Greetings and welcome to the Ashford Hospitality Trust First Quarter 2020 Results Conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, that this conference is being recorded.I will now turn the conference over to our host, Jordan Jennings, Manager of Investor Relations. Thank you. You may begin.

Good day, everyone, and welcome to today’s conference call to review the results for Ashford Hospitality Trust for the first quarter 2020, and to update you on recent developments.On the call today will be Rob Hays, President and Chief Executive Officer; Deric Eubanks, Chief Financial Officer; and Jeremy Welter, Chief Operating Officer. 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 are based upon forward-looking information and are being made pursuant to the Safe Harbor provisions of the federal securities regulations. 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 factors are more fully discussed in the company’s filings with the Securities and Exchange Commission.These forward-looking statements included in this conference call are only made as of the date of the call, and the company is not obligated to publicly update or revise them. In addition, certain 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 SEC on May 20, 2020, 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 the first quarter of 2020 with the first quarter of 2019.I will now turn the call over to Rob Hays. Please go ahead, sir.

Good morning and welcome to our call. First, I’d like to begin by expressing our sincere hope that you and your families are safe and doing well. Our thoughts are with everyone who has been affected by this health crisis. These are challenging times for our country, the economy, and of course, the hospitality industry.Given these trying times, I believe the appropriate starting point for today’s call will be to update you on how Ashford Trust is navigating the COVID-19 pandemic. After that, Deric will review our financial results, and Jeremy will provide an operational update on the portfolio.We are in unprecedented times and while our results in January and February continued the overall solid trends we had seen over prior quarters, we are now operating in a very different environment. The impact of COVID-19 on the U.S. hospitality industry and our day-to-day operations has been profound. Our response to this crisis has been swift and comprehensive as we have focused our efforts on providing a safe environment for our guests and the staff at our properties, while at the same time taking aggressive measures to protect our properties and maintain our financial flexibility, so we can be in a position to return to profitability as travel resumes.Given the economic impact of this pandemic, we were required to make some very difficult and painful decisions. As precautionary measure, and in conjunction with local, state and federal guidelines, we have temporarily suspended operations at 23 properties. And our remaining 93 properties have been operating at greatly reduced levels.However, several of our assets are being used by local government agencies, medical staffing organizations, as well as hotel brands to support COVID-19 response efforts. We are pleased to assist in these efforts, through various initiatives. More than 48 Ashford Trust hotels have provided…

Thanks, Rob. For the first quarter of 2020, we reported a net loss attributable to common stockholders of $94.8 million or $0.94 per diluted share. For the quarter, we reported AFFO per diluted share of negative $0.12.Adjusted EBITDAre totaled $47.4 million for the quarter. At the end of the first quarter, we had $4.1 billion of mortgage loans with a blended average interest rate of 4.4%. Our loans were 9% fixed rate and 91% floating rate. Our loans are all non-recourse, and we have no corporate loans. We are in the process of discussing forbearance agreements with our property-level lenders. We have signed a few agreements and several more are in process.As we disclosed earlier this week in an 8-K filing, we did have one lender accelerate the loan on our Embassy Suites New York Manhattan Times Square and use excess cash held by the lender to pay down their loan. New York City is obviously subject to a government mandated stay-at-home order, but this hotel has remained open and is currently housing first responders in New York City, the center of the COVID-19 outbreak in the U.S.While the hotel is not profitable currently, we believe staying open and providing a place of refuge for these workers is the right thing to do. We continue to call on Congress, the Treasury Department and the Federal Reserve to assist the hotel industry during this crisis.We ended the quarter with $386 million of liquidity including cash and cash equivalents of $240 million and restricted cash of $127 million. The vast majority of that restricted cash is comprised of lender- and manager-held reserve accounts. We have been and continue to work with our property managers and lenders, in order to utilize these lender- and manager-held reserves to fund operating shortfalls at our hotels.At…

Thank you, Deric. Comparable RevPAR for our portfolio decreased 22.9% during the first quarter of 2020. This decrease actually represents 1.7 percentage point and 0.6 percentage point outperformances relative to our hotels’ competitive sets and submarket chain scales, respectively. During the first quarter, Hotel EBITDA flow through was 38%. The ongoing COVID-19 pandemic has disproportionately impacted the travel and tourism industry.Prior to the COVID-19 pandemic, many of our hotels were performing well to start 2020. Year-to-date February, comparable RevPAR for the Hyatt Regency Coral Gables and Courtyard Ft. Lauderdale Weston grew 26.4% and 15.6%, respectively, positively impacted by Miami hosting the Super Bowl. On the back of a large Amazon citywide in January and hosting the NBA All-Star game in February, comparable RevPAR for Chicago’s The Silversmith grew 12.3%.When it became apparent that the COVID-19 pandemic was going to severely impact our hotels’ performance, we took swift action to put ourselves in position for long-term success. In March, we reduced operating expenses significantly by 38.6%, or $29.7 million, relative to March 2019. These decreases will be even more pronounced in the second quarter numbers. We’ve also temporarily suspended operations at 23 hotels. These are unprecedented and difficult times.Asset management, property management, and the brands are all working together. We want to bring back as many associates as soon as we can when demand justifies bringing them back. Our associates have been pushed hard, working through a challenging situation. Folks have risen to the occasion. It makes us proud to see how many – how everyone has pitched in to help while being asked to do less – do more for less pay.The following are a few of the many steps we have taken at our hotels to reduce expenses and generate revenue. We have reduced staff through furloughs and layoffs…

Thank you, Jeremy. I wanted to make a few final comments before starting the Q&A portion of this call. And while I have only been the President and CEO of Ashford Trust for a handful of days, I have been here at Ashford for over 15 years. As a team we have had many successes in those years, as well as our share of failures and hard lessons learned. But nothing compares to the devastation we are experiencing today. The pandemic is impacting our shareholders, our associates, our guests, our management team, our brand partners, our lenders and all of the other stakeholders of the company in ways we couldn’t have imagined just few weeks ago.But there are silver linings in every crisis and blessings that can come out of suffering. Leaders in our organization are rising to respond to the chaos with long hours, serious determination, and a hope for the future. Our associates at the hotels across the portfolio are working hard to welcome guests back safely and with genuine hospitality and gratitude. And all of us have a better grasp on what is truly important in life and have benefitted from the reminder of how quickly tragedy can strike.So hear me clearly on this, we will get through this and I promise you it will make us a better company, one that does give us a deeper respect and thankfulness for all of our stakeholders. In that light, I want to mention that once we make our way through COVID-19, I anticipate that we will spend some time analyzing lessons learned from this crisis and the past decade, and we’ll likely update the strategy of Ashford Trust going forward. This could include changes to our leverage profile, capital stack, our liquidity profile and our investment strategy.I would not be doing my job as the new CEO if I didn’t take a hard look at our performance the last few years and take some steps to adjust the strategy, particularly in light of new strategies. That concludes our prepared remarks, and we’ll now open up the call for Q&A.

Thank you. At this time, we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Tyler Batory with Janney Capital Markets. Please state your question.

Hey, good morning. Thanks for taking my questions.

Good morning, Tyler.

Just a couple for me and, first, Rob, I wanted to follow up on some of the comments that you just made there. And, yeah, I appreciate it is early, may be not a whole lot that you can say. But you’ve been with this company for a number of years. And just in terms of reviewing the strategy, I mean, is anything and everything on the table here? Or are there a few items maybe you’re focused on in terms of strategy, company structure, et cetera, just any high-level thoughts, or anything you anything you can tease out in terms of potential changes that we might expect going forward?

Yeah, I don’t know if there’s anything in terms of pure expectations. But I can say that, from my perspective, anything and everything is on the table. And that’s the sort of situation that we’re in. I do think that we’ve gone into this crisis with too much leverage. It’s something that I think Douglas looked for opportunities, and we, as a company, had looked for opportunities to de-lever somewhat, going prior to this, and had in many ways been unsuccessful, due to just the environment that we were in.But in this your crisis, that’s something that we’ve got to take a real look at. What I’m not going to be content with is, quote, just survival, that we set up this company with all non-recourse debt for a reason. We set up this company and building our cash balances for a reason. And we, obviously, didn’t imagine it’d be this sort of situation, but here we are. And so, it does allow us certain amount of flexibility in doing that. I’m sure glad, as I sit here today, that I don’t have bondholders for example.So we got to take an honest look at that. And what I, like I said, I’m not going to be content with is just making it through this crisis surviving, and having a company that some investors may not think as investable, and some – and many think we’ll have too much leverage. I’m not okay with that.I want to set up this company on the back side of all this to be able to grow and to be able to raise capital and to be able to flourish. I’m not okay, continuing to be, quote unquote, in a box. We’re not going to do that anymore. And then, so that, by definition that means everything needs to be on the table. And that’s something that we’ve had discussions with the Board, discussions with Monty very generally. And I think everyone was on board with that.It’s going to take time to figure out what that strategy looks like once we make it through all this. We have a lot of things in front of us right now we got to deal with. But that’s the situation we are in today.

Okay, perfect. I appreciate that, that color. And then, just in terms of some of the conversations you’re having with your lenders, can you talk a little bit more generally about how some of those are progressing and any commentary in terms of helping us thinking about how we should handicap the range of outcomes here?

Sure, those – I’d say, they kind of put it into stages. Right now, lenders are obviously overwhelmed. They’ve got a lot of loans coming back their way. And that is also true for both balance sheet lenders and for CMBS lenders. They’re a little overwhelmed. And no one I think is really willing to engage on any serious discussions that, quote unquote, solve the problem. Right now, everyone is just trying to postpone the problem. And, frankly, kind of hold out hope that things will just get better.And so, as a result, most of the discussions that we’re having are just on temporary forbearances. And these are looking at things like 3 to 6 months forbearances, deferring interest to a later date. Sometimes it’s spread out over time, sometimes it’s paid back at maturity, sometimes it’s paid back earlier than that, getting access to FF&E and other reserves to pay operating expenses. Those are kind of the main terms.And frankly, we’ve had a wide variety of success with that. We have signed up some and have made good progress with others. And there are other lenders or servicers out there that have, frankly, been fairly difficult to deal with, and may even, in some sense, be seen as an opportunity to get restructuring fees or other things. And so – and I kind of put it in light of, we’ve had great working relationships with our brands, for example, the brands have bent over backwards, I think, in terms of, particularly our friends at Hilton and Marriott and Hyatt, where they’re giving us access to reserves. They are suspending brand standards.They are allowing us to operate in ways that were completely unimaginable, just a few months ago. And so, kudos and credit to them, because they’ve been a tremendous…

Okay, great. I appreciate all that detail. Thank you. That’s all for me.

Yeah.

Our next question comes from Chris Woronka with Deutsche Bank. Please state your question.

Hey, good morning, guys. Rob, welcome in to the new seat.

Thanks. Thanks, Chris.

Yeah, great. Thanks. Thanks, Rob. Just a quick question, a follow-up on that – on Tyler’s question, I guess, as you think about the New York City Embassy Suites, and I think there is another one, right, Santa Cruz, Hilton, what are kind of the next steps there? And what kind of – how does that process kind of play out? It seems like it’s been a little bit more formalized now. So what – can you just walk us through what happens?

Yeah, no. It’s a good question. I mean, in some ways – in one sense, nothing happens. It’s just a terminology that’s used, and in many cases, they can be unwound. But there was an acceleration and it just means that we need to spend some time focusing on that and working with the various people that are in that capital stack. As you know, there is the realities of it being in New York City. There’s the reality that you had Governor Cuomo put out his kind of moratorium on foreclosures.No one really even knows what that means, frankly. There are different cases that are going on in the state. But regardless of that, foreclosures and that sort of process in New York takes time. We know that. The lenders know that. The servicers know that. And so, it’s something that we are – it just means that we are actively working with them to come to a mutual solution.And New York is in a pretty rough place right now. And it’s not exactly clear what the trajectory of recovery is going to be, when will it cease to be a hotspot. As Jeremy mentioned in his comments, we’ve been – this asset specifically has been housing a lot of first-responders and workers in regards to this pandemic. It’s not profitable.It is losing money, but it is at least kind of covering the incremental fixed expenses – the incremental variable expenses as part of it. But it is something that I’m hopeful that we would like to work something out, asset that we recently purchased. It’s our only asset in Manhattan Proper. So it’s just going to be a process of working with the various members of the capital stack.

And, Chris, this is Deric, I would just add that really the acceleration is just sort of a next step in the process after there’s an event of default. And what would really need to happen here was just kind of everybody hit the pause button, because we were forced to close; obviously, several of our properties given government mandates and government orders. And the Federal Reserve gave guidance to banks, which obviously as a borrower very appreciative of, where they encouraged banks to work with borrowers that have been impacted by the COVID-19 pandemic.And basically say like, look, give your borrower some breathing room. Like Rob said, we just need some time to kind of work this out. Unfortunately, in terms of hotel lending world, hotel financing, banks only make up about 50% of the outstanding hotel debt. So there’s another half of the financing world out there that are not commercial banks that are governed and regulated by the Federal Reserve.And unfortunately, there’s no single voice yet that has given those lenders guidance in terms of what to do. And so, as Rob says, been a little frustrating, because different lenders are doing different things. To us, to have a loan be accelerated and take our reserve accounts and use to pay down a loan for a hotel in New York City that is housing first responders, just doesn’t feel right. And so, we’ve called on Congress, we’ve called on the Treasury Department, we’ve called on Federal Reserve, someone to give some guidance to these other lenders that are not regulated by the Federal Reserve, to assist hotel borrowers.There are a lot of borrowers that are just like us. Most hotel owners are individuals that own a small portfolio, maybe one asset, maybe a handful of asset and they finance their assets through property-level mortgages. And so our industry has just been crushed, and really need some guidance from our government officials in terms of how lenders should be working with borrowers right now to make it through this crisis.

Okay, great. I appreciate all that color. And then, Rob, I think you mentioned in the prepared comments, a reduction in the advisory fee, I guess, with Ashford Inc. Can you give us maybe a little bit more color on that? And is that something as in your new role, does this situation kind of put that back on the table in terms of maybe doing a second – another amendment to the master agreement?

Well, I mean, I think at some point in time, we’ll – there’s going to – we’ll – I mean, like I said, we’re going to have to review everything to figure out what is the best way to set up Ashford Trust for success on the backside of all this. That mechanism – there’s a mechanism within the existing advisory agreement, where the fees can be reduced by 10% year-over-year as stock prices and whatnot drop. And so, you will see and have seen the fees to Ashford Inc. drop as part of all this.And to the extent that this process, that this crisis continues – you’ll continue to see probably year-over-year drops potentially. But no, we just got to think through all of it. I mean, there’s obviously great benefits that come from that relationship, I mean, the ability to have the team that Jeremy has in asset management. It’s definitely a massive benefit, and we can do that because we also have $2 billion of assets – we actually have $2 billion of assets over at Braemar and with the goal of continuing to hopefully grow over time.There’s also – Ashford Inc. has services like Pure, which here in this environment, there are quite a few assets that we have in trust, that have Pure Rooms, hypoallergenic deep clean rooms. That may be an offering, that is a real strategic advantage for our hotels going forward, and we’re looking at ways to potentially roll that out in a bigger scale.We have OpenKey. For example, this was something at Ashford Trust that we’ve been focused on over the last 6 months prior to all this, which is working on a true Skip-The-Desk process that, frankly, other than Hilton, which really only does that for certain elite members. That…

Okay. Very good. I appreciate all that color. Thanks, guys.

Our next question comes from Bryan Maher with B. Riley FBR. Please state your question.

Yeah, good morning. Robert or Deric, can you talk about the potential to have the government come in and do some kind of backstop on the CMBS and foreclosures? And what type of timing is involved in that? What’s the status of that? And who specifically is lobbying for that?

Yeah. Hey, Bryan. This is Deric. I’ll address that. The AHLA, the American Hotel and Lodging Association, has really done a great job, spearheading a lot of advocacy for our industry. Something that I’ve had personal conversations with several Federal Reserve folks about that I think would be great is if the federal government could just backstop a refinancing program for any hotel loan that was performing and current prior to the declaration of a national emergency. Because the reality is, if you’ve got a hotel mortgage today, pretty much every hotel in the country will be in default – every hotel loan in the country.And that’s the way that lenders could get made whole. If they – through commercial banks could basically sponsor a refinancing effort where banks would refinance existing loans that were current prior to the national emergency, previous lenders get paid off that capital can get recycled back into the economy. And borrowers are able to hold on to their assets and give us some breathing room to make through this crisis. So that’s a proposal that’s out there. The likelihood of that, I don’t know. I know, there’s some bills that have been proposed in Congress recently regarding declaring the pandemic available for business interruption insurance. And that’s something has been kicked around on a retroactive basis that companies could go back and get coverage through the federal government for any business interruption that can be claimed as a result of the pandemic, because most business interruption policies have specific exclusions for pandemics.So I know there’s some things working. The likelihood of that, I don’t know. But clearly, there is a need for it. And our industry has just been crushed. I know hotel industry leaders met with President, Trump; and Vice President, Pence, I think the second week of March. And we were hopeful that the PPP/SBA program would be able to assist hotel owners like us. And unfortunately with the changing of the guidance of that program, we were unable to keep those funds and access that those funds. The Main Street facility that’s been announced, will not work for the REITs, given the requirement to not use that money to refinance any existing loan. So there’s still a need, and we’re optimistic and hopeful that our elected officials will come up with something.

Yeah, I mean, we – I’ll add a couple of other points on that, Bryan, is that, I mean, one, we have to operate as if we assume nothing is coming, right. So we – it’s not like we have to we’re just kind of sitting here twiddling our thumbs hoping that help comes. So we have to move forward as if we don’t. There are, I guess, a couple of things that I’ll mention that Deric kind of touched on. There is kind of a little bit of groundswell movement that we’ve come in contact with a bunch of small – kind of small CMBS borrowers. I think they started a group called hotelstogether.org, which is trying to have these certain standards and guidelines, particularly for CMBS, but other lenders. I think they’re calling kind of the fairness in lending standards.Because it is kind of seen that, in our experience, at least my experience has been in the last few weeks, is that you get the sense that the CMBS guys, in particular, would actually welcome some sort of guidance from the federal government or the treasury, the Federal Reserve, the FDIC, whomever in order to kind of get them cover, because these guys are very nervous about taking steps. And then in the low likelihood situation that things come ramping back quicker, they look silly, and made a bad decision. So I think they would welcome that.And then there’s also, as Deric mentioned, this thing called the Workplace Recovery Act, which is getting some traction that we’ve heard through certain members of Congress that is more or less a business interruption insurance type structure. So, again, I think, both of those would be very, very helpful for us in our industry, but the likelihood is – I would imagine likelihood is low, given just the realities that we’re dealing with, but maybe one of them get some traction.

Yeah. Just 2 quick ones from me. The 23 hotels that are still closed, how soon do you think that those reopen? And is it more of a government mandate thing? Or is it a lack of demand versus the costs associated with reopening?

Yeah. There are a couple of them that were still kind of – that were government mandated. For example, in Monroe County, down in Key West. They’re going to be opening up on June 1. So that was one that was closed down due to the government. Most of the others are more demand driven. So you’re going to see a wave of them. A good amount of them will be coming back on June 1. And then you do have a few kind of laggards that just based on, typically, maybe their bigger assets or have demand generators that are urban that may not be coming back. That could be a little bit later, maybe everywhere from mid-June to sometime in July. So there are a few laggards into July. But most of them will be open in the next 30 days.

And Rob, when you sit here today, being the new CEO and with the challenges that you face here with everything that’s going on with the lenders and CMBS, and what have you, how do you envision this portfolio looking in size a year from now? Is it 50 hotels? Is it 70 hotels? Is it 90 hotels? Just a best guess. I mean, I know it’s hugely uncertain times, but how are you thinking about this business a year from now?

Well, I mean, if I look at – I’d say there’s a couple of factors. One is when we look through what we – what happened in the financial crisis. I think, we ended up getting back 3 hotels, right. We – it was a Hilton in El Conquistador in Tucson; at Chicago, O’Hare Westin; and a Hyatt in Michigan, in Dearborn. This is materially worse than that situation. In what we’re seeing and how far underwater certain assets may be. So in one sense, I would say, it probably be more than that.At the same time, what I just don’t know is, it’s kind of phrase, right, if I owe you a dollar, it’s my problem. And if I owe you a million, it’s your problem. There’s some of that that may happen with these lenders, because they’re so underwater and there’s so many problems. And so we just don’t know how difficult they’re going to be and how willing to work with us they are. We obviously have priorities and keepers and thing and assets that, frankly, if we had to hand back, I would be okay with that. There’s all of those. So I just don’t know what the lenders are going to do, Bryan, I just don’t control that. But from a depth of problem situation, it’s definitely much more severe than the financial crisis. And so I would anticipate that we’re definitely at risk to hand back a few.

Okay, thanks. That’s all for me.

Thanks, Bryan.

Thank you. [Operator Instructions] Our next question comes from Michael Bellisario with Baird. Please state your question.

Good Morning, everyone.

Good morning, Mike.

Just a couple questions for you, more along the same lines of the debt modifications. I think you mentioned you’re still making a few principal and interest payments. Can you tell us which loans or which mortgages those are? And then why did you choose those properties?

Yeah, I don’t know, if I’ll go to the detail of which ones, but what I can tell you, there are a handful of ones where either we’re in the midst of, say, either renovation that has certain funds that we want to make sure are – we’re being able to get access to. Or there’s just certain discussion with lenders that you’ll make it more necessary to be kind of current in order to deal with them? But it’s very limited. I mean, the number of loans that we’re current on, as we sit here today is extraordinarily small. So it’s mostly just about either the type of relationship or maintaining access to certain reserve accounts that, that were important for kind of normal operations or renovations to keep going.

Got it. That’s helpful. And then maybe a bit more technical question for Deric. But I guess, what can be negotiated or modified with the servicer when you’re going through these forbearance agreements? I guess, can you extend the maturity date? Or is it really all about the smaller items and kind of the current pay items that Rob mentioned earlier?

Like, I can take that too. I mean, I think, once you’re dealing with the special, most things can be changed. I mean, they have their – the rights, the abilities to do quite a few types of modifications, including extensions, changes in rate, changes in a variety of terms. There are certain things, structurally, that they may not be able to do. To give you an example, one thing that we had as an ask early on in some of our forbearance discussions was taking deferred interest and putting it onto the back end as an addition to principal payments at maturity, As we’ve discovered, that’s not something structurally, that’s very easy to do within the CMBS environment. So there’s things like that, that are just no more difficult.The issue, I think, is less about what they’re capable of doing and more about what they’re willing to do in this right now. Again, I don’t think people have – the servicers and lenders have yet come to acknowledge the reality and depth of this crisis, and the fact that I don’t think there will probably be one forbearance of 3 to 6 months that will likely suffice to solve the problem. And I think that’s the case, almost universally, across every hotel loan. No one is ready to solve it. And that may just have to come through continued pain and just watching this slowly crawl back.And so I just don’t know when those legitimate discussions will – they’ll be ready to have, I don’t know if that’s after Forbearance 2.0, as people still realize here in a couple of months that there’s still assets that have still low-double-digit, 20%, 30% occupancy. And they’re still treading water and still underwater. Is it then – do they kick the can out just another 3 months or 6 months we do this again? But at some point, in time, fundamentally, every hotel loan in America will likely need to have some sort of restructuring of something.And I just don’t know when that will happen. Obviously, we’re – we would love for that to be happening sooner rather than later. But I think the lenders are by and large, and the servicers are hesitant to do that, because they just – that’s a lot of work. That’s a lot of some sense of risk that they’re taking, because they just don’t know the trajectory of the recovery. And again, they don’t want to look silly as if they gave the borrower a really friendly deal, and then they look back and say, well, that was stupid, we gave them too much. And they’re just not ready to do that yet. So it’s not just that, I mean, I think it’s the case that every loan, every hotel loan in America is going to have some sort of need to be extended and some sort of restructuring done.

That make sense. And then just on your $127 million of restricted cash, how much of that is held by lenders? How much is held by your managers? I think that the Remington portion. And then how would you get access to that money if you’re not making your monthly mortgage payments? Can they just kind of walk us through the mechanics of that and where that money is held specifically?

Yeah. So I’d say that the vast majority of that is held by the lenders and lender held reserves. Marriott does hold some of those FF&E reserves. And that’s obviously just part of the negotiation with the forbearance, because it is held by the lender. There are specific requirements in the loan doc in terms of getting reimbursed when we spend those CapEx dollars to get reimbursed from those.But, obviously, now we’re trying to get access to those to use those funds for operating shortfalls, which all of the brands have really waived their requirement of even having FF&E reserves and any cash within an existing reserve can be utilized to fund operating shortfalls. So, now, it’s just a question of getting there with the lenders. And that’s a discussion that we’re kind of having at the moment.

Yeah. And that’s kind of probably the key part of all of our forbearance agreements is, is being able to get access to those FF&E reserves. And I think, I mean, generally speaking, the lenders, I think, are amenable to that. It’s just what are the other kind of requirements or asset terms around that, that make it more difficult to work on. But we’re getting there and communication is active with the lenders. And so, we’re just kind of chopping away and making some progress on it.

Got it. And then, just last one from me on your preferred, what’s your latest thought on why you might still or maybe not pay this coming quarter’s dividend and kind of where’s your head at in terms of that piece of the capital stack today and that quarterly cash outflow?

Big question, the decision to pay the preferred in the first quarter was made for a pretty specific reason for us. At that time, Ashford Inc. had started the Ashford Securities platform, and was setting up, in this case was Braemar to do an offering that was out in the public market that we – that Braemar had announced was going to be kind of a non-traded preferred paper.And that was something that, at some point time down the road could be an interesting part of the capital stack or interesting way to raise capital for Ashford Trust. And so, as a result, at that time, we didn’t know what the trajectory was here at Ashford Trust. And that was potentially a valuable capital raising option.We didn’t want to do anything here in the short term to kill that option down the road. To suspend payment on preferreds, obviously, would be a detriment to that strategy in the story. Now, as we sit here today, the world has changed. As we sit here today, the Board is clearly aware of the cash needs we have of the business and the environment we’re in. They have not declared or not declared – the dividends that will be decisions they make going into the – as they normally do in the second quarter.But they are clearly aware of the current environment we’re operating in. So I’m sure they will take that into account as considering what to do going forward.

Thanks for all the color. I appreciate it.

Thanks. Your next question comes from Robin Farley of UBS. Please state your question.

Great. I know you talked about the expectation that leisure business would come back first. Can you – I don’t know if you’ve quantified kind of what percent of your businesses is leisure and what percent is also drive-in business versus flying? I don’t know if you have those percentages.And then, just lastly, I guess, is the idea of selling assets in this environment, would that just, I guess, not address any issues with debt due on those properties, given the rates that like a distressed sale? Is that - is that why that’s kind of not on the table at this point?

That’s a good question. I mean, let me answer the second one first. I mean, as we sit here today, we actually a couple months ago did kind of dangle out there a couple of assets to kind of see what was market pricing out there. And those assets came in, I think, generally, maybe 40% off of what we thought kind of pre-COVID-19 values were.And that was pretty significant and something where we didn’t think that was a reasonable number. And so, we kind of moved on from those alternatives. As we sit here today, there may be a time where asset sales do make some sense. There may be times where there may be assets that we do end up wanting to hand them back. We’re working with the lender to team up for sale or that may be part of restructuring of certain loans. We will see.And there’s always a price, right? There’s always someone comes in with an offer that’s too good to say no to. That’s always possible. The reality is that with our loans, by and large, in default across the portfolio, it’s unlikely that to the extent that we sold an asset that any of those proceeds, net proceeds would come to us, they’d likely go to the lender just to pay down debt, which, again, may be part of what we have to do in order to get the capital structure and a place over time to where we needed to be.But as we sit here today, our focus is clearly on managing our costs, working with our lenders to come to solutions. And as we make progress down that, if there is some asset sales that can make sense to help that and help position the portfolio, we’ll do that.In terms of the first question, I will say, I don’t know if I’ve seen data that specifically breaks up drive-to versus fly-to. I don’t think we really track that. Like I was saying, we did mention we are about 80% transient and with a little bit of contract. But we are a predominantly a transient house. And we do have a pretty wide mix of both limited-service and full-service assets that are transient houses.So at least as we look through the portfolio, there are, let’s call it, if you take most of our limited-service products and you add some of the other located full-service assets, I’m going to say you probably have, I don’t know, 50 to 60 assets. It’s maybe half the portfolio, that have a material amount of drive-to traffic. And so, it’s substantive. It’s definitely, I think, more than the vast majority of our peers in the industry who tend to have more urban, more big-box type products. So I think we’re pretty well positioned from that perspective.

Great. Thank you.

Thank you. There are no further questions at this time. I’ll turn it back to management for closing remarks.

Thank you for joining today’s call. And we look forward to speaking with you next quarter.

Thank you. This concludes today’s conference. All parties may disconnect. Have a good day.