Ashford Inc. makes plans to delist from NYSE

DALLAS — In the latest move for Dallas-based Ashford Inc., the troubled company has announced a plan to delist its common stock from trading on the New York Stock Exchange this summer, which it said will save $2.5 million per year.

Late on April 1, the company announced that its board of directors had approved a plan to terminate its common stock under federal securities laws following the completion of a proposed reverse stock split, which would be followed immediately by a forward stock split transaction.

Ashford said it is taking these steps to avoid the “substantial cost and expense of being a public reporting company and to focus the company’s resources on enhancing long-term stockholder value.”

The company is the advisor to two NYSE-listed REITs: Ashford Hospitality Trust and Braemar Hotels & Resorts.

Ashford Hospitality Trust has spent the last half of 2023 and early 2024 selling assets to pay down its debt after disclosing last July it would likely break pencils on 19 loans and return keys to the lenders for the still-underperforming hotels.

Last week, Braemar Hotels & Resorts faced a board challenge from an activist investor when New York City-based Blackwells Capital nominated new members for half of Braemar’s board after trying to acquire the company in December. Braemar says it was rejecting the nominations.

Details of the reverse stock split

The proposed reverse stock split would be a 1-for-10,000 split, in which holders of less than 10,000 shares would be cashed out for a price of $5 per share, which Ashford said would be a 125.2% premium above the stock’s closing price on April 1. Stockholders with 10,000 or more shares would not have any shares cashed out and remain stockholders. Their number of shares would be unchanged, as there would then be a forward split of 10,000-for-1 for continuing stockholders.

Ashford estimates that approximately 1.1 million shares (representing approximately 31% of the shares of common stock currently outstanding) would be cashed out in the transaction. The company’s aggregate cost would be approximately $5.5 million, plus transaction expenses, estimated to be approximately $6.7 million. Ashford said it intends to fund this using cash on hand.

The plan is subject to regulatory clearance and stockholder approval, which will be held during a special meeting of stockholders this summer.

As of March 25, Ashford’s directors and executive officers owned approximately 37.9% of the company’s stock.

Ashford’s debt, distressed properties

During its fourth-quarter earnings call in late February, Ashford Hospitality Trust (AHT) said it had signed a definitive agreement to sell the 390-key Hilton Boston Back Bay in Boston for $171 million to an undisclosed buyer. The REIT also said it had operating losses of $13.3 million for the fourth quarter and $31.3 million for 2023.

At the time, AHT also provided an update on its plan to pay off strategic financing with a final maturity date of January 2026. The REIT said it plans to raise capital through asset sales, mortgage debt refinancing, and non-traded preferred capital raises. It listed 12 hotels at various stages of being available for sale.  

Broker R.W. Baird said that AHT is making “tangible progress on the asset sales front and should be in a position to repay the Oaktree financing within the next few months, in our view.”

Last summer, the REIT announced it would likely give back the keys to 19 underperforming hotel assets that had $570 million in debt, predominantly limited-service and extended-stay hotels, rather than pay down about $255 million to extend financing and spend down another $80 million in CapEx through 2025. In December, AHT said it completed the transfer to lenders of five of those properties, including hotels in Arizona, California, Georgia, New Jersey and North Carolina.

According to The Real Deal, just a day before the April 1 filing, two of those distressed properties in Plano, Texas, were listed for a foreclosure sale — a 152-key Courtyard Dallas Plano and a 126-key Residence Inn Dallas Plano/Legacy.