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Ashford Hospitality Trust's Strategic Moves to Improve Liquidity

In a key strategic announcement, Ashford Hospitality Trust, Inc. (NYSE: AHT) has revealed that its advisor, Ashford Inc., will waive approximately $17 million in advisory fees. This waiver is aimed at strengthening the company's liquidity over the next six months. Additionally, Ashford Inc. has committed to purchasing 2.5% of the company's outstanding common stock quarterly in the open market. This move aligns the interests of Ashford Inc. with those of its stockholders.

The independent members of the Board of Directors of Ashford Hospitality Trust unanimously approved these measures. As previously stated by Amish Gupta, Vice Chairman and Lead Independent Director, the primary objectives are to enhance liquidity while placing the advisor's capital alongside that of stockholders. "The fee waiver retains about $17 million within the Company during this period," Gupta explained. "Alongside this, the share purchase agreement is all set to solidify our commitment to prioritizing stockholder interests."

Under the terms of the advisory fee waiver, Ashford Inc. has forsaken both base and incentive advisory fees for services rendered between November 2026 and April 2027. This initiative is expected to save approximately $2.60 per common share, significantly benefitting the overall financial health of the Company. Crucially, the waived fees will not become payable at any future date, marking a substantial gain for the Company’s liquidity position.

Share Purchase Agreement Details

Further solidifying its commitment, the share purchase agreement initiates that Ashford Inc. will acquire an equivalent of 2.5% of the company's outstanding shares each calendar quarter. Given the current count of approximately 6.47 million shares, the first quarterly commitment will involve acquiring around 162,000 shares.

Ashford Inc. must finalize these quarterly purchases within six months following each quarter's end. Notably, if Ashford Inc. fails to meet its purchase commitments, it is obligated to provide the Company with a credit against future advisory fees worth 150% of the average stock price for each unpurchased share. This unique structure directly ties the performance of Ashford Inc. to the interests of the common stockholders, thereby incentivizing robust stock market practices.

Termination of At-the-Market Program

In conjunction with these new initiatives, Ashford Hospitality Trust has also decided to terminate its at-the-market equity offering program. This program, which was established on April 11, 2022, allowed the Company to sell common stock intermittently through various offerings in the market. The termination indicates a decisive pivot towards consolidating the capital structure and focusing on more stable financing avenues moving forward.

The Company’s proactive steps to manage its liquidity and relationship with its advisor are a testament to its commitment to shareholder value. According to Hector Sanchez, President of Ashford Inc., this move reflects a steadfast dedication to the long-term success of Ashford Hospitality Trust: "Our commitment to the Trust and its stockholders is solidified through these agreements. We are foregoing our advisory fees and investing in the Trust's common stock concurrently with its stockholders."

As Ashford Hospitality Trust navigates these changes, additional disclosures regarding the fee waiver and share purchase will be provided in a Current Report on Form 8-K, which will be filed with the Securities and Exchange Commission.

Conclusion

Through these significant measures—both the advisory fee waiver and share purchase commitment—Ashford Hospitality Trust is positioning itself not just for immediate liquidity gains, but for a more substantial long-term alignment with shareholder interests. These proactive strategies illustrate the trust's responsive governance and commitment to maximizing shareholder value amidst a fluctuating market landscape.