Business Context and Reporting Period
This Form 8-K Current Report was filed by Ashford Hospitality Trust, Inc. on November 5, 2020. The filing details a series of financial accommodations granted by the independent members of the board of directors of Ashford Inc. to Ashford Trust. These actions involve deferrals of management and success fees, as well as a waiver of asset replacement obligations, aimed at preserving liquidity during the reporting period.
Key Financial Metrics and Liquidity
The filing does not provide comprehensive financial statements, revenue, profit, or cash flow data. However, it highlights specific liquidity-related transactions:
- Fee Deferrals: Approximately $3 million in base advisory fees for November 2020 were deferred.
- Success Fees: Approximately $3.3 million in Lismore success fees related to October 2020 forbearance agreements were deferred.
- Payment Timeline: All deferred payments (October and November fees) are now due and payable on December 1, 2020.
- Asset Waiver: A requirement to replace Furniture, Fixtures, and Equipment (FF&E) valued in connection with the Embassy Suites New York Manhattan Times Square transaction was waived.
Material Changes and Events
The primary material change reported is the extension of payment terms and the waiver of contractual obligations:
- Advisory Agreement: An additional 30-day deferral was granted for October 2020 base advisory fees, and a new 30-day deferral was granted for November 2020 base advisory fees.
- Lismore Agreement: Deferrals were extended for October 2020 success fees and granted for November 2020 success fees.
- ERFP Agreement: The requirement for Ashford Trust to replace FF&E following the sale of the Embassy Suites New York Manhattan Times Square was waived.
- Waiver of Claims: Ashford Inc. waived any claims for breach of contract or damages arising from these deferrals and waivers.
Outlook, Risks, and Management Commentary
The filing indicates ongoing liquidity management strategies involving the company's advisor, Ashford Inc. The board's approval of these deferrals and waivers suggests a focus on cash preservation. The filing notes that the summary is qualified by reference to the full Advisory Agreement, Lismore Agreement, and ERFP Agreement. No specific forward-looking guidance regarding revenue or earnings is provided in this document.
Investor Verification Checklist
- Verify the total outstanding deferred fees payable on December 1, 2020, including the ~$3 million advisory fees and ~$3.3 million success fees.
- Review the full text of the Advisory Agreement (Exhibit 10.1) and ERFP Agreement (Exhibit 10.2) to understand the long-term implications of these waivers.
- Confirm the status of the Embassy Suites New York Manhattan Times Square sale and the impact of the FF&E waiver on the company's asset base.
- Monitor subsequent filings for confirmation of payment on the December 1, 2020 due date or further deferral requests.