Ashford Hospitality Trust Inc Aktie

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ashford Hospitality Trust Fourth Quarter 2025 Results Conference Call. [Operator Instructions]

I would now like to turn the call over to Allison Beach, Director of Public Relations. Please go ahead.

Good morning, and welcome to today's conference call to review results for Ashford Hospitality Trust for the fourth quarter and full year 2025 and to update you on recent developments.

On the call today will be Stephen Zsigray, President and Chief Executive Officer; Deric Eubanks, Chief Financial 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 discussed 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 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 February 25, 2026, 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 fourth quarter and full year ended December 31, 2025, with the fourth quarter and full year ended December 31, 2024.

I will now turn the call over to Stephen Zsigray. Please go ahead.

Good morning, and thank you for joining us on today's call. Following my introductory comments, Deric will provide a review of our financial results, and Chris will provide an operational update on our portfolio.

Before we begin, I'd like to remind everyone that in early December, we announced that the company has formed a special committee to evaluate strategic alternatives to maximize shareholder value, including a potential transaction. As we highlighted in that press release, we remain frustrated by the discrepancy between the value of our underlying portfolio and the market value of our common stock, and the Board has tasked the special committee with proactively exploring alternatives to bridge that gap.

In the interim, we will continue to execute on our strategy of driving outsized performance while pursuing opportunistic dispositions to deleverage, improve cash flow and maximize shareholder value. Any material updates will be publicly disseminated, but we do not have further details to share at this time. Our fourth quarter and full year financial results reflect the combined impact of 2 competing realities. On one hand, we felt the ongoing pressures across the lodging industry, industry-wide negative RevPAR growth and margin compression, substantial reductions in government spend, elevated interest rates and increased CapEx demands have created a challenging environment for owners. On the other hand, we've made tremendous progress with our GRO AHT initiatives, and our property managers have worked diligently to maximize revenues and minimize expenses.

Despite numerous headwinds in 2025, we are pleased that for the full year, our portfolio delivered positive growth in comparable total revenues while achieving 2.4% growth in comparable hotel EBITDA. Our efforts also extended to corporate G&A, where we achieved more than $13 million in year-over-year improvement. In total, we estimate that the GRO AHT initiatives contributed over $40 million in EBITDA improvement in 2025, and we expect to continue building on these efforts moving forward.

Beyond our focus on driving outsized performance, we continue to execute on strategic dispositions to strengthen our capital structure, improve cash flow and maximize shareholder value. Since paying off our remaining corporate level debt last February, we've now completed the sale of 6 hotels, including the Hilton Houston Clear Lake; The Residence Inn, Evansville; The Residence Inn, Sorrento Mesa; the Le Pavillon Hotel in New Orleans; the Embassy Suites in Houston and the Embassy Suites in Austin.

In total, these sales generated approximately $145 million in sales proceeds, representing a blended 3.9% trailing cap rate while also eliminating nearly $50 million in anticipated capital expenditures. Proceeds were used primarily to pay down mortgage debt, resulting in approximately $5 million in improvement to annualized portfolio cash flow after debt service.

We also recently announced agreements to sell the La Posada de Santa Fe Resort & Spa for $57.5 million and the Hilton St. Petersburg Bayfront for $96 million, both of which we expect to close in the coming weeks. And yesterday, signed an agreement to sell the Embassy Suites Palm Beach Gardens for $41 million. Collectively, these 3 sales represent a blended 6.9% trailing cap rate and are expected to save an additional $45 million in anticipated capital expenditures.

Opportunistic dispositions will remain a core component of our strategy in 2026 as we believe there are several additional assets in the portfolio that can yield similarly positive impact on leverage, cash flow after debt service and future capital expenditures. While we may not ultimately transact on all of them, we are currently marketing or negotiating off-market transactions on 18 additional hotels.

In addition to these sales, we recently announced a maturity default on our JPM8 mortgage loan. This $325 million loan is secured by 8 hotels that generated approximately $20.2 million of net operating income in 2025. While we have engaged with a special servicer and will continue to work towards a favorable resolution, disposition of these assets for the balance of the debt would represent a 6.2% trailing cap rate and would yield many of the same benefits for the portfolio as our ongoing sales efforts in terms of cash flow improvement and future CapEx savings.

Looking ahead, while liquidity will remain constrained as we execute our plan, we expect that our continued focus on performance, combined with strategic low cap rate dispositions will result in a leaner, stronger portfolio and will position the company to pursue accretive growth opportunities in the future.

I will now turn the call over to Deric to review our fourth quarter and full year financial performance.

Thanks, Stephen. For the fourth quarter, we reported a net loss attributable to common stockholders of $78.3 million or $12.33 per diluted share. For the full year, we reported a net loss attributable to common stockholders of $215 million or $35.99 per diluted share. For the quarter, we reported AFFO per diluted share of negative $2.45. And for the full year, we reported AFFO per diluted share of negative $5.66. Adjusted EBITDAre for the quarter was $40.4 million and $221.3 million for the full year.

At the end of the fourth quarter, we had $2.6 billion of loans with a blended average interest rate of 7.7%. Approximately 5% of our debt is fixed and 95% is floating. In January 2026, we extended our Highland mortgage loan secured by 18 hotels. As a condition to the extension, the loan was paid down by $10 million to a current balance of $723.6 million or approximately 65% of the appraised value and has a final maturity date of July 9, 2026. We ended the quarter with cash and cash equivalents of $66.8 million and restricted cash of $149.6 million. The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. At the end of the quarter, we also had $25.7 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 $103.2 million.

As of December 31, 2025, our consolidated portfolio consisted of 68 hotels with 16,500 net rooms. Our share count currently stands at approximately 6.6 million fully diluted shares outstanding, which is comprised of 6.5 million shares of common stock and 0.1 million OP units.

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. During the fourth quarter, comparable hotel RevPAR decreased 1.8% compared to the prior year period. This performance was largely driven by the federal government shutdown that began in October, which resulted in declines in government-related demand. Government room nights declined 27.9% during the fourth quarter compared to the prior year period. Given that Washington, D.C. represents over 14% of our total key count, this shutdown had an outsized impact on our portfolio. Excluding Washington, D.C., comparable hotel RevPAR was flat and total revenue increased slightly compared to the prior year period. Additionally, results were impacted by the absence of onetime events that benefited portfolio performance in the prior year, including the 2024 presidential election in Washington, D.C.

Performance was further pressured by ongoing demand disruptions, including the closure of a major convention center in Austin, which constrained group and convention demand for 3 of our properties during the quarter. Despite these headwinds, we are pleased with the portfolio's performance for the full year 2025.

Full year total revenue increased 0.8% compared to the prior year period, driven by growth in other revenue, which improved 12.9% compared to the prior year period. Full year hotel EBITDA increased 2.4% and hotel EBITDA margin expanded by over 40 basis points compared to the prior year period. These results reflect the impact of our focused operational initiatives and positions us well as we move into 2026.

Group revenue declined 1.1% for full year 2025 compared to the prior year period, including a 3.8% decline in the fourth quarter compared to the prior year period. Excluding the Washington, D.C. market, group room revenue increased 1.6% for full year 2025 compared to the prior year period. Our resort assets performed particularly well in 2025 with group room revenue increasing 9% to the prior year period. A standout performer was Renaissance Palm Springs, our second largest group hotel, which delivered a 16.9% increase in group room revenue compared to the prior year period. Proactive prospecting and upselling efforts along with strong partnerships, including Visit Greater Palm Springs, drove a record year for the group segment of the property.

Looking ahead to 2026, group demand across the portfolio is gaining momentum with group room revenue pacing ahead 1% in the first quarter of 2026 and 3.3% in the second quarter of 2026 compared to the prior year period. In addition, full year 2026 group rooms revenue pace has continued to accelerate on a quarter-over-quarter basis. Group ADR is also pacing ahead across all quarters in 2026 compared to the prior year period. We anticipate strong group demand in 2026, supported by a robust pipeline of event-driven opportunities, including the Super Bowl in Santa Clara and the 2026 FIFA World Cup. The 2026 FIFA World Cup is expected to provide a meaningful boost to host city economies next summer and approximately 42% of our portfolio's room count is located within these markets, positioning us well to benefit from the anticipated increase in demand.

Our GRO AHT initiative drove meaningful operational and financial improvements across the portfolio during the full year 2025. As mentioned earlier, full year 2025 hotel EBITDA margin expanded by over 40 basis points compared to the prior year period, supported by disciplined cost controls and strong growth in high-margin ancillary revenue. Close collaboration with our property managers, these initiatives generated approximately $7.7 million of incremental other revenue for the full year compared to the prior year period, with other revenue increasing 11.5% on a per occupied room basis.

GRO AHT is a strategic framework designed to improve hotel EBITDA and overall portfolio profitability through more diversified revenue generation and enhanced operational efficiency. In partnership with our largest property manager, Remington, and our key brand partners, we continue to execute targeted actions across the portfolio, including the rollout of new ancillary revenue streams and improvements in food and beverage profitability. Collectively, these actions help protect performance in a softer demand environment and position the portfolio for continued improvement.

During the fourth quarter, our recent hotel opening delivered strong results in the portfolio, underscoring the value created through disciplined capital investment and strategic brand positioning. Le Meridien Fort Worth Downtown, which opened in August 2024 as a newly redeveloped premium boutique hotel in the heart of Downtown completed its first full quarter with a comparable prior year period in the fourth quarter. The property benefited from a significantly improved group mix, which established a strong base of demand and resulted in group room revenue growth of 201.2% compared to the prior year period. This base layer of demand provided the opportunity to push rate in our direct booking channels.

Additionally, we are seeing increased revenue from its food and beverage outlets, including its signature rooftop lounge, which continues to gain traction as a local destination. Food and beverage revenue grew 59.4% in the fourth quarter compared to the prior year period and contributed to a 48.3% increase in total revenue compared to the prior year period. These results underscore the strong ramp trajectory of the asset as it continues to progress towards stabilization.

Moving on to capital expenditures. In 2025, we completed guest room renovations at Courtyard Bloomington and Embassy Suites West Palm Beach, along with public space enhancements at Hilton Garden Inn, Austin and Hampton Inn, Evansville. We also commenced a public space renovation at Westin Princeton in the fourth quarter to further enhance the property's competitive positioning.

Additionally, I'd like to highlight upcoming brand conversions at 2 properties, Sheraton Mission Valley and Sheraton Anchorage, which are expected to convert to Hyatt Regency Hotels. Across these 2 projects, we expect to invest over $70 million, and both conversions are intended to benefit from Hyatt sales, distribution and loyalty platforms.

In total for the portfolio, we invested approximately $71 million on capital expenditures in 2025. For 2026, we anticipate spending between $90 million and $110 million on capital expenditures. In summary, our GRO AHT initiatives are delivering meaningful hotel EBITDA growth, underscored by a disciplined and targeted capital investment strategy. We remain optimistic about the outlook of this portfolio. This concludes today's call. Thank you for joining.

Ladies and gentlemen, this concludes today's conference call. We thank you for participating. You may now disconnect your lines.

Good morning, and welcome to the Ashford Hospitality Trust Third Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to [ Allison Beach ], Director of Public Relations. Thank you. Please go ahead.

Good morning, and welcome to today's conference call to review results for Ashford Hospitality Trust for the third quarter of 2025, and to update you on recent developments. On the call today will be Stephen Zsigray, President and Chief Executive Officer; Deric Eubanks, Chief Financial 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 discussed 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 registration statement and prospectus, which can be found at www.sec.gov.

In addition, certain terms 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 4, 2025, 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, 2025, with the third quarter ended September 30, 2024.

I will now turn the call over to Stephen Zsigray. Please go ahead.

Good morning, everyone, and thank you for joining us today. After my introductory comments, Deric will review our third quarter financial results, and then Chris will provide an operational update on our portfolio.

Our third quarter performance was highlighted by comparable hotel EBITDA growth of 2%, with continued economic headwinds driving the RevPAR declines and pressuring margins industry-wide in the quarter, we're very pleased with our resilient operating performance, which reflects the impact of the strategic decisions our team has made over the past several quarters, and the strength of our high-quality, geographically diverse portfolio.

In late 2024, we announced a transformative initiative aimed at driving $50 million in run rate EBITDA improvement that we refer to as [ Grow AHT ]. Realizing outsized improvement in property level performance is critical to achieving that goal. Despite challenging industry conditions, we are continuing to see the benefits of the tremendous efforts that our asset management team and property managers have made to drive total revenue growth while aggressively managing operating expenses.

In addition to solid property level performance, we've also benefited from a number of corporate cost saving measures that our adviser, Ashford Inc., has implemented for Ashford Trust. Several [ Grow AHT ] initiatives remain underway, and we've seen meaningful impact from these efforts through the third quarter. Year-to-date, despite dispositions accounting for a $65.5 million decline in total hotel revenue compared to the prior year, corporate adjusted EBITDAre declined just $10.1 million.

We have also continued to make improvements to our capital structure. In July, we extended our Highland mortgage loan secured by 18 hotels. The extension provides for an initial maturity in January 2026, and an additional 6-month extension options subject to the satisfaction of certain conditions with a final maturity date in July 2026. Following substantial tightening in CMBS spreads over the past several months, we are actively pursuing a longer-term refinancing of this loan and recently completed the refinancing of the Renaissance Nashville that we expect to save the company $2 million to $3 million per year in interest expense.

Lastly, we continued to make progress on strategic dispositions. Reflecting our continued focus on creating shareholder value via multiple avenues, in early August, we completed the previously announced sale of the Hilton Houston NASA Clear Lake for $27 million, and the sale of the Residence in Evansville for $6 million. Separately, during the quarter, we signed a definitive agreement to sell the 150-room residents in San Diego Sorrento Mesa for $42 million, or $280,000 per key. The sale was completed in October. Combined, these 3 sales achieved a very attractive blended cap rate of 5.3% on trailing 12-month net operating income.

With the majority of sales proceeds applied to paying off mortgage debt, we expect these sales to improve annualized cash flow after debt service by approximately $2 million. We also expect to save an additional $36 million in projected capital expenditures that would have been spent on these assets in the coming years.

We have also identified several additional potential asset sales that we believe could have a similarly positive impact on leverage, cash flow after debt service and future capital expenditures. While we may not ultimately transact on all of them, we currently have 8 additional assets being marketed for sale, and have potential buyers conducting diligence on 2 off-market transactions.

Looking ahead to the remainder of 2025 and into early 2026, we expect to benefit significantly from recent and potential future interest rate cuts. With approximately $2.5 billion of floating rate mortgage debt, and none of our interest rate caps currently in the money, each 25 basis point cut in interest rates would save the company over $6 million in annual interest expense, or approximately $1 per fully diluted share. That said, we remain focused on controlling what we can control by driving outsized performance while strengthening our capital structure and exploring opportunistic dispositions to better position the company moving forward.

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 $69 million, or $11.35 per diluted share. For the quarter, we reported AFFO per diluted share of negative $2.85. Adjusted EBITDAre for the quarter was $45.4 million. At the end of the third quarter, we had $2.6 billion of loans with a blended average interest rate of 8%. Approximately 5% of our debt is fixed, and approximately 95% is floating. We ended the quarter with cash and cash equivalents of $81.9 million and restricted cash of $166.9 million. The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. Our restricted cash increased $12 million from the previous quarter, and the vast majority of that cash is set aside for future capital expenditures.

At the end of the quarter, we also had $27.4 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 $144.3 million. As of September 30, 2025, our consolidated portfolio consisted of 70 hotels, with 16,876 net rooms. Our share count currently stands at approximately 6.3 million fully diluted shares outstanding, which is comprised of 6.2 million shares of common stock, and 0.1 million OP units. While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend in 2025.

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. Third quarter comparable hotel RevPAR decreased 1.5%, and comparable total revenue increased 0.2% compared to the prior year period. Additionally, during the third quarter, comparable hotel EBITDA grew 2% compared to the prior year period. We continue to collaborate closely with our property managers on initiatives designed to enhance profitability, driving high-margin ancillary revenue growth and achieving meaningful expense reductions across the portfolio.

These revenue streams grew by approximately $1.7 million during the third quarter compared to the prior year period. Additionally, labor efficiency improved 2.6% on a per occupied room basis compared to the prior year period. These improvements underscore the strong execution of our strategy to drive higher margin, diversified revenue and sustained profitability gains.

Government room nights declined approximately 18.8% during the third quarter compared to the prior year period. The Washington, D.C. market represents just over 14% of our total key count. Excluding the Washington, D.C. market, third quarter comparable hotel RevPAR was down only 0.3%, which outperformed the broader U.S. upper upscale segment. Additionally, several onetime events that benefited our portfolio performance in 2024, further muted performance in 2025, such as the 2024 Democratic National Convention in Chicago, and closure of a major convention center in Austin this year, creating additional headwinds for certain properties this quarter. Despite these headwinds, during the third quarter, our portfolio was successful in expanding hotel EBITDA margin by 46 basis points compared to the prior year period.

Group room revenue is currently pacing ahead 0.5% for the full year 2025 compared to the prior year. During the third quarter, group revenue decreased 0.4% compared to the prior year period. Excluding the Washington, D.C. market, group room revenue increased 1.3% during the third quarter compared to the prior year period, underscoring the strength of demand across the portfolio.

Our resort assets performed particularly well during the third quarter with group room revenue having increased 11% compared to the prior year period. A standout performer was the Renaissance Palm Springs, our highest group volume resort property, which achieved a 34.5% increase in group room revenue during the third quarter compared to the prior year period. Proactive prospecting and strong partnerships with visit, Greater Palm Springs led to key group wins.

Looking ahead to the fourth quarter of 2025, the portfolio's group demand remained strong, with group room revenue pacing ahead 4.4% in the prior year period. Additionally, our sales pipeline is strengthened with group leads increasing compared to the prior year quarter. We expect strong group demand across the portfolio in 2026, supported by a robust pipeline of event-driven opportunities, most notably the 2026 FIFA World Cup. This global event is anticipated to deliver a significant boost to host city economies next summer, and approximately 42% of our portfolio's room count are located within these markets, positioning us well to capture the anticipated surge in demand.

Our [ Grow AHT ] initiative has driven meaningful operational and financial improvements across the portfolio. As mentioned earlier, third quarter hotel EBITDA margin expanded by approximately 46 basis points compared to the prior year period. Additionally, other revenue increased 9% on a per occupied room basis, reflecting continued success in our efforts to capture ancillary revenue opportunities. Grow AHT initiative is a strategic framework aimed at improving hotel EBITDA and portfolio profitability through stronger cost controls and more diverse revenue generation.

In collaboration with our largest property manager, Remington, and our key brand partners, we have continued to execute a focused strategy aimed at expanding high-margin revenue streams and driving greater operational efficiency throughout the portfolio. These efforts include new ancillary revenue streams, improved food and beverage margin performance plans and cuts to contracted services and centralized overhead that's allocated to the company. These targeted initiatives have been instrumental in mitigating the efforts -- mitigating the effects of softer market conditions and preserving overall portfolio performance.

I would like to highlight a few additional third quarter success stories from across our portfolio. Both the Atlanta and Dallas Fort Worth markets delivered solid performance during the third quarter, reflecting healthy demand and disciplined operational execution. In the Atlanta market, during the third quarter, total revenue increased 3.7%, and hotel EBITDA improved 7.9%, underscoring the effectiveness of our asset management team and their continued focus on cost control and margin expansion.

The [ Ritz-Carlton ] Atlanta located in the heart of Downtown Atlanta was a standout performer, achieving a 13% increase in hotel EBITDA during the third quarter compared to the prior year period. Recent changes in commercial leadership have driven improved operational focus and strategic execution. The team has concentrated on transient and retail growth initiatives, and revenues for these segments have increased 10.9% and 42.6%, respectively, compared to the prior year period, helping to offset softness in group demand.

Property also continues to strengthen its positioning as the only true luxury destination in the heart of Downtown Atlanta, reinforcing the [ Ritz-Carlton ] brands presence in this key urban market. Similarly, the Dallas Fort Worth market delivered steady gains with transient growth across all retail, corporate and leisure segments. Our hotels in the market reported a 19.9% increase in hotel EBITDA. The Embassy Suites Dallas Galleria, which completed a comprehensive guest room renovation in late 2024, delivered a standout performance during the third quarter, achieving RevPAR growth of 22.5%, and hotel EBITDA growth of 638.7% compared to the prior year period. We are encouraged by the continued growth trajectory of this asset and the strong early returns on the capital we've invested following the renovation.

Moving to capital expenditures. During the third quarter of 2025, we completed the renovation of the restaurant meeting space at the Hilton Garden and Austin, aimed at modernizing the property and fully leveraging its premier downtown location. Model rooms were also completed at both Sheraton Anchorage and Sheraton Mission Valley, supporting our planned strategic conversion of these assets to the Hyatt Regency brand. Additionally, we began a guest room renovation at the Hilton Garden Inn, Virginia Beach to elevate guest experience and support the brand franchise agreement renewal.

Later this year, we plan to start the public space renovation at Sheraton Anchorage to support the strategic brand conversion into a Hyatt Regency Hotel, along with public space enhancements at Westin Princeton and Courtyard Bloomington, an alignment with brand franchise agreement renewals. These initiatives reflect our disciplined capital deployment strategy and continue to focus on long-term value creation through portfolio quality and brand alignment. For 2025, we anticipate spending between $70 million and $80 million on capital expenditures.

In summary, our Grow AHT initiatives continued to deliver meaningful hotel EBITDA growth supported by a disciplined capital investment strategy that aligns with our long-term value creation goals. As we look ahead, we remain focused on driving sustained performance and enhancing the long-term value of our portfolio for shareholders.

That concludes our prepared remarks, and we will now open up the call for Q&A.

[Operator Instructions] And we have no questions. I would like to turn the call back over to management for closing remarks.

Thank you for joining today's call, and we look forward to speaking with you all again next quarter.

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

Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Ashford Hospitality Trust Second Quarter 2025 Results Conference Call. [Operator Instructions] I would now like to turn the call over to Deric Eubanks, Chief Financial Officer. Deric?

Good morning, and welcome to today's conference call to review results for Ashford Hospitality Trust for the second quarter of 2025 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 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 discussed 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 July 31, 2025, 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 second quarter ended June 30, 2025, with the second quarter ended June 30, 2024.

I will now turn the call over to Stephen Zsigray. Please go ahead.

Good morning, everyone, and thank you for joining today's call. After my introductory comments, Deric will review our second quarter financial results, and then Chris will provide an operational update on our portfolio.

Our second quarter performance was highlighted by comparable total revenue growth of 1.3% and comparable hotel EBITDA growth of 2.6%. With macroeconomic headwinds driving RevPAR declines and pressuring margins industry-wide in the quarter, we're very pleased with our operating performance, which reflects the impact of the strategic decisions our team has made over the past several quarters and the strength of our high-quality geographically diverse portfolio.

In late 2024, we announced a transformative initiative aimed at driving $50 million in run rate EBITDA improvement that we refer to as Grow AHT. Realizing outsized improvement in property level performance is critical to achieving that goal. With comparable total revenue growth outpacing comparable RevPAR growth in the second quarter by 3.5 percentage points and our 2.6 percentage point increase in comparable hotel EBITDA for the quarter, we're reaping the benefits of the tremendous efforts that our asset management team and property managers have made to drive revenue growth while aggressively managing operating expenses.

In addition to strong property level performance, we've also benefited from a number of corporate cost-saving measures that our adviser, Ashford Inc., has implemented for Ashford Trust. Several Grow AHT initiatives remain underway, but we've seen meaningful impact from these efforts through the second quarter. Following a number of asset sales, total reported revenue year-to-date declined more than $41 million versus 2024, yet year-to-date adjusted EBITDAre for the company is down less than $3 million.

We have also continued to make improvements to our capital structure. In April, we extended our MS 17 mortgage loan secured by 17 hotels. The extension provides for an initial maturity in March of 2026 and 2 1-year extension options subject to the satisfaction of certain conditions with a final maturity date in March 2028.

The loan has a current balance of $410 million and continues to bear interest at a floating rate of SOFR plus 3.39%. Just yesterday, we extended our Highland mortgage loan secured by 18 hotels. The extension provides for an initial maturity in January of 2026 and an additional 6-month extension option, subject to the satisfaction of certain conditions with a final maturity date in July 2026.

The loan has a current balance of $734 million and bears interest at a floating rate of SOFR plus 4.13%. As previously discussed, our nontraded preferred stock offering closed at the end of March. This capital raise allowed us to access substantial capital totaling $212 million in gross proceeds. We have launched our follow-on offering of nontraded preferred stock and expect this to be an important source of capital for continued property level deleveraging and future growth.

Lastly, we've continued to make progress on strategic dispositions. We expect to close on the previously announced sale of the Hilton Houston NASA Clear Lake in the coming weeks and anticipate selling at least 3 additional assets in the near term. The primary objective of these sales will be to reduce leverage and improve overall cash flow after debt service. We believe these coordinated efforts are opening a new chapter for Ashford Trust and the collective impact was evident in our results for the second quarter.

Looking ahead to the second half of the year, while we expect demand headwinds to continue to subside and would further benefit from anticipated interest rate cuts, we remain focused on controlling what we can control and driving outsized performance. We also plan to continue making improvements to our capital structure and exploring opportunistic dispositions to better position the company moving forward.

I will now turn the call over to Deric to review our second quarter financial performance.

Thanks, Stephen. For the second quarter, we reported a net loss attributable to common stockholders of $39.9 million or $6.88 per diluted share. For the quarter, we reported AFFO per diluted share of $0.78. It's important to note that during the quarter, we accrued approximately $6.8 million of default interest on our $744 million Highland loan. We recently entered into an extension of that loan that eliminated the default interest. If we had not accrued the default interest, our AFFO and AFFO per diluted share for the quarter would have been approximately $11.4 million and $1.93, respectively.

Adjusted EBITDAre for the quarter was $73.8 million. At the end of the second quarter, we had $2.7 billion of loans with a blended average interest rate of 8.1%, taking into account in-the-money interest rate caps. Considering the current level of SOFR and the corresponding interest rate caps, approximately 24% of our debt is now effectively fixed and 76% is effectively floating. We ended the quarter with cash and cash equivalents of $100 million and restricted cash of $153.9 million.

The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. Our restricted cash increased $15 million from the previous quarter, and the vast majority of that cash is set aside for future capital expenditures. At the end of the quarter, we also had $21.8 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 $184 million, which was $28 million higher than the previous quarter. As of June 30, 2025, our consolidated portfolio consisted of 72 hotels with 17,329 rooms. Our share count currently stands at approximately 6.2 million fully diluted shares outstanding, which is comprised of 6.1 million shares of common stock and 0.1 million OP units. While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend in 2025.

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. During the second quarter of 2025, our portfolio demonstrated continued resilience despite a challenging demand environment. During the quarter, comparable hotel RevPAR declined 2.2% compared to the prior year quarter, largely due to reduced demand from group and government-related travel. During the second quarter, government room nights were down approximately 26% compared to the prior year period, representing a significant headwind to RevPAR performance. Despite these challenges, our portfolio delivered strong performance with comparable hotel revenue increasing 1.3% and comparable hotel EBITDA growing 2.6% compared to the prior year period.

This performance underscores the impact of our Grow AHT initiative, which has prioritized high-margin revenue strategies and targeted cost reductions across the portfolio, resulting in comparable hotel EBITDA margin expansion of 39 basis points. Our asset management team's focus on driving ancillary income and controlling costs has laid a strong foundation for the remainder of the year, supporting outsized revenue growth even as broader market conditions soften.

Reflecting broader industry trends, the second quarter is expected to be the softest period of 2025 for the group segment, impacted by the late timing of Easter and continued headwinds from Doge initiatives affecting government-related travel.

Group revenue for the portfolio declined approximately 4% during the second quarter compared to the prior year period. Our resort assets performed particularly well with group revenue up 14% in the second quarter compared to the prior year period. Renaissance Palm Springs was a strong contributor to success, delivering a 36% increase in group revenue during the second quarter compared to the prior year period. The hotel benefited from robust demand associated with festival groups and multiple citywide conventions.

Looking ahead in the third quarter of 2025, group demand remains healthy with group revenue currently pacing ahead of the prior year. We're also encouraged by the growing pipeline of event-driven demand, including the 2026 FIFA World Cup, which will run from early June to mid-July across key markets like Miami, Dallas and Washington, D.C. Notably, 42% of our portfolio hotel rooms are located in the host cities for the upcoming World Cup, positioning us to capture outsized demand from this global event. As mentioned earlier, Grow AHT has led to significant operational and financial gains across our portfolio. Second quarter comparable hotel EBITDA margin expanded by 39 basis points compared to the prior year period.

Additionally, during the second quarter, other revenue increased 22% on a per occupied room basis compared to the prior year quarter. As part of the Grow AHT initiative, we have taken decisive strategic actions to enhance hotel EBITDA and improve overall profitability while maintaining service standards. Our property managers have implemented a range of high-margin revenue opportunities and cost optimization measures. These efforts include the deployment of tools to help us monetize our amenities, improved food and beverage margin performance plans and cut the contracted services.

These targeted initiatives have played a key role in driving margin growth in a tough environment. A good example of this is Marriott Crystal Gateway. Despite headwinds related to government activity in Washington, D.C., Marriott Crystal Gateway delivered a 100% increase in other revenue during the second quarter and improved its GOP margin by 219 basis points compared to the prior year quarter.

Looking ahead, we believe Grow AHT positions us to operate under a more sustainable and efficient model. As we move through the remainder of 2025, we remain focused on identifying additional opportunities to further strengthen hotel level performance and maximize long-term shareholder value.

With that, I would like to highlight a few recent success stories from across our portfolio. In partnership with the project management firm Premier, many of our assets have recently undergone major renovations or brand conversions and are now beginning to realize the benefits of those investments. For properties that have completed significant renovations or repositionings within the past year, hotel RevPAR increased 19% in the second quarter compared to the prior year period, demonstrating strong early returns on capital. One example is Embassy Suites Dallas Galleria, which completed a comprehensive guestroom renovation in late 2024. The property delivered an outstanding performance during the second quarter with total hotel revenue up 31% compared to the prior year period. Another strong performer was La Concha Key West, which underwent a strategic repositioning from a Crowne Plaza to a Marriott Autograph Collection Hotel in December of 2024.

In the second full quarter under the new brand, the hotel saw RevPAR increase 28%, total revenue increased 41% and hotel EBITDA increased 59% compared to the prior year period. Contributing to this momentum were 4 newly launched food and beverage outlets, including a full-service dinner restaurant that opened midway through the first quarter. As a result, during the second quarter, food and beverage revenue increased 668% on a per occupied room basis compared to the prior year period, a testament to the property's improved guest experience and market positioning.

La Pavillon in New Orleans also continued to build on its recent conversion to Marriott's Tribute portfolio, delivering another strong quarter. Second quarter RevPAR was up 55% and total revenue increased 46% compared to the prior year quarter. We remain optimistic about this property's trajectory and are actively working to build a robust group and event calendar to further unlock its potential as a differentiated offering within the historic setting.

Moving on to capital expenditures. During the second quarter of 2025, we completed the guest room renovation at Courtyard Bloomington and the public space renovation at Hampton Inn Evansville. Both projects were aligned with brand franchise agreement renewals and reflect our continued commitment to elevating the guest experience. We also began upgrades to the restaurant and meeting space at Hilton Garden in Austin, aimed at modernizing the property and fully leveraging its premier downtown location.

Looking ahead, we plan to initiate strategic brand conversions at Sheraton Mission Valley and Sheraton Anchorage, both of which will transition to Hyatt Regency brand. In addition, we expect to commence public space enhancement at Westin Princeton and Courtyard Bloomington, along with guest room renovations at Hilton Garden Inn Virginia Beach. These initiatives are part of our disciplined capital deployment strategy and demonstrate our ongoing focus on long-term value creation through portfolio quality and brand alignment.

For full year 2025, we anticipate spending between $90 million and $110 million on capital expenditures. In summary, our ancillary revenue initiatives are gaining meaningful traction. Our expense optimization initiatives continue to drive hotel EBITDA growth, and our capital investment strategy remains firmly aligned with long-term value creation. We remain focused on positioning our platform for sustained success and are fully committed to maximizing both the performance and the value of our portfolio.

That concludes our prepared remarks, and we will now open up the call for Q&A.

[Operator Instructions] And it appears there are no questions going once, going twice. All right. No questions today. So I will now turn the call back over to management for closing comments.

Thank you for joining today's call, and we look forward to speaking with you all again next quarter.

Thank you all for joining. You may now disconnect.