EX-99.1 2 ahthighlandproforma8-kexhi.htm EXHIBIT 99.1 AHT Highland Pro Forma 8-K Exhibit
EXHIBIT 99.1

On December 14, 2014, Ashford Hospitality Trust, Inc. ("Ashford Trust" or the "Company") executed a Letter Agreement (the “Agreement”) with PRISA III Investments ("PRISA III"). The Agreement was approved by the investment committee of Prudential Real Estate Investors ("PREI"), the investment manager of PRISA III, and fully executed and delivered to the Company on December 15, 2014. Pursuant to the Agreement, Ashford Trust agreed to purchase and PRISA III agreed to sell (the “Transaction”) all of PRISA III’s right, title and interest in and to its approximately 28.26% interest in PIM Highland Holding LLC (“PIM Highland”). The transaction closed on March 6, 2015 at which time Ashford Trust owned 100% of PIM Highland. The fair value of the net assets of PIM Highland at the time of the acquisition was approximately $772.8 million. The Company has not finalized the purchase price allocation related to the assets acquired. Upon closing, $907.6 million of assumed mortgage loans due March 2015 were refinanced with a $1.07 billion non-recourse mortgage loan due April 2017. The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisition and related transactions occurred on the date indicated or what may result in the future.





ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of December 31, 2014
(in thousands, except share amounts) 
 
 
Ashford Trust
Consolidated
Historical (A)
 
PIM Highland JV Portfolio(B)
 
Adjustments(C)
 
 
 
Ashford Trust
Consolidated
Pro Forma
Assets
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
215,063

 
$
29,194

 
$
(240,053
)
 
(C)(i)
 
$
214,332

 
 
 
 
 
 
210,128

 
(C)(viii)
 
 
Marketable securities
 
63,217

 
—

 
—

 
 
 
63,217

Total cash, cash equivalents and marketable securities
 
278,280

 
29,194

 
(29,925
)
 
 
 
277,549

Investment in hotel properties, net
 
2,128,611

 
1,197,862

 
565,243

 
(C)(ii)
 
3,891,716

Restricted cash
 
85,830

 
113,871

 
(65,358
)
 
(C)(viii)
 
134,343

Accounts receivable, net of allowance
 
22,399

 
12,823

 
—

 
 
 
35,222

Inventories
 
2,104

 
1,920

 
—

 
 
 
4,024

Notes receivable, net of allowance
 
3,553

 
—

 
—

 
 
 
3,553

Investment in unconsolidated entities
 
206,790

 
—

 
(144,784
)
 
(C)(iii)
 
62,006

Deferred costs, net
 
12,588

 
1,773

 
(1,588
)
 
(C)(iv)
 
30,961

 
 
 
 
 
 
18,188

 
(C)(viii)
 
 
Prepaid expenses
 
7,017

 
8,113

 
—

 
 
 
15,130

Derivative assets, net
 
182

 
—

 
—

 
 
 
182

Other assets
 
17,116

 
9,343

 
8,730

 
(C)(v)
 
25,187

 
 
 
 
 
 
(10,002
)
 
(C)(i)
 
 
Due from Ashford Prime OP, net
 
896

 
—

 
—

 
 
 
896

Due from affiliates
 
3,473

 
—

 
(3,473
)
 
(C)(vi)
 
—

Due from third-party hotel managers
 
12,241

 
19,844

 
—

 
 
 
32,085

Total assets
 
$
2,781,080

 
$
1,394,743

 
$
337,031

 
 
 
$
4,512,854

Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
Indebtedness
 
$
1,954,103

 
$
1,116,383

 
3,527

 
(C)(vii)
 
$
3,236,971

 
 
 
 
 
 
162,958

 
(C)(viii)
 
 
Accounts payable and accrued expenses
 
71,118

 
36,565

 
—

 
 
 
107,683

Dividends payable
 
21,889

 
—

 
—

 
 
 
21,889

Unfavorable management contract liabilities
 
5,330

 
—

 
—

 
 
 
5,330

Due to Ashford Inc., net
 
8,202

 
—

 
—

 
 
 
8,202

Due to related party, net
 
1,867

 
5,192

 
(3,473
)
 
(C)(vi)
 
3,586

Due to third-party hotel managers
 
1,640

 
—

 
—

 
 
 
1,640

Liabilities associated with marketable securities and other
 
6,201

 
—

 
—

 
 
 
6,201

Other liabilities
 
1,233

 
8,480

 
20,137

 
(C)(v)
 
29,850

Total liabilities
 
$
2,071,583

 
$
1,166,620

 
$
183,149

 
 
 
$
3,421,352

Redeemable noncontrolling interests in operating partnership
 
177,064

 
—

 
49,677

 
(C)(ix)
 
226,741

Equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized:
 
 
 
 
 
 
 
 
 
 
Series A Cumulative Preferred Stock, 1,657,206 shares issued and outstanding at December 31, 2014
 
17

 
—

 
—

 
 
 
17

Series D Cumulative Preferred Stock, 9,468,706 shares issued and outstanding at December 31, 2014
 
95

 
—

 
—

 
 
 
95

Series E Cumulative Preferred Stock, 4,630,000 shares issued and outstanding at December 31, 2014
 
46

 
—

 
—

 
 
 
46

Common stock, $0.01 par value, 200,000,000 shares authorized, 124,896,765 shares issued, 89,439,624 shares outstanding at December 31, 2014
 
1,249

 
—

 
—

 
 
 
1,249

Additional paid-in capital
 
1,706,274

 
228,123

 
(250,055
)
 
(C)(i)
 
1,706,445

 
 
 
 
 
 
565,243

 
(C)(ii)
 
 
 
 
 
 
 
 
(144,784
)
 
(C)(iii)
 
 
 
 
 
 
 
 
(1,588
)
 
(C)(iv)
 
 
 
 
 
 
 
 
(11,407
)
 
(C)(v)
 
 
 
 
 
 
 
 
(3,527
)
 
(C)(vii)
 
 
 
 
 
 
 
 
(381,834
)
 
(C)(ix)
 


Accumulated deficit
 
(1,050,323
)
 
—

 
332,157

 
(C)(ix)
 
(718,166
)
Treasury stock, at cost (35,457,141 shares at December 31, 2014)
 
(125,725
)
 
—

 
—

 
 
 
(125,725
)
Total stockholders’ equity of the Company
 
531,633

 
228,123

 
104,205

 
 
 
863,961

Noncontrolling interests in consolidated entities
 
800

 
—

 
—

 
 
 
800

Total equity
 
532,433

 
228,123

 
104,205

 
 
 
864,761

Total liabilities and equity
 
$
2,781,080

 
$
1,394,743

 
$
337,031

 
 
 
$
4,512,854

See accompanying notes.




NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A)
Represents the historical consolidated balance sheet of Ashford Trust as of December 31, 2014, as reported in its Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 2, 2015.
(B)
Represents the historical consolidated balance sheet of PIM Highland as of December 31, 2014, as included in Exhibit 99.1 of Amendment No. 1 to Ashford Trust's Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 31, 2015.
(C)
Represents adjustments for Ashford Trust’s purchase of the remaining ownership interest in PIM Highland as of December 31, 2014, which include; (i) the cash consideration to be paid, net of deposit; (ii) the remeasurement of investment in hotel properties, net to fair value upon acquiring a controlling interest in PIM Highland; (iii) the elimination of investment in unconsolidated entities as a result of consolidating PIM Highland; (iv) the removal of deferred costs that would not have any fair value assigned upon acquisition; (v) the remeasurement of intangible assets and liabilities associated with above/below market leases upon acquiring a controlling interest in PIM Highland; (vi) the elimination of due to/from affiliates between Ashford Trust and PIM Highland upon consolidation; (vii) the remeasurement of indebtedness to fair value upon acquiring a controlling interest in PIM Highland; and (viii) the deferred loan costs, return of restricted cash and additional proceeds associated with the refinancing of indebtedness in conjunction with the acquisition of a controlling interest in PIM Highland; and (ix) represents the reclassification of the gain associated with acquiring a controlling interest in PIM Highland from additional paid-in capital to accumulated deficit and redeemable noncontrolling interests in operating partnership.





ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2014
(in thousands, except share and per share amounts)
 
 
Ashford Trust
Consolidated
Historical (A)
 
PIM Highland JV Portfolio(B)
 
Adjustments (C)
 
 
 
Ashford Trust
Consolidated
Pro Forma
Revenue
 
 
 
 
 
 
 
 
 
 
Rooms
 
$
640,325

 
$
339,538

 
$
—

 
 
 
$
979,863

Food and beverage
 
112,701

 
110,803

 
—

 
 
 
223,504

Other
 
26,958

 
16,362

 
—

 
 
 
43,320

Total hotel revenue
 
779,984

 
466,703

 
—

 
 
 
1,246,687

Advisory services revenue
 
10,724

 
—

 
—

 
 
 
10,724

Other
 
4,141

 
—

 
(3,680
)
 
(C)(i)
 
461

Total Revenue
 
794,849

 
466,703

 
(3,680
)
 
 
 
1,257,872

Expenses
 
 
 
 
 
 
 
 
 
 
Hotel operating expenses:
 
 
 
 
 
 
 
 
 
 
Rooms
 
143,751

 
73,824

 
—

 
 
 
217,575

Food and beverage
 
77,653

 
71,619

 
—

 
 
 
149,272

Other expenses
 
254,495

 
142,136

 
(235
)
 
(C)(ii)
 
396,396

Management fees
 
31,125

 
15,128

 
—

 
 
 
46,253

Total hotel operating expenses
 
507,024

 
302,707

 
(235
)
 
 
 
809,496

Property taxes, insurance and other
 
38,499

 
23,726

 
—

 
 
 
62,225

Depreciation and amortization
 
110,653

 
60,955

 
34,588

 
(C)(iii)
 
206,196

Impairment charges
 
(415
)
 
—

 
—

 
 
 
(415
)
Gain on insurance settlement
 
(5
)
 
—

 
—

 
 
 
(5
)
Transaction costs
 
625

 
—

 
—

 
 
 
625

Advisory services fee
 
4,533

 
—

 
—

 
 
 
4,533

Corporate general and administrative
 
57,243

 
4,392

 
(3,680
)
 
(C)(i)
 
57,955

Total Operating Expenses
 
718,157

 
391,780

 
30,673

 
 
 
1,140,610

Operating income
 
76,692

 
74,923

 
(34,353
)
 
 
 
117,262

Equity in earnings of unconsolidated entities
 
2,495

 
—

 
(5,482
)
 
(C)(iv)
 
(2,987
)
Interest income
 
62

 
53

 
—

 
 
 
115

Other income
 
6,573

 
—

 
—

 
 
 
6,573

Interest expense and amortization of premiums and loan costs
 
(114,502
)
 
(59,456
)
 
(6,658
)
 
(C)(v)
 
(180,616
)
Write-off of loan costs and exit fees
 
(10,353
)
 
—

 
—

 
 
 
(10,353
)
Unrealized loss on marketable securities
 
(332
)
 
—

 
—

 
 
 
(332
)
Unrealized loss on derivatives
 
(1,100
)
 
(44
)
 
—

 
 
 
(1,144
)
Income (loss) from continuing operations before income taxes
 
(40,465
)
 
15,476

 
(46,493
)
 
 
 
(71,482
)
Income tax (expense) benefit
 
(1,266
)
 
(4,294
)
 
—

 
(C)(vi)
 
(5,560
)
Income (loss) from continuing operations
 
(41,731
)
 
11,182

 
(46,493
)
 
 
 
(77,042
)
Income from discontinued operations
 
33

 
—

 
—

 
 
 
33

Gain on sale of hotel property, net of tax
 
3,491

 
—

 
—

 
 
 
3,491

Net income (loss)
 
(38,207
)
 
11,182

 
(46,493
)
 
 
 
(73,518
)
Loss from consolidated entities attributable to noncontrolling interests
 
406

 
—

 
—

 
 
 
406

Net loss attributable to redeemable noncontrolling interests in operating partnership
 
6,400

 
—

 
3,112

 
(C)(vii)
 
9,512

Net income (loss) attributable to the Company
 
(31,401
)
 
11,182

 
(43,381
)
 
 
 
(63,600
)
Preferred dividends
 
(33,962
)
 
—

 
—

 
 
 
(33,962
)
Net income (loss) available to common stockholders
 
$
(65,363
)
 
$
11,182

 
$
(43,381
)
 
 
 
$
(97,562
)
Income (loss) per share – basic and diluted:
 

 

 
 
 
 
 

Loss from continuing operations attributable to common stockholders
 
$
(0.75
)
 
 
 
 
 
 
 
 
Income from discontinued operations attributable to common stockholders
 
—

 
 
 
 
 
 
 
 
Loss attributable to common stockholders
 
$
(0.75
)
 
 
 
 
 
 
 
 
Weighted average common shares outstanding—basic and diluted
 
87,622

 
 
 
 
 
 
 
 
Dividends declared per common share
 
$
0.48

 
 
 
 
 
 
 
 
Amounts attributable to common stockholders:
 
 
 
 
 
 
 
 
 
 
Loss from continuing operations, net of tax
 
$
(31,430
)
 
$
11,182

 
$
(43,381
)
 
 
 
$
(63,629
)
Income from discontinued operations, net of tax
 
29

 
—

 
—

 
 
 
29

Preferred dividends
 
(33,962
)
 
—

 
—

 
 
 
(33,962
)
Net income (loss) attributable to common stockholders
 
$
(65,363
)
 
$
11,182

 
$
(43,381
)
 
 
 
$
(97,562
)

See accompanying notes.




NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(A)
Represents the historical consolidated statement of operations of Ashford Trust for the year ended December 31, 2014, as reported in its Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 2, 2015.
(B)
Represents the historical consolidated statement of operations of PIM Highland for the year ended December 31, 2014, as included in Exhibit 99.1 of Amendment No. 1 to Ashford Trust's Annual Report on Form 10-K for the year ended December 31, 2014 filed on March 31, 2015.
(C)
Represents adjustments for PIM Highland for the year ended December 31, 2014; which include; (i) the elimination of corporate general and administrative expenses of PIM Highland and other revenue of Ashford Trust related to services provided by Ashford Trust for the year ended December 31, 2014, as a result of the consolidation of PIM Highland; (ii) adjustment to lease expense as a result of the remeasurement of intangible assets and liabilities associated with above/below market leases upon acquiring a controlling interest in PIM Highland; (iii) additional depreciation expense as a result of the remeasurement of investment in hotel properties, net to fair value upon acquiring a controlling interest in PIM Highland; (iv) the removal of equity in earnings as a result of consolidating PIM Highland; (v) adjustment to interest expense and amortization of premiums and loan costs as a result of the remeasurement of indebtedness to fair value upon acquiring a controlling interest in PIM Highland and the refinancing of indebtedness; (vi) no further adjustment to income tax expense to reflect total income tax expense as if the consolidated group filed with PIM Highland; and (vii) adjustment to loss attributable to redeemable noncontrolling interests in operating partnership for the incremental operating results of PIM Highland based on ownership interests of 13.01% for the year ended December 31, 2014.The adjustment does not reflect the estimated gain of $381.8 million resulting from acquiring a controlling interest in PIM Highland.