Good day, everyone. And welcome to the Ashford Hospitality Trust Third Quarter 2017 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Joe Calabrese with Financial Relations Board. Please go ahead.

Thanks, Ann. Good day, everyone. And welcome to today’s conference call to review the results for Ashford Hospitality Trust for the third quarter of 2017 and to update you on recent developments. On the call today will be Douglas Kessler, President and Chief Executive Officer; Deric Eubanks, Chief Financial Officer; and Jeremy Welter, Executive Vice President of Asset Management. The results, as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were distributed yesterday afternoon in a press release that has been covered by the financial media. At this time, let me remind you that certain statements and assumptions in this conference call contain or based upon forward-looking information and are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These risk factors are more fully discussed in the company’s filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them. In addition, certain items -- terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings release and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on November 2, 2017 and may also be accessed through the company’s website at www.ahtreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also unless otherwise stated, all reported results discussed in this call compare to third quarter 2017 with the third quarter of 2016. I will now turn the call over to Douglas Kessler. Please go ahead, sir.

Good morning. And thank you for joining us to discuss Ashford Hospitality Trust results. Our third quarter comparable RevPAR growth for all hotels was flat, while comparable RevPAR growth for all hotels not under renovation was 0.4%. Additionally, we reported AFFO per share of $0.30 and adjusted EBITDA of $128 million. We are very fortunate that our portfolio is not significantly impacted by the recent hurricanes. We monitored the storms very closely and had teams and supplies in place to quickly respond after the storms passed. I am extremely proud of our asset management team led by Jeremy Welter and our property managers for their resilience and perseverance during and after these storms. This management team has a long track record since our IPO of creating shareholder value and over the years we have worked on various ways to maximize the value of our existing assets, while also looking for accretive hotel investment opportunities and maintaining capital markets discipline. We believe shareholders have benefited from our efforts since our IPO, given that Ashford Trust has achieved 192% total shareholder return compared to 150% return for our peers as of yesterday’s close. Key to that outperformance is the exceptionally high level of alignment that is created by our 19% insider ownership, which is among the highest in the hotel REIT space and approximately 6 times the peer average. Our strategy remains focused in our effort to create shareholder value. We will continue to own predominantly upper upscale full service hotels, opportunistically recycle capital, target net debt-to-gross assets of 55% to 60%, and maintain a cash and cash equivalents balance between 25% to 35% of our equity market capitalization for financial flexibility. We believe this excess cash balance provides a hedge in uncertain economic times, as well as providing dry powder to…

Thanks, Douglas. For the third quarter of 2017, we reported a net loss attributable to common stockholders of $37.8 or $0.40 per diluted share. For the quarter we reported AFFO per diluted share of $0.30. Adjusted EBITDA totaled $128 million for the quarter. For purposes of calculating adjusted EBITDA and AFFO this quarter, we added back the uninsured costs associated with the hurricane. Those expenses totaled $5.5 million. Also, when comparing our results to prior year it is important to remember that our prior year adjusted EBITDA included hotel EBITDA of $3.9 million and $20.5 million in the third quarter and year-to-date periods, respectively, associated with hotels that we have sold. Our adjusted EBITDA in the fourth quarter of last year, included $2.4 million of hotel EBITDA associated with hotels that we have sold. At the end of the quarter, we had total assets of $4.7 billion, we had $3.7 billion of mortgage debt with a blended average interest rate of 5.7%, our debt was approximately 12% fixed rate and 88% floating rate, all of which have interest rate caps in place, all of our debt is nonrecourse property level debt and we have a well-laddered maturity schedule. Including the market value of our equity investment at Ashford Inc., we ended the quarter with net working capital of $484 million. I think it’s important to point out this networking capital on our balance sheet currently equates to approximately $4.12 per share. As of September 30, 2017, our portfolio consisted of 120 hotels with 25,028 net rooms. Our share count currently stands at 117.5 million fully diluted shares outstanding, which is comprised of 97.4 million shares of common stock and 20.1 million OP units. We have 21.3 million OP units, but as a result of the current conversion factor being less…

Thank you, Deric. Those hotels in our portfolio not under renovation group comparable RevPAR by 0.4% during the third quarter. Our comparable RevPAR growth outperformed the upper upscale chain nationally by 110 basis points. Year-to-date comparable RevPAR for those hotels not under renovation has been 1.4%. Holidays had a negative impact this quarter, with Rosh Hashanah and Yom Kippur shifting in the September of 2017 compared with October 2016 and July 4 following on the Tuesday in 2017 compared with the Monday in 2016. Specifically, we had a significant decrease in corporate negotiated travel for the week of July 4. We are on pace for unprecedented RevPAR index growth. Our portfolio has grown RPI in each of the last three years relative to its competitors and is on pace to do so again this year, which would mark four consecutive years. Despite renovations, acquisitions and conversions, what Ashford asset management has achieved is remarkable. Over four years ago in July 2013, we created a separate revenue optimization team with dedicated personnel focused on revenue strategies. These impressive achievements emphatically underscore the success and overall capabilities of Ashford’s industry-leading asset management team. The hurricanes in September certainly affect our portfolio, in some areas our diversified portfolio has benefited from the impact of those storms. Specifically, the Embassy Suites Orlando Airport realized 38.4% RevPAR growth during the third quarter, an increased driven by both prior year renovation displacement, as well as hurricane Irma. This topline performance surpassed that of the Orlando market and South Orlando submarket by 2,850 basis points and 2,750 basis points, respectively. Hotel EBITDA increased by 216,000 or 93%, a margin increase of 43.4%. These strong third quarter results provide year-to-date RevPAR growth to 19.7% in hotel EBITDA flow through to 54%. We believe our risk management group and…

Thank you. [Operator Instructions] We will take our first question from Robin Farley with UBS.

Hi. This is actually Arpine here for Robin. And if you look at your portfolio, Houston was up 20% for the 10%, could you perhaps quantify what RevPAR could have been up without those -- that outside growth from those markets dealing with the aftermath of the hurricanes. Then I have a follow-up?

I think, that’s a difficult theoretical question. So you’re asking had the hurricane not come through what the RevPAR would have been in the Houston market. I think, if that’s the question, I think, you’d simply just have to look at generally what the trend was in the prior to hurricane quarters. Houston had been a somewhat soft market, given the new supply coming in, obviously, the continued weakness in the oil industry. And so, unfortunately, the hurricane hit, but it has had at least for the third quarter a positive impact and that’s fairly typical in markets that you see following a hurricane. There is some potential benefit from those remaining operating hotels as you have displaced residents and you have responders to the damage done and they fill hotel rooms. And obviously, there are some offset because you do lose some business that decided to hold off on their travel to that market until such time is things stabilize there. But I -- it would be very difficult for us to comment on what the RevPAR growth would have been other than the direction that I sort of hinted at with respect to prior quarter performance.

Okay. And then, we saw margins flat for the quarter with flattest RevPAR, maybe you could remind us what type of RevPAR growth you would need next year to keep margin flat. I know you don’t guide for RevPAR. But, theoretically, how much RevPAR growth you would need for your margins to be flat into next year? Thank you.

I think that we will provide that type of guidance.

Okay. Thanks.

Thank you.

We will go next to Chris Woronka with Deutsche Bank.

Hey. Good morning, guys.

Good morning, Chris.

Good morning. I want to ask you on the Ritz, Atlanta, I know the one up in bucket is going to go out of the Ritz system right but stay within Marriott, would you guys expect maybe some kind of benefit to accrue to that to your location downtown once that happen, is that possible?

Yes. We believe that the removal of the hotel from the system at least with respect to branded as Ritz is a benefit to our Downtown and Ritz-Carlton. In addition, that property is going through -- our property downtown is going through a significant renovation to rooms product and we believe that that will be a significant driver for us once that rooms renovation is complete. So we are really looking forward to the completion of that renovation work and obviously the removal of the Ritz in bucket we think is a net positive for us.

Okay. Great. And then, you guys have been pretty active in recent years with converting management contracts to franchises and few branch changes where you can, is there anything kind of on the horizon is -- in the pace of that accelerator or is it -- it’s kind of hard to tell, is it kind of more of one by one case, but do you see anything coming down the road?

You’re right. I think we have been successful doing that, our most recent example was the conversion of our Marriott DFW from brand managed to Remington managed and we’re very pleased with that along with the renovation of that property which is now completed. Our portfolio, as you can imagine has matured and it provides fewer examples or opportunities or that type of activity. We do have some independent hotels and so it gives us chances with brand ideas. We also have some hotels that are obviously highly aligned with both Hilton and Marriott, and we are one of their largest accounts on both fronts. And so sometimes when we are negotiations with them on other matters, it does create an opportunity for us to possibly horse trade and at least asked for the opportunity for that type of conversion. Few and far between going forward, but we never stop asking in the event that we think that there is a value-add opportunity as such for our shareholders.

Great. And just -- understood your comments about the higher level of renovations in the fourth quarter, is there any kind of as we look at ‘18 just a general sense for whether there is going to be more renovation activities or less relative to ‘17?

We are still going through and finalizing our capital plans and that’s going to go through the Board. So, I don’t think, we are prepared to five any guidance for 2018 from the capital front just yet.

Okay. Fair enough. Thanks guys.

Thank you.

We will go next to Bryan Maher with B. Riley FBR.

Good morning, guys.

Good morning.

Can you drill a little bit deeper on kind of what you’re seeing in the market as it relates to your slight service assets, is it just the bid ask spread is too wide for you or is there something else going on?

No. It’s pretty simple, Bryan. We commented during our Investor Day back in October that we had been looking at a variety of strategic alternative for our select portfolio, either that -- overall valuation or execution of something more strategic in nature just didn’t seem to cancel at that time, that doesn’t mean we have close the door to ideas, is just that based upon the options that we had at the time didn’t seem to make much sense. We continue to look at ideas to monetize those assets. But one of the balances is not just what we could sell the assets for. It’s also how do we redeploy the capital. How do we perform that execution in a way that we think is accretive to shareholders. So we have to look at a variety of metrics. One, we have to look at the debt pools that the assets are in. Two, we have to look at the prices that we could sell these assets for. Three we have to consider how do we redeploy that capital into accretive investment opportunities. Let me touch on this latter point, when we look at the current market today for what is a very clear strategy for Trust to focus predominantly on the upper upscale full-service hotels, we look at the depth of the transaction, but what we are seeing is some aspirational prices being asked by many sellers today. And the reason why they’re doing that is because they know that with their view of the fundamentals which I think for a lot of sellers today are still a reasonably healthy fundamental. They can refinance their property alternatively and do so at a very attractive time in terms of the debt markets. So they can get great price of the asset. They will trade otherwise they are comfortable refinancing and writing the continued cycle, which last two quarters have shown 3% GDP growth and where the cycle goes from here, I think, everyone still trying to determine that. So when we are looking to redeploying that capital, the yields that we have seen on some recent transactions has been uninspiring for us in terms of deploying our capital. And so as a result of that, we want to make sure that if for trading out that we don’t have too much of a bid ask -- not really bid ask, but a gap between selling cap rates and buying cap rates, because we want to make sure that we are doing something that is accretive to our shareholders in terms of the expected share price performance as a result of those trades. We remain open to trading at our select service and we typically don’t comment on trading activities until such time as something occurs.

Thanks. That’s helpful. But taking it kind of to the next level, I mean, you do have decent amount of cash on hand and I’m sure you’re exploring the outright purchase market irrespective of whether you sell select service or not, are you seeing out -- anything out there that appetizing in the more full-service upscale segment that you want to be in or are those price just too aspirational also on the part of the seller?

Pretty much the same comment, obviously, when you look back in terms of the transaction volume, 2015 was a pretty strong year, 2016 was down quite a bit and 2017 has been slightly of that amount. When we look at the investment opportunities, we are still seeing some aspirational request for valuations and so those yields we view to be somewhat unattractive. Obviously, we are not just looking at the yields that we are buying the assets for. We are looking at the underwritten internal rates of return, key metrics with respect to the impact on our share price, everything that we outlined in our Investor Day in terms of all the metrics that we focus on. I think that the issue for us is that, we also have to look at what our cost of capital is. And when you look at where we are trading today at the current moment of [ph] $6.57 (27:59) and we have $4.12 of net working capital, we feel like we need to get a stronger value for our currency in order to deploy it. Now absent the change in cap rates, absent the change in our cost of capital, absent the change in the underwritten performance metrics going forward. We will continue to be disciplined and I think we should get credit for being disciplined. It’s been -- sometimes we deploy our capital and I think it’s been really a function of where we see our currency today and where we see the prices in the market. Meanwhile, around the edges, we’ve been doing a lot of other activities to create value for shareholders such and there are many of them, but as an example, some of the refinancing activity that we did accomplished during the quarter, which is true savings through value-add of $13.7 million. So we look at that as a good rotation into the types of events, which we believe will add value to shareholders. Meanwhile, we are not satisfied with what we are seeing in the current transaction market. Now going into 2018, I think, we are hopeful that the transaction pace will pick up and that the variety of opportunities will increase. It is not that we are necessarily losing out to competitive bidder for the types of assets that we are chasing, I think, we are losing out to is the alternative of sellers refinancing their assets. And in conversations that I’ve had with some of the leading hotel brokerage firms they confirm the very same thing that I am saying.

Yeah. That’s all really helpful. Thanks, Douglas.

You bet.

We will go next to Michael Bellisario with Baird.

Good everyone.

Good morning.

Good morning.

And Doug, I want to make -- if you can maybe marry Deric’s comments on the strong debt markets and then also just your successful refinancing recently. I mean, how that improvement in just maybe last 30 days or 60 days versus what you told us a month ago at the Investor Day? Thinking about your options for the select service asset any differently because of the changes in debt market that you are seeing?

No. I would say, we are thinking any differently. Obviously, the pool that we just refinanced had select service assets. But our approach on the debt is less of mixing and matching loan pools. It’s more of looking ahead and refinancing proactively, capitalizing on the current debt market today to hopefully reduce our interest expense, which we have been very successful doing over the past couple of years. So in conjunction with those refinancings, we have also tried to free up adequate buckets within those loan pools to allow us to sell assets of any type within the loan pool. So even within the 17 pack portfolio that we just refinanced. We have capacity to extract assets out and in a way that we think is cost effective. So I think if you’re asking because of the favorable debt markets, are we looking alternatively to refinance instead of selling, I think, our refinancing strategy is more programmatic and less focus on the alternative of selling select or refinancing all of the select from a strategy standpoint. Its more loan pool-oriented as opposed to strategy-oriented. Obviously, there is the general strategies I suggested of lowering our interest expense and refinancing proactively and refinancing early, which is why we have been successfully removed not only all of our 2017 maturities but all of our 2018 maturities and our next one isn’t until the first quarter of 2019. We will continue to look at all options with respect to our select service strategy.

Got it. Understood. And then, maybe the same kind of question from the other side, just from the buyers perspective, their ability to get attractively priced debt, are you seeing any change in your appetite to transact, I guess, that’s in a way I was going with my question sell side, is that making it more appealing for you from a valuation perspective to improve those assets?

I think, so, I mean, I think, that’s -- a great alternative you to look at. I think that you’re right. I think, our most recent asset sale the Crowne Plaza Ravinia is a good example. I mean, we traded that asset. It is a $84 RevPAR asset. We traded it at a 5.6%, I believe trailing cap rate, is what I believe we reported in our -- our last quarters’ earnings. And I think, some of that had to do with the fact that the debt markets are attractive still right now. And so there is the opportunity to be active selling in the market and having buyers capitalized on attractive leverage today. So that is a positive -- that is a positive for transaction activity. We need to make sure that we can sell the assets at the right price, redeploy the capital appropriately, we are obviously sitting on a fair amount of cash currently and so the balance and timing of that is something that we are taking into consideration as we look at how to structure our transaction activities both on the buy and sell sided ways that is the most accretive for our shareholders in terms of share price in total shareholder return.

Understood. And then, switching gears just a little bit kind of 30,000, 40,000 for you -- your geographically diversified portfolio and historically you attract the harder industry a lot closer than it has recently. Are you seeing anything differently or doing anything differently that may be causing the trend divergence and kind of what are you seeing on the ground, what changes are you seeing that is maybe causing your portfolio, your assets that the performance are diverged a bit from the broader industry recently?

That’s a good question. We -- as you know, our portfolio is diversified, while we have got clearly assets on the top 10 markets. We are more diversified across the top 50 markets. And the top 10 markets have generally lagged the broader economy in terms of RevPAR growth, whereas the rest of the portfolio has accelerated. I think that the performance that we have lagged behind is now becoming a little bit more market specific. And it may just be the case that where we have had outperformance, we are now beginning to experience the impact not only of supply coming into some of those secondary markets, but also slightly, while we try to be not as disruptive from our performance, when it comes to our CapEx spend, we do have more projects going under CapEx and so as a result of that while we try to minimize the disruption, some of that could be impacting it. So I would attribute it really to those two things. We are at that part of the cycle where it’s probably about peak supply. I think we have seen some indicators that would suggest that maybe 2019 could be the crest of new supply for the industry. So as a result of that while we have still, I think, outperformed the peer group from a RevPAR growth standpoint, we have slightly lag the broader industry as a whole and obviously, I think, in this cycle most REITs have lag the broader industry as a whole. We’ve held up better. But this quarter that was not necessarily the case.

It -- the only thing I would add is that a lot of it is chain scale as well, some lower chain scales are experiencing lot more growth than we are positioned. As I mentioned, we have gained market share, so this going to be the fourth year in the row that we have gain market share.

Got it. And then, just on the CapEx requirements, not looking for a number, but do you see 2018 kind of being a more level of CapEx, do you think that will step down a bit versus the $210 to $220 that you are taking for this year or the $200 to $210?

Yeah. We just had the same question earlier in the queue, you might have missed it. But we are still going through our capital budgeting process and we are finalizing that and we are not prepared to share that guidance until we get approval through our Board of Directors.

Okay. Fair enough. Thanks guys.

Thank you.

[Operator Instructions] We will go next to Tyler Batory with Janney Capital Markets.

Thanks. Good morning. I want to ask a little bit about the flow through for the entire portfolio, how did that come in versus your expectations for the quarter? And then, what are you seeing on wages generally just across all your markets?

Okay. Yeah. This is Jeremy. We missed our flow target by $2.3 million this quarter. So naturally we are all disappointed, I am disappointed. A big portion of that is property tax related. Internally we have different metrics but from the operational side, we missed our flow by about $800,000 and the rest of the $2.3 million was property tax related. And there is a very -- there is a several no underlying theme of what caused that miss. Certainly wage pressure is one of them. A mix of the type of business we have is included as well, because we had a big drop in some of our high-margin banquet and catering business, and we didn’t float as well we should have. But in terms of wage pressures that’s certainly something that we are dealing with and we have a track record of identifying creative ways to cut costs in these situations, environments like this, when you have a little bit softer RevPAR.

Okay. That’s helpful. And then, would you look at the full-service hotels that you have in your portfolio and you compare those to 61 flex service hotels that you guys have. Is there much difference in RevPAR growth over the past couple quarters? And can you also talk potentially about the absolute RevPAR difference at your full-service or select service properties?

It’s more market specific for us when you look at in our rollup in terms of growth and it’s not necessarily. And I think they are very similar in terms of year-over-year growth. But I don’t know if we have the prepared to share the difference in RevPAR.

That was 29.

Yeah. We will be able to get that later.

Okay. I mean, that was only the question, I mean, if you guys are able to sell some of these flex service assets, I presume that, the RevPAR or the absolute RevPAR for the entire portfolio would probably go up, correct?

That is correct.

We have done that in the past for some of the Investor Days.

Okay. And then just last question, I understand there is a lot of moving pieces these with holiday shifts, hurricanes, et cetera. But maybe an updated view to some, what you guys are thinking just industry broadly here would be helpful?

The broad industry view, I think, that there is a fair amount of economic data that is of interest as of late. We’ve seen for the first time in this economic recovery back-to-back GDP growth. And obviously, at a level north of 3% that’s pretty strong. And we think that, obviously, on a lag basis that can be constructive to the hotel room demand. Meanwhile, we continue to see strong job numbers, consumer confidence is extremely high, corporate profits are good, the opportunity on the supply side continues to kind of shrink from what we gather anecdotally, we are not obviously in that business, but in discussions we’ve had with groups that are more active in that area we believe that there’s continued rationing if you will of construction financing, which points to a tapering at some point in the near-term. As I commented, we felt that the potential crest could be sometime in 2019. So when you put that all together, we are seeing at least from an economic standpoint on top of possible tax reform some stimulus. Now the flip side of that is, we continue to see cost increases, we are continuing to see property tax increases, we fortunately are not seeing energy increases, we love to be seeing whether there are insurance cost increases as a result of this year’s buyers and hurricanes across the U.S. But we also see improvements in technology, which can also serve to reduce some cost. So we think that that backdrop allows people to draw their own conclusions as to whether we are in a recovery mode with future growth or we experiencing short-term impact of new supply, is there some cost creep, love to be seeing.

Okay. Great. That’s all for me. Thank you.

And this concludes the question-and-answer session. I would like to turn the call back over to management for any additional or closing remarks.

Thank you for joining us on today’s call and we look forward to speaking with you again next quarter.