Home Lodging Ashford Seeks Additional Deals That Would Use ERFP Program

Ashford Seeks Additional Deals That Would Use ERFP Program

49
SHARE

Ashford Inc. delivered strong performance in the third quarter and executives were pleased with the groundwork the REIT was laying for the continued success of its platform. For the quarter, revenues increased by 116%, adjusted EBITDA was 4.1 million and adjusted net income per share was $0.75, said Robinson Hays, co-president and chief strategy officer, on the firm’s Q3 earnings call.

“We are very pleased with these results and believe they highlight the benefits of our strategy. We are excited about the new enhanced return funding program or ERFP agreement with trust. The ERFP is a $50 million funding commitment, designed to produce strong returns on hotel investment at trust and strong fee growth at Ashford. So far, we are pleased to have completed two deals with trust, where we have committed to ERFP funding and Trust has another acquisition in process that will also utilize ERFP.”

He adds that the company is actually looking for additional deals that would use ERFP. “We are very bullish about the future prospects of this program and its positive benefits for both Ashford, Inc and Trust. Our strategy is built around our ability to leverage the combined expertise of our management team to grow both our company and the platforms we advise. We believe we have one of the most highly aligned, stable and effective management teams in the hospitality industry and acting like shareholders has distinguished us from others in the industry. We consider it one of our main competitive advantages.”

Ashford currently advises two publicly traded REIT platforms, trust and Braemar Hotels and Resorts, which together own 130 hotels with approximately 28,000 rooms and $7.7 billion of assets as of September 30, 2018. Ashford has a high growth, fee-based business model with a diversified platform of multiple fee generators. “We believe it to be scalable with attractive margins,” he said.

Additionally, the company has a very stable cash flow base as the advisory agreements with the REIT stipulate that the base fee is maintained at the level of at least 90% from the previous year’s base fee. “We have a fee structure in place that incentivizes Ashford to create shareholder value at its advisory platforms. With our base fee driven by their share price performance and our incentive fee based on total shareholder return outperformance versus their REIT peers, our management team’s primary focus is maximizing returns.”