Ashford Hospitality Trust, Inc. (AHT) Q3 2020 Earnings Report, Transcript and Summary

Greetings and welcome to Ashford Hospitality Trust Inc. Third 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] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Manager of Investor Relations.

Good day, everyone, and welcome to today's conference call to review the results for Ashford Hospitality Trust for the third quarter of 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. 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. 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 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 October 27, 2020, and may be -- also be accessed through the company's website at www.ahtreit.com. Each listener is encouraged to review those reconciliations provided in our earnings release together with all other information provided in the release. Also unless otherwise stated, all reported results discussed in this call compare the third quarter of 2020 with the third quarter of 2019. I will now turn the call over to Rob Hays. Please go ahead, sir.

Good morning and welcome to our call. Since our last call in July, our business and the industry have remained pressured due to the pandemic. The last several months continue to be unlike anything most of us have experienced in our lifetimes and these remain challenging times for our country, the economy and of course the hospitality industry. I'll start with the current environment and how Ashford Trust has managed through this pandemic and the early parts of the recovery. After that Deric will review our financial results and Jeremy will provide an operational update on our portfolio. While we have made progress getting our business back up and running, we anticipate dealing with pandemic-related challenges for some time, because of the impact of COVID-19 on the U.S. hospitality industry and the day-to-day operations at our hotels. As discussed on our last two earnings calls, our response to the pandemic has been swift and comprehensive. We have focused our efforts on providing a safe environment for our guests and staff at our properties, while at the same time taking aggressive measures to protect our properties and preserve liquidity. So we can be in a position to return to profitability as the economy opens up and travel resumes. Additionally, given the economic impact of the pandemic, we were initially required to make the difficult decision to temporarily suspend operations at many of our properties. I'm pleased to report that we currently have only two properties with suspended operations. We hope to reopen them soon as demand returns. Operationally, we are focused on mitigating the financial impacts of the pandemic, with cost control initiatives, including working closely with our property managers to manage cost structures and maximize liquidity at the properties. This is where our relationship with our affiliated property manager, Remington, really sets us apart. Remington has been able to quickly cut costs and rapidly adjust to this new operating environment. We are proud of their efforts and believe this has enabled us to better weather the impact of COVID-19 and Jeremy will discuss this in more detail. We have also significantly reduced our planned spend for CapEx for the rest of the year and suspended both our common and preferred dividends. Deric will provide more detail around our liquidity shortly. But throughout the quarter, we have taken action to preserve liquidity. We've been actively working with our lenders on property level debt to arrange mutually acceptable forbearance agreements to reduce our near-term cash utilization and improve our liquidity. In early October, we announced we entered into forbearance agreements on our KEYS Loan Pools as well as the Hilton Boston Back Bay representing 35 hotels and approximately $1.3 billion of debt. With the completion of these agreements, we now have loan forbearance or modification agreements in place for 62 properties, representing approximately 72% of our current outstanding mortgage debt balance. The forbearance agreements typically allow us to defer interest on the loans for up to six months, subject to certain conditions. They also allow us to utilize lender and manager-held reserve accounts, which are included in restricted cash on our balance sheet to fund operating shortfalls at the hotels. Discussions on the remaining loan pools are progressing well and we look forward to providing additional information as we work through this process. As I mentioned on our last call, it is unlikely that we will be able to agree on forbearance terms on all of our loan pools and investors should anticipate that we may hand back assets to lenders during this process. There are several reasons why we may decide to give back assets to lenders. One, there's negative equity in the loan pool and is unlikely to reach positive equity in the medium to long-term; two, there are significant cash requirements at the property, such as operating shortfalls ongoing debt service or capital expenditures that we do not believe are economical; or three, the terms the lenders and servicers are proposing are onerous making keeping the properties unattractive. While we hope to retain as many of our properties as possible, I do think it is important for our investors to know that during this process we will plan on handing back assets that do not create long-term value for our shareholders. To that end during the quarter, we handed back 13 hotels to lenders. And while we take no joy in handing back assets to our lenders we do hope it demonstrates that we are willing to make hard decisions that are in the best interest of our shareholders. The first nine months of 2020 have been extraordinary by any measure. I cannot be prouder of the effort and the performance of our teams during this time, and I believe our response has been the right one for both the short and long-term health of our guests, our portfolio, the communities we serve and our shareholders. We are closely monitoring the fluid situation and have plans in place to continue to reopen closed properties as business demanding conditions warrant. Our management team has extensive experience in effectively navigating tough market environments and extended downturns. Now each crisis is invariably different, but we believe we have the right plan in place to protect the long-term values of our assets and the company. I'll now turn the call over to Deric to review third quarter financial performance.

Thanks Rob. For the third quarter of 2020, we reported a net loss attributable to common stockholders of $109 million, or $9.26 per diluted share. For the quarter, we reported AFFO per diluted share of negative $4.57. Adjusted EBITDAre totaled negative $22.7 million for the quarter. At the end of the third quarter, we had $3.7 billion of mortgage loans, with a blended average interest rate of 3.5%. This average interest rate does not take into account any default rates. Our loans were approximately 7% fixed rate and 93% floating rate. Our loans are all non-recourse. As Rob mentioned, we have signed forbearance or other agreements for 62 properties, representing approximately 72% of our current outstanding mortgage debt balance and we are discussing forbearance agreements with our property-level lenders on all other loans. We ended the quarter with cash and cash equivalents of $120.9 million and restricted cash of $89.5 million. The vast majority of that restricted cash is comprised of lender and manager held reserve accounts. We 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 the end of the quarter, we also had $13.2 million in due from third-party hotel managers. This represents cash held by one of our property managers, which is also available to fund hotel operating costs. As of September 30, 2020, our portfolio consisted of 103 hotels with 22,592 net rooms. Our current share count stands at approximately 16.8 million fully diluted shares outstanding, which is comprised of 14.6 million shares of common stock and 2.1 million OP units and reflects our recent 1-for-10 reverse stock split. During the quarter, we commenced an offer to exchange shares of each series of our preferred stock for common stock. We amended the exchange offer earlier this week and the total maximum consideration offered in the exchange offers is approximately 126 million of newly issued shares of our common stock, which is the maximum amount issuable if all the outstanding shares of preferred stock were tendered into the exchange offer. We may issue substantially less than this amount depending on the number of preferred shares tendered into the exchange offer. We also announced that we are extending the exchange offer expiration date until November 20, 2020. This concludes our financial review. And I would now like to turn it over to Jeremy to discuss our asset management activities for the quarter.

Thank you Deric. Comparable RevPAR for our portfolio decreased 72.1% during the third quarter of 2020. Hotel EBITDA flow-through was solid at 54.2%. As recovery in the hospitality industry continues to take place, we are monitoring daily occupancy and revenue, which has experienced steady growth. Generally, we are seeing more demand at our select-service hotels with third quarter occupancy down 54.6% compared to full service which was down 62.5%. Something that I have always believed is that we have the best asset management team in the industry. When COVID-19 started sweeping its way across the country, our team took immediate action to mitigate its impact on our portfolio. Admittedly, the last few months have not been easy to navigate but this team has buckled down to better position us for the recovery. We made tough decisions to suspend operations at some hotels, cut staff and ultimately rethink the entire business model for our hotel operations. Recently, we have been busy reopening and driving revenue at many of the 23 hotels that had suspended service. As of today, we've reopened 21 of these hotels. Of the two that still have operations suspended, one is the Hampton Inn Parsippany, which is still accepting reservations and funneling them to our Hilton Parsippany next door. And the other is the Le Meridien, Minneapolis, which is given the – which given the uncertainty in the market is still waiting for demand to come back. While ideally we would have all our hotels open, we're very proud to have 98% of our portfolio back in operation. As previously mentioned, we have had to rethink some of the business models at our hotels during the pandemic. Part of that process has been shifting our focus to securing partnerships with long-term projects, airline crews and universities to provide student housing during upcoming semesters. A number of our hotels have been successful in this endeavor including Marriott Beverly Hills, Hilton Santa Fe and Hotel Indigo Atlanta Midtown. At our Marriott Beverly Hills, we managed to secure business via the California state government. That piece of business brought in 7,615 room nights and approximately $754,000 in rooms revenue. This combined with our – with other business on the books contributed to hotels' incredible performance of 71.1% occupancy and 50.8% hotel EBITDA flow-through for the third quarter. Another success story has been the Hilton Santa Fe. We were able to successfully launch an Amazon film crew during August and September, which generated 3,467 room nights and $270,000 in room revenue. What is really impressive is that hotel ran 96.9% occupancy for the month of September. In early August, at the Hotel Indigo Atlanta Midtown, we were able to secure a partnership with Georgia Tech University to provide student housing. During the third quarter that relationship produced 7,614 room nights and approximately $484,000 in rooms revenue. As a result, the hotel ran a 21.8% hotel EBITDA margin. These types of arrangements are great because they solve unique business issues to both universities and hotels are facing due to the pandemic. During the last few years, we have invested significant capital in renovating our hotels – our portfolio to maintain competitiveness. During the third quarter, we completed the guest room renovation at the Marriott Bridgewater. Looking ahead to the final quarter of 2020, these investments will provide us with a competitive advantage while our industry weathers the storm brought on by the COVID-19 pandemic. Additionally, our capital investment strategies will allow us to allocate capital more shrewdly for the remainder of the year. Looking ahead, one area that we expect that may have a strong recovery is the Washington D.C. market, which represents approximately 11% of our total revenues. First, we have the presidential inauguration coming in January 2021, from which our assets should benefit; second, Amazon's HQ2 is being built right next door to a number of our hotels, some of which will be within walking distance. As a result, we look forward to significant improvement in that important market. That concludes our prepared remarks. We will now open the call for Q&A.

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

Hey, good morning. Thank you for taking my questions. I wanted to start on demand trends and what you're seeing out there. Obviously, you're the first company in the space to report. So very curious what you're seeing. And obviously, occupancy for the quarter near 30%. Are you able to say for your portfolio what we saw in terms of demand trends in October? I know you don't want to give specific guidance on the quarter, but just kind of curious what you saw after September. And then also interested, if you could discuss leisure travel trends, especially after Labor Day weekend?

Well I'll start and let Jeremy jump in here. I mean, what I can say is that we saw September was overall fairly similar to August. And I think overall, we're seeing October is fairly similar to September. I mean, we're looking to see -- I think overall, we're not seeing I guess a significant ramp in demand that it's -- the kind of the theme or feel that we're seeing in the last few months overall is probably fairly consistent. Now the mix of that is a little bit different as Jeremy can talk about here in a minute. But I don't think we're -- the booking windows have shortened to a point where it's really coming in a week or so or less even ahead of time. And so, as we sit here now, we're kind of anticipating similar trends to what we've seen here recently. But I don't know Jeremy, if you have...

Yes. What I'd say to that is that every month since pandemic starting in April, we've seen month-over-month increase in occupancy demand and RevPAR with the exception of September was more or less flat with August. And that has to do with having a good amount of leisure demand in August and then with folks coming -- going back to school in September. We actually -- in October, we are seeing a little bit more demand and better RevPAR than we saw in September. Every week continues to just get a little bit better week-over-week and we compare it to the previous 4 weeks as well. And when we look at where we think we'll end up, we're hopeful that October is definitely going to be better than September, but not materially at this point.

Okay. Okay. That's very helpful. And just to switch gears a little bit to the...

Hey, one other thing I'd say is that we're really close at a level where our hotels are breakeven on a cash flow basis. So if we hit where we think we could be in October, we're going to be very, very close to that level which is a huge progress from where we've been in previous months previous quarters.

Yes. See for the third quarter, our hotel EBITDA averaged about negative $3 million in EBITDA. So we are getting to a point where we are getting close to that kind of breakeven-type level that Jeremy was mentioning.

Okay. Okay. That's a good segue to my next question. I was going to ask a little bit more, if you could provide some detail in terms of the cost structure and what you guys are doing. It looks like the flow-through was a little bit better than we had expected. Are you seeing as some of these hotels are reopening? Are you seeing the flow-through perhaps a little bit better than you might have anticipated originally?

Yes. Well let me start. I mean, I definitely think if you had told us given the revenue levels that we're seeing, would we be able to flow the numbers that we are. And my guess probably a year ago would have said, no way. But as we sit here now, the work that Remington and that our brand partners at Marriott, Hilton and Hyatt have done have been pretty remarkable, where we have been able to achieve 50% or better flows in these revenue environments. So I don't know Jeremy, if you have more specifics on that, but it's been pretty remarkable in their ability to handle those flows.

Yes. We -- what I'd say is every month we continue to exceed our forecast both on the revenue side and on the cost side. What we do is we're getting the properties that forecast really the revenues just because we want to manage our expense structures around almost the worst-case scenario. And so we continue to exceed our forecast, when the actuals come in. And we have been very pleased given the set of circumstances with the low revenue environment, with the -- just all the pressures that we have across the board in our hotels that, we've been able to achieve the flow-throughs that we've been able to achieve. I think it is not from coincidence, it's been a lot of effort by the asset management team. They're doing weekly, P&L reviews at all our properties, weekly revenue calls with all our properties, and we're down to the general leisure data where we are just dissecting every cost component of the hotels. Now, as we start to see revenues continue to come back which they are coming back and I do think that that will be accelerated obviously when we have a vaccine which hopefully we'll have soon, I'd anticipate that we'll be able to maintain higher margins coming in the recovery than we have in previous cycles just because we have eliminated so many different positions and the brands themselves have done a really good job removing above property costs that are allocated to our properties. And so you've got multiple angles in which we've got cost savings and that doesn't include what we've done on the third-party side with all our vendors and what have you. So, I'm optimistic that we'll have a sustained level of higher margins than what we've had in previous operating environments as revenues come back.

Okay. And then the last question I had probably for Robert [ph] or Deric. Just when you look in terms of forbearance can you talk about the discussions you're having with lenders? And more importantly, I think initially in the pandemic you were able to get forbearance. A lot of that was six months or so. You're starting to run up to the end of some of those initial agreements. How are those conversations going with lenders and special servicers?

Yes. Good question. So, you're right most of the forbearance arrangements that we have signed up to-date were six months type duration of interest forbearance which typically went up to here in October or November. And so as of right now I mean we do anticipate those loans that we signed up forbearance arrangements to restart interest expense here this month or next month. We have reached out to some of them to open up discussions to see if there's additional forbearance possibilities available and that's still kind of TBD on whether or not that's going to be possible or not. And then we do have about 25% of the assets that we haven't yet announced forbearance arrangements. We are in discussions with all the various parties and I do feel good about where most of them are but some of those need time to be documented and finalized. But we have made progress. That's not all of them. It's per the comments we made on the call they're definitely -- or there will potentially be some that we don't. And that's where we may have some additional hard decisions to make on whether or not to keep properties or not. We're hopeful that it's going to be a minority of the amount that's remaining. But that's still TBD. But we do have the -- these forbearance arrangements in one sense kind of burning off in terms of the instance forbearance. And all of those have some sort of structure where we'll repay any deferred amounts over some period of time typically nine months or 12 months or 18 months depends on the agreement.

Okay. That's all from me. Thank you for the detail. Appreciate it.

The next question is from Bryan Maher of B. Riley Securities. Please proceed with your question.

Yes, good morning. So kind of following on some of that forbearance discussion. And as it relates to the 13 hotels you handed back is there some kind of common denominators the type of assets that are going back? Are they full-service properties? Are they select-service properties? What has it been? And what do you expect it might be?

Good question Bryan. Each one had its own story frankly. So I don't know if there's a common theme amongst all of them. On some of them there were assets that were in a little bit of trouble prior to this pandemic and that were going to be difficult having the ability to refinance some of those assets anyway. Others of them were obviously specifically hit for example the MC suites in New York that we handed back. That was disappointing because it was an asset that we had purchased in the last couple of years and felt good about over the long run but what has happened to New York and the outlook for New York for the next several years just made it so that it was uneconomic in order to keep it. So, I don't know if there really is a single theme because they've been both full-service assets in a couple of them and limited-service assets for the majority of them. So, I'd just say it's kind of story-by-story, pool-by-pool.

Yes. The determining factor is just economic decisions. And so we just -- we've looked at it very objectively and I think you can definitely see that when you see that by and large the vast majority -- substantial majority have been Remington-managed hotels.

Yes. Well, -- and I guess the one other thing that maybe there is a little bit of a theme Bryan is that all of those loans were ones that had mezz on them, right? And that just in many of the loan pools can create situations where you have attention whether it's because of the intercreditor agreement and certain rights that need to be enforced and that creates the demand and depending upon whether or not the special servicer is giving any kind of forbearance to the other mezz players as part of that or if they just stick to the letter of the law and aren't working with the other pieces of the cap stack. So that was probably, I guess, one common theme is just the reality of that mezz was in all of those loan pools.

Great. And then look, I mean, modeling you guys has always been without any guidance a little bit more difficult than not. Clearly it's much more of the case now because we don't know at any one time when assets are being handed back or not. I will say that we noticed that our interest expense was way off for the quarter predominantly because I guess you have the forbearance agreements in place. But I guess, the question I'm asking is kind of on a go-forward basis with all the unknowns, I mean should we just model the company with what you kind of had at the end of the quarter and what we think interest rates are going to be and just have to live with the higher level of uncertainty as you work through all of these agreements?

Hey, Bryan, it's Deric. Yes, I would say, just from a modeling perspective look at the company as we were at the end of the quarter. Obviously, we do make announcements during the quarter in file 8-Ks on anything that's material that you guys could see and could incorporate those into your models. On your comment on the interest expense, there was some noise in the quarter because we do have to accrue for default interest and just about all the cases where we've signed these forbearance agreements they've waived default interest. So they might reverse that out. So there is some noise in the interest expense line item. But currently, the monthly run rate for interest expense for our portfolio on a, sort of, cash interest expense basis assuming we are paying interest on all of our loans is around $11.5 million to $12 million a month. But I would encourage you to just look at the portfolio as it sits at the end of the quarter and use that in your models.

Okay. And then when we think about the preferred exchange offer out there and I'm sure you're massively limited on what you can say. But what happens to the preferreds that don't get tendered? I mean, do they just hang out there and supposedly accrue deferred dividends? How does that play out?

Yes. It's a good question. As you saw we have made some announcements here recently as we've kind of amended the terms of the exchange offer. And one of the things that we did we would had to seek two different votes for the common shareholders in order to approve the ability to effectuate that transaction one of which was getting approval to issue of the shares for the exchange and then another was actually for a charter amendment that would allow us to what's called drag along all of the -- any preferreds that didn't tender if we could get two-thirds of them to tender. That second one that was for the charter amendment we announced that that special meeting for it is going to -- we're going to kind of withdraw that or cancel that special meeting. But the previous one of getting the approval for the shares was passed by our shareholders. So what that allows us to do is basically take and accept whatever is exchanged in and those that do not tender will stay as they are. And so they'll remain outstanding and the rest will be converted at a premium into common stock.

Okay. And then last for me and maybe this is a question for Deric and maybe you can answer it. But aside from the monthly run rate of cash interest expense that you shared is there a monthly burn rate in general that you can share? And if not can you give us some color as to if it's been directionally improving over the past couple of few months?

Yes. I'll take a shot at that Bryan. So I think the way to think about it is we've got corporate G&A costs of about $4 million a month. As I said in the third quarter, we had negative EBITDA at the property it's about $3 million per month. As per Jeremy's comments, we think those are getting a little bit better. So hopefully here in the next several months we'll be at breakeven or better. And then the interest expense per Deric's comment was $11.5 million to $12 million a month. So that's the vast majority. Now there can be obviously other expenses other onetime things. For example sometimes as we're signing up these forbearance arrangements there may be 25 basis points, 50 basis points or whatnot of various fees and one-time fees associated with those forbearance arrangements. But those numbers should give you a good sense for what we think our cash burn as we sit here.

Okay. Thank you.

You got it.

[Operator Instructions] Our next question comes from Chris Woronka of Deutsche Bank. Please proceed with your question.

Hey, guys, good morning.

Good morning, Chris.

Good morning. Can you talk a little bit about the forbearance agreements? I know you covered it in some detail before, but are there embedded terms that would allow you to go back for an extension of those whether it's a three-month kind of deal? And maybe can you give us a little bit of color on exactly how much -- what exactly you need to get to come out of a forbearance comfortably? Is it just property level EBITDA, or is it something else beyond that?

Well, what I can say is none of the forbearance arrangements necessarily have, kind of, automatic extensions that go beyond their initial term. I mean, we have some that -- for example, that mezz can have some extensions for a few months. But in terms of the ability to extend those for another three months or six months that would be an additional negotiation. And as I mentioned earlier, I mean we have reached out to some of our lenders about the potential of that, but that's TBD in terms of the success or viability of that path. And I guess what was the second part of your question?

Yeah. Just kind of what exact -- I mean, is it as simple as if the hotel generates x-level of EBITDA and your debt payment on it if you break even on that you come out you, say we're flat or…

Yeah, that's a good question. So it really is more or less dealing with the same cash trap metrics that existed on the loans. So for example -- so as most of them work we'll have say call it six months of forbearance on interest right? So probably maybe that's April through October or April through September. And then over sometimes maybe starting in January that interest will be paid back call it maybe in 12 increments monthly over 2021. So we'll have heightened interest expense starting say next year and that goes on. Then they'll allow us to use say FF&E reserves or other reserves to the extent that we're experiencing operating shortfalls call it this year. And any deferrals or replenishments may need to happen to those FF&E reserves or other reserves starting next year. And so what happens is that there's usually some waterfall where the -- those I guess the uses of those reserves get replenished. And then you'll be paying back the expense and then your current expense and then goes to your mezz. And then once you hit certain levels and will get back to distributing cash to us. But usually those are set within the same cash management system that exists within the loan docs today.

Okay. I think I got it. That's helpful. I just wanted to also ask you as you work with the brand companies I know you've got a lot of Remington-managed hotels. But from a franchise perspective, what's your sense so far as to how flexible these brand companies are? And do you think that can last long enough for you guys to make up for lost time, or is there eventually more friction with the franchise companies?

Well, I mean our experience thus far has been outstanding. I mean we've just been very, very happy with our relationship with Marriott, Hilton and Hyatt and our brand partners because they really have gone I think above and beyond this time in this pandemic and disaster of being flexible with us and working with us to provide us not just flexibility, but also data as Jeremy, I think mentioned maybe in one of his earlier comments. I mean, the amount of data operationally that we're getting now is – far surpasses anything we've had before and allows us to really maintain and control costs like we've never had before. And we do believe that those – that sort of relationship and transparency of information is one that helps us across the board in terms of what this looks like in recovery in terms of maintaining cost structures and margins. Frankly, the brands themselves have been going through a very, very painful time. I mean, they're going through layoffs and furloughs, and restructurings and they're going through their own time of distress. And so we're trying to be good partners with them to be able to find ways to help them out. And so there are a lot of discussions, when it comes to CapEx to PIPs, but we don't have a whole lot of PIPs, but some of the plans that we have over the next several years of having a good amount of flexibility with them on that timing. But I think the reality is that a lot of that is going to be to come. As we kind of see how the recovery happens and we can get back to a more stabilized view of the world I think that will be the same thing for them where we can kind of all exhale a little bit and think about the best way to make capital decisions, and brand decisions, operating decisions together, of what the kind of post-COVID world looks like. So it's hard to say exactly what that will look like, but we do think it will be a much more efficient and cost-saving process and structure for us going forward.

Okay. Very good. Thanks, Rob.

The next question is from Robin Farley of UBS. Please proceed with your question.

Hi. Thank you. This is Arpine here for Robin. I know, this will vary by property, but if you can give us a sense of overall, what percentage of RevPAR decline would be breakeven at property level and what percentage RevPAR would be breakeven at corporate level? And then I have a quick follow-up. Thanks.

Sure. Okay. That's a good question. So the way that we have been looking at and thinking about it here internally is that, when you're talking about limited-service assets that breakeven level maybe somewhere between 25% to 30% occupancy. And as you get more into full service that maybe somewhere closer to 35% to 40% occupancy obviously depending upon if it's a labor union hotel or there's other certain markets where that may be a little bit higher. But across the whole portfolio at Ashford Trust, we think that breakeven level at the properties is all in about 35%. When you then add debt service to it we think breakeven level is probably closer to 50%. And to cover kind of all kind of corporate costs and everything else it's probably closer to 60%.

Okay. That's very helpful. Thank you for that granular answer. And then what is your more typical mix of leisure versus business travel in Q3, let's say Q3 of 2019, which was sort of a more normal – obviously more normalized year? And what would that be in Q4 in terms of how that mix shifts from Q3 to Q4?

Well, I don't know on Q4, I have – I'm not exactly sure because the booking windows have shortened so much it's very difficult to say. But I mean as of right now we are seeing obviously materially more leisure travel and business traveler housing group is – I mean, it's not nothing, but it's very low. It's just a very small group. And so it's definitely a majority of leisure travel. So –

That was more obviously in a more typical demand environment like last year this time. What was that shift as you shifted from Q3 to Q4?

Yeah. I don't know, there's a big shift Q3 to Q4. But typically, what we historically see is that we're operating 20% to 25% group, and then the balance is mostly going to be transient. There is some contract business we have. It's a very small historical percentage of our portfolio. And contract would be like airline crews and things like that. In terms of the mix between business and leisure, we have estimates on that because we don't always know why someone is coming in and checking the hotel. We definitely know which accounts are what they call qualified business or special corporate or negotiated. And that's typically, 20% maybe a little bit more than that. And so then, the balance is going to be a mix of business and leisure. And best guess is maybe 50-50 maybe a little bit more on the business side typically historically, but we're definitely seeing a much higher mix of leisure travel right now. And I think actually in some cases in some markets, leisure travel is up. I mean we had a Lakeway, which is a hotel in Austin on Lake Travis. Its RevPAR was up year-over-year for the quarter. And innately our drive to, leisure resort markets have performed much, much stronger than we would have anticipated.

Okay. It's helpful. Thank you.

[Operator Instructions] Our next question is from Michael Bellisario of Baird. Please proceed with your question.

Good morning everyone.

Good morning.

I wanted to focus a little bit more on liquidity. And what you're doing to shore that up and kind of really more interested in the permanent solutions, not really the temporary forbearance agreements that you've talked about a lot. Can you maybe give us a sense of, what you're doing on this front? Are you considering asset sales? And I guess really what other options do you have at this point in time?

Yeah. Good question, Mike. So we obviously have to -- I think have all options on the table right, in this sort of environment. We have to -- and we are spending a significant amount of time looking at what are all the various solutions that can lead us, not just to survive, but thrive on the backside of all of this. And so, there are a handful of levers we can pull because you're right. I mean these forbearance arrangements are not a permanent solution. And those are one we obviously have spent some time looking at, asset sales. We are fortunate to be in a position where we think we have a decent amount of equity in the portfolio, even at price for the equity, value and then as we recover. And to the extent that we want to be able to maximize value to shareholders over time and we want to obviously retain as many of those assets that have equity value in them as possible. And so that's a tension that exists. We obviously are focused on what are the best ways to raise capital whether that's publicly or privately and there are efforts underway on that front to see what are sizable amounts of capital that we could raise to be able to give the company enough liquidity to make it through all this. And so those efforts are underway. And then, we also have to look at all options, right? Are there ways for us to restructure the company, to the extent that other alternatives, don't lead to the best result for shareholders over the long-term right? And so that's where we are looking at things like this preferred exchange in order to redo the cap structure. There's other ways that we can restructure the company. And it may be whether in court or out of court. I mean we're looking at all alternatives. We have a lot of lines in the water and are doing our due diligence, in order to determine what we think the best path is for all the various stakeholders in the company over time. So I would say that we're working on a lot of fronts. And we'll be diligent. And as we come to decisions and determinations we'll make sure to keep everybody up to speed with what those are.

Got it. And then a follow-up on that maybe for Deric, it looks like you did issue some stock on the ATM in the quarter. Can you maybe provide how many shares were issued? And at what price or what the proceeds were?

Yeah. So Mike, so that will be in our Q which we'll file next week. But we did have -- we did turn on the ATM during the quarter and issued some shares. So, that will be in the Q that we'll file next week.

Okay. And then, on Crystal Gateway, can you maybe help us understand what your thoughts and plans are there for that maturity next month? And then, Sheraton Ann Arbor it looks like, you got an extension maybe for $1 million pay down. Can you kind of walk us through that? And what the terms of that amendment were?

Yeah. So I can say that too on Gateway, that does mature here soon. We are in the process of documenting an extension on that, relatively shorter-term extension a long-term extension on that. So we'll be -- we're in the process of documenting that. And once we have that signed up we'll obviously release the terms of that. But that will give us a little bit of runway on that front, because it is a great asset and an important one to us. In terms of Ann Arbor that's obviously a relatively small asset. But it is one where we had a small pay down that came with it. And then, had some additional pay downs over time. It was I think a three-year extension. And that was one that -- it actually had a decent amount of reserves at the property itself. So that was one where the deal was we were able to use some of those reserves for an interest reserve and some for operating shortfalls, to mitigate any negative cash flows at that property. So that's one that we think is set for some time, in terms of not a use of cash other than some potential small pay downs, over the next year.

Got it. It's helpful. Thank you.

There are no additional questions at this time. I would like to turn the call back to management, for closing remarks.

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

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.