DALLAS—Ashford Inc. posted a strong third quarter, with an increase in total revenue, up 37%, an increase in adjusted EBITDA to 104%, and adjust net income per share up 111%. The company’s gross assets under management reached $8.1 billion at the end of the quarter.
“We are very pleased with our third quarter results, which reflect the diligent execution of our operating strategy focused on accretively growing our advised platforms and acquiring growth-oriented, hospitality-related businesses,” stated Monty J. Bennett, Ashford’s chairman and CEO.
“To this end, the recent formation of Ashford Securities will provide Ashford and its advised platforms an additional source of capital that is not dependent on the traditional publicly traded capital markets. We are excited to pursue a fresh source of capital that will help us prudently grow all our platforms over the long term for increased shareholder value. We are also equally excited that the proposed acquisition of Remington’s Hotel Management business will immediately add scale, diversification and an enhanced competitive position for Ashford in the hospitality industry,” he added. “Looking ahead to the remainder of 2019 and 2020, we remain committed to maximizing value for our shareholders as we look to opportunistically grow our existing REIT platforms and create new platforms and grow our service businesses via increased AUM and third-party business.”
Strategic Overview
- High-growth, fee-based business model
- Diversified platform of multiple fee generators
- Grow existing REIT platforms accretively and create new platforms
- Grow service businesses via increased AUM and third-party business
- Highly aligned management team with superior long-term track record
- Leader in asset and investment management for the real estate & hospitality sectors
Financial & Operating Highlights
Net loss attributable to common stockholders for the third quarter of 2019 totaled $9.4 million, or $3.94 per diluted share, compared with net income of $1.4 million, or $0.18 per diluted share, in the prior-year quarter. Adjusted net income for the third quarter was $7.0 million, or $1.58 per diluted share, compared with $2.6 million, or $0.75 per diluted share, in the prior-year quarter.
Total revenue for the third quarter of 2019 was $56.9 million, reflecting a growth rate of 36.9% over the prior-year quarter.
Adjusted EBITDA for the third quarter was $8.4 million, reflecting a growth rate of 104.1% over the prior-year quarter.
At the end of the third quarter of 2019, the company had approximately $8.1 billion of gross assets under management.
During the quarter, Ashford closed on the acquisition of Sebago for $7 million, which equates to an implied trailing 12-month Adjusted EBITDA multiple of 4.4x.
During the quarter, the company formed Ashford Securities LLC, a dedicated platform to raise retail capital through financial intermediaries and the broker-dealer channel.
Subsequent to quarter end, the company repurchased stock from Ashford Trust and Braemar Hotels & Resorts that represented approximately 16% of its common shares outstanding.
Subsequent to quarter end, the company announced it had obtained stockholder approval for the proposed acquisition of Remington Holdings’ Hotel Management business.
As of September 30, 2019, the company had corporate cash of $33.2 million.
Agreement to Acquire Remington’s Hotel Management Business
On June 3, 2019, Ashford announced that it had signed a definitive agreement to acquire the hotel management business of privately held Remington Holdings LP. The proposed acquisition of Remington’s high-margin, low-CapEx hotel management business is expected to be immediately accretive to adjusted net income per share and will immediately add scale, diversification and an enhanced competitive position for Ashford. It will also expand the breadth of services the company offers to its advised REITs. Additionally, the company believes the transaction represents a compelling opportunity to further diversify its earnings stream and, moving forward, the potential to expand business to other third-party clients.
Ashford revealed the final results of the Special Meeting of Stockholders held October 24, during which Ashford stockholders overwhelmingly approved the proposal in connection with the transaction. Holders of approximately 92% of Ashford shares present and voting at the meeting voted in favor of the proposal, including a majority of shares, excluding shares owned by Ashford Trust, Braemar, the Bennetts, and management, present and voting at the meeting voted in favor of the proposal. The company also announced that it has received the final, official private letter ruling from the Internal Revenue Service related to the transaction.
The proposed acquisition is expected to close on or around November 6.
