Keeping investors happy isn’t easy. But Monty Bennett, CEO of Ashford, a publicly traded hospitality and real estate asset management firm, has come to learn what they want. “Investors love specificity,” Bennett says. “They love a focused place.”
To get to that sweet spot, Ashford has leapt over hurdles as the manager of two publicly traded real estate investment trusts (REITs)—Ashford Hospitality Trust and Ashford Hospitality Prime—which combined have more than 140 hotels and approximately $6 billion in assets. Bennett is chairman and CEO of both entities.
Just look back at June 2015, when Ashford Trust axed its plan to launch a new select-service platform. In response to investor feedback, the company redefined its investment strategy to focus predominately on upper upscale, full-service hotels in top 25 markets. That meant putting a portfolio of 24 select-service hotels up for sale, with intentions of shedding its remaining select-service assets opportunistically over time, Bennett says. Ashford Trust’s portfolio encompasses 132 hotels, 70 of which are select-service.
In August, Ashford Prime, which invests in luxury hotels, said it was exploring strategic alternatives—including a sale of the company—less than two years after it was spun off from Ashford Trust. These moves are part of a relentless effort to increase shareholder value.
“We are trying to communicate more with investors,” Bennett explains. “We have outlines of what our strategy is for the different platforms—the how and why—and when we don’t get the performance we think we should, then we do something like we’ve done over at Ashford Prime.”
In addition to pursuing new strategies, Bennett says appeasing investors requires drilling down the details. “It’s having more frequent shareholder meetings and being more specific in other areas of our strategy, such as communicating what our debt levels are and how much cash we plan to hold,” he says. “And, if we still don’t get the value, to explore strategic alternatives, even including a sale.”
To build value proposition for both Ashford Trust and Prime, Ashford announced plans in September to acquire Remington Holdings, a hotel property and project management company. Bringing asset management and property management together under one roof is extremely valuable, Bennett says.
Ninety-five percent of Remington’s business is dedicated to Ashford Trust and Ashford Prime, so the move made a lot of sense for Ashford, he explains. Not only will it add value, the business combination also eliminates a private entity owned by Bennett and his father that did business with Ashford Trust. “Investors like more transparency, so the fact that these are public companies, not private, makes it a very transparent operation for them,” Bennett says.
According to Bennett, the future looks bright for both platforms. During the third quarter of 2015, Ashford Trust saw a 5 percent increase in revenue per available room (RevPAR) for all of its hotels. Ashford Prime’s RevPAR growth was a little soft at 2.7 percent, but Bennett sees it as an aberration because the third quarter in 2014 was really strong.
Once Ashford Trust sells its first group of select-service assets, the company will evaluate whether it wants to redeploy them into full-service assets or buy back its own stock instead, Bennett says. Because stock prices are currently low, Ashford Trust is being cautious and pulling in the reins a bit on acquisitions. “At least right now, it’s unlikely we’ll jump out there and do more acquisitions of any size, unless the stock market prices start to pick up again. In that case, we’ll go out there and maybe reload.”