to time in accordance with generally accepted accounting
rules to reflect changes in fair value. Downward adjustments, or
mark-to-market
losses, would reduce our stockholders equity.
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Hedging involves both risks and costs, including transaction
costs, which may reduce our overall returns on our investments.
These costs increase as the period covered by the hedging
relationship increases and during periods of rising and volatile
interest rates. These costs will also limit the amount of cash
available for distributions to stockholders. We generally intend
to hedge as much of the interest rate risk as management
determines is in our best interests given the cost of such
hedging transactions. The REIT qualification rules may limit our
ability to enter into hedging transactions by requiring us to
limit our income from hedges. If we are unable to hedge
effectively because of the REIT rules, we will face greater
interest rate exposure than may be commercially prudent.
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We may
not be able to sell our investments on favorable
terms.
We may decide to sell investments for a variety of reasons. We
cannot assure you that we will be able to sell any of our
investments on favorable terms or that our investments will not
be sold for a loss.
Risks
Related to Hotel Investments
We are
subject to general risks associated with operating
hotels.
Our hotels and hotels underlying our mortgage and mezzanine
loans are subject to various operating risks common to the hotel
industry, many of which are beyond our control, including the
following:
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our hotels compete with other hotel properties in their
geographic markets and many of our competitors have substantial
marketing and financial resources;
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over-building in our markets, which adversely affects occupancy
and revenues at our hotels;
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dependence on business and commercial travelers and
tourism; and
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adverse effects of general, regional, and local economic
conditions and increases in energy costs or labor costs and
other expenses affecting travel, which may affect travel
patterns and reduce the number of business and commercial
travelers and tourists.
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These factors could adversely affect our hotel revenues and
expenses, as well as the hotels underlying our mortgage and
mezzanine loans, which in turn would adversely affect our
ability to make distributions to our stockholders.
We may
have to make significant capital expenditures to maintain our
lodging properties.
Our hotels have an ongoing need for renovations and other
capital improvements, including replacements of furniture,
fixtures, and equipment. Franchisors of our hotels may also
require periodic capital improvements as a condition of
maintaining franchise licenses. Generally, we are responsible
for the cost of these capital improvements, which gives rise to
the following risks:
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cost overruns and delays;
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renovations can be disruptive to operations and can displace
revenue at the hotels, including revenue lost while rooms under
renovation are out of service;
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the cost of funding renovations and the possibility that
financing for these renovations may not be available on
attractive terms; and
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the risk that the return on our investment in these capital
improvements will not be what we expect.
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If we have insufficient cash flow from operations to fund needed
capital expenditures, then we will need to borrow to fund future
capital improvements.
The
hotel business is seasonal, which affects our results of
operations from quarter to quarter.
The hotel industry is seasonal in nature. Generally, occupancy
rates and hotel revenues are greater in the second and third
quarters than in the first and fourth quarters. This seasonality
can cause quarterly fluctuations in our revenues.
Our
hotel investments may be subject to risks relating to potential
terrorist activity
During 2007, approximately 16% of total revenue from 12 hotels
was generated from hotels located in the Washington D.C. and
Baltimore areas, the areas vulnerable to terrorist attack. Our
financial and operating performance may be adversely affected by
potential terrorist activity. that may cause in the future, or
results to differ materially from anticipated results.
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Our
development activities may be more costly than we have
anticipated.
As part of our growth strategy, we may develop additional
hotels. Hotel development involves substantial risks, including
that:
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actual development costs may exceed our budgeted or contracted
amounts;
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construction delays may prevent us from opening hotels on
schedule;
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we may not be able to obtain all necessary zoning, land use,
building, occupancy, and construction permits;
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our developed properties may not achieve our desired revenue or
profit goals; and
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we may incur substantial development costs and then have to
abandon a development project before completion.
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Risks
Relating to Investments in Mortgages and Mezzanine
Loans
Mortgage
investments that are not United States government insured and
non-investment grade mortgage assets involve risk of
loss.
As part of our business strategy, we originate and acquire
lodging-related uninsured and non-investment grade mortgage
loans and mortgage assets, including mezzanine loans. While
holding these interests, we are subject to risks of borrower
defaults, bankruptcies, fraud and related losses, and special
hazard losses that are not covered by standard hazard insurance.
Also, costs of financing the mortgage loans could exceed returns
on the mortgage loans. In the event of any default under
mortgage loans held by us, we will bear the risk of loss of
principal and non-payment of interest and fees to the extent of
any deficiency between the value of the mortgage collateral and
the principal amount of the mortgage loan. To the extent we
suffer such losses with respect to our investments in mortgage
loans, our value and the price of our securities may be
adversely affected.
We
invest in non-recourse loans, which will limit our recovery to
the value of the mortgaged property.
Our mortgage loan assets are generally non-recourse. With
respect to our non-recourse mortgage loan assets, in the event
of a borrower default, the specific mortgaged property and other
assets, if any, pledged to secure the relevant mortgage loan,
may be less than the amount owed under the mortgage loan. As to
those mortgage loan assets that provide for recourse against the
borrower and its assets generally, we cannot assure you that the
recourse will provide a recovery in respect of a defaulted
mortgage loan greater than the liquidation value of the
mortgaged property securing that mortgage loan.
Investment
yields affect our decision whether to originate or purchase
investments and the price offered for such
investments.
In making any investment, we consider the expected yield of the
investment and the factors that may influence the yield actually
obtained on such investment. These considerations affect our
decision whether to originate or purchase an investment and the
price offered for that investment. No assurances can be given
that we can make an accurate assessment of the yield to be
produced by an investment. Many factors beyond our control are
likely to influence the yield on the investments, including, but
not limited to, competitive conditions in the local real estate
market, local and general economic conditions, and the quality
of management of the underlying property. Our inability to
accurately assess investment yields may result in our purchasing
assets that do not perform as well as expected, which may
adversely affect the price of our securities.
Volatility
of values of mortgaged properties may adversely affect our
mortgage loans.
Lodging property values and net operating income derived from
lodging properties are subject to volatility and may be affected
adversely by a number of factors, including the risk factors
described herein relating to general economic conditions,
operating lodging properties, and owning real estate
investments. In the event its net operating income decreases, a
borrower may have difficulty paying our mortgage loan, which
could result in losses to us. In
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addition, decreases in property values reduce the value of the
collateral and the potential proceeds available to a borrower to
repay our mortgage loans, which could also cause us to suffer
losses.
Mezzanine
loans involve greater risks of loss than senior loans secured by
income-producing properties.
We make and acquire mezzanine loans. These types of mortgage
loans are considered to involve a higher degree of risk than
long-term senior mortgage lending secured by income-producing
real property due to a variety of factors, including the loan
being entirely unsecured or, if secured, becoming unsecured as a
result of foreclosure by the senior lender. 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.
Risks
Related to the Real Estate Industry
Mortgage
debt obligations expose us to increased risk of property losses,
which could harm our financial condition, cash flow, and ability
to satisfy our other debt obligations and pay
dividends.
Incurring mortgage debt increases our risk of property losses
because defaults on indebtedness secured by properties may
result in foreclosure actions initiated by lenders and
ultimately our loss of the property securing any loans for which
we are in default. For tax purposes, a foreclosure of any of our
properties would be treated as a sale of the property for a
purchase price equal to the outstanding balance of the debt
secured by the mortgage. If the outstanding balance of the debt
secured by the mortgage exceeds our tax basis in the property,
we would recognize taxable income on the foreclosure but would
not receive any cash proceeds. As a result, we may be required
to identify and utilize other sources of cash for distributions
to our stockholders of that income.
In addition, our default under any one of our mortgage debt
obligations may result in a default on our other indebtedness.
If this occurs, our financial condition, cash flow, and ability
to satisfy our other debt obligations or ability to pay
dividends may be impaired.
Illiquidity
of real estate investments could significantly impede our
ability to respond to adverse changes in the performance of our
properties and harm our financial condition.
Because real estate investments are relatively illiquid, our
ability to promptly sell one or more properties or mortgage
loans in our portfolio in response to changing economic,
financial, and investment conditions is limited. The real estate
market is affected by many factors that are beyond our control,
including:
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adverse changes in national and local economic and market
conditions;
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changes in interest rates and in the availability, cost, and
terms of debt financing;
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changes in governmental laws and regulations, fiscal policies,
and zoning and other ordinances, and costs of compliance with
laws and regulations;
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the ongoing need for capital improvements, particularly in older
structures;
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changes in operating expenses; and
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civil unrest, acts of war, and natural disasters, including
earthquakes and floods, which may result in uninsured and
underinsured losses.
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We cannot predict whether we will be able to sell any property
or loan for the price or on the terms set by us, or whether any
price or other terms offered by a prospective purchaser would be
acceptable to us. We also cannot predict the length of time
needed to find a willing purchaser and to close the sale of a
property or loan. Because we intend to offer more flexible terms
on our mortgage loans than some providers of commercial mortgage
loans, 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 cannot assure you
that we will have funds available to correct those defects or to
make those improvements. In
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acquiring a property, we may agree to lock-out provisions that
materially restrict us from selling that property for a period
of time or impose other restrictions, such as a limitation on
the amount of debt that can be placed or repaid on that
property. These factors and any others that would impede our
ability to respond to adverse changes in the performance of our
properties could have a material adverse effect on our operating
results and financial condition, as well as our ability to pay
dividends to stockholders.
The
costs of compliance with or liabilities under environmental laws
may harm our operating results.
Our properties and properties underlying our loan assets may be
subject to environmental liabilities. An owner of real property,
or a lender with respect to a property that exercises control
over the property, can face liability for environmental
contamination created by the presence or discharge of hazardous
substances on the property. We may face liability regardless of:
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our knowledge of the contamination;
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the timing of the contamination;
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the cause of the contamination; or
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the party responsible for the contamination.
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There may be environmental problems associated with our
properties or properties underlying our loan assets of which we
are unaware. Some of our properties or the properties underlying
our loan assets use, or may have used in the past, underground
tanks for the storage of petroleum-based or waste products that
could create a potential for release of hazardous substances. If
environmental contamination exists on a property, we could
become subject to strict, joint and several liability for the
contamination if we own the property or if we foreclose on the
property or otherwise have control over the property.
The presence of hazardous substances on a property we own or
have made a loan with respect to may adversely affect our
ability to sell or foreclose on the property, and we may incur
substantial remediation costs. The discovery of environmental
liabilities attached to our properties or properties underlying
our loan assets could have a material adverse effect on our
results of operations, financial condition, and ability to pay
dividends to stockholders.
We have environmental insurance policies on each of our owned
properties, and we intend to obtain environmental insurance for
any other properties that we may acquire. However, if
environmental liabilities are discovered during the underwriting
of the insurance policies for any property that we may acquire
in the future, we may be unable to obtain insurance coverage for
the liabilities at commercially reasonable rates or at all, and
we may experience losses. In addition, we generally do not
require our borrowers to obtain environmental insurance on the
properties they own that secure their loans from us.
Our
properties and the properties underlying our mortgage loans may
contain or develop harmful mold, which could lead to liability
for adverse health effects and costs of remediating the
problem.
When excessive moisture accumulates in buildings or on building
materials, mold growth may occur, particularly if the moisture
problem remains undiscovered or is not addressed over a period
of time. 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. As a
result, the presence of significant mold at any of our
properties or the properties underlying our loan assets could
require us or our borrowers to undertake a costly remediation
program to contain or remove the mold from the affected
property. In addition, the presence of significant mold could
expose us or our borrowers to liability from guests, employees,
and others if property damage or health concerns arise.
Compliance
with the Americans with Disabilities Act and fire, safety, and
other regulations may require us or our borrowers to make
unintended expenditures that adversely impact our operating
results.
All of our properties and properties underlying our mortgage
loans are required to comply with the Americans with
Disabilities Act, or the ADA. The ADA requires that public
accommodations such as hotels be made accessible to people
with disabilities. Compliance with the ADA requirements could
require removal of access
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barriers and non-compliance could result in imposition of fines
by the U.S. government or an award of damages to private
litigants, or both. We or our borrowers may be required to
expend funds to comply with the provisions of the ADA at our
hotels or hotels underlying our loan assets, which could
adversely affect our results of operations and financial
condition and our ability to make distributions to stockholders.
In addition, we and our borrowers are required to operate our
properties in compliance with fire and safety regulations,
building codes, and other land use regulations as they may be
adopted by governmental agencies and bodies and become
applicable to our properties. We and our borrowers may be
required to make substantial capital expenditures to comply with
those requirements, and these expenditures could have a material
adverse effect on our operating results and financial condition
as well as our ability to pay dividends to stockholders.
We may
experience uninsured or underinsured losses.
We have property and casualty insurance with respect to our
properties and other insurance, in each case, with loss limits
and coverage thresholds deemed reasonable by our management (and
with the intent to satisfy the requirements of lenders and
franchisors). In doing so, we have made decisions with respect
to what deductibles, policy limits, and terms are reasonable
based on managements experience, our risk profile, the
loss history of our property managers and our properties, the
nature of our properties and our businesses, our loss prevention
efforts, and the cost of insurance.
Various types of catastrophic losses may not be insurable or may
not be economically insurable. In the event of a substantial
loss, our insurance coverage may not cover the full current
market value or replacement cost of our lost investment.
Inflation, changes in building codes and ordinances,
environmental considerations, and other factors might cause
insurance proceeds to be insufficient to fully replace or
renovate a hotel after it has been damaged or destroyed.
Accordingly, there can be no assurance that (i) the
insurance coverage thresholds that we have obtained will fully
protect us against insurable losses (i.e., losses may exceed
coverage limits); (ii) we will not incur large deductibles
that will adversely affect our earnings; (iii) we will not
incur losses from risks that are not insurable or that are not
economically insurable; or (iv) current coverage thresholds
will continue to be available at reasonable rates. In the
future, we may choose not to maintain terrorism insurance on any
of our properties. As a result, one or more large uninsured or
underinsured losses could have a material adverse affect on us.
Each of our current lenders requires us to maintain certain
insurance coverage thresholds, and we anticipate that future
lenders will have similar requirements. We believe that we have
complied with the insurance maintenance requirements under the
current governing loan documents and we intend to comply with
any such requirements in any future loan documents. However, a
lender may disagree, in which case the lender could obtain
additional coverage thresholds and seek payment from us, or
declare us in default under the loan documents. In the former
case, we could spend more for insurance than we otherwise deem
reasonable or necessary or, in the latter case, subject us to a
foreclosure on hotels collateralizing one or more loans. In
addition, a material casualty to one or more hotels
collateralizing loans may result in (i) the insurance
company applying to the outstanding loan balance insurance
proceeds that otherwise would be available to repair the damage
caused by the casualty, which would require us to fund the
repairs through other sources, or (ii) the lender
foreclosing on the hotels if there is a material loss that is
not insured.
Risks
Related to Our Status as a REIT
If we
do not qualify as a REIT, we will be subject to tax as a regular
corporation and face substantial tax liability.
We conduct operations so as to qualify as a REIT under the
Internal Revenue Code. However, qualification as a REIT involves
the application of highly technical and complex Internal Revenue
Code provisions for which only a limited number of judicial or
administrative interpretations exist. Even a technical or
inadvertent mistake could jeopardize our REIT status.
Furthermore, new tax legislation, administrative guidance, or
court decisions, in each
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instance potentially with retroactive effect, could make it more
difficult or impossible for us to qualify as a REIT. If we fail
to qualify as a REIT in any tax year, then:
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we would be taxed as a regular domestic corporation, which,
among other things, means being unable to deduct distributions
to stockholders in computing taxable income and being subject to
federal income tax on our taxable income at regular corporate
rates;
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we would also be subject to federal alternative minimum tax and,
possibly, increased state and local taxes;
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any resulting tax liability could be substantial and would
reduce the amount of cash available for distribution to
stockholders; and
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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 would be reduced for each of the
years during which we did not qualify as a REIT.
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If we fail to qualify as a REIT, we will not be required to make
distributions to stockholders to maintain our tax status. As a
result of all of these factors, our failure to qualify as a REIT
would impair our ability to raise capital, expand our business,
and make distributions to our stockholders and would adversely
affect the value of our securities.
Even
if we remain qualified as a REIT, we may face other tax
liabilities that reduce our cash flow.
Even if we remain qualified for taxation as a REIT, we may be
subject to certain federal, state, and local taxes on our income
and assets. For example:
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We will be required to pay tax on undistributed REIT taxable
income.
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We may be required to pay the alternative minimum
tax on our items of tax preference.
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If we have net income from the disposition of foreclosure
property held primarily for sale to customers in the ordinary
course of business or other non-qualifying income from
foreclosure property, we must pay tax on that income at the
highest corporate rate.
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If we sell a property in a prohibited transaction,
our gain from the sale would be subject to a 100% penalty tax.
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Our taxable REIT subsidiary, Ashford TRS, is a fully taxable
corporation and will be required to pay federal and state taxes
on its income.
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Complying
with REIT requirements may cause us to forego otherwise
attractive opportunities.
To qualify as a REIT for federal income tax purposes, we must
continually satisfy tests concerning, among other things, the
sources of our income, the nature and diversification of our
assets, the amounts we distribute to our stockholders, and the
ownership of our stock. We may be required to make distributions
to stockholders at disadvantageous times or when we do not have
funds readily available for distribution. Thus, compliance with
the REIT requirements may hinder our ability to operate solely
on the basis of maximizing profits.
Complying
with REIT requirements may limit our ability to hedge
effectively.
The REIT provisions of the Internal Revenue Code may limit our
ability to hedge mortgage securities and related borrowings by
requiring us to limit our income in each year from qualified
hedges, together with any other income not generated from
qualified real estate assets, to no more than 25% of our gross
income. In addition, we must limit our aggregate income from
nonqualified hedging transactions, from our provision of
services, and from other non-qualifying sources to no more than
5% of our annual gross income. As a result, we may have to limit
our use of advantageous hedging techniques. This could result in
greater risks associated with changes in interest rates than we
would otherwise want to incur. If we were to violate the 25% or
5% limitations, we may have to pay a penalty tax equal to the
amount of income in excess of those limitations multiplied by a
fraction intended to reflect
25
our profitability. If we fail to satisfy the REIT gross income
tests, unless our failure was due to reasonable cause and not
due to willful neglect, we could lose our REIT status for
federal income tax purposes.
Complying
with REIT requirements may force us to liquidate otherwise
attractive investments.
To qualify as a REIT, we must also ensure that at the end of
each calendar quarter at least 75% of the value of our assets
consists of cash, cash items, government securities, and
qualified REIT real estate assets. The remainder of our
investment in securities (other than government securities and
qualified real estate assets) generally cannot include more than
10% of the outstanding voting securities of any one issuer or
more than 10% of the total value of the outstanding securities
of any one issuer. In addition, in general, no more than 5% of
the value of our assets (other than government securities and
qualified real estate assets) can consist of the securities of
any one issuer, and no more than 20% of the value of our total
securities can be represented by securities of one or more
taxable REIT subsidiaries. If we fail to comply with these
requirements at the end of any calendar quarter, we must correct
such failure within 30 days after the end of the calendar
quarter to avoid losing our REIT status and suffering adverse
tax consequences. As a result, we may be required to liquidate
otherwise attractive investments.
Complying
with REIT requirements may force us to borrow to make
distributions to stockholders.
As a REIT, we must distribute at least 90% of our annual REIT
taxable income (subject to certain adjustments) to our
stockholders. 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. In addition, we will be
subject to a 4% nondeductible excise tax if the actual amount
that we pay out to our stockholders in a calendar year is less
than a minimum amount specified under federal tax laws.
From time to time, we may generate taxable income greater than
our net income for financial reporting purposes due to, among
other things, amortization of capitalized purchase premiums, or
our taxable income may be greater than our cash flow available
for distribution to stockholders. If we do not have other funds
available in these situations, we could be required to borrow
funds, sell investments at disadvantageous prices, or find
another alternative source of funds to make distributions
sufficient to enable us to pay out enough of our taxable income
to satisfy the distribution requirement and to avoid corporate
income tax and the 4% excise tax in a particular year. These
alternatives could increase our costs or reduce our equity.
We may
be subject to adverse legislative or regulatory tax changes that
could reduce the market price of our securities.
At any time, the federal income tax laws governing REITs or the
administrative interpretations of those laws may be amended. Any
of those new laws or interpretations may take effect
retroactively and could adversely affect us or our stockholders.
On May 28, 2003, the President signed the Jobs and Growth
Tax Relief Reconciliation Act of 2003, which we refer to as the
Jobs and Growth Tax Act. Effective for taxable years beginning
after December 31, 2002, the Jobs and Growth Tax Act
reduced the maximum rate of tax applicable to individuals on
dividend income from regular C corporations from 38.6% to 15.0%.
This reduced substantially the so-called double
taxation (that is, taxation at both the corporate and
stockholder levels) that has generally applied to corporations
that are not taxed as REITs. Generally, dividends from REITs
will not qualify for the dividend tax reduction. The
implementation of the Jobs and Growth Tax Act could ultimately
cause individual investors to view stocks of non-REIT
corporations as more attractive relative to shares of REITs
because the dividends paid by non-REIT corporations would be
subject to lower tax rates. We cannot predict whether in fact
this will occur or whether, if it occurs, what the impact will
be on the value of our securities.
Your
investment in our securities has various federal, state, and
local income tax risks that could affect the value of your
investment.
Although the provisions of the Internal Revenue Code relevant to
your investment in our securities are generally described in
Federal Income Tax Consequences of Our Status as a
REIT, we strongly urge you to consult your own tax advisor
concerning the effects of federal, state, and local income tax
law on an investment in our securities because of the complex
nature of the tax rules applicable to REITs and their
stockholders.
26
Risk
Factors Related to Our Corporate Structure
There
are no assurances of our ability to make distributions in the
future.
We intend to continue paying quarterly dividends and to make
distributions to our stockholders in amounts such that all or
substantially all of our taxable income in each year, subject to
certain adjustments, is distributed. This, along with other
factors, should enable us to qualify for the tax benefits
accorded to a REIT under the Internal Revenue Code. However, our
ability to pay dividends may be adversely affected by the risk
factors described herein. All distributions will be made at the
discretion of our Board of Directors and will depend upon our
earnings, our financial condition, maintenance of our REIT
status, and such other factors as our Board of Directors may
deem relevant from time to time. There are no assurances of our
ability to pay dividends in the future. In addition, some of our
distributions may include a return of capital.
Failure
to maintain an exemption from the Investment Company Act would
adversely affect our results of operations.
We believe that we will conduct our business in a manner that
allows us to avoid registration as an investment company under
the Investment Company Act of 1940, or the 1940 Act. Under
Section 3(c)(5)(C) of the 1940 Act, entities that are
primarily engaged in the business of purchasing or otherwise
acquiring mortgages and other liens on and interests in
real estate are not treated as investment companies. The
SEC staffs position generally requires us to maintain at
least 55% of our assets directly in qualifying real estate
interests to be able to rely on this exemption. To constitute a
qualifying real estate interest under this 55% requirement, a
real estate interest must meet various criteria. Mortgage
securities that do not represent all of the certificates issued
with respect to an underlying pool of mortgages may be treated
as securities separate from the underlying mortgage loans and,
thus, may not qualify for purposes of the 55% requirement. Our
ownership of these mortgage securities, therefore, is limited by
the provisions of the 1940 Act and SEC staff interpretive
positions. There are no assurances that efforts to pursue our
intended investment program will not be adversely affected by
operation of these rules.
Our
charter does not permit ownership in excess of 9.8% of our
capital stock, and attempts to acquire our capital stock in
excess of the 9.8% limit without approval from our Board of
Directors are void.
For the purpose of preserving our REIT qualification, our
charter prohibits direct or constructive ownership by any person
of more than 9.8% of the lesser of the total number or value of
the outstanding shares of our common stock or more than 9.8% of
the lesser of the total number or value of the outstanding
shares of our preferred stock unless our Board of Directors
grants a waiver. Our charters constructive ownership rules
are complex and may cause the outstanding stock owned by a group
of related individuals or entities to be deemed to be
constructively owned by one individual or entity. As a result,
the acquisition of less than 9.8% of the outstanding stock by an
individual or entity could cause that individual or entity to
own constructively in excess of 9.8% of the outstanding stock,
and thus be subject to our charters ownership limit. Any
attempt to own or transfer shares of our common or preferred
stock in excess of the ownership limit without the consent of
the Board of Directors will be void, and could result in the
shares being automatically transferred to a charitable trust.
Because
provisions contained in Maryland law and our charter may have an
anti-takeover effect, investors may be prevented from receiving
a control premium for their shares.
Provisions contained in our charter and Maryland general
corporation law may have effects that delay, defer, or prevent a
takeover attempt, which may prevent stockholders from receiving
a control premium for their shares. For example,
these provisions may defer or prevent tender offers for our
common stock or purchases of large blocks of our common stock,
thereby limiting the opportunities for our stockholders to
receive a premium for their common stock over then-prevailing
market prices. These provisions include the following:
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|
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|
|
Ownership limit: The ownership limit in our
charter limits related investors, including, among other things,
any voting group, from acquiring over 9.8% of our common stock
without our permission.
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|
Classification of preferred stock: Our charter
authorizes our Board of Directors to issue preferred stock in
one or more classes and to establish the preferences and rights
of any class of preferred stock issued. These
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27
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|
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|
|
actions can be taken without soliciting stockholder approval.
Our preferred stock issuances could 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.
|
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. Hence, directors of a Maryland corporation are
not required to act in takeover situations under the same
standards as apply in Delaware and other corporate jurisdictions.
Offerings
of debt securities, which would be senior to our common stock
and any preferred stock upon liquidation, or equity securities,
which would dilute our existing stockholders holdings be
senior to our common stock for the purposes of dividend
distributions, may adversely affect the market price of our
common stock and any preferred stock.
We may attempt to increase our capital resources by making
additional offerings of debt or equity securities, including
commercial paper, medium-term notes, senior or subordinated
notes, and classes of preferred stock or common stock or classes
of preferred units. Upon liquidation, holders of our debt
securities or preferred units and lenders with respect to other
borrowings will receive a distribution of our available assets
prior to the holders of shares of preferred stock or common
stock. Furthermore, holders of our debt securities and preferred
stock or preferred units and lenders with respect to other
borrowings will receive a distribution of our available assets
prior to the holders of our common stock. Additional equity
offerings may dilute the holdings of our existing stockholders
or reduce the market price of our common or preferred stock or
both. Our preferred stock or preferred units could have a
preference on liquidating distributions or a preference on
dividend payments that could limit our ability to make a
dividend distribution to the holders of our common stock.
Because our decision to issue securities in any future offering
will depend on market conditions and other factors beyond our
control, we cannot predict or estimate the amount, timing, or
nature of our future offerings. Thus, our stockholders bear the
risk of our future offerings reducing the market price of our
securities and diluting their securities holdings in us.
Securities
eligible for future sale may have adverse effects on the market
price of our securities.
We cannot predict the effect, if any, of future sales of
securities, or the availability of securities for future sales,
on the market price of our outstanding securities. Sales of
substantial amounts of common stock, or the perception that
these sales could occur, may adversely affect prevailing market
prices for our securities.
We also may issue from time to time additional securities or
units of our operating partnership in connection with the
acquisition of properties and we may grant additional demand or
piggyback registration rights in connection with these
issuances. Sales of substantial amounts of our securities or the
perception that such sales could occur may adversely affect the
prevailing market price for our securities or may impair our
ability to raise capital through a sale of additional debt or
equity securities.
We
depend on key personnel with long-standing business
relationships. The loss of key personnel could threaten our
ability to operate our business successfully.
Our future success depends, to a significant extent, upon the
continued services of our management team. In particular, the
lodging industry experience of Messrs. Archie and
Montgomery Bennett, Kessler, Brooks, Kimichik, and Nunneley and
the extent and nature of the relationships they have developed
with hotel franchisors, operators, and owners and hotel lending
and other financial institutions are critically important to the
success of our business. We do not maintain key
person life insurance on any of our officers. Although these
officers currently have employment agreements with us, we cannot
assure their continued employment. The loss of services of one
or more members of our corporate management team could harm our
business and our prospects.
An
increase in market interest rates may have an adverse effect on
the market price of our securities.
A factor investors may consider in deciding whether to buy or
sell our securities is our dividend rate as a percentage of our
share or unit price relative to market interest rates. If market
interest rates increase, prospective investors may desire a
higher dividend or interest rate on our securities or seek
securities paying higher dividends or
28
interest. 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 from the market value or
underlying appraised value of the properties or investments
themselves. As a result, interest rate fluctuations and capital
market conditions can affect the market price of our securities.
For instance, if interest rates rise without an increase in our
dividend rate, the market price of our common or preferred stock
could decrease because potential investors may require a higher
dividend yield on our common or preferred stock as market rates
on interest-bearing securities, such as bonds, rise. In
addition, rising interest rates would result in increased
interest expense on our variable-rate debt, thereby adversely
affecting cash flow and our ability to service our indebtedness
and pay dividends.
Our
major policies, including our policies and practices with
respect to investments, financing, growth, debt capitalization,
and REIT qualification and distributions, are determined by our
Board of Directors. Although we have no present intention to do
so, our Board of Directors may amend or revise these and other
policies from time to time without a vote of our stockholders.
Accordingly, our stockholders will have limited control over
changes in our policies and the changes could harm our business,
results of operations, and share price.
Changes in our strategy or investment or leverage policy could
expose us to greater credit risk and interest rate risk or could
result in a more leveraged balance sheet. We cannot predict the
effect any changes to our current operating policies and
strategies may have on our business, operating results, and
stock price. However, the effects may be adverse.
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|
Item 1B.
|
Unresolved
Staff Comments
|
None.
As of December 31, 2007, we owned interest in 112 hotel
properties, which includes direct ownership in 106 hotel
properties and between
75-89%
interest in six hotel properties through equity investments with
joint venture partners. These hotels represent 26,553 total
rooms or 26,211 net rooms excluding those attributable to
joint venture partners. Regarding the 112 hotel properties, 111
are located within the United States and one is located in
Canada. In addition, 111 of these hotel properties are leased or
owned by Ashford TRS, while the remaining hotel is leased on a
triple-net
lease basis to a third-party tenant who operates the hotel. We
own our hotels in fee simple except for (a) the Doubletree
Guest Suites in Columbus, Ohio, which was built on an air rights
lease above the parking garage that expires in 2045,
(b) the Hilton in Ft. Worth, Texas, which we own
pursuant to a partial ground lease which expires in 2040
(including all extensions), (c) the Crowne Plaza in Key
West, Florida, which we own pursuant to a ground lease that
expires in 2084 (including all extensions), (d) the JW
Marriott in San Francisco, California, which we own
pursuant to a ground lease that expires in 2083 (including all
extensions), (e) the JW Marriott in New Orleans,
Louisiana, which we own pursuant to a ground lease that expires
in 2081 (including all extensions), (f) the Hilton in
La Jolla, California which we own pursuant to a ground
lease that expires in 2043 (including all extensions), and
(g) the Renaissance in Tampa, Florida, which we own
pursuant to a ground lease that expires in 2080 (including all
extensions). Regarding the 112 hotels, 110 are held for
investment purposes while two are held for sale.
All 112 hotels are operated by our managers. The following table
sets forth certain descriptive information regarding these
hotels as of December 31, 2007:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
%
|
|
|
Owned
|
|
Hotel Property
|
|
Location
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|
Rooms
|
|
|
Owned
|
|
|
Rooms
|
|
|
Embassy Suites
|
|
Austin, TX
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Embassy Suites
|
|
Dallas, TX
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Embassy Suites
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|
Herndon, VA
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Embassy Suites
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|
Las Vegas, NV
|
|
|
220
|
|
|
|
100
|
%
|
|
|
220
|
|
Embassy Suites
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|
Syracuse, NY
|
|
|
215
|
|
|
|
100
|
%
|
|
|
215
|
|
29
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
%
|
|
|
Owned
|
|
Hotel Property
|
|
Location
|
|
Rooms
|
|
|
Owned
|
|
|
Rooms
|
|
|
Embassy Suites
|
|
Flagstaff, AZ
|
|
|
119
|
|
|
|
100
|
%
|
|
|
119
|
|
Embassy Suites
|
|
Houston, TX
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Embassy Suites
|
|
West Palm Beach, FL
|
|
|
160
|
|
|
|
100
|
%
|
|
|
160
|
|
Embassy Suites
|
|
Philadelphia, PA
|
|
|
263
|
|
|
|
100
|
%
|
|
|
263
|
|
Embassy Suites
|
|
Walnut Creek, CA
|
|
|
249
|
|
|
|
100
|
%
|
|
|
249
|
|
Embassy Suites
|
|
Arlington, VA
|
|
|
267
|
|
|
|
100
|
%
|
|
|
267
|
|
Embassy Suites
|
|
Portland, OR
|
|
|
276
|
|
|
|
100
|
%
|
|
|
276
|
|
Embassy Suites
|
|
Santa Clara, CA
|
|
|
257
|
|
|
|
100
|
%
|
|
|
257
|
|
Embassy Suites
|
|
Orlando, FL
|
|
|
174
|
|
|
|
100
|
%
|
|
|
174
|
|
Radisson Hotel
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|
Holtsville, NY
|
|
|
188
|
|
|
|
100
|
%
|
|
|
188
|
|
Radisson Hotel
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|
Rockland, MA
|
|
|
127
|
|
|
|
100
|
%
|
|
|
127
|
|
Doubletree Guest Suites
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|
Columbus, OH
|
|
|
194
|
|
|
|
100
|
%
|
|
|
194
|
|
Hilton Garden Inn
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|
Jacksonville, FL
|
|
|
119
|
|
|
|
100
|
%
|
|
|
119
|
|
Hilton
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|
Ft. Worth, TX
|
|
|
294
|
|
|
|
100
|
%
|
|
|
294
|
|
Hilton
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|
Houston, TX
|
|
|
243
|
|
|
|
100
|
%
|
|
|
243
|
|
Hilton
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|
St. Petersburg, FL
|
|
|
333
|
|
|
|
100
|
%
|
|
|
333
|
|
Hilton
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|
Santa Fe, NM
|
|
|
157
|
|
|
|
100
|
%
|
|
|
157
|
|
Hilton
|
|
Bloomington, MN
|
|
|
300
|
|
|
|
100
|
%
|
|
|
300
|
|
Hilton
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|
Washington DC
|
|
|
544
|
|
|
|
75
|
%
|
|
|
408
|
|
Hilton
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|
La Jolla, CA
|
|
|
394
|
|
|
|
75
|
%
|
|
|
296
|
|
Hilton
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|
Costa Mesa, CA
|
|
|
486
|
|
|
|
100
|
%
|
|
|
486
|
|
Hilton
|
|
Tuscon, AZ
|
|
|
428
|
|
|
|
100
|
%
|
|
|
428
|
|
Hilton
|
|
Dallas, TX
|
|
|
500
|
|
|
|
100
|
%
|
|
|
500
|
|
Hilton
|
|
Rye Town, NY
|
|
|
446
|
|
|
|
100
|
%
|
|
|
446
|
|
Hilton
|
|
Auburn Hills, MI
|
|
|
224
|
|
|
|
100
|
%
|
|
|
224
|
|
Homewood Suites
|
|
Mobile, AL
|
|
|
86
|
|
|
|
100
|
%
|
|
|
86
|
|
Hampton Inn
|
|
Lawrenceville, GA
|
|
|
86
|
|
|
|
100
|
%
|
|
|
86
|
|
Hampton Inn
|
|
Evansville, IN
|
|
|
141
|
|
|
|
100
|
%
|
|
|
141
|
|
Hampton Inn
|
|
Terre Haute, IN
|
|
|
112
|
|
|
|
100
|
%
|
|
|
112
|
|
Hampton Inn
|
|
Buford, GA
|
|
|
92
|
|
|
|
100
|
%
|
|
|
92
|
|
Hampton Inn
|
|
Houston, TX
|
|
|
176
|
|
|
|
85
|
%
|
|
|
150
|
|
Hampton Inn
|
|
Jacksonville, FL
|
|
|
118
|
|
|
|
100
|
%
|
|
|
118
|
|
Marriott
|
|
Durham, NC
|
|
|
225
|
|
|
|
100
|
%
|
|
|
225
|
|
Marriott
|
|
Arlington, VA
|
|
|
697
|
|
|
|
100
|
%
|
|
|
697
|
|
Marriot
|
|
Seattle,WA
|
|
|
358
|
|
|
|
100
|
%
|
|
|
358
|
|
Marriot
|
|
Bridgewater, NJ
|
|
|
347
|
|
|
|
100
|
%
|
|
|
347
|
|
Marriot
|
|
Plano, TX
|
|
|
404
|
|
|
|
100
|
%
|
|
|
404
|
|
Marriot
|
|
Dallas, TX
|
|
|
266
|
|
|
|
100
|
%
|
|
|
266
|
|
JW Marriott
|
|
San Francisco, CA
|
|
|
338
|
|
|
|
100
|
%
|
|
|
338
|
|
JW Marriott
|
|
New Orleans, LA
|
|
|
494
|
|
|
|
100
|
%
|
|
|
494
|
(a)
|
SpringHill Suites by Marriott
|
|
Jacksonville, FL
|
|
|
102
|
|
|
|
100
|
%
|
|
|
102
|
|
SpringHill Suites by Marriott
|
|
Baltimore, MD
|
|
|
133
|
|
|
|
100
|
%
|
|
|
133
|
|
SpringHill Suites by Marriott
|
|
Kennesaw, GA
|
|
|
90
|
|
|
|
100
|
%
|
|
|
90
|
|
SpringHill Suites by Marriott
|
|
Buford, GA
|
|
|
96
|
|
|
|
100
|
%
|
|
|
96
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
%
|
|
|
Owned
|
|
Hotel Property
|
|
Location
|
|
Rooms
|
|
|
Owned
|
|
|
Rooms
|
|
|
SpringHill Suites by Marriott
|
|
Gaithersburg, MD
|
|
|
162
|
|
|
|
100
|
%
|
|
|
162
|
|
SpringHill Suites by Marriott
|
|
Centreville, VA
|
|
|
136
|
|
|
|
100
|
%
|
|
|
136
|
|
SpringHill Suites by Marriott
|
|
Charlotte, NC
|
|
|
136
|
|
|
|
100
|
%
|
|
|
136
|
|
SpringHill Suites by Marriott
|
|
Durham, NC
|
|
|
120
|
|
|
|
100
|
%
|
|
|
120
|
|
SpringHill Suites by Marriott
|
|
Orlando, FL
|
|
|
400
|
|
|
|
100
|
%
|
|
|
400
|
|
SpringHill Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
164
|
|
|
|
100
|
%
|
|
|
164
|
|
SpringHill Suites by Marriott
|
|
Plymouth Meeting, PA
|
|
|
199
|
|
|
|
100
|
%
|
|
|
199
|
|
SpringHill Suites by Marriott
|
|
Glen Allen, VA
|
|
|
136
|
|
|
|
100
|
%
|
|
|
136
|
|
Fairfield Inn by Marriott
|
|
Kennesaw, GA
|
|
|
87
|
|
|
|
100
|
%
|
|
|
87
|
|
Fairfield Inn by Marriott
|
|
Orlando, FL
|
|
|
388
|
|
|
|
100
|
%
|
|
|
388
|
|
Courtyard by Marriott
|
|
Bloomington, IN
|
|
|
117
|
|
|
|
100
|
%
|
|
|
117
|
|
Courtyard by Marriott
|
|
Columbus, IN
|
|
|
90
|
|
|
|
100
|
%
|
|
|
90
|
|
Courtyard by Marriott
|
|
Louisville, KY
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Courtyard by Marriott
|
|
Crystal City, VA
|
|
|
272
|
|
|
|
100
|
%
|
|
|
272
|
|
Courtyard by Marriott
|
|
Ft. Lauderdale, FL
|
|
|
174
|
|
|
|
100
|
%
|
|
|
174
|
|
Courtyard by Marriott
|
|
Overland Park, KS
|
|
|
168
|
|
|
|
100
|
%
|
|
|
168
|
|
Courtyard by Marriott
|
|
Palm Desert, CA
|
|
|
151
|
|
|
|
100
|
%
|
|
|
151
|
|
Courtyard by Marriott
|
|
Foothill Ranch, CA
|
|
|
156
|
|
|
|
100
|
%
|
|
|
156
|
|
Courtyard by Marriott
|
|
Alpharetta, GA
|
|
|
154
|
|
|
|
100
|
%
|
|
|
154
|
|
Courtyard by Marriott
|
|
Philadelphia, PA
|
|
|
498
|
|
|
|
89
|
%
|
|
|
443
|
|
Courtyard by Marriott
|
|
Seattle,WA
|
|
|
250
|
|
|
|
100
|
%
|
|
|
250
|
|
Courtyard by Marriott
|
|
San Francisco, CA
|
|
|
405
|
|
|
|
100
|
%
|
|
|
405
|
|
Courtyard by Marriott
|
|
Orlando, FL
|
|
|
312
|
|
|
|
100
|
%
|
|
|
312
|
|
Courtyard by Marriott
|
|
Oakland, CA
|
|
|
156
|
|
|
|
100
|
%
|
|
|
156
|
|
Courtyard by Marriott
|
|
Scottsdale, AZ
|
|
|
180
|
|
|
|
100
|
%
|
|
|
180
|
|
Courtyard by Marriott
|
|
Plano, TX
|
|
|
153
|
|
|
|
100
|
%
|
|
|
153
|
|
Courtyard by Marriott
|
|
Edison, NJ
|
|
|
146
|
|
|
|
100
|
%
|
|
|
146
|
|
Courtyard by Marriott
|
|
Newark, CA
|
|
|
181
|
|
|
|
100
|
%
|
|
|
181
|
|
Courtyard by Marriott
|
|
Manchester, CT
|
|
|
90
|
|
|
|
85
|
%
|
|
|
77
|
|
Courtyard by Marriott
|
|
Basking Ridge, NJ
|
|
|
235
|
|
|
|
100
|
%
|
|
|
235
|
|
Marriott Residence Inn
|
|
Lake Buena Vista, FL
|
|
|
210
|
|
|
|
100
|
%
|
|
|
210
|
|
Marriott Residence Inn
|
|
Evansville, IN
|
|
|
78
|
|
|
|
100
|
%
|
|
|
78
|
|
Marriott Residence Inn
|
|
Orlando, FL
|
|
|
350
|
|
|
|
100
|
%
|
|
|
350
|
|
Marriott Residence Inn
|
|
Falls Church, VA
|
|
|
159
|
|
|
|
100
|
%
|
|
|
159
|
|
Marriott Residence Inn
|
|
San Diego, CA
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Marriott Residence Inn
|
|
Salt Lake City, UT
|
|
|
144
|
|
|
|
100
|
%
|
|
|
144
|
|
Marriott Residence Inn
|
|
Palm Desert, CA
|
|
|
130
|
|
|
|
100
|
%
|
|
|
130
|
|
Marriott Residence Inn
|
|
Las Vegas, NV
|
|
|
256
|
|
|
|
100
|
%
|
|
|
256
|
|
Marriott Residence Inn
|
|
Phoenix, AZ
|
|
|
200
|
|
|
|
100
|
%
|
|
|
200
|
|
Marriott Residence Inn
|
|
Plano, TX
|
|
|
126
|
|
|
|
100
|
%
|
|
|
126
|
|
Marriott Residence Inn
|
|
Newark, CA
|
|
|
168
|
|
|
|
100
|
%
|
|
|
168
|
|
Marriott Residence Inn
|
|
Manchester, CT
|
|
|
96
|
|
|
|
85
|
%
|
|
|
82
|
|
Marriott Residence Inn (Buckhead)
|
|
Atlanta, GA
|
|
|
150
|
|
|
|
100
|
%
|
|
|
150
|
|
Marriott Residence Inn
|
|
Jacksonville, FL
|
|
|
120
|
|
|
|
100
|
%
|
|
|
120
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
%
|
|
|
Owned
|
|
Hotel Property
|
|
Location
|
|
Rooms
|
|
|
Owned
|
|
|
Rooms
|
|
|
TownePlace Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
144
|
|
|
|
100
|
%
|
|
|
144
|
|
Sea Turtle Inn
|
|
Atlantic Beach, FL
|
|
|
193
|
|
|
|
100
|
%
|
|
|
193
|
|
Sheraton Hotel
|
|
Langhorne, PA
|
|
|
187
|
|
|
|
100
|
%
|
|
|
187
|
|
Sheraton Hotel
|
|
Minneapolis, MN
|
|
|
222
|
|
|
|
100
|
%
|
|
|
222
|
|
Sheraton Hotel
|
|
Milford, MA
|
|
|
173
|
|
|
|
100
|
%
|
|
|
173
|
|
Sheraton Hotel
|
|
Indianapolis, IN
|
|
|
371
|
|
|
|
100
|
%
|
|
|
371
|
|
Sheraton Hotel
|
|
Anchorage, AK
|
|
|
375
|
|
|
|
100
|
%
|
|
|
375
|
|
Sheraton Hotel
|
|
Iowa City, IA
|
|
|
234
|
|
|
|
100
|
%
|
|
|
234
|
(a)
|
Sheraton Hotel
|
|
San Diego, CA
|
|
|
260
|
|
|
|
100
|
%
|
|
|
260
|
|
Hyatt Regency
|
|
Anaheim, CA
|
|
|
654
|
|
|
|
100
|
%
|
|
|
654
|
|
Hyatt Regency
|
|
Herndon, VA
|
|
|
316
|
|
|
|
100
|
%
|
|
|
316
|
|
Hyatt Regency
|
|
Montreal, CAN
|
|
|
607
|
|
|
|
100
|
%
|
|
|
607
|
|
Hyatt Regency
|
|
Detriot, MI
|
|
|
772
|
|
|
|
100
|
%
|
|
|
772
|
|
Hyatt Regency
|
|
Coral Gables, FL
|
|
|
242
|
|
|
|
100
|
%
|
|
|
242
|
|
Crowne Plaza
|
|
Beverly Hills, CA
|
|
|
260
|
|
|
|
100
|
%
|
|
|
260
|
|
Crowne Plaza
|
|
Key West, FL
|
|
|
160
|
|
|
|
100
|
%
|
|
|
160
|
|
Annapolis Inn
|
|
Annapolis, MD
|
|
|
124
|
|
|
|
100
|
%
|
|
|
124
|
|
Westin
|
|
Rosemont, IL
|
|
|
525
|
|
|
|
100
|
%
|
|
|
525
|
|
Renaissance
|
|
Tampa, FL
|
|
|
293
|
|
|
|
100
|
%
|
|
|
293
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
26,553
|
|
|
|
|
|
|
|
26,211
|
|
Held For Sale Hotels Room Count(a)
|
|
|
|
|
(728
|
)
|
|
|
|
|
|
|
(728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing Operations Hotels Room Count
|
|
|
|
|
25,825
|
|
|
|
|
|
|
|
25,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 3.
|
Legal
Proceedings
|
We are currently subject to litigation arising in the normal
course of our business. In the opinion of management, none of
these lawsuits or claims against us, either individually or in
the aggregate, is likely to have a material adverse effect on
our business, results of operations, or financial condition. In
addition, we believe we have adequate insurance in place to
cover such litigation.
|
|
Item 4.
|
Submission
of Matters to a Vote of Security Holders
|
No matters were submitted to a vote of security holders during
the fourth quarter of the year ended December 31, 2007.
32
PART II
|
|
Item 5.
|
Market
for Registrants Common Equity, Related Stockholder
Matters, and Issuer Purchases of Equity Securities
|
Market
and Dividend Information
Our common stock is traded on the New York Stock Exchange under
the symbol AHT. The following table sets forth, for
the indicated periods, the high and low sales prices for our
common stock as traded on that exchange and cash distributions
declared per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
Price Range
|
|
|
Distributions
|
|
|
|
High
|
|
|
Low
|
|
|
per Share
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
13.06
|
|
|
$
|
10.66
|
|
|
$
|
0.20
|
|
Second quarter
|
|
$
|
12.62
|
|
|
$
|
10.38
|
|
|
$
|
0.20
|
|
Third quarter
|
|
$
|
13.00
|
|
|
$
|
11.49
|
|
|
$
|
0.20
|
|
Fourth quarter
|
|
$
|
13.18
|
|
|
$
|
11.72
|
|
|
$
|
0.20
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
First quarter
|
|
$
|
13.05
|
|
|
$
|
11.25
|
|
|
$
|
0.21
|
|
Second quarter
|
|
$
|
12.54
|
|
|
$
|
11.53
|
|
|
$
|
0.21
|
|
Third quarter
|
|
$
|
12.62
|
|
|
$
|
9.80
|
|
|
$
|
0.21
|
|
Fourth quarter
|
|
$
|
10.57
|
|
|
$
|
7.19
|
|
|
$
|
0.21
|
|
To maintain our qualification as a REIT, we intend to make
annual distributions to our stockholders of at least 90% of our
REIT taxable income (which does not necessarily equal net income
as calculated in accordance with generally accepted accounting
principles). Distributions will be authorized by our Board of
Directors and declared by us based upon a variety of factors
deemed relevant by our Directors. No assurance can be given that
our dividend policy will not change in the future. Our ability
to pay distributions to our 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,
wholly-owned subsidiaries of our operating partnership and the
management of our properties by our property managers.
33
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, the
NAREIT Mortgage Index, and the NAREIT Lodging Resort Index for
the period from August 29, 2003, the date of our initial
public offering, through December 31, 2007, assuming an
initial investment of $100 in stock on August 29, 2003 with
reinvestment of dividends. The NAREIT Lodging Resorts Index is
not a published index; however, we believe the companies
included in this index provide a representative example of
enterprises in the lodging resort line of business in which we
engage. Stockholders who wish to request a list of companies in
the NAREIT Lodging Resorts Index may send written requests to
Ashford Hospitality Trust, Inc., Attention: Stockholder
Relations, 14185 Dallas Parkway, Suite 1100, Dallas, Texas
75254. The stock price performance shown on the graph is not
necessarily indicative of future price performance.
COMPARISON
OF 52 MONTH CUMULATIVE TOTAL RETURN*
Among Ashford Hospitality Trust, Inc., The S&P 500
Index,
The NAREIT Mortgage Index And The NAREIT Lodging &
Resorts
* $100 invested on 8/29/03 in stock or index-including
reinvestment of dividends. Fiscal year ending December 31.
Copyright©
2008, Standard & Poors, a division of The McGraw-Hill
Companies, Inc. All rights reserved.
www.researchdatagroup.com/S&P.htm
Recent
Sales of Unregistered Securities
None during the quarter ended December 31, 2007.
Stockholder
Information
As of February 22, 2008, we had approximately 19,500
holders of record of our common stock. In order to comply with
certain requirements related to our qualification as a REIT, our
charter limits the number of shares of capital stock that may be
owned by any single person or affiliated group without our
permission to 9.8% of the outstanding shares of any class of our
capital stock. In the past, our Board of Directors has granted
waivers to three stockholders allowing such stockholders to
temporarily exceed the ownership limitation. However, no
stockholder currently exceeds the ownership limit.
34
Equity
Compensation Plans Information
The following table sets forth the number of securities to be
issued upon exercise of outstanding options, warrants, and
rights; the weighted-average exercise price of outstanding
options, warrants, and rights; and the number of securities
remaining available for future issuance as of December 31,
2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
to be Issued Upon
|
|
|
Weighted-Average
|
|
|
|
|
|
|
Exercise of
|
|
|
Exercise Price
|
|
|
|
|
|
|
Outstanding
|
|
|
of Outstanding
|
|
|
Number of Securities
|
|
|
|
Options, Warrants,
|
|
|
Options, Warrants,
|
|
|
Remaining Available
|
|
|
|
and Rights
|
|
|
and Rights
|
|
|
for Future Issuance
|
|
|
Equity compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common stock
|
|
|
None
|
|
|
|
NA
|
|
|
|
1,385,289
|
|
Equity compensation plans not approved by security holders
|
|
|
None
|
|
|
|
None
|
|
|
|
None
|
|
Issuer
Purchases of Equity Securities
During the fourth quarter of 2007, the Companys Board of
Directors authorized management to purchase up to a total of
$50 million of its common stock from time to time on the
open market (the Plan). The purchases are to be made
at a price not to exceed $9.00 per share provided the ratio of
the Companys net debt to gross assets does not exceed
62.4%. The following table provides the information with respect
to purchases of shares made by the Company during each of the
months in the fourth quarter of 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Maximum Dollar
|
|
|
|
Total
|
|
|
|
|
|
Shares Purchased as
|
|
|
Value of Shares that
|
|
|
|
Number of
|
|
|
Average Price
|
|
|
Part of Publicly
|
|
|
May Yet be Purchaed
|
|
Period
|
|
Shares Purchased
|
|
|
Paid per Share
|
|
|
Announced Plan
|
|
|
Under the Plan
|
|
|
October 1 to October 31
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
50,000,000
|
|
November 1 to November 30
|
|
|
318,900
|
|
|
|
7.82
|
|
|
|
318,900
|
|
|
|
47,505,000
|
|
December 1 to December 31
|
|
|
2,047,400
|
|
|
|
7.67
|
|
|
|
2,047,400
|
|
|
|
31,809,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,366,300
|
|
|
|
7.69
|
|
|
|
2,366,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 6.
|
Selected
Financial Data
|
The following table sets forth consolidated selected historical
operating and financial data for the Company beginning with its
commencement of operations on August 29, 2003. Prior to
that time, this table includes the combined selected historical
operating and financial data of certain affiliates of Remington
Lodging (the Predecessor).
The selected historical consolidated financial information as of
December 31, 2007 and 2006 and for each of the three years
in the period ended December 31, 2007 were derived from
financial statements contained elsewhere herein. The selected
historical consolidated financial information as of
December 31, 2005, 2004, and 2003 and for each of the two
years in the period ended December 31, 2004 (as adjusted
for discontinued operations) were derived from the
Companys previously filed audited consolidated financial
statements. The selected historical consolidated financial
information for the year ended December 31, 2003 includes
the combined results of the Predecessor prior to the
Companys formation on August 29, 2003.
The information below should be read along with all other
financial information and analysis presented elsewhere herein,
including the section captioned Managements
Discussion and Analysis of Financial Condition and Results of
Operations and the Companys consolidated financial
statements and related notes thereto.
35
ASHFORD
HOSPITALITY TRUST, INC. AND PREDECESSOR
SELECTED HISTORICAL FINANCIAL AND OTHER DATA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor)
|
|
|
|
(In thousands, except share and per share amounts)
|
|
|
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
|
817,735
|
|
|
$
|
358,420
|
|
|
$
|
229,850
|
|
|
$
|
77,302
|
|
|
$
|
29,522
|
|
Food and beverage
|
|
|
245,213
|
|
|
|
79,494
|
|
|
|
47,496
|
|
|
|
11,184
|
|
|
|
3,588
|
|
Rental income from operating leases
|
|
|
4,548
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income from notes receivable
|
|
|
11,005
|
|
|
|
14,858
|
|
|
|
13,323
|
|
|
|
7,549
|
|
|
|
110
|
|
Other
|
|
|
50,266
|
|
|
|
18,356
|
|
|
|
13,148
|
|
|
|
4,880
|
|
|
|
1,185
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Revenue
|
|
|
1,128,767
|
|
|
|
471,128
|
|
|
|
303,817
|
|
|
|
100,915
|
|
|
|
34,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
187,225
|
|
|
|
80,273
|
|
|
|
51,473
|
|
|
|
17,633
|
|
|
|
6,673
|
|
Food and beverage
|
|
|
176,052
|
|
|
|
59,099
|
|
|
|
35,943
|
|
|
|
8,271
|
|
|
|
2,695
|
|
Other direct
|
|
|
25,854
|
|
|
|
7,971
|
|
|
|
5,020
|
|
|
|
1,890
|
|
|
|
797
|
|
Indirect
|
|
|
307,231
|
|
|
|
134,459
|
|
|
|
89,113
|
|
|
|
29,478
|
|
|
|
11,993
|
|
Management fees, including related parties
|
|
|
42,775
|
|
|
|
17,571
|
|
|
|
10,663
|
|
|
|
2,869
|
|
|
|
1,121
|
|
Property taxes, insurance, and other
|
|
|
58,285
|
|
|
|
25,825
|
|
|
|
15,777
|
|
|
|
5,667
|
|
|
|
2,366
|
|
Depreciation & amortization
|
|
|
153,285
|
|
|
|
48,460
|
|
|
|
27,218
|
|
|
|
9,092
|
|
|
|
4,167
|
|
Corporate general and administrative
|
|
|
26,953
|
|
|
|
20,359
|
|
|
|
14,523
|
|
|
|
11,855
|
|
|
|
4,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
977,660
|
|
|
|
394,017
|
|
|
|
249,730
|
|
|
|
86,755
|
|
|
|
33,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
151,107
|
|
|
|
77,111
|
|
|
|
54,087
|
|
|
|
14,160
|
|
|
|
590
|
|
Interest income
|
|
|
3,178
|
|
|
|
2,917
|
|
|
|
1,027
|
|
|
|
335
|
|
|
|
289
|
|
Interest expense and amortization of loan costs
|
|
|
(139,113
|
)
|
|
|
(45,185
|
)
|
|
|
(34,672
|
)
|
|
|
(11,101
|
)
|
|
|
(5,000
|
)
|
Write-off of loan costs and exit fees
|
|
|
(4,216
|
)
|
|
|
(101
|
)
|
|
|
(5,803
|
)
|
|
|
(1,633
|
)
|
|
|
|
|
Loss on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for income taxes and minority
interest
|
|
|
10,956
|
|
|
|
34,742
|
|
|
|
4,639
|
|
|
|
1,761
|
|
|
|
(4,121
|
)
|
Benefit from (provision for) income taxes
|
|
|
(4,981
|
)
|
|
|
2,945
|
|
|
|
2,571
|
|
|
|
(683
|
)
|
|
|
(133
|
)
|
Minority interest related to consolidated joint ventures
|
|
|
(323
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minority interest related to limited partners
|
|
|
(1,684
|
)
|
|
|
(4,540
|
)
|
|
|
(1,482
|
)
|
|
|
(187
|
)
|
|
|
356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) From Continuing Operations
|
|
|
3,968
|
|
|
|
33,147
|
|
|
|
5,728
|
|
|
|
891
|
|
|
|
(3,898
|
)
|
Income (loss) from discontinued operations, net
|
|
|
26,192
|
|
|
|
4,649
|
|
|
|
3,709
|
|
|
|
528
|
|
|
|
(22
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
30,160
|
|
|
|
37,796
|
|
|
|
9,437
|
|
|
|
1,419
|
|
|
|
(3,920
|
)
|
Preferred dividends
|
|
|
(23,990
|
)
|
|
|
(10,875
|
)
|
|
|
(9,303
|
)
|
|
|
(1,355
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Available To Common Shareholders
|
|
$
|
6,170
|
|
|
$
|
26,921
|
|
|
$
|
134
|
|
|
$
|
64
|
|
|
$
|
(3,920
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(Loss) Income From Continuing Operations Per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available To Common Shareholders
|
|
$
|
(0.19
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Discontinued Operations Per Share
|
|
$
|
0.25
|
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) Per Share Available To
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shareholders
|
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding
|
|
|
105,786,502
|
|
|
|
62,127,948
|
|
|
|
40,194,132
|
|
|
|
25,120,653
|
|
|
|
24,627,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36
|
|
|
(a) |
|
For the year ended December 31, 2003, per share and
weighted average shares data only relates to the period from
inception through December 31, 2003. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company)
|
|
|
(Company &
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Predecessor)
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in hotel properties, net
|
|
$
|
3,885,737
|
|
|
$
|
1,632,946
|
|
|
$
|
1,106,668
|
|
|
$
|
427,005
|
|
|
$
|
173,724
|
|
Cash, cash equivalents, and restricted cash
|
|
|
145,143
|
|
|
|
82,756
|
|
|
|
85,837
|
|
|
|
61,168
|
|
|
|
77,628
|
|
Assets held for sale
|
|
|
75,739
|
|
|
|
119,342
|
|
|
|
117,873
|
|
|
|
|
|
|
|
|
|
Notes receivable
|
|
|
94,225
|
|
|
|
102,833
|
|
|
|
107,985
|
|
|
|
79,662
|
|
|
|
10,000
|
|
Total assets
|
|
|
4,381,291
|
|
|
|
2,011,912
|
|
|
|
1,482,486
|
|
|
|
595,945
|
|
|
|
267,882
|
|
Indebtedness Continuing operations
|
|
|
2,639,546
|
|
|
|
1,015,555
|
|
|
|
782,938
|
|
|
|
292,879
|
|
|
|
38,882
|
|
Total owners equity
|
|
|
1,285,003
|
|
|
|
641,709
|
|
|
|
358,323
|
|
|
|
218,692
|
|
|
|
172,292
|
|
Other Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provided by operating activities
|
|
$
|
155,737
|
|
|
$
|
139,691
|
|
|
$
|
56,528
|
|
|
$
|
6,652
|
|
|
$
|
5,735
|
|
Used in investing activities
|
|
|
(1,872,900
|
)
|
|
|
(565,473
|
)
|
|
|
(652,267
|
)
|
|
|
(310,624
|
)
|
|
|
(89,189
|
)
|
Provided by financing activities
|
|
|
1,736,022
|
|
|
|
441,130
|
|
|
|
606,625
|
|
|
|
274,827
|
|
|
|
161,718
|
|
Unaudited:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total number of rooms at December 31
|
|
|
26,211
|
|
|
|
15,492
|
|
|
|
13,184
|
|
|
|
5,095
|
|
|
|
2,381
|
|
Total number of hotels at December 31
|
|
|
112
|
|
|
|
81
|
|
|
|
80
|
|
|
|
33
|
|
|
|
15
|
|
EBITDA(1)
|
|
$
|
357,151
|
|
|
$
|
138,757
|
|
|
$
|
79,346
|
|
|
$
|
23,909
|
|
|
$
|
5,508
|
|
FFO(2)
|
|
$
|
147,680
|
|
|
$
|
84,748
|
|
|
$
|
32,741
|
|
|
$
|
11,076
|
|
|
$
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) EBITDA Reconciliation (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
30,160
|
|
|
$
|
37,796
|
|
|
$
|
9,437
|
|
|
$
|
1,419
|
|
|
$
|
(3,920
|
)
|
Plus depreciation and amortization
|
|
|
166,161
|
|
|
|
52,863
|
|
|
|
30,291
|
|
|
|
10,768
|
|
|
|
4,933
|
|
Plus interest expense & amortization of loan costs
|
|
|
154,338
|
|
|
|
48,457
|
|
|
|
38,404
|
|
|
|
11,101
|
|
|
|
5,000
|
|
Less interest income
|
|
|
(3,064
|
)
|
|
|
(2,917
|
)
|
|
|
(1,027
|
)
|
|
|
(335
|
)
|
|
|
(289
|
)
|
Remove minority interest relating to limited partners
|
|
|
3,957
|
|
|
|
5,277
|
|
|
|
2,425
|
|
|
|
298
|
|
|
|
(358
|
)
|
Remove (benefit from) provision for income taxes
|
|
|
5,599
|
|
|
|
(2,719
|
)
|
|
|
(184
|
)
|
|
|
658
|
|
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
357,151
|
|
|
$
|
138,757
|
|
|
$
|
79,346
|
|
|
$
|
23,909
|
|
|
$
|
5,508
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) FFO Reconciliation (unaudited):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
$
|
6,170
|
|
|
$
|
26,921
|
|
|
$
|
134
|
|
|
$
|
64
|
|
|
$
|
(3,920
|
)
|
Plus real estate depreciation and amortization(a)
|
|
|
165,757
|
|
|
|
52,550
|
|
|
|
30,182
|
|
|
|
10,714
|
|
|
|
4,931
|
|
Remove gains on sales of properties, net of related income taxes
|
|
|
(28,204
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remove minority interest relating to limited partners
|
|
|
3,957
|
|
|
|
5,277
|
|
|
|
2,425
|
|
|
|
298
|
|
|
|
(358
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FFO
|
|
$
|
147,680
|
|
|
$
|
84,748
|
|
|
$
|
32,741
|
|
|
$
|
11,076
|
|
|
$
|
653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes property-level furniture, fixtures, and equipment. |
|
(1) |
|
EBITDA is defined as net income (loss) before interest expense,
interest income (excluding interest income from mezzanine
loans), income taxes, depreciation and amortization, and
minority interest relating to limited partners. We believe
EBITDA is useful to investors as an indicator of our ability to
service debt and pay cash |
37
|
|
|
|
|
distributions. EBITDA, as calculated by us may not be comparable
to EBITDA reported by other companies that do not define EBITDA
exactly as we define the term. EBITDA does not represent cash
generated from operating activities determined in accordance
with genereally accepted accounting principles
(GAAP), and should not be considered as an
alternative to operating income or net income determined in
accordance with GAAP as an indicator of performance or as an
alternative to cash flows from operating activities as
determined by GAAP as an indicator of liquidity. |
|
(2) |
|
The White Paper on Funds From Operations (FFO)
approved by the Board of Governors of the National Association
of Real Estate Investment Trusts (NAREIT) in April
2002 defines FFO as net income (loss) computed in accordance
with generally accepted accounting principles
(GAAP), excluding gains (or losses) from sales of
properties and extraordinary items as defined by GAAP, plus
depreciation and amortization of real estate assets, and net of
adjustments for the portion of these items related to minority
interests relating to limited partners. NAREIT developed FFO as
a relative measure of performance of an equity REIT to recognize
that income-producing real estate historically has not
depreciated on the basis determined by GAAP. We compute FFO in
accordance with our interpretation of standards established by
NAREIT, which may not be comparable to FFO reported by other
REITs that do not define the term in accordance with the current
NAREIT definition or that interpret the NAREIT definition
differently than us. FFO does not represent cash generated from
operating activities as determined by GAAP and should not be
considered an alternative to a) GAAP net income (loss) as
an indication of our financial performance or b) GAAP cash
flows from operating activities as a measure of our liquidity,
nor is it indicative of cash available to fund our cash needs,
including our ability to make cash distributions. We believe
that to facilitate a clear understanding of our historical
operating results, FFO should be considered along with our net
income (loss) and cash flows reported in the consolidated
financial statements. |
|
|
Item 7.
|
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
|
FORWARD-LOOKING
STATEMENTS:
The following discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere
herein. This report contains forward-looking statements within
the meaning of the federal securities laws. Ashford Hospitality
Trust, Inc. (the Company or we or
our or us) cautions investors that any
forward-looking statements presented herein, or which management
may express orally or in writing from time to time, are based on
managements beliefs and assumptions at that time.
Throughout this report, words such as anticipate,
believe, expect, intend,
may, might, plan,
estimate, project, should,
will, result, and other similar
expressions, which do not relate solely to historical matters,
are intended to identify forward-looking statements. Such
statements are subject to risks, uncertainties, and assumptions
and are not guarantees of future performance, which may be
affected by known and unknown risks, trends, uncertainties, and
factors beyond our control. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those
anticipated, estimated, or projected. We caution investors that
while forward-looking statements reflect our good-faith beliefs
at the time such statements are made, said statements are not
guarantees of future performance and are affected by actual
events that occur after such statements are made. We expressly
disclaim any responsibility to update forward-looking
statements, whether as a result of new information, future
events, or otherwise. Accordingly, investors should use caution
in relying on past forward-looking statements, which were based
on results and trends at the time those statements were made, to
anticipate future results or trends.
Some risks and uncertainties that may cause our actual results,
performance, or achievements to differ materially from those
expressed or implied by forward-looking statements include,
among others, those discussed in Part I, Item 1A, Risk
Factors. These risks and uncertainties continue to be relevant
to our performance and financial condition. Moreover, we operate
in a very competitive and rapidly changing environment where new
risk factors emerge from time to time. It is not possible for
management to predict all such risk factors, nor can management
assess the impact of all such risk factors on our business or
the extent to which any factor, or combination of factors, may
cause actual results to differ materially from those contained
in any forward-looking statements. Given these risks and
uncertainties, investors should not place undue reliance on
forward-looking statements as predictions of actual results.
38
EXECUTIVE
OVERVIEW:
We are a real estate investment trust (REIT) that
commenced operations upon completion of our initial public
offering (IPO) and related formation transactions on
August 29, 2003. As of December 31, 2007, we owned
interest in 112 hotel properties, which includes direct
ownership in 106 hotel properties and between
75-89%
interest in six hotel properties through equity investments with
joint venture partners. In addition, as of December 31,
2007, we owned approximately $94.2 million of mezzanine or
first-mortgage loans receivable. Of these 112 hotels, five were
contributed upon our formation, seven were acquired in 2003, 15
were acquired in 2004, 29 were acquired in 2005, ten were
acquired in 2006, and 46 were acquired in 2007. As of
December 31, 2007, 110 of the 112 hotels were classified in
continuing operations while the remaining two were classified as
discontinued operations.
The 54 hotel properties acquired since December 31, 2005
that are included in continuing operations contributed
approximately $699.0 million and $80.6 million to our
total revenue and operating income, respectively, for the year
ended December 31, 2007, and approximately
$60.7 million and $3.9 million to our total revenue
and operating income, respectively, for the year ended
December 31, 2006.
Based on our primary business objectives and forecasted
operating conditions, our key priorities and financial
strategies include, among other things:
|
|
|
|
|
acquiring hotels with a favorable current yield with an
opportunity for appreciation,
|
|
|
|
implementing selective capital improvements designed to increase
profitability,
|
|
|
|
directing our hotel managers to minimize operating costs and
increase revenues,
|
|
|
|
originating or acquiring mezzanine loans, and
|
|
|
|
other investments that our Board of Directors deems appropriate.
|
Throughout 2007, strong economic growth in the United States
economy combined with improved business demand generated strong
RevPar growth throughout the lodging industry. For 2008,
forecasts for the lodging industry continue to be favorable.
RESULTS
OF OPERATIONS:
Marriott International, Inc. (Marriott) manages 42
of the Companys properties. For these 42 Marriott-managed
hotels, the fiscal year reflects twelve weeks of operations for
each of the first three quarters of the year and sixteen weeks
for the fourth quarter of the year. Therefore, in any given
quarterly period, period-over-period results will have different
ending dates. For Marriott-managed hotels, the fourth quarters
of 2007 and 2006 ended December 28th and
December 29th, respectively.
RevPAR is a commonly used measure within the hotel industry to
evaluate hotel operations. RevPAR is defined as the product of
the average daily room rate (ADR) charged and the
average daily occupancy achieved. RevPAR does not include
revenues from food and beverage or parking, telephone, or other
guest services generated by the property. Although RevPAR does
not include these ancillary revenues, it is generally considered
the leading indicator of core revenues for many hotels. We also
use RevPAR to compare the results of our hotels between periods
and to analyze results of our comparable hotels. RevPAR
improvements attributable to increases in occupancy are
generally accompanied by increases in most categories of
variable operating costs. 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.
39
The following table illustrates the key performance indicators
for the years ended December 31, 2007 and 2006 for the 56
hotel properties included in continuing operations that we owned
throughout the entirety of both years presented (2007
comparable hotels):
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Comparative Hotels (56 properties):
|
|
|
|
|
|
|
|
|
Room revenues (in thousands)
|
|
$
|
336,489
|
|
|
$
|
317,301
|
|
RevPar
|
|
$
|
93.58
|
|
|
$
|
87.82
|
|
Occupancy
|
|
|
73.39
|
%
|
|
|
73.69
|
%
|
ADR
|
|
$
|
127.51
|
|
|
$
|
119.17
|
|
The following table reflects key line items from our
consolidated statements of operations for the years ended
December 31, 2007, 2006, and 2005 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
Favorable (Unfavorable)
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
Change
|
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
December 31, 2005
|
|
|
2006 to 2007
|
|
|
2005 to 2006
|
|
|
Total revenue
|
|
$
|
1,128,767
|
|
|
$
|
471,128
|
|
|
$
|
303,817
|
|
|
$
|
657,639
|
|
|
$
|
167,311
|
|
Total hotel expenses
|
|
|
739,137
|
|
|
|
299,373
|
|
|
|
192,212
|
|
|
|
(439,764
|
)
|
|
|
(107,161
|
)
|
Property taxes, insurance, and other
|
|
|
58,285
|
|
|
|
25,825
|
|
|
|
15,777
|
|
|
|
(32,460
|
)
|
|
|
(10,048
|
)
|
Depreciation and amortization
|
|
|
153,285
|
|
|
|
48,460
|
|
|
|
27,218
|
|
|
|
(104,825
|
)
|
|
|
(21,242
|
)
|
Corporate general and administrative
|
|
|
26,953
|
|
|
|
20,359
|
|
|
|
14,523
|
|
|
|
(6,594
|
)
|
|
|
(5,836
|
)
|
Operating income
|
|
|
151,107
|
|
|
|
77,111
|
|
|
|
54,087
|
|
|
|
73,996
|
|
|
|
23,024
|
|
Interest income
|
|
|
3,178
|
|
|
|
2,917
|
|
|
|
1,027
|
|
|
|
261
|
|
|
|
1,890
|
|
Interest expense
|
|
|
(133,275
|
)
|
|
|
(43,201
|
)
|
|
|
(30,772
|
)
|
|
|
(90,074
|
)
|
|
|
(12,429
|
)
|
Amortization of loan costs
|
|
|
(5,838
|
)
|
|
|
(1,984
|
)
|
|
|
(3,900
|
)
|
|
|
(3,854
|
)
|
|
|
1,916
|
|
Write-off of loan costs and exit fees and loss on debt
extinguishment
|
|
|
(4,216
|
)
|
|
|
(101
|
)
|
|
|
(15,803
|
)
|
|
|
(4,115
|
)
|
|
|
15,702
|
|
Benefit from income taxes
|
|
|
(4,981
|
)
|
|
|
2,945
|
|
|
|
2,571
|
|
|
|
(7,926
|
)
|
|
|
374
|
|
Minority interest in consolidated joint ventures
|
|
|
(323
|
)
|
|
|
|
|
|
|
|
|
|
|
(323
|
)
|
|
|
|
|
Minority interest relating to limited partners
|
|
|
(1,684
|
)
|
|
|
(4,540
|
)
|
|
|
(1,482
|
)
|
|
|
2,856
|
|
|
|
(3,058
|
)
|
Income from discontinued operations, net
|
|
|
26,192
|
|
|
|
4,649
|
|
|
|
3,709
|
|
|
|
21,543
|
|
|
|
940
|
|
Net income
|
|
$
|
30,160
|
|
|
$
|
37,796
|
|
|
$
|
9,437
|
|
|
$
|
(7,636
|
)
|
|
$
|
28,359
|
|
Comparison
of Year Ended December 31, 2007 and Year Ended
December 31, 2006
Revenue. Total revenue for the year ended
December 31, 2007 increased approximately
$657.6 million or 139.6% to approximately $1.1 billion
from total revenue of approximately $471.1 million for the
year ended December 31, 2006. The increase was primarily
due to approximately $638.3 million in incremental revenues
attributable to the 54 hotel properties acquired since
December 31, 2005 that are included in continuing
operations and approximately $23.1 million increase in
revenues for comparable hotels, primarily due to increases in
room revenues, offset by a decrease of approximately
$3.9 million in income earned on the Companys
mezzanine loans receivable portfolio as a result of a decline in
the average balance outstanding compared to the same period last
year.
Room revenues at comparable hotels for the year ended
December 31, 2007 increased approximately
$19.2 million or 6.0% compared to 2006, primarily due to an
increase in RevPar from $87.82 to $93.58, which consisted of a
7.0% increase in ADR and a 0.41% decrease in occupancy. Due to
the continued recovery in the economy and consistent with
industry trends, several hotels experienced significant
increases in ADR and relatively flat occupancy. In addition to
improved market conditions, certain hotels also benefited in
2007 from increasing or garnering more favorable group
room-night contracts, eliminating less favorable contracts, and
charging higher
40
rates on transient business. Although occupancy increased at
several hotels, renovations at certain hotels in 2007 reduced
room availability, which offset these increases.
Food and beverage revenues at comparable hotels for the year
ended December 31, 2007 increased approximately
$4.5 million or 7.3% compared to 2006 primarily due to
increased occupancy at certain hotels, increased prices overall,
and increased banquets at certain hotels. The remainder of the
increase is primarily attributable to the 54 hotel properties
acquired since December 31, 2005.
Rental income from operating leases represents rental income
recognized on a straight-line basis associated with a hotel
property acquired on April 11, 2007, which is leased to a
third-party tenant on a
triple-net
lease basis.
Other revenues for the year ended December 31, 2007
compared to 2006 increased approximately $31.8 million due
to approximately $32.5 million in incremental revenues
attributable to the 54 hotel properties acquired since
December 31, 2005 that are included in continuing
operations offset by a decline of approximately $609,000 at
comparable hotels primarily due to decreased space rentals at
certain hotels.
Interest income from notes receivable decreased to approximately
$11.0 million for the year ended December 31, 2007
compared to approximately $14.9 million for 2006 due to a
decrease in the average mezzanine loans portfolio balance
outstanding during 2007 compared to last year.
Asset management fees and asset management consulting fees were
approximately $1.3 million for both of the year ended
December 31, 2007 and 2006. Asset management fees relate to
27 hotel properties previously owned by affiliates for which the
Company provided asset management and consulting services. The
Company acquired 21 of these hotel properties from said
affiliates on March 16, 2005, and the affiliates
subsequently sold the remaining six hotel properties. However,
the affiliates, pursuant to an agreement, continue to guarantee
a minimum annual fee of approximately $1.2 million through
December 31, 2008.
Hotel Operating Expenses. Hotel operating
expenses, which consists of room expense, food and beverage
expense, other direct expenses, indirect expenses, and
management fees, increased approximately $441.8 million or
147.6% for the year ended December 31, 2007 compared to
2006 primarily due to approximately $428.9 million of
expenses associated with the 54 hotel properties acquired since
December 31, 2005 that are included in continuing
operations. In addition, hotel operating expenses at comparable
hotels increased approximately $12.9 million or 5.1% for
the year ended December 31, 2007 compared to 2006 primarily
due to increases in rooms, food and beverage, and indirect
expenses. These increases were partially offset by a
$2.0 million transaction fees the Company is to be
reimbursed by Hilton Hotels Corporation relating to the asset
swap transaction.
Rooms expense at comparable hotels increased approximately
$3.1 million or 4.5% for the year ended December 31,
2007 compared to 2006 primarily due to increased occupancy at
certain hotels, virtually flat costs at hotels experiencing
comparable occupancy due to the fixed nature of maintaining
staff, and increased prices overall. The increase in food and
beverage expense at comparable hotels is consistent with the
related increase in food and beverage revenues. Indirect
expenses at comparable hotels increased approximately
$7.6 million or 6.5% for the year ended December 31,
2007 compared to 2006. Indirect expenses primarily increased as
a result of:
|
|
|
|
|
increased hotel-level general and administrative expenses due to
increased salaries and staffing needs consistent with increased
revenues, and
|
|
|
|
increased franchise fees and incentive management fees due to
increased room revenues at certain hotels.
|
Property Taxes, Insurance, and Other. Property
taxes, insurance, and other increased approximately
$32.5 million or 125.7% for the year ended
December 31, 2007 compared to 2006 due to approximately
$32.9 million of expenses associated with the 54 hotel
properties acquired since December 31, 2005 that are
included in continuing operations. Aside from additional costs
incurred at these acquired hotels, property taxes, insurance,
and other expense decreased for the year ended December 31,
2007 compared to 2006 primarily resulting from decreased
property insurance rates incurred under new policies related to
several hotels.
Depreciation and Amortization. Depreciation
and amortization increased approximately $104.8 million or
216.3% for the year ended December 31, 2007 compared to
2006 primarily due to approximately $99.9 million of
depreciation associated with the 54 hotel properties acquired
since December 31, 2005 that are included in
41
continuing operations. Aside from these additional hotels
acquired, depreciation and amortization increased approximately
$4.9 million for the year ended December 31, 2007
compared to 2006 as a result of capital improvements made at
several comparative hotels since December 31, 2005.
Corporate General and
Administrative. Corporate general and
administrative expense increased to approximately
$27.0 million for the year ended December 31, 2007
compared to approximately $20.4 million in 2006, which
includes an increase in non-cash expenses associated with
stock-based compensation from approximately $5.2 million in
2006 compared to approximately $6.2 million in 2007. The
increase is primarily the result of increased headcount due to
the acquisition of the CNL Portfolio on April 11, 2007. As
a percentage of total revenue, however, corporate general and
administrative expense decreased to approximately 2.4% in 2007
from approximately 4.3% in 2006 due to corporate synergies
inherent in overall growth.
Operating Income. Operating income was
approximately $151.1 million and $77.1 million for the
years ended December 31, 2007 and 2006, respectively, which
represents an increase of approximately $74.0 million as a
result of the aforementioned operating results.
Interest Income. Interest income increased
approximately $261,000 to approximately $3.2 million for
the year ended December 31, 2007 from approximately
$2.9 million in 2006 primarily due to interest earned on
funds received from borrowings and equity offerings during 2007
in excess of interest earned on funds received from borrowings
and equity offerings during 2006.
Interest Expense and Amortization of Loan
Costs. Interest expense and amortization of loan
costs increased approximately $93.9 million to
approximately $139.1 million for the year ended
December 31, 2007 from approximately $45.2 million in
2006. The increase in interest expense and amortization of loan
costs is associated with the higher average debt balance over
the course of the two comparative periods.
Write-off of Loan Costs and Exit Fees. During
the year ended December 31, 2007, the Company recorded
write-off of loan costs and exit fees of $4.2 million
consisting of the following:
|
|
|
|
|
On March 8, 2007, the Company terminated its
$100.0 million credit facility, due December 23, 2008.
In connection with this termination, the Company wrote-off
unamortized loan costs of approximately $490,000.
|
|
|
|
On April 10, 2007, the Company repaid its
$45.0 million outstanding balance on its
$150.0 million credit facility, due August 16, 2008,
and terminated the facility. In connection with this
termination, the Company wrote-off unamortized loan costs of
approximately $1.2 million.
|
|
|
|
On April 24 and 25, 2007, with proceeds received from its
follow-on public offering completed April 24, 2007, the
Company paid off its $325.0 million variable-rate loan, due
April 9, 2008, and paid down approximately
$180.1 million related to its $555.1 million
variable-rate loan, due May 9, 2009. In connection with
these repayments, the Company wrote-off unamortized loan costs
of approximately $1.9 million and incurred prepayment
penalties of approximately $559,000.
|
During the year ended December 31, 2006, the Company
recorded write-off of loan costs and exit fees of $101,000
relating to the repayment on May 30, 2006, of its then
outstanding $11.1 million balance on its mortgage note
payable due April 1, 2011.
(Provision for) Benefit from Income Taxes. As
a REIT, the Company generally will not be subject to federal
corporate income tax on the portion of its net income that does
not relate to taxable REIT subsidiaries. However, the Company
leases all of its hotel properties, except one, to Ashford TRS,
which is treated as a taxable REIT subsidiary for federal income
tax purposes. For the year ended December 31, 2007, the
provision for income taxes of approximately $5.0 million
consists primarily of the expense associated with fully
reserving the Companys deferred tax asset at
December 31, 2007. As a result of Ashford TRS losses in
2007 and 2006, and the limitations imposed by the Internal
Revenue Code on the utilization of net operating losses of
acquired subsidiaries, the Company believes that it is more
likely than not its net deferred tax asset will not be realized,
and therefore, has provided a valuation allowance to fully
reserve against these amounts. For the year ended
December 31, 2006, the benefit from income taxes of
approximately $2.9 million relates to the net loss
associated with Ashford TRS. For the years ended
December 31, 2007 and 2006, an additional provision for
income taxes of approximately $618,000 and
42
$226,000 is included in discontinued operations, respectively.
For the year ended December 31, 2007, the provision for
income taxes included in discontinued operations also consists
primarily of the expense associated with fully reserving the
Companys deferred assets at December 31, 2007.
The following table summarizes the estimated taxability of
distributions paid per share for federal income tax purposes:
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
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|
Years Ended December 31,
|
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|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
0.80330
|
|
|
|
96.78266
|
%
|
|
|
0.85000
|
|
|
|
100.00000
|
%
|
|
|
0.27708
|
|
|
|
41.98180
|
%
|
Capital gains
|
|
|
0.01346
|
|
|
|
1.62271
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return of capital
|
|
|
0.01324
|
|
|
|
1.59463
|
%
|
|
|
|
|
|
|
|
|
|
|
0.38292
|
|
|
|
58.01820
|
%
|
|
|
|
0.83000
|
|
|
|
100.00000
|
%
|
|
|
0.85000
|
|
|
|
100.00000
|
%
|
|
|
0.66000
|
|
|
|
100.00000
|
%
|
Series A preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
2.10232
|
|
|
|
98.35000
|
%
|
|
|
2.13760
|
|
|
|
100.00000
|
%
|
|
|
2.13760
|
|
|
|
100.00000
|
%
|
Capital gains
|
|
|
0.03528
|
|
|
|
1.65000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.13760
|
|
|
|
100.00000
|
%
|
|
|
2.13760
|
|
|
|
100.00000
|
%
|
|
|
2.13760
|
|
|
|
100.00000
|
%
|
Series B preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
0.82614
|
|
|
|
98.35000
|
%
|
|
|
0.80000
|
|
|
|
100.00000
|
%
|
|
|
0.71000
|
|
|
|
100.00000
|
%
|
Capital gains
|
|
|
0.01386
|
|
|
|
1.65000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.84000
|
|
|
|
100.00000
|
%
|
|
|
0.80000
|
|
|
|
100.00000
|
%
|
|
|
0.71000
|
|
|
|
100.00000
|
%
|
Series C preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
0.53118
|
|
|
|
98.35000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gains
|
|
|
0.00891
|
|
|
|
1.65000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.54009
|
|
|
|
100.00000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series D preferred stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary income
|
|
|
0.94072
|
|
|
|
98.35000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital gains
|
|
|
0.01578
|
|
|
|
1.65000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.95650
|
|
|
|
100.00000
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys tax returns have not been examined by the
Internal Revenue Service and, therefore, the taxability of
dividends is subject to change.
Minority Interest In Consolidated Joint
Ventures. Minority interest in consolidated joint
ventures represents net income (loss) attributable to joint
venture partners. Such joint venture partners originally owned
between 11%-30% of 17 hotel properties acquired on
April 11, 2007. On December 15, 2007, the Company
completed an asset swap with its partner in two of these joint
ventures, whereby the Company surrendered its majority ownership
interest in two hotel properties in exchange for the joint
venture partners minority ownership interest in nine hotel
properties. Upon completion of this asset swap, remaining joint
venture partners now own between 11%-25% of six hotel properties.
Minority Interest Related to Limited
Partners. Minority interest related to limited
partners represents a reduction to net income of approximately
$1.7 million and $4.5 million for the years ended
December 31, 2007 and 2006, respectively. Upon formation of
the Company on August 29, 2003, minority interest in the
operating partnership was established to represent the limited
partners proportionate share of equity in the operating
partnership. Minority interest related to limited partners
represents an allocation of net income (loss) available to
common shareholders based on the weighted-average ownership
percentage of these limited partners common unit holdings
throughout the period plus dividends related to these limited
partners Class B unit holdings. Minority interest
related to limited partners included in discontinued operations
represents reductions to income from discontinued operations of
approximately $2.3 million and $737,000, respectively.
43
Income from Continuing Operations. Income from
continuing operations was approximately $4.0 million and
$33.1 million for the years ended December 31, 2007
and 2006, respectively, which represents a decrease of
approximately $29.2 million as a result of the
aforementioned operating results.
Income from Discontinued Operations,
Net. During the year ended December 31,
2007, the Company classified operations from 26 assets,
including 24 hotel properties and two office buildings, as
discontinued. During this time, 23 of these assets, including 22
hotel properties and one office building, were sold, which
resulted in gains totaling approximately $35.1 million.
During the year ended December 31, 2006, the Company
classified operations from 24 assets, including 22 hotel
properties and two office buildings, as discontinued. During
that time, ten of these hotel properties were sold. Operating
results from discontinued operations also reflected allocated
interest and related debt expense totaling $21.2 million
and $4.0 million for 2007 and 2006, respectively, to the
discontinued operations in accordance with Emerging Issues Task
Force (EITF) abstract
No. 87-24
Allocation of Interest to Discontinued Operations.
See Notes 2 and 6 of Notes to Consolidated Financial
Statements.
In addition, income from discontinued operations also included
write-off of loan costs and exit fees of approximately
$4.5 million and $687,000 for the years ended
December 31, 2007 and 2006, respectively, consisting of the
following:
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On February 6, 2007, in connection with the sale of its
Marriott located in Trumbull, Connecticut, the Company paid down
approximately $28.0 million of its mortgage loan, due
December 11, 2009. In connection with this pay-down, the
Company wrote-off unamortized loan costs of approximately
$212,000.
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|
On May 18, 2007, in connection with the sale of seven
TownePlace Suites hotels, the Company paid down approximately
$32.0 million related to its mortgage loan due July 1,
2015. In connection with this pay-down, the Company wrote-off
unamortized loan costs of approximately $205,000 and incurred
prepayment penalties of approximately $1.5 million.
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|
On October 2, 2007, in connection with the sale of its
Hilton in Birmingham, Alabama, the Company paid down its
mortgage loan, due May 9, 2009, by approximately
$23.7 million. In connection with this payment, the Company
wrote-off unamortized loan costs of approximately $258,000.
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|
On November 2, 2007, in connection with the sale of two
Residence Inns in Torrance, California, and Atlanta, Georgia,
the Company paid down its mortgage loan, due May 9, 2009,
by approximately $67.7 million pursuant to the loan
agreement, with proceeds from the sale and corporate cash. In
connection with this payment, the Company wrote-off unamortized
loan costs of approximately $699,000 and incurred prepayment
penalties of approximately $242,000.
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|
|
|
On November 20, 2007, in connection with the sale of its
Residence Inn in Kansas City, Missouri, the Company paid down
its mortgage loan, due May 9, 2009, by approximately
$7.4 million. In connection with this payment, the Company
wrote-off unamortized loan costs of approximately $72,000 and
incurred prepayment penalties of approximately $40,000.
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|
|
|
On November 30, 2007, in connection with the sale of its
Marriott in Baltimore, Maryland, the Company paid down its
mortgage loan, due May 9, 2009, by approximately
$62.4 million. In connection with this payment, the Company
wrote-off unamortized loan costs of approximately $609,000 and
incurred prepayment penalties of approximately $312,000.
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|
|
|
On December 15, 2007, in connection with an asset swap with
a joint venture partner, the Company repaid an additional
$8.7 million of mortgage debt attributable to its majority
ownership in such joint ventures, which was secured by hotels
involved in the asset swap and had maturity dates ranging from
2010 to 2011. In connection with this payment, the Company
wrote-off related unamortized loan costs of approximately
$143,000 and incurred a prepayment penalty of approximately
$326,000.
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|
|
|
On March 24, 2006, in connection with the sale of eight
hotel properties, the buyer assumed approximately
$93.7 million of mortgage debt, due July 1, 2015.
Related to this assumption, the Company wrote-off unamortized
loan costs of approximately $687,000.
|
44
Net Income. Net income was approximately
$30.2 million and $37.8 million for the years ended
December 31, 2007 and 2006, respectively, which represents
a decrease of approximately $7.6 million as a result of the
aforementioned operating results and gains on sales of
properties in 2007.
Preferred Dividends. During the year ended
December 31, 2007, the Company declared cash dividends of
approximately $4.9 million, or $0.5344 per share per
quarter, for Series A preferred stockholders, approximately
$6.3 million, or $0.21 per share per quarter, for
Series B preferred stockholders, approximately
$4.3 million for Series C preferred stockholders, and
approximately $7.7 million, or $0.5281 per share per
quarter prorated for the period outstanding, for Series D
preferred stockholders. In addition, during the year ended
December 31, 2007, the Company recognized non-cash
preferred dividends of approximately $845,000 related to the
amortization of the Series C preferred stock discount
attributable to the increasing-rate preferred dividend clause
effective 18 months after issuance. During the year ended
December 31, 2006, the Company declared cash dividends of
approximately $4.9 million, or $0.5344 per share per
quarter, for Series A preferred stockholders, and
approximately $6.0 million, or $0.20 per share per quarter,
for Series B preferred stockholders.
Net Income Available to Common
Shareholders. Net income available to common
shareholders was approximately $6.2 million and
$26.9 million for the years ended December 31, 2007
and 2006, respectively, which represents a decrease of
approximately $20.8 million as a result of the aforementioned
operating results, gains on sales of properties in 2007, and
preferred dividends.
Comparison
of Year Ended December 31, 2006 and Year Ended
December 31, 2005
Revenue. Total revenue for the year ended
December 31, 2006 increased approximately
$167.3 million or 55.1% to approximately
$471.1 million from total revenue of approximately
$303.8 million for the year ended December 31, 2005.
The increase was primarily due to approximately
$156.6 million in incremental revenues attributable to the
38 hotel properties acquired since December 31, 2004 that
are included in continuing operations, approximately
$1.5 million increase in interest income earned on the
Companys notes receivable portfolio, and approximately
$9.1 million increase in revenues for comparable hotels,
primarily due to increases in room revenues.
Room revenues at comparable hotels for the year ended
December 31, 2006 increased approximately $7.6 million
or 6.2% compared to 2005, primarily due to an increase in RevPar
from $80.18 to $85.16, which consisted of a 4.5% increase in ADR
and a 1.6% increase in occupancy. Due to the continued recovery
in the economy and consistent with industry trends, several
hotels experienced increases in both ADR and occupancy. In
addition to improved market conditions, certain hotels also
benefited from the following:
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|
|
renovations were completed at several hotels in 2005, which
generated increased occupancy in 2006 as rooms previously under
renovations became available, and
|
|
|
|
certain hotels were successful in garnering more favorable group
room-night contracts in 2006.
|
Food and beverage revenues at comparable hotels for the year
ended December 31, 2006 increased approximately
$1.4 million or 5.8% compared to 2005 primarily due to the
overall increase in occupancy. The remainder of the increase is
primarily attributable to the 38 hotel properties acquired since
December 31, 2004.
Other revenues for the year ended December 31, 2006
compared to 2005 increased approximately $5.2 million or
43.7% due to an increase at comparable hotels of approximately
$174,000 or 2.6%, primarily resulting from increases in
occupancy, and an increase of approximately $5.0 million
related to incremental revenues attributable to the 38 hotel
properties acquired since December 31, 2004 that are
included in continuing operations.
Interest income from notes receivable increased to approximately
$14.9 million for the year ended December 31, 2006
compared to approximately $13.3 million for 2005 primarily
due to an increase in the average balance outstanding of the
notes receivable portfolio and an increase in interest rates.
Asset management fees remained flat at approximately
$1.3 million for both the years ended December 31,
2006 and 2005. Asset management fees relate to 27 hotel
properties owned by affiliates for which the Company provided
asset management and consulting services. The Company acquired
21 of these hotel properties from said affiliates on
March 16, 2005, and the affiliates subsequently sold the
remaining six hotel properties. However, the
45
affiliates, pursuant to an agreement, will continue to guarantee
a minimum annual fee of approximately $1.2 million through
December 31, 2008.
Hotel Operating Expenses. Hotel operating
expenses, which consists of room expense, food and beverage
expense, other direct expenses, indirect expenses, and
management fees, increased approximately $107.2 million or
55.8% for the year ended December 31, 2006 compared to
2005, primarily due to approximately $102.5 million of
expenses associated with the 38 hotel properties acquired since
December 31, 2004 that are included in continuing
operations. In addition, hotel operating expenses at comparable
hotels experienced an increase of approximately
$4.7 million or 4.6% for the year ended December 31,
2006 compared to 2005 primarily due to increases in rooms, food
and beverage, and indirect expenses.
Rooms expense at comparable hotels increased approximately
$1.6 million or 5.5% for the year ended December 31,
2006 compared to 2005 primarily due to increased occupancy at
most hotels and virtually flat costs at hotels experiencing
comparable occupancy due to the fixed nature of maintaining
staff. Food and beverage expense at comparable hotels for the
year ended December 31, 2006 compared to 2005 also
increased approximately $681,000, which is consistent with the
increase in food and beverage revenues at most hotels and the
overall increase in occupancy. Indirect expenses at comparable
hotels increased approximately $2.0 million or 4.3% for the
year ended December 31, 2006 compared to 2005. Indirect
expenses increased as a result of:
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increased hotel-level general and administrative expenses due to
increased salaries and staffing needs consistent with increased
revenues,
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|
increased sales and marketing expenses due to increased room
availability at certain hotels as a result of rooms undergoing
renovations during 2005,
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|
|
increased franchise fees due to increased room revenues at
certain hotels in 2006, and
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|
|
increased energy costs due to increased utility rates.
|
Property Taxes, Insurance, and Other. Property
taxes, insurance, and other increased approximately
$10.0 million or 63.7% for the year ended December 31,
2006 compared to 2005 due to approximately $9.6 million of
expenses associated with the 38 hotel properties acquired since
December 31, 2004 that are included in continuing
operations. Aside from additional costs incurred at these
acquired hotels, property taxes, insurance, and other expense
increased approximately $494,000 in 2006 compared to 2005
primarily resulting from increased property insurance rates,
primarily due to 2005 hurricanes, and increased property value
tax assessments at certain hotels.
Depreciation and Amortization. Depreciation
and amortization increased approximately $21.2 million or
78.0% for the year ended December 31, 2006 compared to 2005
primarily due to approximately $19.8 million of
depreciation associated with the 38 hotel properties acquired
since December 31, 2004 that are included in continuing
operations. Aside from these additional hotels acquired,
depreciation and amortization increased approximately
$1.5 million in 2006 compared to 2005 as a result of
capital improvements made at several comparative hotels since
December 31, 2004.
Corporate General and
Administrative. Corporate general and
administrative expense increased to approximately
$20.4 million for the year ended December 31, 2006
compared to approximately $14.5 million for 2005 primarily
due to overall company growth and an increase in non-cash
expenses associated with stock-based compensation to
approximately $5.2 million in 2006 compared to
approximately $3.4 million in 2005. As a percentage of
total revenue, however, corporate general and administrative
expense decreased to approximately 4.3% in 2006 from
approximately 4.8% in 2005 due to corporate synergies inherent
in overall growth.
Operating Income. Operating income increased
approximately $23.0 million to approximately
$77.1 million for the year ended December 31, 2006
from approximately $54.1 million in 2005 as result of the
aforementioned operating results.
Interest Income. Interest income increased
approximately $1.9 million to approximately
$2.9 million for the year ended December 31, 2006 from
approximately $1.0 million in 2005 primarily due to
interest earned on funds received from borrowings and equity
offerings in 2006 in excess of interest earned on funds received
from borrowings and equity offerings in 2005.
46
Interest Expense and Amortization of Loan
Costs. Interest expense and amortization of loan
costs increased approximately $10.5 million to
approximately $45.2 million for the year ended
December 31, 2006 from approximately $34.7 million in
2005. The increase in interest expense and amortization of loan
costs is associated with the higher average debt balance over
the course of the two comparative periods and increased interest
rates.
Write-off of Loan Costs and Exit Fees. On
May 30, 2006, the Company repaid its then outstanding
$11.1 million balance on its mortgage note payable, due
April 1, 2011, which resulted in the write-off of
unamortized loan costs of approximately $101,000.
During the year ended December 31, 2005, the Company
recorded write-off of loan costs and exit fees of
$5.8 million consisting of the following:
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|
|
On January 20, 2005, the Company repaid its
$15.5 million mortgage note payable, due December 31,
2005, and its $7.0 million mortgage note payable, due
July 31, 2007, which resulted in the write-off of
unamortized loan costs of approximately $151,000.
|
|
|
|
On November 10, 2005, the Company repaid the remaining
$18.8 million balance outstanding under its
$45.6 million credit facility, due July 13, 2007,
which resulted in the write-off of unamortized loan costs of
approximately $640,000 and early exit fees of approximately
$456,000.
|
|
|
|
On November 14, 2005, the Company repaid its
$210.0 million term loan, due October 10, 2006, and
its $6.2 million mortgage loan, due January 1, 2006,
which resulted in the write-off of unamortized loan costs of
approximately $2.5 million and early exit fees of
approximately $2.1 million.
|
Loss on Debt Extinguishment. During the year
ended December 31, 2006, there were no losses on debt
extinguishments. During the year ended December 31, 2005,
the Company completed several debt restructuring transactions to
extend its maturities, lower its borrowing costs, and fix its
interest rates. On March 30, 2005, the Company paid down
mortgage debt assumed in the 21-property hotel portfolio
acquisition on March 16, 2005 by approximately
$18.2 million, which generated a loss on early
extinguishment of debt of approximately $2.3 million, which
is net of the write-off of the related portion of debt premium
of approximately $1.4 million. On October 13, 2005,
the Company extinguished approximately $98.9 million of
this debt, which generated a loss on early extinguishment of
debt of approximately $4.3 million, which is net of the
write-off of debt premiums associated with these mortgages of
approximately $3.0 million. On December 20, 2005, the
Company extinguished the remaining $31.0 million of this
debt, which generated a loss on early extinguishment of debt of
approximately $3.4 million, which is net of the write-off
of the debt premium associated with this mortgage of
approximately $780,000.
Benefit from Income Taxes. As a REIT, the
Company generally will not be subject to federal corporate
income tax on the portion of its net income that does not relate
to taxable REIT subsidiaries. However, the Company leases each
of its hotel properties to Ashford TRS, which is treated as a
taxable REIT subsidiary for federal income tax purposes. For the
years ended December 31, 2006 and 2005, the benefit from
income taxes related to continuing operations of approximately
$2.9 million and $2.6 million, respectively, relates
to the net income associated with Ashford TRS. For the years
ended December 31, 2006 and 2005, an additional provision
for income taxes of approximately $226,000 and
$2.4 million, respectively, is included in discontinued
operations.
Minority Interest Related to Limited
Partners. Minority interest related to limited
partners represents a reduction to net income of approximately
$4.5 million and $1.5 million for the years ended
December 31, 2006 and 2005, respectively. Upon formation of
the Company on August 29, 2003, minority interest in the
operating partnership was established to represent the limited
partners proportionate share of the equity in the
operating partnership. Minority interest related to limited
partners represents an allocation of net income (loss) available
to common shareholders based on the weighted-average ownership
percentage of these limited partners common unit holdings
throughout the period plus dividends related to these limited
partners Class B unit holdings.
Income from Continuing Operations. Income from
continuing operations was approximately $33.1 million and
$5.7 million for the years ended December 31, 2006 and
2005, respectively, which represents an increase of
approximately $27.4 million as a result of the
aforementioned operating results.
47
Income from Discontinued Operations, Net. On
March 16, 2005, the Company acquired 21 hotel properties
and an office building for approximately $250.0 million.
Soon thereafter, the Company made a strategic commitment to sell
eight of these hotel properties, six of which were sold in the
second quarter of 2005. On January 17, 2006, the Company
sold the remaining two properties. On June 17, 2005, the
Company acquired 30 hotel properties for approximately
$465.0 million. Soon thereafter, the Company made a
strategic commitment to sell eight of these properties, which
were sold on March 24, 2006. On December 7, 2006, the
Company acquired seven hotel properties for approximately
$267.2 million, two of which were immediately held for
sale. In late 2006 and early 2007, the Company made a strategic
decision to sell an additional 16 hotel properties acquired
between 2003 and 2006 and its office building acquired on
March 16, 2005. Operating results related to these
properties during the periods such properties were owned are
included in income from discontinued operations for both the
years ended December 31, 2006 and 2005. These results also
reflected allocated interest and related debt expense totaling
$4.0 million and $3.7 million for 2006 and 2005,
respectively.
Net Income. Net income was approximately
$37.8 million and $9.4 million for the years ended
December 31, 2006 and 2005, respectively, which represents
an increase of approximately $28.4 million as a result of
the aforementioned operating results.
Preferred Dividends. During the year ended
December 31, 2006, the Company declared cash dividends of
approximately $4.9 million, or $0.5344 per share per
quarter, for Series A preferred stockholders, and
approximately $6.0 million, or $0.20 per share per quarter,
for Series B preferred stockholders. During the year ended
December 31, 2005, the Company declared cash dividends of
approximately $4.9 million and $3.4 million, for
Series A preferred stockholders and Series B preferred
stockholders, respectively. In addition, on June 15, 2005,
the Company sold a financial institution its remaining
6,454,816 shares of Series B cumulative convertible
redeemable preferred stock for approximately $65.0 million,
or $10.07 per share. In connection with this sale, the Company
recognized a non-cash preferred dividend of approximately
$1.0 million related to the difference in the market value
of the Companys common stock and the $10.07 conversion
price on June 6, 2005, which represents the date at which
the Company notified the financial institution of its intention
to exercise its option to sell the preferred shares.
Net Income Available to Common
Shareholders. Net income available to common
shareholders was approximately $26.9 million and $134,000
for the years ended December 31, 2006 and 2005,
respectively, which represents an increase of approximately
$26.8 million as a result of the aforementioned operating
results and preferred dividends.
LIQUIDITY
AND CAPITAL RESOURCES
Our principal source of funds to meet our cash requirements,
including distributions to stockholders, is our share of the
operating partnerships cash flow. The operating
partnerships principal sources of cash flow include:
(i) cash flow from hotel operations, (ii) interest
income from and repayments of our notes receivable portfolio,
and (iii) proceeds from sales of hotel properties and other
assets. The Company believes it has adequate means to satisfy
all of its short-term cash obligations through cash flows from
hotel operations, potential sales of hotels, availability on its
lines of credit, or potential additional borrowings on its
unencumbered assets.
Cash flows from hotel operations are subject to all operating
risks common to the hotel industry, including:
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Competition for guests from other hotels;
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Adverse effects of general and local economic conditions;
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Dependence on demand from business and leisure travelers, which
may fluctuate and be seasonal;
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Increases in energy costs, airline fares, and other
travel-related expenses, which may deter traveling;
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Increases in operating costs, including wages, benefits,
insurance, and energy, related to inflation and other factors;
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Overbuilding in the hotel industry, especially in particular
markets; and
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Actual or threatened acts of terrorism and actions taken against
terrorists, which create public concern over travel safety.
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48
During the year ended December 31, 2007, we completed the
following significant transactions, which have or will impact
our cash flow and liquidity:
Business
Combinations:
On April 11, 2007, the Company acquired the CNL Portfolio
from CNL Hotels and Resorts, Inc. (CNL) for
approximately $2.4 billion plus closing costs of
approximately $96.0 million. The Company acquired 100% of
33 properties and 70%-89% of 18 properties through existing
joint ventures. To fund this acquisition, the Company utilized
several sources as follows: a) borrowings of approximately
$928.5 million of ten-year, fixed-rate debt at an average
blended interest rate of 5.95%, approximately
$555.1 million of two-year, variable-rate debt with three
one-year extension options at an interest rate of LIBOR plus
1.65%, and approximately $325.0 million of one-year,
variable-rate debt with two one-year extension options at an
interest rate of LIBOR plus 1.5%, b) the sale of
8.0 million shares of Series C Cumulative Redeemable
Preferred Stock for approximately $200.0 million less a
commitment fee of approximately $6.3 million at a dividend
rate of LIBOR plus 2.5%, c) assumed fixed-rate debt of
approximately $562.1 million (or approximately
$432.3 million net of debt attributable to joint venture
partners), representing eleven fixed-rate loans with an average
blended interest rate of 6.01% and expiration dates ranging from
2008 to 2027, and d) a $50.0 million draw on a newly
executed $200.0 million credit facility with an interest
rate of LIBOR plus a range of 1.55% to 1.95% depending on the
loan-to-value ratio, which matures April 9, 2010 with two
one-year extension options, and requires interest-only payments
through maturity.
On April 11, 2007, the Company acquired the remaining 15%
joint venture interest in the Hyatt Regency Dearborn in Detroit,
Michigan, for approximately $7.5 million, which represents
approximately $2.9 million in cash and assumed debt of
approximately $4.6 million. The Company acquired the other
85% interest pursuant to its acquisition of CNL Portfolio, which
was consummated April 11, 2007, as discussed above.
On May 21, 2007, the Company acquired a Marriott Residence
Inn and a Hampton Inn, both in Jacksonville, Florida, from MS
Resort Holdings LLC for approximately $35.8 million in
cash. The acquisition of these hotel properties, which were
previously owned by CNL, related to the Companys
acquisition of the CNL Portfolio on April 11, 2007. The
Company used proceeds from its sale of seven hotels on
May 18, 2007 and cash on hand to fund this acquisition.
On December 15, 2007, the Company completed an asset swap
with Hilton Hotels Corporation, its partner in two joint
ventures which were simultaneously dissolved, whereby the
Company surrendered its majority ownership interest in two hotel
properties in exchange for the joint venture partners
minority ownership interest in nine hotel properties. In
connection with this asset swap, the Company assumed
$41.9 million of debt previously attributable to the joint
venture partners minority ownership in the nine acquired
hotel properties that secured such debt and ceded
$109.5 million of debt, of which $80.1 million was
attributable to its majority ownership in the two surrendered
hotel properties that secured such debt and the remainder
attributable to the joint venture partners former minority
ownership.
Capital
Stock:
On April 11, 2007, the Company issued 8.0 million
shares of Series C cumulative redeemable preferred stock at
$25 per share for approximately $200.0 million less a
commitment fee of approximately $6.3 million. On
July 18, 2007, with proceeds received from the issuance of
Series D preferred stock discussed below, the Company
redeemed its 8.0 million shares of Series C preferred
stock for approximately $200.0 million and received a
refund of related commitment fees of approximately
$4.3 million.
On April 24, 2007, in a follow-on public offering, the
Company issued 48,875,000 shares of its common stock at
$11.75 per share, which generated gross proceeds of
approximately $574.3 million. However, the aggregate
proceeds to the Company, net of underwriters discount and
offering costs, was approximately $548.2 million. The
48,875,000 shares issued include 6,375,000 shares sold
pursuant to an over-allotment option granted to the
underwriters. These net proceeds along with cash on hand were
used to pay-down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, payoff the $325.0 million variable-rate loan, due
April 9, 2008, and pay-down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively.
49
On July 18, 2007, the Company issued 8.0 million
shares of 8.45% Series D cumulative preferred stock at $25
per share for approximately $200.0 million less
underwriting discounts and commissions of approximately
$6.3 million.
During the year ended December 31, 2007, the Company
acquired 60,177 shares of treasury stock for approximately
$728,000 in connection with the Companys Incentive Stock
Plan (Stock Plan), which allows employees to tender
vested shares of restricted common stock to the Company at
current market prices to cover individual federal income taxes
withheld on such shares as such shares vest. During the year
ended December 31, 2007, the Company reissued 36,841
treasury shares under its Stock Plan as common stock granted to
its executives, certain employees, and directors.
During the year ended December 31, 2007, the Company
acquired 2,366,300 shares of treasury stock for
approximately $18.2 million in connection with its stock
repurchase program.
Discontinued
Operations:
On February 6, 2007, the Company sold its Marriott located
in Trumbull, Connecticut, for approximately $28.3 million.
As the Company acquired this property on December 7, 2006,
no gain or loss was recognized on the sale.
On February 8, 2007, the Company sold its Fairfield Inn in
Princeton, Indiana, for approximately $3.2 million. In
connection with this sale, the Company recognized a gain of
approximately $1.4 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On April 24, 2007, the Company sold its Radisson Hotel in
Indianapolis, Indiana, for approximately $5.4 million. In
connection with this sale, the Company recognized a gain of
approximately $2.7 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On April 26, 2007, the Company sold its Fairfield Inn in
Evansville, Indiana, for approximately $5.5 million. In
connection with this sale, the Company recognized a gain of
approximately $531,000, of which related income tax gains were
deferred through a 1031 like-kind exchange.
On April 27, 2007, the Company sold its Embassy Suites in
Phoenix, Arizona, for approximately $25.0 million. In
connection with this sale, the Company recognized a gain of
approximately $8.5 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On May 2, 2007, the Company sold its Radisson Hotel in
Covington, Kentucky, and an office building for approximately
$22.4 million. In connection with this sale, the Company
recognized a gain of approximately $3.4 million, of which
related income tax gains were deferred through a 1031 like-kind
exchange.
On May 18, 2007, the Company sold its portfolio of seven
TownePlace Suites hotels for approximately $57.5 million.
In connection with this sale, the Company recognized a gain of
approximately $18.3 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On July 2, 2007, the Company sold its Hampton Inn in Horse
Cave, Kentucky, for approximately $3.5 million. In
connection with this sale, the Company recognized a gain of
approximately $363,000.
On September 27, 2007, the Company sold its Doubletree
Guest Suites in Dayton, Ohio, for approximately
$6.5 million. In connection with this sale, the Company
recognized a gain of approximately $168,000.
On October 2, 2007, the Company sold its Hilton in
Birmingham, Alabama, for approximately $25.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on the sale. In connection with this
sale, the Company paid down its $375.0 million mortgage
loan, due May 9, 2009, by approximately $23.7 million.
On November 2, 2007, the Company sold two Residence Inns in
Torrance, California, and Atlanta, Georgia, for approximately
$61.5 million. As the Company acquired these properties on
April 11, 2007, no gain or loss was recognized on the sale.
In connection with this sale, the Company paid down its
$375.0 million mortgage loan, due
50
May 9, 2009, by approximately $67.7 million pursuant
to the loan agreement, with proceeds from the sale and corporate
cash.
On November 20, 2007, the Company sold its Residence Inn in
Kansas City, Missouri, for approximately $7.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale. In connection with
this sale, the Company paid down its $375.0 million
mortgage loan, due May 9, 2009, by approximately
$7.4 million.
On November 30, 2007, the Company sold its Marriott in
Baltimore, Maryland, for approximately $61.5 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale. In connection with
this sale, the Company paid down its $375.0 million
mortgage loan, due May 9, 2009, by approximately
$62.4 million.
Notes
Receivable:
On February 6, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due February 2007.
On May 8, 2007, the Company received approximately
$8.6 million related to all principal and interest due
under its $8.5 million note receivable, due June 2007.
On June 11, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due May 2010.
On June 18, 2007, the Company received approximately
$5.7 million related to all principal and interest due
under its $5.6 million note receivable, due July 2008.
On December 5, 2007, the Company originated a
$21.5 million mezzanine loan receivable, due January 2018.
Indebtedness:
On January 30, 2007, the Company completed a
$20.0 million draw on its $150.0 million credit
facility, due August 16, 2008.
On February 6, 2007, in connection with the Companys
sale of its Marriott located in Trumbull, Connecticut, for
approximately $28.3 million, the Company paid down its
$212.0 million mortgage note payable, due December 11,
2009, by approximately $28.0 million. Consequently, the
$212.0 million mortgage loan secured by seven hotels
outstanding at December 31, 2006 became the
$184.0 million mortgage loan secured by six hotels
outstanding at September 30, 2007.
On March 8, 2007, the Company terminated its
$100.0 million credit facility, due December 23, 2008.
This credit facility never had an outstanding balance.
On April 9, 2007, the Company drew $45.0 million on
its $47.5 million credit facility, due October 10,
2008.
On April 10, 2007, the Company repaid its
$45.0 million outstanding balance on its
$150.0 million credit facility, due August 16, 2008,
and terminated the facility.
On April 11, 2007, in connection with its acquisition of
the CNL Portfolio for approximately $2.4 billion plus
closing costs of approximately $96.0 million, the Company
executed a $928.5 million, ten-year, fixed-rate loan at an
average blended interest rate of 5.95%, a $555.1 million,
two-year, variable-rate loan with three one-year extension
options at an interest rate of LIBOR plus 1.65%, and a
$325.0 million, one-year, variable-rate loan with two
one-year extension options at an interest rate of LIBOR plus
1.5%, and assumed fixed-rate debt of approximately
$562.1 million (or approximately $432.3 million net of
debt attributable to joint venture partners), representing
eleven fixed-rate loans with an average blended interest rate of
6.01% and expiration dates ranging from 2008 to 2027. In
addition, the Company executed a $200.0 million credit
facility with an interest rate of LIBOR plus a range of 1.55% to
1.95% depending on the loan-to-value ratio, which matures
April 9, 2010 with two one-year extension options, requires
interest-only payments through maturity, and requires quarterly
commitment
51
fees ranging from 0.125% to 0.20% of the average undrawn balance
during the quarter. To fund this acquisition, the Company drew
approximately $50.0 million on this credit facility.
On April 11, 2007, in connection with its acquisition of
the remaining 15% joint venture interest in the Hyatt Regency
Dearborn in Detroit, Michigan, for approximately
$7.5 million, the Company assumed debt attributable to the
joint venture partner of approximately $4.6 million. The
Company acquired the other 85% interest pursuant to its
acquisition of the CNL Portfolio on April 11, 2007, as discussed
above.
On April 16, 2007, the Company drew $25.0 million on
its $200.0 million credit facility, due April 9, 2010.
On April 24 and 25, 2007, with proceeds received from its
follow-on public offering completed April 24, 2007, the
Company paid down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, paid off the $325.0 million variable-rate loan, due
April 9, 2008, and paid down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively.
On May 3, 2007, the Company repaid $25.0 million on
its $200.0 million credit facility, due April 9, 2010.
On May 18, 2007, in connection with the Companys sale
of its portfolio of seven TownePlace Suites hotels for
approximately $57.5 million, the Company paid down
approximately $32.0 million related to its mortgage loan
due July 1, 2015. Consequently, the $487.1 million
mortgage loan secured by 32 hotels outstanding at
December 31, 2006 became the $455.1 million mortgage
loan secured by 25 hotels outstanding at December 31, 2007.
On May 22, 2007, the Company modified its
$200.0 million credit facility, due April 9, 2010, to
increase its capacity to $300.0 million.
On October 2, 2007, in connection with the sale of its
Hilton in Birmingham, Alabama, for approximately
$25.0 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $23.7 million.
On October 9, 2007, the Company drew approximately
$47.5 million on its $47.5 million credit facility,
and used the proceeds to repay $20.0 million on its
$300.0 million credit facility, due April 9, 2010. On
October 11, 2007, the revolving period on this
$47.5 million credit facility expired and the outstanding
balance converted to a $47.5 million mortgage loan, due
October 10, 2008, at an interest rate of LIBOR plus 2%,
requiring monthly interest-only payments through maturity, with
three one-year extension options.
On October 9, 2007, the repaid $20.0 million on its
$300.0 million credit facility, due April 9, 2010.
On November 2, 2007, in connection with the sale of two
Residence Inns in Torrance, California, and Atlanta, Georgia,
for approximately $61.5 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $67.7 million pursuant to the loan agreement,
with proceeds from the sale and corporate cash.
On November 20, 2007, in connection with the sale of its
Residence Inn in Kansas City, Missouri, for approximately
$7.0 million, the Company paid down its $375.0 million
mortgage loan, due May 9, 2009, by approximately
$7.4 million.
On November 30, 2007, in connection with the sale of its
Marriott in Baltimore, Maryland, for approximately
$61.5 million, the Company paid down its
$375.0 million mortgage loan, due May 9, 2009, by
approximately $62.4 million.
On December 4, 2007, the Company drew $25.0 million on
its $300.0 million credit facility, due April 9, 2010.
On December 15, 2007, in connection with an asset swap with
a joint venture partner, the Company assumed $41.9 million
of mortgage debt previously attributable to the joint venture
partners minority ownership in nine acquired hotel
properties that secured such debt and ceded $109.5 million
of mortgage debt, of which $80.1 million was attributable
to its majority ownership in the two surrendered hotel
properties that secured such debt and the remainder attributable
to the joint venture partners former minority ownership.
Such surrendered debt had maturities ranging from 2010 to 2011.
52
On December 15, 2007, in connection with the aforementioned
asset swap, the Company repaid an additional $8.7 million
of mortgage debt attributable to its majority ownership in such
joint ventures, which was secured by hotels involved in the
asset swap and had maturities ranging from 2010 to 2011.
On December 20, 2007, the Company drew $10.0 million
on its $300.0 million credit facility, due April 9,
2010.
Dividends:
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $100.4 million, or
$0.21 per share per quarter, related to both common stockholders
and common unit holders, of which approximately
$92.3 million and $8.1 million related to each,
respectively. During the year ended December 31, 2007, the
Company declared cash dividends of approximately
$2.9 million, or $0.19 per share per quarter, related to
Class B unit holders.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $4.9 million, or
$0.5344 per share per quarter, related to Series A
preferred stockholders.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $6.3 million, or
$0.21 per share per quarter, related to Series B preferred
stockholders.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $4.3 million,
based on LIBOR plus 2.5% for the period outstanding, related to
Series C preferred stockholders. In addition, the Company
recognized non-cash preferred dividends of approximately
$845,000 related to the amortization of the discount
attributable to the increasing-rate preferred dividend clause
effective 18 months after issuance.
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $7.7 million, or
$0.5281 per share per quarter prorated for the period
outstanding, related to Series D preferred stockholders.
Net Cash Flow Provided By Operating
Activities. For the year ended December 31,
2007, net cash flow provided by operating activities increased
approximately $16.0 million from cash flow provided of
approximately $139.7 million for 2006 to cash flow provided
of approximately $155.7 million for 2007. The increase in
net cash flow provided by operating activities was primarily
attributable to improved operating income excluding
depreciation, amortization, and gains on sales in 2007, which
resulted from improved operations at the 56 comparable hotels
included in continuing operations as well as the 54 hotels
acquired since December 31, 2005 included in continuing
operations. The increase was partially offset by an increase in
restricted cash in 2007 compared to a decrease in restricted
cash in 2006.
Net Cash Flow Used In Investing
Activities. For the year ended December 31,
2007, net cash flow used in investing activities was
approximately $1.9 billion, which consisted of
approximately $2.1 billion related to acquisitions of hotel
properties, $21.5 million related to acquisitions or
originations of notes receivable, and approximately
$127.3 million of improvements to various hotel properties.
These cash outlays were partially offset by approximately
$304.9 million related to sales of 22 hotel properties and
one office building and approximately $30.1 million related
to payments on notes receivable. For the year ended
December 31, 2006, net cash flow used in investing
activities was approximately $565.5 million, which
consisted of approximately $540.6 million related to
acquisitions of hotel properties, $37.3 million related to
acquisitions or originations of notes receivable, and
$47.7 million of improvements to various hotel properties.
These cash outlays were somewhat offset by net proceeds of
approximately $17.4 million related to the sales of ten
hotel properties and $42.8 million related to payments on
notes receivable.
Net Cash Flow Provided By Financing
Activities. For the year ended December 31,
2007, net cash flow provided by financing activities was
approximately $1.7 billion, which represents approximately
$2.0 billion in borrowings of debt, $193.3 million of
net proceeds related to the issuance of Series C preferred
stock, $193.8 million of net proceeds related to the
issuance of Series D preferred stock, and
$548.2 million of net proceeds received from the
Companys follow-on public offering on April 24, 2007.
These cash inflows were partially offset by approximately
$832.1 million of payments on indebtedness and capital
leases, $195.7 million related to the redemption of
Series C preferred stock, $111.4 million of dividends
paid, $11.8 million in payments of loan costs,
$18.9 million of
53
payments to acquire treasury shares, $13.2 million of
distributions to joint venture partners, $2.4 million of
early repayment fees on debt, and approximately $10,000 of costs
associated with issuing common shares in exchange for units of
limited partnership interest. For the year ended
December 31, 2006, net cash flow provided by financing
activities was approximately $441.1 million, which
represents $178.9 million in draws on the Companys
credit facilities, $313.0 million of new debt borrowings to
fund acquisitions, and approximately $290.1 million of net
proceeds received from the Companys follow-on public
offerings on January 25, 2006 and July 25, 2006,
partially offset by approximately $66.1 million of
dividends paid, $271.4 million of payments on indebtedness
and capital leases, $3.3 million of payments of loan costs,
and $53,000 of costs associated with issuing common shares in
exchange for units of limited partnership interest.
In general, we focus exclusively on investing in the hospitality
industry across all segments, including direct hotel
investments, first mortgages, mezzanine loans, and eventually
sale-leaseback transactions. We intend to acquire and, in the
appropriate market conditions, develop additional hotels and
provide structured financings to owners of lodging properties.
We may incur indebtedness to fund any such acquisitions,
developments, or financings. We may also incur indebtedness to
meet distribution requirements imposed on REITs under the
Internal Revenue Code to the extent that working capital and
cash flow from our investments are insufficient to fund required
distributions.
However, no assurances can be given that we will obtain
additional financings or, if we do, what the amount and terms
will be. 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 mortgage
financing on individual properties and our mortgage investments.
We will acquire or develop additional hotels and invest in
structured financings only as suitable opportunities arise, and
we will not undertake such investments unless adequate sources
of financing are available. Funds for future hotel-related
investments are expected to be derived, in whole or in part,
from future borrowings under a credit facility or other loan,
proceeds from hotel sales, or proceeds from additional issuances
of common stock, preferred stock, or other securities. However,
other than acquisitions mentioned herein, 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.
Our existing hotels are located in developed areas that contain
competing hotel properties. The future occupancy, ADR, and
RevPAR of any individual hotel could be materially and adversely
affected by an increase in the number or quality of the
competitive hotel properties in its market area. Competition
could also affect the quality and quantity of future investment
opportunities.
INFLATION
We rely entirely on the performance of our properties and the
ability of the properties managers to increase revenues to
keep pace with inflation. Hotel operators can generally increase
room rates rather quickly, but competitive pressures may limit
their ability to raise rates faster than inflation. Our general
and administrative costs, real estate and personal property
taxes, property and casualty insurance, and utilities are
subject to inflation as well.
SEASONALITY
Our properties operations historically have been seasonal
as certain properties maintain higher occupancy rates during the
summer months and some during the winter months. This
seasonality pattern can cause fluctuations in our quarterly
lease revenue under our percentage leases. We anticipate that
our cash flows from the operations of our properties will be
sufficient to enable us to make quarterly distributions to
maintain our REIT status. To the extent that cash flows from
operations are insufficient during any quarter due to temporary
or seasonal fluctuations in lease revenue, we expect to utilize
other cash on hand or borrowings to fund required distributions.
However, we cannot make any assurances that we will make
distributions in the future.
54
CRITICAL
ACCOUNTING POLICIES
Our accounting policies are more fully described in note 3
to our consolidated financial statements. As disclosed in
note 3, the preparation of the financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions about
future events that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ
significantly from those estimates. The Company believes that
the following discussion addresses the Companys most
critical accounting policies, representing those policies
considered most vital to the portrayal of the Companys
financial condition and results of operations and require
managements most difficult, subjective, and complex
judgments.
Management Agreements In connection with the
Companys acquisitions of Marriott Crystal Gateway hotel in
Arlington, Virginia, on July 13, 2006 and the 51-hotel CNL
portfolio on April 11, 2007, the Company assumed certain
existing management agreements. Based on the Companys
review of these management agreements, the Company concluded
that the terms of certain management agreements are more
favorable to the respective managers than typical current market
management agreements. As a result, the Company recorded
unfavorable contract liabilities related to these management
agreements of $23.4 million as of the respective
acquisition dates based on the present value of expected cash
outflows over the initial terms of the related agreements. Such
unfavorable contract liabilities are amortized as reductions to
incentive management fees on a straight-line basis over the
initial terms of the related agreements. In evaluating
unfavorable contract liabilities, the Companys analysis
involves considerable management judgment and assumptions.
Income Taxes At December 31, 2007, the
Company increased the valuation allowance to approximately
$64.1 million to fully offset its net deferred tax asset
except for certain minor deductible temporary differences. As a
result of Ashford TRS losses in 2007 and 2006, and the
limitations imposed by the Internal Revenue Code on the
utilization of net operating losses of acquired subsidiaries,
the Company believes that it is more likely than not its net
deferred tax asset will not be realized, and therefore, has
provided a valuation allowance to fully reserve against these
amounts. In addition, at December 31, 2007, Ashford TRS has
net operating loss carryforwards for federal income tax purposes
of approximately $110.2 million, which are available to
offset future taxable income, if any, through 2027. The analysis
utilized by the Company in determining its deferred tax asset
valuation allowance involves considerable management judgment
and assumptions.
In July 2006, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
(FIN No. 48), effective January 1,
2007. FIN No. 48 prescribes a recognition threshold
and measurement attribute for the recognition and measurement of
a tax position taken in a tax return. FIN No. 48
requires that a determination be made as to whether it is
more likely than not that a tax position taken,
based on its technical merits, will be sustained upon
examination, including resolution of any appeals and litigation
processes. If the more-likely-than-not threshold is met, the
related tax position must be measured to determine the amount of
provision or benefit, if any, to recognize in the financial
statements. FIN No. 48 applies to all tax positions
related to income taxes subject to FASB Statement No. 109,
Accounting for Income Taxes, but does not apply to
tax positions related to FASB Statement No. 5,
Accounting for Contingencies. The Company or its
subsidiaries file income tax returns in the U.S. federal
jurisdiction and various states, and in Canada. Tax years 2004
through 2006 remain subject to potential examination by certain
federal and state taxing authorities, respectively. No income
tax examinations are currently in process. As the Company
determined no material unrecognized tax benefits or liabilities
exist, the adoption of FIN No. 48, effective
January 1, 2007, did not impact the Companys
financial condition or results of operations. The Company
classifies interest and penalties related to underpayment of
income taxes as income tax expense.
Investment in Hotel Properties Hotel
properties are generally stated at cost. However, the initial
properties contributed upon the Companys formation are
stated at the predecessors historical cost, net of any
impairment charges, plus a minority interest partial
step-up
related to the acquisition of minority interest from third
parties associated with four of the initial properties. In
addition, in connection with the 51-hotel CNL portfolio acquired
on April 11, 2007 and subsequent asset swap completed on
December 15, 2007, the Company owns between 75%-89%
ownership interest in certain hotel properties owned by joint
ventures. For these hotel properties, the carrying basis
attributable to the joint venture partners minority
ownership is recorded at the predecessors historical cost,
net of any impairment charges, while the carrying basis
attributable to the Companys majority ownership is
recorded
55
based on the allocated purchase price of the Companys
ownership interest in the joint ventures. All improvements and
additions which extend the useful life of hotel properties are
capitalized.
Impairment of Investment in Hotel Properties and Hotel
Related Intangibles Hotel properties and hotel
related intangibles are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying values of
such hotel properties may not be recoverable. The Company tests
for impairment in several situations, including when current or
projected cash flows are less than historical cash flows, when
it becomes more likely than not that a hotel property will be
sold before its previously estimated useful life expires, and
when events or changes in circumstances indicate that a hotel
propertys net book value or the carrying value of the
related intangibles may not be recoverable. In evaluating the
impairment of hotel properties and hotel related intangibles,
the Company makes many assumptions and estimates, including
projected cash flows, holding period, expected useful life,
future capital expenditures, and fair values, which considers
capitalization rates, discount rates, and comparable selling
prices. If an asset was deemed to be impaired, the Company would
record an impairment charge for the amount that the
propertys net book value exceeds its fair value. To date,
no such impairment charges have been recognized.
Depreciation and Amortization Expense
Depreciation expense is based on the estimated useful life
of the Companys assets, while amortization expense for
leasehold improvements is based on the shorter of the lease term
or the estimated useful life of the related assets. Presently,
hotel properties are depreciated using the straight-line method
over lives which range from 15 to 39 years for buildings
and improvements and 3 to 5 years for furniture, fixtures,
and equipment. While the Company believes its estimates are
reasonable, a change in estimated lives could affect
depreciation expense and net income (loss) as well as resulting
gains or losses on potential hotel sales.
Assets Held For Sale and Discontinued Operations
The Company records assets as held for sale when management
has committed to a plan to sell the assets, actively seeks a
buyer for the assets, and the consummation of the sale is
considered probable and expected within one year. The related
operations of assets held for sale are reported as discontinued
if a) such operations and cash flows can be clearly
distinguished, both operationally and financially, from the
ongoing operations of the Company, b) such operations and
cash flows will be eliminated from ongoing operations once the
disposal occurs, and c) the Company will not have any
significant continuing involvement subsequent to the disposal.
Notes Receivable The Company provides
mezzanine and first-mortgage financing in the form of loans
receivable, which are recorded at cost, adjusted for net
origination fees and costs. Premiums, discounts, and net
origination fees are amortized or accreted as an adjustment to
interest income using the effective interest method. Loans
receivable are reviewed for potential impairment at each balance
sheet date. A loan receivable is considered impaired when it
becomes probable, based on current information, that the Company
will be unable to collect all amounts due according to the
loans contractual terms. The amount of impairment, if any,
is measured by comparing the recorded amount of the loan to the
present value of the expected future cash flows or the fair
value of the collateral. If a loan was deemed to be impaired,
the Company would record a reserve for loan losses through a
charge to income for any shortfall. To date, no such impairment
charges have been recognized.
In accordance with Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable
Interest Entities, as revised
(FIN No. 46), variable interest entities,
as defined, must be consolidated by their primary beneficiaries
if the variable interest entities do not effectively disperse
risks among parties involved. The Companys mezzanine and
first-mortgage loans receivable are each secured by various
hotel properties or partnership interests in hotel properties
and are subordinate to primary loans related to the secured
hotels. All such loans receivable are considered to be variable
interests in the entities that own the related hotels, which are
variable interest entities. However, the Company is not
considered to be the primary beneficiary of these hotel
properties as a result of holding these loans. Therefore, the
Company does not consolidate such hotels for which it has
provided financing. Interests in entities acquired or created in
the future will be evaluated based on FIN No. 46
criteria, and such entities will be consolidated, if required.
In evaluating FIN No. 46 criteria, the Companys
analysis involves considerable management judgment and
assumptions.
56
Recent Accounting Pronouncements In September
2006, the FASB issued Statement of Financial Accounting
Standards (SFAS) No. 157, Fair Value
Measurements, effective for financial statements issued
for fiscal years beginning after November 15, 2007.
SFAS No. 157 provides guidance for using fair value to
measure assets and liabilities. SFAS No. 157 also
requires expanded information regarding the extent to which
assets and liabilities are measured at fair value, the
information used to measure fair value, and the effect of fair
value measurements on earnings. SFAS No. 157 applies
whenever other standards require (or permit) assets or
liabilities to be measured at fair value, and does not expand
the use of fair value in any new circumstances. In February
2008, FASB issued FASB Staff Position
No. FAS 157-2
to delay the effective date of SFAS No. 157 to fiscal
years beginning after November 15, 2008, for non-financial
assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial
statements on a recurring basis. Presently, the Company values
its derivative financial instruments at fair value. Based on its
preliminary assessment, the Company does not feel the adoption
of SFAS No. 157 will have a material impact on its
valuation of derivative financial instruments.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities, effective for financial statements issued for
fiscal years beginning after November 15, 2007.
SFAS No. 159 permits entities to choose to measure
many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by
providing entities with opportunities to mitigate volatility in
reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge
accounting provisions. Based on its preliminary assessment, the
Company does not feel the adoption of SFAS No. 159
will have a material impact on its valuation of derivative
financial instruments.
In December 2007, the FASB issued SFAS No. 141R
Business Combinations. SFAS 141R establishes
principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. The statement also
provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what
information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the
business combinations. SFAS 141R is effective for financial
statements issued for fiscal years beginning after
December 15, 2008. Accordingly, any business combinations
the Company engages in will be recorded and disclosed following
existing accounting principles until January 1, 2009. The
Company expects SFAS 141R will affect the Companys
consolidated financial statements when effective, but the nature
and magnitude of the specific effects will depend upon the
nature, term and size of the acquisitions, if any, the Company
consummates after the effective date.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements
(SFAS No. 160), effective for financial
statements issued for fiscal years beginning after
December 15, 2008. SFAS No. 160 states that
accounting and reporting for minority interests will be
recharacterized as noncontrolling interests and classified as a
component of equity. SFAS No. 160 applies to all
entities that prepare consolidated financial statements, except
not-for-profit organizations, and will impact the recording of
minority interest. The Company is currently evaluating the
effects the adoption of SFAS No. 160 will have on its
financial condition or results of operations.
CONTRACTUAL
OBLIGATIONS AND COMMITMENTS
As of December 31, 2007, our contractual obligations and
commitments are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
< 1 Year
|
|
|
2-3 Years
|
|
|
4-5 Years
|
|
|
> 5 Years
|
|
|
Total
|
|
|
Indebtedness payments(1)
|
|
$
|
171,329
|
|
|
$
|
710,563
|
|
|
$
|
115,104
|
|
|
$
|
1,700,011
|
|
|
$
|
2,697,007
|
|
Capital leases payments
|
|
|
235
|
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
|
498
|
|
Operating leases payments
|
|
|
5,203
|
|
|
|
7,916
|
|
|
|
6,963
|
|
|
|
178,948
|
|
|
|
199,030
|
|
Interest payments
|
|
|
96,306
|
|
|
|
127,879
|
|
|
|
130,834
|
|
|
|
1,530,517
|
|
|
|
1,885,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
273,073
|
|
|
$
|
846,621
|
|
|
$
|
252,901
|
|
|
$
|
3,409,476
|
|
|
$
|
4,782,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
57
As of December 31, 2007, our contractual obligations and
commitments including extension options are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments Due by Period
|
|
|
|
< 1 Year
|
|
|
2-3 Years
|
|
|
4-5 Years
|
|
|
> 5 Years
|
|
|
Total
|
|
|
Indebtedness payments(1)
|
|
$
|
123,880
|
|
|
$
|
360,123
|
|
|
$
|
512,993
|
|
|
$
|
1,700,011
|
|
|
$
|
2,697,007
|
|
Capital leases payments
|
|
|
235
|
|
|
|
263
|
|
|
|
|
|
|
|
|
|
|
|
498
|
|
Operating leases payments
|
|
|
5,203
|
|
|
|
7,916
|
|
|
|
6,963
|
|
|
|
178,948
|
|
|
|
199,030
|
|
Interest payments
|
|
|
96,948
|
|
|
|
167,303
|
|
|
|
159,918
|
|
|
|
1,530,517
|
|
|
|
1,954,686
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total contractual obligations
|
|
$
|
226,266
|
|
|
$
|
535,605
|
|
|
$
|
679,874
|
|
|
$
|
3,409,476
|
|
|
$
|
4,851,221
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Payments do not reflect the premiums of $3,768,000 that are
being amortized as a reduction of interest expense. |
At December 31, 2007, capital commitments of approximately
$40.6 million relating to general capital improvements are
expected to be paid in the next 12 months.
In addition, we have entered into employment agreements with
certain executive officers, which provide for minimum annual
base salaries, other fringe benefits, and non-compete clauses as
determined by our Board of Directors. These agreements terminate
on December 31, 2008, with automatic one-year renewals,
unless terminated by either party upon six months notice,
subject to severance provisions.
RECENT
DEVELOPMENTS
Effective January 1, 2008, the Company created the
Nonqualified Deferred Compensation Plan (NDCP),
which allows designated employees the option to defer receipt of
certain cash and restricted stock compensation and to index such
amounts to selected investment funds. With certain exceptions,
payments under NDCP will be upon a) a fixed date, as
selected by the employee, b) termination of employment, or
c) an unforeseeable emergency.
On January 2, 2008, the Company originated a
$7.1 million mezzanine loan receivable, which is secured by
one hotel, matures January 2011, at an interest rate of LIBOR
plus 9%, with interest-only payments through maturity.
On January 4, 2008, the Company drew $10.0 million on
its $300.0 million credit facility, due April 9, 2010.
On January 11, 2008, the Company sold its JW Marriott in
New Orleans, Louisiana, for approximately $67.5 million. As
the Company acquired this property on April 11, 2007, no
gain or loss will be recognized on this sale. In connection with
this sale, the buyer assumed approximately $43.5 million
mortgage debt, due August 1, 2010. In addition, the Company
wrote-off the related debt premium balance of approximately
$2.1 million and unamortized loan costs of approximately
$155,000.
On January 14, 2008, the Company drew $30.0 million on
its $300.0 million credit facility, due April 9, 2010.
On January 22, 2008, the Company formed a joint venture
with Prudential Real Estate Investors (PREI) to
invest in structured debt and equity hotel investments in the
United States. The joint venture, which is expected to be funded
over the next two years, will ultimately be capitalized with
$300 million from investors in a fund managed by PREI and
$100 million from the Company. The Company and PREI will
contribute the capital required for each mezzanine investment on
a 25%/75% basis, respectively. The Company will be entitled to
annual management and sourcing fees, reimbursement of expenses,
and a promoted yield equal to a current 1.3x the venture yield
subject to maximum threshold limitations, but further enhanced
by an additional promote based upon a total net return to PREI.
PREIs equity will be in a senior position on each
investment. With limited exceptions, the joint venture will be
the primary vehicle for the Companys hotel lending
efforts. The joint venture will have the right of first refusal
on all mezzanine investment opportunities presented by the
Company, provided the investment meets certain criteria. On
February 6, 2008, PREI acquired a 75% interest in the
Companys $21.5 million mezzanine loan receivable,
which the Company originated December 5, 2007, is secured
by two hotels, and matures January 2018. Simultaneously, the
Company and PREI capitalized the joint venture by contributing
this $21.5 million mezzanine loan receivable to the joint
venture.
On February 6, 2008, the Company drew $20.0 million on
its $300.0 million credit facility, due April 9, 2010.
On February 6, 2008, the Company acquired a
$38.0 million mezzanine loan receivable for approximately
$33.0 million, which is secured by one hotel, matures June
2017, at an interest rate of 9.66%, with interest-only payments
through maturity.
58
On February 19, 2008, the Company acquired a
$21.0 million senior mezzanine loan, which is secured by a
29-hotel portfolio, through its joint venture with PREI for
approximately $17.5 million at an interest rate of LIBOR
plus 2.75%, with interest only payments through maturity. This
loan has an initial term of three years from origination with
two one-year extension options.
|
|
Item 7A.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
Our primary market risk exposure consists of changes in interest
rates on borrowings under our debt instruments and notes
receivable that bear interest at variable rates that fluctuate
with market interest rates. The analysis below presents the
sensitivity of the market value of our financial instruments to
selected changes in market interest rates.
As of December 31, 2007, our $2.7 billion debt
portfolio, which includes approximately $34.8 million of
debt attributable to joint venture partners, consisted of
approximately $2.2 billion, or 81%, of fixed-rate debt,
with interest rates ranging from 5.42% to 7.24%, and
approximately $510.3 million, or 19%, of variable-rate
debt. As of December 31, 2006, our $1.1 billion debt
portfolio consisted of approximately $854.2 million, or
78%, of fixed-rate debt, with interest rates ranging from 5.41%
to 7.24%, and approximately $237.0 million, or 22%, of
variable-rate debt. Our overall weighted average interest rate
at December 31, 2007 and 2006 was 5.94% and 5.93%,
respectively.
For the years ended December 31, 2007 and 2006, the impact
to our results of operations of a one-point change in interest
rate on the outstanding balance of variable-rate debt as of
December 31, 2007 and 2006, respectively, would be
approximately $5.1 million and $2.4 million,
respectively.
Periodically, we purchase derivatives to increase stability
related to interest expense and to manage our exposure to
interest rate movements or other identified risks. To accomplish
this objective, we primarily use interest rate swaps and caps
within our cash flow hedging strategy. Interest rate swaps
designated as cash flow hedges involve the receipt of
variable-rate amounts in exchange for fixed-rate payments over
the life of the agreements without exchange of the underlying
principal amount. Interest rate caps provide us with interest
rate protection above the caps strike rate and result in
us receiving interest payments when interest rates exceed the
cap strike. As of December 31, 2007 and 2006, we owned the
following interest rate caps:
On October 28, 2005, we purchased a 7.0% LIBOR interest
rate cap with a $45.0 million notional amount, which
matured October 15, 2007, to limit our exposure to rising
interest rates on $45.0 million of our variable-rate debt.
We designated the $45.0 million cap as a cash flow hedge of
our exposure to changes in interest rates on a corresponding
amount of variable-rate debt. On February 9, 2006, we paid
down the related hedged $45.0 million mortgage loan, due
October 10, 2007, to $100 and discontinued hedge accounting
related to this derivative.
On December 6, 2006, we purchased a 6.25% LIBOR interest
rate cap with a $212.0 million notional amount, which
matures December 11, 2009, to limit our exposure to rising
interest rates on $212.0 million of our variable-rate debt.
We designated the $212.0 million cap as a cash flow hedge
of our exposure to changes in interest rates on a corresponding
amount of variable-rate debt. On February 6, 2007, we paid
down the related hedged $212.0 million mortgage loan, due
December 11, 2009, by approximately $28.0 million and
discontinued hedge accounting related to $28.0 million of
this derivative.
On December 6, 2006, we purchased a 6.25% LIBOR interest
rate cap with a $35.0 million notional amount, which
matures December 11, 2009, to limit our exposure to rising
interest rates on future variable-rate debt that we intend to
draw over the next two years as capital expenditures are
incurred. As this cap did not meet applicable hedge accounting
criteria, it is not designated as a cash flow hedge.
On April 11, 2007, we purchased four 6.0% LIBOR interest
rate caps with a total notional amount of approximately
$555.1 million, which mature May 9, 2009, to limit our
exposure to rising interest rates on $555.1 million of our
variable-rate debt. On April 25, 2007, we paid down the
related hedged $555.1 million mortgage loan, due
May 9, 2009, by approximately $180.1 million and
terminated a corresponding amount of these caps. As the
remaining $375.0 million of these derivatives did not meet
applicable hedge accounting criteria, such derivatives are not
designated as cash flow hedges.
On October 15, 2007, we purchased a 7.0% LIBOR interest
rate cap with a $47.5 million notional amount, which
matures October 15, 2008, to limit our exposure to rising
interest rates on $47.5 million of our variable-rate
59
debt. We designated the $47.5 million cap as a cash flow
hedge of our exposure to changes in interest rates on a
corresponding amount of variable-rate debt.
As of December 31, 2007, our $94.2 million notes
receivable portfolio consisted of approximately
$57.9 million of outstanding variable-rate notes and
approximately $36.5 million of outstanding fixed-rate
notes. As of December 31, 2006, our $103.0 million
notes receivable portfolio consisted of approximately
$80.0 million of outstanding variable-rate notes and
approximately $23.0 million of outstanding fixed-rate
notes. For the years ended December 31, 2007 and 2006, the
impact to our results of operations of a one-point change in
interest rate on the outstanding balance of variable-rate notes
receivable as of December 31, 2007 and 2006, respectively,
would be approximately $579,000 and $800,000, respectively.
The above amounts were determined based on the impact of
hypothetical interest rates on our borrowing and lending
portfolios, and assume no changes in our capital structure. As
the information presented above includes only those exposures
that exist as of December 31, 2007, it does not consider
exposures or positions which could arise after that date. Hence,
the information presented herein has limited predictive value.
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 at the time, and the
related interest rates.
|
|
Item 8.
|
Financial
Statements and Supplementary Data
|
The required financial statements are filed herein as listed in
Item 15.
|
|
Item 9.
|
Changes
In and Disagreements With Accountants on Accounting and
Financial Disclosure
|
None.
|
|
Item 9A.
|
Controls
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the
participation of our management, including our Chief Executive
Officer and our Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and
procedures. Based upon that evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective to ensure that
information required to be disclosed by us in the reports that
we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in
the SECs rules and forms, and that such information is
accumulated and communicated to our management, including our
Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required
disclosures.
Managements
Report on Internal Control over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term
is defined in Exchange Act
Rules 13a-15(e).
Under the supervision and with the participation of our
management, including our Chief Executive Officer and our Chief
Financial Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting
as of December 31, 2007 based on the framework in Internal
Control Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
Based on that evaluation, our management, including our Chief
Executive Officer and Chief Financial Officer, concluded that
our internal control over financial reporting was effective as
of December 31, 2007.
Changes
in Internal Control over Financial Reporting
There have been no changes in our internal controls over
financial reporting during our most recent fiscal quarter that
have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.
60
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Ashford Hospitality Trust, Inc.
We have audited Ashford Hospitality Trust, Inc.s (the
Company) internal control over financial reporting
as of December 31, 2007, based on criteria established in
Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Ashford Hospitality Trust, Inc.s
management is responsible for maintaining effective internal
control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting
included in the accompanying Managements Report on
Internal Control over Financial Reporting. Our responsibility is
to express an opinion on the Companys internal control
over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control
over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk
that a material weakness exists, testing and evaluating the
design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinion.
A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A companys
internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of
management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
companys assets that could have a material effect on the
financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Ashford Hospitality Trust, Inc. maintained, in
all material respects, effective internal control over financial
reporting as of December 31, 2007, based on the COSO
criteria.
We have also audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), the
2007 consolidated financial statements and financial statement
schedules of Ashford Hospitality Trust, Inc., and our report
dated February 29, 2008 expressed an unqualified opinion
thereon.
Dallas, Texas
February 29, 2008
61
|
|
Item 9B.
|
Other
Information
|
None.
PART III
|
|
Item 10.
|
Directors,
Executive Officers, and Corporate Governance
|
The required information is incorporated by reference from our
Proxy Statement to be filed with respect to the Annual Meeting
of Shareholders to be held on May 13, 2008.
|
|
Item 11.
|
Executive
Compensation
|
The required information is incorporated by reference from our
Proxy Statement to be filed with respect to the Annual Meeting
of Shareholders to be held on May 13, 2008.
|
|
Item 12.
|
Security
Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
|
The required information is incorporated by reference from our
Proxy Statement to be filed with respect to the Annual Meeting
of Shareholders to be held on May 13, 2008.
|
|
Item 13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
The required information is incorporated by reference from our
Proxy Statement to be filed with respect to the Annual Meeting
of Shareholders to be held on May 13, 2008.
|
|
Item 14.
|
Principal
Accountant Fees and Services
|
The required information is incorporated by reference from our
Proxy Statement to be filed with respect to the Annual Meeting
of Shareholders to be held on May 13, 2008.
62
PART IV
|
|
Item 15.
|
Financial
Statement Schedules and Exhibits
|
(a) Financial Statements and Schedules
|
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
73
|
|
Consolidated Financial Statements:
|
|
|
|
|
Consolidated Balance Sheets as of December 31, 2007 and 2006
|
|
|
74
|
|
Consolidated Statements of Operations for the years ended
December 31, 2007, 2006, and 2005
|
|
|
75
|
|
Consolidated Statements of Comprehensive Income for years ended
December 31, 2007, 2006, and 2005
|
|
|
76
|
|
Consolidated Statement of Owners Equity for the years
ended December 31, 2007, 2006, and 2005
|
|
|
77
|
|
Consolidated Statements of Cash Flows for the years ended
December 31, 2007, 2006, and 2005
|
|
|
80
|
|
Notes to Consolidated Financial Statements
|
|
|
81
|
|
Schedule III Real Estate and Accumulated
Depreciation as of December 31, 2007
|
|
|
128
|
|
Schedule IV Mortgage Loans and Interest Earned
on Real Estate as of December 31, 2007
|
|
|
135
|
|
All other financial statement schedules have been omitted
because such schedules are not required under the related
instructions, such schedules are not significant, or the
required information has been disclosed elsewhere in the
consolidated financial statements and related notes thereto.
63
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
3
|
.1
|
|
Articles of Amendment and Restatement (incorporated by reference
to Exhibit 3.1 of
Form S-11/A,
filed on July 31, 2003)
|
|
3
|
.2.1
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 of
Form S-11/A,
filed on July 31, 2003)
|
|
3
|
.2.2
|
|
Amendment No. 1 to Amended and Restated Bylaws
(incorporated by reference to Exhibit 3.2.2 to the
Registrants
Form 10-K
for the year ended December 31, 2003)
|
|
4
|
.1
|
|
Form of Certificate for Common Stock (incorporated by reference
to Exhibit 4.1 of
Form S-11/A,
filed on August 20, 2003)
|
|
4
|
.1.1
|
|
Articles Supplementary for Series A Cumulative
Preferred Stock, dated September 15, 2004 (incorporated by
reference to Exhibit 4.4 to the Registrants
Form 8-K,
dated September 21, 2004, for the event dated
September 15, 2004)
|
|
4
|
.1.2
|
|
Form of Certificate of Series A Cumulative Preferred Stock
(incorporated by reference to Exhibit 4.4.1 to the
Registrants
Form 8-K,
dated September 21, 2004, for the event dated
September 15, 2004)
|
|
4
|
.2
|
|
Articles Supplementary for
Series B-1
Convertible Preferred Stock, dated December 28, 2004
(incorporated by reference to Exhibit 4.1 to the
Registrants
Form 8-K,
dated January 4, 2005, for the event dated
December 28, 2004)
|
|
4
|
.3
|
|
Articles Supplementary for
Series B-2
Convertible Preferred Stock, dated December 28, 2004
(incorporated by reference to Exhibit 4.2 to the
Registrants
Form 8-K,
dated January 4, 2005, for the event dated
December 28, 2004)
|
|
4
|
.4
|
|
Articles Supplementary for Series C Cumulative
Redeemable Preferred Stock, dated April 11, 2007
(incorporated by reference to Exhibit 4.4 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
4
|
.5
|
|
Articles Supplementary for Series D Cumulative
Redeemable Preferred Stock, dated July 17, 2007
(incorporated by reference to Exhibit 3.5 to the
Registrants
Form 8-A,
filed July 17, 2007)
|
|
4
|
.6
|
|
Form of Certificate of Series D Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 4.2
to the Registrants
Form 8-A,
filed July 17, 2007)
|
|
10
|
.1.1
|
|
Third Amended and Restated Agreement of Limited Partnership of
Ashford Hospitality Limited Partnership (incorporated by
reference to Exhibit 10.33.1.1 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.1.2
|
|
Amendment No. 1 to Third Amended and Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership
(incorporated by reference to Exhibit 10.1.5 of the
Registrants
Form 8-K,
dated July 24, 2007, for the event dated July 18, 2007)
|
|
*10
|
.1.3
|
|
Amendment No. 2 to Third Amended Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership.
|
|
10
|
.2
|
|
Registration Rights Agreement among Ashford Hospitality Trust,
Inc. and the persons named therein (incorporated by reference to
Exhibit 10.2 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.3.1
|
|
Amended and Restated 2003 Stock Incentive Plan of Ashford
Hospitality Trust, Inc. (incorporated by reference to
Exhibit 10.3.1 to the Registrants
Form 8-K,
dated May 9, 2005, for the event dated May 3, 2005)
|
|
*10
|
.3.2
|
|
Nonqualified Deferred Compensation Plan of Ashford Hospitality
Trust, Inc., dated January 1, 2008
|
|
10
|
.4
|
|
Non-Compete Agreement between Ashford Hospitality Trust, Inc.
and Archie Bennett, Jr. (incorporated by reference to
Exhibit 10.4 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.1
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Montgomery J. Bennett (incorporated by reference to
Exhibit 10.5 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.1.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Montgomery J. Bennett (incorporated by reference
to Exhibit 10.5.11 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.2
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Douglas Kessler (incorporated by reference to Exhibit 10.6
of
Form S-11/A,
filed on July 31, 2003)
|
64
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.5.2.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Douglas Kessler (incorporated by reference to
Exhibit 10.5.7 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.3
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
David A. Brooks (incorporated by reference to Exhibit 10.7
of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.3.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and David A. Brooks (incorporated by reference to
Exhibit 10.5.9 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.4
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
David Kimichik (incorporated by reference to Exhibit 10.8
of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.4.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and David Kimichik (incorporated by reference to
Exhibit 10.5.8 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.5
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Mark Nunneley (incorporated by reference to Exhibit 10.9 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.5.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Mark Nunneley (incorporated by reference to
Exhibit 10.5.10 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.6
|
|
Form of Management Agreement between Remington Lodging and
Ashford TRS Corporation (incorporated by reference to
Exhibit 10.10 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.6.1
|
|
Hotel Management Agreement between Remington Management, L.P.
and Ashford TRS Corporation (incorporated by reference to
Exhibit 10.6.1 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.7
|
|
Form of Lease Agreement between Ashford Hospitality Limited
Partnership and Ashford TRS Corporation (incorporated by
reference to Exhibit 10.11 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.8.1
|
|
Assignment and Assumption of Contract and Contract Rights
between Ashford Hospitality Limited Partnership and Ashford
Financial Corporation, dated October 7, 2003 (incorporated
by reference to Exhibit 10.4 of
Form 10-Q,
filed on November 14, 2003)
|
|
10
|
.8.2
|
|
Assignment and Assumption of Contract and Contract Rights
between Ashford Hospitality Limited Partnership and Ashford
Financial Corporation, dated January 4, 2004 Bylaws
(incorporated by reference to Exhibit 10.10.2 to the
Registrants
Form 10-K
for the year ended December 31, 2003)
|
|
10
|
.9
|
|
Guaranty by Ashford Financial Corporation in favor of Ashford
Hospitality Trust Limited Partnership (incorporated by
reference to Exhibit 10.26 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.10
|
|
Mutual Exclusivity Agreement by and between Ashford Hospitality
Limited Partnership, Ashford Hospitality Trust, Inc., Remington
Hotel Corporation and Remington Lodging and Hospitality, L.P.
(incorporated by reference to Exhibit 10.22 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.11
|
|
Tax Indemnification Agreement between Ashford Hospitality Trust,
Inc. and the persons named therein (incorporated by reference to
Exhibit 10.25 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.12
|
|
Secured Revolving Credit Facility Agreement, dated
February 5, 2004, among the Registrant and Credit Lyonnais
New York Branch, as Administrative Agent and Sole Lead Arranger
and Book Manager, and Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services, Inc., as Syndication
Agent (incorporated by reference to Exhibit 10.15 to the
Registrants
Form 10-Q
for the quarter ended March 31, 2004)
|
|
10
|
.12.1
|
|
First Amendment to Credit Agreement, dated August 17, 2004,
among the Registrant, Calyon New York Branch, and Merrill Lynch
Capital (incorporated by reference to Exhibit 10.15.1 of
the Registrants
Form 10-Q
for the quarter ended September 30, 2004)
|
|
10
|
.12.2
|
|
Third Amendment to Credit Agreement, dated August 24, 2005,
among the Registrant, Calyon New York Branch, and Merrill Lynch
Capital (incorporated by reference to Exhibit 10.15.2 of
the Registrants
Form 8-K,
dated August 26, 2005, for the event dated August 24,
2005)
|
|
10
|
.12.3
|
|
Fourth Amendment to Credit Agreement, dated September 8,
2006, among the Registrant, Calyon New York Branch, Merrill
Lynch Capital, and Wachovia Bank (incorporated by reference to
Exhibit 10.15.3 of the Registrants
Form 8-K,
dated September 12, 2006, for the event dated
September 8, 2006)
|
65
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.13
|
|
Contribution and Purchase and Sale Agreement, dated
December 27, 2004, between the Registrant and FGSB Master
Corp. (incorporated by reference to Exhibit 10.20 to the
Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14
|
|
Purchase Agreement, dated December 27, 2004, between the
Registrant and Security Capital Preferred Growth Incorporated
(incorporated by reference to Exhibit 10.21 to the
Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14.1
|
|
Form of Registration Rights Agreement, dated December 27,
2004, between the Registrant and Security Capital Preferred
Growth Incorporated (incorporated by reference to
Exhibit 10.21.1 to the Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14.2
|
|
Amendment #1 to Purchase Agreement, dated February 8, 2005,
between the Registrant and Security Capital Preferred Growth
Incorporated (incorporated by reference to Exhibit 10.21.2
to the Registrants
Form 8-K,
dated February 9, 2005, for the event dated
February 8, 2005)
|
|
10
|
.15
|
|
Loan Agreement, dated October 28, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.23.2 to the
Registrants
Form 8-K,
dated November 1, 2005, for the event dated
October 28, 2005)
|
|
10
|
.15.1
|
|
Amendment No. 2 to Loan Agreement, dated October 28,
2005, between the Registrant and Merrill Lynch Mortgage Lending,
Inc. (incorporated by reference to Exhibit 10.23.2.1 to the
Registrants
Form 8-K,
dated July 27, 2006, for the event dated July 26, 2006)
|
|
10
|
.15.2
|
|
$45 Million Rate Protection Agreement, dated October 27,
2005, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.23.3 to the Registrants
Form 8-K,
dated November 1, 2005, for the event dated
October 28, 2005)
|
|
10
|
.16
|
|
Commitment Letter, dated October 5, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.8 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.1
|
|
Early Rate Lock Agreement, dated October 5, 2005, between
the Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.9 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.10 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.10.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.2
|
|
Loan Agreement, dated as of October 13, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.11 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.2.1
|
|
Cross-Collateralization and Cooperation Agreement, dated
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.11.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.3
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.12 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.3.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.12.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.4
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.13 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
66
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.16.4.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.13.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.5
|
|
Amended and Restated Loan Agreement, dated as of
December 20, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.14 to the Registrants
Form 8-K,
dated December 22, 2005, for the event dated
December 20, 2005)
|
|
10
|
.16.5.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated December 20, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.14.1 to the Registrants
Form 8-K,
dated December 22, 2005, for the event dated
December 20, 2005)
|
|
10
|
.17
|
|
Mortgage Loan Agreement (Pool 1), dated November 14, 2005,
between the Registrant and UBS Real Estate Investments, Inc.
(incorporated by reference to Exhibit 10.25 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.1
|
|
Mortgage Loan Agreement (Pool 2), dated November 14, 2005,
between the Registrant and UBS Real Estate Investments, Inc.
(incorporated by reference to Exhibit 10.25.1 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.2
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 1 (incorporated by
reference to Exhibit 10.25.2 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.3
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 1 (incorporated by
reference to Exhibit 10.25.3 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.4
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 2 (incorporated by
reference to Exhibit 10.25.4 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.5
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 2 (incorporated by
reference to Exhibit 10.25.5 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.6
|
|
Interest Rate Lock Agreement (Pool 1), dated October 24,
2005, between the Registrant and UBS Real Estate Investments,
Inc. (incorporated by reference to Exhibit 10.25.6 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.7
|
|
Interest Rate Lock Agreement (Pool 2), dated October 24,
2005, between the Registrant and UBS Real Estate Investments,
Inc. (incorporated by reference to Exhibit 10.25.7 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.18
|
|
Purchase and Sale Agreement, dated October 12, 2005,
between the Registrant and Schuylkill, LLC (incorporated by
reference to Exhibit 10.26 to the Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.18.1
|
|
Amendment No. 1 to Purchase and Sale Agreement, dated
November 11, 2005, between the Registrant and Schuylkill,
LLC (incorporated by reference to Exhibit 10.26.1 to the
Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.18.2
|
|
Amendment No. 2 to Purchase and Sale Agreement, dated
November 18, 2005, between the Registrant and Schuylkill,
LLC (incorporated by reference to Exhibit 10.26.2 to the
Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.19
|
|
Revolving Credit Loan And Security Agreement, dated
December 23, 2005, between the Registrant and UBS Real
Estate Investments, Inc. (incorporated by reference to
Exhibit 10.27 to the Registrants
Form 8-K,
dated December 28, 2005, for the event dated
December 23, 2005)
|
67
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.20
|
|
Purchase and Sale Agreement, dated February 16, 2006,
between the Registrant and W2001 Pac Realty, LLC. (incorporated
by reference to Exhibit 10.28 to the Registrants
Form 8-K,
dated February 23, 2006, for the event dated
February 16, 2006)
|
|
10
|
.21
|
|
Purchase and Sale Agreement, dated May 18, 2006, between
the Registrant and EADS Associates Limited Partnership
(incorporated by reference to Exhibit 10.29 to the
Registrants
Form 8-K,
dated May 23, 2006, for the event dated May 18, 2006)
|
|
10
|
.22
|
|
Purchase and Sale Agreement, dated September 6, 2006,
between the Registrant and JER OHare Hotel, LLC
(incorporated by reference to Exhibit 10.30 to the
Registrants
Form 8-K,
dated September 8, 2006, for the event dated
September 6, 2006)
|
|
10
|
.23
|
|
Purchase and Sale Agreement, dated September 15, 2006,
between the Registrant and a partnership between Oak Hill
Capital Partners, The Blackstone Group, and Interstate Hotels
and Resorts (incorporated by reference to Exhibit 10.31 to
the Registrants
Form 8-K,
dated September 19, 2006, for the event dated
September 15, 2006)
|
|
10
|
.23.1
|
|
Loan Agreement, dated December 7, 2006, between the
Registrant and Countrywide Commercial Real Estate Finance, Inc.
(incorporated by reference to Exhibit 10.3.1 to the
Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.23.2
|
|
$212 Million Rate Protection Agreement, dated December 6,
2006, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.31.2 to the Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.23.3
|
|
$35 Million Rate Protection Agreement, dated December 6,
2006, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.31.3 to the Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.24
|
|
Loan Agreement, dated November 16, 2006, between the
Registrant and Morgan Stanley Mortgage Capital, Inc.
(incorporated by reference to Exhibit 10.32 to the
Registrants
Form 8-K,
dated November 20, 2006, for the event dated
November 16, 2006)
|
|
10
|
.25
|
|
Purchase and Sale Agreement, dated January 18, 2007,
between the Registrant and CNL Hotels and Resorts, Inc.
(incorporated by reference to Exhibit 10.33 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.1
|
|
Agreement and Plan of Merger, dated January 18, 2007,
between the Registrant, MS Resort Holdings LLC, MS Resort
Acquisition LLC, MS Resort Purchase LLC, and CNL
Hotels & Resorts, Inc. (incorporated by reference to
Exhibit 10.33.1 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.1.1
|
|
Amendment #1 to Agreement and Plan of Merger, dated
February 21, 2007, between the Registrant, MS Resort
Holdings LLC, MS Resort Acquisition LLC, MS Resort Purchase LLC,
and CNL Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 10.33.1.1 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.1.2
|
|
Amendment #2 to Agreement and Plan of Merger, dated
April 4, 2007, between the Registrant, MS Resort Holdings
LLC, MS Resort Acquisition LLC, MS Resort Purchase LLC, and CNL
Hotels & Resorts, Inc. (incorporated by reference to
Exhibit 10.33.1.2 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.2
|
|
Guaranty Agreement, dated January 18, 2007, between the
Registrant and Morgan Stanley Real Estate Fund V U.S., L.P.
in favor of CNL Hotels and Resorts, Inc. (incorporated by
reference to Exhibit 10.33.3 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.3
|
|
Contribution and Rights Agreement, dated January 18, 2007,
between the Registrant and Morgan Stanley Real Estate
Fund V U.S., L.P. (incorporated by reference to
Exhibit 10.33.3 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.4
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Junior Holder I LLC, Ashford Sapphire
Junior Holder II LLC, and Wachovia Bank, National
Association (incorporated by reference to Exhibit 10.33.4
to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.1
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Junior Mezz I LLC, Ashford Sapphire
Junior Mezz II LLC and Wachovia Bank, National Association
(incorporated by reference to Exhibit 10.33.4.1 to the
Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
68
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.25.4.2
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Senior Mezz I LLC, Ashford Senior
Mezz II LLC and Wachovia Bank, National Association
(incorporated by reference to Exhibit 10.33.4.2 to the
Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.3
|
|
Form of Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing (Floating Rate Pool) (incorporated by reference
to Exhibit 10.33.4.3 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.4
|
|
Form of Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing (Fixed Rate Pool) (incorporated by reference to
Exhibit 10.33.4.4 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.5
|
|
Credit Agreement, dated as of April 10, 2007, by and among
Ashford Hospitality Limited Partnership, as Borrower, Ashford
Hospitality Trust, Inc., as Parent, Wachovia Capital Markets,
LLC, as Arranger, Wachovia Bank, National Association, as
Administrative Agent, Morgan Stanley Senior Funding, Inc. and
Merrill Lynch Bank USA, as Co-Syndication Agents, each of Bank
America, N.A. and Caylon New York Branch, as Co-Documentation
Agents and the financial institutions initially signatory
thereto and their assignees, as Lenders (incorporated by
reference to Exhibit 10.33.4.5 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 10,
2007)
|
|
10
|
.25.4.5.1
|
|
First Amendment to Credit Agreement between the Registrant and
Wachovia Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.1 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007)
|
|
10
|
.25.4.5.2
|
|
Guarantor Acknowledgement of the Registrant in favor of Wachovia
Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.2 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007)
|
|
10
|
.25.4.5.3
|
|
Revolving Note Agreements between the Registrant and Wachovia
Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.3 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007)
|
|
10
|
.25.4.6
|
|
Form of Guaranty for Fixed-Rate Pool between the Registrant and
Wachovia Bank, National Association, dated April 11, 2007
(incorporated by reference to Exhibit 10.33.4.6 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.7
|
|
Guaranty Agreement for Floating-Rate Pool between Registrant and
Wachovia Bank, National Association, dated April 11, 2007
(incorporated by reference to Exhibit 10.33.4.7 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.8
|
|
Guaranty Agreement for Junior Mezzanine Loan between Registrant
and Wachovia Bank, National Association, dated April 11,
2007 (incorporated by reference to Exhibit 10.33.4.8 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.9
|
|
Guaranty Agreement for Intermediate Mezzanine Loan between
Registrant and Wachovia Bank, National Association, dated
April 11, 2007 (incorporated by reference to
Exhibit 10.33.4.9 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.10
|
|
Guaranty Agreement for Senior Mezzanine Loan between Registrant
and Wachovia Bank, National Association, dated April 11,
2007 (incorporated by reference to Exhibit 10.33.4.10 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.5
|
|
Stock Purchase Agreement, dated April 11, 2007, between the
registrant and Wachovia Investment Holdings, LLC (incorporated
by reference to Exhibit 10.33.5 to the Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.5.1
|
|
Investor Rights Agreement, dated April 11, 2007, between
the registrant and Wachovia Investment Holdings, LLC
(incorporated by reference to Exhibit 10.33.5.1 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.5.2
|
|
Letter Agreement, dated April 10, 2007, between the
registrant and Security Capital Preferred Growth Incorporated
(incorporated by reference to Exhibit 10.33.5.2 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
69
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
*10
|
.26
|
|
Investor Program Agreement, dated January 22, 2008, between
the registrant and Prudential Investment Management, Inc.
|
|
*10
|
.26.1
|
|
Form of Joint Venture Agreement to the Investor Program
Agreement, dated January 22, 2008, between the registrant
and Prudential Investment Management, Inc.
|
|
*10
|
.26.2
|
|
Form of Loan Servicing Agreement to the Investor Program
Agreement, dated January 22, 2008, between the registrant
and Prudential Investment Management, Inc.
|
|
*10
|
.26.3
|
|
Limited Liability Company Agreement of PIM Ashford
Venture I, LLC, dated February 6, 2008, between the
registrant and Prudential Investment Management, Inc.
|
|
*21
|
.1
|
|
Registrants Subsidiaries Listing as of December 31,
2007
|
|
*23
|
.1
|
|
Consent of Ernst & Young LLP
|
|
*31
|
.1
|
|
Certification of the Chief Executive Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*31
|
.2
|
|
Certification of the Chief Financial Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*31
|
.3
|
|
Certification of the Chief Accounting Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*32
|
.1
|
|
Certification of the Chief Executive Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
|
*32
|
.2
|
|
Certification of the Chief Financial Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
|
*32
|
.3
|
|
Certification of the Chief Accounting Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
70
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned
thereunto duly authorized on March 9, 2007.
ASHFORD HOSPITALITY TRUST, INC.
|
|
|
|
By:
|
/s/ MONTGOMERY
J. BENNETT
|
Montgomery J. Bennett
Chief Executive Officer
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, this report has been signed
below on behalf of the Registrant in the capacities and on the
dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ ARCHIE
BENNETT, JR.
Archie
Bennett, Jr.
|
|
Chairman of the Board of Directors
|
|
February 28, 2008
|
|
|
|
|
|
/s/ MONTGOMERY
J. BENNETT
Montgomery
J. Bennett
|
|
President, Chief Executive Officer, and Director (Principal
Executive Officer)
|
|
February 28, 2008
|
|
|
|
|
|
/s/ DAVID
J. KIMICHIK
David
J. Kimichik
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
February 28, 2008
|
|
|
|
|
|
/s/ MARK
L. NUNNELEY
Mark
L. Nunneley
|
|
Chief Accounting Officer (Principal Accounting Officer)
|
|
February 28, 2008
|
|
|
|
|
|
/s/ MARTIN
L. EDELMAN
Martin
L. Edelman
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ W.
D. MINAMI
W.
D. Minami
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ W.
MICHAEL MURPHY
W.
Michael Murphy
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ PHILIP
S. PAYNE
Philip
S. Payne
|
|
Director
|
|
February 28, 2008
|
|
|
|
|
|
/s/ CHARLES
P. TOPPINO
Charles
P. Toppino
|
|
Director
|
|
February 28, 2008
|
71
ASHFORD
HOSPITALITY TRUST, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
|
|
|
|
|
73
|
|
Consolidated Financial Statements:
|
|
|
|
|
|
|
|
74
|
|
|
|
|
75
|
|
|
|
|
76
|
|
|
|
|
77
|
|
|
|
|
80
|
|
|
|
|
81
|
|
|
|
|
128
|
|
|
|
|
135
|
|
All other financial statement schedules have been omitted
because such schedules are not required under the related
instructions, such schedules are not significant, or the
required information has been disclosed elsewhere in the
consolidated financial statements and related notes thereto
72
Report of
Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Ashford Hospitality Trust, Inc.
We have audited the accompanying consolidated balance sheets of
Ashford Hospitality Trust, Inc. (the Company) as of
December 31, 2007 and 2006, and the related consolidated
statements of operations, comprehensive income, owners
equity, and cash flows for each of the three years in the period
ended December 31, 2007. Our audits also included the
financial statement schedules listed in the Index at
Item 15(a). These financial statements and schedules are
the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial
statements and schedules based on our audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of the Company at December 31, 2007 and
2006, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended
December 31, 2007, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the
related financial statement schedules, when considered in
relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.
As discussed in Note 3 to the consolidated financial
statements, in 2007 the Company changed its method of accounting
for income taxes.
We also have audited, in accordance with the Standards of the
Public Company Accounting Oversight Board (United States),
Ashford Hospitality Trust, Inc.s internal control over
financial reporting as of December 31, 2007, based on
criteria established in Internal Control Integrated
Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission, and our report dated February 29,
2008 expressed an unqualified opinion thereon.
Dallas, Texas
February 29, 2008
73
ASHFORD
HOSPITALITY TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(In thousands, except share
|
|
|
|
and per share amounts)
|
|
|
ASSETS
|
Investment in hotel properties, net
|
|
$
|
3,885,737
|
|
|
$
|
1,632,946
|
|
Cash and cash equivalents
|
|
|
92,271
|
|
|
|
73,343
|
|
Restricted cash
|
|
|
52,872
|
|
|
|
9,413
|
|
Accounts receivable, net of allowance of $1,458 and $384,
respectively
|
|
|
51,314
|
|
|
|
22,081
|
|
Inventories
|
|
|
4,100
|
|
|
|
2,110
|
|
Assets held for sale
|
|
|
75,739
|
|
|
|
119,342
|
|
Notes receivable
|
|
|
94,225
|
|
|
|
102,833
|
|
Deferred costs, net
|
|
|
25,714
|
|
|
|
14,143
|
|
Prepaid expenses
|
|
|
20,223
|
|
|
|
11,154
|
|
Other assets
|
|
|
6,027
|
|
|
|
7,826
|
|
Intangible assets, net
|
|
|
13,889
|
|
|
|
|
|
Due from third-party hotel managers
|
|
|
58,300
|
|
|
|
15,964
|
|
Due from related parties
|
|
|
880
|
|
|
|
757
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
4,381,291
|
|
|
$
|
2,011,912
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND OWNERS EQUITY
|
Indebtedness continuing operations
|
|
$
|
2,639,546
|
|
|
$
|
1,015,555
|
|
Indebtedness discontinued operations
|
|
|
61,229
|
|
|
|
75,595
|
|
Capital leases payable
|
|
|
498
|
|
|
|
177
|
|
Accounts payable
|
|
|
55,177
|
|
|
|
16,371
|
|
Accrued expenses
|
|
|
69,519
|
|
|
|
32,591
|
|
Dividends payable
|
|
|
35,031
|
|
|
|
19,975
|
|
Deferred income
|
|
|
254
|
|
|
|
294
|
|
Deferred incentive management fees
|
|
|
3,557
|
|
|
|
3,744
|
|
Unfavorable management contract liabilities
|
|
|
23,396
|
|
|
|
15,281
|
|
Other liabilities
|
|
|
4,703
|
|
|
|
|
|
Due to third-party hotel managers
|
|
|
4,699
|
|
|
|
1,604
|
|
Due to related parties
|
|
|
3,612
|
|
|
|
4,152
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
2,901,221
|
|
|
|
1,185,339
|
|
Commitments and contingencies (see Note 17)
|
|
|
|
|
|
|
|
|
Minority interest in consolidated joint ventures (see
Note 14)
|
|
|
19,036
|
|
|
|
|
|
Minority interest related to limited partnership interests (see
Note 14)
|
|
|
101,031
|
|
|
|
109,864
|
|
Preferred stock, $0.01 par value:
|
|
|
|
|
|
|
|
|
Series B Cumulative Convertible Redeemable Preferred Stock,
7,447,865 issued and outstanding at December 31, 2007 and
2006, respectively
|
|
|
75,000
|
|
|
|
75,000
|
|
Preferred stock, $0.01 par value, 50,000,000 shares
authorized:
|
|
|
|
|
|
|
|
|
Series A Cumulative Preferred Stock, 2,300,000 issued and
outstanding at December 31, 2007 and 2006, respectively
|
|
|
23
|
|
|
|
23
|
|
Series D Cumulative Preferred Stock, 8,000,000 issued and
outstanding at December 31, 2007
|
|
|
80
|
|
|
|
|
|
Common stock, $0.01 par value, 200,000,000 shares
authorized, 122,765,691 shares issued and
120,376,055 shares outstanding at December 31, 2007
and 72,942,841 shares issued and outstanding at
December 31, 2006
|
|
|
1,228
|
|
|
|
729
|
|
Additional paid-in capital
|
|
|
1,455,917
|
|
|
|
708,420
|
|
Accumulated other comprehensive income (loss)
|
|
|
(115
|
)
|
|
|
111
|
|
Accumulated deficit
|
|
|
(153,664
|
)
|
|
|
(67,574
|
)
|
Treasury stock, at cost (2,389,636 shares)
|
|
|
(18,466
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total owners equity
|
|
|
1,285,003
|
|
|
|
641,709
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and owners equity
|
|
$
|
4,381,291
|
|
|
$
|
2,011,912
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
74
ASHFORD
HOSPITALITY TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except share
|
|
|
|
and per share amounts)
|
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
$
|
817,735
|
|
|
$
|
358,420
|
|
|
$
|
229,850
|
|
Food and beverage
|
|
|
245,213
|
|
|
|
79,494
|
|
|
|
47,496
|
|
Rental income from operating leases
|
|
|
4,548
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
48,932
|
|
|
|
17,090
|
|
|
|
11,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hotel revenue
|
|
|
1,116,428
|
|
|
|
455,004
|
|
|
|
289,236
|
|
Interest income from notes receivable
|
|
|
11,005
|
|
|
|
14,858
|
|
|
|
13,323
|
|
Asset management fees from affiliates
|
|
|
1,334
|
|
|
|
1,266
|
|
|
|
1,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Revenue
|
|
|
1,128,767
|
|
|
|
471,128
|
|
|
|
303,817
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
187,225
|
|
|
|
80,273
|
|
|
|
51,473
|
|
Food and beverage
|
|
|
176,052
|
|
|
|
59,099
|
|
|
|
35,943
|
|
Other direct
|
|
|
25,854
|
|
|
|
7,971
|
|
|
|
5,020
|
|
Indirect
|
|
|
307,231
|
|
|
|
134,459
|
|
|
|
89,113
|
|
Management fees third-party hotel managers
|
|
|
32,602
|
|
|
|
10,944
|
|
|
|
5,651
|
|
Management fees related parties (see Note 16)
|
|
|
10,173
|
|
|
|
6,627
|
|
|
|
5,012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total hotel expenses
|
|
|
739,137
|
|
|
|
299,373
|
|
|
|
192,212
|
|
Property taxes, insurance, and other
|
|
|
58,285
|
|
|
|
25,825
|
|
|
|
15,777
|
|
Depreciation and amortization
|
|
|
153,285
|
|
|
|
48,460
|
|
|
|
27,218
|
|
Corporate general and administrative
|
|
|
26,953
|
|
|
|
20,359
|
|
|
|
14,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating Expenses
|
|
|
977,660
|
|
|
|
394,017
|
|
|
|
249,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING INCOME
|
|
|
151,107
|
|
|
|
77,111
|
|
|
|
54,087
|
|
Interest income
|
|
|
3,178
|
|
|
|
2,917
|
|
|
|
1,027
|
|
Interest expense
|
|
|
(133,275
|
)
|
|
|
(43,201
|
)
|
|
|
(30,772
|
)
|
Amortization of loan costs
|
|
|
(5,838
|
)
|
|
|
(1,984
|
)
|
|
|
(3,900
|
)
|
Write-off of loan costs and exit fees
|
|
|
(4,216
|
)
|
|
|
(101
|
)
|
|
|
(5,803
|
)
|
Loss on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
|
|
|
10,956
|
|
|
|
34,742
|
|
|
|
4,639
|
|
(Provision for) benefit from income taxes
|
|
|
(4,981
|
)
|
|
|
2,945
|
|
|
|
2,571
|
|
Minority interest in consolidated joint ventures benefit (see
Note 14)
|
|
|
(323
|
)
|
|
|
|
|
|
|
|
|
Minority interest related to limited partners benefit (see
Note 14)
|
|
|
(1,684
|
)
|
|
|
(4,540
|
)
|
|
|
(1,482
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME FROM CONTINUING OPERATIONS
|
|
|
3,968
|
|
|
|
33,147
|
|
|
|
5,728
|
|
Income from discontinued operations, net (see Note 6)
|
|
|
26,192
|
|
|
|
4,649
|
|
|
|
3,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME
|
|
|
30,160
|
|
|
|
37,796
|
|
|
|
9,437
|
|
Preferred dividends
|
|
|
23,990
|
|
|
|
10,875
|
|
|
|
9,303
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
|
$
|
6,170
|
|
|
$
|
26,921
|
|
|
$
|
134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income From Continuing Operations Per Share Available
To Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.19
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(0.19
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income From Discontinued Operations Per Share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.25
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.25
|
|
|
$
|
0.07
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income Per Share Available To Common Shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.06
|
|
|
$
|
0.44
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.06
|
|
|
$
|
0.43
|
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
105,786,502
|
|
|
|
61,713,178
|
|
|
|
40,194,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
105,786,502
|
|
|
|
62,127,948
|
|
|
|
40,194,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
75
ASHFORD
HOSPITALITY TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
NET INCOME
|
|
$
|
30,160
|
|
|
$
|
37,796
|
|
|
$
|
9,437
|
|
Reclassification to Increase (Decrease) Interest Expense
|
|
|
(144
|
)
|
|
|
(1,228
|
)
|
|
|
(188
|
)
|
Net Unrealized Gains (Losses) on Derivative Instruments
|
|
|
(151
|
)
|
|
|
(33
|
)
|
|
|
1,006
|
|
Foreign Currency Translation Adjustments
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income
|
|
$
|
29,934
|
|
|
$
|
36,535
|
|
|
$
|
10,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
76
Ashford
Hospitality Trust, Inc.
For the Years Ended December 31, 2007, 2006, and 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A
|
|
|
Series C
|
|
|
Series D
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Paid-In
|
|
|
Unearned
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Treasury Stock
|
|
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Compensation
|
|
|
Income (Loss)
|
|
|
Deficit
|
|
|
Shares
|
|
|
Cost
|
|
|
Total
|
|
|
|
(In thousands, except per share amounts)
|
|
|
Balance at January 1, 2005
|
|
|
2,300
|
|
|
$
|
23
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
25,810
|
|
|
$
|
258
|
|
|
$
|
234,973
|
|
|
$
|
(3,959
|
)
|
|
$
|
554
|
|
|
$
|
(13,177
|
)
|
|
|
|
|
|
$
|
|
|
|
$
|
218,672
|
|
Amortization of Unearned Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,315
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,315
|
|
Issuance of Common Shares in Follow-On Public Offering on
January 20, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,350
|
|
|
|
104
|
|
|
|
94,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
94,376
|
|
Issuance of Common Shares in Follow-On Public Offering on
April 5, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
50
|
|
|
|
49,292
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,342
|
|
Issuance of Common Shares Related to Underwriters
Over-allotment Option on May 4, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
182
|
|
|
|
2
|
|
|
|
1,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,806
|
|
Offering Costs Related to Series B Cumulative Convertible
Redeemable Preferred Stock Issuances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(582
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(582
|
)
|
Issuance of Common Shares to Financial Institution on
July 1, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,070
|
|
|
|
20
|
|
|
|
18,882
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,902
|
|
Issuance of Restricted Common Shares to Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
412
|
|
|
|
4
|
|
|
|
4,163
|
|
|
|
(4,167
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forfeitures of Restricted Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
|
|
(19
|
)
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Shares to Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
Dividends Declared Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29,595
|
)
|
|
|
|
|
|
|
|
|
|
|
(29,595
|
)
|
Dividends Declared Preferred Shares
Series A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
Dividends Declared Preferred Shares
Series B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,033
|
|
|
|
|
|
|
|
|
|
|
|
(4,386
|
)
|
|
|
|
|
|
|
|
|
|
|
(3,353
|
)
|
Net Unrealized Gain on Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
818
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
818
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,437
|
|
|
|
|
|
|
|
|
|
|
|
9,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2005
|
|
|
2,300
|
|
|
$
|
23
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
43,831
|
|
|
$
|
438
|
|
|
$
|
403,919
|
|
|
$
|
(4,792
|
)
|
|
$
|
1,372
|
|
|
$
|
(42,637
|
)
|
|
|
|
|
|
$
|
|
|
|
|
358,323
|
|
Reclassification of Unearned Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,792
|
)
|
|
|
4,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Unearned Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,018
|
|
Forfeitures of Restricted Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Common Shares in Follow-On Public Offering on
January 25, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,108
|
|
|
|
121
|
|
|
|
128,014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,135
|
|
Issuance of Common Shares in Follow-On Public Offering on
July 25, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,950
|
|
|
|
150
|
|
|
|
161,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
161,958
|
|
Issuance of Restricted Common Shares to Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
646
|
|
|
|
6
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77
Ashford
Hospitality Trust, Inc.
Consolidated
Statement of Owners
Equity (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A
|
|
|
Series C
|
|
|
Series D
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Paid-In
|
|
|
Unearned
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Treasury Stock
|
|
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Compensation
|
|
|
Income (Loss)
|
|
|
Deficit
|
|
|
Shares
|
|
|
Cost
|
|
|
Total
|
|
|
|
(In thousands, Except Per Share Amounts)
|
|
|
Issuance of Common Shares to Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
186
|
|
Issuance of Common Shares in Exchange for Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,394
|
|
|
|
14
|
|
|
|
14,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,287
|
|
Dividends Declared Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(51,859
|
)
|
|
|
|
|
|
|
|
|
|
|
(51,859
|
)
|
Dividends Declared Preferred Shares
Series A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
Dividends Declared Preferred Shares
Series B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,958
|
)
|
|
|
|
|
|
|
|
|
|
|
(5,958
|
)
|
Net Unrealized Loss on Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(33
|
)
|
Reclassification to Reduce Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,228
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,228
|
)
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,796
|
|
|
|
|
|
|
|
|
|
|
|
37,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2006
|
|
|
2,300
|
|
|
$
|
23
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
72,943
|
|
|
$
|
729
|
|
|
$
|
708,420
|
|
|
$
|
|
|
|
$
|
111
|
|
|
$
|
(67,574
|
)
|
|
|
|
|
|
$
|
|
|
|
$
|
641,709
|
|
Stock-based Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,032
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,032
|
|
Issuance of Common Shares in Follow-On Public Offering on
April 24, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48,875
|
|
|
|
489
|
|
|
|
547,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
548,249
|
|
Issuance of Preferred Shares Series C
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,319
|
|
Issuance of Preferred Shares Series D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
80
|
|
|
|
|
|
|
|
|
|
|
|
193,759
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,839
|
|
Redemption of Preferred Shares Series C
|
|
|
|
|
|
|
|
|
|
|
(8,000
|
)
|
|
|
(80
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(195,700
|
)
|
Forfeitures of Restricted Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of Restricted Common Shares to Employees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
817
|
|
|
|
8
|
|
|
|
(268
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(260
|
)
|
Issuance of Common Shares in Exchange for Units
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166
|
|
|
|
2
|
|
|
|
1,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,752
|
|
Purchases of Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,426
|
)
|
|
|
(18,919
|
)
|
|
|
(18,919
|
)
|
Reissuances of Treasury Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37
|
|
|
|
453
|
|
|
|
453
|
|
Dividends Declared Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92,260
|
)
|
|
|
|
|
|
|
|
|
|
|
(92,260
|
)
|
Dividends Declared Preferred Shares
Series A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,916
|
)
|
Dividends Declared Preferred Shares
Series B
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,256
|
)
|
|
|
|
|
|
|
|
|
|
|
(6,256
|
)
|
Dividends Declared Preferred Shares
Series C
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
845
|
|
|
|
|
|
|
|
|
|
|
|
(5,166
|
)
|
|
|
|
|
|
|
|
|
|
|
(4,321
|
)
|
Dividends Declared Preferred Shares
Series D
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,652
|
)
|
|
|
|
|
|
|
|
|
|
|
(7,652
|
)
|
78
Ashford
Hospitality Trust, Inc.
Consolidated
Statement of Owners
Equity (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Series A
|
|
|
Series C
|
|
|
Series D
|
|
|
Common Stock
|
|
|
Additional
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Number of
|
|
|
$0.01
|
|
|
Paid-In
|
|
|
Unearned
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Treasury Stock
|
|
|
|
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Shares
|
|
|
Par Value
|
|
|
Capital
|
|
|
Compensation
|
|
|
Income (Loss)
|
|
|
Deficit
|
|
|
Shares
|
|
|
Cost
|
|
|
Total
|
|
|
|
(In thousands, Except Per Share Amounts)
|
|
|
Net Unrealized Loss on Derivative Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(151
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(151
|
)
|
Reclassification to Reduce Interest Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(144
|
)
|
Foreign Operations Translation Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69
|
|
Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,160
|
|
|
|
|
|
|
|
|
|
|
|
30,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
|
2,300
|
|
|
$
|
23
|
|
|
|
|
|
|
$
|
|
|
|
|
8,000
|
|
|
$
|
80
|
|
|
|
122,766
|
|
|
$
|
1,228
|
|
|
$
|
1,455,917
|
|
|
$
|
|
|
|
$
|
(115
|
)
|
|
$
|
(153,664
|
)
|
|
|
(2,389
|
)
|
|
$
|
(18,466
|
)
|
|
$
|
1,285,003
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
79
ASHFORD
HOSPITALITY TRUST, INC.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
Year
|
|
|
Year
|
|
|
|
Ended
|
|
|
Ended
|
|
|
Ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands)
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
30,160
|
|
|
$
|
37,796
|
|
|
$
|
9,437
|
|
Adjustments to reconcile net income to net cash flow provided by
operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
168,586
|
|
|
|
52,863
|
|
|
|
30,291
|
|
Gains on sales of properties
|
|
|
(35,071
|
)
|
|
|
|
|
|
|
|
|
Loss on reclassification from discontinued to continuing
|
|
|
|
|
|
|
863
|
|
|
|
|
|
Amortization of loan costs
|
|
|
7,781
|
|
|
|
2,038
|
|
|
|
3,956
|
|
Write-off of loan costs and exit fees
|
|
|
8,104
|
|
|
|
788
|
|
|
|
5,803
|
|
Loss on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
Amortization to reduce interest expense from comprehensive income
|
|
|
(144
|
)
|
|
|
(1,228
|
)
|
|
|
(188
|
)
|
Stock-based compensation
|
|
|
6,225
|
|
|
|
5,204
|
|
|
|
3,446
|
|
Minority interest in consolidated joint ventures
|
|
|
2,321
|
|
|
|
|
|
|
|
|
|
Minority interest related to limited partnership interests
|
|
|
3,957
|
|
|
|
5,277
|
|
|
|
2,425
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable and inventories
|
|
|
9,950
|
|
|
|
5,650
|
|
|
|
(7,687
|
)
|
Other miscellaneous assets
|
|
|
(37,162
|
)
|
|
|
(3,245
|
)
|
|
|
2,085
|
|
Restricted cash
|
|
|
(29,773
|
)
|
|
|
22,555
|
|
|
|
(625
|
)
|
Other miscellaneous liabilities
|
|
|
20,803
|
|
|
|
11,130
|
|
|
|
(2,415
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by operating activities
|
|
|
155,737
|
|
|
|
139,691
|
|
|
|
56,528
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions or originations of notes receivable
|
|
|
(21,500
|
)
|
|
|
(37,308
|
)
|
|
|
(55,494
|
)
|
Proceeds from payments of notes receivable
|
|
|
30,083
|
|
|
|
42,777
|
|
|
|
26,850
|
|
Acquisitions of hotel properties
|
|
|
(2,059,155
|
)
|
|
|
(540,638
|
)
|
|
|
(613,534
|
)
|
Net proceeds from sales of discontinued operations
|
|
|
304,943
|
|
|
|
17,445
|
|
|
|
28,212
|
|
Improvements and additions to hotel properties
|
|
|
(127,271
|
)
|
|
|
(47,749
|
)
|
|
|
(38,301
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow used in investing activities
|
|
|
(1,872,900
|
)
|
|
|
(565,473
|
)
|
|
|
(652,267
|
)
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments of dividends
|
|
|
(111,375
|
)
|
|
|
(66,093
|
)
|
|
|
(38,178
|
)
|
Distributions to joint venture partners
|
|
|
(13,153
|
)
|
|
|
|
|
|
|
0
|
|
Borrowings on indebtedness and capital leases
|
|
|
1,986,037
|
|
|
|
491,958
|
|
|
|
962,275
|
|
Payments on indebtedness and capital leases
|
|
|
(832,090
|
)
|
|
|
(271,444
|
)
|
|
|
(524,588
|
)
|
Payments of deferred financing costs
|
|
|
(11,785
|
)
|
|
|
(3,330
|
)
|
|
|
(10,807
|
)
|
Proceeds received from sale of derivatives
|
|
|
|
|
|
|
|
|
|
|
1,635
|
|
Payments related to indebtedness early exit fees
|
|
|
(2,390
|
)
|
|
|
|
|
|
|
(2,556
|
)
|
Payments to extinguish indebtedness
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
Proceeds received from follow-on public offerings
|
|
|
548,249
|
|
|
|
290,092
|
|
|
|
145,524
|
|
Proceeds received from common stock sale to financial institution
|
|
|
|
|
|
|
|
|
|
|
18,902
|
|
Proceeds received from Series B preferred stock sale
|
|
|
|
|
|
|
|
|
|
|
65,000
|
|
Proceeds received from Series C preferred stock sale
|
|
|
193,319
|
|
|
|
|
|
|
|
|
|
Proceeds received from Series D preferred stock sale
|
|
|
193,839
|
|
|
|
|
|
|
|
|
|
Payments related to Series B preferred stock sale
|
|
|
|
|
|
|
|
|
|
|
(582
|
)
|
Payments for redemption of Series C preferred stock
|
|
|
(195,700
|
)
|
|
|
|
|
|
|
|
|
Payments for purchases of treasury stock
|
|
|
(18,919
|
)
|
|
|
|
|
|
|
|
|
Payments to convert partnership units into common stock
|
|
|
(10
|
)
|
|
|
(53
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash flow provided by financing activities
|
|
|
1,736,022
|
|
|
|
441,130
|
|
|
|
606,625
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate on cash
|
|
|
69
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents
|
|
|
18,859
|
|
|
|
15,348
|
|
|
|
10,886
|
|
Cash and cash equivalents, beginning balance
|
|
|
73,343
|
|
|
|
57,995
|
|
|
|
47,109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, ending balance
|
|
$
|
92,271
|
|
|
$
|
73,343
|
|
|
$
|
57,995
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See notes to consolidated financial statements.
80
ASHFORD
HOSPITALITY TRUST, INC.
For the
Years Ended December 31, 2007, 2006, and 2005
|
|
1.
|
Organization
and Description of Business
|
Ashford Hospitality Trust, Inc. and subsidiaries (the
Company or we or our) is a
self-advised real estate investment trust (REIT),
which commenced operations on August 29, 2003 when it
completed its initial public offering (IPO) and
concurrently consummated certain other formation transactions,
including the acquisition of six hotels (initial
properties). The Company owns its lodging investments and
conducts its business through Ashford Hospitality Limited
Partnership, its operating partnership. Ashford OP General
Partner LLC, its wholly-owned subsidiary, serves as the sole
general partner of the Companys operating partnership.
As of December 31, 2007, the Company owned interest in 112
hotel properties, which includes direct ownership in 106 hotel
properties and between
75-89%
interest in six hotel properties through equity investments with
joint venture partners. These hotel properties represent 26,553
total rooms or 26,211 net rooms excluding those
attributable to joint venture partners. Of the total 112 hotel
properties, 111 are located in the United States and one is
located in Canada. As of December 31, 2007, the Company
also owned approximately $94.2 million of mezzanine or
first-mortgage loans receivable.
For federal income tax purposes, the Company elected to be
treated as a REIT, which imposes limitations related to
operating hotels. As of December 31, 2007, 111 of the
Companys hotel properties were leased or owned by
wholly-owned subsidiaries of the Company that are treated as
taxable REIT subsidiaries for federal income tax purposes
(collectively, such 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. Hotel operating results related to
these properties are included in the consolidated results of
operations. As of December 31, 2007, the remaining hotel
property was leased on a
triple-net
lease basis to a third-party tenant who operates the hotel.
Rental income from this operating lease is included in the
consolidated results of operations.
Remington Lodging & Hospitality, L.P. and Remington
Management, L.P. (collectively, Remington Lodging),
both primary property managers for the Company, are beneficially
wholly owned by Mr. Archie Bennett, Jr., the
Companys Chairman, and Mr. Montgomery J. Bennett, the
Companys President and Chief Executive Officer. As of
December 31, 2007, Remington Lodging managed 43 of the
Companys 112 hotel properties while third-party management
companies managed the remaining 69 hotel properties.
As of December 31, 2007, 120,376,055 shares of common
stock, 2,300,000 shares of Series A preferred stock,
7,447,865 shares of Series B preferred stock,
8,000,000 shares of Series D preferred stock, and
13,346,843 units of limited partnership interest held by
entities other than the Company were outstanding and
2,389,636 shares of common stock were held as treasury
stock. During the year ended December 31, 2007, the Company
completed the following transactions:
|
|
|
|
|
On March 27, 2007, the Company issued 838,500 shares
of restricted common stock to its executive officers and certain
employees.
|
|
|
|
On April 11, 2007, the Company issued 8,000,000 shares
of Series C cumulative redeemable preferred stock to a
financial institution.
|
|
|
|
On April 24, 2007, the Company issued
48,875,000 shares of common stock in a follow-on public
offering.
|
|
|
|
On May 15, 2007, the Company issued 16,000 shares of
common stock to its directors as compensation for serving on the
Board of Directors through May 2008.
|
|
|
|
On July 18, 2007, the Company publicly issued
8,000,000 shares of Series D cumulative preferred
stock.
|
|
|
|
On July 18, 2007, the Company redeemed
8,000,000 shares of Series C cumulative redeemable
preferred stock.
|
81
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
During the year ended December 31, 2007, the Company
acquired 60,177 shares of treasury stock in connection with
the Companys incentive stock plan, which allows employees
to tender vested shares of restricted common stock to the
Company at current market prices to cover individual federal
income taxes withheld on such shares as such shares vest, of
which 36,841 shares were reissued in connection with the
aforementioned common stock grants.
|
|
|
|
During the year ended December 31, 2007, the Company
acquired 2,366,300 shares of treasury stock in connection
with its stock repurchase program.
|
|
|
|
During the year ended December 31, 2007, 35,391 unvested
shares of restricted common stock were forfeited.
|
|
|
|
During the year ended December 31, 2007, the Company issued
165,582 shares of common stock in exchange for
165,582 units of limited partnership interest.
|
The following items affect the Companys reporting
comparability related to its consolidated financial statements:
|
|
|
|
|
As of December 31, 2007, Marriott International, Inc.
(Marriott) manages 42 of the Companys
properties. For these 42 Marriott-managed hotels, the fiscal
year reflects twelve weeks of operations for each of the first
three quarters of the year and sixteen weeks for the fourth
quarter of the year. Therefore, in any given quarterly period,
period-over-period results will have different ending dates. For
Marriott-managed hotels, the fourth quarters of 2007, 2006, and
2005 ended December 28th, December 29th, and
December 30th, respectively.
|
|
|
|
As a result of reclassification of certain hotels from
continuing operations to discontinued operations, certain
previously reported amounts have been reclassified to conform to
the current presentation.
|
During the
4th quarter
of 2007, the Company allocated interest and related debt expense
totaling $21.2 million to the discontinued operations in
accordance with Emerging Issues Task Force (EITF)
abstract
No. 87-24,
Allocation of Interest to Discontinued Operations.
See Note 6. Additionally, the Company revised its
discontinued operations previously reported to reflect
reclassifications of $4.0 million for 2006 and
$3.7 million for 2005 related to the same EITF.
|
|
3.
|
Significant
Accounting Policies Summary
|
Principles of Consolidation The
Companys consolidated financial statements include the
Company and its majority-owned subsidiaries and its
majority-owned joint ventures in which it has a controlling
interest. All significant intercompany accounts and transactions
between consolidated entities have been eliminated in these
consolidated financial statements.
Revenue Recognition Hotel revenues include
room, food, beverage, and ancillary revenues such as
long-distance telephone service, laundry, and space rentals.
Rental income from operating leases represents rental income
recognized on a straight-line basis associated with the hotel
property leased to a third-party tenant on a
triple-net
lease basis. Interest income from notes receivable represents
interest earned on the Companys mezzanine and
first-mortgage loans receivable portfolio. Asset management fees
relate to asset management services performed on behalf of a
related party, including risk management and insurance
procurement, assistance with taxes, negotiating franchise
agreements and equipment leases, monitoring compliance with loan
covenants, preparation of capital and operating budgets, and
property litigation management. Hotel revenues and asset
management fees are recognized as the related services are
delivered.
82
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Foreign Currency Translations Financial
information related to the Companys hotel property located
in Montreal, Canada, is maintained in the local currency.
Results of operations are translated to U.S. dollars using
the average exchange rates during the period while assets and
liabilities are translated using the exchange rate in effect at
the balance sheet date. Translation adjustments are reflected in
the consolidated statements of owners equity as a
component of accumulated other comprehensive income. Gains or
losses from foreign currency transactions, however, are
reflected in the consolidated statements of operations.
Use of Estimates The preparation of these
consolidated financial statements in accordance with accounting
principles generally accepted in the United States requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from
those estimates
Management Agreements In connection with the
Companys acquisitions of Marriott Crystal Gateway hotel in
Arlington, Virginia, on July 13, 2006 and the 51-hotel CNL
portfolio on April 11, 2007, the Company assumed certain
existing management agreements. Based on the Companys
review of these management agreements, the Company concluded
that the terms of certain management agreements are more
favorable to the respective managers than typical current market
management agreements. As a result, the Company recorded
unfavorable contract liabilities related to these management
agreements of $23.4 million as of the respective
acquisition dates based on the present value of expected cash
outflows over the initial terms of the related agreements. Such
unfavorable contract liabilities are amortized as reductions to
incentive management fees on a straight-line basis over the
initial terms of the related agreements. In evaluating
unfavorable contract liabilities, the Companys analysis
involves considerable management judgment and assumptions.
Investment in Hotel Properties Hotel
properties are generally stated at cost. However, the initial
properties contributed upon the Companys formation are
stated at the predecessors historical cost, net of any
impairment charges, plus a minority interest partial
step-up
related to the acquisition of minority interest from third
parties associated with four of the initial properties In
addition, in connection with the 51-hotel CNL portfolio acquired
on April 11, 2007 and subsequent asset swap completed on
December 15, 2007, the Company owns between 75%-89%
ownership interest in certain hotel properties owned by joint
ventures. For these hotel properties, the carrying basis
attributable to the joint venture partners minority
ownership is recorded at the predecessors historical cost,
net of any impairment charges, while the carrying basis
attributable to the Companys majority ownership is
recorded based on the allocated purchase price of the
Companys ownership interest in the joint ventures. All
improvements and additions which extend the useful life of the
hotel properties are capitalized.
Intangible Assets Intangible assets with
finite lives are amortized over their estimated useful lives.
Intangible assets with indefinite lives are reviewed annually
for impairment.
Impairment of Investment in Hotel Properties and Hotel
Related Intangibles Hotel properties and hotel
related intangibles are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying values of
such hotel properties or intangibles may not be recoverable. The
Company tests for impairment in several situations, including
when current or projected cash flows are less than historical
cash flows, when it becomes more likely than not that a hotel
property will be sold before its previously estimated useful
life expires, and when events or changes in circumstances
indicate that a hotel propertys net book value or the
carrying value of the related intangibles may not be
recoverable. In evaluating the impairment of hotel properties
and hotel related intangibles, the Company makes many
assumptions and estimates, including projected cash flows,
holding period, expected useful life, future capital
expenditures, and fair values, which considers capitalization
rates, discount rates, and comparable selling prices. If an
asset was deemed to be impaired, the Company would record an
impairment charge for the amount that the propertys net
book value exceeds its fair value. To date, no such impairment
charges have been recognized.
83
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Depreciation and Amortization Expense
Depreciation expense is based on the estimated useful life
of the Companys assets, while amortization expense for
leasehold improvements is based on the shorter of the lease term
or the estimated useful life of the related assets. Presently,
hotel properties are depreciated using the straight-line method
over lives which range from 15 to 39 years for buildings
and improvements and 3 to 5 years for furniture, fixtures,
and equipment. While the Company believes its estimates are
reasonable, a change in estimated lives could affect
depreciation expense and net income (loss) as well as resulting
gains or losses on potential hotel sales.
Cash and Cash Equivalents Cash and cash
equivalents represent cash on hand or held in banks plus
short-term investments with an initial maturity of three months
or less when purchased.
Restricted Cash Restricted cash includes
reserves for debt service, real estate taxes, and insurance, as
well as excess cash flow deposits and reserves for furniture,
fixtures, and equipment replacements of approximately 4% to 6%
of property revenue for certain hotels, as required by certain
management or mortgage debt agreement restrictions and
provisions. Restricted cash also includes cash collateral
deposited with the Company related to one mezzanine loan that
may be used by the Company toward the payments of principal and
interest of the loan and any other amounts due under the loan in
the event of default.
Accounts Receivable Accounts receivable
consists primarily of meeting and banquet room rental and hotel
guest receivables. The Company generally does not require
collateral. Ongoing credit evaluations are performed and an
allowance for potential credit losses is provided against the
portion of accounts receivable that is estimated to be
uncollectible.
Inventories Inventories, which primarily
consist of food, beverages, and gift store merchandise, are
stated at the lower of cost or market value. Cost is determined
using the
first-in,
first-out method.
Assets Held For Sale and Discontinued Operations
The Company records assets as held for sale when management
has committed to a plan to sell the assets, actively seeks a
buyer for the assets, and the consummation of the sale is
considered probable and expected within one year. The related
operations of assets held for sale are reported as discontinued
if a) such operations and cash flows can be clearly
distinguished, both operationally and financially, from the
ongoing operations of the Company, b) such operations and
cash flows will be eliminated from ongoing operations once the
disposal occurs, and c) the Company will not have any
significant continuing involvement subsequent to the disposal.
Notes Receivable The Company provides
mezzanine and first-mortgage financing in the form of loans
receivable, which are recorded at cost, adjusted for net
origination fees and costs. Premiums, discounts, and net
origination fees are amortized or accreted as an adjustment to
interest income using the effective interest method. Loans
receivable are reviewed for potential impairment at each balance
sheet date. A loan receivable is considered impaired when it
becomes probable, based on current information, that the Company
will be unable to collect all amounts due according to the
loans contractual terms. The amount of impairment, if any,
is measured by comparing the recorded amount of the loan to the
present value of the expected future cash flows or the fair
value of the collateral. If a loan was deemed to be impaired,
the Company would record a reserve for loan losses through a
charge to income for any shortfall. To date, no such impairment
charges have been recognized.
In accordance with Financial Accounting Standards Board
Interpretation No. 46, Consolidation of Variable
Interest Entities, as revised
(FIN No. 46), variable interest entities,
as defined, must be consolidated by their primary beneficiaries
if the variable interest entities do not effectively disperse
risks among parties involved. The Companys mezzanine and
first-mortgage loans receivable are each secured by various
hotel properties or partnership interests in hotel properties
and are subordinate to primary loans related to the secured
hotels. All such loans receivable are considered to be variable
interests in the entities that own the related hotels, which are
variable interest entities. However, the Company is not
considered to be the primary beneficiary of these hotel
properties as a result of holding these loans. Therefore, the
Company does not consolidate such hotels for which it has
provided financing. Interests in entities acquired or created in
the future will be evaluated based on FIN No. 46
84
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
criteria, and such entities will be consolidated, if required.
In evaluating FIN No. 46 criteria, the Companys
analysis involves considerable management judgment and
assumptions.
Deferred Costs, Net Deferred loan costs are
recorded at cost and amortized over the terms of the related
indebtedness using the effective interest method. Deferred
franchise fees are amortized on a straight-line basis over the
terms of the related franchise agreements.
Guarantees Upon acquisition of the 51-hotel
CNL portfolio on April 11, 2007, the Company assumed
certain guarantees, which represent funds provided by
third-party hotel managers to guarantee minimum returns for
certain hotel properties. As the Company is obligated to repay
such amounts through increased incentive management fees over
the remaining terms of the related management agreements or
through cash reimbursements, such guarantees are recorded as
other liabilities. As of December 31, 2007, these
liabilities totaled approximately $568,000.
Due from Third-Party Hotel Managers Due from
third-party hotel managers primarily consists of amounts due
from Marriott related to cash reserves held at the Marriott
corporate level related to capital, insurance, real estate
taxes, and other items.
Due to/from Affiliates - Due to/from affiliates
represents current receivables and payables resulting from
transactions related to hotel management and project management
with affiliated entities. Due from affiliates results primarily
from advances of shared costs incurred. Due to affiliates
results primarily from hotel management and project management
fees incurred. Both due to and due from affiliates are generally
settled within a period not to exceed one year.
Advertising Costs Advertising costs are
charged to expense as incurred. For the years ended
December 31, 2007, 2006, and 2005, the Company incurred
advertising costs of approximately $3.6 million,
$2.1 million, and $1.2 million, respectively.
Advertising costs related to continuing operations are included
in indirect expenses in the accompanying consolidated statements
of operations.
Indirect Expenses Indirect expenses primarily
include hotel-level general and administrative fees, sales and
marketing expenses, repairs and maintenance expenses, franchise
fees, and utility costs.
Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
Activities, as amended and interpreted
(SFAS No. 133), establishes accounting and
reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts, and
for hedging activities. As required by SFAS No. 133,
the Company records all derivatives on the balance sheet at fair
value. Accounting for changes in the fair value of derivatives
depends on the intended use of the derivative and the resulting
designation. Derivatives used to hedge exposure to changes in
the fair value of an asset, liability, or firm commitment
attributable to a particular risk, such as interest rate risk,
are considered fair value hedges. Derivatives used to hedge
exposure to variability in expected future cash flows, or other
types of forecasted transactions, are considered cash flow
hedges.
For derivatives designated as fair value hedges, changes in the
fair value of the derivative and the hedged item related to the
hedged risk are recognized in earnings. For derivatives
designated as cash flow hedges, the effective portion of changes
in the fair value of the derivative is initially reported in
other comprehensive income (outside of earnings) and
subsequently reclassified to earnings when the hedged
transaction affects earnings, while the ineffective portion of
changes in the fair value of the derivative is recognized
directly in earnings. The Company assesses the effectiveness of
each hedging relationship by comparing the changes in fair value
or cash flows of the derivative hedging instrument with the
changes in fair value or cash flows of the designated hedged
item or transaction. For derivatives not designated as hedges,
changes in the fair value are recognized in earnings.
The Companys objective in using derivatives is to increase
stability related to interest expense and to manage its exposure
to interest rate movements or other identified risks. To
accomplish this objective, the Company primarily uses interest
rate swaps and caps within its cash flow hedging strategy.
Interest rate swaps designated as
85
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
cash flow hedges involve the receipt of variable-rate amounts in
exchange for fixed-rate payments over the life of the agreements
without exchange of the underlying principal amount. Interest
rate caps designated as cash flow hedges provide the Company
with interest rate protection above the strike rate on the cap
and result in the Company receiving interest payments when
actual rates exceed the cap strike.
Income Taxes As a REIT, the Company generally
will not be subject to federal corporate income tax on the
portion of its net income (loss) that does not relate to taxable
REIT subsidiaries. However, Ashford TRS is treated as a taxable
REIT subsidiary for federal income tax purposes. In accordance
with Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes, the Company accounts
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 addition, the analysis utilized by the Company in determining
its deferred tax asset valuation allowance involves considerable
management judgment and assumptions.
Segments The Company presently operates in
two business segments within the hotel lodging industry: direct
hotel investments and hotel financing. Direct hotel investments
refers to owning hotels through either acquisition or new
development. Hotel financing refers to owning subordinate
hotel-related mortgage receivables through acquisition or
origination.
Stock-based Compensation The Company accounts
for stock-based compensation using the fair-value method. In
connection with the Companys formation, the Company
established an employee Incentive Stock Plan (the Stock
Plan). Under the Stock Plan, the Company periodically
issues shares of restricted and non-restricted common stock. All
such shares are charged to compensation expense on a
straight-line basis over the vesting period based on the
Companys stock price on the date of issuance. Under the
Stock Plan, the Company may issue a variety of additional
performance-based stock awards, including nonqualified stock
options. As of December 31, 2007, no performance-based
stock awards aside from the aforementioned stock grants have
been issued.
Earnings (Loss) Per Share Basic earnings
(loss) per common share is calculated by dividing net income
(loss) available to common shareholders by the weighted average
common shares outstanding during the period. Diluted earnings
(loss) per common share reflects the potential dilution that
could occur if securities or other contracts to issue common
shares were exercised or converted into common shares, whereby
such exercise or conversion would result in lower earnings per
share. The following table reconciles the amounts used in
calculating basic and diluted earnings (loss) per share for the
years ended December 31, 2007, 2006, and 2005 (in
thousands, except share and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
(Loss) income from continuing operations less preferred
dividends basic
|
|
$
|
(20,022
|
)
|
|
$
|
22,272
|
|
|
$
|
(3,575
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding basic
|
|
|
105,786,502
|
|
|
|
61,713,178
|
|
|
|
40,194,132
|
|
Incremental diluted shares related to unvested restricted shares
|
|
|
|
|
|
|
414,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding diluted
|
|
|
105,786,502
|
|
|
|
62,127,948
|
|
|
|
40,194,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share from continuing operations
basic Income
|
|
$
|
(0.19
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(loss) per share from continuing operations diluted
|
|
$
|
(0.19
|
)
|
|
$
|
0.36
|
|
|
$
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2007, dividends related to
convertible preferred shares of approximately $6.3 million
and minority interest (income) expense related to limited
partners of approximately $3.4 million as well as weighted
average convertible preferred shares outstanding of
approximately 7.4 million, weighted average
86
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
units of limited partnership interest of approximately
13.5 million, and incremental diluted shares related to
unvested restricted stock of approximately 476,000 are excluded
from diluted earnings per share as such shares and units are
anti-dilutive.
For the year ended December 31, 2006, dividends related to
convertible preferred shares of approximately $6.0 million
and minority interest (income) expense related to limited
partners of approximately $4.5 million as well as weighted
average convertible preferred shares outstanding of
approximately 7.4 million and weighted average units of
limited partnership interest of approximately 12.3 million
are excluded from diluted earnings per share as such shares and
units are anti-dilutive.
For the year ended December 31, 2005, dividends related to
convertible preferred shares of approximately $4.4 million
and minority interest (income) expense related to limited
partners of approximately $1.5 million as well as weighted
average convertible preferred shares outstanding of
approximately 4.5 million, weighted average units of
limited partnership interest of approximately 10.1 million,
incremental diluted shares related to unvested restricted stock
of approximately 270,000, and weighted average incremental
diluted shares relating to an option to purchase common stock of
approximately 94,000 are excluded from diluted earnings per
share as such shares and units are anti-dilutive.
Reclassifications Certain amounts in the
consolidated financial statements for 2006 and 2005 have been
reclassified to conform to the presentation adopted in 2007.
These classifications have no effect on net income previously
reported.
Recent Accounting Pronouncements In June
2006, EITF ratified EITF
No. 06-3,
How Taxes Collected from Customers and Remitted to
Government Authorities Should be Presented in the Income
Statement (That Is, Gross versus Net Presentation). EITF
No. 06-3
is effective for interim and annual periods beginning after
December 15, 2006, with earlier application permitted. EITF
No. 06-3
relates to taxes assessed by a governmental authority imposed on
revenue-producing transactions, such as sales taxes. EITF
No. 06-3 states
that gross versus net income statement presentation of such
taxes is an accounting policy decision requiring disclosure.
EITF
No. 06-3
further requires disclosure of the amount of such taxes
reflected at gross, if any. The Company records all sales net of
such taxes.
In July 2006, the FASB issued FASB Interpretation No. 48,
Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109
(FIN No. 48), effective January 1,
2007. FIN No. 48 prescribes a recognition threshold
and measurement attribute for the recognition and measurement of
a tax position taken in a tax return. FIN No. 48
requires that a determination be made as to whether it is
more likely than not that a tax position taken,
based on its technical merits, will be sustained upon
examination, including resolution of any appeals and litigation
processes. If the more-likely-than-not threshold is met, the
related tax position must be measured to determine the amount of
provision or benefit, if any, to recognize in the financial
statements. FIN No. 48 applies to all tax positions
related to income taxes subject to SFAS No. 109,
Accounting for Income Taxes, but does not apply to
tax positions related to FASB Statement No. 5,
Accounting for Contingencies. The Company or its
subsidiaries file income tax returns in the U.S. federal
jurisdiction and various states, and in Canada. Tax years 2004
through 2006 remain subject to potential examination by certain
federal and state taxing authorities, respectively. No income
tax examinations are currently in process. As the Company
determined no material unrecognized tax benefits or liabilities
exist, the adoption of FIN No. 48, effective
January 1, 2007, did not impact the Companys
financial condition or results of operations. The Company
classifies interest and penalties related to underpayment of
income taxes as income tax expense.
In September 2006, the FASB issued Statement of Financial
Accounting Standards (SFAS) No. 157, Fair
Value Measurements, effective for financial statements
issued for fiscal years beginning after November 15, 2007.
SFAS No. 157 provides guidance for using fair value to
measure assets and liabilities. SFAS No. 157 also
requires expanded information regarding the extent to which
assets and liabilities are measured at fair value, the
information used to measure fair value, and the effect of fair
value measurements on earnings. SFAS No. 157 applies
whenever
87
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
other standards require (or permit) assets or liabilities to be
measured at fair value, and does not expand the use of fair
value in any new circumstances. In February 2008, FASB issued
FASB Staff Position
No. FAS 157-2
to delay the effective date of SFAS No. 157 to fiscal
years beginning after November 15, 2008, for non-financial
assets and non-financial liabilities, except for items that are
recognized or disclosed at fair value in the financial
statements on a recurring basis. Presently, the Company values
its derivative financial instruments at fair value. Based on its
preliminary assessment, the Company does not feel the adoption
of SFAS No. 157 will have a material impact on its
valuation of derivative financial instruments.
In February 2007, the FASB issued SFAS No. 159,
The Fair Value Option for Financial Assets and Financial
Liabilities, effective for financial statements issued for
fiscal years beginning after November 15, 2007.
SFAS No. 159 permits entities to choose to measure
many financial instruments and certain other items at fair
value. The objective is to improve financial reporting by
providing entities with opportunities to mitigate volatility in
reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge
accounting provisions. Based on its preliminary assessment, the
Company does not feel the adoption of SFAS No. 159
will have a material impact on its valuation of derivative
financial instruments.
In December 2007, the FASB issued SFAS No. 141R
Business Combinations. SFAS 141R establishes
principles and requirements for how the acquirer of a business
recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree. The statement also
provides guidance for recognizing and measuring the goodwill
acquired in the business combination and determines what
information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the
business combinations. SFAS 141R is effective for financial
statements issued for fiscal years beginning after
December 15, 2008. Accordingly, any business combinations
the Company engages in will be recorded and disclosed following
existing accounting principles until January 1, 2009. The
Company expects SFAS 141R will affect the Companys
consolidated financial statements when effective, but the nature
and magnitude of the specific effects will depend upon the
nature, term and size of the acquisitions, if any, the Company
consummates after the effective date.
In December 2007, the FASB issued Statement of Financial
Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements
(SFAS No. 160), effective for financial
statements issued for fiscal years beginning after
December 15, 2008. SFAS No. 160 states that
accounting and reporting for minority interests will be
recharacterized as noncontrolling interests and classified as a
component of equity. SFAS No. 160 applies to all
entities that prepare consolidated financial statements, except
not-for-profit organizations, and will impact the recording of
minority interest. The Company is currently evaluating the
effects the adoption of SFAS No. 160 will have on its
financial condition and results of operations.
|
|
4.
|
Concentrations
of Risk
|
The Companys investments are all concentrated within the
hotel industry. The Companys current investment strategy
is to acquire or develop upscale to
upper-upscale
hotels, acquire first mortgages on hotel properties, and invest
in other mortgage-related instruments such as mezzanine loans to
hotel owners and operators. At present, all of the
Companys owned hotels are domestically located aside from
one hotel located in Montreal, Canada. In addition, all hotels
securing the Companys loans receivable are domestically
located aside from one hotel located in Nevis, West Indies,
which secures an $18.2 million loan receivable. Presently,
all the Companys loans receivable are collateralized by
either the properties securing the loans or interest in the
first lien on such properties. Accordingly, adverse conditions
in the hotel industry will have a material adverse effect on the
Companys operating and investment revenues and cash
available for distribution to stockholders.
In addition, the Company expects to originate or acquire
additional mezzanine loans receivable. These types of mortgage
loans involve a higher degree of risk than long-term senior
mortgage lending secured by income-producing real property due
to a variety of factors, including such loans being entirely
unsecured or, if secured, becoming unsecured as a result of
foreclosure by the senior lender. The Company may not recover
some or all of its
88
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
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.
|
|
5.
|
Investment
in Hotel Properties
|
Investment in Hotel Properties consists of the following as of
December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Land
|
|
$
|
567,438
|
|
|
$
|
217,930
|
|
Buildings and improvements
|
|
|
3,226,708
|
|
|
|
1,379,946
|
|
Furniture, fixtures, and equipment
|
|
|
278,598
|
|
|
|
125,514
|
|
Construction in progress
|
|
|
68,569
|
|
|
|
15,482
|
|
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
4,141,313
|
|
|
|
1,738,872
|
|
Accumulated depreciation
|
|
|
(255,576
|
)
|
|
|
(105,926
|
)
|
|
|
|
|
|
|
|
|
|
Investment in hotel properties, net
|
|
$
|
3,885,737
|
|
|
$
|
1,632,946
|
|
|
|
|
|
|
|
|
|
|
On February 24, 2006, the Company acquired the Marriott at
Research Triangle Park hotel property in Durham, North Carolina,
for approximately $28.0 million. Considering closing costs,
this acquisition generated an increase in Investment in Hotel
Properties of approximately $28.2 million.
On March 26, 2006, the Company completed its
$10.5 million renovation and re-branding of the Hilton
Ft. Worth hotel property in Ft. Worth, Texas, which
was formerly a Radisson hotel property.
On April 19, 2006, the Company acquired the Pan Pacific
San Francisco Hotel in San Francisco, California, for
approximately $95.0 million. Considering closing costs,
this acquisition generated an increase in Investment in Hotel
Properties of approximately $96.4 million.
On July 13, 2006, the Company acquired the Marriott Crystal
Gateway hotel in Arlington, Virginia, for approximately
$107.2 million. Considering closing costs and the
unfavorable contract liability assumed, this acquisition
generated an increase in Investment in Hotel Properties of
approximately $123.7 million.
On November 9, 2006, the Company acquired the Westin
OHare hotel property in Rosemont, Illinois, for
approximately $125.0 million in cash. Considering closing
costs, this acquisition generated an increase in Investment in
Hotel Properties of approximately $125.2 million.
On December 7, 2006, the Company acquired a seven-property
hotel portfolio (MIP Portfolio) for approximately
$267.2 million in cash. Two of these seven properties were
immediately held for sale and classified as discontinued
operations. Considering closing costs, this acquisition
generated an increase in Investment in Hotel Properties of
approximately $231.6 million with the remainder of the
purchase price related to working capital or discontinued
operations classified as assets held for sale of approximately
$35.6 million, of which approximately $35.5 million
relates to investment in hotel properties and approximately
$166,000 relates to franchise fees.
On April 11, 2007, the Company acquired a 51-property hotel
portfolio from CNL Hotels and Resorts, Inc. (CNL)
for approximately $2.4 billion. Pursuant to this agreement,
the Company acquired 100% of 33 properties and 70%-89% of 18
properties through existing joint ventures. In addition, on
April 11, 2007, the Company acquired the remaining 15%
joint venture interest in the Hyatt Regency Dearborn in Detroit,
Michigan, for approximately $7.5 million. Considering
closing costs and unfavorable contract liabilities assumed,
these acquisitions generated an increase in Investment in Hotel
Properties of approximately $2.7 billion, which includes
the historical cost basis related to the joint venture
partners minority ownership.
89
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On May 21, 2007, the Company acquired a Marriott Residence
Inn and a Hampton Inn, both in Jacksonville, Florida, for
approximately $35.8 million. The acquisition of these hotel
properties, which were previously owned by CNL, related to the
Companys acquisition of the CNL portfolio on
April 11, 2007. Considering closing costs, this acquisition
generated an increase in Investment in Hotel Properties of
approximately $35.7 million with the remainder of the
purchase price related to working capital.
On December 15, 2007, the Company completed an asset swap
with Hilton Hotels Corporation, its partner in two joint
ventures which were simultaneously dissolved, whereby the
Company surrendered its majority ownership interest in two hotel
properties in exchange for the joint venture partners
minority ownership interest in nine hotel properties.
Considering closing costs, this acquisition generated an
increase in Investment in Hotel Properties of approximately
$41.9 million as a result of acquiring 100% of the
ownership in the nine hotel properties.
For the years ended December 31, 2007, 2006, and 2005, the
Company recognized depreciation expense, including depreciation
of assets under capital leases, of approximately
$167.9 million, $52.4 million, and $29.7 million,
respectively.
|
|
6.
|
Assets
Held for Sale and Discontinued Operations
|
On January 19, 2005, the Company sold an office building
for approximately $2.9 million, which is net of nominal
closing costs. The Company had acquired this office building,
which had one tenant and nominal operations, on July 7,
2004, in connection with its acquisition of an adjacent hotel
property in Philadelphia, Pennsylvania, for approximately
$16.7 million in cash. At the time of the acquisition, the
Company planned to sell the office building. Consequently, no
gain or loss was recognized on this sale.
On March 16, 2005, the Company acquired 21 hotel properties
and an office building for approximately $250.0 million.
Soon thereafter, the Company made a strategic commitment to sell
eight of these properties, six of which were sold in 2005 for
approximately $25.3 million, net of closing costs. On
January 17, 2006, the Company sold the remaining two
properties for approximately $10.7 million, net of closing
costs. In addition, in late 2005, the Company made a strategic
commitment to sell a portion of one of the other hotel
properties acquired in this acquisition. This property has
nominal operations and remains in assets held for sale at
December 31, 2007. In late 2006, the Company made a
strategic commitment to sell the office building acquired in
this acquisition, which is discussed below. Operating results
related to these properties during the periods such assets were
owned are included in income from discontinued operations for
the years ended December 31, 2007, 2006, and 2005. No
significant gain or loss or adverse tax consequences resulted
from the sales of these properties.
During the year ended December 31, 2005, the six properties
sold for approximately $25.3 million consisted of the
following:
|
|
|
|
|
On April 1, 2005, the Company sold a hotel located in
Dallas, Texas, for approximately $1.3 million, which is net
of nominal closing costs,
|
|
|
|
On April 19, 2005, the Company sold a hotel located in
Hyannis, Massachusetts, for approximately $4.6 million,
which is net of nominal closing costs,
|
|
|
|
On April 22, 2005, the Company sold a hotel located in
Warner Robins, Georgia, for approximately $1.4 million,
which is net of nominal closing costs,
|
|
|
|
On June 7, 2005, the Company sold a hotel located in
Yarmouth, Massachusetts, for approximately $3.3 million,
which is net of nominal closing costs,
|
|
|
|
On June 14, 2005, the Company sold a hotel located in
Falmouth, Massachusetts, for approximately $4.4 million,
which is net of nominal closing costs, and
|
|
|
|
On June 15, 2005, the Company sold a hotel located in Coral
Gables, Florida, for approximately $10.3 million, which is
net of nominal closing costs.
|
90
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On June 17, 2005, the Company acquired 30 hotel properties
for approximately $465.0 million. Soon thereafter, the
Company made a strategic commitment to sell 15 of these
properties. On March 24, 2006, the Company sold eight of
these properties for approximately $100.4 million, net of
closing costs. Operating results related to these eight hotel
properties during the periods such hotels were owned are
included in income from discontinued operations for the years
ended December 31, 2006 and 2005. No significant gain or
loss or adverse tax consequences resulted from the sales of
these properties. Subsequent to March 31, 2006, Company
management made a strategic decision to discontinue further
sales efforts related to the seven remaining hotels.
Consequently, assets previously reported as assets held for sale
related to these hotels were reclassified to investment in hotel
properties. The Company recorded such assets in investment in
hotel properties at approximately $38.9 million, which
represented the carrying value of such assets (net of
depreciation not recognized while said assets were held for sale
of approximately $863,000), which is lower than such
assets estimated fair values.
On December 7, 2006, the Company acquired seven hotel
properties for approximately $267.2 million, two of which
properties were immediately held for sale. The Company sold one
of these properties in 2007, as discussed below, and the other
property remains in assets held for sale at December 31,
2007. Operating results related to these two hotel properties
during the periods such hotels were owned are included in income
for discontinued operations for the years ended
December 31, 2007 and 2006. No significant gain or loss or
adverse tax consequences have resulted or are expected to result
from the sales of these properties.
In late 2006, the Company made a strategic decision to sell 13
hotel properties acquired throughout 2003 through 2005 and its
office building acquired on March 16, 2005. These 13 hotel
properties include one hotel property acquired on March 16,
2005 and the seven hotel properties acquired on June 17,
2005, which were initially classified as discontinued operations
and assets held for sale. As discussed below, all of these hotel
properties were sold during 2007. Operating results related to
these properties during the periods such hotels were owned are
included in income for discontinued operations for the years
ended December 31, 2007, 2006, and 2005.
During the year ended December 31, 2007, the Company
entered into a definitive agreements to sell nine additional
hotel properties, including its Embassy Suites hotel in Phoenix,
Arizona, acquired in 2003 and eight hotel properties acquired on
April 11, 2007, which includes two hotels in which the
Company owned 70% and 75%, respectively, through equity
investments with joint venture partners. During 2007, the
Company sold eight of these hotels and entered a definitive
agreement to sell the remaining hotel, which is classified in
assets held for sale at December 31, 2007. Transactions
completed in 2007 are more specifically discussed below.
Operating results related to these properties during the periods
such hotels were owned are included in income for discontinued
operations for the years ended December 31, 2007, 2006, and
2005.
In summary, during the year ended December 31, 2007, the
Company completed the following transactions related to assets
classified as held for sale and discontinued operations:
COMPLETED
SALES:
On February 6, 2007, the Company sold its Marriott located
in Trumbull, Connecticut, for approximately $28.3 million.
As the Company acquired this property on December 7, 2006,
no gain or loss was recognized on the sale.
On February 8, 2007, the Company sold its Fairfield Inn in
Princeton, Indiana, for approximately $3.2 million. In
connection with this sale, the Company recognized a gain of
approximately $1.4 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On April 24, 2007, the Company sold its Radisson Hotel in
Indianapolis, Indiana, for approximately $5.4 million. In
connection with this sale, the Company recognized a gain of
approximately $2.7 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
91
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On April 26, 2007, the Company sold its Fairfield Inn in
Evansville, Indiana, for approximately $5.5 million. In
connection with this sale, the Company recognized a gain of
approximately $531,000, of which related income tax gains were
deferred through a 1031 like-kind exchange.
On April 27, 2007, the Company sold its Embassy Suites in
Phoenix, Arizona, for approximately $25.0 million. In
connection with this sale, the Company recognized a gain of
approximately $8.5 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On May 2, 2007, the Company sold its Radisson Hotel in
Covington, Kentucky, and an office building for approximately
$22.4 million. In connection with this sale, the Company
recognized a gain of approximately $3.4 million, of which
related income tax gains were deferred through a 1031 like-kind
exchange.
On May 18, 2007, the Company sold its portfolio of seven
TownePlace Suites hotels for approximately $57.5 million.
In connection with this sale, the Company recognized a gain of
approximately $18.2 million, of which related income tax
gains were deferred through a 1031 like-kind exchange.
On July 2, 2007, the Company sold its Hampton Inn in Horse
Cave, Kentucky, for approximately $3.5 million. In
connection with this sale, the Company recognized a gain of
approximately $363,000.
On September 27, 2007, the Company sold its Doubletree
Guest Suites in Dayton, Ohio, for approximately
$6.5 million. In connection with this sale, the Company
recognized a gain of approximately $168,000.
On October 2, 2007, the Company sold its Hilton in
Birmingham, Alabama, for approximately $25.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on the sale.
On November 2, 2007, the Company sold two Residence Inns in
Torrance, California, and Atlanta, Georgia, for approximately
$61.5 million. As the Company acquired these properties on
April 11, 2007, no gain or loss was recognized on the sale.
On November 20, 2007, the Company sold its Residence Inn in
Kansas City, Missouri, for approximately $7.0 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale.
On November 30, 2007, the Company sold its Marriott in
Baltimore, Maryland, for approximately $61.5 million. As
the Company acquired this property on April 11, 2007, no
gain or loss was recognized on this sale.
On December 15, 2007, the Company completed an asset swap
with Hilton Hotels Corporation, its partner in two joint
ventures which were simultaneously dissolved, whereby the
Company surrendered its majority ownership interest in two hotel
properties in exchange for the joint venture partners
minority ownership interest in nine hotel properties.
DEFINITIVE
SALES AGREEMENTS REACHED:
On November 21, 2007, the Company reached a definitive
agreement to sell its JW Marriott hotel located in New Orleans,
Louisiana, for approximately $67.5 million. As the Company
acquired this property on April 11, 2007, no gain or loss
will be recognized on this sale.
For the years ended December 31, 2007 and 2006, as
discussed above, the Company classified three and 17 properties,
respectively, in assets held for sale as such assets met the
Companys held-for-sale criteria as of those dates.
92
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For the years ended December 31, 2007, 2006, and 2005,
financial results related to the Companys properties
included in discontinued operations was as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Total revenues
|
|
$
|
127,612
|
|
|
$
|
57,373
|
|
|
$
|
56,635
|
|
Operating expenses
|
|
|
95,064
|
|
|
|
42,536
|
|
|
|
42,792
|
|
Depreciation and amortization
|
|
|
15,301
|
|
|
|
4,403
|
|
|
|
3,073
|
|
Loss on reclassification from discontinued to continuing
|
|
|
|
|
|
|
863
|
|
|
|
|
|
Gains on sales of properties
|
|
|
(35,071
|
)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
14,846
|
|
|
|
3,218
|
|
|
|
3,676
|
|
Amortization of loan costs
|
|
|
1,943
|
|
|
|
54
|
|
|
|
56
|
|
Write-off of loan costs and exit fees
|
|
|
4,448
|
|
|
|
687
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before taxes and minority interest
|
|
|
31,081
|
|
|
|
5,612
|
|
|
|
7,038
|
|
Provision for income taxes
|
|
|
(618
|
)
|
|
|
(226
|
)
|
|
|
(2,387
|
)
|
Minority interest in consolidated joint ventures
|
|
|
(1,997
|
)
|
|
|
|
|
|
|
|
|
Minority interest related to limited partners
|
|
|
(2,274
|
)
|
|
|
(737
|
)
|
|
|
(942
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
26,192
|
|
|
$
|
4,649
|
|
|
$
|
3,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the
4th quarter
of 2007, the Company allocated interest and related debt expense
totaling $21.2 million, $4.0 million, and
$3.7 million for 2007, 2006, and 2005, respectively, to
discontinued operations in accordance with Emerging Issues Task
Force (EITF) abstract
No. 87-24,
Allocation of Interest to Discontinued Operations.
93
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Notes receivable consists of the following as of
December 31, 2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
$11.0 million mezzanine loan secured by various government
securities, matures September 2011, at an interest rate of 14%
(12% pay rate with deferred interest through the first two
years), with interest only payments through maturity
|
|
$
|
11,000
|
|
|
$
|
11,000
|
|
$8.0 million mezzanine loan secured by one hotel property,
matured February 2007, at an interest rate of LIBOR plus 9.13%,
with interest-only payments through maturity
|
|
|
|
|
|
|
8,000
|
|
$8.0 million mezzanine loan secured by one hotel property,
matures May 2010, at an interest rate of 14% which increases 1%
annually until reaching an 18% maximum, with interest-only
payments through maturity
|
|
|
|
|
|
|
8,000
|
|
$8.5 million mezzanine loan secured by one hotel property,
matured June 2007, at an interest rate of LIBOR plus 9.75%, with
interest-only payments through maturity
|
|
|
|
|
|
|
8,500
|
|
$4.0 million mezzanine loan secured by one hotel property,
matures July 2010, at an interest rate of 14%, with
interest-only payments through maturity
|
|
|
4,000
|
|
|
|
4,000
|
|
$5.6 million mezzanine loan secured by one hotel property,
matures July 2008, at an interest rate of LIBOR plus 9.5%, with
interest-only payments through February 2007 plus principal
payments thereafter based on a twenty-five-year amortization
schedule
|
|
|
|
|
|
|
5,583
|
|
$3.0 million mezzanine loan secured by one hotel property,
matures September 2008, at an interest rate of LIBOR plus
11.15%, with interest-only payments through maturity
|
|
|
3,000
|
|
|
|
3,000
|
|
$18.2 million first-mortgage loan secured by one hotel
property, matures October 2008, at an interest rate of LIBOR
plus 9%, with interest-only payments through maturity
|
|
|
18,200
|
|
|
|
18,200
|
|
$25.7 million mezzanine loan secured by 105 hotel
properties, matures April 2008, at an interest rate of LIBOR
plus 5%, with interest-only payments through maturity
|
|
|
25,694
|
|
|
|
25,694
|
|
$7.0 million mezzanine loan secured by one hotel property,
matures December 2009, at an interest rate of LIBOR plus 6.5%,
with interest-only payments through maturity
|
|
|
7,000
|
|
|
|
7,000
|
|
$4.0 million mezzanine loan secured by one hotel property,
matures December 2009, at an interest rate of LIBOR plus 5.75%,
with interest-only payments through maturity
|
|
|
4,000
|
|
|
|
4,000
|
|
$21.5 million mezzanine loan secured by two hotel
properties, matures January 2018, at an interest rate of 14%,
with interest-only payments through maturity
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross notes receivable
|
|
$
|
94,394
|
|
|
$
|
102,977
|
|
Deferred income, net
|
|
|
(169
|
)
|
|
|
(144
|
)
|
|
|
|
|
|
|
|
|
|
Net notes receivable
|
|
$
|
94,225
|
|
|
$
|
102,833
|
|
|
|
|
|
|
|
|
|
|
Weighted average interest rate
|
|
|
12.40
|
%
|
|
|
13.20
|
%
|
|
|
|
|
|
|
|
|
|
As of January 1, 2006, the Companys $6.6 million
note receivable, secured by one hotel, matured and all principal
and interest of approximately $7.0 million was due at that
time. Effective January 1, 2006, the Company executed an
120-day
forbearance on the collection of all amounts due on this loan,
allowing the borrower time to sell or refinance the related
property. On May 3, 2006, the Company received
approximately $7.3 million in full payment of all principal
and interest due under this loan.
94
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
During the year ended December 31, 2006, the Company
originated the $26.3 million (balance at December 31,
2007 was $25.7 million), $7.0 million, and
$4.0 million notes receivable, as described sequentially in
the above table, on June 9, 2006, December 27, 2006,
and December 27, 2006, respectively.
On June 15, 2006, the Company received approximately
$15.2 million related to all principal and interest due
under its $15.0 million note receivable, due January 2007.
On July 21, 2006, the Company received approximately
$15.2 million related to all principal and interest due
under its $15.0 million note receivable, due April 2007.
On September 24, 2006, the Company extended the maturity
date on its $5.0 million note receivable, originally due
October 2006, to October 2007. On December 5, 2006, the
Company received approximately $5.1 million related to all
principal and interest due under this loan.
On November 17, 2006, the Company received a principal
payment of approximately $614,000 related to a portion of its
$26.3 million note receivable, due April 2008. As a result
of this prepayment, the $26.3 million note receivable,
originally secured by 107 hotel properties, became a
$25.7 million note receivable, secured by 105 hotel
properties.
On February 6, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due February 2007.
On May 8, 2007, the Company received approximately
$8.6 million related to all principal and interest due
under its $8.5 million note receivable, due June 2007.
On June 11, 2007, the Company received approximately
$8.1 million related to all principal and interest due
under its $8.0 million note receivable, due May 2010.
On June 18, 2007, the Company received approximately
$5.7 million related to all principal and interest due
under its $5.6 million note receivable, due July 2008.
On December 5, 2007, the Company originated the
$21.5 million mezzanine loan receivable, which is described
in the above table.
On December 13, 2007, the Company substituted the
collaterals of mortgage-backed securities on the
$11.0 million mezzanine loan with various government
securities.
For the years ended December 31, 2007, 2006, and 2005, the
Company recognized interest income related to notes receivable
of approximately $11.0 million, $14.9 million, and
$13.3 million, respectively.
In general, the Companys notes receivable have extension
options, prohibit prepayment through stated periods, and require
decreasing prepayment penalties through maturity. As of
December 31, 2007, all notes receivable balances were
current and no reserve for loan losses had been recorded.
Deferred costs consist of the following as of December 31,
2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Deferred loan costs
|
|
$
|
32,552
|
|
|
$
|
15,285
|
|
Deferred franchise fees
|
|
|
4,155
|
|
|
|
3,439
|
|
|
|
|
|
|
|
|
|
|
Total cost
|
|
|
36,707
|
|
|
|
18,724
|
|
Accumulated amortization
|
|
|
(10,993
|
)
|
|
|
(4,581
|
)
|
|
|
|
|
|
|
|
|
|
Deferred costs, net
|
|
$
|
25,714
|
|
|
$
|
14,143
|
|
|
|
|
|
|
|
|
|
|
95
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In late 2006, the Company made a strategic decision to sell 15
hotel properties and an office building, which resulted in
approximately $525,000 reclassified from deferred costs to
assets held for sale at December 31, 2006.
Intangibles consist of the following as of December 31,
2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Gross cost
|
|
$
|
13,956
|
|
|
$
|
1,402
|
|
Accumulated amortization
|
|
|
(67
|
)
|
|
|
(395
|
)
|
|
|
|
|
|
|
|
|
|
Intangibles, net
|
|
$
|
13,889
|
|
|
$
|
1,007
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007, intangibles of approximately
$3.2 million and $10.7 million relate to a favorable
market-rate lease and other identifiable intangible assets,
respectively, both of which relate to the preliminary purchase
price allocation related to certain hotels acquired on
April 11, 2007. The intangible asset related to the
favorable market-rate lease is amortized over the related
remaining lease term, which expires in 2043. Other intangibles
with finite useful lives will be amortized over their estimated
lives.
As of December 31, 2006, intangibles relate to existing
tenant leases of an office building, primarily representing
market-rate adjustments, occupancy levels, customer
relationships, and origination fees. However, all such
intangibles were classified as assets held for sale at
December 31, 2006 and relate to assets sold in 2007. Prior
to reclassification of these intangibles as assets held for sale
in late 2006, such intangibles were amortized over the related
remaining lease terms, which expired between 2008 and 2013.
For the years ended December 31, 2007, 2006, and 2005,
amortization expense related to intangibles was approximately
$67,000, $211,000, and $186,000, respectively.
Indebtedness consists of the following as of December 31,
2007 and 2006 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
$455.1 million mortgage note payable secured by 25 hotel
properties, of which $160.5 million matures July 1,
2015 and $294.6 million matures February 1, 2016, at a
weighted average fixed interest rate locked at 5.42%, with
interest-only payments due monthly plus principal payments based
on a twenty-five-year amortization schedule beginning
July 10, 2010
|
|
$
|
455,115
|
|
|
$
|
487,110
|
|
$211.5 million term loan secured by 16 hotel properties
divided equally into two pools. The first pool for
$110.9 million matures December 11, 2014, at a fixed
interest rate of 5.75%, with interest-only payments due monthly
plus principal payments based on a twenty-five-year amortization
schedule beginning December 11, 2009. The second pool for
$100.6 million matures December 11, 2015, at a fixed
interest rate of 5.7%, with interest-only payments due monthly
plus principal payments based on a twenty-five-year amortization
schedule beginning December 11, 2010
|
|
|
211,475
|
|
|
|
211,475
|
|
$928.5 million mortgage loan secured by 28 hotel
properties, matures April 11, 2017, at a weighted average
fixed interest rate locked at 5.95%, with interest-only payments
due monthly plus principal payments based on a thirty-year
amortization schedule beginning April 11, 2012
|
|
|
928,465
|
|
|
|
|
|
$213.9 million loan secured by 13 hotel properties and
mezzanine notes receivable, matures May 9, 2009, at an
interest rate of LIBOR plus 1.65%, with interest-only payments
due monthly, with three one-year extension options
|
|
|
213,889
|
|
|
|
|
|
96
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
$300.0 million secured credit facility, matures
April 9, 2010, at an interest rate of LIBOR plus a range of
1.55% to 1.95% depending on the loan-to-value ratio, with
interest-only payments due monthly, with a commitment fee of
0.125% to 0.20% on the unused portion of the line payable
quarterly, with two one-year extension options
|
|
|
65,000
|
|
|
|
|
|
$150.0 million secured credit facility secured by nine
hotel properties, matures August 16, 2008, at an interest
rate of LIBOR plus a range of 1.6% to 1.85% depending on the
loan-to-value ratio, with interest-only payments due monthly,
with a commitment fee of 0.2% to 0.35% on the unused portion of
the line payable quarterly, with two one-year extension options
|
|
|
|
|
|
|
25,000
|
|
$47.5 million term loan secured by 1 hotel property,
matures October 10, 2008, at an interest rate of LIBOR plus
2.0%, with interest-only payments due monthly, with three
one-year extension options
|
|
|
47,450
|
|
|
|
|
|
Mortgage note payable secured by one hotel property, matures
December 1, 2017, at an interest rate of 7.24% through
December 31, 2007 and 7.39% thereafter, with principal and
interest payments due monthly of approximately $462,000 through
December 31, 2007 and $598,000 thereafter, and including a
remaining premium of approximately $1.7 million
|
|
|
52,474
|
|
|
|
54,565
|
|
Mortgage note payable secured by one hotel property, matures
December 8, 2016, at an interest rate of 5.81%, with
interest-only payments due monthly plus principal payments based
on a thirty-year amortization schedule beginning
December 8, 2011
|
|
|
101,000
|
|
|
|
101,000
|
|
Mortgage note payable secured by six hotel properties, matures
December 11, 2009, at an interest rate of LIBOR plus 1.72%,
with interest-only payments due monthly, with two one-year
extension options
|
|
|
184,000
|
|
|
|
212,000
|
|
Mortgage loans assumed with acquisition of CNL Portfolio,
secured by 16 hotel properties, maturing between 2008 and 2018,
with an average blended interest rate of 6.07%, with total
principal and interest payments due monthly of approximately
$2.7 million, and including a total remaining premium of
approximately $2.1 million (approximately
$34.8 million of principal is attributable to joint venture
partners)
|
|
|
441,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
2,700,775
|
|
|
$
|
1,091,150
|
|
Related to discontinued operations
|
|
|
61,229
|
|
|
|
75,595
|
|
|
|
|
|
|
|
|
|
|
Related to continuing operations
|
|
$
|
2,639,546
|
|
|
$
|
1,015,555
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007 and 2006, LIBOR was 4.60% and 5.32%,
respectively.
On February 9, 2006, the Company paid down its
$45.0 million mortgage loan, due October 10, 2007, at
an interest rate of LIBOR plus 2%, to $100. On April 3,
2006, the Company modified this mortgage note payable to a
$47.5 million revolving credit facility, with a revolving
period through October 11, 2006 and interest rates during
the revolving period ranging from LIBOR plus 1% to LIBOR plus
1.5% depending on the outstanding balance. After the revolving
period expires, the interest rate resumes its original rate of
LIBOR plus 2%. Consistent with the original mortgage, the
modified credit facility requires monthly interest-only payments
and has three one-year extension options. On April 18, 2006
and June 6, 2006, the Company completed draws of
approximately $15.0 million each on this credit facility.
On July 25, 2006, the Company repaid the $30.0 million
outstanding balance on this credit facility. On July 26,
2006, the Company modified this credit facility to extend both
the revolving period and maturity date by one year to
October 11, 2007 and October 10, 2008, respectively.
As of December 31, 2006, approximately $100 was outstanding
on this credit facility.
On March 24, 2006, in connection with the Companys
sale of a portfolio of eight Residence Inn hotels for
approximately $100.4 million, net of closing costs, the
buyer assumed approximately $93.7 million of mortgage
97
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
debt, which had an interest rate of 5.32% and matured
July 1, 2015. This reduced the Companys
$580.8 million mortgage note payable, previously secured by
40 hotels, with an average interest rate of 5.4%, to
$487.1 million outstanding at December 31, 2006,
secured by 32 hotels, with an average interest rate of 5.41%. In
connection with the buyers assumption of this debt, the
Company wrote-off unamortized loan costs of approximately
$687,000.
On May 30, 2006, the Company repaid its then outstanding
$11.1 million balance on its mortgage note payable, due
April 1, 2011, which resulted in the write-off of
unamortized loan costs of approximately $102,000.
On July 13, 2006, in connection with the acquisition of the
Marriott Crystal Gateway hotel in Arlington, Virginia, the
Company assumed a $53.3 million mortgage note payable, due
December 1, 2017, at an interest rate of 7.24% through
December 31, 2007 and 7.39% thereafter. The Company
originally recorded this mortgage at a premium of approximately
$2.1 million as the fixed interest rate on this mortgage
exceeds current interest rates the Company would otherwise incur
on similar financial instruments. The debt premium is amortized
as an adjustment to interest expense over the term of the
mortgage using the effective interest method.
On September 8, 2006, the Company modified its
$100.0 million credit facility, due August 16, 2008,
to increase the capacity to $150.0 million with the ability
to be increased to $200.0 million subject to certain
conditions and reduced the interest rate from LIBOR plus a range
of 1.6% to 1.95% to LIBOR plus a range of 1.6% to 1.85%
depending on the loan-to-value ratio. On February 27, 2006,
April 18, 2006, July 14, 2006, November 8, 2006,
and December 6, 2006, the Company completed draws on this
credit facility of $10.0 million, $88.9 million,
$25.0 million, $80.0 million, and $25.0 million,
respectively. On January 31, 2006, June 28, 2006,
July 25, 2006, and November 16, 2006, the Company paid
down this credit facility by $60.0 million,
$25.0 million, $98.9 million, and $80.0 million,
respectively. At December 31, 2006, the Company had an
outstanding balance of $25.0 million on this credit
facility.
On November 16, 2006, the Company executed a
$101.0 million mortgage note payable, due December 8,
2016, at an interest rate of 5.81%, with interest-only payments
due monthly for five years plus principal payments thereafter
based on a thirty-year amortization schedule, and certain
prepayment restrictions and fees imposed.
On December 7, 2006, the Company executed a
$247.0 million mortgage note payable, of which
$212.0 million was funded immediately with the remaining
balance to be funded over the next two years, if necessary, as
capital expenditures are incurred by the Company. The loan
matures December 11, 2009, with two one-year extension
options, bears interest at a rate of LIBOR plus 1.72%, with
interest-only payments due monthly, and includes certain
prepayment restrictions and fees. In connection with this loan,
the Company purchased two 6.25% LIBOR interest rate caps with a
total notional amount of $247.0 million, which both mature
December 11, 2009, to limit its exposure to rising interest
rates on its variable-rate debt.
On January 30, 2007, the Company completed a
$20.0 million draw on its $150.0 million credit
facility, due August 16, 2008.
On February 6, 2007, in connection with the Companys
sale of its Marriott located in Trumbull, Connecticut, for
approximately $28.3 million, the Company paid down its
$212.0 million mortgage note payable, due December 11,
2009, by approximately $28.0 million. Consequently, the
$212.0 million mortgage loan secured by seven hotels
outstanding at December 31, 2006 became the
$184.0 million mortgage loan secured by six hotels
outstanding at December 31, 2007. In connection with this
pay-down, the Company wrote-off unamortized loan costs of
approximately $212,000.
On March 8, 2007, the Company terminated its
$100.0 million credit facility, due December 23, 2008.
This credit facility never had an outstanding balance. In
connection with this termination, the Company wrote-off
unamortized loan costs of approximately $490,000.
On April 9, 2007, the Company drew $45.0 million on
its $47.5 million credit facility, due October 10,
2008.
98
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On April 10, 2007, the Company repaid its
$45.0 million outstanding balance on its
$150.0 million credit facility, due August 16, 2008,
and terminated the facility. In connection with this
termination, the Company wrote-off unamortized loan costs of
approximately $1.2 million. This transaction was completed
in connection with the Companys acquisition of a
51-property hotel portfolio on April 11, 2007 discussed
below.
On April 11, 2007, in connection with its acquisition of a
51-property hotel portfolio from CNL Hotels and Resorts, Inc.
for approximately $2.4 billion plus closing costs of
approximately $96.0 million, the Company executed a
$928.5 million, ten-year, fixed-rate loan at an average
blended interest rate of 5.95%, a $555.1 million, two-year,
variable-rate loan with three one-year extension options at an
interest rate of LIBOR plus 1.65%, and a $325.0 million,
one-year, variable-rate loan with two one-year extension options
at an interest rate of LIBOR plus 1.5%, and assumed fixed-rate
debt of approximately $562.1 million (or approximately
$432.3 million net of debt attributable to joint venture
partners) representing eleven fixed-rate loans with an average
blended interest rate of 6.01% and expiration dates ranging from
2008 to 2027. In addition, the Company executed a
$200.0 million credit facility with an interest rate of
LIBOR plus a range of 1.55% to 1.95% depending on the
loan-to-value ratio, which matures April 9, 2010 with two
one-year extension options, requires interest-only payments
through maturity, and requires quarterly commitment fees ranging
from 0.125% to 0.20% of the average undrawn balance during the
quarter. To fund this acquisition, the Company drew
approximately $50.0 million on this credit facility.
Regarding the assumed debt of approximately $562.1 million,
the Company recorded these loans at premiums totaling
approximately $2.7 million as the fixed interest rates on
many of these loans exceeds current interest rates the Company
would otherwise incur on similar financial instruments. The debt
premiums are amortized as an adjustment to interest expense over
the terms of the related loans using the effective interest
method.
On April 11, 2007, in connection with its acquisition of
the remaining 15% joint venture interest in the Hyatt Regency
Dearborn in Detroit, Michigan, for approximately
$7.5 million, the Company assumed debt attributable to the
joint venture partner of approximately $4.6 million. The
Company acquired the other 85% interest pursuant to its
acquisition of the 51-property hotel portfolio on April 11,
2007, as discussed above.
On April 24 and 25, 2007, with proceeds received from its
follow-on public offering completed April 24, 2007, the
Company paid down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, paid off the $325.0 million variable-rate loan, due
April 9, 2008, and paid down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively. In connection with these repayments, the
Company wrote-off unamortized loan costs of approximately
$1.9 million related to the repayment of the
$325.0 million loan and incurred prepayment penalties of
approximately $559,000 related to the $180.1 million
repayment.
On May 18, 2007, in connection with the Companys sale
of its portfolio of seven TownePlace Suites hotels for
approximately $57.5 million, the Company paid down
approximately $32.0 million related to its mortgage loan
due July 1, 2015. Consequently, the $487.1 million
mortgage loan secured by 32 hotels outstanding at
December 31, 2006 became the $455.1 million mortgage
loan secured by 25 hotels outstanding at December 31, 2007.
In connection with this pay-down, the Company wrote-off
unamortized loan costs of approximately $205,000 and incurred
prepayment penalties of approximately $1.5 million.
On May 22, 2007, the Company modified its
$200.0 million credit facility, due April 9, 2010, to
increase its capacity to $300.0 million. On April 16,
2007, December 4, 2007, and December 20, 2007, the
Company completed draws on this credit facility of
$25.0 million, $25.0 million, and $10.0 million,
respectively. On May 3, 2007 and October 9, 2007, the
Company paid down this credit facility by $25.0 million and
$20.0 million, respectively. At December 31, 2007, the
Company had an outstanding balance of $65.0 million on this
credit facility.
On October 2, 2007, in connection with the sale of its
Hilton in Birmingham, Alabama, for approximately
$25.0 million, the Company paid down its mortgage loan, due
May 9, 2009, by approximately $23.7 million. In
connection with this payment, the Company wrote-off unamortized
loan costs of approximately $258,000.
99
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On October 9, 2007, the Company drew approximately
$47.5 million on its $47.5 million credit facility,
and used the proceeds to repay $20.0 million on its
$300.0 million credit facility, due April 9, 2010, as
discussed above. On October 11, 2007, the revolving period
on this $47.5 million credit facility expired and the
outstanding balance converted to a $47.5 million mortgage
loan, due October 10, 2008, at an interest rate of LIBOR
plus 2%, requiring monthly interest-only payments through
maturity, with three one-year extension options. In connection
with this loan, on October 15, 2007, the Company purchased
a 7.0% LIBOR interest rate cap with a $47.5 million
notional amount, which matures October 15, 2008, to limit
its exposure to rising interest rates on its variable-rate debt.
On November 2, 2007, in connection with the sale of two
Residence Inns in Torrance, California, and Atlanta, Georgia,
for approximately $61.5 million, the Company paid down its
mortgage loan, due May 9, 2009, by approximately
$67.7 million pursuant to the loan agreement, with proceeds
from the sale and corporate cash. In connection with this
payment, the Company wrote-off unamortized loan costs of
approximately $699,000 and incurred a prepayment penalty of
approximately $242,000.
On November 20, 2007, in connection with the sale of its
Residence Inn in Kansas City, Missouri, for approximately
$7.0 million, the Company paid down its mortgage loan, due
May 9, 2009, by approximately $7.4 million. In
connection with this payment, the Company wrote-off unamortized
loan costs of approximately $72,000 and incurred a prepayment
penalty of approximately $40,000.
On November 30, 2007, in connection with the sale of its
Marriott in Baltimore, Maryland, for approximately
$61.5 million, the Company paid down its mortgage loan, due
May 9, 2009, by approximately $62.4 million. In
connection with this payment, the Company wrote-off unamortized
loan costs of approximately $609,000 and incurred a prepayment
penalty of approximately $312,000.
On December 15, 2007, in connection with an asset swap with
a joint venture partner, the Company assumed $41.9 million
of mortgage debt previously attributable to the joint venture
partners minority ownership in nine acquired hotel
properties that secured such debt and ceded $109.5 million
of mortgage debt, of which $80.1 million was attributable
to its majority ownership in the two surrendered hotel
properties that secured such debt and the remainder attributable
to the joint venture partners former minority ownership.
The surrendered debt had interest rates ranging from 5.47% to
5.95% and maturity dates ranging from 2010 to 2011.
On December 15, 2007, in connection with the aforementioned
asset swap, the Company repaid an additional $8.7 million
of mortgage debt attributable to its majority ownership in such
joint ventures, which was secured by hotels involved in the
asset swap, at interest rates ranging from 5.47% to 5.95%, and
with maturity dates ranging from 2010 to 2011. In connection
with this payment, the Company wrote-off related unamortized
loan costs of approximately $143,000 and incurred a prepayment
penalty of approximately $326,000.
Maturities of indebtedness as of December 31, 2007 are as
follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
171,329
|
|
2009
|
|
|
560,376
|
|
2010
|
|
|
150,187
|
|
2011
|
|
|
86,506
|
|
2012
|
|
|
28,598
|
|
Thereafter
|
|
|
1,700,011
|
|
|
|
|
|
|
Total(1)
|
|
$
|
2,697,007
|
|
|
|
|
|
|
100
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Maturities of indebtedness as of December 31, 2007
including extension options are as follows (in thousands):
|
|
|
|
|
2008
|
|
$
|
123,880
|
|
2009
|
|
|
162,486
|
|
2010
|
|
|
197,637
|
|
2011
|
|
|
270,506
|
|
2012
|
|
|
242,487
|
|
Thereafter
|
|
|
1,700,011
|
|
|
|
|
|
|
Total(1)
|
|
$
|
2,697,007
|
|
|
|
|
|
|
|
|
|
(1) |
|
Payments do not reflect the premiums of $3,768,000 that are
being amortized as a reduction of interest expense. |
The carrying values of assets collateralizing indebtedness as of
December 31, 2007 and 2006 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Hotel Property
|
|
Location
|
|
2007
|
|
|
2006
|
|
|
Embassy Suites
|
|
Austin, TX
|
|
|
10,751
|
(b)
|
|
$
|
9,502
|
(b)
|
Embassy Suites
|
|
Dallas, TX
|
|
|
10,681
|
(b)
|
|
|
9,697
|
(b)
|
Embassy Suites
|
|
Herndon, VA
|
|
|
11,733
|
(b)
|
|
|
9,691
|
(b)
|
Embassy Suites
|
|
Las Vegas, NV
|
|
|
22,947
|
(b)
|
|
|
17,395
|
(b)
|
Embassy Suites
|
|
Syracuse, NY
|
|
|
14,115
|
(b)
|
|
|
14,651
|
(b)
|
Embassy Suites
|
|
Flagstaff, AZ
|
|
|
6,430
|
(c)
|
|
|
6,441
|
(d)
|
Embassy Suites
|
|
Houston, TX
|
|
|
12,441
|
(a)
|
|
|
12,612
|
(a)
|
Embassy Suites
|
|
West Palm Beach, FL
|
|
|
19,306
|
(a)
|
|
|
25,315
|
(a)
|
Embassy Suites
|
|
Philadelphia, PA
|
|
|
44,068
|
(h)
|
|
|
41,368
|
(e)
|
Embassy Suites
|
|
Walnut Creek, CA
|
|
|
36,546
|
(h)
|
|
|
43,122
|
(e)
|
Embassy Suites
|
|
Arlington, VA
|
|
|
78,428
|
(i)
|
|
|
|
|
Embassy Suites
|
|
Portland, OR
|
|
|
70,550
|
(i)
|
|
|
|
|
Embassy Suites
|
|
Santa Clara, CA
|
|
|
57,371
|
(i)
|
|
|
|
|
Embassy Suites
|
|
Orlando, FL
|
|
|
27,406
|
(i)
|
|
|
|
|
Radisson Hotel
|
|
Holtsville, NY
|
|
|
21,062
|
(d)
|
|
|
|
|
Radisson Hotel
|
|
Rockland, MA
|
|
|
4,198
|
(d)
|
|
|
|
|
Doubletree Guest Suites
|
|
Columbus, OH
|
|
|
9,419
|
(d)
|
|
|
|
|
Hilton Garden Inn
|
|
Jacksonville, FL
|
|
|
11,490
|
(b)
|
|
|
11,046
|
(b)
|
Hilton
|
|
Ft. Worth, TX
|
|
|
27,824
|
(a)
|
|
|
27,322
|
(a)
|
Hilton
|
|
Houston, TX
|
|
|
17,642
|
(a)
|
|
|
17,087
|
(a)
|
Hilton
|
|
St. Petersburg, FL
|
|
|
21,911
|
(a)
|
|
|
20,394
|
(a)
|
Hilton
|
|
Santa Fe, NM
|
|
|
20,430
|
(d)
|
|
|
19,450
|
(d)
|
Hilton
|
|
Bloomington, MN
|
|
|
66,446
|
(h)
|
|
|
59,256
|
(e)
|
Hilton
|
|
Washington DC
|
|
|
145,676
|
(i)
|
|
|
|
|
Hilton
|
|
La Jolla, CA
|
|
|
114,009
|
(i)
|
|
|
|
|
Hilton
|
|
Costa Mesa, CA
|
|
|
108,288
|
(i)
|
|
|
|
|
Hilton
|
|
Tuscon, AZ
|
|
|
65,259
|
(i)
|
|
|
|
|
Hilton
|
|
Dallas, TX
|
|
|
69,458
|
(i)
|
|
|
|
|
101
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Hotel Property
|
|
Location
|
|
2007
|
|
|
2006
|
|
|
Hilton
|
|
Rye Town, NY
|
|
|
46,429
|
(i)
|
|
|
|
|
Hilton
|
|
Auburn Hills, MI
|
|
|
17,281
|
(i)
|
|
|
|
|
Homewood Suites
|
|
Mobile, AL
|
|
|
8,986
|
(d)
|
|
|
|
|
Hampton Inn
|
|
Lawrenceville, GA
|
|
|
4,388
|
(d)
|
|
|
4,527
|
(d)
|
Hampton Inn
|
|
Evansville, IN
|
|
|
7,608
|
(b)
|
|
|
8,225
|
(b)
|
Hampton Inn
|
|
Terre Haute, IN
|
|
|
8,603
|
(b)
|
|
|
8,792
|
(b)
|
Hampton Inn
|
|
Buford, GA
|
|
|
6,531
|
(b)
|
|
|
6,654
|
(b)
|
Hampton Inn
|
|
Houston, TX
|
|
|
16,798
|
(i)
|
|
|
|
|
Marriott
|
|
Durham, NC
|
|
|
29,987
|
(c)
|
|
|
27,920
|
(d)
|
Marriott
|
|
Arlington, VA
|
|
|
128,652
|
(f)
|
|
|
122,858
|
(f)
|
Marriott
|
|
Trumbull, CT
|
|
|
|
|
|
|
27,537
|
(e)
|
Marriot
|
|
Seattle,WA
|
|
|
166,978
|
(c)
|
|
|
|
|
Marriot
|
|
Bridgewater, NJ
|
|
|
93,995
|
(c)
|
|
|
|
|
Marriot
|
|
Plano, TX
|
|
|
93,059
|
(c)
|
|
|
|
|
Marriot
|
|
Dallas, TX
|
|
|
33,875
|
(c)
|
|
|
|
|
JW Marriott
|
|
New Orleans, LA
|
|
|
63,253
|
(i)
|
|
|
|
|
SpringHill Suites by Marriott
|
|
Jacksonville, FL
|
|
|
8,670
|
(b)
|
|
|
9,046
|
(b)
|
SpringHill Suites by Marriott
|
|
Baltimore, MD
|
|
|
15,543
|
(d)
|
|
|
15,722
|
(d)
|
SpringHill Suites by Marriott
|
|
Kennesaw, GA
|
|
|
6,456
|
(d)
|
|
|
6,719
|
(d)
|
SpringHill Suites by Marriott
|
|
Buford, GA
|
|
|
6,988
|
(b)
|
|
|
7,158
|
(b)
|
SpringHill Suites by Marriott
|
|
Gaithersburg, MD
|
|
|
21,942
|
(a)
|
|
|
22,294
|
(a)
|
SpringHill Suites by Marriott
|
|
Centreville, VA
|
|
|
13,843
|
(a)
|
|
|
14,011
|
(a)
|
SpringHill Suites by Marriott
|
|
Charlotte, NC
|
|
|
7,852
|
(a)
|
|
|
8,021
|
(a)
|
SpringHill Suites by Marriott
|
|
Durham, NC
|
|
|
5,012
|
(a)
|
|
|
5,110
|
(a)
|
SpringHill Suites by Marriott
|
|
Orlando, FL
|
|
|
36,226
|
(c)
|
|
|
|
|
SpringHill Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
25,975
|
(c)
|
|
|
|
|
SpringHill Suites by Marriott
|
|
Plymouth Meeting, PA
|
|
|
27,372
|
(c)
|
|
|
|
|
SpringHill Suites by Marriott
|
|
Glen Allen, VA
|
|
|
17,182
|
(c)
|
|
|
|
|
Fairfield Inn by Marriott
|
|
Kennesaw, GA
|
|
|
5,011
|
(d)
|
|
|
5,099
|
(d)
|
Fairfield Inn by Marriott
|
|
Orlando, FL
|
|
|
17,369
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Bloomington, IN
|
|
|
11,755
|
(b)
|
|
|
12,155
|
(b)
|
Courtyard by Marriott
|
|
Columbus, IN
|
|
|
6,034
|
(b)
|
|
|
6,190
|
(b)
|
Courtyard by Marriott
|
|
Louisville, KY
|
|
|
13,229
|
(b)
|
|
|
13,659
|
(b)
|
Courtyard by Marriott
|
|
Crystal City, VA
|
|
|
44,622
|
(a)
|
|
|
45,472
|
(a)
|
Courtyard by Marriott
|
|
Ft. Lauderdale, FL
|
|
|
20,012
|
(a)
|
|
|
20,612
|
(a)
|
Courtyard by Marriott
|
|
Overland Park, KS
|
|
|
16,167
|
(a)
|
|
|
16,179
|
(a)
|
Courtyard by Marriott
|
|
Palm Desert, CA
|
|
|
15,124
|
(a)
|
|
|
15,425
|
(a)
|
Courtyard by Marriott
|
|
Foothill Ranch, CA
|
|
|
18,133
|
(a)
|
|
|
18,784
|
(a)
|
Courtyard by Marriott
|
|
Alpharetta, GA
|
|
|
15,032
|
(a)
|
|
|
15,389
|
(a)
|
Courtyard by Marriott
|
|
Philadelphia, PA
|
|
|
102,049
|
(i)
|
|
|
|
|
102
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Hotel Property
|
|
Location
|
|
2007
|
|
|
2006
|
|
|
Courtyard by Marriott
|
|
Seattle,WA
|
|
|
74,317
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
San Francisco, CA
|
|
|
93,397
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Orlando, FL
|
|
|
35,800
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Oakland, CA
|
|
|
24,222
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Scottsdale, AZ
|
|
|
27,772
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Plano, TX
|
|
|
23,630
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Edison, NJ
|
|
|
13,491
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Newark, CA
|
|
|
13,125
|
(c)
|
|
|
|
|
Courtyard by Marriott
|
|
Manchester, CT
|
|
|
8,308
|
(i)
|
|
|
|
|
Courtyard by Marriott
|
|
Basking Ridge, NJ
|
|
|
50,422
|
(c)
|
|
|
|
|
Marriott Residence Inn
|
|
Lake Buena Vista, FL
|
|
|
24,072
|
(b)
|
|
|
23,249
|
(b)
|
Marriott Residence Inn
|
|
Evansville, IN
|
|
|
7,230
|
(b)
|
|
|
7,646
|
(b)
|
Marriott Residence Inn
|
|
Orlando, FL
|
|
|
45,383
|
(a)
|
|
|
46,635
|
(a)
|
Marriott Residence Inn
|
|
Falls Church, VA
|
|
|
37,098
|
(a)
|
|
|
38,110
|
(a)
|
Marriott Residence Inn
|
|
San Diego, CA
|
|
|
32,220
|
(a)
|
|
|
33,206
|
(a)
|
Marriott Residence Inn
|
|
Salt Lake City, UT
|
|
|
17,614
|
(a)
|
|
|
17,985
|
(a)
|
Marriott Residence Inn
|
|
Palm Desert, CA
|
|
|
13,985
|
(a)
|
|
|
14,067
|
(a)
|
Marriott Residence Inn
|
|
Las Vegas, NV
|
|
|
66,054
|
(d)
|
|
|
|
|
Marriott Residence Inn
|
|
Pheonix, AZ
|
|
|
29,436
|
(c)
|
|
|
|
|
Marriott Residence Inn
|
|
Plano, TX
|
|
|
18,348
|
(c)
|
|
|
|
|
Marriott Residence Inn
|
|
Newark, CA
|
|
|
14,453
|
(c)
|
|
|
|
|
Marriott Residence Inn (Buckhead)
|
|
Atlanta, GA
|
|
|
18,048
|
(c)
|
|
|
|
|
TownePlace Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
22,052
|
(c)
|
|
|
|
|
TownePlace Suites by Marriott
|
|
Mt. Laurel, NJ
|
|
|
|
|
|
|
7,469
|
(a)
|
TownePlace Suites by Marriott
|
|
Scarborough, ME
|
|
|
|
|
|
|
6,742
|
(a)
|
TownePlace Suites by Marriott
|
|
Miami, FL
|
|
|
|
|
|
|
5,398
|
(a)
|
TownePlace Suites by Marriott
|
|
Ft. Worth, TX
|
|
|
|
|
|
|
5,657
|
(a)
|
TownePlace Suites by Marriott
|
|
Miami Lakes, FL
|
|
|
|
|
|
|
7,883
|
(a)
|
TownePlace Suites by Marriott
|
|
Tewksbury, MA
|
|
|
|
|
|
|
2,627
|
(a)
|
TownePlace Suites by Marriott
|
|
Newark, CA
|
|
|
|
|
|
|
2,634
|
(a)
|
Sea Turtle
|
|
Atlantic Beach, FL
|
|
|
39,772
|
(d)
|
|
|
24,040
|
(d)
|
Sheraton Hotel
|
|
Langhorne, PA
|
|
|
17,746
|
(c)
|
|
|
|
|
Sheraton Hotel
|
|
Minneapolis, MN
|
|
|
18,196
|
(a)
|
|
|
18,369
|
(a)
|
Sheraton Hotel
|
|
Milford, MA
|
|
|
7,893
|
(d)
|
|
|
|
|
Sheraton Hotel
|
|
Indianapolis, IN
|
|
|
32,213
|
(a)
|
|
|
27,482
|
(a)
|
Sheraton Hotel
|
|
Anchorage, AK
|
|
|
45,929
|
(h)
|
|
|
39,161
|
(e)
|
Sheraton Hotel
|
|
Iowa City, IA
|
|
|
9,550
|
(h)
|
|
|
15,003
|
(e)
|
Sheraton Hotel
|
|
San Diego, CA
|
|
|
44,800
|
(h)
|
|
|
42,653
|
(e)
|
Hyatt Regency
|
|
Anaheim, CA
|
|
|
|
|
|
|
75,720
|
(j)
|
Hyatt Regency
|
|
Herndon, VA
|
|
|
69,242
|
(e)
|
|
|
70,204
|
(g)
|
103
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
Hotel Property
|
|
Location
|
|
2007
|
|
|
2006
|
|
|
Hyatt Regency
|
|
Detriot, MI
|
|
|
48,865
|
(i)
|
|
|
|
|
Hyatt Regency
|
|
Coral Gables, FL
|
|
|
53,621
|
(d)
|
|
|
|
|
Crowne Plaza
|
|
Beverly Hills, CA
|
|
|
29,815
|
(a)
|
|
|
28,995
|
(a)
|
Crowne Plaza
|
|
Key West, FL
|
|
|
29,036
|
(a)
|
|
|
28,257
|
(a)
|
Annapolis Inn
|
|
Annapolis, MD
|
|
|
14,219
|
(a)
|
|
|
14,030
|
(a)
|
Westin
|
|
Rosemont, IL
|
|
|
119,051
|
(g)
|
|
|
124,202
|
(c)
|
Renaissance
|
|
Tampa, FL
|
|
|
71,873
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
$
|
3,692,204
|
|
|
$
|
1,535,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Represents collateral for the $455.1 million mortgage note
payable outstanding at December 31, 2007. |
|
(b) |
|
Represents collateral for the $211.5 million term loan
outstanding at December 31, 2007. |
|
(c) |
|
Represents collateral for the $928.5. million mortgage note
payable outstanding at December 31, 2007. |
|
(d) |
|
Represents collateral for the $213.9 million mortgage note
payable outstanding at December 31, 2007. |
|
(e) |
|
Represents collateral for the $47.5 million credit facility
outstanding at December 31, 2007. |
|
(f) |
|
Represents collateral for the $52.5 million mortgage note
payable and premium outstanding at December 31, 2007. |
|
(g) |
|
Represents collateral for the $101.0 million mortgage note
payable outstanding at December 31, 2007. |
|
(h) |
|
Represents collateral for the $184.0 million mortgage note
payable outstanding at December 31, 2007. |
|
(i) |
|
Represents collateral for the $441.9 million mortgage note
payable and premium outstanding at December 31, 2007. |
|
(j) |
|
Represents collateral for the $150.0 million credit
facility with a $25.0 million outstanding balance at
December 31, 2006. |
If the Company violates covenants in any debt agreements, the
Company could be required to repay all or a portion of its
indebtedness before maturity at a time when the Company might be
unable to arrange financing for such repayment on attractive
terms, if at all. Violations of certain debt covenants may
result in the Company being unable to borrow unused amounts
under a line of credit, even if repayment of some or all
borrowings is not required. In any event, financial covenants
under the Companys current or future debt obligations
could impair the Companys planned business strategies by
limiting the Companys ability to borrow (i) beyond
certain amounts or (ii) for certain purposes. Presently,
the Companys existing financial debt covenants primarily
relate to maintaining minimum debt coverage ratios at certain
properties, maintaining an overall minimum net worth,
maintaining a maximum loan to value, and maintaining an overall
minimum total assets.
|
|
11.
|
Derivative
Instruments and Hedging Activities
|
Derivatives owned as of December 31, 2007 and 2006 as well
as derivative-related transactions completed during the years
ended December 31, 2007, 2006, and 2005 are described below:
On September 2, 2004, the Company purchased a 6.0% LIBOR
interest rate cap with a $210.0 million notional amount to
limit its exposure to rising interest rates on
$210.0 million of its variable-rate debt. To partially
offset the cost of the purchased cap, the Company sold a 6.0%
LIBOR interest rate cap with a $105.0 million notional
amount with identical terms to the purchased cap. Both interest
rate caps matured on October 2, 2006. The Company
designated the net purchased option of $105.0 million as a
cash flow hedge of its exposure to changes in interest rates on
a corresponding amount of variable-rate debt.
104
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On September 7, 2004, the Company entered into a
$105.0 million stair-stepped interest rate swap agreement,
at an average interest rate of 4.9% over the term of the swap,
which matured March 1, 2007. The interest rate swap, which
effectively converted interest payments on $105.0 million
of the Companys variable-rate debt to a fixed rate, was
designated as a cash flow hedge.
On October 28, 2005, the Company purchased a 7.0% LIBOR
interest rate cap with a $45.0 million notional amount,
which matured October 15, 2007, to limit its exposure to
rising interest rates on $45.0 million of its variable-rate
debt. The Company designated the $45.0 million cap as a
cash flow hedge of its exposure to changes in interest rates on
a corresponding amount of variable-rate debt. On
February 9, 2006, the Company paid down the related hedged
$45.0 million revolving mortgage loan, due October 10,
2008, to $100 and discontinued hedge accounting related to this
derivative as it no longer qualified as a cash flow hedge.
On November 14, 2005, the Company executed a
$211.5 million mortgage loan and used the proceeds to repay
its hedged variable-rate $210.0 million term loan, due
October 10, 2006. In connection with the repayment of the
$210.0 million loan, the Company sold its net purchased
$105.0 million cap and terminated its $105.0 million
interest-rate swap for approximately $1.6 million.
Accumulated other comprehensive income associated with these
cash flow hedges of approximately $1.6 million, which had
accumulated over the lives of these hedging relationships, was
reclassified from accumulated other comprehensive income to
reduce interest expense over the original terms of these cash
flow hedges as interest payments on the new mortgage loan were
made. In addition, the originally hedged $210.0 million
loan was effectively refinanced with the new $211.5 million
loan, thus no hedge ineffectiveness was recognized related to
the original loans payoff.
On December 6, 2006, the Company purchased a 6.25% LIBOR
interest rate cap with a $212.0 million notional amount,
which matures December 11, 2009, to limit its exposure to
rising interest rates on $212.0 million of its
variable-rate debt. The Company designated the
$212.0 million cap as a cash flow hedge of its exposure to
changes in interest rates on a corresponding amount of
variable-rate debt. On February 6, 2007, the Company paid
down the related hedged $212.0 million mortgage loan, due
December 11, 2009, by approximately $28.0 million and
discontinued hedge accounting related to $28.0 million of
this derivative.
On December 6, 2006, the Company purchased a 6.25% LIBOR
interest rate cap with a $35.0 million notional amount,
which matures December 11, 2009, to limit its exposure to
rising interest rates on future variable-rate debt that the
Company intends to draw over the next two years as capital
expenditures are incurred. As this cap did not meet applicable
hedge accounting criteria, it is not designated as a cash flow
hedge.
On April 11, 2007, the Company purchased four 6.0% LIBOR
interest rate caps with a total notional amount of approximately
$555.1 million, which mature May 9, 2009, to limit its
exposure to rising interest rates on $555.1 million of its
variable-rate debt. On April 25, 2007, the Company paid
down the related hedged $555.1 million mortgage loan, due
May 9, 2009, by approximately $180.1 million and
terminated a corresponding amount of these caps. As the
remaining $375.0 million of these caps did not meet
applicable hedge accounting criteria, such derivatives are not
designated as cash flow hedges.
On October 15, 2007, the Company purchased a 7.0% LIBOR
interest rate cap with a $47.5 million notional amount,
which matures October 15, 2008, to limit its exposure to
rising interest rates on $47.5 million of its variable-rate
debt. The Company designated the $47.5 million cap as a
cash flow hedge of its exposure to changes in interest rates on
a corresponding amount of variable-rate debt.
As of December 31, 2007 and 2006, no derivatives were
designated as fair value hedges or hedges of net investments in
foreign operations. Additionally, the Company does not use
derivatives for trading or speculative purposes.
As of December 31, 2007 and 2006, derivatives with a fair
value of approximately $21,000 and $222,000, respectively, were
included in other assets. For the years ended December 31,
2007, 2006, and 2005, the change in accumulated other
comprehensive income of approximately ($295,000) million,
($1.3 million), and $818,000,
105
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
respectively, for all derivatives is separately disclosed in the
consolidated statements of comprehensive income (loss).
For the years ended December 31, 2007, 2006, and 2005,
approximately $211,000, $16,000, and $0 was recognized as a
reduction in other income, respectively, related to hedge
ineffectiveness and fair value changes of derivatives not
qualifying as cash flow hedges. Amounts reported in accumulated
other comprehensive income related to derivatives will be
reclassified to interest expense as interest payments are made
on the Companys variable-rate debt. During the next twelve
months, the Company estimates that approximately $58,000 will be
reclassified from accumulated other comprehensive income
existing at December 31, 2007 to reduce interest expense.
|
|
12.
|
Employee
Stock Grants
|
All shares issued under the Companys Stock Plan are
charged to compensation expense on a straight-line basis over
the vesting period based on the Companys stock price on
the date of each issuance. For the years ended December 31,
2007, 2006, and 2005, the Company recognized compensation
expense of approximately $6.2 million, $5.2 million,
and $3.4 million, respectively, related to these shares. As
of December 31, 2007, the unamortized value of the
Companys unvested shares of restricted stock was
approximately $11.7 million, with an average remaining
vesting period of approximately 1.25 years.
During the years ended December 31, 2007, 2006, and 2005,
35,391, 2,225, and 2,553 unvested shares of restricted common
stock were forfeited and became available for re-issuance.
During the year ended December 31, 2007, 60,177 vested
shares were acquired by the Company to cover employees
individual federal income taxes withheld on such shares. Such
shares became available for re-issuance.
For the years ended December 31, 2007 and 2006, the Company
issued the following shares under its Stock Plan:
On March 28, 2006, the Company issued 642,557 shares
of restricted common stock to its executive officers and certain
employees of the Company and its affiliates. Such shares vest
over three years.
On May 2, 2006, the Company issued 16,000 shares of
common stock to its directors as compensation for serving on the
Board of Directors through May 2007. Such shares vested
immediately.
On August 1, 2006, the Company issued 3,000 shares of
restricted common stock to certain employees of the Company.
Such shares vest over three years.
On March 27, 2007, the Company issued 712,500 shares
of restricted common stock to its executive officers. Such
shares vest over four years.
On March 27, 2007, the Company issued 126,000 shares
of restricted common stock to certain employees. Such shares
vest over three years.
On May 15, 2007, the Company issued 16,000 shares of
common stock to its directors as compensation for serving on the
Board of Directors through May 2008. Such shares vested
immediately.
106
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For the years ended December 31, 2007 and 2006, the
following table summarizes information regarding the
Companys Stock Plan:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
|
|
Share Count
|
|
|
Grant Price
|
|
|
Unvested shares at December 31, 2005
|
|
|
685,553
|
|
|
$
|
9.77
|
|
Shares granted on March 28, 2006
|
|
|
642,557
|
|
|
|
12.47
|
|
Shares granted on May 2, 2006
|
|
|
16,000
|
|
|
|
11.61
|
|
Shares forfeited on June 14, 2006
|
|
|
(2,225
|
)
|
|
|
12.22
|
|
Shares granted on August 1, 2006
|
|
|
3,000
|
|
|
|
11.51
|
|
Shares vested during the year ended December 31, 2006
|
|
|
(405,262
|
)
|
|
|
9.56
|
|
|
|
|
|
|
|
|
|
|
Unvested shares at December 31, 2006
|
|
|
939,623
|
|
|
|
11.74
|
|
Shares granted on March 27, 2007
|
|
|
838,500
|
|
|
|
12.39
|
|
Shares granted on May 15, 2007
|
|
|
16,000
|
|
|
|
12.06
|
|
Shares forfeited during the year ended December 31, 2007
|
|
|
(35,391
|
)
|
|
|
12.19
|
|
Shares vested during the year ended December 31, 2007
|
|
|
(390,232
|
)
|
|
|
11.51
|
|
|
|
|
|
|
|
|
|
|
Unvested shares at December 31, 2007
|
|
|
1,368,500
|
|
|
$
|
12.19
|
|
|
|
|
|
|
|
|
|
|
Common Stock On January 25, 2006, in a
follow-on public offering, the Company issued
12,107,623 shares of its common stock at $11.15 per share,
which generated gross proceeds of approximately
$135.0 million. However, the aggregate proceeds to the
Company, net of underwriters discount and offering costs,
was approximately $128.1 million. The
12,107,623 shares issued include 1,507,623 shares sold
pursuant to an over-allotment option granted to the
underwriters. The net proceeds were used for a
$60.0 million pay-down on the Companys
$100.0 million credit facility, due August 17, 2008,
on January 31, 2006, a $45.0 million pay-down on the
Companys $45.0 million mortgage loan, due
October 10, 2007, on February 9, 2006, and the
acquisition of the Marriott at Research Triangle Park hotel
property on February 24, 2006 for $28.0 million.
On February 15, 2006, the Company filed a
Form S-3
related to the registration of up to $700.0 million of
securities for potential future issuance, including common
stock, preferred stock, debt, and warrants.
On July 25, 2006, in a follow-on public offering, the
Company issued 14,950,000 shares of its common stock at
$11.40 per share, which generated gross proceeds of
approximately $170.4 million. However, the aggregate
proceeds to the Company, net of underwriters discount and
offering costs, was approximately $162.0 million. The
14,950,000 shares issued include 1,950,000 shares sold
pursuant to an over-allotment option granted to the
underwriters. On July 25, 2006, the net proceeds were used
to pay down the Companys $30.0 million balance on its
$47.5 million credit facility, due October 10, 2007,
and pay down its $98.9 million balance on its
$100.0 million credit facility, due August 17, 2008.
On April 13, 2007, the Company filed a
Form S-3
related to the registration of an indeterminate value of
securities for potential future issuance, including common
stock, preferred stock, debt, and warrants.
On April 24, 2007, in a follow-on public offering, the
Company issued 48,875,000 shares of its common stock at
$11.75 per share, which generated gross proceeds of
approximately $574.3 million. However, aggregate proceeds
to the Company, net of underwriters discount and offering
costs, was approximately $548.2 million. The
48,875,000 shares issued include 6,375,000 shares sold
pursuant to an over-allotment option granted to the
underwriters. These net proceeds along with cash on hand were
used to pay-down the $45.0 million outstanding balance on
its $47.5 million credit facility, due October 10,
2008, payoff the $325.0 million variable-rate loan, due
107
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
April 9, 2008, and pay-down its $555.1 million
variable-rate loan, due May 9, 2009, by approximately
$180.1 million. These three debt payments were made on
April 25, 2007, April 24, 2007, and April 25,
2007, respectively.
During the year ended December 31, 2007, the Company
acquired 60,177 shares of treasury stock for approximately
$728,000 in connection with the Companys Stock Plan, which
allows employees to tender vested shares of restricted common
stock to the Company at current market prices to cover
individual federal income taxes withheld on such shares as such
shares vest. During the year ended December 31, 2007, the
Company reissued 36,841 treasury shares under its Stock Plan as
common stock granted to its executives, certain employees, and
directors.
During the year ended December 31, 2007, the Company
acquired 2,366,300 shares of treasury stock for
approximately $18.2 million in connection with its stock
repurchase program.
Common Stock and Units Dividends During the
year ended December 31, 2007, the Company declared cash
dividends of approximately $100.4 million, or $0.21 per
share per quarter, related to both common stockholders and
common unit holders, of which approximately $92.3 million
and $8.1 million related to each, respectively. During the
year ended December 31, 2007, the Company declared cash
dividends of approximately $2.9 million, or $0.19 per share
per quarter, related to Class B unit holders.
During the year ended December 31, 2006, the Company
declared cash dividends of approximately $60.1 million, or
$0.20 per share per quarter, related to both common stockholders
and common unit holders, of which approximately
$51.9 million and $8.3 million related to each,
respectively. During the year ended December 31, 2006, the
Company declared cash dividends of approximately
$1.4 million, or $0.19 per share per quarter prorated for
days outstanding, related to Class B unit holders.
Preferred Stock In accordance with the
Companys charter, the Company is authorized to issue
50 million shares of preferred stock, which currently
includes Series A cumulative preferred stock, Series B
cumulative convertible redeemable preferred stock, and
Series D cumulative preferred stock.
Series A Cumulative Preferred Stock As
of December 31, 2007 and 2006, the Company had 2,300,000
outstanding shares of 8.55% Series A Cumulative Preferred
Stock at $25 per share. Series A preferred stock has no
maturity date, and the Company is not required to redeem these
shares at any time. Prior to September 22, 2009,
Series A preferred stock is not redeemable, except in
certain limited circumstances relating to the ownership
limitation necessary to preserve the Companys
qualification as a REIT. However, on and after
September 22, 2009, Series A preferred stock will be
redeemable at the Companys option for cash, in whole or
from time to time in part, at a redemption price of $25 per
share plus accrued and unpaid dividends, if any, at the
redemption date. Series A preferred stock dividends are
payable quarterly, when and as declared, at the rate of 8.55%
per annum of the $25 liquidation preference (equivalent to an
annual dividend rate of $2.1375 per share). In general,
Series A preferred stock holders have no voting rights.
Series A Preferred Stock Dividends
During the years ended December 31, 2007 and 2006, the
Company declared cash dividends of approximately
$4.9 million and $4.9 million, respectively, or
$0.5344 per share per quarter, related to Series A
preferred stockholders.
Series B Cumulative Convertible Redeemable Preferred
Stock As of December 31, 2007 and 2006, the
Company had 7,447,865 outstanding shares of Series B
Cumulative Convertible Redeemable Preferred Stock. Series B
preferred stock is convertible at any time, at the option of the
holder, into the Companys common stock by dividing the
preferred stock carrying value by the conversion price then in
effect, which is $10.07, subject to certain adjustments, as
defined. Series B preferred stock holders are entitled to
vote, on an as-converted basis voting as a single class together
with common stock holders, on all matters to be voted on by the
Companys stockholders.
Series B preferred stock is redeemable for cash at the
option of the Company at the liquidation preference, which is
set at $10.07, after three years from June 17, 2005 (or two
years if the Companys weighted average common stock price
for a period of 30 days is above $11.83 with over
7.5 million shares traded during that period).
108
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Series B preferred stock is redeemable for cash at the
option of the holder at a specified redemption price, as
defined, if certain events occur. Series B preferred stock
quarterly dividends are set at the greater of $0.14 per share or
the prevailing common stock dividend rate.
Series B Preferred Stock Dividends
During the years ended December 31, 2007 and 2006, the
Company declared cash dividends of approximately
$6.3 million and $6.0 million, respectively, related
to Series B preferred stockholders, which represents $0.21
and $0.20 per share per quarter, respectively, for those years.
Series C Cumulative Preferred Stock On
April 11, 2007, the Company issued 8.0 million shares
of Series C cumulative redeemable preferred stock at $25
per share for approximately $200.0 million less a
commitment fee of approximately $6.3 million. On
July 18, 2007, with proceeds received from the issuance of
Series D preferred stock discussed below, the Company
redeemed its 8.0 million shares of Series C preferred
stock for approximately $200.0 million and received a
refund of related commitment fees of approximately
$4.3 million. Dividends were payable quarterly, when and as
declared, at a rate of three-month LIBOR plus 2.5% through the
first 18 months and three-month LIBOR plus a range of 4.25%
to 8.0% depending on the net debt to total assets ratio
thereafter.
Series C Preferred Stock Dividends
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $4.3 million,
based on LIBOR plus 2.5% for the period outstanding, related to
Series C preferred stockholders. In addition, the Company
recognized non-cash preferred dividends of approximately
$845,000 related to the amortization of the discount
attributable to the increasing-rate preferred dividend clause
effective 18 months after issuance.
Series D Cumulative Preferred Stock On
July 18, 2007, the Company issued 8.0 million shares
of 8.45% Series D cumulative preferred stock at $25 per
share for approximately $200.0 million less underwriting
discounts and commissions of approximately $6.3 million.
Series D preferred stock has no maturity date, and the
Company is not required to redeem the shares at any time. Prior
to July 18, 2012, Series D preferred stock is not
redeemable, except in certain limited circumstances such as to
preserve the status of the Company as a REIT or in the event the
Series D preferred stock ceases to be listed on an exchange
and the Company ceases to be subject to the reporting
requirements of the Exchange Act, at the Companys option,
as described in the Companys charter. However, on and
after July 18, 2012, Series D preferred stock will be
redeemable at the Companys option for cash, in whole or
from time to time in part, at a redemption price of $25 per
share plus accrued and unpaid dividends, if any, at the
redemption date. Series D preferred stock dividends are
payable quarterly, when and as declared, at the rate of 8.45%
per annum of the $25 liquidation preference (equivalent to an
annual dividend rate of $2.11 per share). The dividend rate
increases to 9.45% per annum if these shares are no longer
traded on a major stock exchange. In general, Series D
preferred stock holders have no voting rights.
Series D Preferred Stock Dividends
During the year ended December 31, 2007, the Company
declared cash dividends of approximately $7.7 million, or
$0.5281 per share per quarter prorated for the period
outstanding, related to Series D preferred stockholders.
Minority Interest In Consolidated Joint
Ventures Minority interest in consolidated joint
ventures represents net income (loss) attributable to joint
venture partners. Such joint venture partners originally owned
between 11%-30% of 17 hotel properties acquired on
April 11, 2007. On December 15, 2007, the Company
completed an asset swap with its partner in two of these joint
ventures, whereby the Company surrendered its majority ownership
interest in two hotel properties in exchange for the joint
venture partners minority ownership interest in nine hotel
properties. Upon completion of this asset swap, remaining joint
venture partners now own between 11%-25% of six hotel properties.
Minority Interest Related To Limited Partners
Minority interest related to limited partners represents the
limited partners proportionate share of the equity in the
operating partnership. Minority interest related to limited
partners represents dividends to Class B common unit
holders plus an allocation of net income (loss) available to
109
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
common shareholders after deducting dividends to Class B
common unit holders based on the common unit holders
weighted average limited partnership percentage ownership
throughout the period.
Beginning one year after issuance, each common unit of limited
partnership interest (including each Class B common unit)
may be redeemed for either cash or one share of the
Companys common stock at the Companys discretion,
subject to contractual
lock-up
agreements that prevent holders of Class B common units
from redeeming
2/3
of said units before 18 months and
1/3
of said units before two years from the issuance date. Beginning
ten years after issuance, each Class B common unit of
limited partnership interest may be converted into a common unit
at either partys discretion.
For the years ended December 31, 2007, 2006, and 2005, the
following table summarizes information related to limited
partnership units outstanding:
|
|
|
|
|
Units outstanding at January 1, 2005
|
|
|
6,097,925
|
|
Units issued during 2005
|
|
|
4,994,150
|
|
|
|
|
|
|
Units outstanding at December 31, 2005
|
|
|
11,092,075
|
|
Units issued during 2006
|
|
|
3,814,842
|
|
Units redeemed for common stock during 2006
|
|
|
(1,394,492
|
)
|
|
|
|
|
|
Units outstanding at December 31, 2006
|
|
|
13,512,425
|
|
Units redeemed for common stock during 2007
|
|
|
(165,582
|
)
|
|
|
|
|
|
Units outstanding at December 31, 2007
|
|
|
13,346,843
|
|
|
|
|
|
|
On July 13, 2006, the Company issued 3,814,842 Class B
common units of limited partnership interest in connection with
the acquisition of the Marriott Crystal Gateway hotel in
Arlington, Virginia, of which 165,582 such units were redeemed
for common stock on November 1, 2007. Aside from these
Class B common units, all other outstanding units represent
common units. Class B common units have a fixed dividend
rate of 6.82% in years 1-3 and 7.2% thereafter, and have
priority in payment of cash dividends over common unit holders
but otherwise have no preference over common units.
As of December 31, 2007, 2006, and 2005, all units of
limited partnership interest represent a minority interest
ownership of approximately 9.98%, 15.63%, and 20.20%,
respectively.
For federal income tax purposes, the Company elected to be
treated as a REIT under the Internal Revenue Code. To qualify as
a REIT, the Company must meet certain organizational and
operational stipulations, including a requirement that the
Company distribute at least 90% its REIT taxable income to its
stockholders. The Company currently intends to adhere to these
requirements and maintain its REIT status. If the Company fails
to qualify as a REIT in any taxable year, the Company will be
subject to federal income taxes at regular corporate rates
(including any applicable alternative minimum tax) and may not
qualify as a REIT for four subsequent taxable years. Even if the
Company qualifies for taxation as a REIT, the Company may be
subject to certain state and local taxes as well as to federal
income and excise taxes on its undistributed taxable income.
As of December 31, 2007, 111 of the Companys 112
hotel properties were leased or owned by Ashford TRS (the
Companys taxable REIT subsidiaries) while the remaining
hotel was leased on a
triple-net
lease basis to a third-party tenant. For the years ended
December 31, 2007, 2006, and 2005, Ashford TRS recognized
net book (loss) income of approximately ($8.5 million),
($5.5 million), and $13,000, respectively, and a (provision
for) benefit from income taxes of approximately
($5.6 million), $2.7 million, and $184,000,
respectively.
110
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For the years ended December 31, 2007, 2006, and 2005, the
following table reconciles the (provision for) benefit from
income taxes at statutory rates to the actual benefit from
(provision for) income taxes recorded (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Benefit from income taxes at 35% statutory rate
|
|
$
|
8,633
|
|
|
$
|
3,362
|
|
|
$
|
2,106
|
|
State income taxes benefit, net of Federal benefit
|
|
|
286
|
|
|
|
433
|
|
|
|
268
|
|
Foreign
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
Other
|
|
|
(361
|
)
|
|
|
629
|
|
|
|
197
|
|
Valuation allowance
|
|
|
(13,444
|
)
|
|
|
(1,479
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision for) benefit income taxes from:
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations
|
|
|
(4,981
|
)
|
|
|
2,945
|
|
|
|
2,571
|
|
Discontinued operations
|
|
|
(618
|
)
|
|
|
(226
|
)
|
|
|
(2,387
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
(5,599
|
)
|
|
$
|
2,719
|
|
|
$
|
184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2007, 2006, and 2005,
components of the (provision for) benefit from income taxes from
continuing operations are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
149
|
|
|
$
|
1,657
|
|
|
$
|
1,542
|
|
State
|
|
|
(838
|
)
|
|
|
213
|
|
|
|
293
|
|
Foreign
|
|
|
(95
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current
|
|
|
(784
|
)
|
|
|
1,870
|
|
|
|
1,835
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(3,720
|
)
|
|
|
953
|
|
|
|
509
|
|
State
|
|
|
(477
|
)
|
|
|
122
|
|
|
|
227
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred
|
|
|
(4,197
|
)
|
|
|
1,075
|
|
|
|
736
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Provision for) benefit from income taxes from continuing
operations
|
|
|
(4,981
|
)
|
|
$
|
2,945
|
|
|
$
|
2,571
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In May 2006, the State of Texas adopted House Bill 3, which
modified the states franchise tax structure, replacing the
previous tax based on capital or earned surplus with a margin
tax (the Texas Margin Tax) effective with franchise tax reports
filed on or after January 1, 2008. The Texas Margin Tax is
computed by applying the applicable tax rate (1% for the
Companys business) to the profit margin, which is
generally determined by total revenue less either the cost of
goods sold or compensation as applicable. Although House Bill
3 states that the Texas Margin Tax is not an income tax,
the Company believes that SFAS No. 109,
Accounting for Income Taxes, applies to the
Texas Margin Tax. However, the Partnership has determined that
the impact of the Texas Margin Tax is insignificant as of
December 31, 2007. The Company may be required to record an
income tax provision for the Texas Margin Tax in future periods.
For the year ended December 31, 2007, the provision for
income taxes includes interest and penalties paid to taxing
authorities of approximately $215,000. At December 31,
2007, the Company determined that there were no amounts to
accrue for interest and penalties due to taxing authorities.
111
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2007 and 2006, the Companys deferred
tax assets (liabilities) and related valuation allowance
consisted of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Allowance for doubtful accounts
|
|
$
|
609
|
|
|
$
|
152
|
|
Unearned income
|
|
|
1,405
|
|
|
|
1,479
|
|
Unfavorable management contract liability
|
|
|
9,242
|
|
|
|
6,245
|
|
Federal and state net operating losses
|
|
|
43,472
|
|
|
|
1,673
|
|
Accrued expenses
|
|
|
3,579
|
|
|
|
1,312
|
|
Prepaid expenses
|
|
|
(7,047
|
)
|
|
|
|
|
Interest expense carryforward
|
|
|
3,009
|
|
|
|
729
|
|
Tax property basis greater(less) than book
|
|
|
9,290
|
|
|
|
(216
|
)
|
Other
|
|
|
858
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross deferred tax asset
|
|
|
64,417
|
|
|
|
11,374
|
|
Valuation allowance
|
|
|
(64,137
|
)
|
|
|
(7,724
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
280
|
|
|
$
|
3,650
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2007, the Company increased the valuation
allowance to approximately $64.1 million to fully offset
its net deferred tax asset except for certain minor deductible
temporary differences. As a result of Ashford TRS losses in 2007
and 2006, and the limitations imposed by the Internal Revenue
Code on the utilization of net operating losses of acquired
subsidiaries, the Company believes that it is more likely than
not its net deferred tax asset will not be realized, and
therefore, has provided a valuation allowance to fully reserve
against these amounts. In addition, at December 31, 2007,
Ashford TRS has net operating loss carryforwards for federal
income tax purposes of approximately $110.2 million, which
are available to offset future taxable income, if any, through
2027. Approximately $60.1 million of the
$110.2 million net operating loss carryforward is
attributable to acquired subsidiaries and subject to substantial
limitations on its use.
|
|
16.
|
Related
Party Transactions
|
Under management agreements with related parties owned by the
Companys Chairman and its Chief Executive Officer,
the Company pays such related parties a) monthly property
management fees equal to the greater of $10,000 (CPI adjusted)
or 3% of gross revenues as well as annual incentive management
fees, if certain operational criteria are met, b) market
service fees on the approved capital improvements, including
project management fees of up to 4% of project costs, and
c) other reimbursements as approved by the Companys
independent directors. As of December 31, 2007, these
related parties managed 43 of the Companys 112 hotels
while unaffiliated management companies managed the remaining 69
hotel properties.
Under agreements with both related parties and unaffiliated
hotel managers, the Company incurred property management fees,
including incentive property management fees, of approximately
$59.6 million, $25.0 million, and $15.2 million
for the years ended December 31, 2007, 2006, and 2005,
respectively. Regarding the $59.6 million incurred for the
year ended December 31, 2007, approximately
$13.1 million and $46.5 million relates to related
parties and third parties, respectively. Regarding the
$25.0 million incurred for the year ended December 31,
2006, approximately $9.1 million and $15.9 million
relates to related parties and third parties, respectively.
Regarding the $15.2 million incurred for the year ended
December 31, 2005, approximately $7.3 million and
$8.0 million relates to related parties and third parties,
respectively. Incentive property management fees are included in
indirect expenses in the accompanying consolidated statements of
operations.
112
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
Under these agreements with related parties, the Company also
incurred market service and project management fees related to
capital improvement projects of approximately $9.0 million,
$5.1 million, and $3.3 million for the years ended
December 31, 2007, 2006, and 2005, respectively.
In addition, these related parties fund certain corporate
general and administrative expenses on behalf of the Company,
including rent, payroll, office supplies, travel, and
accounting. These related parties allocate such charges to the
Company based on various methodologies, including headcount and
actual amounts incurred. For the years ended December 31,
2007, 2006, and 2005, such costs were approximately
$3.2 million, $3.6 million, and $3.0 million,
respectively.
Management agreements with related parties include exclusivity
clauses that require the Company to engage such related parties,
unless the Companys independent directors either
(i) unanimously vote to hire a different manager or
developer or (ii) by a majority vote elect not to engage
such related party because special circumstances exist or, based
on the related partys prior performance, it is believed
that another manager or developer could materially improve the
performance of such management duties.
On March 16, 2005, the Company acquired 21 hotel properties
and an office building from selling entities controlled by
affiliates of Fisher Brothers, Gordon Getty Trust, and George
Soros, which collectively owned approximately 78% of the
acquired properties, and certain members of the Companys
senior management, which collectively owned approximately 22% of
the acquired properties, for approximately $250.0 million.
The $250.0 million purchase price consisted of
approximately $35.0 million in cash, approximately
$164.7 million in assumed mortgage debt, and approximately
$50.3 million worth of limited partnership units. Company
management received 100% of their net consideration for the
acquisition in the form of limited partnership units, whereas
the third parties received 50% of their consideration in limited
partnership units and 50% in cash. The 21 acquired hotels were
among the 27 hotel properties for which the Company provided
asset management and consulting services for related parties,
who subsequently sold the remaining six properties. However, the
related parties, pursuant to an agreement, will continue to
guarantee a minimum annual fee of approximately
$1.2 million through December 31, 2008. In addition,
related to this acquisition, the Companys Board of
Directors formed a Special Committee solely comprised of
independent directors to evaluate this transaction. In
connection with their services, the Special Committee retained
independent advisors to review, evaluate, and negotiate the
transaction, which the Special Committee unanimously approved.
Upon formation of the Company on August 29, 2003, the
Company agreed to indemnify certain related parties, including
its Chief Executive Officer and its Chairman, who contributed
hotel properties in connection with the Companys initial
public offering in exchange for operating partnership units,
against the income tax such related parties may incur if the
Company disposes of one of these properties.
|
|
17.
|
Commitments
and Contingencies
|
Restricted Cash Under certain management and
debt agreements existing at December 31, 2007, the Company
escrows payments required for insurance, real estate taxes, and
debt service. In addition, for certain properties with
underlying debt, the Company escrows 4% to 6% of gross revenue
for capital improvements.
Franchise Fees Under franchise agreements
existing at December 31, 2007, the Company pays franchisors
royalty fees between 2.5% and 6% of gross room revenue, 3.0%
food and beverage revenue, fees for marketing, reservations, and
other related activities aggregating between 1% and 3.75% of
gross room revenue. These franchise agreements expire from 2011
through 2027. When a franchise term expires, the franchisor has
no obligation to renew the franchise. A franchise termination
could have a material adverse effect on the operations or the
underlying value of the affected hotel due to loss of associated
name recognition, marketing support, and centralized reservation
systems provided by the franchisor. A franchise termination
could also have a material adverse effect on cash available for
distribution to stockholders. In addition, if the Company
terminates a franchise
113
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
prior to its expiration date, the Company may be liable for up
to three times the average annual franchise fees incurred for
that property.
For the years ended December 31, 2007, 2006, and 2005, the
Company incurred franchise fees of approximately
$27.9 million, $18.0 million, and $13.9 million,
respectively. Franchise fees related to continuing operations
are included in indirect hotel operating expenses in the
accompanying consolidated statements of operations.
Management Fees Under management agreements
existing at December 31, 2007, the Company pays
a) monthly property management fees equal to the greater of
$10,000 (CPI adjusted) or 3% of gross revenues, or in some cases
3% to 7% of gross revenues, as well as annual incentive
management fees, if applicable, b) market service fees on
approved capital improvements, including project management fees
of up to 4% of project costs, for certain hotels, and
c) other general fees at current market rates as approved
by the Companys independent directors. These management
agreements expire from 2008 through 2027, with renewal options
on agreements with related parties of up to 25 additional years.
If the Company terminates a management agreement prior to its
expiration, it may be liable for estimated management fees
through the remaining term of the related contract or, in
certain circumstances, allowed to substitute a new management
agreement related to a different hotel. To date, the Company has
terminated certain management agreements upon sale of the
related hotels prior to such agreements expirations. In
such cases, the Company has either a) received termination
fee waivers from related parties managing the hotels or
b) substituted a similar management agreement.
Leases The Company leases certain equipment,
land, and facilities under non-cancelable operating leases,
which expire between 2040 and 2084, including six ground leases
and one air lease related to its hotel properties. Several of
these leases are subject to base rent plus contingent rent based
on the related propertys financial results. For the years
ended December 31, 2007, 2006, and 2005, the Company
recognized rent expense of approximately $8.6 million,
$3.9 million, and $2.3 million, respectively. Rent
expense related to continuing operations is included in indirect
hotel operating expenses in the accompanying consolidated
statements of operations. The Company also owns equipment
acquired under capital leases, included in Investment in Hotel
Properties, which expire between 2007 and 2012, and have
interest rates ranging between 7.15% and 11.64%.
As of December 31, 2007, future minimum annual commitments
for non-cancelable lease agreements are as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
Operating
|
|
|
Capital
|
|
|
|
Leases
|
|
|
Leases
|
|
|
2008
|
|
|
5,203
|
|
|
|
235
|
|
2009
|
|
|
4,223
|
|
|
|
263
|
|
2010
|
|
|
3,693
|
|
|
|
|
|
2011
|
|
|
3,539
|
|
|
|
|
|
2012
|
|
|
3,424
|
|
|
|
|
|
Thereafter
|
|
|
178,948
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total future minimum lease payments
|
|
$
|
199,030
|
|
|
$
|
498
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007 and 2006, assets acquired under
capital leases consist of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
Assets under capital leases
|
|
$
|
781
|
|
|
$
|
1,036
|
|
Accumulated depreciation
|
|
|
(372
|
)
|
|
|
(609
|
)
|
|
|
|
|
|
|
|
|
|
Assets under capital leases, net
|
|
$
|
409
|
|
|
$
|
427
|
|
|
|
|
|
|
|
|
|
|
114
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
At December 31, 2007, the Company had capital commitments
of approximately $40.6 million relating to general capital
improvements that are expected to be paid in the next
12 months.
Employment Agreements The Companys
employment agreements with certain executive officers provide
for minimum annual base salaries, other fringe benefits, and
non-compete clauses as determined by the Board of Directors. The
employment agreements terminate on December 31, 2008, with
automatic one-year renewals, unless terminated by either party
upon six months notice, subject to severance provisions.
Employee Incentive Plan The Companys
Employee Savings and Incentive Plan (ESIP), a
nonqualified compensation plan that covers employees who work at
least 25 hours per week, allows eligible employees to
contribute up to 100% of their compensation to various
investment funds. The Company matches 25% of the first 10% each
employee contributes. Employee contributions vest immediately
whereas Company contributions vest 25% annually. For the years
ended December 31, 2007, 2006, and 2005, the Company
incurred matching expenses of approximately $7,000, $34,000, and
$60,000, respectively.
401(k) Plan Effective January 1, 2006,
the Company created a 401(k) Plan, a qualified contribution
retirement plan that covers employees 21 years of age or
older who have completed one year of service and work a minimum
of 1,000 hours annually. The 401(k) Plan allows eligible
employees to defer receipt of up to 100% of their compensation,
subject to IRS-imposed limitations, and contribute such amounts
to various investment funds. The Company matches 50% of amounts
contributed up to 6% of a particular employees salary.
However, for each employee, Company matching only occurs in
either the 401(k) Plan or the ESIP, as directed by the employee.
Employee contributions vest immediately whereas Company
contributions vest 25% annually. For the years ended
December 31, 2007 and 2006, the Company incurred matching
expenses of approximately $91,000 and $73,000, respectively.
Litigation The Company is currently subject
to litigation arising in the normal course of its business. In
the opinion of management, none of these lawsuits or claims
against the Company, either individually or in the aggregate, is
likely to have a material adverse effect on the Companys
business, results of operations, or financial condition. In
addition, management believes the Company has adequate insurance
in place to cover any such significant litigation.
Taxes If the Company disposes of the four
remaining properties contributed in connection with its IPO in
exchange for units of operating partnership, the Company may be
obligated to indemnify the contributors, including the
Companys Chairman and Chief Executive Officer whom have
substantial ownership interests, against the tax consequences of
the sale. In addition, the Company agreed to use commercially
reasonable efforts to maintain non-recourse mortgage
indebtedness of at least $16.0 million, which allows
contributors of the Las Vegas hotel property to defer gain
recognition in connection with its contribution.
Additionally, for certain periods of time, the Company is
prohibited from selling or transferring the Sea Turtle Inn in
Atlantic Beach, Florida, and the Marriott Crystal Gateway in
Arlington, Virginia, if as a result, the entity from which the
Company acquired the property would recognize gain for federal
tax purposes.
Further, in connection with the Companys acquisition of
certain properties on March 16, 2005 that were contributed
in exchange for units of operating partnership, the Company
agreed to certain tax indemnities with respect to 11 of these
properties. If the Company disposes of these 11 properties or
reduces debt on these properties in a transaction that results
in a taxable gain to the contributors, the Company may be
obligated to indemnify the contributors or their specified
assignees against the tax consequences of the transaction.
In general, tax indemnities equal the federal, state, and local
income tax liabilities the contributor or its specified assignee
incurs with respect to the gain allocated to the contributor.
The contribution agreements terms generally require the
Company to
gross-up tax
indemnity payments for the amount of income taxes due as a
result of such tax indemnities.
115
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
18.
|
Fair
Value of Financial Instruments
|
As of December 31, 2007, the Companys
$2.7 billion debt portfolio consisted of approximately
$510.3 million of variable-rate debt and approximately
$2.2 billion of fixed-rate debt, with interest rates
ranging from 5.42% to 7.24%. As of December 31, 2007, the
Companys $94.2 million portfolio of mezzanine and
first-mortgage loans receivable consisted of approximately
$57.9 million of variable-rate notes and approximately
$36.5 million of fixed-rate notes, all with interest rates
of 14%.
As of December 31, 2006, the Companys
$1.1 billion debt portfolio consisted of approximately
$237.0 million of variable-rate debt and approximately
$854.2 million of fixed-rate debt, with interest rates
ranging from 5.41% to 7.24%. As of December 31, 2006, the
Companys $103.0 million portfolio of mezzanine and
first-mortgage loans receivable consisted of approximately
$80.0 million of variable-rate notes and approximately
$23.0 million of fixed-rate notes, with interest rates
ranging from 14.0% to 15.0%.
As of December 31, 2007 and 2006, the carrying values of
cash and cash equivalents, restricted cash, accounts receivable,
amounts due from or to affiliates or third-party hotel managers,
accounts payable, and accrued expenses approximate their fair
values due to the short-term nature of these financial
instruments.
As of December 31, 2007 and 2006, the carrying values of
variable-rate notes receivable, variable-rate indebtedness, and
capital leases payable approximates their fair values because
the interest rates on these financial instruments are variable
or approximate current interest rates charged on similar
financial instruments. However, due to the Companys
significant holdings of fixed-rate financial instruments at
December 31, 2007 and 2006, carrying values and related
estimated fair values of notes receivable and indebtedness as of
December 31, 2007 and 2006 are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2007
|
|
|
December 31, 2006
|
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
|
Carrying Value
|
|
|
Fair Value
|
|
|
Notes receivable
|
|
$
|
94,394
|
|
|
$
|
97,776
|
|
|
$
|
102,977
|
|
|
$
|
111,048
|
|
Indebtedness
|
|
$
|
2,700,775
|
|
|
$
|
2,705,218
|
|
|
$
|
1,091,150
|
|
|
$
|
1,099,775
|
|
Fair values presented in the above tables are based on estimates
that consider the terms of the individual instruments. However,
there is not an active market for these instruments. Therefore,
the estimated fair values do not necessarily represent the
amounts at which these instruments could be purchased, sold, or
settled.
As of December 31, 2007 and 2006, derivatives with a fair
value of approximately $21,000 and $222,000, respectively, were
included in other assets. Derivatives owned as of
December 31, 2007 and 2006 are described below:
On October 28, 2005, the Company purchased a 7.0% LIBOR
interest rate cap with a $45.0 million notional amount,
which matured October 15, 2007, to limit its exposure to
rising interest rates on $45.0 million of its variable-rate
debt. The Company designated the $45.0 million cap as a
cash flow hedge of its exposure to changes in interest rates on
a corresponding amount of variable-rate debt. On
February 9, 2006, the Company paid down the related hedged
$45.0 million revolving mortgage loan, due October 10,
2008, to $100 and discontinued hedge accounting related to this
derivative as it no longer qualified as a cash flow hedge.
On December 6, 2006, the Company purchased a 6.25% LIBOR
interest rate cap with a $212.0 million notional amount,
which matures December 11, 2009, to limit its exposure to
rising interest rates on $212.0 million of its
variable-rate debt. The Company designated the
$212.0 million cap as a cash flow hedge of its exposure to
changes in interest rates on a corresponding amount of
variable-rate debt. On February 6, 2007, the Company paid
down the related hedged $212.0 million mortgage loan, due
December 11, 2009, by approximately $28.0 million and
discontinued hedge accounting related to $28.0 million of
this derivative.
On December 6, 2006, the Company purchased a 6.25% LIBOR
interest rate cap with a $35.0 million notional amount,
which matures December 11, 2009, to limit its exposure to
rising interest rates on future variable-rate debt
116
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
that the Company intends to draw over the next two years as
capital expenditures are incurred. As this cap did not meet
applicable hedge accounting criteria, it is not designated as a
cash flow hedge.
On April 11, 2007, the Company purchased four 6.0% LIBOR
interest rate caps with a total notional amount of approximately
$555.1 million, which mature May 9, 2009, to limit its
exposure to rising interest rates on $555.1 million of its
variable-rate debt. On April 25, 2007, the Company paid
down the related hedged $555.1 million mortgage loan, due
May 9, 2009, by approximately $180.1 million and
terminated a corresponding amount of these caps. As the
remaining $375.0 million of these caps did not meet
applicable hedge accounting criteria, such derivatives are not
designated as cash flow hedges.
On October 15, 2007, the Company purchased a 7.0% LIBOR
interest rate cap with a $47.5 million notional amount,
which matures October 15, 2008, to limit its exposure to
rising interest rates on $47.5 million of its variable-rate
debt. The Company designated the $47.5 million cap as a
cash flow hedge of its exposure to changes in interest rates on
a corresponding amount of variable-rate debt. Considerable
judgment is required to interpret market data to develop
estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts the Company
could realize in a current market exchange. The use of different
market assumptions
and/or
estimation methodologies may have a material effect on estimated
fair value amounts.
|
|
19.
|
Supplemental
Cash Flow Information
|
For the years ended December 31, 2007, 2006, and 2005,
interest paid was approximately $138.3 million,
$45.0 million, and $32.4 million, respectively.
For the years ended December 31, 2007, 2006, and 2005,
income taxes paid was approximately $701,000, $1.3 million,
and $1.9 million, respectively.
During the year ended December 31, 2007, the Company
recorded the following non-cash transactions: a) on
March 27, 2007, the Company issued 838,500 shares of
restricted common stock to its executives and certain employees,
b) on April 11, 2007, in connection with its
acquisition of a 51-property hotel portfolio, the Company
assumed eleven mortgage loans totaling approximately
$562.1 million (or approximately $432.3 million net of
debt attributable to joint venture partners) and recognized debt
premiums of approximately $2.7 million, c) on
April 11, 2007, the in connection with its acquisition of
the remaining 15% joint venture interest in a hotel property,
the Company assumed debt attributable to the joint venture
partner of approximately $4.6 million, d) on
May 15, 2007, the Company issued 16,000 shares of
common stock to its directors, e) on November 1, 2007,
the Company issued 165,582 shares of common stock in
exchange for 165,582 units of limited partnership interest,
f) on December 15, 2007, in connection with an asset
swap with a joint venture partner, the Company assumed
$41.9 million of debt previously attributable to the joint
venture partners minority ownership in nine acquired hotel
properties that secured such debt and ceded $80.1 million
of debt previously attributable to its majority ownership in the
two surrendered hotel properties that secured such debt, and
g) during the year ended December 31, 2007, the
Company recognized non-cash preferred dividends of approximately
$845,000 related to the amortization of the discount associated
with its Series C preferred stock.
During the year ended December 31, 2006, the Company
recorded the following non-cash transactions: a) on
March 24, 2006, in connection with the sale of eight hotel
properties, the buyer assumed approximately $93.7 million
of the Companys mortgage debt, b) on March 28,
2006, the Company issued 642,557 shares of restricted
common stock to its executives and certain employees of the
Company and its affiliates, c) on May 2, 2006, the
Company issued 16,000 shares of common stock to its
directors, d) on July 13, 2006, in connection with its
acquisition of a hotel property, the Company assumed a mortgage
note payable of approximately $53.3 million and recognized
a debt premium of approximately $2.1 million, e) on
July 13, 2006, in connection with its acquisition of a
hotel property, the Company issued 3,814,842 units of
limited partnership interest, f) on August 1, 2006,
the Company issued 3,000 shares of restricted common stock
to certain employees of the Company, and g) during the
117
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
year ended December 31, 2006, the Company issued
1,394,492 shares of common stock in exchange for
1,394,492 units of limited partnership interest.
The Company presently operates in two business segments within
the hotel lodging industry: direct hotel investments and hotel
financing. Direct hotel investments refer to owning hotels
through either acquisition or new development. Management
reports operating results of direct hotel investments on an
aggregate basis as substantially all of the Companys hotel
investments have similar economic characteristics and exhibit
similar long-term financial performance. Hotel financing refers
to owning subordinate hotel-related mortgages through
acquisition or origination. The Company does not allocate
corporate-level accounts to its operating segments, including
corporate general and administrative expenses, non-operating
interest income, interest expense, provision for income taxes,
and minority interest.
For the year ended December 31, 2007, financial information
related to the Companys reportable segments was as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Hotel
|
|
|
Hotel
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
Financing
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
Total revenues
|
|
$
|
1,117,762
|
|
|
$
|
11,005
|
|
|
$
|
|
|
|
$
|
1,128,767
|
|
Operating expenses
|
|
|
797,422
|
|
|
|
|
|
|
|
|
|
|
|
797,422
|
|
Depreciation and amortization
|
|
|
153,285
|
|
|
|
|
|
|
|
|
|
|
|
153,285
|
|
Corporate general and administrative
|
|
|
|
|
|
|
|
|
|
|
26,953
|
|
|
|
26,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
167,055
|
|
|
|
11,005
|
|
|
|
(26,953
|
)
|
|
|
151,107
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
3,178
|
|
|
|
3,178
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(133,275
|
)
|
|
|
(133,275
|
)
|
Amortization of loan costs
|
|
|
|
|
|
|
|
|
|
|
(5,838
|
)
|
|
|
(5,838
|
)
|
Write-off of loan costs
|
|
|
|
|
|
|
|
|
|
|
(4,216
|
)
|
|
|
(4,216
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest and benefit from income
taxes
|
|
|
167,055
|
|
|
|
11,005
|
|
|
|
(167,104
|
)
|
|
|
10,956
|
|
Provision for income taxes
|
|
|
|
|
|
|
|
|
|
|
(4,981
|
)
|
|
|
(4,981
|
)
|
Minority interest in consolidated joint ventures
|
|
|
|
|
|
|
|
|
|
|
(323
|
)
|
|
|
(323
|
)
|
Minority interest related to limited partners
|
|
|
|
|
|
|
|
|
|
|
(1,684
|
)
|
|
|
(1,684
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
167,055
|
|
|
$
|
11,005
|
|
|
$
|
(174,092
|
)
|
|
$
|
3,968
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For the year ended December 31, 2006, financial information
related to the Companys reportable segments was as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Hotel
|
|
|
Hotel
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
Financing
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
Total revenues
|
|
$
|
456,270
|
|
|
$
|
14,858
|
|
|
$
|
|
|
|
$
|
471,128
|
|
Operating expenses
|
|
|
325,198
|
|
|
|
|
|
|
|
|
|
|
|
325,198
|
|
Depreciation and amortization
|
|
|
48,460
|
|
|
|
|
|
|
|
|
|
|
|
48,460
|
|
Corporate general and administrative
|
|
|
|
|
|
|
|
|
|
|
20,359
|
|
|
|
20,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
82,612
|
|
|
|
14,858
|
|
|
|
(20,359
|
)
|
|
|
77,111
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
2,917
|
|
|
|
2,917
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(43,201
|
)
|
|
|
(43,201
|
)
|
Amortization of loan costs
|
|
|
|
|
|
|
|
|
|
|
(1,984
|
)
|
|
|
(1,984
|
)
|
Write-off of loan costs
|
|
|
|
|
|
|
|
|
|
|
(101
|
)
|
|
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest and benefit from income
taxes
|
|
|
82,612
|
|
|
|
14,858
|
|
|
|
(62,728
|
)
|
|
|
34,742
|
|
Benefit from income taxes
|
|
|
|
|
|
|
|
|
|
|
2,945
|
|
|
|
2,945
|
|
Minority interest related limited partners
|
|
|
|
|
|
|
|
|
|
|
(4,540
|
)
|
|
|
(4,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
82,612
|
|
|
$
|
14,858
|
|
|
$
|
(64,323
|
)
|
|
$
|
33,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,796
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For the year ended December 31, 2005, financial information
related to the Companys reportable segments was as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Hotel
|
|
|
Hotel
|
|
|
|
|
|
|
|
|
|
Investments
|
|
|
Financing
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
Total revenues
|
|
$
|
290,494
|
|
|
$
|
13,323
|
|
|
$
|
|
|
|
$
|
303,817
|
|
Operating expenses
|
|
|
207,989
|
|
|
|
|
|
|
|
|
|
|
|
207,989
|
|
Depreciation and amortization
|
|
|
27,218
|
|
|
|
|
|
|
|
|
|
|
|
27,218
|
|
Corporate general and administrative
|
|
|
|
|
|
|
|
|
|
|
14,523
|
|
|
|
14,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
55,287
|
|
|
|
13,323
|
|
|
|
(14,523
|
)
|
|
|
54,087
|
|
Interest income
|
|
|
|
|
|
|
|
|
|
|
1,027
|
|
|
|
1,027
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(30,772
|
)
|
|
|
(30,772
|
)
|
Amortization of loan costs
|
|
|
|
|
|
|
|
|
|
|
(3,900
|
)
|
|
|
(3,900
|
)
|
Write-off of loan costs and exit fees
|
|
|
|
|
|
|
|
|
|
|
(5,803
|
)
|
|
|
(5,803
|
)
|
Loss on debt extinguishment
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
(10,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before minority interest and provision for income
taxes
|
|
|
55,287
|
|
|
|
13,323
|
|
|
|
(63,971
|
)
|
|
|
4,639
|
|
Benefit from income taxes
|
|
|
|
|
|
|
|
|
|
|
2,571
|
|
|
|
2,571
|
|
Minority interest related limited partners
|
|
|
|
|
|
|
|
|
|
|
(1,482
|
)
|
|
|
(1,482
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
$
|
55,287
|
|
|
$
|
13,323
|
|
|
$
|
(62,882
|
)
|
|
$
|
5,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
9,437
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2007, 2006, and 2005, aside from the
Companys $94.2 million, $103.0 million, and
$108.3 million notes receivable portfolio, respectively,
all assets of the Company primarily relate to the direct hotel
investments segment. In addition, for the years ended
December 31, 2007, 2006, and 2005, all capital expenditures
incurred by the Company relate to the direct hotel investments
segment.
As of December 31, 2007, 2006, and 2005, all of the
Companys owned hotels were domestically located except for
the Hyatt Regency in Montreal, Canada, acquired April 11,
2007. In addition, as of December 31, 2007, 2006, and 2005,
all hotels securing the Companys notes receivable were
domestically located with the exception of one hotel securing an
$18.2 million loan receivable, which is located in Nevis,
West Indies.
|
|
21.
|
Business
Combinations
|
On February 24, 2006, the Company acquired the Marriott at
Research Triangle Park hotel property in Durham, North Carolina,
from Host Marriott Corporation for approximately
$28.0 million in cash. The Company used proceeds from its
sale of two hotels on January 17, 2006 and its follow-on
public offering on January 25, 2006 to fund this
acquisition.
On April 19, 2006, the Company acquired the Pan Pacific
San Francisco Hotel in San Francisco, California, from
W2001 Pac Realty, L.L.C. for approximately $95.0 million in
cash and immediately re-branded the property as a JW Marriott.
The Company used proceeds from two credit facility draws of
approximately $88.9 million and $15.0 million to fund
this acquisition. In connection with the re-branding of this
hotel, Marriott contributed $5.0 million, which the Company
recorded, net of certain reimbursements to Marriott, as deferred
incentive management fees. Deferred management fees are
amortized as a reduction to management fees on a straight-line
basis over the term of the management agreement, which expires
in 2026.
120
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
On July 13, 2006, the Company acquired the Marriott Crystal
Gateway hotel in Arlington, Virginia, from EADS Associates
Limited Partnership for approximately $107.2 million. The
purchase price consisted of the assumption of approximately
$53.3 million of mortgage debt, the issuance of
approximately $42.7 million worth of limited partnership
units, which equates to 3,814,842 units valued at $11.20
per unit, approximately $2.5 million in cash paid in lieu
of units, the reimbursement of capital expenditures costs of
approximately $7.2 million, and other net closing costs and
adjustments of approximately $1.5 million. The limited
partnership units issued represent Class B common units,
which are more fully described in note 14. For accounting
purposes, these units were valued at approximately
$40.6 million or $10.64 per unit, which represents the
average market price of the Companys common stock from
five business days before the definitive agreement was finalized
on May 18, 2006 to five business days after such date. In
addition, the Company assumed the existing management agreement
which expires in 2017 with three ten-year renewal options. The
management agreement provides for a base management fee of 3% of
the hotels gross revenues plus certain incentive
management fees. Based on the Companys review of this
management agreement, the Company concluded that the terms are
more favorable to the manager than a typical current-market
management agreement. Hence, the Company recorded an unfavorable
contract liability of approximately $15.8 million related
to this management agreement, which is amortized as a reduction
to incentive management fees on a straight-line basis over the
initial term of the management agreement.
On November 9, 2006, the Company acquired the Westin
OHare hotel property in Rosemont, Illinois, from JER
Partners for approximately $125.0 million in cash. To fund
this acquisition, the Company used cash available on its balance
sheet and proceeds from a $101.0 million mortgage loan
executed on November 16, 2006.
On December 7, 2006, the Company acquired a seven-property
hotel portfolio (MIP Portfolio) from a partnership
of affiliates of Oak Hill Capital Partners, The Blackstone
Group, and Interstate Hotels and Resorts for approximately
$267.2 million in cash. Of the seven acquired hotels, five
were considered core hotels while two were immediately held for
sale. To fund this acquisition, the Company used cash available
on its balance sheet, proceeds from a $25.0 million draw on
a credit facility, and proceeds from a $212.0 million
mortgage loan executed on December 7, 2006.
On April 11, 2007, the Company acquired a 51-property hotel
portfolio (CNL Portfolio) from CNL Hotels and
Resorts, Inc. (CNL) for approximately
$2.4 billion plus closing costs of approximately
$96.0 million. The Company acquired 100% of 33 properties
and interests ranging from 70%-89% in 18 properties through
existing joint ventures. To fund this acquisition, the Company
utilized several sources as follows: a) borrowings of
approximately $928.5 million of ten-year, fixed-rate debt
at an average blended interest rate of 5.95%, approximately
$555.1 million of two-year, variable-rate debt with three
one-year extension options at an interest rate of LIBOR plus
1.65%, and approximately $325.0 million of one-year,
variable-rate debt with two one-year extension options at an
interest rate of LIBOR plus 1.5%, b) the sale of
8.0 million shares of Series C Cumulative Redeemable
Preferred Stock for approximately $200.0 million less a
commitment fee of approximately $6.3 million at a dividend
rate of LIBOR plus 2.5%, c) assumed fixed-rate debt of
approximately $562.1 million (or approximately
$432.3 million net of debt attributable to joint venture
partners), representing eleven fixed-rate loans with an average
blended interest rate of 6.01% and expiration dates ranging from
2008 to 2027, and d) a $50.0 million draw on a newly
executed $200.0 million credit facility with an interest
rate of LIBOR plus a range of 1.55% to 1.95% depending on the
loan-to-value ratio, which matures April 9, 2010 with two
one-year extension options, and requires interest-only payments
through maturity. With respect to this acquisition, the Company
recognized the following:
|
|
|
|
|
Based on the Companys preliminary review of management
agreements assumed, the Company believes the terms of certain
management agreements are more favorable to the manager than
typical current-market management agreements. As a result, the
Company recorded an unfavorable contract liability of
approximately $10.4 million related to these management
agreements, which is amortized as a reduction to incentive
management fees on a straight-line basis over the initial terms
of the related management agreements.
|
121
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
|
|
|
Based on the Companys preliminary assessment, the Company
allocated approximately $14.0 million of the purchase price
to intangible assets, which relate to a favorable market-rate
ground lease and other identifiable intangible assets related to
certain hotels.
|
|
|
|
Based on the Companys preliminary assessment, the Company
believes that the terms of an assumed ground lease are more
favorable to the lessor than typical current-market leases. As a
result, the Company recorded an unfavorable lease liability of
approximately $4.2 million related to this lease, which is
classified in other liabilities on the consolidated balance
sheet and is amortized as a reduction to lease expense on a
straight-line basis over the related remaining lease term, which
expires in 2080.
|
|
|
|
Regarding the assumed debt of approximately $562.1 million,
the Company recorded these loans at premiums totaling
approximately $2.7 million as the fixed interest rates on
many of these loans exceeds current interest rates the Company
would otherwise incur on similar financial instruments. The debt
premiums are amortized as an adjustment to interest expense over
the terms of the related loans using the effective interest
method.
|
On April 11, 2007, the Company acquired the remaining 15%
joint venture interest in the Hyatt Regency Dearborn in Detroit,
Michigan, for approximately $7.5 million, which represents
approximately $2.9 million in cash and assumed debt of
approximately $4.6 million. The Company acquired the other
85% interest pursuant to its acquisition of CNL Portfolio, which
was consummated April 11, 2007, as discussed above.
On May 21, 2007, the Company acquired a Marriott Residence
Inn and a Hampton Inn, both in Jacksonville, Florida, from MS
Resort Holdings LLC for approximately $35.8 million in
cash. The acquisition of these hotel properties, which were
previously owned by CNL, related to the Companys
acquisition of the CNL Portfolio on April 11, 2007. The
Company used proceeds from its sale of seven hotels on
May 18, 2007 and cash available on its balance sheet to
fund this acquisition.
On December 15, 2007, the Company completed an asset swap
with Hilton Hotels Corporation, its partner in two joint
ventures which were simultaneously dissolved, whereby the
Company surrendered its majority ownership interest in two hotel
properties in exchange for the joint venture partners
minority ownership interest in nine hotel properties. In
connection with this asset swap, the Company assumed
$41.9 million of debt previously attributable to the joint
venture partners minority ownership in the nine acquired
hotel properties that secured such debt and ceded
$109.5 million of debt, of which $80.1 million was
attributable to its majority ownership in the two surrendered
hotel properties that secured such debt and the remainder
attributable to the joint venture partners former minority
ownership. This asset swap resulted in the following changes in
the Companys ownership structure of the affected hotels:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ownership
|
|
Hotel Property
|
|
Location
|
|
Pre-Asset Swap
|
|
|
Post-Asset Swap
|
|
|
Embassy Suites
|
|
Arlington, VA
|
|
|
75
|
%
|
|
|
100
|
%
|
Embassy Suites
|
|
Portland, OR
|
|
|
70
|
%
|
|
|
100
|
%
|
Embassy Suites
|
|
Santa Clara, CA
|
|
|
75
|
%
|
|
|
100
|
%
|
Embassy Suites
|
|
Orlando, FL
|
|
|
75
|
%
|
|
|
100
|
%
|
Doubletree Guest Suites
|
|
Arlington, VA
|
|
|
75
|
%
|
|
|
0
|
%
|
Hilton
|
|
Costa Mesa, CA
|
|
|
70
|
%
|
|
|
100
|
%
|
Hilton
|
|
Miami, FL
|
|
|
70
|
%
|
|
|
0
|
%
|
Hilton
|
|
Tuscon, AZ
|
|
|
75
|
%
|
|
|
100
|
%
|
Hilton
|
|
Dallas, TX
|
|
|
75
|
%
|
|
|
100
|
%
|
Hilton
|
|
Rye Town, NY
|
|
|
75
|
%
|
|
|
100
|
%
|
Hilton
|
|
Auburn Hills, MI
|
|
|
70
|
%
|
|
|
100
|
%
|
122
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
In connection with these acquisitions, the accompanying
consolidated financial statements include the results of the
acquired hotels since the acquisition dates, all purchase prices
were the result of arms-length negotiations, no value was
assigned to goodwill or other intangible assets aside from those
discussed above, and purchase price allocations related to
certain acquisitions completed within the last year are
preliminary subject to further internal review and third-party
appraisals.
For acquisitions completed during the year ended
December 31, 2007, a condensed balance sheet showing the
amounts assigned to each major asset or liability caption
related to these acquisitions follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finalization
|
|
|
|
|
|
|
CNL
|
|
|
MS
|
|
|
Hilton JVs
|
|
|
of Purchase
|
|
|
|
|
|
|
Portfolio
|
|
|
Portfolio
|
|
|
Asset Swap
|
|
|
Accounting
|
|
|
Total
|
|
|
Investment in hotel properties
|
|
$
|
2,664,656
|
|
|
$
|
35,707
|
|
|
$
|
41,907
|
|
|
$
|
5,374
|
|
|
$
|
2,747,644
|
|
Restricted cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets held for sale
|
|
|
|
|
|
|
|
|
|
|
(212,929
|
)
|
|
|
(5,501
|
)
|
|
|
(218,430
|
)
|
Other assets
|
|
|
87,859
|
|
|
|
378
|
|
|
|
(6,752
|
)
|
|
|
116
|
|
|
|
81,601
|
|
Intangible assets
|
|
|
13,796
|
|
|
|
|
|
|
|
514
|
|
|
|
|
|
|
|
14,310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
$
|
2,766,311
|
|
|
$
|
36,085
|
|
|
$
|
(177,260
|
)
|
|
$
|
(11
|
)
|
|
$
|
2,625,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indebtedness
|
|
$
|
564,778
|
|
|
$
|
|
|
|
$
|
(109,458
|
)
|
|
$
|
|
|
|
|
455,320
|
|
Other liabilities
|
|
|
73,696
|
|
|
|
123
|
|
|
|
(3,066
|
)
|
|
|
0
|
|
|
|
70,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
638,474
|
|
|
|
123
|
|
|
|
(112,524
|
)
|
|
|
0
|
|
|
|
526,073
|
|
Minority interest in consolidated joint ventures
|
|
|
113,516
|
|
|
|
|
|
|
|
(73,619
|
)
|
|
|
|
|
|
|
39,897
|
|
Cash paid, including closing costs
|
|
|
2,014,321
|
|
|
|
35,962
|
|
|
|
8,883
|
|
|
|
(11
|
)
|
|
|
2,059,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash paid and liabilities assumed
|
|
$
|
2,766,311
|
|
|
$
|
36,085
|
|
|
$
|
(177,260
|
)
|
|
$
|
(11
|
)
|
|
$
|
2,625,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
123
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
For acquisitions completed during the year ended
December 31, 2006, a condensed balance sheet showing the
amounts assigned to each major asset or liability caption
related to these acquisitions follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finalization
|
|
|
|
|
|
|
Marriott at
|
|
|
JW Marriott
|
|
|
Marriott
|
|
|
Westin
|
|
|
MIP
|
|
|
of Purchase
|
|
|
|
|
|
|
RTP
|
|
|
Pan Pacific
|
|
|
Gateway
|
|
|
OHare
|
|
|
Portfolio
|
|
|
Accounting
|
|
|
Total
|
|
|
Investment in hotel properties
|
|
$
|
28,164
|
|
|
$
|
96,399
|
|
|
$
|
123,740
|
|
|
$
|
125,206
|
|
|
$
|
226,333
|
|
|
$
|
5,005
|
|
|
$
|
604,847
|
|
Restricted cash
|
|
|
|
|
|
|
|
|
|
|
3,235
|
|
|
|
|
|
|
|
891
|
|
|
|
|
|
|
|
4,126
|
|
Assets held for sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,706
|
|
|
|
(4,535
|
)
|
|
|
38,171
|
|
Other assets
|
|
|
489
|
|
|
|
1,490
|
|
|
|
3,883
|
|
|
|
2,300
|
|
|
|
5,842
|
|
|
|
0
|
|
|
|
14,004
|
|
Intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets acquired
|
|
$
|
28,653
|
|
|
$
|
97,889
|
|
|
$
|
130,858
|
|
|
$
|
127,506
|
|
|
$
|
275,772
|
|
|
$
|
470
|
|
|
$
|
661,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Indebtedness
|
|
$
|
|
|
|
$
|
|
|
|
$
|
55,427
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
55,427
|
|
Other liabilities
|
|
|
120
|
|
|
|
1,780
|
|
|
|
17,282
|
|
|
|
3,215
|
|
|
|
1,784
|
|
|
|
312
|
|
|
|
24,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities assumed
|
|
|
120
|
|
|
|
1,780
|
|
|
|
72,709
|
|
|
|
3,215
|
|
|
|
1,784
|
|
|
|
312
|
|
|
|
79,920
|
|
Minority interest in limited partners
|
|
|
|
|
|
|
|
|
|
|
40,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,590
|
|
Cash paid, including closing costs
|
|
|
28,533
|
|
|
|
96,109
|
|
|
|
17,559
|
|
|
|
124,291
|
|
|
|
273,988
|
|
|
|
158
|
|
|
|
540,638
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash paid, liabilities assumed, and operating partnership
units issued
|
|
$
|
28,653
|
|
|
$
|
97,889
|
|
|
$
|
130,858
|
|
|
$
|
127,506
|
|
|
$
|
275,772
|
|
|
$
|
470
|
|
|
$
|
661,148
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
124
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
The following unaudited pro forma statements of operations for
the years ended December 31, 2007 and 2006 are based on the
historical consolidated financial statements of the Company
adjusted to give effect to the completion of the aforementioned
acquisitions and the related debt and equity offerings to fund
these acquisitions as if such transactions occurred at the
beginning of the periods presented (in thousands, except share
and per share amounts):
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
|
(Unaudited)
|
|
|
Total revenues
|
|
$
|
1,311,390
|
|
|
$
|
1,255,725
|
|
Operating expenses
|
|
|
1,124,969
|
|
|
|
1,083,877
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
186,421
|
|
|
|
171,848
|
|
Interest income
|
|
|
3,178
|
|
|
|
2,917
|
|
Interest expense and amortization of loan costs
|
|
|
(167,279
|
)
|
|
|
(167,279
|
)
|
Write-off of loan costs and exit fees
|
|
|
(4,216
|
)
|
|
|
(101
|
)
|
|
|
|
|
|
|
|
|
|
Income before minority interest and income taxes
|
|
|
18,104
|
|
|
|
7,385
|
|
Provision for income taxes
|
|
|
(5,798
|
)
|
|
|
(957
|
)
|
Minority interest in consolidated joint ventures
|
|
|
(137
|
)
|
|
|
(214
|
)
|
Minority interest relating to limited partners
|
|
|
(1,525
|
)
|
|
|
(1,024
|
)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
10,644
|
|
|
|
5,190
|
|
Preferred dividends
|
|
|
(28,072
|
)
|
|
|
(28,072
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations available to common shareholders
|
|
$
|
(17,428
|
)
|
|
$
|
(22,882
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted:
|
|
|
|
|
|
|
|
|
Loss from continuing operations per share available to common
shareholders
|
|
$
|
(0.14
|
)
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
121,292
|
|
|
|
121,292
|
|
|
|
|
|
|
|
|
|
|
125
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
|
|
22.
|
Selected
Quarterly Financial Data (Unaudited)
|
Selected quarterly financial data for the years ended
December 31, 2007 and 2006 is below (in thousands, except
per share amounts):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Total revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
153,301
|
|
|
$
|
318,245
|
|
|
$
|
312,170
|
|
|
$
|
345,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
100,964
|
|
|
$
|
114,805
|
|
|
$
|
114,268
|
|
|
$
|
141,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
128,459
|
|
|
$
|
277,058
|
|
|
$
|
269,333
|
|
|
$
|
302,811
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
83,441
|
|
|
$
|
91,843
|
|
|
$
|
96,990
|
|
|
$
|
121,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
24,842
|
|
|
$
|
41,187
|
|
|
$
|
42,837
|
|
|
$
|
42,240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
17,523
|
|
|
$
|
22,962
|
|
|
$
|
17,278
|
|
|
$
|
19,348
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
9,328
|
|
|
$
|
(1,315
|
)
|
|
$
|
2,905
|
|
|
$
|
(6,951
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
6,335
|
|
|
$
|
10,108
|
|
|
$
|
7,072
|
|
|
$
|
9,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
11,491
|
|
|
$
|
21,084
|
|
|
$
|
508
|
|
|
$
|
(2,923
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
7,462
|
|
|
$
|
11,023
|
|
|
$
|
8,650
|
|
|
$
|
10,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
8,698
|
|
|
$
|
14,051
|
|
|
$
|
(6,638
|
)
|
|
$
|
(9,941
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
4,743
|
|
|
$
|
8,305
|
|
|
$
|
5,931
|
|
|
$
|
7,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders per
share basic
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
0.12
|
|
|
$
|
0.13
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to common shareholders per
share diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
0.12
|
|
|
$
|
0.13
|
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
$
|
0.09
|
|
|
$
|
0.15
|
|
|
$
|
0.09
|
|
|
$
|
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note:
|
During 2007, the Company reclassified interest and related debt
expense to the discontinued operations in accordance with EITF
No. 87-24.
Accordingly, all quarterly amounts presented for 2007 and 2006
have been restated to reflect this reclassification.
|
As of December 31, 2007 and 2006, Marriott International,
Inc. (Marriott) managed 42 and 24 of the
Companys properties, respectively. For these
Marriott-managed hotels, the fiscal year reflects twelve weeks
of
126
ASHFORD
HOSPITALITY TRUST, INC.
NOTES TO
CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
operations for each of the first three quarters of the year and
sixteen weeks for the fourth quarter of the year. Therefore, in
any given quarterly period, period-over-period results will have
different ending dates. For Marriott-managed hotels, the fourth
quarters of 2007 and 2006 ended December 28th and
December 29th, respectively.
|
|
23.
|
Subsequent
Events (unaudited)
|
Effective January 1, 2008, the Company created the
Nonqualified Deferred Compensation Plan (NDCP),
which allows designated employees the option to defer receipt of
certain cash and restricted stock compensation and to index such
amounts to selected investment funds. With certain exceptions,
payments under NDCP will be upon a) a fixed date, as
selected by the employee, b) termination of employment, or
c) an unforeseeable emergency.
On January 2, 2008, the Company originated a
$7.1 million mezzanine loan receivable, which is secured by
one hotel, matures January 2011, at an interest rate of LIBOR
plus 9%, with interest-only payments through maturity.
On January 4, 2008, the Company drew $10.0 million on
its $300.0 million credit facility, due April 9, 2010.
On January 11, 2008, the Company sold its JW Marriott in
New Orleans, Louisiana, for approximately $67.5 million. As
the Company acquired this property on April 11, 2007, no
gain or loss will be recognized on this sale. In connection with
this sale, the buyer assumed approximately $43.5 million
mortgage debt, due August 1, 2010. In addition, the Company
wrote-off the related debt premium balance of approximately
$2.1 million and unamortized loan costs of approximately
$155,000.
On January 14, 2008, the Company drew $30.0 million on
its $300.0 million credit facility, due April 9, 2010.
On January 22, 2008, the Company formed a joint venture
with Prudential Real Estate Investors (PREI) to
invest in structured debt and equity hotel investments in the
United States. The joint venture, which is expected to be funded
over the next two years, will ultimately be capitalized with
$300 million from investors in a fund managed by PREI and
$100 million from the Company. The Company and PREI will
contribute the capital required for each mezzanine investment on
a 25%/75% basis, respectively. The Company will be entitled to
annual management and sourcing fees, reimbursement of expenses,
and a promoted yield equal to a current 1.3x the venture yield
subject to maximum threshold limitations, but further enhanced
by an additional promote based upon a total net return to PREI.
PREIs equity will be in a senior position on each
investment. With limited exceptions, the joint venture will be
the primary vehicle for the Companys hotel lending
efforts. The joint venture will have the right of first refusal
on all mezzanine investment opportunities presented by the
Company, provided the investment meets certain criteria. On
February 6, 2008, PREI acquired a 75% interest in the
Companys $21.5 million mezzanine loan receivable,
which the Company originated December 5, 2007, is secured
by two hotels, and matures January 2018. Simultaneously, the
Company and PREI capitalized the joint venture by contributing
this $21.5 million mezzanine loan receivable to the joint
venture.
On February 6, 2008, the Company drew $20.0 million on
its $300.0 million credit facility, due April 9, 2010.
On February 6, 2008, the Company acquired a
$38.0 million mezzanine loan receivable for approximately
$33.0 million, which is secured by one hotel, matures June
2017, at an interest rate of 9.66%, with interest-only payments
through maturity.
On February 19, 2008, the Company acquired a
$21.0 million senior mezzanine loan, which is secured by a
29-hotel portfolio, through its joint venture with PREI for
approximately $17.5 million at an interest rate of LIBOR
plus 2.75%, with interest only payments through maturity. This
loan has an initial term of three years from origination with
two one-year extension options.
127
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2007
|
|
|
|
|
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|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
Column A
|
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Column B
|
|
|
Column C
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|
|
Column D
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
|
Costs Capitalized Since Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
FF&E, Buildings
|
|
Hotel Property
|
|
Location
|
|
Encumbrances
|
|
|
Land
|
|
|
and Improvements
|
|
|
Land
|
|
|
and Improvements
|
|
|
|
(In thousands)
|
|
|
Embassy Suites
|
|
Austin, TX
|
|
$
|
14,296
|
|
|
$
|
1,200
|
|
|
$
|
11,531
|
|
|
$
|
201
|
|
|
$
|
3,060
|
|
Embassy Suites
|
|
Dallas, TX
|
|
|
8,449
|
|
|
|
1,871
|
|
|
|
10,960
|
|
|
|
244
|
|
|
|
3,043
|
|
Embassy Suites
|
|
Herndon, VA
|
|
|
26,000
|
|
|
|
1,298
|
|
|
|
11,775
|
|
|
|
282
|
|
|
|
3,682
|
|
Embassy Suites
|
|
Las Vegas, NV
|
|
|
32,176
|
|
|
|
3,300
|
|
|
|
20,055
|
|
|
|
404
|
|
|
|
7,441
|
|
Embassy Suites
|
|
Syracuse, NY
|
|
|
12,877
|
|
|
|
2,839
|
|
|
|
10,959
|
|
|
|
|
|
|
|
4,112
|
|
Embassy Suites
|
|
Flagstaff, AZ
|
|
|
11,407
|
|
|
|
1,267
|
|
|
|
4,873
|
|
|
|
|
|
|
|
1,789
|
|
Embassy Suites
|
|
Houston, TX
|
|
|
13,050
|
|
|
|
1,800
|
|
|
|
10,547
|
|
|
|
|
|
|
|
1,243
|
|
Embassy Suites
|
|
West Palm Beach, FL
|
|
|
18,525
|
|
|
|
5,106
|
|
|
|
18,703
|
|
|
|
|
|
|
|
(2,758
|
)
|
Embassy Suites
|
|
Philadelphia, PA
|
|
|
27,313
|
|
|
|
5,791
|
|
|
|
35,740
|
|
|
|
|
|
|
|
4,363
|
|
Embassy Suites
|
|
Walnut Creek, CA
|
|
|
34,173
|
|
|
|
7,452
|
|
|
|
26,828
|
|
|
|
|
|
|
|
4,109
|
|
Embassy Suites
|
|
Arlington, VA
|
|
|
20,046
|
|
|
|
35,466
|
|
|
|
44,102
|
|
|
|
|
|
|
|
1,005
|
|
Embassy Suites
|
|
Portland, OR
|
|
|
21,515
|
|
|
|
10,938
|
|
|
|
61,903
|
|
|
|
|
|
|
|
227
|
|
Embassy Suites
|
|
Santa Clara, CA
|
|
|
20,198
|
|
|
|
8,800
|
|
|
|
48,128
|
|
|
|
|
|
|
|
2,645
|
|
Embassy Suites
|
|
Orlando, FL
|
|
|
5,488
|
|
|
|
5,580
|
|
|
|
22,638
|
|
|
|
|
|
|
|
30
|
|
Radisson Hotel
|
|
Holtsville, NY
|
|
|
6,300
|
|
|
|
5,745
|
|
|
|
17,014
|
|
|
|
13
|
|
|
|
4,089
|
|
Radisson Hotel
|
|
Rockland, MA
|
|
|
5,350
|
|
|
|
585
|
|
|
|
3,240
|
|
|
|
|
|
|
|
1,050
|
|
Doubletree Guest Suites
|
|
Columbus, OH
|
|
|
9,277
|
|
|
|
|
|
|
|
9,663
|
|
|
|
|
|
|
|
2,322
|
|
Hilton Garden Inn
|
|
Jacksonville, FL
|
|
|
11,098
|
|
|
|
1,751
|
|
|
|
9,920
|
|
|
|
|
|
|
|
1,772
|
|
Hilton
|
|
Fort Worth, TX
|
|
|
24,050
|
|
|
|
5,100
|
|
|
|
17,084
|
|
|
|
|
|
|
|
9,785
|
|
Hilton
|
|
Houston, TX
|
|
|
15,825
|
|
|
|
2,200
|
|
|
|
13,742
|
|
|
|
|
|
|
|
3,662
|
|
Hilton
|
|
St. Peterburg, FL
|
|
|
19,565
|
|
|
|
2,991
|
|
|
|
14,715
|
|
|
|
|
|
|
|
6,903
|
|
Hilton
|
|
Santa Fe, NM
|
|
|
19,572
|
|
|
|
7,004
|
|
|
|
11,632
|
|
|
|
|
|
|
|
3,612
|
|
Hilton
|
|
Bloomington, MN
|
|
|
46,386
|
|
|
|
5,685
|
|
|
|
61,479
|
|
|
|
|
|
|
|
1,809
|
|
Hilton
|
|
Washington DC
|
|
|
63,300
|
|
|
|
44,779
|
|
|
|
106,598
|
|
|
|
|
|
|
|
53
|
|
Hilton
|
|
La Jolla, CA
|
|
|
63,900
|
|
|
|
|
|
|
|
120,180
|
|
|
|
|
|
|
|
(1,052
|
)
|
Hilton
|
|
Costa Mesa, CA
|
|
|
35,947
|
|
|
|
12,717
|
|
|
|
98,716
|
|
|
|
|
|
|
|
1,168
|
|
Hilton
|
|
Tuscon, AZ
|
|
|
42,185
|
|
|
|
11,836
|
|
|
|
55,996
|
|
|
|
|
|
|
|
1,545
|
|
Hilton
|
|
Dallas, TX
|
|
|
31,792
|
|
|
|
3,411
|
|
|
|
69,121
|
|
|
|
|
|
|
|
884
|
|
Hilton
|
|
Rye Town, NY
|
|
|
29,268
|
|
|
|
10,082
|
|
|
|
37,932
|
|
|
|
|
|
|
|
804
|
|
Hilton
|
|
Auburn Hills, MI
|
|
|
10,448
|
|
|
|
3,910
|
|
|
|
13,704
|
|
|
|
|
|
|
|
236
|
|
Homewood Suites
|
|
Mobile, AL
|
|
|
9,951
|
|
|
|
1,334
|
|
|
|
7,559
|
|
|
|
|
|
|
|
1,377
|
|
Hampton Inn
|
|
Lawrenceville, GA
|
|
|
5,974
|
|
|
|
697
|
|
|
|
3,951
|
|
|
|
|
|
|
|
439
|
|
Hampton Inn
|
|
Evansville, IN
|
|
|
7,155
|
|
|
|
1,301
|
|
|
|
5,599
|
|
|
|
|
|
|
|
2,465
|
|
Hampton Inn
|
|
Terre Haute, IN
|
|
|
9,466
|
|
|
|
700
|
|
|
|
7,745
|
|
|
|
|
|
|
|
1,434
|
|
Hampton Inn
|
|
Buford, GA
|
|
|
7,970
|
|
|
|
1,168
|
|
|
|
5,502
|
|
|
|
|
|
|
|
704
|
|
Hampton Inn
|
|
Houston, TX
|
|
|
8,187
|
|
|
|
2,712
|
|
|
|
14,793
|
|
|
|
|
|
|
|
257
|
|
Hampton Inn
|
|
Jacksonville, FL
|
|
|
|
|
|
|
1,701
|
|
|
|
13,328
|
|
|
|
|
|
|
|
14
|
|
Marriott
|
|
Durham, NC
|
|
|
25,983
|
|
|
|
1,794
|
|
|
|
26,370
|
|
|
|
|
|
|
|
4,228
|
|
128
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A
|
|
Column B
|
|
|
Column C
|
|
|
Column D
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
|
Costs Capitalized Since Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
FF&E, Buildings
|
|
Hotel Property
|
|
Location
|
|
Encumbrances
|
|
|
Land
|
|
|
and Improvements
|
|
|
Land
|
|
|
and Improvements
|
|
|
|
(In thousands)
|
|
|
Marriott
|
|
Arlington, VA
|
|
|
52,474
|
|
|
|
20,637
|
|
|
|
103,103
|
|
|
|
|
|
|
|
10,120
|
|
Marriott
|
|
Seattle,WA
|
|
|
135,710
|
|
|
|
31,888
|
|
|
|
133,899
|
|
|
|
|
|
|
|
5,973
|
|
Marriott
|
|
Bridgewater, NJ
|
|
|
75,391
|
|
|
|
4,948
|
|
|
|
92,486
|
|
|
|
|
|
|
|
157
|
|
Marriott
|
|
Plano, TX
|
|
|
79,575
|
|
|
|
2,665
|
|
|
|
93,891
|
|
|
|
|
|
|
|
314
|
|
Marriott
|
|
Dallas, TX
|
|
|
26,942
|
|
|
|
2,642
|
|
|
|
32,625
|
|
|
|
|
|
|
|
88
|
|
JW Marriott
|
|
San Francisco, CA
|
|
|
|
|
|
|
|
|
|
|
96,423
|
|
|
|
|
|
|
|
13,650
|
|
JW Marriott
|
|
New Orleans, LA
|
|
|
45,630
|
|
|
|
|
|
|
|
66,690
|
|
|
|
|
|
|
|
|
|
SpringHill Suites by Marriott
|
|
Jacksonville, FL
|
|
|
8,168
|
|
|
|
1,348
|
|
|
|
7,636
|
|
|
|
|
|
|
|
1,146
|
|
SpringHill Suites by Marriott
|
|
Baltimore, MD
|
|
|
18,061
|
|
|
|
2,502
|
|
|
|
13,666
|
|
|
|
|
|
|
|
1,132
|
|
SpringHill Suites by Marriott
|
|
Kennesaw, GA
|
|
|
8,445
|
|
|
|
1,122
|
|
|
|
5,279
|
|
|
|
|
|
|
|
866
|
|
SpringHill Suites by Marriott
|
|
Buford, GA
|
|
|
8,193
|
|
|
|
1,132
|
|
|
|
6,480
|
|
|
|
|
|
|
|
237
|
|
SpringHill Suites by Marriott
|
|
Gaithersburg, MD
|
|
|
15,680
|
|
|
|
2,200
|
|
|
|
19,827
|
|
|
|
|
|
|
|
1,513
|
|
SpringHill Suites by Marriott
|
|
Centerville, VA
|
|
|
9,150
|
|
|
|
1,806
|
|
|
|
11,780
|
|
|
|
|
|
|
|
1,319
|
|
SpringHill Suites by Marriott
|
|
Charlotte, NC
|
|
|
6,300
|
|
|
|
1,235
|
|
|
|
7,090
|
|
|
|
|
|
|
|
299
|
|
SpringHill Suites by Marriott
|
|
Durham, NC
|
|
|
5,400
|
|
|
|
1,090
|
|
|
|
4,051
|
|
|
|
|
|
|
|
240
|
|
SpringHill Suites by Marriott
|
|
Orlando, FL
|
|
|
30,213
|
|
|
|
8,431
|
|
|
|
28,314
|
|
|
|
|
|
|
|
494
|
|
SpringHill Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
21,920
|
|
|
|
5,600
|
|
|
|
20,871
|
|
|
|
|
|
|
|
38
|
|
SpringHill Suites by Marriott
|
|
Plymouth Meeting, PA
|
|
|
20,000
|
|
|
|
3,140
|
|
|
|
24,855
|
|
|
|
|
|
|
|
41
|
|
SpringHill Suites by Marriott
|
|
Glen Allen, VA
|
|
|
15,286
|
|
|
|
2,000
|
|
|
|
15,672
|
|
|
|
|
|
|
|
13
|
|
Fairfield Inn by Marriott
|
|
Kennesaw, GA
|
|
|
8,277
|
|
|
|
840
|
|
|
|
4,489
|
|
|
|
|
|
|
|
196
|
|
Fairfield Inn by Marriott
|
|
Orlando, FL
|
|
|
15,930
|
|
|
|
6,364
|
|
|
|
10,501
|
|
|
|
|
|
|
|
1,061
|
|
Courtyard by Marriott
|
|
Bloomington, IN
|
|
|
12,323
|
|
|
|
900
|
|
|
|
11,034
|
|
|
|
|
|
|
|
1,534
|
|
Courtyard by Marriott
|
|
Columbus, IN
|
|
|
6,318
|
|
|
|
673
|
|
|
|
5,165
|
|
|
|
|
|
|
|
1,112
|
|
Courtyard by Marriott
|
|
Louisville, KY
|
|
|
15,010
|
|
|
|
1,352
|
|
|
|
13,467
|
|
|
|
|
|
|
|
338
|
|
Courtyard by Marriott
|
|
Crystal City, VA
|
|
|
34,505
|
|
|
|
5,411
|
|
|
|
38,746
|
|
|
|
|
|
|
|
3,827
|
|
Courtyard by Marriott
|
|
Ft. Lauderdale, FL
|
|
|
15,000
|
|
|
|
2,244
|
|
|
|
19,216
|
|
|
|
|
|
|
|
510
|
|
129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A
|
|
Column B
|
|
|
Column C
|
|
|
Column D
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
|
Costs Capitalized Since Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
FF&E, Buildings
|
|
Hotel Property
|
|
Location
|
|
Encumbrances
|
|
|
Land
|
|
|
and Improvements
|
|
|
Land
|
|
|
and Improvements
|
|
|
|
(In thousands)
|
|
|
Courtyard by Marriott
|
|
Overland Park, KS
|
|
|
12,620
|
|
|
|
1,868
|
|
|
|
14,114
|
|
|
|
|
|
|
|
1,347
|
|
Courtyard by Marriott
|
|
Palm Desert, CA
|
|
|
11,350
|
|
|
|
2,722
|
|
|
|
12,071
|
|
|
|
|
|
|
|
1,476
|
|
Courtyard by Marriott
|
|
Foothill Ranch, CA
|
|
|
14,000
|
|
|
|
2,447
|
|
|
|
17,123
|
|
|
|
|
|
|
|
318
|
|
Courtyard by Marriott
|
|
Alpharetta, GA
|
|
|
10,800
|
|
|
|
2,244
|
|
|
|
12,422
|
|
|
|
|
|
|
|
1,569
|
|
Courtyard by Marriott
|
|
Philadelphia, PA
|
|
|
42,783
|
|
|
|
9,608
|
|
|
|
95,232
|
|
|
|
|
|
|
|
535
|
|
Courtyard by Marriott
|
|
Seattle,WA
|
|
|
59,868
|
|
|
|
17,351
|
|
|
|
58,700
|
|
|
|
|
|
|
|
153
|
|
Courtyard by Marriott
|
|
San Francisco, CA
|
|
|
68,540
|
|
|
|
22,154
|
|
|
|
72,102
|
|
|
|
|
|
|
|
2,292
|
|
Courtyard by Marriott
|
|
Orlando, FL
|
|
|
29,190
|
|
|
|
7,227
|
|
|
|
27,842
|
|
|
|
|
|
|
|
1,857
|
|
Courtyard by Marriott
|
|
Oakland, CA
|
|
|
24,002
|
|
|
|
5,000
|
|
|
|
19,799
|
|
|
|
|
|
|
|
86
|
|
Courtyard by Marriott
|
|
Scottsdale, AZ
|
|
|
23,043
|
|
|
|
3,700
|
|
|
|
24,498
|
|
|
|
|
|
|
|
363
|
|
Courtyard by Marriott
|
|
Plano, TX
|
|
|
19,688
|
|
|
|
2,069
|
|
|
|
22,010
|
|
|
|
|
|
|
|
103
|
|
Courtyard by Marriott
|
|
Edison, NJ
|
|
|
12,640
|
|
|
|
2,100
|
|
|
|
12,082
|
|
|
|
|
|
|
|
|
|
Courtyard by Marriott
|
|
Newark, CA
|
|
|
6,227
|
|
|
|
2,800
|
|
|
|
11,036
|
|
|
|
|
|
|
|
34
|
|
Courtyard by Marriott
|
|
Manchester, CT
|
|
|
6,102
|
|
|
|
1,277
|
|
|
|
7,380
|
|
|
|
|
|
|
|
(7
|
)
|
Courtyard by Marriott
|
|
Basking Ridge, NJ
|
|
|
42,640
|
|
|
|
5,300
|
|
|
|
45,347
|
|
|
|
|
|
|
|
1,393
|
|
Marriott Residence Inn
|
|
Lake Buena Vista, FL
|
|
|
25,065
|
|
|
|
2,555
|
|
|
|
22,887
|
|
|
|
|
|
|
|
2,771
|
|
Marriott Residence Inn
|
|
Evansville, IN
|
|
|
6,911
|
|
|
|
960
|
|
|
|
6,285
|
|
|
|
|
|
|
|
943
|
|
Marriott Residence Inn
|
|
Orlando, FL
|
|
|
36,470
|
|
|
|
6,554
|
|
|
|
41,939
|
|
|
|
|
|
|
|
999
|
|
Marriott Residence Inn
|
|
Falls Church, VA
|
|
|
23,850
|
|
|
|
2,752
|
|
|
|
35,058
|
|
|
|
|
|
|
|
2,095
|
|
Marriott Residence Inn
|
|
San Diego, CA
|
|
|
21,375
|
|
|
|
3,156
|
|
|
|
29,589
|
|
|
|
|
|
|
|
2,055
|
|
Marriott Residence Inn
|
|
Salt Lake City, UT
|
|
|
14,700
|
|
|
|
1,897
|
|
|
|
16,429
|
|
|
|
|
|
|
|
466
|
|
Marriott Residence Inn
|
|
Palm Desert, CA
|
|
|
11,750
|
|
|
|
3,280
|
|
|
|
10,528
|
|
|
|
|
|
|
|
1,189
|
|
Marriott Residence Inn
|
|
Las Vegas, NV
|
|
|
54,361
|
|
|
|
18,177
|
|
|
|
49,524
|
|
|
|
|
|
|
|
172
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column A
|
|
Column B
|
|
|
Column C
|
|
|
Column D
|
|
|
|
|
|
|
|
|
Initial Cost
|
|
|
Costs Capitalized Since Acquisition
|
|
|
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
FF&E, Buildings
|
|
Hotel Property
|
|
Location
|
|
Encumbrances
|
|
|
Land
|
|
|
and Improvements
|
|
|
Land
|
|
|
and Improvements
|
|
|
|
(In thousands)
|
|
|
Marriott Residence Inn
|
|
Phoenix, AZ
|
|
|
23,150
|
|
|
|
4,100
|
|
|
|
26,087
|
|
|
|
|
|
|
|
83
|
|
Marriott Residence Inn
|
|
Plano, TX
|
|
|
14,760
|
|
|
|
2,000
|
|
|
|
16,551
|
|
|
|
|
|
|
|
177
|
|
Marriott Residence Inn
|
|
Newark, CA
|
|
|
11,120
|
|
|
|
3,200
|
|
|
|
11,958
|
|
|
|
|
|
|
|
16
|
|
Marriott Residence Inn
|
|
Manchester, CT
|
|
|
|
|
|
|
1,434
|
|
|
|
8,298
|
|
|
|
|
|
|
|
(2
|
)
|
Marriott Residence Inn
|
|
Atlanta, GA
|
|
|
15,933
|
|
|
|
1,860
|
|
|
|
16,440
|
|
|
|
|
|
|
|
111
|
|
Marriott Residence Inn
|
|
Jacksonville, FL
|
|
|
|
|
|
|
1,997
|
|
|
|
18,681
|
|
|
|
|
|
|
|
164
|
|
TownePlace Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
20,230
|
|
|
|
4,700
|
|
|
|
17,282
|
|
|
|
|
|
|
|
515
|
|
Sea Turtle Inn
|
|
Altantic Beach, FL
|
|
|
22,753
|
|
|
|
5,815
|
|
|
|
17,440
|
|
|
|
|
|
|
|
20,554
|
|
Sheraton Hotel
|
|
Langhorne, PA
|
|
|
18,382
|
|
|
|
2,037
|
|
|
|
12,624
|
|
|
|
|
|
|
|
6,654
|
|
Sheraton Hotel
|
|
Minneapolis, MN
|
|
|
19,575
|
|
|
|
2,953
|
|
|
|
14,753
|
|
|
|
|
|
|
|
2,408
|
|
Sheraton Hotel
|
|
Milford, MA
|
|
|
5,784
|
|
|
|
698
|
|
|
|
3,996
|
|
|
|
|
|
|
|
4,451
|
|
Sheraton Hotel
|
|
Indianapolis, IN
|
|
|
27,225
|
|
|
|
3,100
|
|
|
|
22,481
|
|
|
|
|
|
|
|
9,856
|
|
Sheraton Hotel
|
|
Anchorage, AK
|
|
|
24,607
|
|
|
|
4,023
|
|
|
|
40,207
|
|
|
|
|
|
|
|
3,676
|
|
Sheraton Hotel
|
|
Iowa City, IA
|
|
|
15,600
|
|
|
|
2,087
|
|
|
|
12,916
|
|
|
|
|
|
|
|
(5,453
|
)
|
Sheraton Hotel
|
|
San Diego, CA
|
|
|
35,922
|
|
|
|
7,294
|
|
|
|
37,162
|
|
|
|
|
|
|
|
2,210
|
|
Hyatt Regency
|
|
Anaheim, CA
|
|
|
|
|
|
|
16,242
|
|
|
|
64,967
|
|
|
|
|
|
|
|
2,482
|
|
Hyatt Regency
|
|
Herndon, VA
|
|
|
47,450
|
|
|
|
6,753
|
|
|
|
66,196
|
|
|
|
|
|
|
|
2,212
|
|
Hyatt Regency
|
|
Montreal, CAN
|
|
|
|
|
|
|
7,785
|
|
|
|
42,402
|
|
|
|
|
|
|
|
1,150
|
|
Hyatt Regency
|
|
Detriot, MI
|
|
|
30,118
|
|
|
|
3,150
|
|
|
|
47,711
|
|
|
|
|
|
|
|
854
|
|
Hyatt Regency
|
|
Coral Gables, FL
|
|
|
39,784
|
|
|
|
4,700
|
|
|
|
50,108
|
|
|
|
|
|
|
|
134
|
|
Crowne Plaza
|
|
Beverly Hills, CA
|
|
|
32,025
|
|
|
|
6,510
|
|
|
|
22,458
|
|
|
|
|
|
|
|
3,193
|
|
Crowne Plaza
|
|
Key West, FL
|
|
|
29,474
|
|
|
|
|
|
|
|
27,746
|
|
|
|
|
|
|
|
3,935
|
|
Annapolis Inn
|
|
Annapolis, MD
|
|
|
12,850
|
|
|
|
3,028
|
|
|
|
7,962
|
|
|
|
|
|
|
|
5,107
|
|
Westin
|
|
Rosemonth, IL
|
|
|
101,000
|
|
|
|
14,033
|
|
|
|
111,198
|
|
|
|
|
|
|
|
1,225
|
|
Renaissance
|
|
Tampa, FL
|
|
|
45,695
|
|
|
|
|
|
|
|
74,508
|
|
|
|
|
|
|
|
352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
$
|
2,635,775
|
|
|
$
|
570,778
|
|
|
$
|
3,427,710
|
|
|
$
|
1,144
|
|
|
$
|
218,042
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column E
|
|
|
Column F
|
|
|
Column G
|
|
|
Column H
|
|
|
Column I
|
|
|
|
|
|
Gross Carrying Amount at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
Depreciable Life
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
Accumulated
|
|
|
Construction
|
|
|
Acquisition
|
|
|
In Latest
|
|
Hotel Property
|
|
Location
|
|
Land
|
|
|
and Improvements
|
|
|
Total
|
|
|
Depreciation
|
|
|
Date
|
|
|
Date
|
|
|
Income Statement
|
|
|
Embassy Suites
|
|
Austin, TX
|
|
$
|
1,401
|
|
|
$
|
14,591
|
|
|
$
|
15,992
|
|
|
$
|
5,241
|
|
|
|
August 1998
|
|
|
|
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Dallas, TX
|
|
|
2,115
|
|
|
|
14,003
|
|
|
|
16,119
|
|
|
|
5,438
|
|
|
|
December 1998
|
|
|
|
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Herndon, VA
|
|
|
1,580
|
|
|
|
15,457
|
|
|
|
17,037
|
|
|
|
5,304
|
|
|
|
December 1998
|
|
|
|
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Las Vegas, NV
|
|
|
3,704
|
|
|
|
27,496
|
|
|
|
31,200
|
|
|
|
8,253
|
|
|
|
May 1999
|
|
|
|
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Syracuse, NY
|
|
|
2,839
|
|
|
|
15,071
|
|
|
|
17,910
|
|
|
|
3,795
|
|
|
|
|
|
|
|
October 2003
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Flagstaff, AZ
|
|
|
1,267
|
|
|
|
6,662
|
|
|
|
7,929
|
|
|
|
1,499
|
|
|
|
|
|
|
|
October 2003
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Houston, TX
|
|
|
1,800
|
|
|
|
11,790
|
|
|
|
13,590
|
|
|
|
1,149
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
West Palm Beach, FL
|
|
|
5,106
|
|
|
|
15,945
|
|
|
|
21,051
|
|
|
|
1,745
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Philadelphia, PA
|
|
|
5,791
|
|
|
|
40,103
|
|
|
|
45,894
|
|
|
|
1,826
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Walnut Creek, CA
|
|
|
7,452
|
|
|
|
30,937
|
|
|
|
38,389
|
|
|
|
1,843
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Arlington, VA
|
|
|
35,466
|
|
|
|
45,107
|
|
|
|
80,573
|
|
|
|
2,145
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Portland, OR
|
|
|
10,938
|
|
|
|
62,130
|
|
|
|
73,068
|
|
|
|
2,518
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Santa Clara, CA
|
|
|
8,800
|
|
|
|
50,773
|
|
|
|
59,573
|
|
|
|
2,202
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Embassy Suites
|
|
Orlando, FL
|
|
|
5,580
|
|
|
|
22,668
|
|
|
|
28,248
|
|
|
|
842
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Radisson Hotel
|
|
Holtsville, NY
|
|
|
5,758
|
|
|
|
21,103
|
|
|
|
26,860
|
|
|
|
5,798
|
|
|
|
|
|
|
|
January 2001
|
|
|
|
(1
|
),(2), (3)
|
Radisson Hotel
|
|
Rockland, MA
|
|
|
585
|
|
|
|
4,290
|
|
|
|
4,875
|
|
|
|
677
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Doubletree Guest Suites
|
|
Columbus, OH
|
|
|
|
|
|
|
11,985
|
|
|
|
11,985
|
|
|
|
2,566
|
|
|
|
|
|
|
|
October 2003
|
|
|
|
(1
|
),(2), (3)
|
Hilton Garden Inn
|
|
Jacksonville, FL
|
|
|
1,751
|
|
|
|
11,692
|
|
|
|
13,443
|
|
|
|
1,953
|
|
|
|
|
|
|
|
November 2003
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Fort Worth, TX
|
|
|
5,100
|
|
|
|
26,869
|
|
|
|
31,969
|
|
|
|
4,145
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Houston, TX
|
|
|
2,200
|
|
|
|
17,404
|
|
|
|
19,604
|
|
|
|
1,962
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
St. Petersburg, FL
|
|
|
2,991
|
|
|
|
21,618
|
|
|
|
24,609
|
|
|
|
2,698
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Santa Fe, NM
|
|
|
7,004
|
|
|
|
15,244
|
|
|
|
22,247
|
|
|
|
1,817
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Bloomington, MN
|
|
|
5,685
|
|
|
|
63,288
|
|
|
|
68,973
|
|
|
|
2,527
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Washington DC
|
|
|
44,779
|
|
|
|
106,651
|
|
|
|
151,430
|
|
|
|
5,754
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
La Jolla, CA
|
|
|
|
|
|
|
119,128
|
|
|
|
119,128
|
|
|
|
5,119
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Costa Mesa, CA
|
|
|
12,717
|
|
|
|
99,884
|
|
|
|
112,601
|
|
|
|
4,313
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Tuscon, AZ
|
|
|
11,836
|
|
|
|
57,541
|
|
|
|
69,377
|
|
|
|
4,118
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Dallas, TX
|
|
|
3,411
|
|
|
|
70,005
|
|
|
|
73,416
|
|
|
|
3,958
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Rye Town, NY
|
|
|
10,082
|
|
|
|
38,736
|
|
|
|
48,818
|
|
|
|
2,389
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hilton
|
|
Auburn Hills, MI
|
|
|
3,910
|
|
|
|
13,940
|
|
|
|
17,850
|
|
|
|
569
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Homewood Suites
|
|
Mobile, AL
|
|
|
1,334
|
|
|
|
8,936
|
|
|
|
10,270
|
|
|
|
1,284
|
|
|
|
|
|
|
|
November 2003
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Lawrenceville, GA
|
|
|
697
|
|
|
|
4,390
|
|
|
|
5,087
|
|
|
|
699
|
|
|
|
|
|
|
|
November 2003
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Evansville, IN
|
|
|
1,301
|
|
|
|
8,064
|
|
|
|
9,364
|
|
|
|
1,756
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Terre Haute, IN
|
|
|
700
|
|
|
|
9,179
|
|
|
|
9,879
|
|
|
|
1,276
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Buford, GA
|
|
|
1,168
|
|
|
|
6,206
|
|
|
|
7,374
|
|
|
|
843
|
|
|
|
|
|
|
|
July 2004
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Houston, TX
|
|
|
2,712
|
|
|
|
15,050
|
|
|
|
17,762
|
|
|
|
964
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hampton Inn
|
|
Jacksonville, FL
|
|
|
1,701
|
|
|
|
13,342
|
|
|
|
15,043
|
|
|
|
230
|
|
|
|
|
|
|
|
May 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Durham, NC
|
|
|
1,794
|
|
|
|
30,598
|
|
|
|
32,392
|
|
|
|
2,405
|
|
|
|
|
|
|
|
February 2006
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Arlington, VA
|
|
|
20,637
|
|
|
|
113,223
|
|
|
|
133,860
|
|
|
|
5,208
|
|
|
|
|
|
|
|
July 2006
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Seattle,WA
|
|
|
31,888
|
|
|
|
139,872
|
|
|
|
171,760
|
|
|
|
4,782
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Bridgewater, NJ
|
|
|
4,948
|
|
|
|
92,643
|
|
|
|
97,591
|
|
|
|
3,596
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Plano, TX
|
|
|
2,665
|
|
|
|
94,205
|
|
|
|
96,870
|
|
|
|
3,811
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott
|
|
Dallas, TX
|
|
|
2,642
|
|
|
|
32,713
|
|
|
|
35,355
|
|
|
|
1,480
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
JW Marriott
|
|
San Francisco, CA
|
|
|
|
|
|
|
110,073
|
|
|
|
110,073
|
|
|
|
8,998
|
|
|
|
|
|
|
|
April 2006
|
|
|
|
(1
|
),(2), (3)
|
JW Marriott
|
|
New Orleans, LA
|
|
|
|
|
|
|
66,690
|
|
|
|
66,690
|
|
|
|
3,437
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Jacksonville, FL
|
|
|
1,348
|
|
|
|
8,782
|
|
|
|
10,130
|
|
|
|
1,460
|
|
|
|
|
|
|
|
November 2003
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Baltimore, MD
|
|
|
2,502
|
|
|
|
14,798
|
|
|
|
17,300
|
|
|
|
1,757
|
|
|
|
|
|
|
|
May 2004
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Kennesaw, GA
|
|
|
1,122
|
|
|
|
6,145
|
|
|
|
7,267
|
|
|
|
811
|
|
|
|
|
|
|
|
July 2004
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Buford, GA
|
|
|
1,132
|
|
|
|
6,717
|
|
|
|
7,849
|
|
|
|
861
|
|
|
|
|
|
|
|
July 2004
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Gaithersburg, MD
|
|
|
2,200
|
|
|
|
21,340
|
|
|
|
23,540
|
|
|
|
1,598
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Centerville, VA
|
|
|
1,806
|
|
|
|
13,099
|
|
|
|
14,905
|
|
|
|
1,062
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Charlotte, NC
|
|
|
1,235
|
|
|
|
7,389
|
|
|
|
8,624
|
|
|
|
772
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Durham, NC
|
|
|
1,090
|
|
|
|
4,291
|
|
|
|
5,381
|
|
|
|
369
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Orlando, FL
|
|
|
8,431
|
|
|
|
28,808
|
|
|
|
37,239
|
|
|
|
1,013
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
5,600
|
|
|
|
20,909
|
|
|
|
26,509
|
|
|
|
534
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Plymouth Meeting, PA
|
|
|
3,140
|
|
|
|
24,896
|
|
|
|
28,036
|
|
|
|
664
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
SpringHill Suites by Marriott
|
|
Glen Allen, VA
|
|
|
2,000
|
|
|
|
15,685
|
|
|
|
17,685
|
|
|
|
503
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Fairfield Inn by Marriott
|
|
Kennesaw, GA
|
|
|
840
|
|
|
|
4,685
|
|
|
|
5,525
|
|
|
|
514
|
|
|
|
|
|
|
|
July 2004
|
|
|
|
(1
|
),(2), (3)
|
Fairfield Inn by Marriott
|
|
Orlando, FL
|
|
|
6,364
|
|
|
|
11,562
|
|
|
|
17,926
|
|
|
|
557
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Bloomington, IN
|
|
|
900
|
|
|
|
12,568
|
|
|
|
13,468
|
|
|
|
1,713
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Columbus, IN
|
|
|
673
|
|
|
|
6,277
|
|
|
|
6,950
|
|
|
|
916
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Louisville, KY
|
|
|
1,352
|
|
|
|
13,805
|
|
|
|
15,157
|
|
|
|
1,928
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Crystal City, VA
|
|
|
5,411
|
|
|
|
42,573
|
|
|
|
47,984
|
|
|
|
3,362
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Ft. Lauderdale, FL
|
|
|
2,244
|
|
|
|
19,726
|
|
|
|
21,970
|
|
|
|
1,958
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Overland Park, KS
|
|
|
1,868
|
|
|
|
15,461
|
|
|
|
17,329
|
|
|
|
1,162
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column E
|
|
|
Column F
|
|
|
Column G
|
|
|
Column H
|
|
|
Column I
|
|
|
|
|
|
Gross Carrying Amount at Close of Period
|
|
|
|
|
|
|
|
|
|
|
|
Depreciable Life
|
|
|
|
|
|
|
|
|
FF&E, Buildings
|
|
|
|
|
|
Accumulated
|
|
|
Construction
|
|
|
Acquisition
|
|
|
In Latest
|
|
Hotel Property
|
|
Location
|
|
Land
|
|
|
and Improvements
|
|
|
Total
|
|
|
Depreciation
|
|
|
Date
|
|
|
Date
|
|
|
Income Statement
|
|
|
Courtyard by Marriott
|
|
Palm Desert, CA
|
|
|
2,722
|
|
|
|
13,547
|
|
|
|
16,269
|
|
|
|
1,145
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Foothill Ranch, CA
|
|
|
2,447
|
|
|
|
17,441
|
|
|
|
19,888
|
|
|
|
1,755
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Alpharetta, GA
|
|
|
2,244
|
|
|
|
13,991
|
|
|
|
16,235
|
|
|
|
1,203
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Philadelphia, PA
|
|
|
9,608
|
|
|
|
95,767
|
|
|
|
105,375
|
|
|
|
3,326
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Seattle,WA
|
|
|
17,351
|
|
|
|
58,853
|
|
|
|
76,204
|
|
|
|
1,887
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
San Francisco, CA
|
|
|
22,154
|
|
|
|
74,394
|
|
|
|
96,548
|
|
|
|
3,151
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Orlando, FL
|
|
|
7,227
|
|
|
|
29,699
|
|
|
|
36,926
|
|
|
|
1,126
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Oakland, CA
|
|
|
5,000
|
|
|
|
19,885
|
|
|
|
24,885
|
|
|
|
663
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Scottsdale, AZ
|
|
|
3,700
|
|
|
|
24,861
|
|
|
|
28,561
|
|
|
|
789
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Plano, TX
|
|
|
2,069
|
|
|
|
22,113
|
|
|
|
24,182
|
|
|
|
552
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Edison, NJ
|
|
|
2,100
|
|
|
|
12,082
|
|
|
|
14,182
|
|
|
|
691
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Newark, CA
|
|
|
2,800
|
|
|
|
11,070
|
|
|
|
13,870
|
|
|
|
745
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Manchester, CT
|
|
|
1,277
|
|
|
|
7,373
|
|
|
|
8,650
|
|
|
|
342
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Courtyard by Marriott
|
|
Basking Ridge, NJ
|
|
|
5,300
|
|
|
|
46,740
|
|
|
|
52,040
|
|
|
|
1,618
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Lake Buena Vista, FL
|
|
|
2,555
|
|
|
|
25,658
|
|
|
|
28,213
|
|
|
|
4,141
|
|
|
|
|
|
|
|
March 2004
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Evansville, IN
|
|
|
960
|
|
|
|
7,228
|
|
|
|
8,188
|
|
|
|
958
|
|
|
|
|
|
|
|
September 2004
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Orlando, FL
|
|
|
6,554
|
|
|
|
42,938
|
|
|
|
49,492
|
|
|
|
4,109
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Falls Church, VA
|
|
|
2,752
|
|
|
|
37,153
|
|
|
|
39,905
|
|
|
|
2,807
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
San Diego, CA
|
|
|
3,156
|
|
|
|
31,644
|
|
|
|
34,800
|
|
|
|
2,580
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Salt Lake City, UT
|
|
|
1,897
|
|
|
|
16,895
|
|
|
|
18,792
|
|
|
|
1,178
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Palm Desert, CA
|
|
|
3,280
|
|
|
|
11,717
|
|
|
|
14,997
|
|
|
|
1,012
|
|
|
|
|
|
|
|
June 2005
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Las Vegas, NV
|
|
|
18,177
|
|
|
|
49,696
|
|
|
|
67,873
|
|
|
|
1,819
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Phoenix, AZ
|
|
|
4,100
|
|
|
|
26,170
|
|
|
|
30,270
|
|
|
|
834
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Plano, TX
|
|
|
2,000
|
|
|
|
16,728
|
|
|
|
18,728
|
|
|
|
380
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Newark, CA
|
|
|
3,200
|
|
|
|
11,974
|
|
|
|
15,174
|
|
|
|
721
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Manchester, CT
|
|
|
1,434
|
|
|
|
8,296
|
|
|
|
9,730
|
|
|
|
343
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Atlanta, GA
|
|
|
1,860
|
|
|
|
16,551
|
|
|
|
18,411
|
|
|
|
363
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Marriott Residence Inn
|
|
Jacksonville, FL
|
|
|
1,997
|
|
|
|
18,845
|
|
|
|
20,842
|
|
|
|
341
|
|
|
|
|
|
|
|
May 2007
|
|
|
|
(1
|
),(2), (3)
|
TownePlace Suites by Marriott
|
|
Manhattan Beach, CA
|
|
|
4,700
|
|
|
|
17,797
|
|
|
|
22,497
|
|
|
|
445
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Sea Turtle Inn
|
|
Altantic Beach, FL
|
|
|
5,815
|
|
|
|
37,994
|
|
|
|
43,809
|
|
|
|
4,037
|
|
|
|
|
|
|
|
April 2004
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Langhorne, PA
|
|
|
2,037
|
|
|
|
19,278
|
|
|
|
21,315
|
|
|
|
3,569
|
|
|
|
|
|
|
|
July 2004
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Minneapolis, MN
|
|
|
2,953
|
|
|
|
17,161
|
|
|
|
20,114
|
|
|
|
1,918
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Milford, MA
|
|
|
698
|
|
|
|
8,447
|
|
|
|
9,145
|
|
|
|
1,252
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Indianapolis, IN
|
|
|
3,100
|
|
|
|
32,337
|
|
|
|
35,437
|
|
|
|
3,224
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Anchorage, AK
|
|
|
4,023
|
|
|
|
43,883
|
|
|
|
47,906
|
|
|
|
1,977
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
Iowa City, IA
|
|
|
2,087
|
|
|
|
7,463
|
|
|
|
9,550
|
|
|
|
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Sheraton Hotel
|
|
San Diego, CA
|
|
|
7,294
|
|
|
|
39,372
|
|
|
|
46,666
|
|
|
|
1,866
|
|
|
|
|
|
|
|
December 2006
|
|
|
|
(1
|
),(2), (3)
|
Hyatt Regency
|
|
Anaheim, CA
|
|
|
16,242
|
|
|
|
67,449
|
|
|
|
83,691
|
|
|
|
10,502
|
|
|
|
|
|
|
|
October 2004
|
|
|
|
(1
|
),(2), (3)
|
Hyatt Regency
|
|
Herndon, VA
|
|
|
6,753
|
|
|
|
68,408
|
|
|
|
75,161
|
|
|
|
5,919
|
|
|
|
|
|
|
|
October 2005
|
|
|
|
(1
|
),(2), (3)
|
Hyatt Regency
|
|
Montreal, CAN
|
|
|
7,785
|
|
|
|
43,552
|
|
|
|
51,337
|
|
|
|
2,976
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hyatt Regency
|
|
Detriot, MI
|
|
|
3,150
|
|
|
|
48,560
|
|
|
|
51,710
|
|
|
|
2,850
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Hyatt Regency
|
|
Coral Gables, FL
|
|
|
4,700
|
|
|
|
50,242
|
|
|
|
54,943
|
|
|
|
1,322
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
Crowne Plaza
|
|
Beverly Hills, CA
|
|
|
6,510
|
|
|
|
25,651
|
|
|
|
32,161
|
|
|
|
2,346
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Crowne Plaza
|
|
Key West, FL
|
|
|
|
|
|
|
31,681
|
|
|
|
31,681
|
|
|
|
2,645
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Annapolis Inn
|
|
Annapolis, MD
|
|
|
3,028
|
|
|
|
13,069
|
|
|
|
16,098
|
|
|
|
1,878
|
|
|
|
|
|
|
|
March 2005
|
|
|
|
(1
|
),(2), (3)
|
Westin
|
|
Rosemonth, IL
|
|
|
14,033
|
|
|
|
112,423
|
|
|
|
126,456
|
|
|
|
7,405
|
|
|
|
|
|
|
|
November 2006
|
|
|
|
(1
|
),(2), (3)
|
Renaissance
|
|
Tampa, FL
|
|
|
|
|
|
|
74,860
|
|
|
|
74,860
|
|
|
|
2,987
|
|
|
|
|
|
|
|
April 2007
|
|
|
|
(1
|
),(2), (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
|
|
$
|
571,922
|
|
|
$
|
3,645,747
|
|
|
$
|
4,217,669
|
|
|
$
|
258,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Estimated useful life for buildings
is 39 years.
|
|
(2)
|
|
Estimated useful life for building
improvements is 15 years.
|
|
(3)
|
|
Estimated useful life for furniture
and fixtures is 3 to 5 years.
|
133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
Investment in Real Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
1,863,741
|
|
|
$
|
1,284,368
|
|
|
$
|
457,801
|
|
Additions
|
|
|
2,834,970
|
|
|
|
690,507
|
|
|
|
859,187
|
|
Disposals
|
|
|
(481,041
|
)
|
|
|
(111,134
|
)
|
|
|
(32,620
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
4,217,670
|
|
|
$
|
1,863,741
|
|
|
$
|
1,284,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning Balance
|
|
$
|
113,980
|
|
|
$
|
61,105
|
|
|
$
|
31,342
|
|
Depreciation expense
|
|
|
167,506
|
|
|
|
52,075
|
|
|
|
29,771
|
|
Loss from reclassification
|
|
|
|
|
|
|
863
|
|
|
|
|
|
Writeoffs
|
|
|
(23,343
|
)
|
|
|
(63
|
)
|
|
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance
|
|
$
|
258,143
|
|
|
$
|
113,980
|
|
|
$
|
61,105
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Real Estate, net
|
|
$
|
3,959,527
|
|
|
$
|
1,749,761
|
|
|
$
|
1,223,263
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
134
SCHEDULE IV
MORTGAGE LOANS AND INTEREST EARNED ON REAL ESTATE
December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Column D
|
|
|
Column E
|
|
|
Column F
|
|
|
Column G
|
|
|
|
|
Column B
|
|
|
Column C
|
|
|
Delinquent
|
|
|
Being
|
|
|
Accrued
|
|
|
Interest Income
|
|
Column A
|
|
|
|
|
|
Balance at
|
|
|
Principal at
|
|
|
Foreclosed at
|
|
|
Interest at
|
|
|
During Year Ended
|
|
Description
|
|
|
Prior Liens
|
|
|
December 31, 2007
|
|
|
December 31, 2007
|
|
|
December 31, 2007
|
|
|
December 31, 2007
|
|
|
December 31, 2007
|
|
|
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westin Hotel*
|
|
|
Various securities
|
|
|
$
|
|
|
|
$
|
11,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
133
|
|
|
$
|
1,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marriott Hotel
|
|
|
Franklin, TN
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
33
|
|
|
|
568
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Doubletree Guest Suites
|
|
|
Albuquerque, NM
|
|
|
|
|
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Four Seasons Resort
|
|
|
Nevis, West Indies
|
|
|
|
|
|
|
|
18,200
|
|
|
|
|
|
|
|
|
|
|
|
108
|
|
|
|
2,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio: 105 Hotels
|
|
|
Various
|
|
|
|
|
|
|
|
25,694
|
|
|
|
|
|
|
|
|
|
|
|
165
|
|
|
|
2,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilton Suites Galleria
|
|
|
Dallas, Texas
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
47
|
|
|
|
874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wyndham Dallas North
|
|
|
Dallas, Texas
|
|
|
|
|
|
|
|
4,000
|
|
|
|
|
|
|
|
|
|
|
|
25
|
|
|
|
469
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westin Resorts
|
|
|
Various
|
|
|
|
|
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
230
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
|
|
|
$
|
94,394
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
511
|
|
|
$
|
9,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Related to paid-off mortgage receviables
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,474
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2007
|
|
$
|
102,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New mortgage loans
|
|
|
21,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Principal payments
|
|
|
(30,083
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (describe)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2007
|
|
$
|
94,394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
On December 13, 2007, the
Company substituted the collaterals of mortgage-backed
securities on this loan with various government securities.
|
135
Exhibit
Index
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
3
|
.1
|
|
Articles of Amendment and Restatement (incorporated by reference
to Exhibit 3.1 of
Form S-11/A,
filed on July 31, 2003)
|
|
3
|
.2.1
|
|
Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 of
Form S-11/A,
filed on July 31, 2003)
|
|
3
|
.2.2
|
|
Amendment No. 1 to Amended and Restated Bylaws
(incorporated by reference to Exhibit 3.2.2 to the
Registrants
Form 10-K
for the year ended December 31, 2003)
|
|
4
|
.1
|
|
Form of Certificate for Common Stock (incorporated by reference
to Exhibit 4.1 of
Form S-11/A,
filed on August 20, 2003)
|
|
4
|
.1.1
|
|
Articles Supplementary for Series A Cumulative
Preferred Stock, dated September 15, 2004 (incorporated by
reference to Exhibit 4.4 to the Registrants
Form 8-K,
dated September 21, 2004, for the event dated
September 15, 2004)
|
|
4
|
.1.2
|
|
Form of Certificate of Series A Cumulative Preferred Stock
(incorporated by reference to Exhibit 4.4.1 to the
Registrants
Form 8-K,
dated September 21, 2004, for the event dated
September 15, 2004)
|
|
4
|
.2
|
|
Articles Supplementary for
Series B-1
Convertible Preferred Stock, dated December 28, 2004
(incorporated by reference to Exhibit 4.1 to the
Registrants
Form 8-K,
dated January 4, 2005, for the event dated
December 28, 2004)
|
|
4
|
.3
|
|
Articles Supplementary for
Series B-2
Convertible Preferred Stock, dated December 28, 2004
(incorporated by reference to Exhibit 4.2 to the
Registrants
Form 8-K,
dated January 4, 2005, for the event dated
December 28, 2004)
|
|
4
|
.4
|
|
Articles Supplementary for Series C Cumulative
Redeemable Preferred Stock, dated April 11, 2007
(incorporated by reference to Exhibit 4.4 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
4
|
.5
|
|
Articles Supplementary for Series D Cumulative
Redeemable Preferred Stock, dated July 17, 2007
(incorporated by reference to Exhibit 3.5 to the
Registrants
Form 8-A,
filed July 17, 2007)
|
|
4
|
.6
|
|
Form of Certificate of Series D Cumulative Redeemable
Preferred Stock (incorporated by reference to Exhibit 4.2
to the Registrants
Form 8-A,
filed July 17, 2007)
|
|
10
|
.1.1
|
|
Third Amended and Restated Agreement of Limited Partnership of
Ashford Hospitality Limited Partnership (incorporated by
reference to Exhibit 10.33.1.1 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.1.2
|
|
Amendment No. 1 to Third Amended and Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership
(incorporated by reference to Exhibit 10.1.5 of the
Registrants
Form 8-K,
dated July 24, 2007, for the event dated July 18, 2007)
|
|
*10
|
.1.3
|
|
Amendment No. 2 to Third Amended Restated Agreement of
Limited Partnership of Ashford Hospitality Limited Partnership.
|
|
10
|
.2
|
|
Registration Rights Agreement among Ashford Hospitality Trust,
Inc. and the persons named therein (incorporated by reference to
Exhibit 10.2 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.3.1
|
|
Amended and Restated 2003 Stock Incentive Plan of Ashford
Hospitality Trust, Inc. (incorporated by reference to
Exhibit 10.3.1 to the Registrants
Form 8-K,
dated May 9, 2005, for the event dated May 3, 2005)
|
|
*10
|
.3.2
|
|
Nonqualified Deferred Compensation Plan of Ashford Hospitality
Trust, Inc., dated January 1, 2008
|
|
10
|
.4
|
|
Non-Compete Agreement between Ashford Hospitality Trust, Inc.
and Archie Bennett, Jr. (incorporated by reference to
Exhibit 10.4 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.1
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Montgomery J. Bennett (incorporated by reference to
Exhibit 10.5 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.1.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Montgomery J. Bennett (incorporated by reference
to Exhibit 10.5.11 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.2
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Douglas Kessler (incorporated by reference to Exhibit 10.6
of
Form S-11/A,
filed on July 31, 2003)
|
136
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.5.2.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Douglas Kessler (incorporated by reference to
Exhibit 10.5.7 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.3
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
David A. Brooks (incorporated by reference to Exhibit 10.7
of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.3.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and David A. Brooks (incorporated by reference to
Exhibit 10.5.9 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.4
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
David Kimichik (incorporated by reference to Exhibit 10.8
of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.4.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and David Kimichik (incorporated by reference to
Exhibit 10.5.8 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.5.5
|
|
Employment Agreement between Ashford Hospitality Trust, Inc. and
Mark Nunneley (incorporated by reference to Exhibit 10.9 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.5.5.1
|
|
Employment Agreement Amendment between Ashford Hospitality
Trust, Inc. and Mark Nunneley (incorporated by reference to
Exhibit 10.5.10 of
Form 8-K,
filed on April 3, 2006)
|
|
10
|
.6
|
|
Form of Management Agreement between Remington Lodging and
Ashford TRS Corporation (incorporated by reference to
Exhibit 10.10 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.6.1
|
|
Hotel Management Agreement between Remington Management, L.P.
and Ashford TRS Corporation (incorporated by reference to
Exhibit 10.6.1 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.7
|
|
Form of Lease Agreement between Ashford Hospitality Limited
Partnership and Ashford TRS Corporation (incorporated by
reference to Exhibit 10.11 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.8.1
|
|
Assignment and Assumption of Contract and Contract Rights
between Ashford Hospitality Limited Partnership and Ashford
Financial Corporation, dated October 7, 2003 (incorporated
by reference to Exhibit 10.4 of
Form 10-Q,
filed on November 14, 2003)
|
|
10
|
.8.2
|
|
Assignment and Assumption of Contract and Contract Rights
between Ashford Hospitality Limited Partnership and Ashford
Financial Corporation, dated January 4, 2004 Bylaws
(incorporated by reference to Exhibit 10.10.2 to the
Registrants
Form 10-K
for the year ended December 31, 2003)
|
|
10
|
.9
|
|
Guaranty by Ashford Financial Corporation in favor of Ashford
Hospitality Trust Limited Partnership (incorporated by
reference to Exhibit 10.26 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.10
|
|
Mutual Exclusivity Agreement by and between Ashford Hospitality
Limited Partnership, Ashford Hospitality Trust, Inc., Remington
Hotel Corporation and Remington Lodging and Hospitality, L.P.
(incorporated by reference to Exhibit 10.22 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.11
|
|
Tax Indemnification Agreement between Ashford Hospitality Trust,
Inc. and the persons named therein (incorporated by reference to
Exhibit 10.25 of
Form S-11/A,
filed on July 31, 2003)
|
|
10
|
.12
|
|
Secured Revolving Credit Facility Agreement, dated
February 5, 2004, among the Registrant and Credit Lyonnais
New York Branch, as Administrative Agent and Sole Lead Arranger
and Book Manager, and Merrill Lynch Capital, a division of
Merrill Lynch Business Financial Services, Inc., as Syndication
Agent (incorporated by reference to Exhibit 10.15 to the
Registrants
Form 10-Q
for the quarter ended March 31, 2004)
|
|
10
|
.12.1
|
|
First Amendment to Credit Agreement, dated August 17, 2004,
among the Registrant, Calyon New York Branch, and Merrill Lynch
Capital (incorporated by reference to Exhibit 10.15.1 of
the Registrants
Form 10-Q
for the quarter ended September 30, 2004)
|
|
10
|
.12.2
|
|
Third Amendment to Credit Agreement, dated August 24, 2005,
among the Registrant, Calyon New York Branch, and Merrill Lynch
Capital (incorporated by reference to Exhibit 10.15.2 of
the Registrants
Form 8-K,
dated August 26, 2005, for the event dated August 24,
2005)
|
|
10
|
.12.3
|
|
Fourth Amendment to Credit Agreement, dated September 8,
2006, among the Registrant, Calyon New York Branch, Merrill
Lynch Capital, and Wachovia Bank (incorporated by reference to
Exhibit 10.15.3 of the Registrants
Form 8-K,
dated September 12, 2006, for the event dated
September 8, 2006)
|
137
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.13
|
|
Contribution and Purchase and Sale Agreement, dated
December 27, 2004, between the Registrant and FGSB Master
Corp. (incorporated by reference to Exhibit 10.20 to the
Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14
|
|
Purchase Agreement, dated December 27, 2004, between the
Registrant and Security Capital Preferred Growth Incorporated
(incorporated by reference to Exhibit 10.21 to the
Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14.1
|
|
Form of Registration Rights Agreement, dated December 27,
2004, between the Registrant and Security Capital Preferred
Growth Incorporated (incorporated by reference to
Exhibit 10.21.1 to the Registrants
Form 8-K,
dated December 28, 2004, for the event dated
December 27, 2004)
|
|
10
|
.14.2
|
|
Amendment #1 to Purchase Agreement, dated February 8, 2005,
between the Registrant and Security Capital Preferred Growth
Incorporated (incorporated by reference to Exhibit 10.21.2
to the Registrants
Form 8-K,
dated February 9, 2005, for the event dated
February 8, 2005)
|
|
10
|
.15
|
|
Loan Agreement, dated October 28, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.23.2 to the
Registrants
Form 8-K,
dated November 1, 2005, for the event dated
October 28, 2005)
|
|
10
|
.15.1
|
|
Amendment No. 2 to Loan Agreement, dated October 28,
2005, between the Registrant and Merrill Lynch Mortgage Lending,
Inc. (incorporated by reference to Exhibit 10.23.2.1 to the
Registrants
Form 8-K,
dated July 27, 2006, for the event dated July 26, 2006)
|
|
10
|
.15.2
|
|
$45 Million Rate Protection Agreement, dated October 27,
2005, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.23.3 to the Registrants
Form 8-K,
dated November 1, 2005, for the event dated
October 28, 2005)
|
|
10
|
.16
|
|
Commitment Letter, dated October 5, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.8 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.1
|
|
Early Rate Lock Agreement, dated October 5, 2005, between
the Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.9 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.10 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.10.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.2
|
|
Loan Agreement, dated as of October 13, 2005, between the
Registrant and Merrill Lynch Mortgage Lending, Inc.
(incorporated by reference to Exhibit 10.24.11 to the
Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.2.2.1
|
|
Cross-Collateralization and Cooperation Agreement, dated
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.11.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.3
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.12 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.3.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.12.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.4
|
|
Amended and Restated Loan Agreement, dated as of
October 13, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.13 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
138
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.16.4.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated October 13, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.13.1 to the Registrants
Form 8-K,
dated October 19, 2005, for the event dated
October 13, 2005)
|
|
10
|
.16.5
|
|
Amended and Restated Loan Agreement, dated as of
December 20, 2005, between the Registrant and Merrill Lynch
Mortgage Lending, Inc. (incorporated by reference to
Exhibit 10.24.14 to the Registrants
Form 8-K,
dated December 22, 2005, for the event dated
December 20, 2005)
|
|
10
|
.16.5.1
|
|
Amended and Restated Cross-Collateralization and Cooperation
Agreement, dated December 20, 2005, between the Registrant
and Merrill Lynch Mortgage Lending, Inc. (incorporated by
reference to Exhibit 10.24.14.1 to the Registrants
Form 8-K,
dated December 22, 2005, for the event dated
December 20, 2005)
|
|
10
|
.17
|
|
Mortgage Loan Agreement (Pool 1), dated November 14, 2005,
between the Registrant and UBS Real Estate Investments, Inc.
(incorporated by reference to Exhibit 10.25 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.1
|
|
Mortgage Loan Agreement (Pool 2), dated November 14, 2005,
between the Registrant and UBS Real Estate Investments, Inc.
(incorporated by reference to Exhibit 10.25.1 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.2
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 1 (incorporated by
reference to Exhibit 10.25.2 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.3
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 1 (incorporated by
reference to Exhibit 10.25.3 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.4
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 2 (incorporated by
reference to Exhibit 10.25.4 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.5
|
|
Guarantee of Recourse Obligations, dated November 14, 2005,
by the Registrant for the benefit of UBS Real Estate
Investments, Inc. with respect to Pool 2 (incorporated by
reference to Exhibit 10.25.5 to the Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.6
|
|
Interest Rate Lock Agreement (Pool 1), dated October 24,
2005, between the Registrant and UBS Real Estate Investments,
Inc. (incorporated by reference to Exhibit 10.25.6 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.17.7
|
|
Interest Rate Lock Agreement (Pool 2), dated October 24,
2005, between the Registrant and UBS Real Estate Investments,
Inc. (incorporated by reference to Exhibit 10.25.7 to the
Registrants
Form 8-K,
dated November 18, 2005, for the event dated
November 14, 2005)
|
|
10
|
.18
|
|
Purchase and Sale Agreement, dated October 12, 2005,
between the Registrant and Schuylkill, LLC (incorporated by
reference to Exhibit 10.26 to the Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.18.1
|
|
Amendment No. 1 to Purchase and Sale Agreement, dated
November 11, 2005, between the Registrant and Schuylkill,
LLC (incorporated by reference to Exhibit 10.26.1 to the
Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.18.2
|
|
Amendment No. 2 to Purchase and Sale Agreement, dated
November 18, 2005, between the Registrant and Schuylkill,
LLC (incorporated by reference to Exhibit 10.26.2 to the
Registrants
Form 8-K,
dated November 28, 2005, for the event dated
November 18, 2005)
|
|
10
|
.19
|
|
Revolving Credit Loan And Security Agreement, dated
December 23, 2005, between the Registrant and UBS Real
Estate Investments, Inc. (incorporated by reference to
Exhibit 10.27 to the Registrants
Form 8-K,
dated December 28, 2005, for the event dated
December 23, 2005)
|
139
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.20
|
|
Purchase and Sale Agreement, dated February 16, 2006,
between the Registrant and W2001 Pac Realty, LLC. (incorporated
by reference to Exhibit 10.28 to the Registrants
Form 8-K,
dated February 23, 2006, for the event dated
February 16, 2006)
|
|
10
|
.21
|
|
Purchase and Sale Agreement, dated May 18, 2006, between
the Registrant and EADS Associates Limited Partnership
(incorporated by reference to Exhibit 10.29 to the
Registrants
Form 8-K,
dated May 23, 2006, for the event dated May 18, 2006)
|
|
10
|
.22
|
|
Purchase and Sale Agreement, dated September 6, 2006,
between the Registrant and JER OHare Hotel, LLC
(incorporated by reference to Exhibit 10.30 to the
Registrants
Form 8-K,
dated September 8, 2006, for the event dated
September 6, 2006)
|
|
10
|
.23
|
|
Purchase and Sale Agreement, dated September 15, 2006,
between the Registrant and a partnership between Oak Hill
Capital Partners, The Blackstone Group, and Interstate Hotels
and Resorts (incorporated by reference to Exhibit 10.31 to
the Registrants
Form 8-K,
dated September 19, 2006, for the event dated
September 15, 2006)
|
|
10
|
.23.1
|
|
Loan Agreement, dated December 7, 2006, between the
Registrant and Countrywide Commercial Real Estate Finance, Inc.
(incorporated by reference to Exhibit 10.3.1 to the
Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.23.2
|
|
$212 Million Rate Protection Agreement, dated December 6,
2006, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.31.2 to the Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.23.3
|
|
$35 Million Rate Protection Agreement, dated December 6,
2006, between the Registrant and SMBC Derivative Products
Limited Branch (incorporated by reference to
Exhibit 10.31.3 to the Registrants
Form 8-K,
dated December 6, 2006, for the event dated
December 7, 2006)
|
|
10
|
.24
|
|
Loan Agreement, dated November 16, 2006, between the
Registrant and Morgan Stanley Mortgage Capital, Inc.
(incorporated by reference to Exhibit 10.32 to the
Registrants
Form 8-K,
dated November 20, 2006, for the event dated
November 16, 2006)
|
|
10
|
.25
|
|
Purchase and Sale Agreement, dated January 18, 2007,
between the Registrant and CNL Hotels and Resorts, Inc.
(incorporated by reference to Exhibit 10.33 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.1
|
|
Agreement and Plan of Merger, dated January 18, 2007,
between the Registrant, MS Resort Holdings LLC, MS Resort
Acquisition LLC, MS Resort Purchase LLC, and CNL
Hotels & Resorts, Inc. (incorporated by reference to
Exhibit 10.33.1 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.1.1
|
|
Amendment #1 to Agreement and Plan of Merger, dated
February 21, 2007, between the Registrant, MS Resort
Holdings LLC, MS Resort Acquisition LLC, MS Resort Purchase LLC,
and CNL Hotels & Resorts, Inc. (incorporated by
reference to Exhibit 10.33.1.1 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.1.2
|
|
Amendment #2 to Agreement and Plan of Merger, dated
April 4, 2007, between the Registrant, MS Resort Holdings
LLC, MS Resort Acquisition LLC, MS Resort Purchase LLC, and CNL
Hotels & Resorts, Inc. (incorporated by reference to
Exhibit 10.33.1.2 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.2
|
|
Guaranty Agreement, dated January 18, 2007, between the
Registrant and Morgan Stanley Real Estate Fund V U.S., L.P.
in favor of CNL Hotels and Resorts, Inc. (incorporated by
reference to Exhibit 10.33.3 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.3
|
|
Contribution and Rights Agreement, dated January 18, 2007,
between the Registrant and Morgan Stanley Real Estate
Fund V U.S., L.P. (incorporated by reference to
Exhibit 10.33.3 of
Form 10-K,
filed on March 9, 2007)
|
|
10
|
.25.4
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Junior Holder I LLC, Ashford Sapphire
Junior Holder II LLC, and Wachovia Bank, National
Association (incorporated by reference to Exhibit 10.33.4
to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.1
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Junior Mezz I LLC, Ashford Sapphire
Junior Mezz II LLC and Wachovia Bank, National Association
(incorporated by reference to Exhibit 10.33.4.1 to the
Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
140
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
10
|
.25.4.2
|
|
Loan and Security Agreement, dated as of April 11, 2007,
between Ashford Sapphire Senior Mezz I LLC, Ashford Senior
Mezz II LLC and Wachovia Bank, National Association
(incorporated by reference to Exhibit 10.33.4.2 to the
Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.3
|
|
Form of Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing (Floating Rate Pool) (incorporated by reference
to Exhibit 10.33.4.3 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.4
|
|
Form of Mortgage, Security Agreement, Assignment of Rents and
Fixture Filing (Fixed Rate Pool) (incorporated by reference to
Exhibit 10.33.4.4 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.4.5
|
|
Credit Agreement, dated as of April 10, 2007, by and among
Ashford Hospitality Limited Partnership, as Borrower, Ashford
Hospitality Trust, Inc., as Parent, Wachovia Capital Markets,
LLC, as Arranger, Wachovia Bank, National Association, as
Administrative Agent, Morgan Stanley Senior Funding, Inc. and
Merrill Lynch Bank USA, as Co-Syndication Agents, each of Bank
America, N.A. and Caylon New York Branch, as Co-Documentation
Agents and the financial institutions initially signatory
thereto and their assignees, as Lenders (incorporated by
reference to Exhibit 10.33.4.5 to the Registrants
Form 8-K,
dated April 13, 2007, for the event dated April 10,
2007)
|
|
10
|
.25.4.5.1
|
|
First Amendment to Credit Agreement between the Registrant and
Wachovia Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.1 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007).
|
|
10
|
.25.4.5.2
|
|
Guarantor Acknowledgement of the Registrant in favor of Wachovia
Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.2 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007).
|
|
10
|
.25.4.5.3
|
|
Revolving Note Agreements between the Registrant and Wachovia
Bank, National Association, dated May 22, 2007
(incorporated by reference to Exhibit 10.33.4.5.3 of
Form 8-K,
dated May 24, 2007, for the event dated May 22, 2007)
|
|
10
|
.25.4.6
|
|
Form of Guaranty for Fixed-Rate Pool between the Registrant and
Wachovia Bank, National Association, dated April 11, 2007
(incorporated by reference to Exhibit 10.33.4.6 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.7
|
|
Guaranty Agreement for Floating-Rate Pool between Registrant and
Wachovia Bank, National Association, dated April 11, 2007
(incorporated by reference to Exhibit 10.33.4.7 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.8
|
|
Guaranty Agreement for Junior Mezzanine Loan between Registrant
and Wachovia Bank, National Association, dated April 11,
2007 (incorporated by reference to Exhibit 10.33.4.8 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.9
|
|
Guaranty Agreement for Intermediate Mezzanine Loan between
Registrant and Wachovia Bank, National Association, dated
April 11, 2007 (incorporated by reference to
Exhibit 10.33.4.9 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.4.10
|
|
Guaranty Agreement for Senior Mezzanine Loan between Registrant
and Wachovia Bank, National Association, dated April 11,
2007 (incorporated by reference to Exhibit 10.33.4.10 of
Form 10-Q,
filed on May 9, 2007)
|
|
10
|
.25.5
|
|
Stock Purchase Agreement, dated April 11, 2007, between the
registrant and Wachovia Investment Holdings, LLC (incorporated
by reference to Exhibit 10.33.5 to the Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.5.1
|
|
Investor Rights Agreement, dated April 11, 2007, between
the registrant and Wachovia Investment Holdings, LLC
(incorporated by reference to Exhibit 10.33.5.1 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
|
10
|
.25.5.2
|
|
Letter Agreement, dated April 10, 2007, between the
registrant and Security Capital Preferred Growth Incorporated
(incorporated by reference to Exhibit 10.33.5.2 to the
Registrants
Form 8-K,
dated April 12, 2007, for the event dated April 11,
2007)
|
141
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
|
*10
|
.26
|
|
Investor Program Agreement, dated January 22, 2008, between
the registrant and Prudential Investment Management, Inc.
|
|
*10
|
.26.1
|
|
Form of Joint Venture Agreement to the Investor Program
Agreement, dated January 22, 2008, between the registrant
and Prudential Investment Management, Inc.
|
|
*10
|
.26.2
|
|
Form of Loan Servicing Agreement to the Investor Program
Agreement, dated January 22, 2008, between the registrant
and Prudential Investment Management, Inc.
|
|
*10
|
.26.3
|
|
Limited Liability Company Agreement of PIM Ashford
Venture I, LLC, dated February 6, 2008, between the
registrant and Prudential Investment Management, Inc.
|
|
*21
|
.1
|
|
Registrants Subsidiaries Listing as of December 31,
2007
|
|
*23
|
.1
|
|
Consent of Ernst & Young LLP
|
|
*31
|
.1
|
|
Certification of the Chief Executive Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*31
|
.2
|
|
Certification of the Chief Financial Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*31
|
.3
|
|
Certification of the Chief Accounting Officer Required by
Rule 13a-14(a)
of the Securities Exchange Act of 1934, as amended
|
|
*32
|
.1
|
|
Certification of the Chief Executive Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
|
*32
|
.2
|
|
Certification of the Chief Financial Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
|
*32
|
.3
|
|
Certification of the Chief Accounting Officer Required by
Rule 13a-14(b)
of the Securities Exchange Act of 1934, as amended (In
accordance with Sec Release
33-8212,
this exhibit is being furnished, and is not being filed as part
of this report or as a separate disclosure document, and is not
being incorporated by reference into any Securities Act of 1933
registration statement.)
|
142