Hello and welcome to the Ashford Hospitality Trust's Third Quarter 2024 Results Conference Call. All lines have been muted to prevent any background noise. Following the speakers' remarks, there will be a question-and-answer session.

Good day, everyone and welcome to today's conference call to review results for Ashford Hospitality Trust for the third quarter of 2024 and to update you on recent developments. On the call today will also be Stephen Zsigray, President and Chief Executive Officer and Chris Nixon, Executive Vice President and Head of Asset Management. The results, as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were distributed yesterday afternoon in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the Safe Harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully disclosed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on November 5th, 2024 and may also be accessed through the company's website at www.ahtreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the third quarter ended September 30, 2024 with the third quarter ended September 30, 2023. I will now turn the call over to Stephen Zsigray. Please go ahead.

Good morning and welcome to our call. After my introductory comments, Deric will review our third quarter financial results and then Chris will provide an operational update on our portfolio. I'll begin by reiterating how pleased I am with the significant progress that we've made executing on our plan to pay off our strategic financing. We announced this plan back in January and since then we've done exactly what we said we would do. We've sold over $310 million of hotels. We've completed a refinancing of our Renaissance Nashville that generated significant excess proceeds and we've now raised approximately $173 million of gross proceeds from the sale of our non-traded preferred stock. We've used some of the proceeds from each of these efforts to pay down our strategic financing by more than $100 million since the beginning of the year to approximately $82 million today. Additionally, we announced this morning that we've agreed to an amendment to the strategic financing. This amendment provides the company with an opportunity for a discounted exit fee if the financing is fully paid off by December 15th, provided that the outstanding balance has been reduced to $50 million or less by next Friday, November 15th. We are currently working on a couple of transactions that we hope will close in the near term and we continue to believe we have a viable path to paying off this financing entirely before the end of the year. Operationally, in light of underwhelming revenue growth across the lodging industry through the first three quarters, our property managers are aggressively driving sales and managing expenses. We are pleased to announce that October saw our highest monthly top-line growth of any month this year with RevPAR growth of 4.6% versus October 2023. We believe we will also begin to see the benefits of additional expense management initiatives in the fourth quarter and more fully throughout 2025. We are also excited about the imminent conversions at our La Concha Hotel in Key West and Le Pavillon Hotel in New Orleans, as well as our newest addition to the portfolio, the Le Meridien Fort Worth of Downtown. Regarding the La Concha Hotel in Key West, we are on track to convert this hotel by the end of the year to the Marriott Autograph Collection. Upon conversion, it will be rebranded to Autograph La Concha and we are creating a distinctive theme and style for the hotel that is commensurate with the upper upscale luxury Autograph product. This includes transforming the lobby, bar and restaurant, as well as upgrading the exterior, guest rooms, guest bathrooms, corridors, pool and meeting space. Ideally located in Old Town Key West, the transformation is expected to elevate the property into a desirable niche in the high barrier to entry, high RevPAR U.S. market. Post-conversion, we believe the new Autograph property should realize a 20% to 30% RevPAR premium compared to pre-conversion. We're also on track to convert our Le Pavillon Hotel in New Orleans to the Marriott Tribute portfolio by the end of 2024. This up branding includes renovations to guest rooms, guest bathrooms, restaurant, lobby bar, as well as extensive exterior work. Located on historic Poydras Street, it is a prime location in proximity to major demand generators in Downtown, New Orleans. Post-conversion, we believe the new Tribute portfolio property should realize a 10% to 20% RevPAR premium, compared to pre-conversion. Additionally, we have also recently opened the Le Meridien, Fort Worth Downtown, following a redevelopment of the 13-storey historic building. Situated in Downtown Fort Worth, the 188-room hotel is located within easy walking distance of the Fort Worth Convention Center and close to local landmarks such as Trinity Park and Sundance Square. The property features a rooftop lounge, French inspired cuisine, over 5,000 square feet of function space and floor to ceiling windows designed to offer scenic views of the city's downtown. It's a great addition to our portfolio. It's already running well ahead of expectations and we're very excited about the prospects for this property. As we look forward, completing the repayment of our strategic financing will allow the company to finally turn the page on the COVID era. As mentioned, we are keenly focused on maximizing the performance, profitability and value of our hotels. Perhaps equally importantly, the company's advisor, Ashford Inc. has also provided an unwavering commitment to substantially improve the profitability of Ashford Hospitality Trust over the coming year through corporate cost reductions, strategic portfolio turnover and continued deleveraging. We will have more information to share regarding those efforts in the coming months and we are excited about the future of the company, especially given increasingly attractive industry fundamentals, several coming years of limited supply growth and improving transaction and financing markets. I will now turn the call over to Deric to review our third quarter financial performance.

Thanks, Stephen. For the third quarter, we reported a net loss attributable to common stockholders of $63.2 million or $12.39 per diluted share. For the quarter, we reported AFFO per diluted share of negative $1.71. Adjusted EBITDAre for the quarter was $52.4 million. At the end of the third quarter, we had $2.7 billion of loans with a blended average interest rate of 8%, taking into account the interest rate caps. Considering the current level of sulfur and the corresponding interest rate caps, approximately 83% of our debt is now effectively fixed and 17% is effectively floating. We ended the quarter with cash and cash equivalents of $119.7 million and restricted cash of $114.3 million. The vast majority of that restricted cash is comprised of lender and manager-held reserve accounts and $2.4 million related to trapped cash held by lenders. At the end of the quarter, we also had $26.7 million due from third-party hotel managers. This primarily represents cash held by one of our property managers, which is also available to fund hotel operating costs. We ended the quarter with net working capital of approximately $160 million. As of September 30, 2024, our consolidated portfolio consisted of 73 hotels with 17,644 rooms. After taking into account, our recently completed one for 10 reverse stock split, our share count at the end of the quarter consisted of approximately 5.6 million fully diluted shares outstanding, which is comprised of 5.4 million shares of common stock and 0.2 million OP units. While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend in 2024. This concludes our financial review and I would now like to turn it over to Chris to discuss our asset management activities for the quarter.

Thank you, Deric. For the third quarter, comparable hotel RevPAR for our portfolio decreased 1% over the prior-year quarter. While achieving growth in RevPAR has been challenging, our team has been actively working with our property managers to roll out several initiatives to grow ancillary revenue, which increased 15% per occupied room compared to the prior-year quarter. Corporate transient is improving with year-to-date corporate revenue up 9% compared to the prior-year period. Additionally, we are seeing an acceleration in attendance at major events and decreased price sensitivity around those events. We've also benefited from non-annual events. For example, in August, when Chicago hosted the Democratic National Convention, our Silversmith Hotel experienced an 85% increase in group room revenue and a 50% increase in group ADR. I will now go into more detail on some of the achievements completed throughout the quarter. Many of our historically group dominant markets are operating at full steam significantly surpassing levels seen in 2019. Group room revenue for the full-year 2024 is pacing ahead of last year by 2% and group room revenue for the full-year 2025 is pacing ahead by 8% with all quarters pacing ahead of the prior year. We are pleased with the positive outlook and continue to build momentum as evidenced by our group lead volume, which increased by 4% compared to the prior-year quarter. Our revenue optimization team has worked diligently with the hotel teams to capitalize on the positive 2025 group outlook seen across the industry to grow group block sizes and extend the booking window. Additionally, our team has set optimal group mix targets across the portfolio for sales teams and is meticulously auditing spending for digital channels and event space demand generators. This process has positioned our two largest hotels in favorable positions with Marriott Crystal Gateway and Renaissance Nashville group room revenue pacing ahead by 14% and 7%, respectively, for 2025. As Stephen mentioned, we opened the Le Meridien, Fort Worth during the last week of August. The 14-storey 188-room full service hotel is well situated near local demand generators and attractions. As background, we completed a comprehensive redevelopment of a property that was abandoned since the mid-2000s. The redevelopment features two food and beverage outlets including an upscale lobby level restaurant and a stunning rooftop lounge with views of Fort Worth's downtown skyline. Situated adjacent to our Hilton Fort Worth property, the historically registered hotel is also managed by Remington, resulting in operational synergies. The initial performance of this upscale boutique property has been strong out of the gate. Total revenue for the first full month of operations was more than double that of our underwriting. This performance was bolstered in part from a local university parents weekend that drove market compression. Although the hotel has only been open for a few weeks, the property team was able to push a $20 ADR premium over the market during that weekend. Turning to property tax during the third quarter, we had successful appeals at several locations and have reduced total real estate assessments by over $100 million with total estimated tax payment savings of $1.7 million. The largest reduction in subsequent savings were generated from our appeal of our current assessment on the Marriott Sugar Land. The Appraisal Review Board agreed to reduce the assessment by over $31 million, which resulted in an estimated tax savings of approximately $600,000. Also, during the quarter, we successfully resolved prior litigation on the Marriott DFW Airport, which will generate refunds of approximately $120,000. In late September and early October, a number of markets and hotels were impacted by hurricanes Helene and Milton in the Southeastern United States. As always, we believe it's important for our hotels to stay open as a place of refuge and service the communities during these storms. We have a lot of experience here and we prioritize the safety and well-being of the hotel employees and guests. We've seen time and time again, that keeping our hotels open not only provides a safe haven for the local community, hotel staff and disaster relief crew members, but positions the properties to be able to quickly mitigate any damage and capitalize on demand. During the third quarter, we are pleased to say that all of our hotels remained open. Our risk management team proactively handles hurricane procedures by identifying and notifying potentially impacted hotels allowing them ample time to prepare. We then preemptively align with the hotels on preparation procedures such as identifying low spots, adding sandbags, removing debris and strapping down equipment. We ensure that all hotels have access to generators in case of a power outage. These procedures have helped us to forge strong relationships with disaster relief companies, who provide quick aid to our hotels with cleanup. Overall, despite minor damage occurring at some of the hotels, our approach toward the hurricanes resulted in minimal operational impact and positive financial results during the quarter. Moving on to capital expenditures during the third quarter of 2024, we completed both the guestroom and public space renovations for two strategic conversions. The $35 million transformation of La Concha, Key West into an Autograph Collection Hotel and the $19 million renovation of Le Pavillon, New Orleans into a Tribute Portfolio Hotel. We anticipate both properties to fully convert their respective brand by year-end. Once finalized, both hotels will benefit significantly from Marriott's extensive sales, distribution and loyalty platforms. We've also made significant progress on the extensive renovation of both guest rooms and public spaces at the Embassy Suites Dallas with the project slated for completion later this year. Additionally, we initiated a comprehensive guest room renovation at the Embassy Suites West Palm Beach. For 2024, we anticipate spending between $80 million and $100 million on capital expenditures as we continue to invest in key renovations and strategic upgrades across our portfolio. As mentioned earlier, group business has continued to show growth. We are experiencing strong demand in various markets and our ancillary revenue initiatives have performed well. We remain optimistic about the outlook for this portfolio and we'll now open up the call for Q&A.

Thank you. Your first question comes from Tyler Batory with Oppenheimer. Please go ahead.

Hi. good morning. This is Jonathan on for Tyler. Thanks for taking my questions. First one from me, Chris, helpful commentary on the group side, but maybe, could you walk us through what you saw on the leisure and BT side for demand in the quarter, maybe on a monthly basis? Has it been kind of a continuation of trends from last quarter? And also, was there any noticeable pickup post Labor Day on the BT side?

Yes, thank you, Jonathan. I’d be glad to discuss that. We are noticing a decline in leisure demand. Weekend retail activity has been weak for us and other hotels in our areas, indicating ongoing softness. This trend is not necessarily worsening; it remains consistently low. On the other hand, corporate business is doing well. Business Travel for our portfolio increased by over 4% in the third quarter compared to last year, with gains coming equally from occupancy and average daily rate. We expect this trend to continue strengthening as we move forward. There was a slight uptick in activity after the Labor Day weekend. However, one area where we experienced decline this quarter was in government travel, likely due to some uncertainty surrounding the election, which affected our hotels in Washington, D.C. We are optimistic that now that the election has concluded, this segment will begin to rebound, as we anticipate.

Okay, very helpful. And then maybe, switching gears there, Stephen the release this morning obviously a positive update. You noticed some additional transactions in the coming weeks. I mean, I'm hoping you can provide some details on kind of the type of those transactions. I'm assuming they're asset sales, you're optimistic and they can close kind of before that December deadline. Just maybe hoping you could add any color on that?

Yes. It is a combination of transactions. We are still considering some asset sales and refinancings. I'm cautious about discussing the details of these transactions prematurely, but I believe that in the coming weeks, we will have plenty to announce regarding them.

Okay, great. And then maybe last one from me, if I could, kind of on that line. Can you provide some additional color on the transaction environment more broadly? Has there been any noticeable pickup or changes in demand as of late? Any changes in the bid ask spread, this is in large valuations versus smaller assets? Any color there you can provide would be helpful given the move in interest rates as of late?

Yes, following the rate cut in September, we've observed an increase in interest, especially from institutional buyers. There's been more interest in various assets, including those we've marketed and some that have garnered inbound inquiries. The election and the uncertainty surrounding it contributed to significant market uncertainty. Now that much of that is behind us, we anticipate continued tightening of the bid-ask spread and further improvements in the financing and transaction markets that depend on it.

Okay. That's very helpful color. I appreciate all the color and the time. Thanks. Thank you very much.

Oh, my apologies. We have a question from Michael Bellisario with Baird. Your line is open.

Good morning.

Hey, good morning.

Good morning, Michael.

Thanks for taking my question. I think in the prepared remarks, you mentioned some cost savings or the potential for cost savings related to, I think you said Ashford Inc. Could you just elaborate on that? Is that something that would be at the property level related to Remington and management fees, or is that something around the advisory agreement related to Ashford Inc.?

So, yes, look, our property managers are doing everything they can to manage expenses at the property level. We'll have more details to announce on this as we move forward over the next couple of months. But Ashford Inc. is very, very committed to the profitability of Ashford Hospitality Trust and making significant improvement there as we look to 2025 and beyond. And so, I believe we'll see some corporate-level cost savings as well, in addition to what we're getting from the portfolio.

And is it too early in the process to quantify that at this point?

Yes. I think it's a little bit premature. Obviously, there will be negotiations between Ashford Inc. and Ashford Hospitality Trust as it relates to this, and we certainly will comment as that starts to come into view and put out more details around what those changes look like.

Yes. And Mike, this is Deric. I'd just also comment. We're right in the middle of budget season. And really, the comment was just meant to convey the level of attention and commitment that Ashford Inc. has in making this platform successful and thriving platform. And so, that's what we're focused on doing.

Got it. Thanks for that. And then just last one from me, maybe fast forward to the end of the year, you’ve paid off Oaktree. Can you just remind us of your strategic priorities and how you expect to allocate capital in 2025 once you've completed these near-term transactions and paid off the Oaktree financing? Thank you.

Sure, sure. Strategic priorities for us, once we've completed the Oaktree payoff, the first one is, we have a number of upcoming debt maturities in the next 12 months. I think priority one for us is getting those maturities pushed out, getting refinancings done, getting extensions done throughout the portfolio. As we start to look forward and we're driving performance on the existing portfolio, I do think there will be opportunities within that portfolio to strategically turn over some of those assets. Again, the sales we've done to date through 2024 have been geared towards paying off Oaktree. I think as we look forward it will be more strategic and looking to reposition the portfolio in some ways. And we're excited. The industry fundamentals are really lining up nicely. The supply growth is something that I think everybody's harped on, but it's virtually nil for the next two or three years. And I think the other thing that very few people have touched on so far is the return to office. And we saw Amazon do it. We've seen 3M now comment and do something similar. I think as more and more of these corporates are starting to bring people back to centralized locations. I think that could be a tremendous driver for that business transient segment that I think we all kind of assumed was tapped out. And so, we've seen great strides on the group side. I think there's opportunity on the business side and we'll look to take advantage of that with Ashford Trust portfolio, which has really a strong exposure to those segments.

Very helpful. Thank you.

This concludes the question-and-answer session. I'll turn the call to management for closing remarks.

Thank you for joining our call. We look forward to speaking with you again, next quarter.

This concludes today's conference call. Thank you for joining. You may now disconnect your lines.