ASHFORD HOSPITALITY TRUST INC Annual Report - How They Did This Year

Hey there! Let's break down Ashford Hospitality Trust's performance this past year. This will give you a clear picture of your investment (or potential investment). Think of this as a chat with a friend, not a stuffy financial report.

This guide is based on their Annual Report for the fiscal year ended December 31, 2025.

Here's what we'll cover:

1. What does this company do and how did they perform this year? (We'll look at their business and overall performance.)
2. Financial health - cash, debt, liquidity (Do they have enough cash, how much do they owe, and can they pay their bills?)
3. Key risks that could hurt the stock price (What are the potential downsides to watch out for?)
4. Competitive positioning (How do they stack up against others in their industry?)
5. Future outlook (What are their plans and expectations for the road ahead?)
6. Market trends or regulatory changes affecting them (Are there bigger industry shifts or new rules impacting their business?)

1. What does this company do and how did they perform this year?

Ashford Hospitality Trust is in the hotel business, as you might expect! They operate as a REIT (Real Estate Investment Trust). This means they primarily own and invest in properties that make money, specifically hotels. Special tax rules apply to REITs. For example, they must pay out at least 90% of their taxable earnings to shareholders each year.

They make money mainly from:

• Room stays: This is the money from people staying in their hotel rooms.
• Food and drinks: Sales from restaurants, bars, and catering at their properties.
• Other hotel income: Other money generated directly by the hotels, like parking or gift shop sales.
• Other services: Broader money streams beyond direct hotel operations, often from related companies.
• Management fees: They also earn fees, likely from managing properties.

By December 31, 2025, they owned parts of 67 hotels. These hotels had 16,445 rooms. They also partly owned another hotel with 188 rooms. Plus, they invested about $7.3 million in the Meritage Resort and Spa in Napa, California.

Their hotels use well-known brands. These include Hilton, Hyatt, Marriott, and Intercontinental Hotel Group. They focus on fancy, full-service hotels in the U.S. They target hotels where the money earned per available room (RevPAR) is usually less than double the U.S. average.

How they operate: Interestingly, Ashford Hospitality Trust itself has no employees! Ashford LLC, an advisory company, handles all employee-like services. Ashford Inc. is the parent company of Ashford LLC. Its subsidiaries employ about 82 full-time staff. These staff advise Ashford Hospitality Trust on many things. This includes buying properties, development, managing assets, and handling money matters. They also help with accounting, taxes, risk, legal, redevelopment, and corporate management.

They don't run their hotels directly. Their 68 hotels are leased by their own subsidiaries. These subsidiaries then hire outside companies to manage daily operations. Remington Hospitality manages 50 of their 68 properties. Ashford Inc. also offers other services. These include design, construction, debt placement, and insurance.

They rely completely on hotel managers like Remington Hospitality. These managers hire and oversee hotel staff. This seems efficient. But Ashford Hospitality Trust cannot directly control staffing levels. They pay managers for these employees. If the market is bad, they cannot easily cut staff. This could mean higher staffing costs than they want.

How did they perform? The company's financial health, discussed later, shows big challenges. They reported a negative shareholder value of $626.4 million. Also, there's a "going concern" warning. They likely did not make a profit or grow revenue much in 2025. It was a tough year. The company faces significant financial pressure.

2. Financial health - cash, debt, liquidity

Ashford Hospitality Trust uses various ways to fund itself. They have these types of funding:

• Common Stock: These are the regular shares investors like us own. By March 18, 2026, 6,476,491 common shares were out there. Shares not held by related parties were worth about $35.2 million by June 30, 2025.
• Preferred Stock: They have many types of preferred stock (Series D through M). These also trade on the NYSE. They usually pay a fixed dividend. Preferred stockholders get paid before common stockholders if the company struggles. They also have "Preferred Stock Repurchase Rights" on the NYSE. Issuing more preferred stock could limit common stock dividends. This is because preferred stockholders get paid first.
• Additional Paid-In Capital: This is money shareholders paid for stock above its face value.
• Retained Earnings: These are profits the company kept. They did not pay them out as dividends.
• Noncontrolling Interests: This is the part of a subsidiary's value that the parent company doesn't own.

They also have Notes Receivable. This means others owe them money.

Cash Position: By December 31, 2025, they had $66.8 million in cash. They also held $149.6 million in restricted cash. This money is set aside for specific uses, mainly for lenders and managers.

They also have Long-Term Debt. Some of this debt has interest rates from 5.83% to 8.33%. It has a 3-year term. They often use debt to increase returns. They look at leverage, debt cost, and cash flow to cover payments. But the company has a big worry. They cannot promise enough cash from operations. They also can't guarantee enough new money. This cash is needed to cover future needs and debt payments. If they can't pay or refinance debt, or lack cash, they face big cash flow problems. They might even cut operations. This would seriously harm their financial health. Also, if they miss debt payments, lenders could seize their hotels. These hotels are used as collateral.

They report depreciation rates for their assets. Buildings and improvements depreciate 5.83% to 8.33% yearly. Furniture and fixtures also depreciate 5.83% to 8.33% annually. This shows how they account for wear and tear on their properties.

Important Note for Common Stockholders: The company faces a big financial challenge. By December 31, 2025, their shareholder value was negative $626.4 million. This means they owe much more than they own. That's a big red flag. They haven't made enough profit to pay a dividend since 2015.

What about dividends? Due to their finances and Maryland law, common stock dividends cannot be paid. All unpaid preferred stock dividends must be paid first. The company clearly states: "No common stock dividend is expected or will be considered soon." This is key for common stockholders. They plan to pay past due preferred dividends when possible. They will review future preferred dividends quarterly. But their board might need to confirm positive shareholder value first. They might even borrow more to meet REIT payout rules if cash flow is low.

A "Poison Pill" to Protect Tax Benefits: In December 2025, the company adopted a "Rights Agreement." This is often called a "poison pill." It's not a cash dividend for common stockholders. Instead, it's a defense to protect valuable "Tax Benefits." These benefits include past losses that can lower future taxes. If an outsider buys 4.99% or more of the stock, this agreement activates. It lets other shareholders buy more common stock cheaply. This makes it very costly for an unwanted buyer to take over. It also protects those tax benefits. These "Rights" went to common stockholders by December 26, 2025. They don't give immediate rights or cash. They are a protective step. These Rights expire on December 14, 2026, unless conditions are met sooner.

Money for Growth: As a REIT, they must pay out at least 90% of their taxable earnings yearly. So, they don't keep much profit to reinvest. To grow, they need to buy new hotels or improve old ones. They mostly rely on new loans or selling more stock for cash. This is hard if markets are bad. Their growth depends on getting outside money easily.

Company Size and Reporting: Ashford Hospitality Trust is a "Non-accelerated filer" and "Smaller reporting company." This means they are a smaller public company. They have different reporting rules than very large companies.

3. Key risks that could hurt the stock price

The company points out several risks. These could affect its performance and your investment. They include:

• Economic Conditions: Interest rate and inflation changes. A long period of slow economic growth. General stock market ups and downs.
• Banking Sector Uncertainty: Banking problems could hurt their ability to get loans. It could also affect how they manage money.
• Geopolitical Events: Big global conflicts, like Russia-Ukraine or Israel-Palestine-Iran. Also, ongoing instability in Venezuela. Changes in tariffs or trade policies. All these could disrupt travel and the economy.
• Natural Disasters/Weather: Extreme weather could damage properties. It could also stop people from traveling. This would hurt their business.
• Debt & Cash Flow Risks: This is a big worry. The company cannot promise enough cash from operations. They also can't guarantee enough new money. This cash is needed to cover future needs and debt payments. If they can't pay or refinance debt, or lack cash, they face big cash flow problems. They might even cut operations. This would seriously harm their financial health. Also, if they miss debt payments, lenders could seize their hotels. These hotels are used as collateral.
• Stock Price Volatility: Their common and preferred stock prices can swing a lot.
• Lodging and Travel Industry: Their business depends on the overall health of hotels and travel.
• Capital Availability: Getting money when needed, on good terms, is key. Using it well is also crucial. If they can't get new loans or sell more stock, their growth will be limited. This includes buying or developing new hotels.
• Rising Costs: Unexpected jumps in financing or operating costs could cut into their profits.
• Industry and Local Market Changes: Hotel industry shifts or local economic conditions could affect them.
• Competition: How they compare to others is always a factor. See section 4 for more.
• Conflicts of Interest & Reliance on Related Parties: Conflicts of interest are possible. This is due to their ties with related companies. These include Ashford Hospitality Advisors LLC, Remington Hospitality, Premier, and Braemar Hotels & Resorts Inc. It also involves their own executives and non-independent directors. Mr. Monty J. Bennett, Chairman and CEO of Ashford Inc., and his father control Ashford Inc. Ashford Inc. advises Ashford Hospitality Trust. It also provides many hotel services. This makes the conflict even clearer. Decisions might sometimes favor these related parties over the company. Ashford Hospitality Trust heavily depends on the financial health and key people at Ashford Inc. and its affiliates. If Ashford Inc. or its key staff face problems, Ashford Hospitality Trust's operations could suffer. Losing experienced management at their advisor could harm their business future.
• Fixed Fees to Related Parties: This is important. Ashford Hospitality Trust must pay minimum fees. These go to their advisor, Ashford Inc. They also go to their hotel manager, Remington Hospitality, a related company. They pay a monthly base advisory fee to Ashford Inc. This fee has a minimum. It's the higher of two amounts. Either 90% of last year's fee for that month. Or 1/12th of a specific ratio (G&A Ratio) times their total market value. So, even if the company's value or performance drops, they still pay this minimum. They also pay minimum hotel management fees to Remington Hospitality per hotel. This minimum is about $18,000 per hotel monthly. This amount adjusts for inflation. Or it's 3% of total revenue, whichever is higher. So, even if a hotel's revenue falls, they still owe this minimum. These fixed payments can squeeze their cash flow. This hurts their financial health. This is especially true when revenues are low. They might also be less likely to challenge Remington Hospitality's staffing choices. This is because Remington is a related company.
• Management Agreements Can Limit Flexibility: Their agreements with hotel operators, like Remington Hospitality, can be very strict. For instance, selling a property quickly or for the best price might be harder. This is especially true if the buyer competes with the manager. These long-term agreements can also lower a property's total value. Ashford Hospitality Trust might be stuck in bad agreements. Or they could face high costs to change them.
• Joint Venture Risks: The company sometimes invests with others in joint ventures. They might not fully control decisions in these cases. They also depend on their partners' financial health. Disagreements can happen, hurting these investments.
• Personnel Changes: Staff changes at Ashford LLC could hurt operations. A lack of qualified people could also cause problems.
• Regulatory & Tax Changes: Government rule changes, accounting standards, or tax rates could hurt them. This includes changes affecting REITs, like the "One Big Beautiful Bill Act" or the Internal Revenue Code. They must follow complex rules to keep their REIT status. Losing it would be very bad. They must also keep up with many laws. These include federal, state, and local rules. Examples are the ADA, zoning, and building codes. Changes or not following rules could be costly.
• Environmental Liabilities: As property owners, they could pay to clean up hazardous substances. This is true even if they didn't cause the problem. They did initial environmental checks on most properties. They believe they comply. But these checks don't use invasive testing. So, hidden issues might exist. Future laws or neighbor problems could also create new responsibilities.
• Insurance Limitations: They have broad insurance for many risks. This includes liability, property, and terrorism. But some big disasters are uninsurable or too costly to cover. Examples are global pandemics, acts of war, or known environmental problems. This means they could face big losses from such events.
• Going Concern Warning: The company's financial reports include a serious warning. Auditors doubt their ability to "continue as a going concern." This means there's significant doubt they can stay in business. They might not meet financial obligations when due. This is a major risk for investors. This doubt could also hurt the price of both preferred and common stock. It could also make it much harder to borrow more money on good terms. This is if they need to boost their cash reserves.
• Dividend Policy: Changes to their dividend policy could make the stock less appealing. This includes their inability to pay common stock dividends, as noted.
• Preferred Stock Rights: Having preferred stock purchase rights might make common stock less attractive.
• Dilution: If the company issues more common stock or other securities, your ownership percentage shrinks. This could lower the value of your shares. The stock price might drop, possibly leading to delisting from the NYSE.

4. Competitive positioning

The hotel industry is tough. Ashford Hospitality Trust's hotels face much competition. This isn't just general; it's often very specific to each local market.

They compete on these factors:

• Key Factors: Convenient location, room availability, strong hotel brands (Hilton, Marriott, etc.). Also, room prices, services offered, guest amenities, loyalty programs, reputation, and reservation systems.

Their main competitors are:

• Other Hotel Companies: Other firms that own and run hotels.
• Hotel Brands: National and international hotel chains.
• New Supply: New hotels are always being built. This adds more rooms to the market. New competitors emerge, even if demand isn't growing fast. This could mean lower revenue for Ashford's hotels.
• Less Expensive Options: In tough economic times, travelers seek cheaper stays. This means more competition. "Select-service" hotels offer fewer amenities but lower prices. Independent, owner-managed hotels also compete.
• Alternative Accommodations: They also compete with newer options. These include home-sharing companies like Airbnb. Apartment operators offering short-term rentals also compete.

More competition could mean fewer guests. It could also mean lower room rates and less revenue. They might also spend more on upgrades just to keep up. This could hurt their profits.

Competition for Deals: It's not just about guests. Ashford also competes to buy and sell hotels. They also compete for good debt investments. Many other companies want similar investments. This means fierce competition for good opportunities. This can make it harder for Ashford to find hotels to buy. Or it might force them to pay higher prices. When they sell a hotel, market conditions matter. The number of buyers affects the price. They might not sell at their target price.

5. Future outlook

The company's future plans focus on several key areas. These are driven by their main goals and expected operating conditions. Their current priorities and financial strategies include:

• Preserving Capital: Keeping cash strong for financial flexibility.
• Asset Management: They sell hotels that don't fit their strategy. These are "non-core properties." They buy new ones expected to add value. They target fancy, full-service hotels. These have money earned per available room (RevPAR) less than double the national average. But their growth from buying or developing depends heavily on getting new loans or selling stock. Their REIT structure limits retained earnings.
• Capital Market Activities: They work to improve long-term shareholder value. This includes getting affordable funding, like issuing non-traded preferred securities. They might also exchange preferred stock for common stock.
• Property Improvements: They invest in specific hotel upgrades. This boosts profits and keeps properties in good shape.
• Operational Efficiency: They use smart asset management. This cuts operating costs and increases revenue.
• Financing: They seek new loans or refinance old ones on good terms. They also work to change or extend their property debt.
• Risk Management: They use tools like hedges and derivatives. This reduces financial risks.
• Growth Opportunities: They look for more ways to add value to their hotels. They also seek other suitable investments or sales.
• Investment Diversification: They might also explore other hotel-related investments. These include mezzanine financing (a mix of debt and equity). First mortgage financing or sale-leaseback deals are also options.

They aim for flexibility. They adjust their investment strategy. This depends on changes in the hotel industry and market conditions.

6. Market trends or regulatory changes affecting them

Ashford Hospitality Trust watches market trends and possible rule changes. These include:

• Industry and Local Economic Conditions: General changes in the hotel industry. Also, the specific economic health of their hotel locations.
• Geopolitical Conditions: Big global events or conflicts can affect travel and the economy. This includes ongoing instability in Venezuela. Changes to tariffs or trade policies also matter.
• Regulatory & Tax Changes: They especially watch changes to the Internal Revenue Code. This includes REIT rules. They also watch for impacts from the "One Big Beautiful Bill Act" (OBBBA). These changes could affect their tax status and operations. They must also keep up with many laws. These include federal, state, and local rules. Examples are the ADA, zoning, and building codes. Changes or not following rules could be costly.

So, what does this all mean for you as an investor? Ashford Hospitality Trust is facing significant financial headwinds, including a "going concern" warning and negative shareholder value. While they have a clear business model and strategies for asset management and growth, these are heavily dependent on external financing and navigating a tough competitive landscape. The company's reliance on related parties and fixed fees, coupled with the unlikelihood of common stock dividends in the near future, are critical factors to consider. Your investment decision should weigh these challenges against their long-term strategies and the potential for recovery in the hospitality sector.