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AH

ASHFORD HOSPITALITY TRUST INC (AHT)·Q3 2025 Earnings Summary

Executive Summary

  • Comparable hotel EBITDA increased 2.0% year over year to $68.9M, with comparable hotel EBITDA margin expanding 46 bps to 26.07%, despite RevPAR pressure and macro headwinds .
  • Revenue and EPS missed Wall Street consensus: revenue $266.1M vs $273.8M*, EPS -$11.35 vs -$10.16*, and EBITDA (GAAP) $45.0M vs $53.8M*, reflecting softness in Washington, D.C. and lapping one-time 2024 events .
  • Strategic capital actions: extended Highland loan (initial maturity Jan 9, 2026) and refinanced Renaissance Nashville, expected to save $2–$3M annually in interest expense .
  • Portfolio optimization continues: three asset sales at an attractive blended 5.3% cap rate; eight additional assets are being marketed, with rate-cut sensitivity of >$6M annual interest savings per 25bp cut (95% floating-rate debt) .
  • 2025 capex outlook lowered to $70–$80M from $90–$110M, while Q4 2025 group revenue pacing +4.4% and resort assets posted strong group gains (+11%) .

What Went Well and What Went Wrong

What Went Well

  • Margin execution: Comparable hotel EBITDA margin expanded 46 bps YoY to 26.07%, showcasing cost discipline and ancillary revenue initiatives under GRO AHT .
  • Capital structure progress: Renaissance Nashville refinancing reduces interest spread (SOFR +2.26%) and is expected to save $2–$3M per year; Highland pool extended with option to July 2026 .
  • Portfolio optimization: Closed/signed three dispositions (Hilton Houston NASA Clear Lake, Residence Inn Evansville, Residence Inn San Diego Sorrento Mesa) at attractive valuation, improving cash flow and reducing future capex .
    “Combined, these three sales achieved a very attractive blended cap rate of 5.3%...and we expect these sales to improve annualized cash flow after debt service by approximately $2 million” .

What Went Wrong

  • Top-line softness: Comparable RevPAR fell 1.5%; Washington, D.C. weakness (government room nights -18.8%) and lapping 2024 events (DNC Chicago, Austin convention center closure) pressured revenue .
  • Consensus misses: Revenue (-$7.7M, -2.8%), EPS (-$1.19), and EBITDA (GAAP) (-$8.8M) versus SPGI estimates*, implying near-term estimate pressure .
  • Rate exposure: ~95% floating-rate mortgage debt and caps not in the money raise sensitivity to rates (each 25bp cut saves >$6M annually), leaving results vulnerable if cuts are slower/lower than expected .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total Revenue ($USD Millions)$276.6 $302.0 $266.1
Diluted EPS ($)-$12.39 -$6.88 -$11.35
Adjusted EBITDAre ($USD Millions)$52.41 $73.83 $45.38
Comparable Hotel EBITDA ($USD Millions)$67.54 $91.02 $68.88
Comparable Hotel EBITDA Margin (%)25.61% 30.63% 26.07%

KPIs (Comparable portfolio):

KPIQ3 2024Q2 2025Q3 2025
RevPAR ($)$130.15 $144.73 $128.25
Occupancy (%)70.54% 75.13% 71.03%
ADR ($)$184.51 $192.65 $180.54

Selected market comparable Hotel EBITDA ($USD Millions):

MarketQ3 2024Q3 2025YoY
Washington D.C. - MD - VA$11.66 $9.84 -$1.82
New York / New Jersey$2.74 $4.07 +$1.33
Nashville, TN$7.47 $8.17 +$0.70
San Diego, CA$2.78 $2.23 -$0.55

Vs. Wall Street (SPGI) Consensus – Q3 2025:

MetricActualConsensusSurprise
Revenue ($USD Millions)$266.1 $273.8*-$7.7M
EPS ($)-$11.35 -$10.16*-$1.19
EBITDA (GAAP) ($USD Millions)$44.98 $53.8*-$8.8M
Values with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capex ($USD Millions)FY 2025$90–$110 $70–$80 Lowered
Common DividendFY 2025Suspended Suspended Maintained
Group Room Revenue PaceFY 2025“Pacing ahead” +6% (select properties) +0.5% portfolio pace; Q4 +4.4% Moderated
Interest Expense SensitivityOngoingN/A>$6M annual savings per 25bp rate cut New disclosure
Preferred DividendsQ4 2025N/ASeries D $0.5281; F/G $0.4609; H/I $0.46875; Series J/K/L/M monthly per CUSIP schedules Declared

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Capital structure/refinancingExtended MS-17 loan to Mar-2028; paid off corporate strategic financing Extended Highland (initial Jan-2026 + option); refinanced Renaissance Nashville (SOFR +2.26%) Improving
Asset dispositionsBoston Courtyard sale; planned Hilton Houston sale Closed/signed 3 sales; 8 assets marketed; off-market diligence on 2 Accelerating
Government demand headwindsDC strength from inauguration; later softness emerging Gov’t room nights -18.8%; DC drag; ex-DC RevPAR -0.3% vs segment Headwind
Group demand/resort strengthResorts group +14% in Q2; R. Palm Springs +36% Resorts group +11%; R. Palm Springs group +34.5%; Q4 group pace +4.4% Positive
GRO AHT executionExpect >$30M run-rate EBITDA; margin +131 bps in Q1 Comparable hotel EBITDA +2% YoY; margin +46 bps YoY Sustained
Rate sensitivity23–24% debt effectively fixed (caps) in H1 ~95% floating-rate; caps not in the money; >$6M per 25bp cut High sensitivity

Management Commentary

  • “During the quarter, we sold two non-core assets and completed the sale of the Residence Inn San Diego Sorrento Mesa in October, reinforcing our strategy to opportunistically deleverage the portfolio while creating long-term value for shareholders.” — Stephen Zsigray .
  • “We expect to benefit significantly from recent and potential future interest rate cuts…each 25 basis point cut in interest rates would save the company over $6 million in annual interest expense.” — Stephen Zsigray .
  • “Adjusted EBITDAre was $45.4 million…cash and cash equivalents of $81.9 million and restricted cash of $166.9 million…net working capital of approximately $144.3 million.” — Deric Eubanks .
  • “Third-quarter comparable hotel RevPAR decreased 1.5%…labor efficiency improved 2.6% per occupied room…portfolio expanded hotel EBITDA margin by 46 basis points.” — Chris Nixon .

Q&A Highlights

  • No Q&A session was conducted on the Q3 2025 call; management provided prepared remarks and closing comments only .
  • Prior quarter context: Analysts focused on government and group demand trends and GRO AHT contributions; management cited transient backfill in D.C., strong resort/group pipeline, and low international exposure (<5%) .

Estimates Context

  • Results missed consensus across key metrics: revenue ($266.1M vs $273.8M*), EPS (-$11.35 vs -$10.16*), EBITDA (GAAP) ($45.0M vs $53.8M*). Low estimate count (1) heightens revision sensitivity and may prompt downward adjustments*, particularly on EBITDA given D.C. headwinds and lapping 2024 events .
    Values with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin resilience amid RevPAR softness (comparable EBITDA margin +46 bps YoY) suggests GRO AHT is delivering defensible efficiency gains .
  • Capital actions (Renaissance Nashville refi, Highland extension) and asset sales are de-risking the balance sheet and reducing interest/capex burdens; monitor additional sale activity (8 assets marketed) as catalysts .
  • Elevated rate sensitivity (95% floating-rate debt; >$6M per 25bp cut) makes macro trajectory a primary driver; rate-cut expectations are a key trading input .
  • Consensus misses across revenue/EPS/EBITDA may drive near-term estimate revisions and sentiment pressure; watch D.C. recovery and Q4 group pacing (+4.4%) for sequential momentum .
  • Lower 2025 capex guidance ($70–$80M) supports cash preservation and ROIC discipline; combined with portfolio optimization, this underpins medium-term deleveraging .
  • Strong resort/group performance (e.g., Renaissance Palm Springs +34.5% group revenue) and 2026 FIFA exposure (~42% of rooms in host markets) provide medium-term demand tailwinds .
  • Preferred dividends declared and common dividend suspension maintained; income investors may focus on preferreds while common equity remains leveraged to rate/macro outcomes .
Notes: Values with * retrieved from S&P Global.