UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 001-31775

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)


Maryland						86-1062192
(State or other jurisdiction of incorporation or organization)						(IRS employer identification number)

14185 Dallas Parkway
Suite 1200
Dallas
Texas						75254
(Address of principal executive offices)						(Zip code)

(972) 490-9600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑☐	Accelerated filer	☐☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes þ No

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

AHT

New York Stock Exchange

Preferred Stock, Series D

AHT-PD

New York Stock Exchange

Preferred Stock, Series F

AHT-PF

New York Stock Exchange

Preferred Stock, Series G

AHT-PG

New York Stock Exchange

Preferred Stock, Series H

AHT-PH

New York Stock Exchange

Preferred Stock, Series I

AHT-PI

New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Common Stock, $0.01 par value per share						~~34,498,993~~34,477,952
(Class)						Outstanding at ~~November 3, 2022~~May 4, 2023

ASHFORD HOSPITALITY TRUST, INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~September 30, 2022~~March 31, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022			2
Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~			3
Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~			4
Consolidated Statements of Equity (Deficit) for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~			5
Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~			7
Notes to Consolidated Financial Statements			9
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			3431
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			5346
ITEM 4. CONTROLS AND PROCEDURES			5346
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			5346
ITEM 1A. RISK FACTORS			5447
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			5547
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			5547
ITEM 4. MINE SAFETY DISCLOSURES			5547
ITEM 5. OTHER INFORMATION			5547
ITEM 6. EXHIBITS			5547
SIGNATURES			5749

~~Table of Contents~~

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements (unaudited)

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS

Investments in hotel properties, net	Investments in hotel properties, net	$	3,114,528	$	3,230,710	Investments in hotel properties, net	$	3,099,605	$	3,118,331
Cash and cash equivalents	Cash and cash equivalents	505,533		592,110		Cash and cash equivalents	344,935		417,064
Restricted cash	Restricted cash	132,055		99,534		Restricted cash	143,821		141,962

Accounts receivable, net of allowance of $634 and $455, respectively		58,601		37,720
Accounts receivable, net of allowance of $427 and $501, respectively						Accounts receivable, net of allowance of $427 and $501, respectively	62,049		49,809
Inventories	Inventories	3,788		3,291		Inventories	3,976		3,856
Notes receivable, net	Notes receivable, net	4,975		8,723		Notes receivable, net	5,151		5,062
Investments in unconsolidated entities	Investments in unconsolidated entities	10,802		11,253		Investments in unconsolidated entities	19,180		19,576
Deferred costs, net	Deferred costs, net	3,247		5,001		Deferred costs, net	2,234		2,665
Prepaid expenses	Prepaid expenses	19,797		13,384		Prepaid expenses	20,534		15,981
Derivative assets	Derivative assets	20,187		501		Derivative assets	37,348		47,182
Operating lease right-of-use assets	Operating lease right-of-use assets	44,082		44,575		Operating lease right-of-use assets	44,339		43,921
Other assets	Other assets	17,559		16,150		Other assets	21,492		21,653
Intangible assets	Intangible assets	797		797		Intangible assets	797		797

Due from Ashford Inc., net	Due from Ashford Inc., net	1,761		25		Due from Ashford Inc., net	—		486
Due from related parties, net	Due from related parties, net	6,597		7,473		Due from related parties, net	3,353		6,570
Due from third-party hotel managers	Due from third-party hotel managers	27,361		26,896		Due from third-party hotel managers	20,596		22,462

Total assets	Total assets	$	3,971,670	$	4,098,143	Total assets	$	3,829,410	$	3,917,377
LIABILITIES AND EQUITY/DEFICIT	LIABILITIES AND EQUITY/DEFICIT					LIABILITIES AND EQUITY/DEFICIT
Liabilities:	Liabilities:					Liabilities:
Indebtedness, net	Indebtedness, net	$	3,838,697	$	3,887,822	Indebtedness, net	$	3,786,065	$	3,838,543
Finance lease liabilities						Finance lease liabilities	18,765		18,847
Accounts payable and accrued expenses	Accounts payable and accrued expenses	135,967		117,650		Accounts payable and accrued expenses	127,892		115,970
Accrued interest payable	Accrued interest payable	10,577		15,432		Accrued interest payable	14,306		15,287
Dividends and distributions payable	Dividends and distributions payable	3,103		3,104		Dividends and distributions payable	3,193		3,118

Due to Ashford Inc., net						Due to Ashford Inc., net	6,480		—

Due to related parties, net		—		728
Due to third-party hotel managers	Due to third-party hotel managers	727		1,204		Due to third-party hotel managers	1,701		1,319
Intangible liabilities, net	Intangible liabilities, net	2,117		2,177		Intangible liabilities, net	2,077		2,097
Operating lease liabilities	Operating lease liabilities	44,781		45,106		Operating lease liabilities	45,109		44,661

Other liabilities	Other liabilities	4,452		4,832		Other liabilities	4,200		4,326

Total liabilities	Total liabilities	4,040,421		4,078,055		Total liabilities	4,009,788		4,044,168
Commitments and contingencies (note 16)
Commitments and contingencies (note 17)						Commitments and contingencies (note 17)
Redeemable noncontrolling interests in operating partnership	Redeemable noncontrolling interests in operating partnership	21,988		22,742		Redeemable noncontrolling interests in operating partnership	21,617		21,550
Series J Redeemable Preferred Stock, $0.01 par value, 501,864 and 87,115 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Series J Redeemable Preferred Stock, $0.01 par value, 501,864 and 87,115 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	11,543		2,004
Series K Redeemable Preferred Stock, $0.01 par value, 34,250 and 1,800 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Series K Redeemable Preferred Stock, $0.01 par value, 34,250 and 1,800 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	843		44
Equity (deficit):	Equity (deficit):					Equity (deficit):
Preferred stock, $0.01 par value, 50,000,000 shares authorized:	Preferred stock, $0.01 par value, 50,000,000 shares authorized:					Preferred stock, $0.01 par value, 50,000,000 shares authorized:

Series D Cumulative Preferred Stock, 1,174,427 shares issued and outstanding at September 30, 2022 and December 31, 2021		12		12
Series F Cumulative Preferred Stock, 1,251,044 shares issued and outstanding at September 30, 2022 and December 31, 2021		12		12
Series G Cumulative Preferred Stock, 1,531,996 shares issued and outstanding at September 30, 2022 and December 31, 2021		15		15
Series H Cumulative Preferred Stock, 1,308,415 shares issued and outstanding at September 30, 2022 and December 31, 2021		13		13
Series I Cumulative Preferred Stock, 1,252,923 shares issued and outstanding at September 30, 2022 and December 31, 2021		13		13
Common stock, $0.01 par value, 400,000,000 shares authorized, 34,498,993 and 34,490,381 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		345		345
Series D Cumulative Preferred Stock, 1,174,427 shares issued and outstanding at March 31, 2023 and December 31, 2022						Series D Cumulative Preferred Stock, 1,174,427 shares issued and outstanding at March 31, 2023 and December 31, 2022	12		12
Series F Cumulative Preferred Stock, 1,251,044 shares issued and outstanding at March 31, 2023 and December 31, 2022						Series F Cumulative Preferred Stock, 1,251,044 shares issued and outstanding at March 31, 2023 and December 31, 2022	12		12
Series G Cumulative Preferred Stock, 1,531,996 shares issued and outstanding at March 31, 2023 and December 31, 2022						Series G Cumulative Preferred Stock, 1,531,996 shares issued and outstanding at March 31, 2023 and December 31, 2022	15		15
Series H Cumulative Preferred Stock, 1,308,415 shares issued and outstanding at March 31, 2023 and December 31, 2022						Series H Cumulative Preferred Stock, 1,308,415 shares issued and outstanding at March 31, 2023 and December 31, 2022	13		13
Series I Cumulative Preferred Stock, 1,252,923 shares issued and outstanding at March 31, 2023 and December 31, 2022						Series I Cumulative Preferred Stock, 1,252,923 shares issued and outstanding at March 31, 2023 and December 31, 2022	13		13
Common stock, $0.01 par value, 400,000,000 shares authorized, 34,478,064 and 34,495,185 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively						Common stock, $0.01 par value, 400,000,000 shares authorized, 34,478,064 and 34,495,185 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	345		345
Additional paid-in capital	Additional paid-in capital	2,382,863		2,379,906		Additional paid-in capital	2,384,000		2,383,244
Accumulated deficit	Accumulated deficit	(2,474,012)		(2,382,970)		Accumulated deficit	(2,598,791)		(2,534,043)

Total equity (deficit)	Total equity (deficit)	(90,739)		(2,654)		Total equity (deficit)	(214,381)		(150,389)
Total liabilities and equity/deficit	Total liabilities and equity/deficit	$	3,971,670	$	4,098,143	Total liabilities and equity/deficit	$	3,829,410	$	3,917,377

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in thousands, except per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
REVENUE	REVENUE										REVENUE
Rooms	Rooms	$	260,616	$	202,119	$	731,474	$	459,264		Rooms	$	252,955	$	195,330
Food and beverage	Food and beverage	48,633		29,744		139,709		57,487			Food and beverage	58,991		36,760
Other hotel revenue	Other hotel revenue	18,183		14,944		50,042		38,358			Other hotel revenue	16,282		14,436
Total hotel revenue	Total hotel revenue	327,432		246,807		921,225		555,109			Total hotel revenue	328,228		246,526
Other	Other	724		627		2,164		1,567			Other	658		612
Total revenue	Total revenue	328,156		247,434		923,389		556,676			Total revenue	328,886		247,138
EXPENSES	EXPENSES										EXPENSES
Hotel operating expenses:	Hotel operating expenses:										Hotel operating expenses:
Rooms	Rooms	61,464		48,035		169,250		109,095			Rooms	59,203		47,406
Food and beverage	Food and beverage	36,199		22,750		100,981		42,860			Food and beverage	39,790		27,770
Other expenses	Other expenses	106,907		92,581		310,407		224,422			Other expenses	113,879		92,048
Management fees	Management fees	11,686		8,976		33,552		21,944			Management fees	12,246		9,554
Total hotel expenses	Total hotel expenses	216,256		172,342		614,190		398,321			Total hotel expenses	225,118		176,778
Property taxes, insurance and other	Property taxes, insurance and other	17,541		17,222		51,289		51,821			Property taxes, insurance and other	16,537		16,459
Depreciation and amortization	Depreciation and amortization	49,428		53,069		152,444		166,291			Depreciation and amortization	47,855		52,120

Advisory services fee	Advisory services fee	12,513		7,395		38,176		39,110			Advisory services fee	12,986		13,386
Corporate, general and administrative	Corporate, general and administrative	(884)		2,414		6,730		12,113			Corporate, general and administrative	2,612		3,104
Total expenses		294,854		252,442		862,829		667,656
Total operating expenses											Total operating expenses	305,108		261,847
Gain (loss) on disposition of assets and hotel properties	Gain (loss) on disposition of assets and hotel properties	(11)		103		273		395			Gain (loss) on disposition of assets and hotel properties	(24)		103
OPERATING INCOME (LOSS)	OPERATING INCOME (LOSS)	33,291		(4,905)		60,833		(110,585)			OPERATING INCOME (LOSS)	23,754		(14,606)
Equity in earnings (loss) of unconsolidated entities	Equity in earnings (loss) of unconsolidated entities	(147)		(145)		(451)		(423)			Equity in earnings (loss) of unconsolidated entities	(396)		(153)
Interest income	Interest income	1,576		124		2,153		137			Interest income	2,557		51
Other income (expense)	Other income (expense)	241		208		426		682			Other income (expense)	134		101
Interest expense and amortization of discounts and loan costs	Interest expense and amortization of discounts and loan costs	(61,023)		(43,003)		(152,975)		(112,003)			Interest expense and amortization of discounts and loan costs	(81,515)		(43,559)
Write-off of premiums, loan costs and exit fees	Write-off of premiums, loan costs and exit fees	(1,378)		(1,034)		(3,076)		(5,200)			Write-off of premiums, loan costs and exit fees	(420)		(727)
Gain (loss) on extinguishment of debt		—		1,292		—		11,896

Unrealized gain (loss) on derivatives		9,774		6,029		19,059		3,712

Realized and unrealized gain (loss) on derivatives											Realized and unrealized gain (loss) on derivatives	(5,415)		3,211
INCOME (LOSS) BEFORE INCOME TAXES	INCOME (LOSS) BEFORE INCOME TAXES	(17,666)		(41,434)		(74,031)		(211,784)			INCOME (LOSS) BEFORE INCOME TAXES	(61,301)		(55,682)
Income tax (expense) benefit	Income tax (expense) benefit	(4,657)		(2,615)		(10,340)		(2,916)			Income tax (expense) benefit	(221)		(120)

NET INCOME (LOSS)	NET INCOME (LOSS)	(22,323)		(44,049)		(84,371)		(214,700)			NET INCOME (LOSS)	(61,522)		(55,802)
(Income) loss attributable to noncontrolling interest in consolidated entities		—		(10)		—		84

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	231		367		679		3,594			Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	600		372
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(22,092)		(43,692)		(83,692)		(211,022)			NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(60,922)		(55,430)
Preferred dividends	Preferred dividends	(3,104)		(2,039)		(9,311)		1,488			Preferred dividends	(3,243)		(3,103)
Gain (loss) on extinguishment of preferred stock		—		(1,789)		—		959
Deemed dividends on redeemable preferred stock											Deemed dividends on redeemable preferred stock	(407)		—

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(25,196)	$	(47,520)	$	(93,003)	$	(208,575)		NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(64,572)	$	(58,533)

INCOME (LOSS) PER SHARE - BASIC AND DILUTED	INCOME (LOSS) PER SHARE - BASIC AND DILUTED										INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:	Basic:										Basic:

Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	(0.73)	$	(1.70)	$	(2.71)	$	(11.89)		Net income (loss) attributable to common stockholders	$	(1.88)	$	(1.71)
Weighted average common shares outstanding – basic	Weighted average common shares outstanding – basic	34,371		28,033		34,324		17,520			Weighted average common shares outstanding – basic	34,381		34,269
Diluted:	Diluted:										Diluted:

Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	$	(0.73)	$	(1.70)	$	(2.71)	$	(11.89)		Net income (loss) attributable to common stockholders	$	(1.88)	$	(1.71)
Weighted average common shares outstanding – diluted	Weighted average common shares outstanding – diluted	34,371		28,033		34,324		17,520			Weighted average common shares outstanding – diluted	34,381		34,269

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited, in thousands)


		Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net income (loss)	Net income (loss)	$	(22,323)	$	(44,049)	$	(84,371)	$	(214,700)		Net income (loss)	$	(61,522)	$	(55,802)
Other comprehensive income (loss), net of tax:	Other comprehensive income (loss), net of tax:										Other comprehensive income (loss), net of tax:

Total other comprehensive income (loss)	Total other comprehensive income (loss)	—		—		—		—			Total other comprehensive income (loss)	—		—
Comprehensive income (loss)	Comprehensive income (loss)	(22,323)		(44,049)		(84,371)		(214,700)			Comprehensive income (loss)	(61,522)		(55,802)
Less: Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities		—		(10)		—		84

Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	231		367		679		3,594			Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	600		372
Comprehensive income (loss) attributable to the Company	Comprehensive income (loss) attributable to the Company	$	(22,092)	$	(43,692)	$	(83,692)	$	(211,022)		Comprehensive income (loss) attributable to the Company	$	(60,922)	$	(55,430)

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)

(unaudited, in thousands except per share amounts)


			Preferred Stock																						Additional Paid-in Capital				Accumulated Deficit									Total				Redeemable Noncontrolling Interests in Operating Partnership													Preferred Stock																																								Additional Paid-in Capital		Accumulated Deficit	Total
		Series D		Series F			Series G			Series H			Series I				Common Stock																	Total		Redeemable Noncontrolling Interests in Operating Partnership								Series D									Series F									Series G									Series H										Series I						Common Stock					Additional Paid-in Capital		Accumulated Deficit		Total
			Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares		Amount		Shares		Amount										Redeemable Noncontrolling Interests in Operating Partnership																	Shares					Amount				Shares					Amount				Shares					Amount					Shares					Amount		Shares				Amount		Shares				Total
Balance at June 30, 2022			1,174	$	12	1,251	$	12	1,532	$	15	1,308	$	13	1,253		$	13	34,487		$	345					$	2,382,197										$	(2,448,350)					$	(65,743)	$	21,308
Balance at December 31, 2022																Balance at December 31, 2022				1,174			$	12				1,251						$	12			1,532				$	15			1,308					$	13				1,253				$	13				34,495				$	345				$	2,383,244				$	(2,534,043)				$	(150,389)

Purchases of common stock	Purchases of common stock		—	—		—	—		—	—		—	—		—		—		(21)		—				(164)				—									(164)				—		Purchases of common stock											—				—					—				—					—					—				—				—		—		—	(17)		—		(56)		—	(56)
Equity-based compensation	Equity-based compensation		—	—		—	—		—	—		—	—		—		—		—		—				830				—									830				445		Equity-based compensation											—				—					—				—					—					—				—				—		—		—	—		—		812		—	812

Issuance of restricted shares/units			—	—		—	—		—	—		—	—		—		—		33		—				—				—									—				—
Issuance of preferred shares																Issuance of preferred shares				—			—					—				—					—			—					—				—					—				—					—				—					—					—								—

Dividends declared – preferred stock - Series D ($0.53/share)	Dividends declared – preferred stock - Series D ($0.53/share)		—	—		—	—		—	—		—	—		—		—		—		—				—				(621)									(621)				—		Dividends declared – preferred stock - Series D ($0.53/share)											—				—					—				—					—					—				—				—		—		—	—		—		—		(620)	(620)
Dividends declared – preferred stock - Series F ($0.46/share)	Dividends declared – preferred stock - Series F ($0.46/share)		—	—		—	—		—	—		—	—		—		—		—		—				—				(577)									(577)				—		Dividends declared – preferred stock - Series F ($0.46/share)											—				—					—				—					—					—				—				—		—		—	—		—		—		(577)	(577)
Dividends declared – preferred stock - Series G ($0.46/share)	Dividends declared – preferred stock - Series G ($0.46/share)		—	—		—	—		—	—		—	—		—		—		—		—				—				(706)									(706)				—		Dividends declared – preferred stock - Series G ($0.46/share)											—				—					—				—					—					—				—				—		—		—	—		—		—		(706)	(706)
Dividends declared – preferred stock - Series H ($0.47/share)	Dividends declared – preferred stock - Series H ($0.47/share)		—	—		—	—		—	—		—	—		—		—		—		—				—				(613)									(613)				—		Dividends declared – preferred stock - Series H ($0.47/share)											—				—					—				—					—					—				—				—		—		—	—		—		—		(613)	(613)
Dividends declared – preferred stock - Series I ($0.47/share)	Dividends declared – preferred stock - Series I ($0.47/share)		—	—		—	—		—	—		—	—		—		—		—		—				—				(587)									(587)				—		Dividends declared – preferred stock - Series I ($0.47/share)											—				—					—				—					—					—				—				—		—		—	—		—		—		(587)	(587)

Dividends declared – preferred stock - Series J ($0.50/share)																Dividends declared – preferred stock - Series J ($0.50/share)				—			—					—				—					—			—					—				—					—				—					—				—					—					(133)								(133)
Dividends declared – preferred stock - Series K ($0.51/share)																Dividends declared – preferred stock - Series K ($0.51/share)				—			—					—				—					—			—					—				—					—				—					—				—					—					(7)								(7)
Redemption value adjustment	Redemption value adjustment		—	—		—	—		—	—		—	—		—		—		—		—				—				(466)									(466)				466		Redemption value adjustment											—				—					—				—					—					—				—				—		—		—	—		—		—		(176)	(176)

Redemption value adjustment - preferred stock																Redemption value adjustment - preferred stock				—			—					—				—					—			—					—				—					—				—					—				—					—					(407)								(407)
Net income (loss)	Net income (loss)		—	—		—	—		—	—		—	—		—		—		—		—				—				(22,092)									(22,092)				(231)		Net income (loss)											—				—					—				—					—					—				—				—		—		—	—		—		—		(60,922)	(60,922)
Balance at September 30, 2022			1,174	$	12	1,251	$	12	1,532	$	15	1,308	$	13	1,253		$	13	34,499		$	345			$	2,382,863			$	(2,474,012)								$	(90,739)			$	21,988
Balance at March 31, 2023																Balance at March 31, 2023				1,174			$	12				1,251				$	12				1,532			$	15				1,308				$	13				1,253				$	13				34,478				$	345				$	2,384,000				$	(2,598,791)							$	(214,381)

Preferred Stock Additional
Paid-in
Capital Accumulated
Deficit Total Redeemable Noncontrolling
Interests in
Operating
Partnership
Series D Series F Series G Series H Series I Common Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2021 1,174 $ 12 1,251 $ 12 1,532 $ 15 1,308 $ 13 1,253 $ 13 34,490 $ 345 $ 2,379,906 $ (2,382,970) $ (2,654) $ 22,742
Purchases of common stock — — — — — — — — — — (42) — (316) — (316) —
Equity-based compensation — — — — — — — — — — — — 3,438 — 3,438 1,886
Forfeitures of restricted shares — — — — — — — — — — (1) — — — — —
Issuance of restricted shares/units — — — — — — — — — — 52 — — — — —
Common stock offering costs — — — — — — — — — — — — (165) — (165) —
Dividends declared – preferred stock - Series D ($1.59/share) — — — — — — — — — — — — — (1,861) (1,861) —
Dividends declared – preferred stock - Series F ($1.38/share) — — — — — — — — — — — — — (1,730) (1,730) —
Dividends declared – preferred stock - Series G ($1.38/share) — — — — — — — — — — — — — (2,118) (2,118) —
Dividends declared – preferred stock - Series H ($1.41/share) — — — — — — — — — — — — — (1,840) (1,840) —
Dividends declared – preferred stock - Series I ($1.41/share) — — — — — — — — — — — — — (1,762) (1,762) —
Redemption value adjustment — — — — — — — — — — — — — 1,961 1,961 (1,961)
Net income (loss) — — — — — — — — — — — — — (83,692) (83,692) (679)
Balance at September 30, 2022 1,174 $ 12 1,251 $ 12 1,532 $ 15 1,308 $ 13 1,253 $ 13 34,499 $ 345 $ 2,382,863 $ (2,474,012) $ (90,739) $ 21,988


	Preferred Stock						Redeemable Noncontrolling Interests in Operating Partnership
		Series J		Series K
			Shares	Amount		Shares				Amount
Balance at December 31, 2022			87	$	2,004	2		$	44		$	21,550

Purchases of common stock			—	—		—		—			—
Equity-based compensation			—	—		—		—			491

Issuance of preferred shares			415	9,159		32		772			—






Dividends declared – preferred stock - Series D ($0.53/share)			—	—		—		—			—
Dividends declared – preferred stock - Series F ($0.46/share)			—	—		—		—			—
Dividends declared – preferred stock - Series G ($0.46/share)			—	—		—		—			—
Dividends declared – preferred stock - Series H ($0.47/share)			—	—		—		—			—
Dividends declared – preferred stock - Series I ($0.47/share)			—	—		—		—			—



Dividends declared – preferred stock - Series J ($0.50/share)			—	—		—		—			—
Dividends declared – preferred stock - Series K ($0.51/share)			—	—		—		—			—
Redemption value adjustment			—	—		—		—			176

Redemption value adjustment - preferred stock			—	380		—		27			—
Net income (loss)			—	—		—		—			(600)
Balance at March 31, 2023			502	$	11,543	34		$	843		$	21,617

~~Table of Contents~~

Preferred Stock Additional
Paid-in
Capital Accumulated
Deficit Noncontrolling
Interests In
Consolidated
Entities Total Redeemable Noncontrolling
Interests in
Operating
Partnership
Series D Series F Series G Series H Series I Common Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance at June 30, 2021 1,316 $ 13 1,471 $ 15 1,910 $ 19 1,458 $ 14 1,392 $ 14 22,321 $ 223 $ 2,181,467 $ (2,264,954) $ 72 $ (83,117) $ 28,906
Equity-based compensation — — — — — — — — — — — — 1,948 — — 1,948 542
Forfeitures of restricted shares — — — — — — — — — — (1) — — — — — —
Issuance of common stock, net — — — — — — — — — — 9,297 93 176,879 — — 176,972 —
Conversion of operating partnership units — — — — — — — — — — — — 2 — — 2 (2)
Redemption value adjustment — — — — — — — — — — — — — 5,946 — 5,946 (5,946)
Extinguishment of preferred stock (45) — (92) (1) (189) (2) (105) (1) (120) (1) 941 10 1,784 (1,789) — — —
Net income (loss) — — — — — — — — — — — — — (43,692) 10 (43,682) (367)
Balance at September 30, 2021 1,271 $ 13 1,379 $ 14 1,721 $ 17 1,353 $ 13 1,272 $ 13 32,558 $ 326 $ 2,362,080 $ (2,304,489) $ 82 $ 58,069 $ 23,133


		Preferred Stock																		Additional Paid-in Capital		Accumulated Deficit		Total		Redeemable Noncontrolling Interests in Operating Partnership
	Series D		Series F			Series G			Series H			Series I			Common Stock
		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2021		1,174	$	12	1,251	$	12	1,532	$	15	1,308	$	13	1,253	$	13	34,490	$	345	$	2,379,906	$	(2,382,970)	$	(2,654)	$	22,742

Purchases of common stock		—	—		—	—		—	—		—	—		—	—		(14)	—		(118)		—		(118)		—
Equity-based compensation		—	—		—	—		—	—		—	—		—	—		—	—		1,490		—		1,490		418



Issuance of restricted shares/units		—	—		—	—		—	—		—	—		—	—		3	—		—		—		—		—
Common stock offering costs		—	—		—	—		—	—		—	—		—	—		—	—		(87)		—		(87)		—



Dividends declared – preferred stock - Series D ($0.53/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(620)		(620)		—
Dividends declared – preferred stock - Series F ($0.46/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(577)		(577)		—
Dividends declared – preferred stock - Series G ($0.46/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(706)		(706)		—
Dividends declared – preferred stock - Series H ($0.47/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(613)		(613)		—
Dividends declared – preferred stock - Series I ($0.47/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(587)		(587)		—


Redemption value adjustment		—	—		—	—		—	—		—	—		—	—		—	—		—		(461)		(461)		461

Net income (loss)		—	—		—	—		—	—		—	—		—	—		—	—		—		(55,430)		(55,430)		(372)
Balance at March 31, 2022		1,174	$	12	1,251	$	12	1,532	$	15	1,308	$	13	1,253	$	13	34,479	$	345	$	2,381,191	$	(2,441,964)	$	(60,363)	$	23,249

Preferred Stock Additional
Paid-in
Capital Accumulated
Deficit Noncontrolling
Interests In
Consolidated
Entities Total Redeemable Noncontrolling
Interests in
Operating
Partnership
Series D Series F Series G Series H Series I Common Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance at December 31, 2020 1,791 $ 18 2,891 $ 29 4,423 $ 44 2,669 $ 27 3,391 $ 34 6,436 $ 64 $ 1,809,455 $ (2,093,292) $ 166 $ (283,455) $ 22,951
Purchases of common stock — — — — — — — — — — (1) — (46) — — (46) —
Equity-based compensation — — — — — — — — — — — — 5,486 — — 5,486 2,053
Forfeitures of restricted shares — — — — — — — — — — (3) — — — — — —
Issuance of restricted shares/units — — — — — — — — — — 251 3 (3) — — — —
PSU dividend claw back upon cancellation — — — — — — — — — — — — — 178 — 178 —
Issuance of common stock, net — — — — — — — — — — 19,009 190 548,091 — — 548,281 —
Conversion of operating partnership units — — — — — — — — — — 1 — 43 — — 43 (43)
Performance LTIP dividend claw back upon cancellation — — — — — — — — — — — — — — — — 454
Redemption value adjustment — — — — — — — — — — — — — (1,312) — (1,312) 1,312
Extinguishment of preferred stock (520) (5) (1,512) (15) (2,702) (27) (1,316) (14) (2,119) (21) 6,865 69 (946) 959 — — —
Net income (loss) — — — — — — — — — — — — — (211,022) (84) (211,106) (3,594)
Balance at September 30, 2021 1,271 $ 13 1,379 $ 14 1,721 $ 17 1,353 $ 13 1,272 $ 13 32,558 $ 326 $ 2,362,080 $ (2,304,489) $ 82 $ 58,069 $ 23,133

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


		Nine Months Ended September 30,				Three Months Ended March 31,
		2022		2021				2023		2022
Cash Flows from Operating Activities	Cash Flows from Operating Activities						Cash Flows from Operating Activities
Net income (loss)	Net income (loss)	$	(84,371)	$	(214,700)		Net income (loss)	$	(61,522)	$	(55,802)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:						Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization	Depreciation and amortization	152,444		166,291			Depreciation and amortization	47,855		52,120

Amortization of intangibles	Amortization of intangibles	78		98			Amortization of intangibles	9		33
Recognition of deferred income	Recognition of deferred income	(374)		(374)			Recognition of deferred income	(125)		(127)
Bad debt expense	Bad debt expense	2,456		1,491			Bad debt expense	626		669
Deferred income tax expense (benefit)	Deferred income tax expense (benefit)	141		(113)			Deferred income tax expense (benefit)	17		(67)
Equity in (earnings) loss of unconsolidated entities	Equity in (earnings) loss of unconsolidated entities	451		423			Equity in (earnings) loss of unconsolidated entities	396		153
(Gain) loss on disposition of assets and hotel properties	(Gain) loss on disposition of assets and hotel properties	(273)		(395)			(Gain) loss on disposition of assets and hotel properties	24		(103)
(Gain) loss on extinguishment of debt		—		(11,896)

Unrealized (gain) loss on derivatives		(19,059)		(3,712)

Realized and unrealized (gain) loss on derivatives							Realized and unrealized (gain) loss on derivatives	5,415		(3,211)

Amortization of loan costs, discounts and capitalized default interest and write-off of premiums, loan costs and exit fees	Amortization of loan costs, discounts and capitalized default interest and write-off of premiums, loan costs and exit fees	7,760		(12,132)			Amortization of loan costs, discounts and capitalized default interest and write-off of premiums, loan costs and exit fees	4,264		2,048

Equity-based compensation	Equity-based compensation	5,324		7,539			Equity-based compensation	1,303		1,908

Non-cash interest income	Non-cash interest income	(262)		(591)			Non-cash interest income	(121)		(82)
Paid-in kind interest expense		—		23,574

Changes in operating assets and liabilities, exclusive of the effect of dispositions of hotel properties:

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Accounts receivable and inventories	Accounts receivable and inventories	(24,893)		(20,199)			Accounts receivable and inventories	(12,572)		(15,567)
Prepaid expenses and other assets	Prepaid expenses and other assets	(7,257)		(1,418)			Prepaid expenses and other assets	(4,360)		(5,304)
Operating lease right-of-use assets		355		358
Operating lease liabilities		(325)		(361)

Accounts payable and accrued expenses and accrued interest payable	Accounts payable and accrued expenses and accrued interest payable	10,401		(21,496)			Accounts payable and accrued expenses and accrued interest payable	12,782		3,126
Due to/from related parties	Due to/from related parties	148		(718)			Due to/from related parties	2,011		(422)
Due to/from third-party hotel managers	Due to/from third-party hotel managers	(942)		(14,170)			Due to/from third-party hotel managers	2,248		5,419
Due to/from Ashford Inc., net	Due to/from Ashford Inc., net	(2,286)		(11,024)			Due to/from Ashford Inc., net	6,456		690

Operating lease liabilities							Operating lease liabilities	366		(121)
Operating lease right-of-use assets							Operating lease right-of-use assets	(447)		187
Other liabilities	Other liabilities	(6)		(4)			Other liabilities	(1)		(1)

Net cash provided by (used in) operating activities	Net cash provided by (used in) operating activities	39,510		(113,529)			Net cash provided by (used in) operating activities	4,624		(14,454)
Cash Flows from Investing Activities	Cash Flows from Investing Activities						Cash Flows from Investing Activities
Improvements and additions to hotel properties	Improvements and additions to hotel properties	(68,054)		(19,018)			Improvements and additions to hotel properties	(29,298)		(22,668)
Net proceeds from disposition of assets and hotel properties	Net proceeds from disposition of assets and hotel properties	34,707		7,543			Net proceeds from disposition of assets and hotel properties	—		357
Payments for initial franchise fees							Payments for initial franchise fees	(149)		—
Proceeds from property insurance							Proceeds from property insurance	75		962

Proceeds from property insurance		1,009		2,000
Investments in unconsolidated entities		—		(250)

Proceeds from note receivable	Proceeds from note receivable	4,000		—			Proceeds from note receivable	—		4,000

Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(28,338)		(9,725)			Net cash provided by (used in) investing activities	(29,372)		(17,349)
Cash Flows from Financing Activities	Cash Flows from Financing Activities						Cash Flows from Financing Activities
Borrowings on indebtedness, net of commitment fee	Borrowings on indebtedness, net of commitment fee	1,552		293,500			Borrowings on indebtedness, net of commitment fee	449		—
Repayments of indebtedness	Repayments of indebtedness	(49,326)		(106,690)			Repayments of indebtedness	(50,840)		(4,664)
Payments for loan costs and exit fees	Payments for loan costs and exit fees	(2,298)		(20,494)			Payments for loan costs and exit fees	(6,751)		(146)
Payments for dividends and distributions	Payments for dividends and distributions	(9,312)		—			Payments for dividends and distributions	(3,162)		(3,104)
Purchases of common stock	Purchases of common stock	(316)		(46)			Purchases of common stock	(7)		—

Payments for derivatives	Payments for derivatives	(5,255)		(824)			Payments for derivatives	(4,174)		(856)
Proceeds from common stock offerings		—		548,441
Proceeds from derivatives							Proceeds from derivatives	9,038		—
Common stock offering costs							Common stock offering costs	—		(167)
Proceeds from preferred stock offerings							Proceeds from preferred stock offerings	9,925		—

Common stock offering costs		(273)		—

Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	(65,228)		713,887			Net cash provided by (used in) financing activities	(45,522)		(8,937)

Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	(54,056)		590,633			Net increase (decrease) in cash, cash equivalents and restricted cash	(70,270)		(40,740)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	691,644		167,313			Cash, cash equivalents and restricted cash at beginning of period	559,026		691,644
Cash, cash equivalents and restricted cash and at end of period		$	637,588	$	757,946
Cash, cash equivalents and restricted cash at end of period							Cash, cash equivalents and restricted cash at end of period	$	488,756	$	650,904

Supplemental Cash Flow Information							Supplemental Cash Flow Information
Interest paid							Interest paid	$	76,923	$	44,830
Income taxes paid (refunded)							Income taxes paid (refunded)	(58)		41
Supplemental Disclosure of Non-Cash Investing and Financing Activities							Supplemental Disclosure of Non-Cash Investing and Financing Activities
Accrued but unpaid capital expenditures							Accrued but unpaid capital expenditures	$	14,822	$	10,273

Accrued stock offering costs							Accrued stock offering costs	—		28
Accrued preferred stock offering costs							Accrued preferred stock offering costs	21		—

Common stock purchases accrued but not paid							Common stock purchases accrued but not paid	—		118

~~Table of Contents~~

Nine Months Ended September 30,
2022 2021
Supplemental Cash Flow Information
Interest paid $ 153,155 $ 153,873
Income taxes paid (refunded) 7,419 2,602
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Accrued but unpaid capital expenditures $ 14,996 $ 4,700
Non-cash consideration from sale of hotel property 1,219 —
Accrued stock offering costs — 160
Non-cash extinguishment of debt — 9,604
Non-cash loan principal associated with default interest and late charges — 32,626
Non-cash extinguishment of preferred stock — 197,093
Issuance of common stock from preferred stock exchanges — 196,134
Debt discount associated with embedded debt derivative — 43,680
Credit facility commitment fee — 4,500
Dividends and distributions declared but not paid 3,103 236
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period $ 592,110 $ 92,905
Restricted cash at beginning of period 99,534 74,408
Cash, cash equivalents and restricted cash at beginning of period $ 691,644 $ 167,313
Cash and cash equivalents at end of period $ 505,533 $ 672,961
Restricted cash at end of period 132,055 84,985
Cash, cash equivalents and restricted cash at end of period $ 637,588 $ 757,946


	Three Months Ended March 31,
	2023		2022
Non-cash preferred stock dividends	6		—
Unsettled proceeds from derivatives	1,963		—
Dividends and distributions declared but not paid	3,193		3,103

Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	$	417,064	$	592,110

Restricted cash at beginning of period	141,962		99,534

Cash, cash equivalents and restricted cash at beginning of period	$	559,026	$	691,644

Cash and cash equivalents at end of period	$	344,935	$	548,592

Restricted cash at end of period	143,821		102,312

Cash, cash equivalents and restricted cash at end of period	$	488,756	$	650,904

See Notes to Consolidated Financial Statements.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Organization and Description of Business

Ashford Hospitality Trust, Inc., together with its subsidiaries (“Ashford Trust”), is a real estate investment trust (“REIT”). While our portfolio currently consists of upscale hotels and upper upscale full-service hotels, our investment strategy is predominantly focused on investing in upper upscale full-service hotels in the United States that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average, and in all methods including direct real estate, equity, and debt. We currently anticipate future investments will predominantly be in upper upscale hotels. We own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership (“Ashford Trust OP”), our operating partnership. Ashford OP General Partner LLC, a wholly-owned subsidiary of Ashford Trust, serves as the sole general partner of our operating partnership. Terms such as the “Company,” “we,” “us,” or “our” refer to Ashford Hospitality Trust, Inc. and, as the context may require, all entities included in its consolidated financial statements.

Our hotel properties are primarily branded under the widely recognized upscale and upper upscale brands of Hilton, Hyatt, Marriott and Intercontinental Hotel Group. As of ~~September 30, 2022,~~March 31, 2023, we ~~owned~~held interests in the following assets:

•99100 consolidated hotel properties, which represent ~~22,116~~22,316 total rooms;

•79 hotel condominium units at WorldQuest Resort in Orlando, Florida (“WorldQuest”);

•15.1% ownership in OpenKey, Inc. (“OpenKey”) with a carrying value of approximately ~~$2.3~~$2.0 million; ~~and~~

•32.5% ownership in 815 Commerce Managing Member, LLC (“815 Commerce MM”), which is developing the Le Meridien Fort Worth, with a carrying value of approximately $8.5 million; and

•an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage (the “Meritage Investment”) in Napa, California, with a carrying value of approximately $8.7 million.

For U.S. federal income tax purposes, we have elected to be treated as a REIT, which imposes limitations related to operating hotels. As of ~~September 30, 2022,~~March 31, 2023, our 99100 hotel properties were leased or owned by our wholly-owned subsidiaries that are treated as taxable REIT subsidiaries for U.S. federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”). Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts. Hotel operating results related to these properties are included in the consolidated statements of operations.

We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”), a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. Remington Lodging & Hospitality, LLC (“Remington Hotels”), a subsidiary of Ashford Inc., manages 6768 of our 99100 hotel properties and WorldQuest. Third-party management companies manage the remaining hotel properties.

Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, audio visual services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, broker-dealer and distribution services and mobile key technology.

2. Significant Accounting Policies

Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements include the accounts of Ashford Hospitality Trust, Inc., its majority-owned subsidiaries, and its majority-owned joint ventures in which it has a controlling interest. All inter-company accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

included in our ~~2021~~2022 Annual Report to Stockholders on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on ~~February 28, 2022.~~March 10, 2023.

Ashford Trust OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Ashford Trust OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions, dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Ashford OP General Partner LLC, its general partner. As such, we consolidate Ashford Trust OP.

Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2022.~~2023.

The following ~~dispositions~~transactions affect reporting comparability of our consolidated financial statements:

Hotel Property

Location

Type

Date

~~Le Meridien Minneapolis~~

~~Minneapolis, MN~~

~~Disposition~~

~~January 20, 2021~~

~~SpringHill Suites Durham~~

~~Durham, NC~~

~~Disposition~~

~~April 29, 2021~~

~~SpringHill Suites Charlotte~~

~~Charlotte, NC~~

~~Disposition~~

~~April 29, 2021~~

Sheraton Ann Arbor

Ann Arbor, MI

Disposition

September 1, 2022

Hilton Marietta

Marietta, GA

Acquisition

December 16, 2022

Use of Estimates—The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Recently Adopted Accounting Standards—In ~~August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,~~ Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in Accounting Standards Codification (“ASC”) 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (“EPS”) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. For SEC filers, excluding smaller reporting companies, this ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot adopt the guidance in an interim reporting period. We adopted the standard effective January 1, 2022, and the adoption of this standard did not have a material impact on our consolidated financial statements.

~~Recently Issued Accounting Standards—In~~ March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)(“ (“ASU 2020-04”)~~. ASU 2020-04 contains practical expedients~~, which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, ~~reference rate reform-related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as~~or recognizing the effects of, reference rate reform ~~activities occur.~~on financial reporting. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848. The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848), which deferred the sunset date of Topic 848 from December 31, 2022 to December 31, 2024. The Company ~~continues~~applied the optional expedient in evaluating debt modifications converting from London Interbank Offered Rate (“LIBOR”) to ~~evaluate~~Secured Overnight Financing Rate (“SOFR”). The Company adopted the standards upon the respective effective dates. There was no material impact as a result of ~~the guidance and may apply the elections as applicable as changes in the market occur.~~

~~Reclassification—Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.~~this adoption.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

3. Revenue

The following tables present our revenue disaggregated by geographical area (dollars in thousands):


		Three Months Ended September 30, 2022												Three Months Ended March 31, 2023
Primary Geographical Market	Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total		Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	Atlanta, GA Area	9	$	17,841	$	4,154	$	1,438	$	—	$	23,433	Atlanta, GA Area	10	$	19,776	$	4,941	$	1,490	$	—	$	26,207
Boston, MA Area	Boston, MA Area	2	15,562		1,363		1,453		—		18,378		Boston, MA Area	2	8,619		935		1,434		—		10,988
Dallas / Ft. Worth, TX Area	Dallas / Ft. Worth, TX Area	7	12,867		3,047		889		—		16,803		Dallas / Ft. Worth, TX Area	7	16,273		5,423		941		—		22,637
Houston, TX Area	Houston, TX Area	3	5,958		1,543		243		—		7,744		Houston, TX Area	3	6,814		2,558		281		—		9,653
Los Angeles, CA Metro Area	Los Angeles, CA Metro Area	6	19,515		3,132		1,252		—		23,899		Los Angeles, CA Metro Area	6	21,603		4,893		1,036		—		27,532
Miami, FL Metro Area	Miami, FL Metro Area	2	4,816		1,617		155		—		6,588		Miami, FL Metro Area	2	8,630		2,837		206		—		11,673
Minneapolis - St. Paul, MN		2	4,361		1,335		163		—		5,859
Minneapolis - St. Paul, MN Area													Minneapolis - St. Paul, MN Area	2	2,395		594		279		—		3,268
Nashville, TN Area	Nashville, TN Area	1	13,705		5,997		1,047		—		20,749		Nashville, TN Area	1	13,217		7,344		692		—		21,253
New York / New Jersey Metro Area	New York / New Jersey Metro Area	6	16,316		4,594		876		—		21,786		New York / New Jersey Metro Area	6	12,081		4,875		566		—		17,522
Orlando, FL Area	Orlando, FL Area	2	4,981		407		430		—		5,818		Orlando, FL Area	2	6,926		512		491		—		7,929
Philadelphia, PA Area	Philadelphia, PA Area	3	6,120		632		196		—		6,948		Philadelphia, PA Area	3	4,562		528		221		—		5,311
San Diego, CA Area	San Diego, CA Area	2	6,127		154		334		—		6,615		San Diego, CA Area	2	4,714		297		317		—		5,328
San Francisco - Oakland, CA Metro Area	San Francisco - Oakland, CA Metro Area	7	19,580		1,588		931		—		22,099		San Francisco - Oakland, CA Metro Area	7	16,051		2,117		697		—		18,865
Tampa, FL Area	Tampa, FL Area	2	5,389		1,472		267		—		7,128		Tampa, FL Area	2	9,847		1,983		454		—		12,284
Washington D.C. - MD - VA Area	Washington D.C. - MD - VA Area	9	28,429		5,102		2,501		—		36,032		Washington D.C. - MD - VA Area	9	28,020		5,883		1,846		—		35,749
Other Areas	Other Areas	36	76,267		12,266		5,565		—		94,098		Other Areas	36	72,408		13,240		5,018		—		90,666
Orlando WorldQuest	Orlando WorldQuest	—	1,068		39		260		—		1,367		Orlando WorldQuest	—	1,019		31		313		—		1,363
Disposed properties		1	1,714		191		183		—		2,088

Corporate	Corporate	—	—		—		—		724		724		Corporate	—	—		—		—		658		658
Total	Total	100	$	260,616	$	48,633	$	18,183	$	724	$	328,156	Total	100	$	252,955	$	58,991	$	16,282	$	658	$	328,886


		Three Months Ended September 30, 2021												Three Months Ended March 31, 2022
Primary Geographical Market	Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total		Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	Atlanta, GA Area	9	$	14,233	$	2,672	$	1,229	$	—	$	18,134	Atlanta, GA Area	9	$	13,646	$	3,121	$	1,166	$	—	$	17,933
Boston, MA Area	Boston, MA Area	2	10,651		795		1,015		—		12,461		Boston, MA Area	2	5,964		1,138		996		—		8,098
Dallas / Ft. Worth, TX Area	Dallas / Ft. Worth, TX Area	7	9,424		1,301		772		—		11,497		Dallas / Ft. Worth, TX Area	7	12,519		2,623		919		—		16,061
Houston, TX Area	Houston, TX Area	3	5,463		897		117		—		6,477		Houston, TX Area	3	5,567		1,558		190		—		7,315
Los Angeles, CA Metro Area	Los Angeles, CA Metro Area	6	16,085		2,695		1,476		—		20,256		Los Angeles, CA Metro Area	6	17,706		2,660		1,018		—		21,384
Miami, FL Metro Area	Miami, FL Metro Area	2	4,491		1,220		195		—		5,906		Miami, FL Metro Area	2	7,474		2,046		251		—		9,771
Minneapolis - St. Paul, MN		2	2,714		567		664		—		3,945
Minneapolis - St. Paul, MN Area													Minneapolis - St. Paul, MN Area	2	1,813		510		84		—		2,407
Nashville, TN Area	Nashville, TN Area	1	11,868		4,073		809		—		16,750		Nashville, TN Area	1	10,896		5,323		966		—		17,185
New York / New Jersey Metro Area	New York / New Jersey Metro Area	6	11,957		3,216		572		—		15,745		New York / New Jersey Metro Area	6	8,069		2,446		520		—		11,035
Orlando, FL Area	Orlando, FL Area	2	4,256		167		373		—		4,796		Orlando, FL Area	2	5,817		313		355		—		6,485
Philadelphia, PA Area	Philadelphia, PA Area	3	5,806		403		204		—		6,413		Philadelphia, PA Area	3	3,834		342		211		—		4,387
San Diego, CA Area	San Diego, CA Area	2	4,208		152		373		—		4,733		San Diego, CA Area	2	3,661		163		300		—		4,124
San Francisco - Oakland, CA Metro Area	San Francisco - Oakland, CA Metro Area	7	13,035		870		673		—		14,578		San Francisco - Oakland, CA Metro Area	7	10,357		973		615		—		11,945
Tampa, FL Area	Tampa, FL Area	2	4,231		521		229		—		4,981		Tampa, FL Area	2	7,623		1,375		295		—		9,293
Washington D.C. - MD - VA Area	Washington D.C. - MD - VA Area	9	16,296		2,172		1,295		—		19,763		Washington D.C. - MD - VA Area	9	16,719		2,850		1,312		—		20,881
Other Areas	Other Areas	36	64,641		7,771		4,639		—		77,051		Other Areas	36	61,547		8,956		4,815		—		75,318
Orlando WorldQuest	Orlando WorldQuest	—	975		39		215		—		1,229		Orlando WorldQuest	—	1,152		48		337		—		1,537
Disposed properties	Disposed properties	1	1,785		213		94		—		2,092		Disposed properties	1	966		315		86		—		1,367
Corporate	Corporate	—	—		—		—		627		627		Corporate	—	—		—		—		612		612
Total	Total	100	$	202,119	$	29,744	$	14,944	$	627	$	247,434	Total	100	$	195,330	$	36,760	$	14,436	$	612	$	247,138

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Nine Months Ended September 30, 2022
Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Other Total
Atlanta, GA Area 9 $ 49,046 $ 11,639 $ 3,787 $ — $ 64,472
Boston, MA Area 2 37,500 3,993 3,872 — 45,365
Dallas / Ft. Worth, TX Area 7 40,145 9,410 2,742 — 52,297
Houston, TX Area 3 17,741 5,232 635 — 23,608
Los Angeles, CA Metro Area 6 58,016 9,734 3,624 — 71,374
Miami, FL Metro Area 2 18,821 5,803 674 — 25,298
Minneapolis - St. Paul, MN 2 9,303 2,705 337 — 12,345
Nashville, TN Area 1 40,041 18,006 3,077 — 61,124
New York / New Jersey Metro Area 6 39,634 12,041 2,066 — 53,741
Orlando, FL Area 2 16,557 1,102 1,181 — 18,840
Philadelphia, PA Area 3 16,394 1,638 669 — 18,701
San Diego, CA Area 2 15,384 573 1,001 — 16,958
San Francisco - Oakland, CA Metro Area 7 46,923 3,992 2,302 — 53,217
Tampa, FL Area 2 19,600 4,500 891 — 24,991
Washington D.C. - MD - VA Area 9 80,263 14,533 5,972 — 100,768
Other Areas 36 218,243 33,848 15,971 — 268,062
Orlando WorldQuest — 3,463 146 911 — 4,520
Disposed properties 1 4,400 814 330 — 5,544
Corporate — — — — 2,164 2,164
Total 100 $ 731,474 $ 139,709 $ 50,042 $ 2,164 $ 923,389

Nine Months Ended September 30, 2021
Primary Geographical Market Number of Hotels Rooms Food and Beverage Other Hotel Other Total
Atlanta, GA Area 9 $ 32,795 $ 5,685 $ 3,124 $ — $ 41,604
Boston, MA Area 2 16,589 1,206 2,573 — 20,368
Dallas / Ft. Worth, TX Area 7 25,084 3,207 1,916 — 30,207
Houston, TX Area 3 13,906 1,931 348 — 16,185
Los Angeles, CA Metro Area 6 37,326 4,994 3,536 — 45,856
Miami, FL Metro Area 2 13,252 2,433 531 — 16,216
Minneapolis - St. Paul, MN 2 5,361 1,256 779 — 7,396
Nashville, TN Area 1 20,806 7,010 2,204 — 30,020
New York / New Jersey Metro Area 6 21,857 5,273 1,426 — 28,556
Orlando, FL Area 2 11,383 453 1,112 — 12,948
Philadelphia, PA Area 3 11,946 688 475 — 13,109
San Diego, CA Area 2 8,918 307 938 — 10,163
San Francisco - Oakland, CA Metro Area 7 29,586 1,395 1,910 — 32,891
Tampa, FL Area 2 14,806 1,522 623 — 16,951
Washington D.C. - MD - VA Area 9 35,477 3,413 3,299 — 42,189
Other Areas 36 153,599 16,322 12,747 — 182,668
Orlando WorldQuest — 2,681 128 628 — 3,437
Disposed properties 4 3,892 264 189 — 4,345
Corporate — — — — 1,567 1,567
Total 103 $ 459,264 $ 57,487 $ 38,358 $ 1,567 $ 556,676

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Land	Land	$	622,759	$	626,917	Land	$	622,759	$	622,759
Buildings and improvements	Buildings and improvements	3,660,742		3,711,006		Buildings and improvements	3,623,737		3,650,464
Furniture, fixtures and equipment	Furniture, fixtures and equipment	234,836		298,121		Furniture, fixtures and equipment	216,440		222,665
Construction in progress	Construction in progress	23,368		16,370		Construction in progress	26,773		21,609
Condominium properties	Condominium properties	9,899		10,739		Condominium properties	9,887		9,889
Hilton Marietta finance lease						Hilton Marietta finance lease	17,269		18,998
Total cost	Total cost	4,551,604		4,663,153		Total cost	4,516,865		4,546,384
Accumulated depreciation	Accumulated depreciation	(1,437,076)		(1,432,443)		Accumulated depreciation	(1,417,260)		(1,428,053)
Investments in hotel properties, net	Investments in hotel properties, net	$	3,114,528	$	3,230,710	Investments in hotel properties, net	$	3,099,605	$	3,118,331

5. Hotel Disposition and Impairment Charges

Hotel Dispositions

On September 1, 2022, the Company sold the Sheraton in Ann Arbor, MI (“Sheraton Ann Arbor”) for total consideration of approximately $35.7 million, which included cash of $34.5 million and an interest-free receivable with an estimated fair value of $1.2 million and a face value of $1.5 million. The payment of the $1.5 million is deferred until the last day of the ~~twenty-four~~th month following the closing date. The sale resulted in a loss of approximately $29,000 for the three and nine months ended September 30, 2022, which was included in “gain (loss) on sale of assets and hotel properties” in the consolidated statements of operations. The Company also repaid the $30.0 million mortgage loan secured by the hotel property. See note 7.

The results of operations for disposed hotel properties are included in net income (loss) through the date of disposition. See note 2 for ~~a list of~~the fiscal year ~~2021 and~~ 2022 hotel property ~~dispositions.~~disposition. The following table includes condensed financial information from the hotel property ~~dispositions~~disposition that occurred in ~~2021 and~~ 2022 for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 ~~and 2021~~ (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Total hotel revenue $ 2,088 $ 2,092 $ 5,544 $ 4,345
Total hotel operating expenses (1,285) (1,326) (4,261) (4,114)
Gain (loss) on disposition of assets and hotel properties 4 — 4 237
Property taxes, insurance and other (134) (148) (433) (565)
Depreciation and amortization — (590) (1,203) (2,030)
Operating income (loss) 673 28 (349) (2,127)
Interest expense and amortization of discounts and loan costs (207) (359) (955) (1,691)
Gain (loss) on extinguishment of debt — — — 10,604
Income (loss) before income taxes 466 (331) (1,304) 6,786
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership (4) 3 8 (53)
Net income (loss) before income taxes attributable to the Company $ 462 $ (328) $ (1,296) $ 6,733


	Three Months Ended March 31,
		2022
Total hotel revenue		$	1,367
Total hotel operating expenses		(1,352)

Property taxes, insurance and other		(149)
Depreciation and amortization		(610)

Operating income (loss)		(744)

Interest expense and amortization of discounts and loan costs		(354)




Income (loss) before income taxes		(1,098)

(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership		7
Net income (loss) before income taxes attributable to the Company		$	(1,091)

Impairment Charges

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ no impairment charges were recorded.

6. Investments in Unconsolidated Entities

OpenKey, which is controlled and consolidated by Ashford Inc., is a hospitality-focused mobile key platform that provides a universal smart phone app and related hardware and software for keyless entry into hotel guest rooms. Our investment is recorded as a component of “investment in unconsolidated entities” in our consolidated balance sheets and is accounted for

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance. As of ~~September 30, 2022,~~March 31, 2023, the Company has made investments in OpenKey totaling approximately $5.5 million.

As of ~~September 30, 2022,~~March 31, 2023, the Company held an investment in 815 Commerce MM of approximately $8.5 million, which is developing the Le Meridien Fort Worth. Our investment is recorded as a component of “investment in unconsolidated entities” in our consolidated balance sheet and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance.

In November 2022, the Company made an initial investment of $9.1 million in an entity that owns the Meritage Investment in Napa, CA. Our investment is recorded as a component of “investment in unconsolidated entities” in our consolidated balance

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

sheets and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance.

The following table summarizes our carrying value and ownership interest in unconsolidated entities:


		September 30, 2022			December 31, 2021				March 31, 2023			December 31, 2022
Carrying value of the investment in OpenKey (in thousands)	Carrying value of the investment in OpenKey (in thousands)	$	2,320		$	2,771		Carrying value of the investment in OpenKey (in thousands)	$	1,953		$	2,103
Ownership interest in OpenKey	Ownership interest in OpenKey	15.1		%	16.7		%	Ownership interest in OpenKey	15.1		%	15.1		%
Carrying value of the investment in 815 Commerce MM (in thousands)	Carrying value of the investment in 815 Commerce MM (in thousands)	$	8,482		$	8,482		Carrying value of the investment in 815 Commerce MM (in thousands)	$	8,482		$	8,482
Ownership interest in 815 Commerce MM	Ownership interest in 815 Commerce MM	32.5		%	32.5		%	Ownership interest in 815 Commerce MM	32.5		%	32.5		%
Carrying value of the Meritage Investment (in thousands)								Carrying value of the Meritage Investment (in thousands)	$	8,745		$	8,991

The following table summarizes our equity in earnings (loss) of unconsolidated entities (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
OpenKey $ (147) $ (145) $ (451) $ (423)


	Three Months Ended March 31,
		2023		2022
OpenKey		$	(150)	$	(153)
815 Commerce MM		—		—
Meritage Investment		(246)		—
		$	(396)	$	(153)

We review our investments in unconsolidated entities for impairment each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of the investment. Any other-than-temporary impairment is recorded in equity in earnings (loss) of unconsolidated entities. No impairment charges were recorded during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

1413

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

7. Indebtedness, net

Indebtedness consisted of the following (in thousands):

September 30, 2022

December 31, 2021

March 31, 2023

December 31, 2022

Indebtedness

Collateral

Maturity

Interest Rate (1)

Debt Balance

Indebtedness

Collateral

Maturity

Interest Rate

Debt Balance

Mortgage loan ~~(2)~~(3)

1 hotel

July 2022

LIBOR (1) + 3.95%

—

33,200

Mortgage loan ~~(2)~~(3)

19 hotels

April 2023

LIBOR (1) + 3.20%

907,030

Mortgage loan (3)

17 hotels

November 2022

LIBOR(1) + 3.00%

415,000

419,000

Mortgage loan

1 hotel

June 2023

LIBOR (1) + 2.45%

73,450

Mortgage loan (4)

1 hotel

November 2022

LIBOR(1) + 2.70%

25,000

Mortgage loan (4)

7 hotels

June 2023

LIBOR (1) + 3.65%

180,720

Mortgage loan ~~(5)~~(4)

1 hotel

December 2022

LIBOR(1) + 2.25%

16,100

Mortgage loan ~~(5)~~(4)

7 hotels

June 2023

LIBOR (1) + 3.39%

174,400

Mortgage loan (4)

5 hotels

June 2023

LIBOR (1) + 3.73%

221,040

Mortgage loan (4)

5 hotels

June 2023

LIBOR (1) + 4.02%

262,640

Mortgage loan ~~(8)~~(4)

5 hotels

June 2023

LIBOR (1) + 2.73%

160,000

Mortgage loan (4)

5 hotels

June 2023

LIBOR (1) + 3.68%

215,120

Mortgage loan (5)

17 hotels

November 2023

LIBOR (1) + 3.13%

415,000

Mortgage loan (6)

1 hotel

January 2023

LIBOR(1) + 3.40%

37,000

Mortgage loan (6)

1 hotel

November 2023

SOFR (2) + 2.80%

25,000

Mortgage loan (7)

8 hotels

February 2023

LIBOR(1) + 3.07%

395,000

Mortgage loan (7)

1 hotel

December 2023

SOFR (2) + 2.85%

15,252

15,290

Mortgage loan ~~(8)~~(4)

2 hotels

March 2023

LIBOR(1) + 2.75%

240,000

Mortgage loan

1 hotel

January 2024

5.49%

6,307

6,345

Mortgage loan

1 hotel

January 2024

5.49%

9,204

9,261

Term loan (8)

Equity

January 2024

14.00%

195,959

Mortgage loan (9)

19 hotels

April 2023

LIBOR(1) + 3.20%

907,030

910,694

Mortgage loan (9)

8 hotels

February 2024

LIBOR (1) + 3.17%

345,000

395,000

Mortgage loan

1 hotel

June 2023

LIBOR(1) + 2.45%

73,450

Mortgage loan (10)

7 hotels

June 2023

LIBOR(1) + 3.65%

180,720

Mortgage loan (10)

7 hotels

June 2023

LIBOR(1) + 3.39%

174,400

Mortgage loan (10)

5 hotels

June 2023

LIBOR(1) + 3.73%

221,040

Mortgage loan (10)

5 hotels

June 2023

LIBOR(1) + 4.02%

262,640

Mortgage loan (10)

5 hotels

June 2023

LIBOR(1) + 2.73%

160,000

Mortgage loan (10)

5 hotels

June 2023

LIBOR(1) + 3.68%

215,120

Mortgage loan (10)

2 hotels

March 2024

LIBOR (1) + 2.75%

240,000

Mortgage loan

1 hotel

January 2024

5.49%

6,383

6,492

Mortgage loan

1 hotel

May 2024

4.99%

5,755

5,819

Mortgage loan

1 hotel

January 2024

5.49%

9,316

9,474

Term loan (11)

Equity

January 2024

16.00%

195,959

200,000

Mortgage loan

1 hotel

May 2024

4.99%

5,881

6,150

Mortgage loan

1 hotel

June 2024

LIBOR(1) + 2.00%

8,881

Mortgage loan (11)

1 hotel

June 2024

SOFR (2) + 2.00%

8,881

Mortgage loan

2 hotels

August 2024

4.85%

11,231

11,427

Mortgage loan

2 hotels

August 2024

4.85%

11,109

11,172

Mortgage loan

3 hotels

August 2024

4.90%

22,466

22,853

Mortgage loan

3 hotels

August 2024

4.90%

22,224

22,349

Mortgage loan (12)

1 hotel

November 2024

LIBOR(1) + 4.65%

85,552

84,000

Mortgage loan (12)

1 hotel

November 2024

LIBOR (1) + 4.65%

86,000

85,552

Mortgage loan (13)

1 hotel

December 2024

SOFR (2) + 4.00%

37,000

Mortgage loan

3 hotels

February 2025

4.45%

47,212

50,098

Mortgage loan

3 hotels

February 2025

4.45%

46,609

46,918

Mortgage loan

1 hotel

March 2025

4.66%

23,468

23,883

Mortgage loan

1 hotel

March 2025

4.66%

23,179

23,326

Mortgage loan (13)

1 hotel

August 2025

LIBOR(1) + 3.80%

98,000

Mortgage loan (14)

1 hotel

August 2025

SOFR (2) + 3.91%

98,000

3,836,849

3,884,622

3,784,879

3,835,272

Premiums (discounts), net

(23,544)

(32,777)

Premiums (discounts), net

(16,075)

(20,249)

Capitalized default interest and late charges

12,161

23,511

Capitalized default interest and late charges

5,263

8,363

Deferred loan costs, net

(10,047)

(15,440)

Deferred loan costs, net

(12,623)

(8,530)

Embedded debt derivative

23,278

27,906

Embedded debt derivative

24,621

23,687

Indebtedness, net

3,838,697

3,887,822

Indebtedness, net

3,786,065

3,838,543

_____________________________

(1) LIBOR rates were ~~3.143%~~4.858% and ~~0.101%~~4.390% at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

(2) ~~On September 1,~~SOFR rates were 4.800% and 4.358% at March 31, 2023 at December 31, 2022, ~~we sold the property securing this mortgage loan. The assets and liabilities associated with this mortgage loan have been removed from the Company's consolidated balance sheet. See note 5.~~respectively.

(3) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The ~~third one-year extension period began in November 2021. On March 2, 2022, we repaid $4.0 million of principal on this mortgage loan.~~

~~(4)~~ This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The second one-year extension option began in November 2021. This mortgage loan has a LIBOR floor of 1.25%.

~~(5)~~ ~~This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.25%.~~

~~(6)~~ ~~This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions.~~

~~(7)~~ ~~This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in February 2022.~~

~~(8)~~ ~~This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in March 2022.~~

~~(9)~~ ~~This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third~~fourth one-year extension period began in April ~~2022.~~2023. In accordance with exercising the fourth one-year extension option, we repaid $45.0 million of principal and the variable interest rate increased from LIBOR + 3.20% to LIBOR + 3.47%.

~~(10)~~(4) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in June 2022.

(5) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The fourth one-year extension period began in November 2022.

(6) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in November 2022.

(7) This loan has two one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in December 2022.

(8) This term loan has two one-year extension options, subject to satisfaction of certain conditions. Effective January 15, 2023, the interest rate decreased from 16% to 14% in accordance with the terms and conditions of the loan agreement.

(9) On February 9, 2023, we amended this mortgage loan. Terms of the amendment included a principal pay down of $50.0 million, and the variable interest rate increased from LIBOR + 3.07% to LIBOR + 3.17%. This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The fourth one-year extension period began in February 2023.

(10) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in March 2023.

(11) This mortgage loan has a SOFR floor of 2.00%.

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~(11)~~(12) ~~This term loan has two one-year extension options, subject to satisfaction of certain conditions.~~ On ~~September 1, 2022, we repaid $4.0 million of principal on this term loan.~~

~~(12)~~ ~~This mortgage loan has two one-year extension options, subject to the satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.10%. Effective September 23, 2022,~~January 27, 2023, we drew ~~$1.6 million~~the remaining $449,000 of the $2.0 million ~~of future~~ additional funding available to replenish restricted cash balances in accordance with the terms of the mortgage loan. This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions.

(13) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 0.50%.

(14) This mortgage loan has one one-year extension option, subject to ~~the~~ satisfaction of certain conditions.

We recognized net premium (discount) amortization as presented in the table below (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Line Item	Line Item	2022		2021		2022		2021		Line Item		2023		2022
Interest expense, net of discount amortization		$	(3,108)	$	(1,913)	$	(8,719)	$	(4,606)
Interest expense and amortization of discounts and loan costs										Interest expense and amortization of discounts and loan costs		$	(4,173)	$	(2,698)

The amortization of the net premium (discount) is computed using a method that approximates the effective interest ~~method, which is included in “interest expense and amortization of discounts and loan costs” in the consolidated statements of operations.~~method.

During the years ended December 31, 2021 and 2020 the Company entered into forbearance and other agreements which were evaluated to be considered troubled debt restructurings due to terms that allowed for deferred interest and the forgiveness of default interest and late charges. As a result of the troubled debt restructurings all accrued default interest and late charges were capitalized into the applicable loan balances and are being amortized over the remaining term of the loan using the effective interest method. The amount of default interest and late charges capitalized into the loan balance was $0 and $32.6 million during the three and nine months ended September 30, 2021. No gain or loss was initially recognized as the carrying amount of the original loans was not greater than the undiscounted cash flows of the modified loans. The amount of the capitalized principal that was amortized during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ was ~~$3.8~~$3.1 million and ~~$11.4 million and $4.3 million and $31.9~~$3.8 million, respectively. These amounts are included inas a reduction to “interest expense and amortization of discounts and loan costs” in the consolidated ~~statement~~statements of operations.

We have extension options relating to certain ~~property level~~property-level loans that will permit us to extend the maturity date of our loans if certain conditions are satisfied at the respective extension dates, including the achievement of debt yield targets required in order to extend such loans. To the extent we decide to extend the maturity date of the debt outstanding under the loans, we may be required to prepay a significant amount of the loans in order to meet the required debt yield targets.

~~We are required to maintain certain financial ratios under various debt and related agreements.~~ If we violate covenants in ~~any~~our debt ~~or related agreement,~~agreements, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. As of ~~September 30, 2022,~~March 31, 2023, we were in compliance with all covenants related to mortgage ~~loans for which we entered into forbearance and other agreements.~~loans. We were also in compliance with all covenants under the senior secured term loan facility with Oaktree Capital Management L.P. (“Oaktree”) (the “Oaktree Credit Agreement”). The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of Ashford Trust or Ashford Trust OP, our operating partnership, and the liabilities of such subsidiaries do not constitute the obligations of Ashford Trust or Ashford Trust OP.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

8. Notes Receivable, Net and Other

Notes receivable, net are summarized in the table below (dollars in thousands):


		Interest Rate		September 30, 2022		December 31, 2021			Interest Rate		March 31, 2023		December 31, 2022
Construction Financing Note (1) (4)
Face amount		7.0	%	$	—	$	4,000

Certificate of Occupancy Note (2) (4)

Certificate of Occupancy Note (1) (3)								Certificate of Occupancy Note (1) (3)
Face amount	Face amount	7.0	%	$	5,250	$	5,250	Face amount	7.0	%	$	5,250	$	5,250
Discount ~~(3)~~(2)	Discount ~~(3)~~(2)			(275)		(527)		Discount ~~(3)~~(2)			(99)		(188)
				4,975		4,723
Notes receivable, net	Notes receivable, net			$	4,975	$	8,723	Notes receivable, net			$	5,151	$	5,062

(1)The outstanding principal balance and all accrued and unpaid interest was due and payable on or before the earlier of (i) the buyer closing on third-party institutional financing for the construction of improvements on the property, (ii) three years after the development commencement date, or (iii) July 9, 2024. On March 4, 2022, the Construction Financing Note was paid in full in the amount of $4.0 million.

~~(2)~~ The outstanding principal balance and all accrued and unpaid interest is due and payable on or before July 9, 2025.

~~(3)~~(2) The discount represents the imputed interest during the interest-free period. Interest begins accruing on July 9, 2023.

~~(4)~~(3) The ~~notes~~note receivable ~~are~~is secured by the 1.65-acre land parcel adjacent to the Hilton St. Petersburg Bayfront.

No cash interest income was recorded for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022. ~~Cash interest income of $63,000 was recorded for the three and nine months ended September 30, 2021.~~

We recognized discount amortization income as presented in the table below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
Line Item 2022 2021 2022 2021
Other income (expense) $ 86 $ 87 $ 252 $ 379

~~As of September 30, 2022 and December 31, 2021, the expected credit loss associated with the notes receivables was immaterial.~~

For the three and nine months ended September 30, 2021, we received reimbursement of $80,000 and $320,000, respectively, for parking fees and recognized income of $80,000 and $89,000, respectively, which is included in “other income (expense)” in the consolidated statements of operations while the parking parcel was in development.

~~On August 31, 2021, the parking parcel was completed and we obtained access to utilize the parking parcel.~~

~~For the three and nine months ended September 30, 2022 and 2021, respectively, we recognized imputed interest income as presented in the table below (in thousands):~~


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Line Item	Line Item	2022		2021		2022		2021		Line Item		2023		2022
Other income (expense)	Other income (expense)	$	—	$	54	$	—	$	211	Other income (expense)		$	89	$	82

1715

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

On September 1, 2022, the Company sold the Sheraton Ann Arbor. See note 5. Under the purchase and sale agreement, $1.5 million of the sales price is deferred, interest free, until the last day of the 24th month following the closing date (September 30, 2024). The components of the receivable, which is included in “other assets” in the consolidated balance sheet, are summarized below (dollars in thousands):


		Imputed Interest Rate		September 30, 2022

							Imputed Interest Rate		March 31, 2023		December 31, 2022
Deferred Receivable	Deferred Receivable					Deferred Receivable
Face amount	Face amount	10.0	%	$	1,500	Face amount	10.0	%	$	1,500	$	1,500
Discount (1)	Discount (1)			(271)		Discount (1)			(208)		(240)
				1,229					$	1,292	$	1,260
Total				$	1,229

_______________

(1) The discount represents the imputed interest during the interest-free period.

We recognized discount amortization income as presented in the table below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
Line Item 2022 2022
Other income (expense) $ 10 $ 10


	Three Months Ended March 31,
Line Item		2023
Other income (expense)		$	32

We review receivables for impairment each reporting period. Under the model, the Company estimates credit losses over the entire contractual term of the instrument from the date of initial recognition of that instrument and is required to record a credit loss expense (or reversal) in each reporting period. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022.

9. Derivative Instruments and Hedging

Interest Rate Derivatives—We are exposed to risks arising from our business operations, economic conditions and financial markets. To manage these risks, we primarily use interest rate derivatives to hedge our debt and our cash flows, which include interest rate caps. To mitigate ~~the~~ nonperformance risk, we routinely use a third party’s analysis of the creditworthiness of the counterparties, which supports our belief that the counterparties’ nonperformance risk is limited. All derivatives are recorded at fair value. Payments from counterparties on in-the-money interest rate caps are recognized as realized gains on our consolidated statements of operations.

The following table presents a summary of our interest rate derivatives entered into over each applicable period:


		Nine Months Ended September 30,								Three Months Ended March 31,
		2022				2021						2023				2022
Interest rate caps:	Interest rate caps:										Interest rate caps:
Notional amount (in thousands)	Notional amount (in thousands)	$	2,873,651		(1)	$	3,304,301		(1)		Notional amount (in thousands)	$	585,000		(1)	$	1,586,281		(1)
Strike rate low end of range	Strike rate low end of range	3.00		%		2.50		%			Strike rate low end of range	4.00		%		3.00		%
Strike rate high end of range	Strike rate high end of range	4.00		%		4.00		%			Strike rate high end of range	6.90		%		4.00		%
Effective date range	Effective date range	January 2022 - June 2022				January 2021 - August 2021					Effective date range	February 2023 - March 2023				January 2022 - March 2022
Termination date range	Termination date range	January 2023 - July 2023				November 2021 - September 2023					Termination date range	February 2024 - March 2024				January 2023 - April 2024
Total cost (in thousands)	Total cost (in thousands)	$	5,255			$	574				Total cost (in thousands)	$	4,174			$	857

_______________

(1)These instruments were not designated as cash flow hedges.

1816

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We held interest rate instruments as summarized in the table below:


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
Interest rate caps:	Interest rate caps:									Interest rate caps:
Notional amount (in thousands)	Notional amount (in thousands)	$	3,525,751		(1)	$	3,597,301		(1)	Notional amount (in thousands)	$	3,462,941		(1)	$	3,549,941		(1)
Strike rate low end of range	Strike rate low end of range	2.00		%		2.00		%		Strike rate low end of range	2.00		%		2.00		%
Strike rate high end of range	Strike rate high end of range	4.00		%		4.00		%		Strike rate high end of range	6.90		%		5.50		%
Termination date range	Termination date range	November 2022 - November 2024				February 2022 - November 2024				Termination date range	April 2023 - January 2025				January 2023 - January 2025
Aggregate principal balance on corresponding mortgage loans (in thousands)	Aggregate principal balance on corresponding mortgage loans (in thousands)	$	3,506,052			$	3,438,714			Aggregate principal balance on corresponding mortgage loans (in thousands)	$	3,455,652			$	3,505,242

_______________

(1)These instruments were not designated as cash flow hedges.

Compound Embedded Debt Derivative—Based on certain provisions in the Oaktree Credit Agreement, the Company is required to pay an exit fee. Under the applicable accounting guidance, the exit fee is considered an embedded derivative liability that meets the criteria for bifurcation from the debt host. There were other features that were bifurcated, but did not have a material value. The embedded debt derivative was initially measured at fair value and the fair value of the embedded debt derivative is estimated at each reporting period. See note 10.

10. Fair Value Measurements

Fair Value Hierarchy—For disclosure purposes, financial instruments, whether measured at fair value on a recurring or nonrecurring basis or not measured at fair value, are classified in a hierarchy consisting of three levels based on the observability of valuation inputs in the ~~market place~~marketplace as discussed below:

•Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.

•Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.

•Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.

The fair value of interest rate caps ~~are~~is determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates ~~rise~~rose above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the caps are based on an expectation of future interest rates derived from observable market interest rate curves ~~(LIBOR~~(LIBOR/SOFR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk.

When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at ~~September 30, 2022,~~March 31, 2023, the ~~LIBOR~~LIBOR/SOFR interest rate forward curve (Level 2 inputs) assumed ~~an uptrend~~a downtrend from ~~3.143%~~4.858% to ~~4.595%~~3.125% for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values of derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.

The Company initially recorded an embedded debt derivative of $43.7 million, which was attributed to the compound embedded derivative liability associated with the Oaktree term loan.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The compound embedded derivative liability is considered a Level 3 measurement due to the utilization of significant unobservable inputs in the valuation, which were based on ‘with and without’ valuation models. Based on the terms and

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

provisions of the Oaktree Credit Agreement, with the assistance of a valuation specialist, the Company utilized a risk neutral model to estimate the fair value of the embedded derivative features requiring bifurcation as of the respective issuance dates and as of the ~~September 30, 2022~~March 31, 2023 reporting date. The risk neutral model is designed to utilize market data and the Company’s best estimate of the timing and likelihood of the settlement events that are related to the embedded derivative features in order to estimate the fair value of the respective notes with these embedded derivative features.

The fair value of the notes with the derivative features is compared to the fair value of a plain vanilla note (excluding the derivative features), which is calculated based on the present value of the future default adjusted expected cash flows. The difference between the two values represents the fair value of the bifurcated derivative features as of each respective valuation date.

The key inputs to the valuation models that were utilized to estimate the fair value of the embedded debt derivative are described as follows:

•the default probability-weighted exit fee and prepayment cash flows are based on the contractual terms of the Oaktree Credit Agreement and the expectation of an acceleration event, including default, of the Company;

•the remaining term was determined based on the remaining time period to maturity of the related note with embedded features subject to valuation (as of the respective valuation date);

•the Company’s equity volatility estimate was based on the historical equity volatility of the Company, based on the remaining term of the respective loans;

•the risk-free rate was the discount rate utilized in the valuation and was determined based on reference to market yields for U.S. treasury debt instruments with similar terms;

•the recovery rate assumed upon occurrence of a default event was estimated based upon recovery rate data published by credit rating agencies specific to the seniority of the notes; and

•the probabilities and timing of a default-related acceleration event were estimated using an annualized probability of default which was implied from the debt issuance proceeds as of the issuance date, and updated utilizing relevant market data including market observed option-adjusted spreads as of ~~September 30, 2022.~~March 31, 2023.

The following table includes a summary of the compound embedded derivative liabilities measured at fair value using significant unobservable (Level 3) inputs (in thousands):


	Fair Value
~~Balance at January 1, 2021~~	$	—
~~Additions~~	~~43,681~~
~~Re-measurement of fair value~~	~~(1,279)~~
~~Balance at March 31, 2021~~	~~42,402~~
~~Re-measurement of fair value~~	~~2,676~~
~~Balance at June 30, 2021~~	~~45,078~~
~~Re-measurement of fair value~~	~~(6,125)~~
~~Balance at September 30, 2021~~	~~38,953~~
~~Re-measurement of fair value~~	~~(11,047)~~
Balance at December 31, 2021	$	27,906
Re-measurement of fair value	(932)
Balance at March 31, 2022	26,974
Re-measurement of fair value	(2,977)
Balance at June 30, 2022	23,997
Re-measurement of fair value	(719)
Balance at September 30, 2022	23,278
Re-measurement of fair value	409
Balance at December 31, 2022	23,687
Re-measurement of fair value	934
Balance at March 31, 2023	$	~~23,278~~24,621

2018

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):


		Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total				Quoted Market Prices (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)			Total
																			Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)	Total

September 30, 2022:
March 31, 2023:											March 31, 2023:
Assets	Assets													Assets
Derivative assets:	Derivative assets:										Derivative assets:

Interest rate derivatives - caps	Interest rate derivatives - caps	$	—	$	20,187	$	—	$	20,187	(1)	Interest rate derivatives - caps	$	—		$	37,348	$	—		$	37,348	(1)

Total	Total	$	—	$	20,187	$	—	$	20,187		Total	$	—		$	37,348	$	—		$	37,348

Liabilities	Liabilities										Liabilities

Embedded debt derivative	Embedded debt derivative	$	—	$	—	$	(23,278)	$	(23,278)	(2)	Embedded debt derivative	$	—		$	—	$	(24,621)		$	(24,621)	(2)

Net	Net	$	—	$	20,187	$	(23,278)	$	(3,091)		Net	$	—		$	37,348	$	(24,621)		$	12,727

December 31, 2021:
December 31, 2022:											December 31, 2022:
Assets	Assets										Assets
Derivative assets:	Derivative assets:										Derivative assets:
Interest rate derivatives - caps	Interest rate derivatives - caps	$	—	$	501	$	—	$	501	(1)	Interest rate derivatives - caps	$	—		$	47,182	$	—		$	47,182	(1)

Total	Total	$	—	$	501	$	—	$	501		Total	$	—		$	47,182	$	—		$	47,182
Liabilities	Liabilities										Liabilities
Embedded debt derivative	Embedded debt derivative	$	—	$	—	$	(27,906)	$	(27,906)	(2)	Embedded debt derivative	$	—		$	—	$	(23,687)		$	(23,687)	(2)
Net	Net	$	—	$	501	$	(27,906)	$	(27,405)		Net	$	—		$	47,182	$	(23,687)		$	23,495

(1) Reported net as “derivative assets” in our consolidated balance sheets.

(2) Reported in “indebtedness, net” in our consolidated balance sheets.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Effect of Fair Value Measured Assets and Liabilities on Condensed Consolidated Statements of Operations

The following table summarizes the effect of fair value measured assets and liabilities on our consolidated statements of operations (in thousands):


		Gain (Loss) Recognized in Income						Gain (Loss) Recognized in Income
		Three Months Ended September 30,						Three Months Ended March 31,
		2022			2021					2023			2022
Assets	Assets								Assets
Derivative assets:	Derivative assets:								Derivative assets:
Interest rate derivatives - floors		$	—		$	(72)

Interest rate derivatives - caps	Interest rate derivatives - caps	9,055		(1)	(24)				Interest rate derivatives - caps	$	(4,481)		$	2,279

Total	Total	9,055			(96)				Total	$	(4,481)		$	2,279
Liabilities	Liabilities								Liabilities
Derivative liabilities:	Derivative liabilities:								Derivative liabilities:

Embedded debt derivative	Embedded debt derivative	719			6,125				Embedded debt derivative	$	(934)		$	932

Net	Net	$	9,774		$	6,029			Net	$	(5,415)		$	3,211

Total combined	Total combined								Total combined
Interest rate derivatives - floors		$	—		$	(72)

Interest rate derivatives - caps	Interest rate derivatives - caps	9,055			(24)				Interest rate derivatives - caps	$	(14,008)		$	2,279

Embedded debt derivative	Embedded debt derivative	719			6,125				Embedded debt derivative	(934)			932
Unrealized gain (loss) on derivatives	Unrealized gain (loss) on derivatives	9,774		(2)	6,029		(2)		Unrealized gain (loss) on derivatives	(14,942)		(1)	3,211		(1)

Realized gain (loss) on interest rate caps									Realized gain (loss) on interest rate caps	9,527		(1) (2)	—

Net	Net	$	9,774		$	6,029			Net	$	(5,415)		$	3,211

(1) Amount excludes income of $133,000 associated with payments received from counterparties on interest rate caps, which is included in other income (expense) in our consolidated statements of operations.

~~(2)~~ Reported as ~~“unrealized~~“realized and unrealized gain (loss) on derivatives” in our consolidated statements of operations.

Gain (Loss) Recognized in Income
Nine Months Ended September 30,
2022 2021
Assets
Derivative assets:
Interest rate derivatives - floors $ — $ (462)
Interest rate derivatives - caps 14,431 (1) (554)
Total 14,431 (1,016)
Liabilities
Derivative liabilities:
Embedded debt derivative 4,628 4,728
Net $ 19,059 $ 3,712
Total combined
Interest rate derivatives - floors $ — $ (462)
Interest rate derivatives - caps 14,431 (554)
Embedded debt derivative 4,628 4,728
Unrealized gain (loss) on derivatives 19,059 (2) 3,712 (2)
Net $ 19,059 $ 3,712

~~(1)~~(2) ~~Amount excludes income of $133,000 associated with~~Represents settled and unsettled payments ~~received~~ from counterparties on interest rate ~~caps, which is included in other income (expense) in our consolidated statements of operations.~~

~~(2)~~ ~~Reported as “unrealized gain (loss) on derivatives” in our consolidated statements of operations.~~caps.

2219

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

11. Summary of Fair Value of Financial Instruments

Determining estimated fair values of our financial instruments such as notes receivable and indebtedness requires considerable judgment to interpret market data. Market assumptions and/or estimation methodologies used may have a material effect on estimated fair value amounts. Accordingly, estimates presented are not necessarily indicative of amounts at which these instruments could be purchased, sold, or settled. Carrying amounts and estimated fair values of financial instruments, for periods indicated, were as follows (in thousands):


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value			Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets measured at fair value:	Financial assets measured at fair value:									Financial assets measured at fair value:

Derivative assets	Derivative assets	$	20,187	$	20,187	$	501	$	501	Derivative assets	$	37,348	$	37,348	$	47,182	$	47,182

Financial liabilities measured at fair value:	Financial liabilities measured at fair value:									Financial liabilities measured at fair value:
Embedded debt derivative	Embedded debt derivative	$	23,278	$	23,278	$	27,906	$	27,906	Embedded debt derivative	$	24,621	$	24,621	$	23,687	$	23,687

Financial assets not measured at fair value:	Financial assets not measured at fair value:									Financial assets not measured at fair value:
Cash and cash equivalents	Cash and cash equivalents	$	505,533	$	505,533	$	592,110	$	592,110	Cash and cash equivalents	$	344,935	$	344,935	$	417,064	$	417,064
Restricted cash	Restricted cash	132,055		132,055		99,534		99,534		Restricted cash	143,821		143,821		141,962		141,962
Accounts receivable, net	Accounts receivable, net	58,601		58,601		37,720		37,720		Accounts receivable, net	62,049		62,049		49,809		49,809
Notes receivable, net	Notes receivable, net	4,975		4,726 to 5,224		8,723		8,287 to 9,159		Notes receivable, net	5,151		4,893 to 5,408		5,062		4,809 to 5,315
Due from Ashford Inc., net	Due from Ashford Inc., net	1,761		1,761		25		25		Due from Ashford Inc., net	—		—		486		486
Due from related parties, net	Due from related parties, net	6,597		6,597		7,473		7,473		Due from related parties, net	3,353		3,353		6,570		6,570
Due from third-party hotel managers	Due from third-party hotel managers	27,361		27,361		26,896		26,896		Due from third-party hotel managers	20,596		20,596		22,462		22,462

Financial liabilities not measured at fair value:	Financial liabilities not measured at fair value:									Financial liabilities not measured at fair value:
Indebtedness	Indebtedness	$	3,813,305	$3,481,207 to $3,847,648		$	3,851,845	$3,407,210 to $3,765,858		Indebtedness	$	3,768,804	$3,465,530 to $3,830,320		$	3,815,023	$3,500,635 to $3,869,122
Accounts payable and accrued expenses	Accounts payable and accrued expenses	135,967		135,967		117,650		117,650		Accounts payable and accrued expenses	127,892		127,892		115,970		115,970
Accrued interest payable	Accrued interest payable	10,577		10,577		15,432		15,432		Accrued interest payable	14,306		14,306		15,287		15,287
Dividends and distributions payable	Dividends and distributions payable	3,103		3,103		3,104		3,104		Dividends and distributions payable	3,193		3,193		3,118		3,118
Due to Ashford Inc., net										Due to Ashford Inc., net	6,480		6,480		—		—

Due to related parties, net		—		—		728		728
Due to third-party hotel managers	Due to third-party hotel managers	727		727		1,204		1,204		Due to third-party hotel managers	1,701		1,701		1,319		1,319

Cash, cash equivalents and restricted cash. These financial assets bear interest at market rates and have original maturities of less than 90 days. The carrying value approximates fair value due to their short-term nature. This is considered a Level 1 valuation technique.

Accounts receivable, net, accounts payable and accrued expenses, accrued interest payable, dividends and distributions payable, due to/from related parties, net, due to/from Ashford Inc., net and due to/from third-party hotel managers. The carrying values of these financial instruments approximate their fair values due to their short-term nature. This is considered a Level 1 valuation technique.

Notes receivable, net. The carrying amount of notes receivable, net approximates its fair value. We estimate the fair value of the notes receivable, net to be approximately 95.0% and 105.0% of the carrying value of ~~$5.0~~$5.2 million at ~~September 30, 2022~~March 31, 2023 and approximately 95.0% to 105.0% of the carrying value of ~~$8.7~~$5.1 million ~~as of~~at December 31, ~~2021~~.2022. This is considered a Level 2 valuation technique.

Derivative assets and embedded debt derivative. See notes 9 and 10 for a complete description of the methodology and assumptions utilized in determining fair values.

Indebtedness. Fair value of indebtedness is determined using future cash flows discounted at current replacement rates for these instruments. Cash flows are determined using a forward interest rate yield curve. Current replacement rates are determined by using the U.S. Treasury yield curve or the index to which these financial instruments are tied and adjusted for credit spreads. Credit spreads take into consideration general market conditions, maturity, and collateral. We estimated the fair value of total indebtedness to be approximately ~~91.3%~~92.0% to ~~100.9%~~101.6% of the carrying value of $3.8 billion at ~~September 30, 2022~~March 31, 2023 and approximately ~~88.5%~~91.8% to ~~97.8%~~101.4% of the carrying value of ~~$3.9~~$3.8 billion at December 31, ~~2021.~~2022. These fair value estimates are considered a Level 2 valuation technique.

2320

~~Table of Contents~~

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12. Income (Loss) Per Share

Basic income (loss) per common share is calculated using the two-class method by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per common share is calculated using the two-class method, or treasury stock method if more dilutive, and reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares, whereby such exercise or conversion would result in lower income per share.

The following table reconciles the amounts used in calculating basic and diluted income (loss) per share (in thousands, except per-share amounts):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Income (loss) allocated to common stockholders - basic and diluted:
Income (loss) attributable to the Company $ (22,092) $ (43,692) $ (83,692) $ (211,022)
Less: Dividends on preferred stock (3,104) (2,039) (9,311) —
Add: Dividend reversal on preferred stock, net (1)
— — — 1,488
Add: Gain (loss) on extinguishment of preferred stock — (1,789) — 959
Add: Claw back of dividends on cancelled performance stock units — — — 178
Distributed and undistributed income (loss) allocated to common stockholders - basic and diluted $ (25,196) $ (47,520) $ (93,003) $ (208,397)
Weighted average common shares outstanding:
Weighted average shares outstanding - basic and diluted 34,371 28,033 34,324 17,520
Basic income (loss) per share:
Net income (loss) allocated to common stockholders per share $ (0.73) $ (1.70) $ (2.71) $ (11.89)
Diluted income (loss) per share:
Net income (loss) allocated to common stockholders per share $ (0.73) $ (1.70) $ (2.71) $ (11.89)

~~_______________~~

~~(1)~~The dividend reversal on preferred stock, net results from the reversal of unpaid dividends which were relinquished upon each 3(a)(9) preferred exchange. These reversals exceeded the amount of dividend expense recorded for the unpaid dividends for the remaining outstanding preferred stock.


	Three Months Ended March 31,
		2023		2022
Income (loss) allocated to common stockholders - basic and diluted:
Income (loss) attributable to the Company		$	(60,922)	$	(55,430)
Less: dividends on preferred stock		(3,243)		(3,103)

Less: deemed dividends on redeemable preferred stock		(407)		—









Distributed and undistributed income (loss) allocated to common stockholders - basic and diluted		$	(64,572)	$	(58,533)












Weighted average common shares outstanding:




Weighted average shares outstanding - basic and diluted		34,381		34,269

Basic income (loss) per share:


Net income (loss) allocated to common stockholders per share		$	(1.88)	$	(1.71)

Diluted income (loss) per share:


Net income (loss) allocated to common stockholders per share		$	(1.88)	$	(1.71)

Due to their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect adjustments for the following items (in thousands):


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
		2022		2021			2022		2021					2023		2022
Income (loss) allocated to common stockholders is not adjusted for:	Income (loss) allocated to common stockholders is not adjusted for:											Income (loss) allocated to common stockholders is not adjusted for:

Income (loss) attributable to redeemable noncontrolling interests in operating partnership	Income (loss) attributable to redeemable noncontrolling interests in operating partnership	$	(231)	$	(367)	(1)	$	(679)	$	(3,594)	(1)	Income (loss) attributable to redeemable noncontrolling interests in operating partnership		$	(600)	$	(372)

Dividends on preferred stock - Series J (inclusive of deemed dividends)												Dividends on preferred stock - Series J (inclusive of deemed dividends)		513		—
Dividends on preferred stock - Series K (inclusive of deemed dividends)												Dividends on preferred stock - Series K (inclusive of deemed dividends)		34		—
Total	Total	$	(231)	$	(367)		$	(679)	$	(3,594)		Total		$	(53)	$	(372)

Weighted average diluted shares are not adjusted for:	Weighted average diluted shares are not adjusted for:											Weighted average diluted shares are not adjusted for:
Effect of unvested restricted stock		—		—			—		26
Effect of unvested performance stock units		—		—			—		12

Effect of assumed conversion of operating partnership units	Effect of assumed conversion of operating partnership units	317		216			278		220			Effect of assumed conversion of operating partnership units		335		236

Effect of assumed issuance of shares for term loan exit fee	Effect of assumed issuance of shares for term loan exit fee	1,745		1,745			1,745		1,648			Effect of assumed issuance of shares for term loan exit fee		1,745		1,745
Effect of assumed conversion of preferred stock - Series J												Effect of assumed conversion of preferred stock - Series J		1,459		—
Effect of assumed conversion of preferred stock - Series K												Effect of assumed conversion of preferred stock - Series K		62		—
Total	Total	2,062		1,961			2,023		1,906			Total		3,601		1,981

~~_______________~~

~~(1)Inclusive of preferred stock dividend of $16~~ ~~and $41~~ ~~for the three and nine months ended September 30, 2021 allocated to redeemable noncontrolling interests in operating partnership.~~

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

13. Redeemable Noncontrolling Interests in Operating Partnership

Redeemable noncontrolling interests in the operating partnership represents the limited partners’ proportionate share of equity in earnings/losses of the operating partnership, which is an allocation of net income/loss attributable to the common unit holders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership (the “common units”) and the units issued under our Long-Term Incentive Plan (the “LTIP units”) that are vested. Each common unit may be redeemed for either cash or, at our sole discretion, up to one share of our REIT common stock, which is either: (i) issued pursuant to an effective registration statement; (ii) included in an effective registration statement providing for the resale of such common stock; or (iii) issued subject to a registration rights agreement.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods of three years. Additionally, certain independent members of the board of directors have elected to receive LTIP units as part of their compensation, which are fully vested upon grant. Upon reaching economic parity with common units, each vested LTIP unit can be converted by the holder into one common unit which can then be redeemed for cash or, at our election, settled in our common stock. An LTIP unit will achieve parity with the common units upon the sale or deemed sale of all or substantially all of the assets of the operating partnership at a time when our stock is trading at a level in excess of the price it was trading on the date of the LTIP issuance. More specifically, LTIP units will achieve full economic parity with common units in connection with (i) the actual sale of all or substantially all of the assets of the operating partnership or (ii) the hypothetical sale of such assets, which results from a capital account revaluation, as defined in the partnership agreement, for the operating partnership.

The compensation committee of the board of directors of the Company may authorize the issuance of Performance LTIP units to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of Performance LTIP units that will be settled in common units of Ashford Trust OP, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period.

In March ~~2022,~~2023, the Company granted approximately ~~1.2 million~~282,000 Performance LTIP units, representing 250% of the target, ~~with a grant date fair value of $10.02 per share~~ and a vesting period of approximately three years. ~~During~~As of March 31, 2023, the ~~second quarter,~~ ~~the Company’s stockholders approved an increase to the~~Company does not have sufficient shares of common stock available under its incentive stock plan ~~which is sufficient~~ to ~~cover~~settle any future redemptions of the ~~expected settlements~~. ~~The 2022~~Performance LTIP units, upon reaching the conditions required for redemption. As a result, the 2023 awards ~~which were originally~~are classified as liability awards and are ~~now classified as equity awards, within temporary equity, which resulted~~included in ~~a remeasurement of the award at a new fair value of $5.64 per share.~~

~~With respect~~“due to the 2020 award agreements, the number of Performance LTIP units actually earned may range from 0% to 200% of target based on achievement of specified absolute and relative total stockholder returns basedAshford Inc., net” on the ~~formulas determined by the Company’s compensation committee on the grant date.~~consolidated balance sheet. The ~~performance criteria for the Performance LTIP units~~2023 awards are ~~based on market conditions under the relevant literatures.~~subject to remeasurement each reporting period. The ~~corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date~~ fair value of the ~~award, regardless~~awards as of ~~the actual outcome of the market condition.~~March 31, 2023 was $3.68 per share.

With respect to the 2021, 2022 and ~~2022~~2023 award agreements, the criteria for the Performance LTIP units are based on performance conditions and market conditions under the relevant literature. The corresponding compensation cost is recognized, based on the ~~grant~~applicable measurement date fair value of the award, ratably over the service period for the award as the service is rendered, which may vary from period to period, as the number of performance grants earned may vary based on the estimated probable achievement of certain performance targets (performance conditions). The number of Performance LTIP Units to be earned based on the applicable performance conditions is ~~determined~~ upon the final vesting date. The initial calculation of the Performance LTIP units earned can range from 0% to 200% of target, which is further subjected to a specified absolute total stockholder return modifier (market condition) based on the formulas determined by the Company’s compensation committee on the grant date. This will result in an adjustment (75% to 125%) of the initial calculation of the number of performance awards earned based on the applicable performance targets resulting in a final award calculation ranging from 0% to 250% of the target amount.

As of ~~September 30, 2022,~~March 31, 2023, there were approximately ~~1.3~~1.6 million Performance LTIP units outstanding, representing ~~200%~~250% of the target number granted for the ~~2020 grants~~2021, 2022 and ~~250% for the 2021 and 2022~~2023 grants.

~~In May 2022, approximately 81,000 LTIP units were issued to independent directors with a fair value of approximately $450,000, which vested immediately upon grant and have been expensed during the~~ ~~nine months ended~~ ~~September 30, 2022.~~

As of ~~September 30, 2022,~~March 31, 2023, we have issued a total of approximately ~~1.6~~1.9 million LTIP and Performance LTIP units, net of Performance LTIP cancellations. All LTIP and Performance LTIP units other than approximately ~~1.3~~1.5 million ~~units (1.2 million~~

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~of which are~~ Performance LTIP ~~units)~~units and 12,000 LTIP units have reached full economic parity with, and are convertible into, common units upon vesting.

~~The following table presents the common units redeemed and the fair value upon redemption (in thousands):~~

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Common units converted to stock — — — 1
Fair value of common units converted $ — $ — $ — $ 41

The following table presents the redeemable noncontrolling ~~interest~~interests in Ashford Trust OP and the corresponding approximate ownership percentage:


		September 30, 2022			December 31, 2021				March 31, 2023			December 31, 2022
Redeemable noncontrolling interests (in thousands)		$	21,988		$	22,742
Redeemable noncontrolling interests in Ashford Trust OP (in thousands)								Redeemable noncontrolling interests in Ashford Trust OP (in thousands)	$	21,617		$	21,550
Cumulative adjustments to redeemable noncontrolling interests (1) (in thousands)	Cumulative adjustments to redeemable noncontrolling interests (1) (in thousands)	184,796			186,756			Cumulative adjustments to redeemable noncontrolling interests (1) (in thousands)	$	184,801		$	184,625
Ownership percentage of operating partnership	Ownership percentage of operating partnership	0.91		%	0.63		%	Ownership percentage of operating partnership	0.92		%	0.91		%

(1) Reflects the excess of the redemption value over the accumulated historical costs.

We allocated net (income) loss to the redeemable noncontrolling interests ~~and declared aggregate cash distributions to holders of common units and holders of LTIP units,~~ as presented in the table below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Allocated net (income) loss to the redeemable noncontrolling interests $ 231 $ 367 $ 679 $ 3,594
Performance LTIP dividend claw back upon cancellation — — — (454)


	Three Months Ended March 31,
		2023		2022
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership		$	600	$	372

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

14. Equity and Equity-Based Compensation

Common Stock Dividends—The board of directors did not declare a quarterly common stock dividend in ~~2022~~2023 or ~~2021.~~2022.

Restricted Stock—We incur stock-based compensation expense in connection with restricted stock awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain of our independent directors, which vests immediately upon issuance.

In May 2022, approximately 16,000 shares of common stock were issued to independent directors with a fair value of approximately $90,000, which vested immediately upon grant and have been expensed during the ~~nine months ended~~ ~~September 30, 2022.~~

Performance Stock Units—The compensation committee of the board of directors of the Company may authorize the issuance of performance stock units (“PSUs”), which have a cliff vesting period of three years, to certain executive officers and directors from time to time. The award agreements provide for the grant of a target number of PSUs that will be settled in shares of common stock of the Company, if, when and to the extent the applicable vesting criteria have been achieved following the end of the performance and service period.

With respect to the ~~2020 award agreements, the number of PSUs actually earned may range from 0% to 200% of target based on achievement of specified absolute~~2021, 2022 and relative total stockholder returns based on the formulas determined by the Company’s Compensation Committee on the grant date. The performance criteria for the PSUs are based on market conditions under the relevant literature. The corresponding compensation cost is recognized ratably over the service period for the award as the service is rendered, based on the grant date fair value of the award, regardless of the actual outcome of the market condition.

~~With respect to the 2021 and 2022~~2023 award agreements, the criteria for the PSUs are based on performance conditions and market conditions under the relevant literature. The corresponding compensation cost is recognized, based on the ~~grant~~corresponding measurement date fair value of the award, ratably over the service period for the award as the service is rendered, which may vary from period to period, as the number of PSUs earned may vary based on the estimated probable achievement of certain performance targets

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~(performance~~ (performance conditions). The number of PSUs to be earned based on the applicable performance conditions is determined upon the final vesting date. The initial calculation of PSUs earned can range from 0% to 200% of target, which is further subjected to a specified absolute total stockholder return modifier (market condition) based on the formulas determined by the Company’s compensation committee on the grant date. This will result in an adjustment (75% to 125%) of the initial calculation for the number of PSUs earned based on the applicable performance targets resulting in a final award calculation ranging from 0% to 250% of the target amount.

In March ~~2022, 34,000~~2023, 165,000 PSUs with a ~~fair value of $344,000 and a~~ vesting period of approximately three years were granted. The ~~2022~~2023 awards may be settled in cash or shares of common stock of the Company solely at the option of the Company. ~~During~~As of March 31, 2023, the ~~second quarter,~~ ~~the Company’s stockholders approved an increase to the~~Company does not have sufficient shares available under its incentive stock plan ~~which is sufficient~~ to ~~cover~~settle the ~~expected settlements~~. ~~The 2022~~2023 awards ~~which were originally~~in shares of common stock. As a result, the 2023 awards are classified as liability awards and are ~~now classified as equity~~included in “due to Ashford Inc., net” on the consolidated balance sheet. The 2023 awards ~~which resulted in a~~are subject to remeasurement ~~of the award at a new~~each reporting period. The fair value of ~~$194,000.~~

~~Common Stock Resale Agreement~~—~~On September 9, 2021,~~ the ~~Company and M3A LP (“M3A”) entered into a purchase agreement (the “M3A Purchase Agreement”) pursuant to which the Company may issue or sell to M3A up to 6.0 million shares~~awards as of ~~the Company’s common stock from time to time during the term of the M3A Purchase Agreement. As of September 30, 2022, the Company had issued 900,000 shares. The Company did not issue any shares during the~~ ~~three and nine months ended September 30, 2022 and 2021.~~

~~At-the-Market-Equity Distribution Agreement~~—On April 11, 2022, the Company entered into an equity distribution agreement (the “Virtu Equity Distribution Agreement”) with Virtu Americas LLC (“Virtu”), to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of November 3, 2022, the Company has not issued any common stock pursuant to the Virtu Equity Distribution Agreement.March 31, 2023 was $603,000.

Preferred Dividends—The board of directors declared quarterly dividends per share as presented below:

Three Months Ended September 30,
2022 2021
8.45% Series D Cumulative Preferred Stock $ 0.5281 $ —
7.375% Series F Cumulative Preferred Stock 0.4609 —
7.375% Series G Cumulative Preferred Stock 0.4609 —
7.50% Series H Cumulative Preferred Stock 0.4688 —
7.50% Series I Cumulative Preferred Stock 0.4688 —

From December 8, 2020 through December 31, 2021, Ashford Trust entered into privately negotiated exchange agreements with certain holders of its 8.45% Series D Cumulative Preferred Stock, 7.375% Series F Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock, 7.50% Series H Cumulative Preferred Stock and 7.50% Series I Cumulative Preferred Stock in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”).

~~The table below summarizes the activity (in thousands):~~

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Preferred Shares Tendered Common Shares Initially Issued
Common Shares Issued (1)
Preferred Shares Tendered Common Shares Initially Issued
Common Shares Issued (1)
8.45% Series D Cumulative Preferred Stock 45 82 81 520 3,992 471
7.375% Series F Cumulative Preferred Stock 92 162 162 1,512 10,943 1,240
7.375% Series G Cumulative Preferred Stock 189 335 335 2,702 21,009 2,402
7.50% Series H Cumulative Preferred Stock 105 436 177 1,316 9,945 1,129
7.50% Series I Cumulative Preferred Stock 120 328 186 2,119 14,698 1,623
551 1,343 941 8,169 60,587 6,865

~~(1)~~ ~~Reflects the number of shares issued after the adjustment for the reverse stock split.~~


	Three Months Ended March 31,
	2023		2022

8.45% Series D Cumulative Preferred Stock	$	0.5281	$	0.5281
7.375% Series F Cumulative Preferred Stock	0.4609		0.4609
7.375% Series G Cumulative Preferred Stock	0.4609		0.4609
7.50% Series H Cumulative Preferred Stock	0.4688		0.4688
7.50% Series I Cumulative Preferred Stock	0.4688		0.4688

Stock Repurchases—On April 6, 2022 the board of directors approved a stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock and preferred stock

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

having an aggregate value of up to $200 million. The board of directors’ authorization replaced the previous repurchase authorization that the board of ~~directors’~~directors authorized in December 2017. No shares of our common stock or preferred stock were repurchased subject to the repurchase program during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

15. Redeemable Preferred Stock

Series J Redeemable Preferred Stock

The Company enters into equity distribution agreements with certain sales agents to sell from time-to-time shares of the Series J Redeemable Preferred Stock (the “Series J Preferred Stock”). Pursuant to such equity distribution agreements, the Company is offering a maximum of 20.0 million shares of Series J Preferred Stock or Series K Preferred Stock in a primary offering at a price of $25.00 per share. The Company is also offering a maximum of 8.0 million shares of the Series J Preferred Stock or Series K Preferred Stock pursuant to a dividend reinvestment plan (the “DRIP”) at $25.00 per share (the “Stated Value”).

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The Series J Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (Series D Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series K Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.

Holders of the Series J Preferred Stock shall not have any voting rights, except for if and whenever dividends on any shares of the Series J Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series J Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series J Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.

Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends (with no redemption fee). The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. The Series J Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon a change of control, the Company, at its option, may redeem, within 120 days, outstanding shares at a redemption price equal to the Stated Value plus an amount equal to any accrued but unpaid dividends. The Company must pay the redemption price in cash upon a change of control.

The redemption fee shall be an amount equal to:

•8.0% of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series J Preferred Stock to be redeemed;

•5.0% of the Stated Value beginning on the second anniversary from the Original Issue Date of the shares of the Series J Preferred Stock to be redeemed; and

•0% of the Stated Value beginning on the third anniversary from the Original Issue Date of the shares of the Series J Preferred Stock to be redeemed.

The Series J Preferred Stock accrues cash dividends at an annual rate equal to 8.0% per annum of the Stated Value beginning on the date of the first settlement of the Series J Preferred Stock.

Dividends are payable on a monthly basis and payable in arrears on the 15th of each month (or, if such payment date is not a business day, the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.

The Company has a DRIP that allows participating holders to have their Series J Preferred Stock dividend distributions automatically reinvested in additional shares of the Series J Preferred Stock at a price of $25.00 per share.

The issuance activity of the Series J Preferred Stock is summarized below (in thousands):


	Three Months Ended March 31,
		2023
Series J Preferred Stock shares issued (1)		415
Net proceeds		$	9,326

________

(1)Exclusive of shares issued under the DRIP.

The Series J Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series J Preferred Stock is classified outside of permanent equity.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

At the date of issuance, the carrying amount of the Series J Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable the carrying value will be adjusted to the redemption amount each reporting period.

The redemption value adjustment of Series J Preferred Stock is summarized below (in thousands):


	March 31, 2023		December 31, 2022
Series J Preferred Stock	$	11,543	$	2,004
Cumulative adjustments to Series J Preferred Stock (1)	$	1,306	$	926

________

(1)Reflects the excess of the redemption value over the accumulated carrying value.

The following table summarizes dividends declared (in thousands):


	Three Months Ended March 31,
		2023
Series J Preferred Stock		$	133

Series K Redeemable Preferred Stock

The Company enters into equity distribution agreements with certain sales agents to sell from time-to-time shares of the Series K Redeemable Preferred Stock (the “Series K Preferred Stock”). Pursuant to such equity distribution agreements, the Company is offering a maximum of 20.0 million shares of Series K Preferred Stock or Series J Preferred Stock in a primary offering at a price of $25.00 per share. The Company is also offering a maximum of 8.0 million shares of the Series K Preferred Stock or Series J Preferred Stock pursuant to the DRIP at the Stated Value.

The Series K Preferred Stock ranks senior to all classes or series of the Company’s common stock and future junior securities, on a parity with each series of the Company’s outstanding preferred stock (Series D Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series H Preferred Stock, Series I Preferred Stock and Series J Preferred Stock) and with any future parity securities and junior to future senior securities and to all of the Company’s existing and future indebtedness, with respect to the payment of dividends and the distribution of amounts upon liquidation, dissolution or winding up of the Company’s affairs.

Holders of the Series K Preferred Stock shall not have any voting rights, except for if and whenever dividends on any shares of the Series K Preferred Stock shall be in arrears for 18 or more monthly periods, whether or not such quarterly periods are consecutive, the number of directors then constituting the board shall be increased by two and the holders of such shares of Series K Preferred Stock (voting together as a single class with all other classes or series of capital stock ranking on a parity with the Series K Preferred Stock) shall be entitled to vote for the election of the additional directors of the Company who shall each be elected for one-year terms.

Each share is redeemable at any time, at the option of the holder, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends, less a redemption fee. Starting on the second anniversary, each share is redeemable at any time, at the option of the Company, at a redemption price of $25.00 per share, plus any accumulated, accrued, and unpaid dividends (with no redemption fee). The Company has the right, in its sole discretion, to redeem the shares in cash, or in an equal number of shares of common stock or any combination thereof, calculated based on the closing price per share for the single trading day prior to the date of redemption. The Series K Preferred Stock is also subject to conversion upon certain events constituting a change of control. Upon a change of control, the Company, at its option, may redeem, within 120 days, outstanding shares at a redemption price equal to the Stated Value plus an amount equal to any accrued but unpaid dividends. The Company must pay the redemption price in cash upon a change of control.

The redemption fee shall be an amount equal to:

•1.5% of the stated value of $25.00 per share (the “Stated Value”) beginning on the Original Issue Date (as defined in the Articles Supplementary) of the shares of the Series K Preferred Stock to be redeemed; and

•0% of the Stated Value beginning on the first anniversary from the Original Issue Date of the shares of the Series K Preferred Stock to be redeemed.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Holders of Series K Preferred Stock are entitled to receive cumulative cash dividends at the initial rate of 8.2% per annum of the Stated Value of $25.00 per share (equivalent to an annual dividend rate of $2.05 per share). Beginning one year from the date of original issuance of each share of Series K Preferred Stock and on each one-year anniversary thereafter for such share of Series K Preferred Stock, the dividend rate shall increase by 0.10% per annum; provided, however, that the dividend rate for any share of Series K Preferred Stock shall not exceed 8.7% per annum of the Stated Value.

Dividends are payable on a monthly basis in arrears on the 15th of each month (or, if such payment date is not a business day, on the next succeeding business day) to holders of record at the close of business on the last business day of each month immediately preceding the applicable dividend payment date. Dividends will be computed on the basis of twelve 30-day months and a 360-day year.

The Company has a DRIP that allows participating holders to have their Series K Preferred Stock dividend distributions automatically reinvested in additional shares of the Series K Preferred Stock at a price of $25.00 per share.

The issuance activity of the Series K Preferred Stock is summarized below (in thousands):


	Three Months Ended March 31,
		2023
Series K Preferred Stock shares issued (1)		32
Net proceeds		$	787

________

(1)Exclusive of shares issued under the DRIP.

The Series K Preferred Stock does not meet the requirements for permanent equity classification prescribed by the authoritative guidance because of certain cash redemption features that are outside of the Company’s control. As such, the Series K Preferred Stock is classified outside of permanent equity.

At the date of issuance, the carrying amount of the Series K Preferred Stock was less than the redemption value. As a result of the Company’s determination that redemption is probable the carrying value will be adjusted to the redemption amount each reporting period.

The redemption value adjustment of Series K Preferred Stock is summarized below (in thousands):


	March 31, 2023		December 31, 2022
Series K Preferred Stock	$	843	$	44
Cumulative adjustments to Series K Preferred Stock (1)	$	47	$	20

________

(1)Reflects the excess of the redemption value over the accumulated carrying value.

The following table summarizes dividends declared (in thousands):


	Three Months Ended March 31,
		2023
Series K Preferred Stock		$	7

16. Related Party Transactions

Ashford Inc.

Advisory Agreement

Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor. Our chairman, Mr. Monty J. Bennett, also serves as chairman of the board of directors and chief executive officer of Ashford Inc.

~~On January 14, 2021,~~

Under our advisory agreement, we ~~entered into the Second Amended~~pay advisory fees to Ashford LLC. Advisory fees consist of base fees and ~~Restated Advisory Agreement with Ashford LLC (the “Second Amended and Restated Advisory Agreement”). The Second Amended and Restated Advisory Agreement amends and restates the terms~~incentive fees. We pay a monthly base fee in an amount equal to 1/12 of (i) 0.70% of the ~~Amended and Restated Advisory Agreement, dated June 10, 2015,~~Total Market Capitalization of the Company for the prior month, plus (ii) the Net Asset Fee Adjustment (as defined in our advisory agreement), if any, on the last day of the

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

prior month during which the advisory agreement was in effect; provided, however in no event shall the Base Fee for any month be less than the Minimum Base Fee as ~~amended~~provided by the ~~Enhanced Return Funding Program Agreement and Amendment No.~~advisory agreement. The Company shall pay the Base Fee or the Minimum Base Fee on the fifth business day of each month.

The Minimum Base Fee for Ashford Trust for each quarter beginning January 1, 2021 is equal to the ~~Amended and Restated Advisory Agreement, dated as~~greater of:

(i) ninety percent (90%) of ~~June 26, 2018 to, among other items: (i) revise the term and termination rights; (ii) fix the percentage used to calculate~~ the base fee ~~thereunder at 0.70% per annum; (iii) update~~paid for the ~~list~~same month in the prior fiscal year and

(ii) 1/12th of ~~peer group members; (iv) suspend~~ the ~~requirement that we maintain a minimum Consolidated Tangible Net Worth~~G&A Ratio (as defined in the ~~Second Amended and Restated Advisory Agreement) until~~advisory agreement) for the ~~first~~most recently completed fiscal quarter ~~beginning after June 30, 2023; and (v) revise~~multiplied by the ~~criteria~~Company’s Total Market Capitalization.

We are also required to pay Ashford LLC an incentive fee that ~~would constitute~~is measured annually (or for a stub period if the advisory agreement is terminated at other than year-end). In each year that the Company’s total shareholder return exceeds the average total shareholder return for the peer group, the Company ~~Change of Control~~shall pay to Ashford LLC an incentive fee. The incentive fee, if any, subject to the Fixed Coverage Charge Ratio Condition (as defined in the ~~Second Amended~~advisory agreement), shall be payable in arrears in three equal annual installments.

We also reimburse Ashford LLC for certain reimbursable overhead and ~~Restated Advisory Agreement)~~internal audit, risk management advisory and asset management services, as specified in order to provide us additional flexibility to dispose of underperforming assets. In connection with the transactions contemplated by the Oaktree Credit Agreement on January 15, 2021, we entered into a Subordination and Non-Disturbance Agreement with Ashford Inc. and Oaktree pursuant to which we agreed to subordinate to the prior repayment in full of all obligations under the Oaktree Credit Agreement: (1) prior to the later of: (i) the second anniversary of the Oaktree Credit Agreement; and (ii) the date accrued interest “in kind” is paid in full, advisory fees (other than reimbursable expenses) in excess of 80% of such fees paid during the fiscal year ended December 31, 2019; (2) any termination fee or liquidated damages amounts under the advisory ~~agreement, or any amount owed under the enhanced return funding program~~agreement. We also record equity-based compensation expense for equity grants of common stock and LTIP units awarded to officers and employees of Ashford LLC in connection with ~~the termination of the~~providing advisory ~~agreement or sale or foreclosure of assets financed thereunder; and (3) any payments to Lismore in connection with the transactions contemplated by the Oaktree Credit Agreement.~~services.

On March 15, 2022, we entered into a Limited Waiver Under Advisory Agreement (the “Limited Waiver”) with Ashford Trust OP, Ashford TRS, Ashford Inc. and Ashford LLC (together with Ashford Inc., the “Advisor”). As previously disclosed, the Company, Ashford Trust OP, Ashford TRS and the Advisor are parties to the Second Amended and Restated Advisory Agreement, which (i) allocates responsibility for certain employee costs between us and our advisor and (ii) permits our board of directors to issue annual equity awards in the Company or Ashford Trust OP to employees and other representatives of our advisor based on achievement by the Company of certain financial or other objectives or otherwise as our board of directors sees fit. Pursuant to the Limited Waiver, the Company, Ashford Trust OP, Ashford TRS and the Advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2022 cash incentive compensation to employees and other representatives of our advisor; provided that such awarded cash incentive compensation does not exceed $8.5 million, in the aggregate, during the waiver period.

The following table summarizes the advisory services fees incurred (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Advisory services fee	Advisory services fee									Advisory services fee
Base advisory fee	Base advisory fee	$	8,854	$	9,476	$	26,202	$	27,217	Base advisory fee		$	8,469	$	8,735
Reimbursable expenses (1)	Reimbursable expenses (1)	2,430		1,979		7,365		5,191		Reimbursable expenses (1)		3,227		2,571
Equity-based compensation (2)	Equity-based compensation (2)	1,229		2,412		4,609		6,702		Equity-based compensation (2)		1,290		1,929
Incentive fee	Incentive fee	—		(6,472)		—		—		Incentive fee		—		151
Total advisory services fee	Total advisory services fee	$	12,513	$	7,395	$	38,176	$	39,110	Total advisory services fee		$	12,986	$	13,386

________

(1)Reimbursable expenses include overhead, internal audit, risk management advisory, asset management services and deferred cash awards.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

(2) Equity-based compensation is associated with equity grants of Ashford Trust’s common stock, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.

Due from related parties, net as of September 30, 2022 and December 31, 2021, includes a $1.2 million security deposit paid to Remington Hotel Corporation, an entity indirectly owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr., for office space allocated to us under our advisory agreement. It will be held as security for the payment of our allocated share of office space rental. If unused it will be returned to us upon lease expiration or earlier termination.

Pursuant to the Company’s hotel management agreements with each hotel management company, the Company bears the economic burden for casualty insurance coverage. Under the advisory agreement, Ashford Inc. secures casualty insurance policies to cover Ashford Trust, Braemar Hotels & Resorts Inc. (“Braemar”), their hotel managers, as needed, and Ashford Inc. The total loss estimates included in such policies are based on the collective pool of risk exposures from each party. Ashford Inc.’s risk management department manages the casualty insurance program. Each year Ashford Inc.’s risk management department collects funds from Ashford Trust, Braemar and their respective hotel management companies, to fund the casualty insurance program as needed, on an allocated basis.

On September 27, 2022, an agreement was entered into by Ashford Inc., Ashford Trust and Braemar pursuant to which the Advisor is to implement the REITs' cash management strategies. This will include actively managing the REITs excess cash by primarily investing in short-term U.S. Treasury securities. The annual fee is 20 bps of the average daily balance of the funds managed by the advisor and is payable monthly in arrears.

Due to Ashford Inc., net as of March 31, 2023, includes a $1.2 million security deposit paid to Remington Hotel Corporation (“RHC”) for office space allocated to us under our advisory agreement. It will be held as security for the payment of our allocated share of office space rental. If unused it will be returned to us upon lease expiration or earlier termination. As of December 31, 2022, RHC was indirectly owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. and the $1.2 million security deposit was included in “due from related parties, net.” On January 3, 2023, Ashford Inc. acquired RHC.

On March 15, 2022, we entered into a Limited Waiver Under Advisory Agreement (the “2022 Limited Waiver”) with Ashford Trust OP, Ashford TRS, Ashford Inc. and Ashford LLC. The Company, Ashford Trust OP, Ashford TRS and the Advisor are parties to the Second Amended and Restated Advisory Agreement, which (i) allocates responsibility for certain

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

employee costs between us and our advisor and (ii) permits our board of directors to issue annual equity awards in the Company or Ashford Trust OP to employees and other representatives of our advisor based on achievement by the Company of certain financial or other objectives or otherwise as our board of directors sees fit. Pursuant to the 2022 Limited Waiver, the Company, Ashford Trust OP, Ashford TRS and the Advisor waived the operation of any provision in the advisory agreement that would otherwise have limited our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2022 cash incentive compensation to employees and other representatives of our advisor; provided that such awarded cash incentive compensation does not exceed $8.5 million, in the aggregate, during the waiver period.

On March 2, 2023, we entered into a second Limited Waiver Under Advisory Agreement (the “2023 Limited Waiver”) with Ashford Trust OP, Ashford TRS, Ashford Inc. and Ashford LLC. Pursuant to the 2023 Limited Waiver, the Company, Ashford Trust OP, Ashford TRS and the Advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023 cash incentive compensation to employees and other representatives of our advisor; provided that such awarded cash incentive compensation does not exceed $13.1 million, in the aggregate, during the waiver period.

Lismore

On March 20, 2020, Lismore Capital II LLC ~~(formerly known as Lismore Capital LLC)~~ (“Lismore”), a subsidiary of Ashford Inc., entered into an agreement with the Company to seek modifications, forbearances or refinancings of the Company’s loans (as amended and restated on July 1, 2020, the “Lismore Agreement”). The Lismore Agreement expired on April 6, 2022.

Upon entering into the agreement with Lismore, the Company made a payment of $5.1 million. No amounts under this payment can be clawed back. As of September 30, 2022, the Company has paid $5.1 million related to periodic installments of which approximately $5.0 million has been expensed in accordance with the agreement. Additionally, the independent members of the board of directors of Ashford Inc. accelerated approximately $506,000 in claw back credit due to Ashford Trust which, absent a waiver, would occur after the expiration of the Lismore Agreement. Such claw back credit was due to Ashford Trust in connection with certain properties Ashford Trust no longer owns. This amount was offset against base advisory fees. Approximately $149,000 may be offset against fees under the agreement that are eligible for claw back under the agreement. The $149,000 was offset against the April 2022 base advisory fee payment. Further, the Company has incurred approximately $8.8 million in success fees under the agreement in connection with each signed forbearance or other agreement, of which no amounts are available for claw back. For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022, the Company recognized expense of ~~$125,000 and $768,000, respectively,~~$643,000, which is included in ~~“write-off~~“write off of premiums, loan costs and exit fees.” For the three and nine months ended September 30, 2021, the Company recognized expense of $643,000 and $4.3 million, respectively, which is included in “write-off of premiums,premium, loan costs and exit fees.”

~~In June~~We engage Lismore or its subsidiaries to provide debt placement services and assist with loan modifications on our behalf. During the three months ended March 31, 2023 and 2022, ~~the Company entered into modification agreements on six mortgage loans associated with the terms~~we made payments of each loan’s extension options. In connection with the modification agreements the Company paid total fees of $607,000 to Lismore. Additionally in June 2022, the Company amended its loan secured by the Sheraton Ann Arbor. In connection with this amendment, the Company paid a fee of $83,000$395,000 and $0, respectively to Lismore.

Ashford Securities

On December 31, 2020, an Amended and Restated Contribution Agreement (the “Amended and Restated Contribution Agreement”) was entered into by Ashford Inc., Ashford Trust and Braemar (collectively, the “Parties” and each individually a “Party”) with respect to funding certain expenses ~~to be reimbursed to~~of Ashford Securities LLC, a subsidiary of Ashford Inc. (“Ashford Securities”). Beginning on the effective date of the Amended and Restated Contribution Agreement, costs will be allocated ~~based upon an allocation percentage of~~ 50% to Ashford Inc., 50% to Braemar and 0% to Ashford Trust. Upon reaching the earlier of $400 million in aggregate preferred equity offerings raised, or June 10, 2023, there will be ~~an amended and restated~~a true up (the “Amended and Restated True-up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual ~~expense reimbursement paid~~amount contributed by each company will be based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively, through Ashford ~~Securities. After~~Securities (the resulting ratio of contributions among the ~~Amended and Restated True-Up Date,~~Parties, the ~~expense reimbursements will be allocated among Ashford Inc., Ashford Trust and Braemar quarterly based on the actual capital raised on their behalf, respectively, through Ashford Securities.~~“Initial True-up Ratio”). On January 27, 2022, Ashford Trust, Braemar and Ashford Inc. entered into a Second Amended and Restated Contribution Agreement which provided for an additional $18 million in expenses to be reimbursed with all expenses allocated 45% to Ashford Trust, 45% to Braemar and 10% to Ashford Inc.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~As of September 30, 2022,~~On February 1, 2023, Ashford Trust ~~has funded approximately $5.6 million. As~~entered into a Third Amended and Restated Contribution Agreement with Ashford Inc. and Braemar. The Third Amended and Restated Contribution Agreement states that after the Amended and Restated True-Up Date occurs, capital contributions for the remainder of ~~September 30, 2022, $110,000~~fiscal year 2023 will be divided between each Party based on the Initial True-Up Ratio. Thereafter on a yearly basis at year-end, starting with the year-end of 2023, there will be a true-up between the Parties whereby there will be adjustments so that the capital contributions made by each Party will be based on the cumulative amount of capital raised by each Party through Ashford Securities as a percentage of the ~~pre-funded~~total amount ~~was included~~raised by the Parties collectively through Ashford Securities since June 10, 2019 (the resulting ratio of capital contributions among the Company, Ashford Inc. and Braemar following this true-up, the “Cumulative Ratio”). Thereafter, the capital contributions will be divided among each Party in ~~“other assets” and $5.0 million was included in “due from Ashford Inc., net” on our consolidated balance sheet. As~~accordance with the Cumulative Ratio, as recalculated at the end of ~~December 31, 2021, $632,000 of the pre-funded amount was included in “other assets” on our consolidated balance sheet.~~ each year.

During the ~~third quarter of~~year ended December 31, 2022, the funding estimate was revised based on the latest capital raise estimates of the aggregate ~~equity offerings~~capital raised bythrough Ashford ~~Securities, this resulted~~Securities. As of December 31, 2022, Ashford Trust had funded approximately $6.2 million of which $126,000 of the pre-funded amount was included in “other assets” and $5.9 million was included in “due from Ashford Inc., net” on our consolidated balance sheet. In March 2023, Ashford Inc. paid $6.1 million to Ashford Trust as a ~~credit~~result of the contribution true-up between the entities described above. As of March 31, 2023, Ashford Trust has funded approximately $136,000 and has a $193,000 payable that is included in “due to ~~expense of approximately $3.9 million.~~Ashford Inc., net” on our consolidated balance sheet.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

The table below summarizes the amount Ashford Trust has expensed related to reimbursed operating expenses of Ashford Securities (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
Line Item 2022 2021 2022 2021
Corporate, general and administrative $ (3,522) $ — $ (2,331) $ 19

~~Enhanced Return Funding Program~~

The Enhanced Return Funding Program Agreement (the “ERFP Agreement”) generally provides that Ashford LLC will make investments to facilitate the acquisition of properties by Ashford Trust OP that are recommended by Ashford LLC, in an aggregate amount of up to $50 million (subject to increase to up to $100 million by mutual agreement). The investments will equal 10% of the property acquisition price and will be made, either at the time of the property acquisition or at any time generally in the following three years, in exchange for hotel FF&E for use at the acquired property or any other property owned by Ashford Trust OP.

The initial term of the ERFP Agreement is two years (the “Initial Term”), unless earlier terminated pursuant to the terms of the ERFP Agreement. At the end of the Initial Term, the ERFP Agreement shall automatically renew for successive one-year periods (each such period a “Renewal Term”) unless either Ashford Inc. or Ashford Trust provides written notice to the other at least 60 days in advance of the expiration of the Initial Term or Renewal Term, as applicable, that such notifying party intends not to renew the ERFP Agreement.

As a result of the Embassy Suites New York Manhattan Times Square acquisition in 2019, under the ERFP Agreement, we were entitled to receive $19.5 million from Ashford LLC in the form of future purchases of hotel FF&E. In the second quarter of 2019, the Company sold $8.1 million of hotel FF&E from certain Ashford Trust hotel properties to Ashford LLC. On March 13, 2020, an extension agreement was entered into whereby the required FF&E acquisition date by Ashford LLC of the remaining $11.4 million was extended to December 31, 2022.

On November 25, 2020, the independent members of the board of directors of Ashford Trust granted Ashford Inc., in its sole and absolute discretion, the right to set-off against the Embassy Suites New York ERFP balance, the fees pursuant to the advisory agreement and Lismore Agreement that have been or may be deferred by Ashford Inc. On April 20, 2021, the Company delivered written notice to Ashford LLC of its intention not to renew the ERFP Agreement. As a result, the ERFP Agreement terminated in accordance with its terms at the end of the current term on June 26, 2021.


	Three Months Ended March 31,
Line Item		2023		2022
Corporate, general and administrative		$	119	$	527

Design and Construction Services

In connection with Ashford Inc.’s August 8, 2018 acquisition of Remington Lodging’s design and construction business, we entered into a design and construction services agreement with Ashford Inc.’s subsidiary, Premier Project Management LLC (“Premier”), ~~pursuant to which Premier~~as a subsidiary of Ashford Inc., provides design and construction services to our hotels, including construction management, interior design, architectural services, and the purchasing, freight management, and supervision of installation of FF&E and related services. Pursuant to the design and construction services agreement, we pay Premier: (a) design and construction fees of up to 4% of project costs; and (b) market service fees at current market rates with respect to construction management, interior design, FF&E purchasing, FF&E expediting/freight management, FF&E warehousing and FF&E installation and supervision. On March 20, 2020, we amended the design and construction services agreement to provide that Premier’s fees shall be paid by the Company to Premier upon the completion of any work provided by third-party vendors to the Company.

Hotel Management Services

At ~~September 30, 2022,~~March 31, 2023, Remington Hotels managed 6768 of our 99100 hotel properties and the WorldQuest condominium properties.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

We pay monthly hotel management fees equal to the greater of approximately $16,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues as well as annual incentive management fees, if certain operational criteria were met, and other general and administrative expense reimbursements primarily related to accounting services.

Pursuant to the terms of the Letter Agreement dated March 13, 2020 (the “Hotel Management Letter Agreement”), in order to allow Remington Hotels to better manage its corporate working capital and to ensure the continued efficient operation of our hotels, we agreed to pay the base fee and to reimburse all expenses on a weekly basis for the preceding week, rather than on a monthly basis. The Hotel Management Letter Agreement went into effect on March 13, 2020 and will continue until terminated by us.

We also have a mutual exclusivity agreement with Remington Hotels, pursuant to which: (i) we have agreed to engage Remington Hotels to provide management services with respect to any hotel we acquire or invest in, to the extent we have the right and/or control the right to direct the management of such hotel; and (ii) Remington Hotels has agreed to grant us a right of first refusal to purchase any opportunity to develop or construct a hotel that it identifies that meets our initial investment guidelines. We are not, however, obligated to engage Remington Hotels if our independent directors either: (i) unanimously vote to hire a different manager or developer; or (ii) by a majority vote elect not to engage such related party because either special circumstances exist such that it would be in the best interest of our Company not to engage such related party, or, based on the related party’s prior performance, it is believed that another manager could perform the management or other duties materially better.

~~Braemar~~

As of December 31, 2021, the Company had a $728,000 payable to Braemar, included in “due to related parties, net” on our consolidated balance sheet. The payable related to a legal settlement between Ashford Trust and the City of San Francisco regarding a transfer tax matter associated with the transfer of The Clancy from Ashford Trust to Braemar upon Braemar’s 2013 spin-off from Ashford Trust. The transfer taxes were initially paid by Braemar at the time of the spin-off. In January 2022, the City of San Francisco remitted payment, which was then remitted to Braemar by the Company.

~~16.~~17. Commitments and Contingencies

Restricted Cash—Under certain management and debt agreements for our hotel properties existing at ~~September 30, 2022,~~March 31, 2023, escrow payments are required for insurance, real estate taxes, and debt service. In addition, for certain properties based on the terms of the underlying debt and management agreements, we escrow generally 4% to 6% of gross revenues for capital improvements. From time to time, the Company may work with its property managers and lenders in order to utilize lender and manager held reserves to fund operating shortfalls.

Franchise Fees—Under franchise agreements for our hotel properties existing at ~~September 30, 2022,~~March 31, 2023, we pay franchisor royalty fees between 3% and 6% of gross rooms revenue and, in some cases, 1% to 3% of food and beverage revenues. Additionally, we pay fees for marketing, reservations, and other related activities aggregating between 1% and 4% of gross rooms revenue and, in some cases, food and beverage revenues. These franchise agreements expire on varying dates between ~~2023~~2024 and 2047. When a franchise term expires, the franchisor has no obligation to renew the franchise. In addition, if we breach the franchise agreement and the franchisor terminates a franchise prior to its expiration date, we may be liable for up to three times the average annual fees incurred for that property.

The table below summarizes the franchise fees incurred (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Line Item	Line Item	2022		2021		2022		2021		Line Item		2023		2022
Other hotel expenses	Other hotel expenses	$	15,616	$	11,641	$	43,789	$	27,695	Other hotel expenses		$	15,612	$	11,612

Management Fees—Under hotel management agreements for our hotel properties existing at ~~September 30, 2022,~~March 31, 2023, we pay monthly hotel management fees equal to the greater of approximately $16,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases 2% to 7% of gross revenues, as well as annual incentive management fees, if applicable. These hotel management agreements expire from ~~2023~~2025 through 2038, with renewal options. If we terminate a hotel management agreement prior to its expiration, we may be liable for estimated management fees through the remaining term and liquidated damages or, in certain circumstances, we may substitute a new management agreement.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years ~~2017~~2018 through ~~2021~~2022 remain subject to potential examination by certain federal and state taxing authorities.

~~Potential Pension Liabilities~~
—Upon our 2006 acquisition of a hotel property, certain employees of such hotel were unionized and covered by a multi-employer defined benefit pension plan. At that time, no unfunded pension liabilities existed. Subsequent to our acquisition, a majority of employees, who are employees of the hotel manager, Remington Lodging, petitioned the employer to withdraw recognition of the union. As a result of the decertification petition, Remington Lodging withdrew recognition of the union. At the time of the withdrawal, the National Retirement Fund, the union’s pension fund, indicated unfunded pension liabilities existed. The National Labor Relations Board filed a complaint against Remington Lodging seeking, among other things, a ruling that Remington Lodging’s withdrawal of recognition was unlawful. The pension fund entered into a settlement agreement with Remington Lodging on November 1, 2011, providing that Remington Lodging will continue to make monthly pension fund payments pursuant to the collective bargaining agreement. As of September 30, 2022, Remington Lodging continues to comply with the settlement agreement by making the appropriate monthly pension fund payments. If Remington Lodging does not comply with the settlement agreement, we have agreed to indemnify Remington Lodging for the payment of the unfunded pension liability, if any, as set forth in the settlement agreement equal to $1.7 million minus the monthly pension payments made by Remington Lodging since the settlement agreement. To illustrate, if Remington Lodging - as of the date a final determination occurs - has made monthly pension payments equaling $100,000, Remington Lodging’s remaining withdrawal liability would be the unfunded pension liability of $1.7 million minus $100,000 (or $1.6 million). This remaining unfunded pension liability would be paid to the pension fund in annual installments of $84,000 (but may be made monthly or quarterly, at Remington Lodging’s election), which shall continue for the remainder of 20 years, which is capped, unless Remington Lodging elects to pay the unfunded pension liability amount earlier.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Litigation—~~Palm Beach Florida Hotel and Office Building Limited Partnership, et al. v. Nantucket Enterprises, Inc.~~This litigation involves a landlord tenant dispute from 2008. This litigation was resolved in 2017 with the determination and reimbursement of attorney’s fees being the only remaining dispute. On July 26, 2018, we paid $544,000 as part of a settlement on certain legal fees. The negotiations relating to the potential payment of the remaining attorneys’ fees are still ongoing, pending the appeal of a contempt order against the Maraist Law Firm for failing to produce their fee records. As of September 30, 2022, we have accrued approximately $504,000 in legal fees, which represents the Company’s estimate of the amount of potential remaining legal fees that could be owed.

On December 4, 2015, Pedro Membrives filed a class action lawsuit against HHC TRS FP Portfolio LLC, Remington Lodging & Hospitality, LLC, Remington Holdings LLC, Mark A. Sharkey, Archie Bennett, Jr., Monty J. Bennett, Christopher Peckham, and any other related entities in the Supreme Court of New York, Nassau County, Commercial Division. On August 30, 2016, the complaint was amended to add Michele Spero as a Plaintiff and Remington Long Island Employers, LLC as a defendant. The lawsuit is captioned Pedro Membrives and Michele Spero, individually and on behalf of others similarly situated v. HHC TRS FP Portfolio LLC, Remington Lodging & Hospitality, LLC, Remington Holdings LLC, Remington Long Island Employers, LLC, et al., Index No. 607828/2015 (Sup. Ct. Nassau Cty.). The plaintiffs allege that the owner and management company of the Hyatt Regency Long Island hotel violated New York law by improperly retaining service charges rather than distributing them to employees. In 2017, the class was certified. On July 24, 2018, the trial court granted the plaintiffs’ motion for summary judgment on liability. The defendants appealed the summary judgment to the New York State Appellate Division, Second Department (the “Second Department”). The Second Department heard oral arguments in this matter on April 20, 2021, and on July 14, 2021, affirmed in part, and modified in part, the trial court’s summary judgment in favor of the plaintiffs. Due to the Second Department’s holding, all information produced during discovery, and the continuing cost and risk, to both sides, a settlement was reached, signed by the parties and approved by the Court in June 2022. The settlement requires the Company to establish a settlement fund that will be used to pay plaintiffs that opt in by November 10, 2022 and are entitled to receive payment, and to fund administrative expenses. The Company previously recorded an accrual of approximately $4.2 million. As of September 30, 2022, the Company has paid $100,000 and the accrual is approximately $4.1 million.

~~Table of Contents~~

~~ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

definitively determined and is the subject of continuing discovery. The opt out period has been extended until such time that discovery has concluded. If this litigation goes to trial, we expect that the earliest the trial would occur is the last quarter of 2023, based on various extensions to which the parties have agreed. The opt out period has been extended until such time that discovery has concluded. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of ~~September 30, 2022,~~March 31, 2023, no amounts have been accrued.

We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated. To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disability Act and similar state laws). The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature. We recognize a loss when we believe the loss is both probable and reasonably estimable. Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow. However, our assessment may change depending upon the development of these legal proceedings, and the final results of these legal proceedings cannot be predicted with certainty. If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

~~17.~~18. Segment Reporting

We operate in one business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments ~~refers~~refer to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments have similar economic characteristics. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, all of our hotel properties were domestically located.

3330

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

The following discussion should be read in conjunction with the unaudited financial statements and notes thereto appearing elsewhere herein. This report contains forward-looking statements within the meaning of the federal securities laws. Ashford Hospitality Trust, Inc. (the “Company,” “we,” “our” or “us”) cautions investors that any forward-looking statements presented herein, or which management may express orally or in writing from time to time, are based on management’s beliefs and assumptions at that time.

Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:

•the impact of the ongoing COVID-19 pandemic, including the resurgence of cases relating to the spread of the Delta, Omicron or other potential variants, on our business, financial condition, liquidity and results of operations;

•the impact of numerous governmental travel restrictions and other orders related to COVID-19 on our business including one or more possible recurrences of COVID-19 case surges causing state and local governments to reinstate travel restrictions;

•our business and investment strategy;

•anticipated or expected purchases, sales or ~~sales~~dispositions of assets;

•our projected operating results;

•completion of any pending transactions;

•our ability to restructure existing ~~property level~~property-level indebtedness;

•our ability to secure additional financing to enable us to operate our ~~business during the pendency of COVID-related business weakness, which has materially impacted our operating cash flows and cash balances;~~business;

•our understanding of our competition;

•projected capital expenditures; and

•the impact of technology on our operations and business.

Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements:

•factors discussed in our Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the Securities and Exchange Commission (“SEC”) on ~~February 28, 2022,~~March 10, 2023, including those set forth under the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties,” as supplemented by our subsequent Quarterly Reports on Form 10-Q and other filings under the Exchange Act;

•~~adverse effects of the COVID-19 pandemic, including a significant reduction in business~~rising interest rates and personal travel and travel restrictions in regions where our hotels are located, and one or more possible recurrences of COVID-19 case surges causing a further reduction in business and personal travel and potential reinstatement of travel restrictions by state or local governments;

•~~changes in interest rates;~~inflation;

•macroeconomic conditions, such as a prolonged period of weak economic growth and volatility in capital markets;

•uncertainty in the banking sector and market volatility due to the recent failures of Silicon Valley Bank, New York Signature Bank and First Republic Bank;

•extreme weather conditions may cause property damage or interrupt business;

•actions by the lenders of the Oaktree Credit Agreement to foreclose on our assets which are pledged as collateral;

•general volatility of the capital markets and the market price of our common and preferred stock;

•general and economic business conditions affecting the lodging and travel industry;

•changes in our business or investment strategy;

•availability, terms, and deployment of capital;

•unanticipated increases in financing and other ~~costs, including a rise in interest rates;~~costs;

•changes in our industry and the market in which we operate ~~interest rates, or~~and local economic conditions;

•the degree and nature of our competition;

•actual and potential conflicts of interest with Ashford ~~Inc. and its subsidiaries (including Ashford~~ LLC, Remington Hotels, ~~and~~ Premier, ~~Project Management LLC (“Premier”)),~~ Braemar, ~~and its subsidiaries,~~ our executive officers and our non-independent directors;

•changes in personnel of Ashford LLC or the lack of availability of qualified personnel;

•changes in governmental regulations, accounting rules, tax rates and similar matters;

•legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the “Code”), and related rules, regulations and interpretations governing the taxation of real estate investment trusts (“REITs”);

•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and

•future sales and issuances of our common stock or other securities might result in dilution and could cause the price of our common stock to decline.

When considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our ~~2021~~2022 Form 10-K filed on ~~February 28, 2022~~March 10, 2023 and this Quarterly Report, and the discussion in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak and the numerous government travel restrictions imposed in response thereto. The extent to which COVID-19 impacts us will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Quarterly Report. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Quarterly Report to conform these statements to actual results and performance, except as may be required by applicable law.

EXECUTIVE OVERVIEW

General

As of ~~September 30, 2022, we owned 99~~March 31, 2023, our portfolio consisted of 100 consolidated hotel properties which represents ~~22,116~~22,316 total rooms. Currently, all of our hotel properties are located in the United States.

Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things:

•maintain significant cash and cash equivalents liquidity;

•opportunistically exchange preferred stock into common stock;

•disposition of non-core hotel properties;

•pursuing capital market activities to enhance long-term stockholder value;

•implementing selective capital improvements designed to increase profitability;

•implementing effective asset management strategies to minimize operating costs and increase revenues;

•financing or refinancing hotels on competitive terms;

•modifying or extending property-level indebtedness;

•utilizing hedges and derivatives to mitigate risks;

•pursue opportunistic value-add additions to our hotel portfolio: and

•making other investments or divestitures that our board of directors deems appropriate.

Our current investment strategy is to focus on owning predominantly full-service hotels in the upper upscale segment in domestic markets that have ~~revenue per available room (“RevPAR”)~~RevPAR generally less than twice the national average. We believe that as supply, demand, and capital market cycles change, we will be able to shift our investment strategy to take advantage of new lodging-related investment opportunities as they may develop. Our board of directors may change our investment strategy

at any time without stockholder approval or notice. We will continue to seek ways to benefit from the cyclical nature of the hotel industry.

We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.

We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of ~~September 30, 2022,~~March 31, 2023, Remington Hotels, a subsidiary of Ashford Inc., managed 6768 of our 99100 hotel properties and WorldQuest. Third-party management companies managed the remaining hotel properties.

Mr. Monty J. Bennett is chairman and chief executive officer of Ashford Inc. and, together with Mr. Archie Bennett, Jr., as of ~~September 30, 2022,~~March 31, 2023, owned approximately ~~610,246~~610,261 shares of Ashford Inc. common stock, which represented an approximate ~~19.6%~~19.1% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which along with all unpaid and accrued and accumulated dividends thereon, is ~~exercisable~~convertible (at ~~an exercise~~a conversion price of $117.50 per share) into an additional approximate ~~3,991,191~~4,148,178 shares of Ashford Inc. common stock, which if ~~exercised~~converted as of ~~September 30, 2022,~~March 31, 2023, would have increased the Bennetts’ ownership interest in Ashford Inc. to 64.8%, provided that prior to August 8, 2023, the voting power of the holders of the Ashford Inc. Series D Convertible Preferred Stock is limited to 40% of the combined voting power of all of the outstanding voting securities of Ashford Inc. entitled to vote on any given matter. The 18,758,600 Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts.

Recent Developments

On ~~September 10, 2021,~~February 9, 2023, the Company ~~filed~~amended its JP Morgan Chase – 8 hotel mortgage loan, which had a ~~registration statement on Form S-11, which was declared effective by~~current maturity in February 2023. As part of the SEC on September 29, 2021, to register for resale under the Securities Act, 6,040,888 shares of Common Stock that may be issued to M3A under the M3A Purchase Agreement. In connection with the Company’s recent eligibility to use a Form S-3,amendment, the Company ~~filed a Form S-3, which was declared effective by~~repaid $50.0 million in principal, exercised the ~~SEC on April 1, 2022,~~2023 loan extension and reduced the 2024 debt yield extension test from 9.25% to ~~replace the previous Form S-11 and to register for resale any future resales by M3A under the M3A Purchase Agreement.~~8.50%.

On March ~~4, 2022,~~2, 2023, we entered into a second Limited Waiver Under Advisory Agreement (the “2023 Limited Waiver”) with Ashford Trust OP, Ashford TRS, Ashford Inc. and Ashford LLC. The Company, Ashford Trust OP, Ashford TRS and the ~~Company filed an initial registration statement on Form S-3 with the SEC, as amended on April 29, 2022, related~~Advisor are parties to the Company’s non-traded Series J Preferred Stock and Series K Preferred Stock. The registration statement was declared effective by the SEC on May 4, 2022, and contemplates the offering of up to (i) 20.0 million shares of Series J Preferred Stock or Series K Preferred Stock in a primary offering and (ii) 8.0 million shares of Series J Preferred Stock or Series K Preferred Stock pursuant to a dividend reinvestment plan. On May 5, 2022, we filed our prospectus for the offering with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager for the offering. On April 28, 2022, we filed with the State Department of Assessments and Taxation of the State of Maryland (“SDAT”) articles supplementary to our Articles of Amendment and Restatement classifying and designating an aggregate of 28,000,000 shares of our unissued and undesignated shares of preferred stock and provided for their issuance either as shares of Series J Preferred Stock or Series K Preferred Stock. We also caused our operating partnership to execute Amendment No. 10 to the SeventhSecond Amended and Restated Advisory Agreement, which (i) allocates responsibility for certain employee costs between us and our advisor and (ii) permits our board of ~~Limited Partnership~~directors to ~~amend~~issue annual equity awards in the ~~terms~~Company or Ashford Trust OP to employees and other representatives of our ~~operating partnership~~advisor based on achievement by the Company of certain financial or other objectives or otherwise as our board of directors sees fit. Pursuant to ~~conform~~the 2023 Limited Waiver, the Company, Ashford Trust OP, Ashford TRS and the Advisor waived the operation of any provision in the advisory agreement that would otherwise limit our ability, in our discretion and at our cost and expense, to award during the first and second fiscal quarters of calendar year 2023 cash incentive compensation to employees and other representatives of our advisor; provided that such awarded cash incentive compensation does not exceed $13.1 million, in the aggregate, during the waiver period.

Ashford Trust and the Operating Partnership, as borrower (the “Borrower”), entered into a Credit Agreement (as amended, the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders”) and Oaktree Fund Administration, LLC, as administrative agent (the “Administrative Agent”). On March 2, 2023, Ashford Trust and the Borrower entered into the Limited Waiver to Credit Agreement (the “Limited Waiver to Credit Agreement”) with the guarantors party thereto, the Lenders party thereto and the Administrative Agent. Pursuant to the Limited Waiver to Credit Agreement, the Borrower, the other Loan Parties (as defined in the Credit Agreement), the Lenders and the Administrative Agent acknowledged and agreed that:

(a) certain deferred cash grants were or are being awarded to employees and/or officers of the Advisor and/or their affiliates pursuant to equity compensation plans during 2022 and 2023, in aggregate amounts of $7,950,817 in 2022 and $13,063,844 in 2023 (i.e., $21,014,661 in the aggregate) (the “Specified Deferred Cash Grants”), which the parties agreed may be made (and were or are being made) in lieu of deferred stock grants that would otherwise be permitted and made under the terms of the ~~articles supplementary for~~Advisory Agreement;

(b) accordingly, (i) the ~~Series J Preferred Stock and Series K Preferred Stock. As of November 3, 2022, no shares of Series J Preferred Stock or Series K Preferred Stock have been issued.~~

On September 14, 2022, we filed with the SDAT new articles supplementary to our Articles of Amendment and Restatement with respect to our Series J Preferred Stock and Series K Preferred Stock to remove (i) references to our option to list the preferred stock in the redemption provisions and (ii) and the provisions regarding certain change of control conversion rights (which were only triggered upon a listing of the preferred stock). All other terms of the Series J Preferred Stock and the Series K Preferred Stock (including, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption) remain unchanged by the filing of the new articles supplementary. We also caused our operating partnership to execute Amendment No. 11 to the Seventh Amended and Restated Agreement of Limited Partnership to conform todeparture from the terms of the ~~Series J Preferred Stock and Series K Preferred Stock, respectively,~~Advisory Agreement in making the Specified Deferred Cash Grants as ~~set forth~~described in the ~~new articles supplementary.~~foregoing clause (a) shall be deemed to be permitted under Section 7.13(b) of the Credit Agreement; provided, however, the Borrower and the other Loan Parties agree that the Specified Deferred Cash Grants, together with any other Restricted Payments (as defined in the Credit Agreement) made pursuant to Section 7.06(f) of the Credit Agreement, shall not exceed $30,000,000 in the aggregate; (ii) the Lenders and the Administrative Agent waive non-compliance with Section 7.13(b), if any, prior to March 2, 2023, which resulted or would result (absent the waiver) from the making of the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement, and (iii) effective from March 2, 2023 Section 7.13(b) shall be deemed to be amended to permit the Specified Deferred Cash Grants in accordance with the foregoing provisions of Section 2 of the Limited Waiver to Credit Agreement; and

(c) the waiver contained in the Limited Waiver to Credit Agreement shall be effective only in this instance and for the specific purpose for which it was intended and shall not be deemed to be a consent to any other transaction or matter or waiver of compliance in the future, or a waiver of any preceding or succeeding breach of the same or any other covenant or provision of the Credit Agreement.

On April 6, ~~2022~~2023, the ~~board of directors approved a repurchase program pursuant~~Company extended its BAML Highland mortgage loan to ~~which the board of directors granted a repurchase authorization to acquire shares~~April 2024. As part of the ~~Company’s common stock~~extension, the Company repaid $45.0 million in principal and ~~preferred stock having an aggregate value of~~the interest rate increased from LIBOR + 3.20% to LIBOR + 3.47%.

3633

~~up to $200 million. The board of directors’ authorization replaced the previous repurchase authorization that the board of directors’ authorized in December 2017.~~

On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of November 3, 2022, the Company has not issued any common stock pursuant to the Virtu Equity Distribution Agreement.

On April 15, 2022, Ashford Inc. and Ashford Hospitality Services, LLC, a subsidiary of Ashford Inc. (“Ashford Services”), agreed with Jeremy Welter, the Chief Operating Officer of Ashford Inc., that, effective on July 15, 2022, Mr. Welter would terminate employment with and service to Ashford Inc., Ashford Services and their affiliates. Mr. Welter was also the Chief Operating Officer of the Company and accordingly his service as Chief Operating Officer of the Company also ended on July 15, 2022.

~~On July 1, 2022, the Bank of America Pool 3 mortgage loan was brought current and is no longer in default.~~

In August 2022, given the recent increases in the federal funds rate and interest rates on short-term U.S. Treasury securities, the independent members of our board of directors approved the engagement of our Advisor to proactively manage and invest the Company’s excess cash in short-term U.S. Treasury securities (the “Cash Management Strategy”). As consideration for the Advisor’s services under this engagement, the Company will pay the Advisor an annual fee equal 20 basis points (0.20%) of the average daily balance of the Company’s excess cash invested by the Advisor (the “Cash Management Fee”). The Cash Management Fee will be calculated and payable monthly in arrears. Investment of the Company’s excess cash pursuant to the Cash Management Strategy commenced in October 2022.

On September 1, 2022, we completed the sale of the Sheraton Ann Arbor for total consideration of approximately $35.7 million, which included cash of $34.5 million and an interest-free receivable with an estimated fair value of $1.2 million and a face value of $1.5 million. The sale resulted in a loss of approximately $29,000 for the three and nine months ended September 30, 2022, which was included in “gain (loss) on sale of assets and hotel properties” in the consolidated statements of operations. The Company also repaid the $30.0 million mortgage loan that was secured by the hotel property.

RESULTS OF OPERATIONS

Key Indicators of Operating Performance

We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel’s contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:

•Occupancy—Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.

•ADR—ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.

•RevPAR—RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.

RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increased other operating department revenue and expense. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.

Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.

We also use funds from operations (“FFO”), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate (“EBITDAre”) and Adjusted EBITDAre as measures of the operating performance of our business. See “Non-GAAP Financial Measures.”

The following table summarizes the changes in key line items from our consolidated statements of operations for the three months ended March 31, 2023 and 2022 (in thousands):


		Three Months Ended September 30,				Favorable/ (Unfavorable) Change				Nine Months Ended September 30,									Favorable/ (Unfavorable) Change			Three Months Ended March 31,							Favorable (Unfavorable) Change
		2022		2021				2022				2021						2023					2022				2023 to 2022
Total revenue	Total revenue	$	328,156	$	247,434			$	80,722			$	923,389			$	556,676					$	366,713	Total revenue	$	328,886		$	247,138		$	81,748
Total hotel operating expenses		(216,256)		(172,342)		(43,914)				(614,190)				(398,321)					(215,869)
Total hotel expenses																					Total hotel expenses	(225,118)				(176,778)			(48,340)
Property taxes, insurance and other	Property taxes, insurance and other	(17,541)		(17,222)		(319)				(51,289)				(51,821)					532		Property taxes, insurance and other	(16,537)				(16,459)			(78)
Depreciation and amortization	Depreciation and amortization	(49,428)		(53,069)		3,641				(152,444)				(166,291)					13,847		Depreciation and amortization	(47,855)				(52,120)			4,265

Advisory services fee		(12,513)		(7,395)		(5,118)				(38,176)				(39,110)					934

Advisory service fee																					Advisory service fee	(12,986)				(13,386)			400
Corporate, general and administrative	Corporate, general and administrative	884		(2,414)		3,298				(6,730)				(12,113)					5,383		Corporate, general and administrative	(2,612)				(3,104)			492
Gain (loss) on disposition of assets and hotel properties	Gain (loss) on disposition of assets and hotel properties	(11)		103		(114)				273				395					(122)		Gain (loss) on disposition of assets and hotel properties	(24)				103			(127)
Operating income (loss)	Operating income (loss)	33,291		(4,905)		38,196				60,833				(110,585)					171,418		Operating income (loss)	23,754				(14,606)			38,360
Equity in earnings (loss) of unconsolidated entities	Equity in earnings (loss) of unconsolidated entities	(147)		(145)		(2)				(451)				(423)					(28)		Equity in earnings (loss) of unconsolidated entities	(396)				(153)			(243)
Interest income	Interest income	1,576		124		1,452				2,153				137					2,016		Interest income	2,557				51			2,506
Other income (expense)	Other income (expense)	241		208		33				426				682					(256)		Other income (expense)	134				101			33
Interest expense and amortization of discounts and loan costs	Interest expense and amortization of discounts and loan costs	(61,023)		(43,003)		(18,020)				(152,975)				(112,003)					(40,972)		Interest expense and amortization of discounts and loan costs	(81,515)				(43,559)			(37,956)
Write-off of premiums, loan costs and exit fees	Write-off of premiums, loan costs and exit fees	(1,378)		(1,034)		(344)				(3,076)				(5,200)					2,124		Write-off of premiums, loan costs and exit fees	(420)				(727)			307
Gain (loss) on extinguishment of debt		—		1,292		(1,292)				—				11,896					(11,896)

Unrealized gain (loss) on derivatives		9,774		6,029		3,745				19,059				3,712					15,347
Income tax (expense) benefit		(4,657)		(2,615)		(2,042)				(10,340)				(2,916)					(7,424)

Realized and unrealized gain (loss) on derivatives																					Realized and unrealized gain (loss) on derivatives	(5,415)				3,211			(8,626)
Income tax benefit (expense)																					Income tax benefit (expense)	(221)				(120)			(101)

Net income (loss)	Net income (loss)	(22,323)		(44,049)		21,726				(84,371)				(214,700)					130,329		Net income (loss)	(61,522)				(55,802)			(5,720)
(Income) loss attributable to noncontrolling interest in consolidated entities		—		(10)		10				—				84					(84)

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	231		367		(136)				679				3,594					(2,915)		Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	600				372			228
Net income (loss) attributable to the Company	Net income (loss) attributable to the Company	$	(22,092)	$	(43,692)	$	21,600			$	(83,692)			$	(211,022)				$	127,330	Net income (loss) attributable to the Company	$	(60,922)			$	(55,430)		$	(5,492)

All hotel properties ~~owned~~held during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ have been included in our results of operations during the respective periods in which they were ~~owned.~~held. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. The hotel properties listed below are not comparable hotel properties for the periods indicated and all other hotel properties are considered comparable hotel properties. The following dispositions affect reporting comparability related to our consolidated financial statements:

Hotel ~~Property~~Properties

Location

Type

Date

~~Le Meridien Minneapolis~~ ~~(1)~~

~~Minneapolis, MN~~

~~Disposition~~

~~January 20, 2021~~

~~SpringHill Suites Durham~~ ~~(1)~~

~~Durham, NC~~

~~Disposition~~

~~April 29, 2021~~

~~SpringHill Suites Charlotte~~ ~~(1)~~

~~Charlotte, NC~~

~~Disposition~~

~~April 29, 2021~~

Sheraton Ann Arbor (1)

Ann Arbor, MI

Disposition

September 1, 2022

Hilton Marietta (2)

Marietta, GA

Acquisition

December 16, 2022

(1) ~~Collectively referred~~Referred to as “Hotel ~~Dispositions”~~Disposition”

(2) Referred to as “Hotel Acquisition”

The following table illustrates the key performance indicators of ~~all~~the hotel properties and WorldQuest ~~owned for the periods indicated:~~included in our results of operations:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2022			2021			2022			2021				2023			2022
RevPAR (revenue per available room)	RevPAR (revenue per available room)	$	126.24		$	97.59		$	119.19		$	74.37		RevPAR (revenue per available room)	$	124.95		$	96.46
Occupancy	Occupancy	70.98		%	62.80		%	67.60		%	54.06		%	Occupancy	68.36		%	58.33		%
ADR (average daily rate)	ADR (average daily rate)	$	177.84		$	155.39		$	176.32		$	137.56		ADR (average daily rate)	$	182.79		$	165.36

The following table illustrates the key performance indicators of the 99 ~~comparable~~ hotel properties and WorldQuest that were included in our results of operations for the full three months ended March 31, 2023 and ~~nine September 30,~~ 2022, ~~and 2021,~~ respectively:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
RevPAR (revenue per available room) $ 126.16 $ 97.59 $ 119.40 $ 74.77
Occupancy 71.00 % 62.84 % 67.70 % 54.23 %
ADR (average daily rate) $ 177.70 $ 155.30 $ 176.37 $ 137.88


	Three Months Ended March 31,
	2023			2022
RevPAR	$	125.11		$	96.83
Occupancy	68.39		%	58.49		%
ADR	$	182.94		$	165.55

Comparison of the Three Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

Net Income (Loss) Attributable to the Company. Net loss attributable to the Company ~~decreased $21.6~~increased $5.5 million, from ~~$43.7~~$55.4 million for the three months ended ~~September 30, 2021~~March 31, 2022 (the ~~“2021~~“2022 quarter”) to ~~$22.1~~$60.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 (the ~~“2022~~“2023 quarter”) as a result of the factors discussed below.

Revenue. Rooms revenue from our hotel properties and WorldQuest increased ~~$58.5~~$57.6 million, or ~~28.9%~~29.5%, to ~~$260.6~~$253.0 million in the ~~2022~~2023 quarter compared to the ~~2021 quarter. This increase is attributable to higher rooms revenue of $58.6 million at our comparable hotel properties and WorldQuest~~2022 quarter as our hotel properties recover from the effects of the COVID-19 ~~pandemic~~pandemic. This increase is attributable to higher rooms revenue of $56.7 million at our comparable hotel properties and WorldQuest and $1.9 million from our Hotel Acquisition partially offset by a decrease of ~~$71,000~~$966,000 from our Hotel ~~Dispositions.~~Disposition. Our comparable hotel properties experienced an increase of ~~14.4%~~10.5% in room rates and ~~an 816~~a 990 basis point increase in occupancy.

Food and beverage revenue increased ~~$18.9~~$22.2 million, or ~~63.5%~~60.5%, to ~~$48.6~~$59.0 million. This increase is attributable to higher sales of food and beverage of ~~$18.9~~$21.7 million at our comparable hotel properties and WorldQuest asand $876,000 from our ~~hotel properties recover~~Hotel Acquisition partially offset by a decrease of $315,000 from ~~the effects of the COVID-19 pandemic.~~our Hotel Disposition.

Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, increased ~~$3.2~~$1.8 million, or ~~21.7%~~12.8%, to ~~$18.2~~$16.3 million. This increase is primarily attributable to an increase of ~~$3.2~~$1.9 million at our comparable hotel properties asand $74,000 from our ~~hotel properties recover~~Hotel Acquisition partially offset by a decrease of $86,000 from ~~the effects of the COVID-19 pandemic.~~our Hotel Disposition. Other non-hotel revenue increased ~~$97,000,~~$46,000, or ~~15.5%~~7.5%, to ~~$724,000~~$658,000 in the ~~2022~~2023 quarter as compared to the ~~2021~~2022 quarter.

Hotel Operating Expenses. Hotel operating expenses increased ~~$43.9~~$48.3 million, or ~~25.5%~~27.3%, to ~~$216.3~~$225.1 million. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees. Direct expenses increased ~~$26.5~~$23.5 million in the ~~2022~~2023 quarter as compared to the ~~2021~~2022 quarter, ~~as our hotel properties recover from the effects of the COVID-19 pandemic,~~ which was primarily comprised of an increase

of ~~$26.4~~$23.3 million from our comparable hotel properties and ~~WorldQuest and an increase of $87,000 from our Hotel Dispositions.~~WorldQuest. Direct expenses were ~~30.8%~~31.0% of total hotel revenue for the ~~2022~~2023 quarter and ~~30.1%~~31.8% for the ~~2021~~2022 quarter. Indirect expenses and management fees increased ~~$17.4~~$24.9 million in the ~~2022~~2023 quarter as compared to the ~~2021~~2022 quarter, which was primarily comprised of an increase of ~~$17.5~~$24.5 million from our comparable hotel properties and ~~WorldQuest as our hotel properties recover from the effects of the COVID-19 pandemic, partially offset by a decrease of $128,000 from our Hotel Dispositions.~~WorldQuest.

Property Taxes, Insurance and Other. Property taxes, insurance and other expense increased ~~$319,000,~~$78,000, or ~~1.9%~~0.5%, to ~~$17.5~~$16.5 million during the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter, which was primarily due to an increase of ~~$333,000~~$186,000 from our comparable hotel properties and WorldQuest and $41,000 from our Hotel Acquisition partially offset by a decrease of ~~$14,000~~$149,000 from our Hotel ~~Dispositions.~~Disposition.

Depreciation and Amortization. Depreciation and amortization decreased ~~$3.6~~$4.3 million, or ~~6.9%~~8.2%, to ~~$49.4~~$47.9 million during the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter, which was primarily due to a decrease of ~~$3.1~~$3.8 million from our comparable hotel properties and WorldQuest primarily related to fully depreciated assets and ~~WorldQuest and~~ a decrease of ~~$590,000~~$611,000 from our Hotel ~~Dispositions.~~Disposition.

Advisory Services Fee. Advisory services fee ~~increased $5.1 million,~~decreased $400,000, or ~~69.2%~~3.0%, to ~~$12.5~~$13.0 million in the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company. In the ~~2022~~2023 quarter, the advisory services fee was comprised of a base advisory fee of ~~$8.9~~$8.5 million, equity-based compensation of ~~$1.2~~$1.3 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of ~~$2.4~~$3.2 million. In the ~~2021~~2022 quarter, the advisory services fee was comprised of a base advisory fee of ~~$9.5~~$8.7 million, equity-based compensation of ~~$2.4~~$1.9 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc., reimbursable expenses of ~~$2.0~~$2.6 million and an incentive fee ~~reversal~~ of ~~$6.5 million.~~$151,000.

Corporate, General and Administrative. Corporate, general and administrative expense ~~changed $3.3 million,~~decreased $492,000, or ~~136.6%~~15.9%, from ~~an expense of $2.4~~$3.1 million in the ~~2021~~2022 quarter to ~~a credit of $884,000~~$2.6 million in the ~~2022~~2023 quarter. The decrease was primarily attributable to ~~a revision to the estimated contribution amount associated with the Second Amended and Restated Contribution Agreement with~~lower

reimbursed operating expenses of Ashford Securities ~~that resulted in a $3.5 million expense reduction,~~of $408,000, lower public company costs of $70,000 and lower other miscellaneous expenses of $94,000, partially offset by higher legal and professional fees of ~~$554,000 and lower public company costs of $85,000 which were partially offset by higher other miscellaneous expenses of $842,000.~~$47,000.

Gain (Loss) on Disposition of Assets and Hotel Properties. Gain (loss) on disposition of assets and hotel properties changed ~~$114,000~~$127,000 from a gain of $103,000 in the ~~2021~~2022 quarter to a loss of ~~$11,000~~$24,000 in the ~~2022~~2023 quarter. The gain in the ~~2021~~2022 quarter of $103,000 was primarily related to the sale of ~~two~~three WorldQuest condominiums. The loss in the ~~2022~~2023 quarter was primarily ~~related~~due to ~~the sale of the Sheraton Ann Arbor.~~asset dispositions.

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of unconsolidated entities ~~which consists~~increased $243,000 during the 2023 quarter compared to the 2022 quarter. The 2023 quarter included equity in loss of ~~our share of earnings/loss~~$150,000 from OpenKey ~~was $147,000~~and $246,000 from an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California. The 2022 quarter ~~and $145,000~~included equity in ~~the 2021 quarter.~~loss of $153,000 from OpenKey.

Interest Income. Interest income was ~~$1.6~~$2.6 million and ~~$124,000~~$51,000 for the 2023 quarter and the 2022 quarter, ~~and the 2021 quarter,~~ respectively. The increase in interest income in the ~~2022~~2023 quarter was primarily ~~related~~attributable to ~~bank account~~higher short-term interest ~~resulting from~~rates on excess cash and the ~~increase in interest rates.~~Company’s cash management agreement with Ashford LLC.

Other Income (Expense). Other income ~~increased $33,000 from $208,000~~consisted of miscellaneous income of $134,000 in the ~~2021~~2023 quarter ~~to $241,000~~and $101,000 in the 2022 quarter. In the 2022 quarter, we recorded $133,000 of income related to payments from counterparties on interest rate caps and miscellaneous income of $108,000. In the 2021 quarter, we recorded miscellaneous income of $208,000.

Interest expense and amortization of discounts and loan costs. Interest expense and amortization of discounts and loan costs increased ~~$18.0~~$38.0 million, or ~~41.9%~~87.1%, to ~~$61.0~~$81.5 million during the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter. The increase is primarily due to ~~$17.5~~higher interest expense of $37.8 million at our comparable hotel properties primarily due to higher ~~LIBOR~~interest rates on our variable rate debt and a ~~$790,000~~$695,000 increase related to the Oaktree loan primarily attributable to the amortization of the ~~embedded~~Oaktree debt ~~derivative of the Oaktree loan and an increase of $42,000 from our Hotel Dispositions.~~discount. These increases were partially offset by a decrease of $351,000 from our Hotel Disposition and lower credits to interest expense of ~~$292,000~~$141,000 related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default. The average LIBOR rates in the ~~2022~~2023 quarter and the ~~2021~~2022 quarter were ~~2.47%~~4.62% and 0.23%, respectively. The average SOFR rates for the 2023 quarter and the 2022 quarter were 4.50% and 0.09%, respectively.

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees ~~increased $344,000~~decreased $307,000 to ~~$1.4 million~~$420,000 in the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter. In the ~~2022~~2023 quarter, we ~~wrote off unamortized loan costs of $265,000 and a pro-rata write-off of the Oaktree loan discount in the amount of $514,000 upon making a $4.0 million pay down on the Oaktree loan. Additionally, we~~ incurred ~~third-party~~ fees of ~~$599,000.~~$25,000 paid to third parties and $395,000 paid to Lismore related to various loan modifications. In the ~~2021~~2022 quarter, we recognized Lismore fees of $643,000 that reflects the amortization over the service period of the Lismore ~~Agreement. Additionally, we wrote off unamortized loan costs in the amount of $332,000~~Agreement (see note 16 to our consolidated financial statements) and ~~recognized a prepayment penalty of $63,000~~$84,000 related to ~~the Hilton Boston Back Bay loan refinance.~~

~~Gain (loss) on extinguishment of debt.~~ Gain on extinguishment of debt was $1.3 million in the 2021 quarter, which primarily related to the write-off of capitalized default interest that was being amortized as a credit to interest expense related to the refinance of the Hilton Boston Back Bay loan.third-party fees, totaling $727,000.

~~Unrealized~~Realized and unrealized Gain (Loss) on Derivatives. ~~Unrealized~~Realized and unrealized gain (loss) on derivatives ~~increased $3.7~~changed $8.6 million from ~~$6.0 million in the 2021 quarter to $9.8~~a gain of $3.2 million in the 2022 quarter to a loss of $5.4 million in the 2023 quarter. In the 2023 quarter, we recognized an unrealized loss of $14.0 million associated with interest rate caps and an unrealized loss of $934,000 from the revaluation of the embedded debt derivative in the Oaktree Agreement partially offset by a realized gain of $9.5 million related to payments from counterparties on interest rate caps. In the 2022 quarter, we ~~recognized~~recorded an unrealized gain of ~~$719,000~~$932,000 from the revaluation of the embedded debt derivative and an unrealized gain of ~~$9.1~~$2.3 million ~~associated with interest rate caps. In the 2021 quarter, we recognized an unrealized gain of $6.1 million~~ from ~~the revaluation of the embedded debt derivative, partially offset by an unrealized loss of $72,000 on interest rate floors and an unrealized loss of $25,000 associated with~~ interest rate caps.

Income Tax (Expense) Benefit. Income tax expense increased ~~$2.0 million,~~$101,000, from ~~$2.6 million in the 2021 quarter to $4.7 million~~$120,000 in the 2022 quarter to $221,000 in the 2023 quarter. This ~~change~~increase was primarily due to an increase in the profitability of our Ashford TRS entities ~~due to the continued recovery from the COVID-19 pandemic~~ in the ~~2022~~2023 quarter compared to the ~~2021~~2022 quarter.

~~(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities.~~ Our noncontrolling interest partner in consolidated entities was allocated income of $10,000 in the 2021 quarter. On December 31, 2021, the Company acquired the remaining interest in the consolidated entities.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of ~~$231,000~~$600,000 in the ~~2022~~2023 quarter and ~~$367,000~~$372,000 in the ~~2021~~2022 quarter. Redeemable noncontrolling interests represented ownership interests of ~~0.91%~~0.92% and ~~0.77%~~0.63% in the operating partnership at ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

~~Comparison of the Nine Months Ended September 30, 2022 and 2021~~

~~Net Income (Loss) Attributable to the Company.~~ Net loss attributable to the Company decreased $127.3 million from $211.0 million for the nine months ended September 30, 2021 (the “2021 period”) to $83.7 million for the nine months ended September 30, 2022 (the “2022 period”) as a result of the factors discussed below.

~~Revenue.~~Rooms revenue from our hotel properties and WorldQuest increased $272.2 million, or 59.3%, to $731.5 million in the 2022 period compared to the 2021 period. This increase is attributable to higher rooms revenue of $271.7 million at our comparable hotel properties and WorldQuest as our hotel properties recover from the effects of the COVID-19 pandemic and an increase of $509,000 from our Hotel Dispositions. Our comparable hotel properties experienced an increase of 27.9% in room rates and an increase of 1,347 basis points in occupancy.

Food and beverage revenue increased $82.2 million, or 143.0%, to $139.7 million in the 2022 period compared to the 2021 period. This increase is attributable to higher sales of food and beverage of $81.7 million at our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and an increase of $550,000 from our Hotel Dispositions.

Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, increased $11.7 million, or 30.5%, to $50.0 million in the 2022 period compared to the 2021 period. This increase is attributable to higher other revenue of $11.5 million from our comparable hotel properties and WorldQuest as our hotel properties recover from the effects of the COVID-19 pandemic and an increase of $141,000 from our Hotel Dispositions. Other revenue increased $597,000, or 38.1%, to $2.2 million in the 2022 period compared to the 2021 period.

~~Hotel Operating Expenses.~~ Hotel operating expenses increased $215.9 million, or 54.2%, to $614.2 million in the 2022 period compared to the 2021 period. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees. Direct expenses increased $119.3 million in the 2022 period compared to the 2021 period, comprised of an increase of $118.8 million from our comparable hotel properties and WorldQuest as our hotel properties continue to recover from the effects of the COVID-19 pandemic and an increase of $475,000 from our Hotel Dispositions. Direct expenses were 30.3% of total hotel revenue for the 2022 period and 28.8% for the 2021 period. Indirect expenses and management fees increased $96.6 million in the 2022 period compared to the 2021 period, comprised of an increase of $96.9 million from our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic, partially offset by a decrease of $329,000 from our Hotel Dispositions.

~~Property Taxes, Insurance and Other.~~ Property taxes, insurance and other expense decreased $532,000 or 1.0%, to $51.3 million in the 2022 period compared to the 2021 period, which was primarily due to a decrease of $132,000 from our Hotel Dispositions and $400,000 at our comparable hotel properties primarily due to real estate assessments or appeals that resulted in lower property taxes.

~~Depreciation and Amortization.~~ Depreciation and amortization decreased $13.8 million or 8.3%, to $152.4 million in the 2022 period compared to the 2021 period, which consisted of lower depreciation of $826,000 from our Hotel Dispositions and lower depreciation of $13.0 million at our comparable hotel properties and WorldQuest primarily due to fully depreciated assets.

~~Advisory Services Fee.~~ Advisory services fee decreased $934,000, or 2.4%, to $38.2 million in the 2022 period compared to the 2021 period. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company. In the 2022 period, the advisory services fee was comprised of a base advisory fee of $26.2 million, equity-based compensation of $4.6 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $7.4 million. In the 2021 period, the advisory services fee was comprised of a base advisory fee of $27.2 million, equity-based compensation of $5.2 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $6.7 million.

~~Corporate, General and Administrative.~~ Corporate, general and administrative expense decreased $5.4 million, or 44.4%, to $6.7 million in the 2022 period compared to the 2021 period. The decrease was primarily attributable to lower legal and professional fees of $5.1 million and a revision to the estimated contribution amount associated with the Second Amended and Restated Contribution Agreement with Ashford Securities that resulted in in an expense reduction of $2.4 million. These decreases were partially offset by higher public company costs of $412,000 and higher miscellaneous expenses of $1.6 million.

~~Gain (Loss) on Disposition of Assets and Hotel Properties.~~ Gain on disposition of assets and hotel properties decreased $122,000, from $395,000 in the 2021 period to $273,000 in the 2022 period. The gain in the 2021 period was primarily related to a franchise fee reimbursement of $327,000 related to the disposition of the Embassy Suites New York Manhattan Times Square and a gain related to the sale of two WorldQuest condominiums. The gain in the 2022 period was primarily related to a gain related to the sale of six WorldQuest condominiums.

~~Equity in Earnings (Loss) of Unconsolidated Entities.~~ ~~Equity in loss of unconsolidated entities was $451,000 in the 2022 period and $423,000 in the 2021 period, which consisted of our share of loss from OpenKey.~~

~~Interest Income.~~ Interest income was $2.2 million and $137,000 in the 2022 period and the 2021 period, respectively. The income in the 2022 period was primarily related to bank account interest resulting from the increase in interest rates.

~~Other Income (Expense).~~ Other income decreased $256,000 from $682,000 in the 2021 period to $426,000 in the 2022 period. In the 2022 period we recorded income of $133,000 related to payments from counterparties on interest rate caps and miscellaneous income of $293,000. In the 2021 period, we recorded miscellaneous income of $682,000.

~~Interest Expense and Amortization of Discounts and Loan Costs.~~ Interest expense and amortization of discounts and loan costs increased $41.0 million, or 36.6%, to $153.0 million in the 2022 period compared to the 2021 period. The increase was primarily due to an $18.6 million increase at our comparable hotel properties primarily due to higher LIBOR rates, $5.3 million attributable to amortization of the embedded debt derivative and the Oaktree term loan as a result of it being outstanding for all of 2022 and lower credits to interest expense of $17.3 million related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default. These increases were partially offset by a decrease of $214,000 from our Hotel Dispositions. The average LIBOR rates in the 2022 period and the 2021 period were 1.24% and 0.10%, respectively.

~~Write-off of Premiums, Loan Costs and Exit Fees.~~ Write-off of premiums, loan costs and exit fees decreased $2.1 million to $3.1 million in the 2022 period compared to the 2021 period. In the 2022 period, we recognized Lismore fees of $643,000 that reflects the amortization over the service period of the Lismore Agreement (see note 15 to our consolidated financial statements) and Lismore fees of $690,000 related to loan modifications. We wrote off unamortized loan costs of $265,000 and a pro-rata write-off of the Oaktree loan discount in the amount of $514,000 upon making a $4.0 million pay down on the Oaktree loan. Additionally, we incurred third-party fees of $964,000. In the 2021 period, we recognized Lismore fees of $5.0 million that reflects the amortization over the service period of the Lismore Agreement, which were partially offset by a net credit of $177,000 related to third-party fees, totaling $4.8 million. Additionally, we wrote off unamortized loan costs in the amount of $332,000 and incurred a prepayment penalty of $63,000 related to the Hilton Boston Back Bay loan refinance.

~~Gain (loss) on extinguishment of debt~~. Gain on extinguishment of debt was $11.9 million in the 2021 period, which primarily related to the foreclosure of the SpringHill Suites Durham and SpringHill Suites Charlotte in the amount of $10.6 million and a gain of $1.4 million related to the write-off of capitalized default interest that was being amortized as a credit to interest expense related to the refinance of the Hilton Boston Back Bay loan.

~~Unrealized Gain (Loss) on Derivatives.~~ Unrealized gain on derivatives increased $15.3 million from $3.7 million in the 2021 period to $19.1 million in the 2022 period. In the 2022 period, we recorded an unrealized gain of $4.6 million from the

revaluation of the embedded debt derivative in the Oaktree Credit Agreement and an unrealized gain of $14.4 million from interest rate caps. In the 2021 period, we recorded unrealized gain of $4.7 million from the revaluation of the embedded debt derivative, partially offset by unrealized losses of $462,000 from interest rate floors and $554,000 from interest rate caps.

~~Income Tax (Expense) Benefit.~~ Income tax expense increased $7.4 million, from $2.9 million in the 2021 period to $10.3 million in the 2022 period. This change was primarily due to an increase in the profitability of our Ashford TRS entities due to the continued recovery from the COVID-19 pandemic in the 2022 period compared to the 2021 period.

~~(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests.~~ Our noncontrolling interest partner in consolidated entities was allocated a loss of $84,000 in the 2021 period. On December 31, 2021, the Company acquired the remaining interest in the consolidated entities.

~~Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.~~ Noncontrolling interests in operating partnership were allocated net losses of $679,000 and $3.6 million in the 2022 period and the 2021 period, respectively. Redeemable noncontrolling interests represented ownership interests of 0.91% and 0.77% in the operating partnership at September 30, 2022 and 2021, respectively.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity

As of ~~September 30, 2022~~March 31, 2023, the Company held cash and cash equivalents of ~~$505.5~~$344.9 million and restricted cash of ~~$132.1~~$143.8 million, the vast majority of which is comprised of lender and manager-held reserves. As of ~~September 30, 2022, $27.4~~March 31, 2023, $20.6 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At March 31, 2023, our net debt to gross assets was 69.7%.

~~In 2020,~~

The Company's cash and cash equivalents are primarily comprised of corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep (“ICS”) accounts, which are fully insured by the ~~Company ceased paying dividends on both its common stock~~FDIC. The Company’s cash and ~~preferred stock. During~~cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank (“G-SIB”) by the ~~fourth quarter of 2021, the Company reinstated~~Financial Stability Board (“FSB”) and caught up on all of its accrued preferred dividends and currently plans to pay dividends on its preferred stock going forward. The Company does not anticipate paying any dividends on its outstanding common stock for the foreseeable future.a small amount deposited with other commercial banks.

Based on our current level of operations, our cash flow from operations and our existing cash balances should be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity ~~payments)~~payments and paydowns for extension tests), working capital, and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes. With respect to upcoming maturities, no assurances can be given that we will be able to refinance our upcoming maturities. Additionally, no assurances can be given that we will obtain additional financings or, if we do, what the amount and terms will be. Our failure to obtain future financing under favorable terms could adversely impact our ability to execute our business strategy or may result in lender foreclosure.

Our cash position from operations is affected primarily by macro industry movements in occupancy and rate as well as our ability to control costs. Further, interest rates can greatly affect the cost of our debt service as well as the value of any financial hedges we may put in place. We monitor industry fundamentals and interest rates very closely. Capital expenditures above our reserves will affect cash flow as ~~well.~~well and are impacted by inflation.

Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotels ~~decline~~declines below a threshold. When these provisions are triggered, substantially all of the profit generated by our hotels is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. During a cash trap, certain disbursements from these hotel operating cash receipts would require consent of our lenders. ~~These cash trap provisions have been triggered on nearly all of our mortgage loans containing cash trap provisions. As of September 30, 2022, 85%~~At March 31, 2023, 40% of our hotels were in cash traps and approximately ~~$18.6~~$9.9 million of our restricted cash was subject to these cash ~~traps.~~traps Additionally, at March 31, 2023, there was approximately $19.1 million of restricted cash associated with three mortgage loans that were no longer in cash traps and was subsequently released. Our loans currently in cash traps may remain subject to cash trap provisions for a substantial period of time which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT.

we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of Ashford Trust or Ashford Trust OP, our operating partnership, and the liabilities of such subsidiaries do not constitute the obligations of Ashford Trust or Ashford Trust OP. ~~As of November 3, 2022, the Company is not expecting to be required to repay all or a portion of our indebtedness before maturity.~~

Mortgage and mezzanine loans are nonrecourse to the borrowers, except for customary exceptions or carve-outs that trigger recourse liability to the borrowers in certain limited instances. Recourse obligations typically include only the payment of costs and liabilities suffered by lenders as a result of the occurrence of certain bad acts on the part of the borrower. However, in certain cases, carve-outs could trigger recourse obligations on the part of the borrower with respect to repayment of all or a portion of the outstanding principal amount of the loans. We have entered into customary guaranty agreements pursuant to which we guaranty payment of any recourse liabilities of the borrowers that result from non-recourse carve-outs (which include, but are not limited to, fraud, misrepresentation, willful conduct resulting in waste, misappropriations of rents following an event of default, voluntary bankruptcy filings, unpermitted transfers of collateral, and certain environmental liabilities). In the opinion of management, none of these guaranty agreements, either individually or in the aggregate, are likely to have a material adverse effect on our business, results of operations, or financial condition.

We have entered into certain customary guaranty agreements pursuant to which we guaranty payment of any recourse liabilities of our subsidiaries or joint ventures that may result from non-recourse carve-outs, which include, but are not limited to, fraud, misrepresentation, willful misconduct resulting in waste, misappropriations of rents following an event of default, voluntary bankruptcy filings, unpermitted transfers of collateral, delinquency of trade payables and certain environmental

liabilities. Certain of these guarantees represent a guaranty of material amounts, and if we are required to make payments under those guarantees, our liquidity could be adversely affected.

We are committed to an investment strategy where we will pursue hotel-related investments as suitable situations arise. Funds for future hotel-related investments are expected to be derived, in whole or in part, from cash on hand, future borrowings under a credit facility or other loans, or proceeds from additional issuances of common stock, preferred stock (including net proceeds from the sale of any shares of Series J Preferred Stock or Series K Preferred Stock), or other securities, asset sales, and joint ventures. However, we have no formal commitment or understanding to invest in additional assets, and there can be no assurance that we will successfully make additional investments. We may, when conditions are suitable, consider additional capital raising opportunities.

Our existing hotel properties are mostly located in developed areas with competing hotel properties. Future occupancy, ADR, and RevPAR of any individual hotel could be materially and adversely affected by an increase in the number or quality of competitive hotel properties, home sharing companies or apartment operators offering short-term rentals in its market area. Competition could also affect the quality and quantity of future investment opportunities.

Debt Transactions

On ~~June 7, 2022, we~~February 9, 2023, the Company amended ~~our $33.2 million~~its JP Morgan Chase – 8 hotel mortgage loan, ~~secured by~~which had a current maturity in February 2023. As part of the ~~Sheraton Ann Arbor hotel, which~~amendment, the Company repaid $50.0 million in principal, exercised the 2023 loan extension and reduced the 2024 debt yield extension test from 9.25% to 8.50%.

On April 6, 2023, the Company extended ~~the maturity to December 2022 and included a $3.2 million principal repayment. The amended~~its BAML Highland mortgage loan ~~was~~to April 2024. As part of the extension, the Company repaid $45.0 million in principal and the interest ~~only and bears interest at a~~ rate ofincreased from LIBOR + ~~4.40%, and had a~~3.20% to LIBOR ~~floor of 0.25%~~+ 3.47%.

~~On July 1, 2022, the Bank of America Pool 3 mortgage loan was brought current and is no longer in default.~~

~~On September 1, 2022, we completed the sale of the Sheraton Ann Arbor and repaid the $30.0 million mortgage loan with the proceeds from the sale.~~

Equity Transactions

On ~~March 1, 2022,~~September 9, 2021, the Company and M3A LP (“M3A”) entered into a purchase agreement (the “M3A Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to M3A up to approximately 6.0 million shares of common stock, from time to time during the term of the M3A Purchase Agreement. The Company filed a ~~new universal shelf registration statement on~~ Form S-3, ~~with~~which was declared effective by the ~~SEC. The shelf registration statement provides for the registration of unspecified amounts of equity and debt securities with a maximum aggregate offering price of up to $300 million. The~~ SEC ~~declared the Form S-3 effective~~ on April 1, ~~2022.~~

2022, to replace the previous Form S-11 and to register for resale any future resales by M3A under the M3A Purchase Agreement. As of May 4, 2023, the Company has issued approximately 900,000 shares of common stock for gross proceeds of approximately $12.9 million under the M3A Purchase Agreement. On March 4, 2022, the Company filed an initial registration statement on Form S-3 with the SEC, as amended on April 29, 2022, related to the Company’s non-traded Series J Preferred Stock and Series K Preferred Stock. The registration statement was declared effective by the SEC on May 4, 2022, and contemplates the offering of up to (i) 20.0 million shares of Series J Preferred Stock or Series K Preferred Stock in a primary offering and (ii) 8.0 million shares of Series J Preferred Stock or Series K Preferred Stock pursuant to a dividend reinvestment plan. On May 5, 2022, we filed our prospectus for the offering with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager for the offering. ~~On April 28, 2022, we filed with~~As of May 4, 2023, the ~~State Department of Assessments and Taxation of the State of Maryland articles supplementary to our~~

~~Articles of Amendment and Restatement classifying and designating an aggregate of 28,000,000 shares of our unissued and undesignated shares of preferred stock and provided for their issuance either as~~Company has issued approximately 814,000 shares of Series J Preferred Stock ~~or Series K Preferred Stock. We also caused our operating partnership to execute Amendment No. 10 to the Seventh Amended~~ and Restated Agreement of Limited Partnership to amend the terms of our operating partnership to conform to the terms of the articles supplementary for the Series J Preferred Stock and Series K Preferred Stock.

~~As of November 3, 2022, no shares of Series J Preferred Stock or Series K Preferred Stock have been issued. We intend to use the~~received net proceeds ~~from the sale~~ of any shares of Series J Preferred Stock or Series K Preferred Stock for general corporate purposes, including, without limitation, payment of dividends on our outstanding capital stock, repayment of debt or other maturing obligations, financing future hotel-related investments, redemption of outstanding shares of our preferred stock, capital expendituresapproximately $18.3 million and ~~working capital.~~

On September 9, 2021, the Company and M3A LP (“M3A”) entered into a purchase agreement (the “M3A Purchase Agreement”), which provides that subject to the terms and conditions set forth therein, the Company may sell to M3A up to approximately 6.0 million shares of common stock, from time to time during the term of the M3A Purchase Agreement. On September 10, 2021, the Company filed a registration statement on Form S-11, which was declared effective by the SEC on September 29, 2021, to register for resale under the Securities Act, 6,040,888 shares of Common Stock that may be issued to M3A under the M3A Purchase Agreement. In connection with the Company’s recent eligibility to use a Form S-3, the Company filed a registration statement on Form S-3, which was declared effective by the SEC on April 1, 2022, to replace the previous Form S-11 and to register for resale any future resales by M3A under the M3A Purchase Agreement. As of November 3, 2022, the Company has issued approximately ~~900,000~~45,000 shares of ~~common stock for gross~~Series K Preferred Stock and received net proceeds of approximately ~~$12.9 million under the M3A Purchase Agreement.~~$1.1 million.

On April 6, 2022 the board of directors approved a stock repurchase program (the “Repurchase Program”) pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock and preferred stock having an aggregate value of up to $200 million. The board of directors’ authorization replaced the 2017 Repurchase Program that the board of ~~directors’~~directors authorized in December 2017. No shares have been repurchased under the Repurchase Program.

On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of ~~November 3, 2022,~~May 4, 2023, the Company has not issued any common stock pursuant to the Virtu Equity Distribution Agreement.

Sources and Uses of Cash

Our principal sources of funds to meet our cash requirements include cash on hand, cash flow from operations, capital market activities, property refinancing proceeds and asset sales. Additionally, our principal uses of funds are expected to include possible operating shortfalls, owner-funded capital expenditures, dividends, new investments, and debt interest and principal payments. Items that impacted our cash flow and liquidity during the periods indicated are summarized as follows:

Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows provided by (used in) operating activities, pursuant to our consolidated statements of cash flows, which includes changes in balance sheet items, were ~~$39.5~~$4.6 million and ~~$(113.5)~~$(14.5) million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. Cash flows provided by (used in) operations were impacted by ~~the COVID-19 pandemic,~~ changes in hotel operations, our hotel ~~dispositions~~disposition and acquisition in ~~2021 and~~ 2022 as well as the timing of collecting receivables from hotel guests, paying vendors, settling with derivative counterparties, settling with related parties and settling with hotel managers.

Net Cash Flows Provided by (Used in) Investing Activities. For the ~~nine~~three months ended ~~September 30,~~March 31, 2023, net cash flows used in investing activities were $29.4 million. Cash outflows consisted of $29.3 million for capital improvements made to various hotel properties and $149,000 of payments for franchise fees, partially offset by cash inflows of $75,000 related to proceeds from property insurance.

For the three months ended March 31, 2022, net cash flows used in investing activities were $28.3 million. Cash outflows consisted of $68.1 million for capital improvements made to various hotel properties partially offset by cash inflows of $34.7 million from proceeds received from the sale of the Sheraton Ann Arbor and six WorldQuest condominium units, $1.0 million of proceeds from property insurance and $4.0 million from the payment of a note receivable.

~~For the nine months ended September 30, 2021, net cash flows used in investing activities were $9.7~~$17.3 million. Cash outflows primarily consisted of ~~$19.0~~$22.7 million for capital improvements made to various hotel properties. Cash outflows were partially offset by cash inflows of ~~$7.5 million~~$357,000 from proceeds received from the sale of ~~the Le Meridien Minneapolis~~three WorldQuest condominium units and ~~$2.0~~$962,000 of proceeds from property insurance and $4.0 million of proceeds from ~~property insurance.~~notes receivable.

Net Cash Flows Provided by (Used in) Financing Activities. For the ~~nine~~three months ended ~~September 30,~~March 31, 2023, net cash flows used in financing activities were $45.5 million. Cash outflows primarily consisted of $50.8 million for repayments of indebtedness, $6.8 million for payments of loan costs and exit fees, $3.2 million of payments for preferred dividends and $4.2 million of payments for derivatives, partially offset by $449,000 of borrowings on indebtedness, $9.9 million of net proceeds from preferred stock offerings and $9.0 million of proceeds from in-the-money interest rate caps.

For the three months ended March 31, 2022, net cash flows used in financing activities were ~~$65.2~~$8.9 million. Cash outflows primarily consisted of ~~$49.3~~$4.7 million for repayments of indebtedness, ~~$2.3 million~~$146,000 for payments of loan costs and exit fees, ~~$9.3~~$3.1 million of payments for preferred dividends, ~~and $5.3 million of payments for derivatives, partially offset by $1.6 million of borrowings on indebtedness.~~

For the nine months ended September 30, 2021, net cash flows provided by financing activities were $713.9 million. Cash inflows primarily consisted of $293.5 million from borrowings on indebtedness, net of commitment fee and $548.4 million of net proceeds from issuances of common stock, partially offset by cash outflows of $106.7 million for repayments of indebtedness, $20.5 million for payments of loan costs and exit fees and $824,000$856,000 of payments for derivatives.

Dividend Policy. Distributions are authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors. The board of directors will continue to review our distribution policy on at least a quarterly basis. Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership. This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business ~~conditions (including the impact of the COVID-19 pandemic).~~conditions. Distributions to our stockholders are generally taxable to our stockholders as ordinary income. However, since a portion of our investments are equity ownership interests in hotels, which result in depreciation and non-cash charges against our income, a portion of our distributions may constitute a non-taxable return of capital, to the extent of a stockholder’s tax basis in the stock. To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity.

On December ~~7, 2021,~~6, 2022, our board of directors reviewed and approved our ~~2022~~2023 dividend policy. We do not anticipate paying any dividends on our outstanding common stock for any quarter during ~~2022~~2023 and expect to pay dividends on our outstanding preferred stock during ~~2022.~~2023. Declaration of dividends in ~~2022~~2023 on our preferred stock may require a determination by our board of directors, at the time of any determination, that the Company would continue to have positive equity on a fair value basis, among other considerations. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto. We may incur indebtedness to meet distribution requirements imposed on REITs under the Code to the extent that working capital and cash flow from our investments are insufficient to fund required distributions. We may pay dividends in excess of our cash flow.

SEASONALITY

Our properties’ operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months, while certain other properties maintain higher occupancy rates during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers’ effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations are insufficient during any quarter to enable us to make quarterly distributions to maintain our REIT status due to temporary or seasonal fluctuations in lease revenue, we expect to utilize cash on hand, borrowings and common stock to fund required distributions. However, we cannot make any assurances that we will make distributions in the future.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the

most difficult judgments are described in our ~~2021~~2022 Form 10-K. There have been no material changes in these critical accounting policies.

NON-GAAP FINANCIAL MEASURES

The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, ~~Funds From Operations (“FFO”)~~FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.

EBITDA is defined as net income (loss) before interest expense and amortization of discounts and loan costs, net, income taxes, depreciation and amortization, as adjusted to reflect only the Company’s portion of EBITDA of unconsolidated entities. In addition, we exclude ~~impairment charges on real estate, and~~ gain/loss on disposition of assets and hotel properties and gain/loss of unconsolidated entities to calculate EBITDAre, as defined by NAREIT.

We then further adjust EBITDAre to exclude certain additional items such as ~~gain/loss on insurance settlements,~~ write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, ~~dead deal costs,~~ advisory services incentive fee and stock/unit-based compensation and non-cash items such as amortization of unfavorable contract liabilities, ~~gain/loss on extinguishment of debt,~~realized and unrealized gains/losses on ~~marketable securities and~~ derivative instruments, as well as our portion of adjustments to EBITDAre of unconsolidated entities.

We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.

4741

The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net income (loss)	Net income (loss)	$	(22,323)	$	(44,049)	$	(84,371)	$	(214,700)	Net income (loss)		$	(61,522)	$	(55,802)
Interest expense and amortization of discounts and loan costs	Interest expense and amortization of discounts and loan costs	61,023		43,003		152,975		112,003		Interest expense and amortization of discounts and loan costs		81,515		43,559
Depreciation and amortization	Depreciation and amortization	49,428		53,069		152,444		166,291		Depreciation and amortization		47,855		52,120
Income tax expense (benefit)	Income tax expense (benefit)	4,657		2,615		10,340		2,916		Income tax expense (benefit)		221		120
Equity in (earnings) loss of unconsolidated entities	Equity in (earnings) loss of unconsolidated entities	147		145		451		423		Equity in (earnings) loss of unconsolidated entities		396		153

Company’s portion of EBITDA of unconsolidated entities	Company’s portion of EBITDA of unconsolidated entities	(148)		(144)		(452)		(419)		Company’s portion of EBITDA of unconsolidated entities		(69)		(153)
EBITDA	EBITDA	92,784		54,639		231,387		66,514		EBITDA		68,396		39,997

(Gain) loss on disposition of assets and hotel properties	(Gain) loss on disposition of assets and hotel properties	11		(103)		(273)		(395)		(Gain) loss on disposition of assets and hotel properties		24		(103)

EBITDAre	EBITDAre	92,795		54,536		231,114		66,119		EBITDAre		68,420		39,894
Amortization of unfavorable contract liabilities	Amortization of unfavorable contract liabilities	43		52		138		158		Amortization of unfavorable contract liabilities		29		53

Transaction and conversion costs										Transaction and conversion costs		119		659
Write-off of premiums, loan costs and exit fees	Write-off of premiums, loan costs and exit fees	1,378		1,034		3,076		5,200		Write-off of premiums, loan costs and exit fees		420		727
(Gain) loss on extinguishment of debt		—		(1,292)		—		(11,896)

Realized and unrealized (gain) loss on derivatives										Realized and unrealized (gain) loss on derivatives		5,415		(3,211)
Stock/unit-based compensation										Stock/unit-based compensation		1,333		2,011
Legal, advisory and settlement costs										Legal, advisory and settlement costs		—		25
Other (income) expense, net	Other (income) expense, net	(241)		(209)		(426)		(683)		Other (income) expense, net		(120)		(101)
Transaction and conversion costs		(3,401)		332		(1,828)		2,254
Legal, advisory and settlement costs		(96)		2,435		(59)		6,932

Unrealized (gain) loss on derivatives		(9,774)		(6,029)		(19,059)		(3,712)
Dead deal costs		76		—		356		689
Uninsured remediation costs		—		(33)		—		341
Stock/unit-based compensation		1,275		2,490		5,324		7,539

Advisory services incentive fee	Advisory services incentive fee	—		(6,472)		—		—		Advisory services incentive fee		—		151

Company’s portion of adjustments to EBITDAre of unconsolidated entities	Company’s portion of adjustments to EBITDAre of unconsolidated entities	1		2		12		14		Company’s portion of adjustments to EBITDAre of unconsolidated entities		1		12
Adjusted EBITDAre	Adjusted EBITDAre	$	82,056	$	46,846	$	218,648	$	72,955	Adjusted EBITDAre		$	75,617	$	40,220

4842

We calculate FFO and Adjusted FFO in the following table. FFO is calculated on the basis defined by NAREIT, which is net income (loss) attributable to common stockholders, computed in accordance with GAAP, excluding gains or losses on disposition of assets and hotel properties, plus depreciation and amortization of real estate assets, impairment charges on real estate assets, and after adjustments for unconsolidated entities and noncontrolling interests in the operating partnership. Adjustments for unconsolidated entities are calculated to reflect FFO on the same basis. NAREIT developed FFO as a relative measure of performance of an equity REIT to recognize that income-producing real estate historically has not depreciated on the basis determined by GAAP. Our calculation of Adjusted FFO excludes ~~gain/loss on extinguishment of debt,~~ write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, ~~dead deal costs, and~~ stock/unit-based compensation and non-cash items such as deemed dividends on redeemable preferred stock, amortization of loan costs, amortization of ~~the term loan discount,~~credit facility exit fee, unrealized gains/losses on ~~marketable securities and~~ derivative instruments, as well as our portion of adjustments to FFO related to unconsolidated entities. We exclude items from Adjusted FFO that are either non-cash or are not part of our core operations in order to provide a period-over-period comparison of our operating results. We present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We consider FFO and Adjusted FFO to be appropriate measures of our ongoing normalized operating performance as a REIT. We compute FFO in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that either do not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than we do. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to a) GAAP net income or loss as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity, nor is it indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements.

The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021				2023		2022
Net income (loss)	Net income (loss)	$	(22,323)	$	(44,049)	$	(84,371)	$	(214,700)	Net income (loss)		$	(61,522)	$	(55,802)
(Income) loss attributable to noncontrolling interest in consolidated entities		—		(10)		—		84

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	231		367		679		3,594		Net (income) loss attributable to redeemable noncontrolling interests in operating partnership		600		372
Preferred dividends	Preferred dividends	(3,104)		(2,039)		(9,311)		1,488		Preferred dividends		(3,243)		(3,103)
Gain (loss) on extinguishment of preferred stock		—		(1,789)		—		959
Deemed dividends on redeemable preferred stock										Deemed dividends on redeemable preferred stock		(407)		—

Net income (loss) attributable to common stockholders	Net income (loss) attributable to common stockholders	(25,196)		(47,520)		(93,003)		(208,575)		Net income (loss) attributable to common stockholders		(64,572)		(58,533)
Depreciation and amortization of real estate	Depreciation and amortization of real estate	49,428		53,033		152,444		166,182		Depreciation and amortization of real estate		47,855		52,120
(Gain) loss on disposition of assets and hotel properties	(Gain) loss on disposition of assets and hotel properties	11		(103)		(273)		(395)		(Gain) loss on disposition of assets and hotel properties		24		(103)
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	(231)		(367)		(679)		(3,594)		Net income (loss) attributable to redeemable noncontrolling interests in operating partnership		(600)		(372)
Equity in (earnings) loss of unconsolidated entities	Equity in (earnings) loss of unconsolidated entities	147		145		451		423		Equity in (earnings) loss of unconsolidated entities		396		153

Company’s portion of FFO of unconsolidated entities	Company’s portion of FFO of unconsolidated entities	(148)		(145)		(452)		(421)		Company’s portion of FFO of unconsolidated entities		(287)		(153)
FFO available to common stockholders and OP unitholders	FFO available to common stockholders and OP unitholders	24,011		5,043		58,488		(46,380)		FFO available to common stockholders and OP unitholders		(17,184)		(6,888)
(Gain) loss on extinguishment of preferred stock		—		1,789		—		(959)
Deemed dividends on redeemable preferred stock										Deemed dividends on redeemable preferred stock		407		—

Transaction and conversion costs										Transaction and conversion costs		119		659
Write-off of premiums, loan costs and exit fees	Write-off of premiums, loan costs and exit fees	1,378		1,034		3,076		5,200		Write-off of premiums, loan costs and exit fees		420		727
(Gain) loss on extinguishment of debt		—		(1,292)		—		(11,896)
Unrealized (gain) loss on derivatives										Unrealized (gain) loss on derivatives		14,942		(3,211)
Stock/unit-based compensation										Stock/unit-based compensation		1,333		2,011
Legal, advisory and settlement costs										Legal, advisory and settlement costs		—		25
Other (income) expense, net										Other (income) expense, net		(120)		(101)

Other (income) expense, net		(108)		(209)		(293)		(683)
Transaction and conversion costs		(3,401)		332		(1,828)		2,628
Legal, advisory and settlement costs		(96)		2,435		(59)		6,932

Unrealized (gain) loss on derivatives		(9,774)		(6,029)		(19,059)		(3,712)
Dead deal costs		76		—		356		689
Uninsured remediation costs		—		(33)		—		341
Stock/unit-based compensation		1,275		2,490		5,324		7,539
Amortization of term loan exit fee		3,092		1,896		8,669		4,556

Amortization of credit facility exit fee										Amortization of credit facility exit fee		4,156		2,681
Amortization of loan costs	Amortization of loan costs	2,512		2,203		7,314		9,960		Amortization of loan costs		2,771		2,399
Advisory services incentive fee	Advisory services incentive fee	—		(6,472)		—		—		Advisory services incentive fee		—		151

Company’s portion of adjustments to FFO of unconsolidated entities	Company’s portion of adjustments to FFO of unconsolidated entities	1		2		12		14		Company’s portion of adjustments to FFO of unconsolidated entities		1		12
Adjusted FFO available to common stockholders and OP unitholders	Adjusted FFO available to common stockholders and OP unitholders	$	18,966	$	3,189	$	62,000	$	(25,771)	Adjusted FFO available to common stockholders and OP unitholders		$	6,845	$	(1,535)

5043

HOTEL PORTFOLIO

The following table presents certain information related to our hotel properties as of ~~September 30, 2022:~~March 31, 2023:


Hotel Property	Hotel Property	Location	Service Type	Total Rooms	% Owned		Owned Rooms	Hotel Property	Location	Service Type	Total Rooms	% Owned	Owned Rooms
Fee Simple Properties	Fee Simple Properties							Fee Simple Properties
Embassy Suites	Embassy Suites	Austin, TX	Full service	150	100	%	150	Embassy Suites	Austin, TX	Full service	150	100	150
Embassy Suites	Embassy Suites	Dallas, TX	Full service	150	100		150	Embassy Suites	Dallas, TX	Full service	150	100	150
Embassy Suites	Embassy Suites	Herndon, VA	Full service	150	100		150	Embassy Suites	Herndon, VA	Full service	150	100	150
Embassy Suites	Embassy Suites	Las Vegas, NV	Full service	220	100		220	Embassy Suites	Las Vegas, NV	Full service	220	100	220
Embassy Suites	Embassy Suites	Flagstaff, AZ	Full service	119	100		119	Embassy Suites	Flagstaff, AZ	Full service	119	100	119
Embassy Suites	Embassy Suites	Houston, TX	Full service	150	100		150	Embassy Suites	Houston, TX	Full service	150	100	150
Embassy Suites	Embassy Suites	West Palm Beach, FL	Full service	160	100		160	Embassy Suites	West Palm Beach, FL	Full service	160	100	160
Embassy Suites	Embassy Suites	Philadelphia, PA	Full service	263	100		263	Embassy Suites	Philadelphia, PA	Full service	263	100	263
Embassy Suites	Embassy Suites	Walnut Creek, CA	Full service	249	100		249	Embassy Suites	Walnut Creek, CA	Full service	249	100	249
Embassy Suites	Embassy Suites	Arlington, VA	Full service	269	100		269	Embassy Suites	Arlington, VA	Full service	269	100	269
Embassy Suites	Embassy Suites	Portland, OR	Full service	276	100		276	Embassy Suites	Portland, OR	Full service	276	100	276
Embassy Suites	Embassy Suites	Santa Clara, CA	Full service	258	100		258	Embassy Suites	Santa Clara, CA	Full service	258	100	258
Embassy Suites	Embassy Suites	Orlando, FL	Full service	174	100		174	Embassy Suites	Orlando, FL	Full service	174	100	174
Hilton Garden Inn	Hilton Garden Inn	Jacksonville, FL	Select service	119	100		119	Hilton Garden Inn	Jacksonville, FL	Select service	119	100	119
Hilton Garden Inn	Hilton Garden Inn	Austin, TX	Select service	254	100		254	Hilton Garden Inn	Austin, TX	Select service	254	100	254
Hilton Garden Inn	Hilton Garden Inn	Baltimore, MD	Select service	158	100		158	Hilton Garden Inn	Baltimore, MD	Select service	158	100	158
Hilton Garden Inn	Hilton Garden Inn	Virginia Beach, VA	Select service	176	100		176	Hilton Garden Inn	Virginia Beach, VA	Select service	176	100	176
Hilton	Hilton	Houston, TX	Full service	242	100		242	Hilton	Houston, TX	Full service	242	100	242
Hilton	Hilton	St. Petersburg, FL	Full service	333	100		333	Hilton	St. Petersburg, FL	Full service	333	100	333
Hilton	Hilton	Santa Fe, NM	Full service	158	100		158	Hilton	Santa Fe, NM	Full service	158	100	158
Hilton	Hilton	Bloomington, MN	Full service	300	100		300	Hilton	Bloomington, MN	Full service	300	100	300
Hilton	Hilton	Costa Mesa, CA	Full service	486	100		486	Hilton	Costa Mesa, CA	Full service	486	100	486
Hilton	Hilton	Boston, MA	Full service	390	100		390	Hilton	Boston, MA	Full service	390	100	390
Hilton	Hilton	Parsippany, NJ	Full service	353	100		353	Hilton	Parsippany, NJ	Full service	353	100	353
Hilton	Hilton	Tampa, FL	Full service	238	100		238	Hilton	Tampa, FL	Full service	238	100	238
Hilton	Hilton	Alexandria, VA	Full service	252	100		252	Hilton	Alexandria, VA	Full service	252	100	252
Hilton	Hilton	Santa Cruz, CA	Full service	178	100		178	Hilton	Santa Cruz, CA	Full service	178	100	178
Hilton	Hilton	Ft. Worth, TX	Full service	294	100		294	Hilton	Ft. Worth, TX	Full service	294	100	294
Hampton Inn	Hampton Inn	Lawrenceville, GA	Select service	85	100		85	Hampton Inn	Lawrenceville, GA	Select service	85	100	85
Hampton Inn	Hampton Inn	Evansville, IN	Select service	140	100		140	Hampton Inn	Evansville, IN	Select service	140	100	140
Hampton Inn	Hampton Inn	Parsippany, NJ	Select service	152	100		152	Hampton Inn	Parsippany, NJ	Select service	152	100	152
Hampton Inn	Hampton Inn	Buford, GA	Select service	92	100		92	Hampton Inn	Buford, GA	Select service	92	100	92
Marriott	Marriott	Beverly Hills, CA	Full service	260	100		260	Marriott	Beverly Hills, CA	Full service	260	100	260
Marriott	Marriott	Durham, NC	Full service	225	100		225	Marriott	Durham, NC	Full service	225	100	225
Marriott	Marriott	Arlington, VA	Full service	701	100		701	Marriott	Arlington, VA	Full service	701	100	701
Marriott	Marriott	Bridgewater, NJ	Full service	349	100		349	Marriott	Bridgewater, NJ	Full service	349	100	349
Marriott	Marriott	Dallas, TX	Full service	265	100		265	Marriott	Dallas, TX	Full service	265	100	265
Marriott	Marriott	Fremont, CA	Full service	357	100		357	Marriott	Fremont, CA	Full service	357	100	357
Marriott	Marriott	Memphis, TN	Full service	232	100		232	Marriott	Memphis, TN	Full service	232	100	232
Marriott	Marriott	Irving, TX	Full service	499	100		499	Marriott	Irving, TX	Full service	499	100	499
Marriott	Marriott	Omaha, NE	Full service	300	100		300	Marriott	Omaha, NE	Full service	300	100	300
Marriott	Marriott	Sugarland, TX	Full service	300	100		300	Marriott	Sugarland, TX	Full service	300	100	300
SpringHill Suites by Marriott	SpringHill Suites by Marriott	Baltimore, MD	Select service	133	100		133	SpringHill Suites by Marriott	Baltimore, MD	Select service	133	100	133
SpringHill Suites by Marriott	SpringHill Suites by Marriott	Kennesaw, GA	Select service	90	100		90	SpringHill Suites by Marriott	Kennesaw, GA	Select service	90	100	90
SpringHill Suites by Marriott	SpringHill Suites by Marriott	Buford, GA	Select service	97	100		97	SpringHill Suites by Marriott	Buford, GA	Select service	97	100	97
SpringHill Suites by Marriott	SpringHill Suites by Marriott	Manhattan Beach, CA	Select service	164	100		164	SpringHill Suites by Marriott	Manhattan Beach, CA	Select service	164	100	164
SpringHill Suites by Marriott	SpringHill Suites by Marriott	Plymouth Meeting, PA	Select service	199	100		199	SpringHill Suites by Marriott	Plymouth Meeting, PA	Select service	199	100	199
Fairfield Inn by Marriott	Fairfield Inn by Marriott	Kennesaw, GA	Select service	86	100		86	Fairfield Inn by Marriott	Kennesaw, GA	Select service	86	100	86
Courtyard by Marriott	Courtyard by Marriott	Bloomington, IN	Select service	117	100		117	Courtyard by Marriott	Bloomington, IN	Select service	117	100	117
Courtyard by Marriott - Tremont	Courtyard by Marriott - Tremont	Boston, MA	Select service	315	100		315	Courtyard by Marriott - Tremont	Boston, MA	Select service	315	100	315
Courtyard by Marriott	Courtyard by Marriott	Columbus, IN	Select service	90	100		90	Courtyard by Marriott	Columbus, IN	Select service	90	100	90
Courtyard by Marriott	Courtyard by Marriott	Denver, CO	Select service	202	100		202	Courtyard by Marriott	Denver, CO	Select service	202	100	202
Courtyard by Marriott	Courtyard by Marriott	Gaithersburg, MD	Select service	210	100		210	Courtyard by Marriott	Gaithersburg, MD	Select service	210	100	210

5144


Hotel Property	Hotel Property	Location	Service Type	Total Rooms	% Owned	Owned Rooms	Hotel Property	Location	Service Type	Total Rooms	% Owned	Owned Rooms
Courtyard by Marriott	Courtyard by Marriott	Crystal City, VA	Select service	272	100	272	Courtyard by Marriott	Crystal City, VA	Select service	272	100	272
Courtyard by Marriott	Courtyard by Marriott	Overland Park, KS	Select service	168	100	168	Courtyard by Marriott	Overland Park, KS	Select service	168	100	168
Courtyard by Marriott	Courtyard by Marriott	Foothill Ranch, CA	Select service	156	100	156	Courtyard by Marriott	Foothill Ranch, CA	Select service	156	100	156
Courtyard by Marriott	Courtyard by Marriott	Alpharetta, GA	Select service	154	100	154	Courtyard by Marriott	Alpharetta, GA	Select service	154	100	154
Courtyard by Marriott	Courtyard by Marriott	Oakland, CA	Select service	156	100	156	Courtyard by Marriott	Oakland, CA	Select service	156	100	156
Courtyard by Marriott	Courtyard by Marriott	Scottsdale, AZ	Select service	180	100	180	Courtyard by Marriott	Scottsdale, AZ	Select service	180	100	180
Courtyard by Marriott	Courtyard by Marriott	Plano, TX	Select service	153	100	153	Courtyard by Marriott	Plano, TX	Select service	153	100	153
Courtyard by Marriott	Courtyard by Marriott	Newark, CA	Select service	181	100	181	Courtyard by Marriott	Newark, CA	Select service	181	100	181
Courtyard by Marriott	Courtyard by Marriott	Manchester, CT	Select service	90	100	90	Courtyard by Marriott	Manchester, CT	Select service	90	100	90
Courtyard by Marriott	Courtyard by Marriott	Basking Ridge, NJ	Select service	235	100	235	Courtyard by Marriott	Basking Ridge, NJ	Select service	235	100	235
Marriott Residence Inn	Marriott Residence Inn	Evansville, IN	Select service	78	100	78	Marriott Residence Inn	Evansville, IN	Select service	78	100	78
Marriott Residence Inn	Marriott Residence Inn	Orlando, FL	Select service	350	100	350	Marriott Residence Inn	Orlando, FL	Select service	350	100	350
Marriott Residence Inn	Marriott Residence Inn	Falls Church, VA	Select service	159	100	159	Marriott Residence Inn	Falls Church, VA	Select service	159	100	159
Marriott Residence Inn	Marriott Residence Inn	San Diego, CA	Select service	150	100	150	Marriott Residence Inn	San Diego, CA	Select service	150	100	150
Marriott Residence Inn	Marriott Residence Inn	Salt Lake City, UT	Select service	144	100	144	Marriott Residence Inn	Salt Lake City, UT	Select service	144	100	144
Marriott Residence Inn	Marriott Residence Inn	Las Vegas, NV	Select service	256	100	256	Marriott Residence Inn	Las Vegas, NV	Select service	256	100	256
Marriott Residence Inn	Marriott Residence Inn	Phoenix, AZ	Select service	200	100	200	Marriott Residence Inn	Phoenix, AZ	Select service	200	100	200
Marriott Residence Inn	Marriott Residence Inn	Plano, TX	Select service	126	100	126	Marriott Residence Inn	Plano, TX	Select service	126	100	126
Marriott Residence Inn	Marriott Residence Inn	Newark, CA	Select service	168	100	168	Marriott Residence Inn	Newark, CA	Select service	168	100	168
Marriott Residence Inn	Marriott Residence Inn	Manchester, CT	Select service	96	100	96	Marriott Residence Inn	Manchester, CT	Select service	96	100	96
Marriott Residence Inn	Marriott Residence Inn	Jacksonville, FL	Select service	120	100	120	Marriott Residence Inn	Jacksonville, FL	Select service	120	100	120
TownePlace Suites by Marriott	TownePlace Suites by Marriott	Manhattan Beach, CA	Select service	143	100	143	TownePlace Suites by Marriott	Manhattan Beach, CA	Select service	143	100	143
One Ocean	One Ocean	Atlantic Beach, FL	Full service	193	100	193	One Ocean	Atlantic Beach, FL	Full service	193	100	193
Sheraton Hotel	Sheraton Hotel	Langhorne, PA	Full service	186	100	186	Sheraton Hotel	Langhorne, PA	Full service	186	100	186
Sheraton Hotel	Sheraton Hotel	Minneapolis, MN	Full service	220	100	220	Sheraton Hotel	Minneapolis, MN	Full service	220	100	220
Sheraton Hotel	Sheraton Hotel	Indianapolis, IN	Full service	378	100	378	Sheraton Hotel	Indianapolis, IN	Full service	378	100	378
Sheraton Hotel	Sheraton Hotel	Anchorage, AK	Full service	370	100	370	Sheraton Hotel	Anchorage, AK	Full service	370	100	370
Sheraton Hotel	Sheraton Hotel	San Diego, CA	Full service	260	100	260	Sheraton Hotel	San Diego, CA	Full service	260	100	260
Hyatt Regency	Hyatt Regency	Coral Gables, FL	Full service	254	100	254	Hyatt Regency	Coral Gables, FL	Full service	254	100	254
Hyatt Regency	Hyatt Regency	Hauppauge, NY	Full service	358	100	358	Hyatt Regency	Hauppauge, NY	Full service	358	100	358
Hyatt Regency	Hyatt Regency	Savannah, GA	Full service	351	100	351	Hyatt Regency	Savannah, GA	Full service	351	100	351
Renaissance	Renaissance	Nashville, TN	Full service	673	100	673	Renaissance	Nashville, TN	Full service	673	100	673
Annapolis Historic Inn	Annapolis Historic Inn	Annapolis, MD	Full service	124	100	124	Annapolis Historic Inn	Annapolis, MD	Full service	124	100	124
Lakeway Resort & Spa	Lakeway Resort & Spa	Austin, TX	Full service	168	100	168	Lakeway Resort & Spa	Austin, TX	Full service	168	100	168
Silversmith	Silversmith	Chicago, IL	Full service	144	100	144	Silversmith	Chicago, IL	Full service	144	100	144
The Churchill	The Churchill	Washington, D.C.	Full service	173	100	173	The Churchill	Washington, D.C.	Full service	173	100	173
The Melrose	The Melrose	Washington, D.C.	Full service	240	100	240	The Melrose	Washington, D.C.	Full service	240	100	240
Le Pavillon	Le Pavillon	New Orleans, LA	Full service	226	100	226	Le Pavillon	New Orleans, LA	Full service	226	100	226
The Ashton	The Ashton	Ft. Worth, TX	Full service	39	100	39	The Ashton	Ft. Worth, TX	Full service	39	100	39
Westin	Westin	Princeton, NJ	Full service	296	100	296	Westin	Princeton, NJ	Full service	296	100	296
W	W	Atlanta, GA	Full service	237	100	237	W	Atlanta, GA	Full service	237	100	237
Hotel Indigo	Hotel Indigo	Atlanta, GA	Full service	141	100	141	Hotel Indigo	Atlanta, GA	Full service	141	100	141
Ritz-Carlton	Ritz-Carlton	Atlanta, GA	Full service	444	100	444	Ritz-Carlton	Atlanta, GA	Full service	444	100	444
La Posada de Santa Fe	La Posada de Santa Fe	Santa Fe, NM	Full service	157	100	157	La Posada de Santa Fe	Santa Fe, NM	Full service	157	100	157
Ground Lease Properties
Leasehold Properties							Leasehold Properties
Crowne Plaza (1) (2)	Crowne Plaza (1) (2)	Key West, FL	Full service	160	100	160	Crowne Plaza (1) (2)	Key West, FL	Full service	160	100	160
Renaissance (3)	Renaissance (3)	Palm Springs, CA	Full service	410	100	410	Renaissance (3)	Palm Springs, CA	Full service	410	100	410
Hilton (4)							Hilton (4)	Marietta, GA	Full service	200	100	200
Total	Total			22,116		22,116	Total			22,316		22,316

________

(1) The ground lease expires in 2084.

(2) The Company entered into a ~~new~~ franchise agreement with Marriott to convert the Crowne Plaza La Concha Key West Hotel in Key West, Florida to an Autograph Collection property. The agreement with Marriott calls for the ~~Hotel~~hotel to operate under Marriott White Label beginning on November 1, 2023 and to be converted to an Autograph property by ~~July~~April 1, ~~2023.~~2025.

(3) The ground lease expires in 2059 with one 25-year extension option.

(4) The lease expires in 2054 and includes the lease of the land, hotel and conference center (including the building, improvements, furniture, fixtures and equipment).

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Our primary market risk exposure consists of changes in interest rates on borrowings under our debt instruments. The analysis below presents the sensitivity of the market value of our financial instruments to selected changes in market interest rates.

At ~~September 30, 2022,~~March 31, 2023, our total indebtedness of $3.8 billion included $3.5 billion of variable-rate debt. The impact on our results of operations of a 25-basis point change in interest rate on the outstanding balance of variable-rate debt at ~~September 30, 2022,~~March 31, 2023 would be approximately ~~$8.8~~$8.7 million per year. However, we currently have various interest rate caps in place that limit this exposure. Interest rate changes have no impact on the remaining ~~$321.9~~$320.3 million of fixed-rate debt.

The above amounts were determined based on the impact of hypothetical interest rates on our borrowings and assume no changes in our capital structure. As the information presented above includes only those exposures that existed at ~~September 30, 2022,~~March 31, 2023, it does not consider exposures or positions that could arise after that date. Accordingly, the information presented herein has limited predictive value. As a result, the ultimate realized gain or loss with respect to interest rate fluctuations will depend on exposures that arise during the period, the hedging strategies in place at the time, and the related interest rates.

ITEM 4.CONTROLS AND PROCEDURES

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September 30, 2022~~March 31, 2023 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective (i) to ensure that information required to be disclosed in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms; and (ii) to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

There have been no changes in our internal controls over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

Litigation—~~Palm Beach Florida Hotel and Office Building Limited Partnership, et al. v. Nantucket Enterprises, Inc.~~This litigation involves a landlord tenant dispute from 2008. The litigation was resolved in 2017 with the determination and reimbursement of attorneys’ fees being the only remaining dispute. On July 26, 2018, we paid $544,000 as part of a settlement on certain legal fees. The negotiations relating to the potential payment of the remaining attorney’s fees are still ongoing, pending the appeal of a contempt order against the Maraist Law Firm for failing to produce their fee records. As of September 30, 2022, we have accrued approximately $504,000 in legal fees, which represents the Company’s estimate of the amount of potential remaining legal fees that could be owed.

~~approximately $4.2 million. As of September 30, 2022, the Company has paid $100,000 and the accrual is approximately $4.1 million.~~

On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects nine hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: ~~(1)~~(i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks; and ~~(2)~~(ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment. Notices to potential class members were sent out on February 2, 2021. Potential class members had until April 4, 2021 to opt out of the class, however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery. The opt out period has been extended until such time that discovery has concluded. If this litigation goes to trial, we expect that the earliest the trial would occur is the last quarter of 2023, based on various extensions to which the parties have agreed. The opt out period has been extended until such time that discovery has concluded. While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time. As of ~~September 30, 2022,~~March 31, 2023, no amounts have been accrued.

depending upon the development of these legal proceedings, and the final results of these legal proceedings cannot be predicted with certainty. If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.

ITEM 1A.RISK FACTORS

The discussion of our business and operations should be read together with the risk factors contained in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, filed with the Securities and Exchange Commission, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. ~~The~~In addition to the risk factors set forth ~~below update, and should be read together with, the risk factors described~~ in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022, the following risk factor should be carefully considered in evaluating us and our business..

~~Economic conditions~~Our cash, cash equivalents and investments could be adversely affected if the financial institutions in which we hold our cash, cash equivalents and investments fail.

We regularly maintain cash balances at third-party financial institutions in excess of the Federal Deposit Insurance Corporation (the “FDIC”) insurance limit. The FDIC took control and was appointed receiver of Silicon Valley Bank, New York Signature Bank and First Republic Bank on March 10, 2023, March 12, 2023 and May 1, 2023, respectively. The Company does not have any direct exposure to Silicon Valley Bank, New York Signature Bank or First Republic Bank. However, if other banks and financial institutions enter receivership or become insolvent in the ~~United States~~future in response to financial conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and investments may be threatened and could have a material adverse ~~impact~~effect on our ~~earnings~~business and financial condition.

The economic outlook in the United States is uncertain and facing recessionary concerns resulting from slowing gross domestic product growth, continuing effects of the COVID-19 pandemic, rising inflation, increasing interest rates, supply chain disruptions and the conflict between Russia and Ukraine. Because economic conditions in the United States may affect demand within the hospitality industry and our subsidiaries’ businesses, current and future economic conditions in the United States, including slower growth, stock market volatility and recession fears, could have a material adverse impact on our earnings and financial condition. Economic conditions may be affected by numerous factors, including but not limited to, the pace of economic growth and/or recessionary concerns, inflation, increases in the levels of unemployment, energy prices, changes in currency exchange rates, uncertainty about government fiscal and tax policy, geopolitical events, the regulatory environment and the availability of credit and interest rates.

~~Inflation and price volatility could negatively impact our businesses and results of operations.~~

General inflation in the United States has risen to levels not experienced in recent decades, including rising energy prices, prices for consumer goods, interest rates, wages, and currency volatility, causing interest rates and borrowing costs to rise. These increases and any fiscal, monetary or other policy interventions by the U.S. government or Federal Reserve in reaction to such events could negatively impact our businesses by increasing our operating costs and our borrowing costs and may negatively impact our ability to access the debt markets on favorable terms.

~~Table of Contents~~

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

The following table provides the information with respect to purchases and forfeitures of shares of our common stock during each of the months in the ~~third~~first quarter of ~~2022:~~2023:


Period	Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plan (1)	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan		Period	Total Number of Shares Purchased		Average Price Paid Per Share			Total Number of Shares Purchased as Part of Publicly Announced Plan (1)	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan (1)
Common stock:	Common stock:									Common stock:
July 1 to July 31		20,874	(2)	$	7.81	(3)	—	$	200,000,000
August 1 to August 31		452	(2)	—			—	200,000,000
September 1 to September 30		31		9.79		(3)	—	200,000,000
January 1 to January 31										January 1 to January 31	2	(2)	$	—		—	$	200,000,000
February 1 to February 28										February 1 to February 28	61		6.10		(3)	—	200,000,000
March 1 to March 31										March 1 to March 31	17,058	(2)	3.32		(3)	—	200,000,000
Total	Total	21,357		$	7.81		—			Total	17,121		$	3.33		—

____________________

(1)On April 6, 2022 the board of directors approved a stock repurchase program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock and preferred stock having an aggregate value of up to $200 million. The board of directors’ authorization replaced the previous repurchase authorization that the board of ~~directors’~~directors authorized in December 2017.

(2)There is no cost associated with the forfeiture of 2 and ~~452~~184 restricted shares of our common stock in ~~July~~January and ~~August,~~March, respectively.

(3)Includes ~~20,872~~61 and 3116,874 shares in ~~July~~February and ~~September~~March that were withheld to cover tax-withholding requirements related to the vesting of restricted shares of our common stock issued to employees of our advisor pursuant to the Company’s stockholder-approved stock incentive plan.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

None.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

Table of Contents


Exhibit						Description
3.1						Articles of Amendment and Restatement, as amended by Amendment Number One to Articles of Amendment and Restatement (incorporated by reference to Exhibit 4.6 to Registration Statement on Form S-3 filed May 15, 2015)

3.2						Amendment Number Two to Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on May 22, 2017) (File No. 00131775)

3.3						Articles of Amendment to the Company’s charter (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on July 1, 2020) (File No. 001-31775)

3.4						Articles of Amendment to the Articles of Amendment and Restatement of the Company (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on July 16, 2021) (File No. 001-31775)
3.5						Articles Supplementary, dated April 28, 2022 (incorporated by reference to Exhibit 4.10 to the Registrant’s Registration Statement on Form S-3, filed on April 29, 2022) (File No. 333-263323)
3.6						Articles Supplementary establishing the Series J Preferred Stock, dated September 14, 2022 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on September 14, 2022) (File No. 333-263323)

3.7						Articles Supplementary establishing the Series K Preferred Stock, dated September 14, 2022 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, filed on September 14, 2022) (File No. 333-263323)

3.8						Second Amended and Restated Bylaws, as amended by Amendment No. 1 on October 26, 2014, by Amendment No. 2 on October 19, 2015, by Amendment No. 3 on August 2, 2016, ~~and~~ by Amendment No. 4 on March 17, 2022 and by Amendment No. 5 on February 23, 2023, adopted on ~~March 17, 2022.~~February 23, 2023 (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K, filed on ~~March 18, 2022)~~February 23, 2023) (File No. 001-31775)







~~10.1~~						~~Amendment No. 11 to the Seventh Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Limited Partnership, dated as of September 14, 2022(incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed on September 14, 2022) (File No. 001-31775)~~



10.1						Limited Waiver Under Advisory Agreement, dated as of March 2, 2023, by and among Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed on March 3, 2023) (File No. 001-31775)

10.2						Limited Waiver to Credit Agreement, dated as of March 2, 2023, by and among Ashford Hospitality Limited Partnership, Ashford Hospitality Trust, Inc., the guarantors party thereto, the Lenders party thereto and Oaktree Fund Administration, LLC, as administrative agent (incorporated by reference to Exhibit 10.2 to the Registrant’s Form 8-K, filed on March 3, 2023) (File No. 001-31775)

31.1*						Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

~~Table of Contents~~


~~Exhibit~~						~~Description~~

31.2*						Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1**						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2022~~March 31, 2023 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income (Loss); (iv) Consolidated Statements of Equity (Deficit); (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements. In accordance with Rule 402 of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document	Submitted electronically with this report.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	Submitted electronically with this report.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	Submitted electronically with this report.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	Submitted electronically with this report.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Submitted electronically with this report.
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

___________________________________

* Filed herewith.

** Furnished herewith.

5648

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ASHFORD HOSPITALITY TRUST, INC.

Date:

~~November 7, 2022~~May 8, 2023

By:

/s/ J. ROBISON HAYS, III

J. Robison Hays, III

President and Chief Executive Officer

Date:

~~November 7, 2022~~May 8, 2023

By:

/s/ DERIC S. EUBANKS

Deric S. Eubanks

Chief Financial Officer

5749


	Nine Months Ended September 30, 2022
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	9	$	49,046	$	11,639	$	3,787	$	—	$	64,472
Boston, MA Area	2	37,500		3,993		3,872		—		45,365
Dallas / Ft. Worth, TX Area	7	40,145		9,410		2,742		—		52,297
Houston, TX Area	3	17,741		5,232		635		—		23,608
Los Angeles, CA Metro Area	6	58,016		9,734		3,624		—		71,374
Miami, FL Metro Area	2	18,821		5,803		674		—		25,298
Minneapolis - St. Paul, MN	2	9,303		2,705		337		—		12,345
Nashville, TN Area	1	40,041		18,006		3,077		—		61,124
New York / New Jersey Metro Area	6	39,634		12,041		2,066		—		53,741
Orlando, FL Area	2	16,557		1,102		1,181		—		18,840
Philadelphia, PA Area	3	16,394		1,638		669		—		18,701
San Diego, CA Area	2	15,384		573		1,001		—		16,958
San Francisco - Oakland, CA Metro Area	7	46,923		3,992		2,302		—		53,217
Tampa, FL Area	2	19,600		4,500		891		—		24,991
Washington D.C. - MD - VA Area	9	80,263		14,533		5,972		—		100,768
Other Areas	36	218,243		33,848		15,971		—		268,062
Orlando WorldQuest	—	3,463		146		911		—		4,520
Disposed properties	1	4,400		814		330		—		5,544
Corporate	—	—		—		—		2,164		2,164
Total	100	$	731,474	$	139,709	$	50,042	$	2,164	$	923,389


	Nine Months Ended September 30, 2021
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	9	$	32,795	$	5,685	$	3,124	$	—	$	41,604
Boston, MA Area	2	16,589		1,206		2,573		—		20,368
Dallas / Ft. Worth, TX Area	7	25,084		3,207		1,916		—		30,207
Houston, TX Area	3	13,906		1,931		348		—		16,185
Los Angeles, CA Metro Area	6	37,326		4,994		3,536		—		45,856
Miami, FL Metro Area	2	13,252		2,433		531		—		16,216
Minneapolis - St. Paul, MN	2	5,361		1,256		779		—		7,396
Nashville, TN Area	1	20,806		7,010		2,204		—		30,020
New York / New Jersey Metro Area	6	21,857		5,273		1,426		—		28,556
Orlando, FL Area	2	11,383		453		1,112		—		12,948
Philadelphia, PA Area	3	11,946		688		475		—		13,109
San Diego, CA Area	2	8,918		307		938		—		10,163
San Francisco - Oakland, CA Metro Area	7	29,586		1,395		1,910		—		32,891
Tampa, FL Area	2	14,806		1,522		623		—		16,951
Washington D.C. - MD - VA Area	9	35,477		3,413		3,299		—		42,189
Other Areas	36	153,599		16,322		12,747		—		182,668
Orlando WorldQuest	—	2,681		128		628		—		3,437
Disposed properties	4	3,892		264		189		—		4,345
Corporate	—	—		—		—		1,567		1,567
Total	103	$	459,264	$	57,487	$	38,358	$	1,567	$	556,676


	Three Months Ended September 30, 2021	Nine Months Ended September 30, 2021
		Preferred Shares Tendered	Common Shares Initially Issued	Common Shares Issued (1)	Preferred Shares Tendered	Common Shares Initially Issued	Common Shares Issued (1)
8.45% Series D Cumulative Preferred Stock		45	82	81	520	3,992	471
7.375% Series F Cumulative Preferred Stock		92	162	162	1,512	10,943	1,240
7.375% Series G Cumulative Preferred Stock		189	335	335	2,702	21,009	2,402
7.50% Series H Cumulative Preferred Stock		105	436	177	1,316	9,945	1,129
7.50% Series I Cumulative Preferred Stock		120	328	186	2,119	14,698	1,623
		551	1,343	941	8,169	60,587	6,865