Ashford Hospitality launches new preferred stock series

Ashford Hospitality Trust Inc . (NYSE:AHT), a real estate investment trust currently trading at what InvestingPro analysis suggests is an undervalued level, announced on Tuesday the issuance of two new series of preferred stock, Series L and Series M, following the amendment of its partnership agreement and the reclassification of shares within its charter. The company, which maintains a healthy current ratio of 2.52x, has seen its stock rise over 11% year-to-date despite historical volatility.

On January 22, 2025, Ashford Hospitality Trust, through its subsidiaries, amended its partnership agreement in connection with the public offering of its Series L and Series M Redeemable Preferred Stock. This amendment authorized the issuance of 11.2 million Series L Redeemable Preferred Units and 4.8 million Series M Redeemable Preferred Units, designed to mirror the economic rights of the corresponding preferred stock.

Concurrently, the company filed articles supplementary with the State Department of Assessments and Taxation of Maryland, which reclassified 5 million previously unissued common shares as undesignated preferred shares, increasing the total preferred shares to 55 million. This change took effect immediately upon filing.

The newly designated Series L Preferred Stock will offer cumulative cash dividends at an annual rate of 7.5% of the stated $25.00 per share value, while the Series M Preferred Stock will start with a 7.7% dividend rate, increasing annually up to a maximum of 8.2%.

Both series rank senior to common stock and on parity with other preferred series for dividend payments and liquidation rights. According to InvestingPro data, the company currently manages $3.12 billion in total debt, making this preferred stock issuance a significant component of its capital structure strategy.

Holders of the new preferred stock will have the right to require redemption of their shares at 100% of the stated value, with accrued dividends, subject to certain conditions. The company retains the right to redeem the shares after two years from issuance, at the same 100% value plus accrued dividends.

The offering is being managed on a "reasonable best efforts" basis by Ashford (NYSE:AINC) Securities LLC, an affiliate of the company’s advisor, Ashford Hospitality Advisors LLC. This includes a primary offering of up to 12 million shares and an additional 4 million shares available through a dividend reinvestment plan.

This announcement is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy any securities. The offering is subject to the effectiveness of a registration statement filed with the SEC, which has not yet been declared effective.

Investors should note that this information is derived from an SEC filing and should consider the full text of the partnership agreement amendment and articles supplementary for a complete understanding of the rights and privileges of the new preferred stock series.

For deeper insights into AHT’s financial health and valuation metrics, including 14 additional ProTips and comprehensive analysis, investors can access the full Pro Research Report available on InvestingPro.

In other recent news, Ashford Hospitality Trust reported a moderate 3.0% rise in revenue per available room (RevPAR) for the fourth quarter of 2024. The company’s trailing twelve-month revenue stood at $1.22 billion, maintaining a strong current ratio of 2.52. Additionally, Ashford raised approximately $185 million through its Series J and Series K non-traded preferred stock offering.

Ashford also announced the departure of director Mr. Kamal Jafarnia and Alan Tallis from the board, both of which were not due to disagreements regarding company operations, policies, or practices. The company is set to sell the Courtyard Boston Downtown for $123 million, a transaction expected to finalize in January 2025.

These developments are part of Ashford’s ongoing efforts to streamline operations and enhance financial performance. The company’s leadership, including CFO Deric Eubanks and CEO Stephen Zsigray, provided updates and made forward-looking statements during its third-quarter earnings call for 2024.

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