UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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

For the quarterly period ended ~~September 30, 2017~~March 31, 2021



¨☐			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 1100~~
~~Dallas, Texas~~Suite 1200						~~75254~~
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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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

þ☑

Non-accelerated filer

¨☐

~~(Do not check if a smaller reporting company)~~

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) ifof 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						~~97,416,095~~145,330,202
(Class)						Outstanding at ~~November 3, 2017~~May 6, 2021

ASHFORD HOSPITALITY TRUST, ~~INC~~INC.

FORM 10-Q

FOR THE QUARTER ENDED ~~SEPTEMBER 30, 2017~~

March 31, 2021

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~2020			2
Consolidated Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~ March 31, 2021 and ~~2016~~2020			3
Consolidated Statements of Comprehensive Income (Loss) for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			4
Consolidated ~~Statement~~Statements of Equity (Deficit) for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and 2020			5
Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020			6
Notes to Consolidated Financial Statements			8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			3137
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			4958
ITEM 4. CONTROLS AND PROCEDURES			4958
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			5058
ITEM 1A. RISK FACTORS			5060
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			5161
ITEM 3. DEFAULTS UPON SENIOR SECURITIES			5161
ITEM 4. MINE SAFETY DISCLOSURES			5161
ITEM 5. OTHER INFORMATION			5161
ITEM 6. EXHIBITS			5261
SIGNATURES			5363

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. ~~FINANCIAL STATEMENTS~~Financial Statements (unaudited)

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

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

September 30, 2017 December 31, 2016
Assets
Investments in hotel properties, net $ 4,064,555
$ 4,160,563
Cash and cash equivalents 393,527
347,091
Restricted cash 133,127
144,014
Marketable securities 11,960
53,185
Accounts receivable, net of allowance of $609 and $690, respectively 61,677
44,629
Inventories 4,384
4,530
Investment in unconsolidated entities 5,240
58,779
Deferred costs, net 2,845
2,846
Prepaid expenses 24,198
17,578
Derivative assets, net 1,721
3,614
Other assets 14,225
11,718
Intangible assets, net 9,972
10,061
Due from third-party hotel managers 19,230
13,348
Assets held for sale —
19,588
Total assets $ 4,746,661
$ 4,891,544
Liabilities and Equity
Liabilities:
Indebtedness, net $ 3,698,869
$ 3,723,559
Accounts payable and accrued expenses 153,772
126,986
Dividends and distributions payable 25,520
24,765
Unfavorable management contract liabilities 345
1,380
Due to Ashford Inc., net 13,689
15,716
Due to Ashford Prime OP, net —
488
Due to related party, net 326
1,001
Due to third-party hotel managers 2,627
2,714
Intangible liabilities, net 15,928
16,195
Derivative liabilities, net 146
—
Other liabilities 18,203
16,548
Liabilities related to assets held for sale —
37,047
Total liabilities 3,929,425
3,966,399
Commitments and contingencies (note 13)

Redeemable noncontrolling interests in operating partnership 117,434
132,768
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized:
Series A Cumulative Preferred Stock, 0 and 1,657,206 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively —
17
Series D Cumulative Preferred Stock, 7,904,353 and 9,468,706 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 79
95
Series F Cumulative Preferred Stock, 4,800,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 48
48
Series G Cumulative Preferred Stock, 6,200,000 shares issued and outstanding at September 30, 2017 and December 31, 2016 62
62
Series H Cumulative Preferred Stock, 3,800,000 and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 38
—
Common stock, $0.01 par value, 400,000,000 shares authorized, 97,416,095 and 96,376,827 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively 974
964
Additional paid-in capital 1,783,912
1,764,450
Accumulated deficit (1,086,071 ) (974,015 )
Total stockholders’ equity of the Company 699,042
791,621
Noncontrolling interests in consolidated entities 760
756
Total equity 699,802
792,377
Total liabilities and equity $ 4,746,661
$ 4,891,544


	March 31, 2021		December 31, 2020
ASSETS


Investments in hotel properties, net	$	3,364,584	$	3,426,982
Cash and cash equivalents	225,357		92,905
Restricted cash	67,734		74,408

Accounts receivable, net of allowance of $271 and $441, respectively	33,320		21,760
Inventories	2,340		2,447
Notes receivable, net	8,408		8,263
Investment in unconsolidated entity	2,674		2,811
Deferred costs, net	6,805		1,851
Prepaid expenses	17,884		18,401
Derivative assets	195		263
Operating lease right-of-use assets	44,808		45,008
Other assets	20,394		23,303
Intangible assets	797		797


Due from Ashford Inc., net	1,506		0
Due from related parties, net	8,177		5,801
Due from third-party hotel managers	11,847		9,383

Total assets	$	3,816,830	$	3,734,383
LIABILITIES AND EQUITY/DEFICIT
Liabilities:
Indebtedness, net	$	3,941,493	$	3,728,911
Accounts payable and accrued expenses	95,647		99,954
Accrued interest payable	43,630		98,685
Dividends and distributions payable	236		868

Due to Ashford Inc., net	0		13,383


Due to third-party hotel managers	436		184
Intangible liabilities, net	2,237		2,257
Operating lease liabilities	45,184		45,309

Other liabilities	5,210		5,336

Total liabilities	4,134,073		3,994,887
Commitments and contingencies (note 16)	0		0
Redeemable noncontrolling interests in operating partnership	24,683		22,951
Equity (deficit):
Preferred stock, $0.01 par value, 50,000,000 shares authorized:

Series D Cumulative Preferred Stock, 1,678,772 and 1,791,461 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	17		18
Series F Cumulative Preferred Stock, 2,037,824 and 2,891,440 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	20		29
Series G Cumulative Preferred Stock, 3,172,279 and 4,422,623 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	32		44
Series H Cumulative Preferred Stock, 2,002,137 and 2,668,637 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	20		27
Series I Cumulative Preferred Stock, 1,999,575 and 3,391,349 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	20		34
Common stock, $0.01 par value, 400,000,000 shares authorized, 110,140,224 and 64,362,505 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	1,101		644
Additional paid-in capital	1,845,180		1,808,875
Accumulated deficit	(2,188,401)		(2,093,292)
Total stockholders’ equity (deficit) of the Company	(342,011)		(283,621)
Noncontrolling interest in consolidated entities	85		166
Total equity (deficit)	(341,926)		(283,455)
Total liabilities and equity/deficit	$	3,816,830	$	3,734,383

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 March 31,
	Three Months Ended September 30,						Nine Months Ended September 30,							2021		2020
	2017			2016			2017			2016
Revenue
REVENUE													REVENUE
Rooms	$	289,017		$	300,875		$	876,927		$	917,396		Rooms	$	97,114	$	215,807
Food and beverage	48,313			56,206			175,005			188,467			Food and beverage	7,903		47,950
Other hotel revenue	15,006			14,389			43,720			43,213			Other hotel revenue	10,428		17,348
Total hotel revenue	352,336			371,470			1,095,652			1,149,076			Total hotel revenue	115,445		281,105
Other	989			461			2,052			1,297			Other	385		772
Total revenue	353,325			371,931			1,097,704			1,150,373			Total revenue	115,830		281,877
Expenses
EXPENSES													EXPENSES
Hotel operating expenses:													Hotel operating expenses:
Rooms	63,950			65,474			188,857			195,769			Rooms	23,724		52,466
Food and beverage	37,173			41,086			121,619			129,606			Food and beverage	6,527		34,901
Other expenses	112,421			114,377			337,978			347,126			Other expenses	55,769		103,794
Management fees	13,027			13,616			40,100			42,191			Management fees	5,527		10,549
Total hotel expenses	226,571			234,553			688,554			714,692			Total hotel expenses	91,547		201,710
Property taxes, insurance, and other	18,194			17,172			55,293			55,077
Property taxes, insurance and other													Property taxes, insurance and other	17,471		20,472
Depreciation and amortization	60,135			60,170			185,380			182,411			Depreciation and amortization	57,627		66,350

Impairment charges	1,785			4,922			1,785			4,695			Impairment charges	0		27,613
Transaction costs	—			124			11			201

Advisory services fee	14,612			11,948			39,482			34,927			Advisory services fee	12,161		15,299
Corporate general and administrative	2,412			1,968			10,836			6,426
Corporate, general and administrative													Corporate, general and administrative	6,997		3,492
Total expenses	323,709			330,857			981,341			998,429			Total expenses	185,803		334,936
Operating income (loss)	29,616			41,074			116,363			151,944
Gain (loss) on disposition of assets and hotel properties													Gain (loss) on disposition of assets and hotel properties	(69)		3,623
OPERATING INCOME (LOSS)													OPERATING INCOME (LOSS)	(70,042)		(49,436)
Equity in earnings (loss) of unconsolidated entities	(679		)	(560		)	(3,580		)	(4,432		)	Equity in earnings (loss) of unconsolidated entities	(137)		(79)
Interest income	706			92			1,460			229			Interest income	13		611
Gain (loss) on sale of hotel properties	15			1,448			14,024			24,428
Other income (expense)	(273		)	(926		)	(3,539		)	(4,263		)	Other income (expense)	229		1,522
Interest expense and amortization of premiums and loan costs	(56,963		)	(55,762		)	(167,224		)	(168,167		)
Interest expense and amortization of discounts and loan costs													Interest expense and amortization of discounts and loan costs	(33,264)		(57,085)
Write-off of premiums, loan costs and exit fees	—			(972		)	(1,629		)	(4,913		)	Write-off of premiums, loan costs and exit fees	(3,379)		(95)

Unrealized gain (loss) on marketable securities	(936		)	—			(4,813		)	—			Unrealized gain (loss) on marketable securities	0		(1,477)
Unrealized gain (loss) on derivatives	(1,479		)	(9,548		)	(1,804		)	4,248			Unrealized gain (loss) on derivatives	919		4,422
Income (loss) before income taxes	(29,993		)	(25,154		)	(50,742		)	(926		)
INCOME (LOSS) BEFORE INCOME TAXES													INCOME (LOSS) BEFORE INCOME TAXES	(105,661)		(101,617)
Income tax (expense) benefit	1,267			16			507			(1,216		)	Income tax (expense) benefit	271		(303)
Net income (loss)	(28,726		)	(25,138		)	(50,235		)	(2,142		)
(Income) loss from consolidated entities attributable to noncontrolling interest	(22		)	(16		)	(4		)	16

NET INCOME (LOSS)													NET INCOME (LOSS)	(105,390)		(101,920)
(Income) loss attributable to noncontrolling interest in consolidated entities													(Income) loss attributable to noncontrolling interest in consolidated entities	81		48
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	6,940			5,009			13,202			2,745			Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671
Net income (loss) attributable to the Company	(21,808		)	(20,145		)	(37,037		)	619
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY													NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY	(103,038)		(84,201)
Preferred dividends	(11,440		)	(8,875		)	(33,352		)	(25,856		)	Preferred dividends	818		(10,644)
Extinguishment of issuance costs upon redemption of preferred stock	(4,507		)	(6,124		)	(4,507		)	(6,124		)
Net income (loss) attributable to common stockholders	$	(37,755	)	$	(35,144	)	$	(74,896	)	$	(31,361	)
Gain (loss) on extinguishment of preferred stock													Gain (loss) on extinguishment of preferred stock	10,635		0
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS													NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(91,585)	$	(94,845)

Income (loss) per share - basic and diluted:
INCOME (LOSS) PER SHARE - BASIC AND DILUTED													INCOME (LOSS) PER SHARE - BASIC AND DILUTED
Basic:													Basic:

Net income (loss) attributable to common stockholders	$	(0.40	)	$	(0.37	)	$	(0.80	)	$	(0.34	)	Net income (loss) attributable to common stockholders	$	(1.10)	$	(9.40)
Weighted average common shares outstanding – basic	95,332			94,531			95,169			94,384			Weighted average common shares outstanding – basic	83,046		10,047
Diluted:													Diluted:

Net income (loss) attributable to common stockholders	$	(0.40	)	$	(0.37	)	$	(0.80	)	$	(0.34	)	Net income (loss) attributable to common stockholders	$	(1.10)	$	(9.40)
Weighted average common shares outstanding – diluted	95,332			94,531			95,169			94,384			Weighted average common shares outstanding – diluted	83,046		10,047

Dividends declared per common share	$	0.12		$	0.12		$	0.36		$	0.36

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,
	2017			2016			2017			2016				2021		2020
Net income (loss)	$	(28,726	)	$	(25,138	)	$	(50,235	)	$	(2,142	)	Net income (loss)	$	(105,390)	$	(101,920)
Other comprehensive income (loss), net of tax:													Other comprehensive income (loss), net of tax:

Total other comprehensive income (loss)	—			—			—			—			Total other comprehensive income (loss)	0		0
Comprehensive income (loss)	(28,726		)	(25,138		)	(50,235		)	(2,142		)	Comprehensive income (loss)	(105,390)		(101,920)
Less: Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities	(22		)	(16		)	(4		)	16			Less: Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities	81		48
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	6,940			5,009			13,202			2,745			Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671
Comprehensive income (loss) attributable to the Company	$	(21,808	)	$	(20,145	)	$	(37,037	)	$	619		Comprehensive income (loss) attributable to the Company	$	(103,038)	$	(84,201)

See Notes to Consolidated Financial Statements.

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF EQUITY (DEFICIT)

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


		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	64,363	$	644	$	1,808,875	$	(2,093,292)	$	166	$	(283,455)	$	22,951

Purchases of common stock		—	—		—	—		—	—		—	—		—	—		(15)	—		(46)		—		—		(46)		—
Equity-based compensation		—	—		—	—		—	—		—	—		—	—		—	—		1,279		—		—		1,279		665
Forfeitures of restricted shares		—	—		—	—		—	—		—	—		—	—		(2)	—		—		—		—		—		—
Issuance of restricted shares/units		—	—		—	—		—	—		—	—		—	—		131	1		(1)		—		—		0		0

Issuance of common stock		—	—		—	—		—	—		—	—		—	—		16,227	162		45,959		—		—		46,121		—



PSU dividend claw back upon cancellation		—	—		—	—		—	—		—	—		—	—		—	—		—		178		—		178		—







Performance LTIP dividend claw back upon cancellation		—	—		—	—		—	—		—	—		—	—		—	—		—		—		—		—		454
Redemption value adjustment		—	—		—	—		—	—		—	—		—	—		—	—		—		(2,884)		—		(2,884)		2,884
Extinguishment of preferred stock		(112)	(1)		(853)	(9)		(1,251)	(12)		(667)	(7)		(1,391)	(14)		29,436	294		(10,886)		10,635		—		0		—
Net income (loss)		—	—		—	—		—	—		—	—		—	—		—	—		—		(103,038)		(81)		(103,119)		(2,271)
Balance at March 31, 2021		1,679	$	17	2,038	$	20	3,172	$	32	2,002	$	20	2,000	$	20	110,140	$	1,101	$	1,845,180	$	(2,188,401)	$	85	$	(341,926)	$	24,683


		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, 2019		2,389	$	24	4,800	$	48	6,200	$	62	3,800	$	38	5,400	$	54	10,210	$	102	$	1,826,472	$	(1,558,038)	$	504	$	269,266	$	69,870

Purchases of common stock		—	—		—	—		—	—		—	—		—	—		(25)	—		(358)		—		—		(358)		—
Equity-based compensation		—	—		—	—		—	—		—	—		—	—		—	—		3,272		—		—		3,272		1,634
Forfeitures of restricted shares		—	—		—	—		—	—		—	—		—	—		(3)	—		—		—		—		—		—
Issuance of restricted shares/units		—	—		—	—		—	—		—	—		—	—		134	1		(1)		—		—		0		—



PSU dividend claw back upon cancellation		—	—		—	—		—	—		—	—		—	—		—	—		—		378		—		378		—


Dividends declared – preferred stock - Series D ($0.53/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(1,262)		—		(1,262)		—
Dividends declared – preferred stock - Series F ($0.46/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(2,212)		—		(2,212)		—
Dividends declared – preferred stock - Series G ($0.46/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(2,858)		—		(2,858)		—
Dividends declared – preferred stock - Series H ($0.47/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(1,781)		—		(1,781)		—
Dividends declared – preferred stock - Series I ($0.47/share)		—	—		—	—		—	—		—	—		—	—		—	—		—		(2,531)		—		(2,531)		—
Performance LTIP dividend claw back upon cancellation		—	—		—	—		—	—		—	—		—	—		—	—		—		—		—		—		1,401
Conversion of operating partnership units		—	—		—	—		—	—		—	—		—	—		196	2		957		—		—		959		(959)
Redemption value adjustment		—	—		—	—		—	—		—	—		—	—		—	—		—		19,046		—		19,046		(19,046)
Net income (loss)		—	—		—	—		—	—		—	—		—	—		—	—		—		(84,201)		(48)		(84,249)		(17,671)
Balance at March 31, 2020		2,389	$	24	4,800	$	48	6,200	$	62	3,800	$	38	5,400	$	54	10,512	$	105	$	1,830,342	$	(1,633,459)	$	456	$	197,670	$	35,229

Preferred Stock
Additional
Paid In
Capital

Accumulated
Deficit

Noncontrolling
Interests In
Consolidated
Entities
Total
Redeemable Noncontrolling
Interests in
Operating
Partnership
Series A Series D Series F Series G Series H Common Stock
Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
Balance at January 1, 2017 1,657
$ 17
9,469
$ 95
4,800
$ 48
6,200
$ 62
$ —
$ —
96,377
$ 964
$ 1,764,450
$ (974,015 ) $ 756
$ 792,377
$ 132,768
Purchases of common stock —
—
—
—
—
—
—
—
—
—
(203 ) (2 ) (1,271 ) —
—
(1,273 ) —
Equity-based compensation —
—
—
—
—
—
—
—
—
—
—
—
5,002
—
—
5,002
3,749
Forfeitures of restricted shares —
—
—
—
—
—
—
—
—
—
(49 ) —
—
—
—
—
—
Issuance of restricted shares/units —
—
—
—
—
—
—
—
—
—
1,271
12
(12 ) —
—
—
94
Redemption of preferred shares (1,657 ) (17 ) (1,565 ) (16 ) —
—
—
—
—
—
—
—
(76,014 ) (4,507 ) —
(80,554 ) —
Issuances of preferred shares —
—
—
—
—
—
—
—
3,800
38
—
—
91,596
—
—
91,634
—
Dividends declared - common shares —
—
—
—
—
—
—
—
—
—
—
—
—
(35,319 ) —
(35,319 ) —
Dividends declared - preferred shares- Series A —
—
—
—
—
—
—
—
—
—
—
—
—
(2,539 ) —
(2,539 ) —
Dividends declared - preferred shares- Series D —
—
—
—
—
—
—
—
—
—
—
—
—
(14,891 ) —
(14,891 ) —
Dividends declared – preferred shares- Series F —
—
—
—
—
—
—
—
—
—
—
—
—
(6,637 ) —
(6,637 ) —
Dividends declared – preferred shares- Series G —
—
—
—
—
—
—
—
—
—
—
—
—
(8,573 ) —
(8,573 ) —
Dividends declared – preferred shares- Series H —
—
—
—
—
—
—
—
—
—
—
—
—
(712 ) —
(712 ) —
Distributions to noncontrolling interests —
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(7,655 )
Redemption/conversion of operating partnership units —
—
—
—
—
—
—
—
—
—
20
—
161
—
—
161
(161 )
Redemption value adjustment —
—
—
—
—
—
—
—
—
—
—
—
—
(1,841 ) —
(1,841 ) 1,841
Net income (loss) —
—
—
—
—
—
—
—
—
—
—
—
—
(37,037 ) 4
(37,033 ) (13,202 )
Balance at September 30, 2017 —
$ —
7,904
$ 79
4,800
$ 48
6,200
$ 62
3,800
$ 38
97,416
$ 974
$ 1,783,912
$ (1,086,071 ) $ 760
$ 699,802
$ 117,434

See Notes to Consolidated Financial ~~Statements.~~Statements

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Three Months Ended March 31,
	2021		2020
Cash Flows from Operating Activities
Net income (loss)	$	(105,390)	$	(101,920)
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
Depreciation and amortization	57,627		66,350
Impairment charges	0		27,613
Amortization of intangibles	33		(69)
Recognition of deferred income	(125)		(237)

Bad debt expense	279		682
Deferred income tax expense (benefit)	(5)		(321)
Equity in (earnings) loss of unconsolidated entities	137		79
(Gain) loss on disposition of assets and hotel properties	69		(3,623)

Realized and unrealized (gain) loss on marketable securities	0		(627)

Purchases of marketable securities	0		(452)
Sales of marketable securities	0		15,233

Net settlement of trading derivatives	0		4,630

Realized and unrealized (gain) loss on derivatives	(919)		(4,197)
Amortization of loan costs, discounts and capitalized default interest and write-off of premiums, loan costs and exit fees	(6,068)		6,603
Equity-based compensation	1,944		4,906
Amortization of parking asset	0		117
Non-cash interest income	(223)		(208)
Paid-in kind interest expense	6,663		0
Changes in operating assets and liabilities, exclusive of the effect of acquisitions and dispositions of hotel properties:
Accounts receivable and inventories	(11,593)		9,738
Prepaid expenses and other assets	1,880		(11,344)
Operating lease right-of-use assets	126		265
Operating lease liabilities	(125)		(162)
Accounts payable and accrued expenses and accrued interest payable	(20,354)		1,440
Due to/from related parties	(2,376)		(1,380)
Due to/from third-party hotel managers	(2,212)		(1,303)

Due to/from Ashford Inc., net	(11,293)		(632)

Other liabilities	(1)		692
Net cash provided by (used in) operating activities	(91,926)		11,873
Cash Flows from Investing Activities
Investment in unconsolidated entity	0		(51)



Improvements and additions to hotel properties	(9,072)		(20,365)
Net proceeds from disposition of assets and hotel properties	7,291		4,654



Proceeds from property insurance	670		147
Net cash provided by (used in) investing activities	(1,111)		(15,615)
Cash Flows from Financing Activities
Borrowings on indebtedness, net of commitment fee	195,500		37,000
Repayments of indebtedness	(4,330)		(45,287)
Payments for loan costs and exit fees	(17,530)		(1,176)
Payments for dividends and distributions	0		(17,974)


Payments for derivatives	(292)		(63)
Proceeds from common stock offerings	45,467		0




Net cash provided by (used in) financing activities	218,815		(27,500)
Net increase (decrease) in cash, cash equivalents and restricted cash	125,778		(31,242)
Cash, cash equivalents and restricted cash at beginning of period	167,313		398,207
Cash, cash equivalents and restricted cash and at end of period	$	293,091	$	366,965

Table of Contents

Nine Months Ended September 30,
2017 2016
Cash Flows from Operating Activities
Net income (loss) $ (50,235 ) $ (2,142 )
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
Depreciation and amortization 185,380
182,411
Impairment charges 1,785
4,695
Amortization of intangibles (178 ) (157 )
Recognition of deferred income (593 ) —
Write-off of intangibles —
564
Bad debt expense 1,441
863
Deferred income tax expense (benefit) (1,683 ) —
Equity in (earnings) loss of unconsolidated entities 3,580
4,432
(Gain) loss on sale of hotel properties, net (14,024 ) (24,428 )
Realized and unrealized (gain) loss on marketable securities 3,991
—
Purchases of marketable securities (38,889 ) —
Sales of marketable securities 76,123
—
Net settlement of trading derivatives (3,840 ) (3,259 )
Payments for derivatives —
(230 )
Realized and unrealized (gain) loss on derivatives 6,512
(823 )
Amortization of loan costs and premiums, write-off of premiums, loan costs and exit fees 10,783
21,340
Equity-based compensation 8,751
5,511
Changes in operating assets and liabilities, exclusive of effect of dispositions of hotel properties:
Accounts receivable and inventories (14,169 ) (19,190 )
Prepaid expenses and other assets (6,311 ) (13,849 )
Accounts payable and accrued expenses 18,573
26,751
Due to/from related party (734 ) (940 )
Due to/from third-party hotel managers (5,969 ) 7,405
Due to/from Ashford Prime OP, net (488 ) 535
Due to/from Ashford Inc., net (2,027 ) 384
Other assets (541 ) —
Other liabilities 1,213
1,150
Net cash provided by (used in) operating activities 178,451
191,023
Cash Flows from Investing Activities
Investment in unconsolidated entity (983 ) (2,000 )
Proceeds from payments on note receivable —
184
Acquisition of hotel properties and assets, net of cash acquired (110 ) (2,106 )
Improvements and additions to hotel properties (164,075 ) (137,897 )
Net proceeds from sales of assets/properties 105,267
168,831
Liquidation of AQUA U.S. Fund 50,942
—
Payments for initial franchise fees (225 ) (30 )
Proceeds from property insurance 2,369
268
Net cash provided by (used in) investing activities (6,815 ) 27,250
Cash Flows from Financing Activities
Borrowings on indebtedness 180,800
37,500
Repayments of indebtedness (246,139 ) (141,528 )
Payments for loan costs and exit fees (5,813 ) (5,119 )
Payments for dividends and distributions (75,571 ) (69,328 )
Purchases of common stock (1,273 ) (732 )
Redemption of preferred stock (80,554 ) (115,750 )
Payments for derivatives (633 ) (104 )
Proceeds from preferred stock offering 91,634
115,769
Other 94
66
Net cash provided by (used in) financing activities (137,455 ) (179,226 )
Net increase (decrease) in cash, cash equivalents and restricted cash 34,181
39,047
Cash, cash equivalents and restricted cash at beginning of period 492,473
368,758
Cash, cash equivalents and restricted cash and at end of period $ 526,654

$ 407,805


	Nine Months Ended September 30,					Three Months Ended March 31,
	2017		2016			2021		2020
Supplemental Cash Flow Information					Supplemental Cash Flow Information
Interest paid	$	158,443	$	152,378	Interest paid	$	58,872	$	51,272
Income taxes paid	1,610		1,611
Supplemental Disclosure of Non-Cash Investing and Financing Activity
Income taxes paid (refunded)					Income taxes paid (refunded)	(38)		(87)
Supplemental Disclosure of Non-Cash Investing and Financing Activities					Supplemental Disclosure of Non-Cash Investing and Financing Activities
Accrued but unpaid capital expenditures	$	18,300	$	9,941	Accrued but unpaid capital expenditures	$	6,344	$	18,714

Accrued stock offering costs					Accrued stock offering costs	155		0

Common stock purchases accrued but not paid					Common stock purchases accrued but not paid	46		358

Non-cash loan principal associated with default interest and late charges					Non-cash loan principal associated with default interest and late charges	32,627		0

Non-cash extinguishment of preferred stock					Non-cash extinguishment of preferred stock	103,188		0
Issuance of common stock from preferred stock exchanges					Issuance of common stock from preferred stock exchanges	92,553		0
Debt discount associated with embedded debt derivative					Debt discount associated with embedded debt derivative	43,681		0

Unsettled common stock offering proceeds					Unsettled common stock offering proceeds	809		0
Dividends and distributions declared but not paid	25,520		22,547		Dividends and distributions declared but not paid	236		11,740
Accrued but unpaid financing costs					Accrued but unpaid financing costs	0		4,994

Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash					Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents at beginning of period	$	347,091	$	215,078	Cash and cash equivalents at beginning of period	$	92,905	$	262,636
Cash and cash equivalents at beginning of period included in assets held for sale	976		—

Restricted cash at beginning of period	144,014		153,680		Restricted cash at beginning of period	74,408		135,571
Restricted cash at beginning of period included in assets held for sale	392		—

Cash, cash equivalents and restricted cash at beginning of period	$	492,473	$	368,758	Cash, cash equivalents and restricted cash at beginning of period	$	167,313	$	398,207

Cash and cash equivalents at end of period	$	393,527	$	256,421	Cash and cash equivalents at end of period	$	225,357	$	240,316
Cash and cash equivalents at end of period included in assets held for sale	—		348

Restricted cash at end of period	133,127		149,865		Restricted cash at end of period	67,734		126,649
Restricted cash at end of period included in assets held for sale	—		1,171

Cash, cash equivalents and restricted cash at end of period	$	526,654	$	407,805	Cash, cash equivalents and restricted cash at end of period	$	293,091	$	366,965

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 ~~upscale and upper upscale segments in domestic and international markets~~U.S. 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. ~~Other than Ashford Hospitality Trust, Inc.’s investment~~Future investments will predominantly be in ~~Ashford Inc. common stock, we~~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. In this report, terms such as the “Company,” “we,” “us,” or “our” refer to Ashford Hospitality Trust, Inc. and all entities included in its consolidated financial statements.

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

Hilton, Hyatt, Marriott and Intercontinental Hotel Group. As of ~~September 30, 2017~~,March 31, 2021, we owned interests in the following assets:

~~120~~•102 consolidated hotel properties, including ~~118~~100 directly owned and ~~two~~2 owned through a majority-owned investment in a consolidated entity, which represent ~~25,055~~22,569 total rooms (or ~~25,028~~22,542 net rooms excluding those attributable to our ~~partners)~~partner);

87•90 hotel condominium units at WorldQuest Resort in Orlando, Florida (“WorldQuest”); and

~~a 29.6% ownership in Ashford Inc. common stock with a carrying value of $2.6 million and a fair value of $36.2 million; and~~

~~a 16.2%~~•17.1% ownership in OpenKey with a carrying value of $2.7 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, 2017~~,March 31, 2021, our ~~120~~102 hotel properties were leased or owned by our ~~wholly owned~~wholly-owned or majority-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.

~~As of~~ ~~September 30, 2017, Remington Lodging &~~We are advised by Ashford Hospitality Advisors LLC ~~together with its affiliates~~ (“~~Remington Lodging”~~Ashford LLC”), ~~which is beneficially wholly owned~~a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by ~~Mr. Monty J. Bennett, our Chairman, and Mr. Archie Bennett, Jr., our Chairman Emeritus, managed~~ 82Ashford 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 ~~120~~hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. Remington Hotels, a subsidiary of Ashford Inc., manages 68 of our 102 hotel properties and ~~WorldQuest Resort.~~WorldQuest. Third-party management companies ~~managed~~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 project management services, debt placement and related services, audio visual services, real estate advisory services, insurance claims services, hypoallergenic premium rooms, investment management services, broker-dealer and distribution services and mobile key technology.

In June 2020, our board of directors approved a reverse stock split of our issued and outstanding common stock at a ratio of 1-for-10. This reverse stock split converted every ten issued and outstanding shares of common stock into one share of common stock. The reverse stock split was effective as of the close of business on July 15, 2020. As a result of the reverse stock split, the number of outstanding shares of common stock was reduced from approximately 104.8 million shares to approximately 10.5 million shares on that date. Additionally, the number of outstanding common units, Long-Term Incentive Plan (“LTIP”) units and Performance LTIP units was reduced from approximately 20.5 million units to approximately 2.1 million units on that date. All common stock, common units, LTIP units, Performance LTIP units, performance stock units and restricted stock units as well as per share data related to these classes of equity have been revised in the accompanying consolidated financial statements to reflect this reverse stock split for all periods presented.

COVID-19, Management’s Plans and Liquidity

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

experienced a significant decline in occupancy and RevPAR and we expect the significant occupancy and RevPAR declines associated with COVID-19 to continue as we are experiencing significant reservation cancellations as well as a significant reduction in new reservations. The prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry and our portfolio have experienced the postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, in March 2020, the Company temporarily suspended operations at 23 of its 116 hotels and dramatically reduced staffing and expenses at its hotels that remained operational. As of March 31, 2021, operations at 1 of the Company’s hotels remained temporarily suspended. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. The full financial impact of the reduction in hotel demand caused by the pandemic cannot be reasonably estimated at this time due to uncertainty as to its severity and duration. In addition, one or more possible recurrences of COVID-19 cases could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash flow throughout 2021 and for the foreseeable future. As a result, the Company suspended the quarterly cash dividend on its common stock beginning in the first quarter of fiscal year 2020, suspended the quarterly cash dividend on its preferred stock beginning in the second quarter of fiscal year 2020, reduced planned capital expenditures, and worked closely with its hotel managers to significantly reduce its hotels’ operating expenses.

Beginning on April 1, 2020, the Company did not make principal or interest payments under nearly all of our loans, which constituted an “Event of Default” as such term is defined under the applicable loan documents. Pursuant to the terms of the applicable loan documents, such an Event of Default caused an automatic increase in the interest rate on our outstanding loan balance for the period such Event of Default remains outstanding. Following an Event of Default, our lenders can generally elect to accelerate all principal and accrued interest payments that remain outstanding under the applicable loan agreement and foreclose on the applicable hotel properties that are security for such loans.

The Company continues to have discussions with its lenders about potential loan modifications on its property level debt. At this time, forbearance agreements have been executed on most, but not all of our loans. In the aggregate, as of March 31, 2021 the Company has entered into forbearance and other agreements with varying terms and conditions that conditionally waive or defer payment defaults for loans with a total outstanding principal balance of approximately $3.6 billion out of approximately $3.7 billion in property level debt outstanding as of March 31, 2021. See note 7.

On January 15, 2021, the Company entered into a senior secured term loan facility with Oaktree Capital Management L.P. comprising of (a) initial term loans in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million and (c) additional delayed draw term loans in an aggregate principal amount of up to $100 million. See note 7.

When preparing financial statements for each annual and interim reporting period management has the responsibility to evaluate whether there are conditions or events, considered in the aggregate, that create substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. In applying the accounting guidance, the Company considers its current financial condition and liquidity sources, including current funds available, forecasted future cash flows and its unconditional obligations due over the next 12 months.

As of March 31, 2021, the Company held cash and cash equivalents of $225.4 million and restricted cash of $67.7 million. We are currently experiencing significant variability in the operating cash flows of our hotel properties. We cannot predict when hotel operating levels will return to normalized levels after the effects of the pandemic subside, whether our hotels will be forced to shut down operations or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future. As a result of these factors arising from the impact of the pandemic, we are unable to estimate future financial performance with certainty. However, based on our completed senior secured term loan facility with Oaktree Capital Management L.P. and forbearance and other agreements with our property-level lenders, our current unrestricted and restricted cash on hand, our current cash utilization and forecast of future operating results for the next 12 months from the date of this report, and the actions we have taken to improve our liquidity, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Facts and circumstances could change in the future that are outside of management’s control, such as additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19.

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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 ~~entities~~joint ventures in which it has a controlling interest. All significant ~~intercompany~~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. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our ~~2016~~2020 Annual Report to Stockholders on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March ~~16, 2017.~~15, 2021.

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 ~~(ii) an implicit financial responsibility to ensure that a VIE operates as designed,~~ and ~~(iii)~~(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

~~Table of Contents~~

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

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

~~(unaudited)~~

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 Trust 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, 2017~~,March 31, 2021, are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017~~.2021.

The following acquisitions and dispositions affect reporting comparability of our consolidated financial statements:

Hotel Property

Location

Type

Date

~~Hotel Property~~

~~Location~~

~~Type~~

~~Date~~

~~5-hotel portfolio~~ ⁽¹⁾

~~Various~~

~~Disposition~~

~~June 1, 2016~~

Crowne Plaza Annapolis

Annapolis, MD

Disposition

March 9, 2020

Columbus Hampton Inn ~~& Suites~~Easton

~~Gainesville, FL~~Columbus, OH

Disposition

~~September 1, 2016~~August 19, 2020

~~SpringHill Suites Gaithersburg~~Stillwater Residence Inn

~~Gaithersburg, MD~~Stillwater, OK

Disposition

~~October 1, 2016~~August 19, 2020

~~2-hotel portfolio~~ ⁽²⁾

Washington Hampton Inn Pittsburgh Meadow Lands

~~Palm Desert, CA~~Pittsburgh, PA

Disposition

~~October 7, 2016~~August 19, 2020

~~Renaissance~~Phoenix Hampton Inn Airport North

~~Portsmouth, VA~~Phoenix, AZ

Disposition

~~February 1, 2017~~August 19, 2020

~~Embassy Suites~~Pittsburgh Hampton Inn Waterfront West Homestead

~~Syracuse, NY~~Pittsburgh, PA

Disposition

~~March 6, 2017~~August 19, 2020

~~Crowne Plaza Ravinia~~Wichita Courtyard by Marriott Old Town

~~Atlanta, GA~~Wichita, KS

Disposition

~~June 29, 2017~~August 19, 2020

Canonsburg Homewood Suites Pittsburgh Southpointe

Pittsburgh, PA

Disposition

August 19, 2020

Billerica Courtyard by Marriott Boston

Boston, MA

Disposition

August 19, 2020

Embassy Suites New York Manhattan Times Square

New York, NY

Disposition

August 19, 2020

W Minneapolis

Minneapolis, MN

Disposition

September 15, 2020

Courtyard Louisville

Louisville, KY

Disposition

September 21, 2020

Courtyard Ft. Lauderdale

Ft. Lauderdale, FL

Disposition

September 21, 2020

Residence Inn Lake Buena Vista

Lake Buena Vista, FL

Disposition

September 21, 2020

Le Meridien Minneapolis

Minneapolis, MN

Disposition

January 20, 2021

⁽¹⁾The 5-hotel portfolio is comprised of the Courtyard Edison in Edison, New Jersey; the Residence Inn Buckhead in Atlanta, Georgia; the Courtyard Lake Buena Vista, the Fairfield Inn Lake Buena Vista and the SpringHill Suites Lake Buena Vista in Orlando, Florida.

⁽²⁾~~The 2-hotel portfolio is comprised of the Courtyard and Residence Inn in Palm Desert, California.~~

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.

~~Restricted Cash~~—Restricted cash includes reserves for debt service, real estate taxes, and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures, and equipment replacements of approximately 4% to 6% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions. We early adopted Accounting Standards Update (“ASU”) 2016-18, ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ ~~effective January 1, 2017. See discussion in recently adopted accounting standards below.~~

~~Impairment of Investments in Hotel Properties~~—Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. We recorded an impairment charge of $1.8 million to investments in hotel properties for the three and nine months ended September 30, 2017 related to hurricanes in Florida and Texas. We recorded an impairment charge of $5.0 million to investments in hotel properties for the three and nine months ended September 31, 2016. See note 4.

~~Hotel Dispositions~~—Discontinued operations are defined as the disposal of components of an entity that represents strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. We believe that individual dispositions of hotel properties do not represent a strategic shift that has (or will have) a major effect on our operations and financial results as most will not fit the definition.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~Assets Held for Sale~~Recently Adopted Accounting Standards—~~We classify assets as held for sale when we have obtained a firm commitment from a buyer,~~In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments-Equity Method and ~~consummation~~Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (“ASU 2020-01”), which clarifies the interaction between the accounting for equity securities, equity method investments, and certain derivative instruments. The ASU, among other things, clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. ASU 2020-01 is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years and should be applied prospectively. We adopted the standard effective January 1, 2021 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 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 reference rate reform activities occur. The Company continues to evaluate the impact of the guidance and may apply the elections as applicable as changes in the market occur.

In August 2020, the FASB issued 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. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. 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 are currently evaluating the impact that ASU 2020-06 may have on our consolidated financial statements and related disclosures.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

3. Revenue

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


	Three Months Ended March 31, 2021
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	9	$	7,800	$	1,213	$	868	$	0	$	9,881
Boston, MA Area	2	1,639		56		664		0		2,359
Dallas / Ft. Worth Area	7	6,156		603		561		0		7,320
Houston, TX Area	3	3,195		137		110		0		3,442
Los Angeles, CA Metro Area	6	8,571		681		797		0		10,049
Miami, FL Metro Area	2	3,465		321		140		0		3,926
Minneapolis - St. Paul, MN - WI Area	2	778		145		49		0		972
Nashville, TN Area	1	2,065		695		723		0		3,483
New York / New Jersey Metro Area	6	2,557		323		408		0		3,288
Orlando, FL Area	2	2,665		119		331		0		3,115
Philadelphia, PA Area	3	2,126		65		110		0		2,301
San Diego, CA Area	2	1,794		51		207		0		2,052
San Francisco - Oakland, CA Metro Area	7	6,550		181		790		0		7,521
Tampa, FL Area	2	4,832		336		169		0		5,337
Washington D.C. - MD - VA Area	9	8,776		143		894		0		9,813
Other Areas	39	33,509		2,812		3,435		0		39,756
Orlando WorldQuest	0	629		22		171		0		822
Disposed properties	1	7		0		1		0		8
Corporate	0	0		0		0		385		385
Total	103	$	97,114	$	7,903	$	10,428	$	385	$	115,830


	Three Months Ended March 31, 2020
Primary Geographical Market	Number of Hotels	Rooms		Food and Beverage		Other Hotel		Other		Total
Atlanta, GA Area	9	$	14,058	$	4,059	$	1,153	$	0	$	19,270
Boston, MA Area	2	5,783		830		1,218		0		7,831
Dallas / Ft. Worth Area	7	13,128		3,921		959		0		18,008
Houston, TX Area	3	5,106		2,291		188		0		7,585
Los Angeles, CA Metro Area	6	16,212		3,357		1,085		0		20,654
Miami, FL Metro Area	2	6,333		2,295		159		0		8,787
Minneapolis - St. Paul, MN - WI Area	2	2,401		867		94		0		3,362
Nashville, TN Area	1	9,538		5,100		888		0		15,526
New York / New Jersey Metro Area	6	11,505		3,335		696		0		15,536
Orlando, FL Area	2	5,132		424		563		0		6,119
Philadelphia, PA Area	3	3,687		688		161		0		4,536
San Diego, CA Area	2	3,344		247		238		0		3,829
San Francisco - Oakland, CA Metro Area	7	16,092		2,068		648		0		18,808
Tampa, FL Area	2	6,609		2,141		351		0		9,101
Washington D.C. - MD - VA Area	9	20,446		4,388		1,977		0		26,811
Other Areas	39	59,205		10,876		5,403		0		75,484
Orlando WorldQuest	0	1,031		25		347		0		1,403
Disposed properties	15	16,197		1,038		1,220		0		18,455
Corporate	0	0		0		0		772		772
Total	117	$	215,807	$	47,950	$	17,348	$	772	$	281,877

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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):


	March 31, 2021		December 31, 2020
Land	$	629,263	$	630,690
Buildings and improvements	3,741,570		3,751,588
Furniture, fixtures and equipment	368,913		388,428
Construction in progress	9,772		16,192
Condominium properties	11,615		11,707
Total cost	4,761,133		4,798,605
Accumulated depreciation	(1,396,549)		(1,371,623)
Investments in hotel properties, net	$	3,364,584	$	3,426,982

5. Hotel Disposition and Impairment Charges

Hotel Dispositions

On January 20, 2021, the Company sold the Le Meridien in Minneapolis, Minnesota for approximately $7.9 million in cash. The sale ~~is considered probable and expected within one year. The related operations~~resulted in a loss of approximately $124,000 for the three months ended March 31, 2021, which was included in “gain (loss) on disposition of assets ~~held~~and hotel properties” in the consolidated statement of operations.

The results of operations for ~~sale~~disposed hotel properties are ~~reported~~included in net income (loss) through the date of disposition. See note 2 for a list of fiscal year 2020 hotel property dispositions. The following table includes condensed financial information from hotel property dispositions that occurred in 2020 and 2021 for the three months ended March 31, 2021 and 2020 (in thousands):


	Three Months Ended March 31,
	2021		2020
Total hotel revenue	$	8	$	18,455
Total hotel operating expenses	(165)		(14,028)
Gain (loss) on disposition of assets and hotel properties	(124)		3,623
Property taxes, insurance and other	(44)		(2,542)
Depreciation and amortization	(32)		(5,159)
Impairment charges	0		(27,613)
Operating income (loss)	(357)		(27,264)
Interest income	0		4
Interest expense and amortization of discounts and loan costs	0		(5,900)




Income (loss) before income taxes	(357)		(33,160)

(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	9		5,279
Net income (loss) before income taxes attributable to the Company	$	(348)	$	(27,881)

Impairment Charges

For the three months ended March 31, 2021, 0 impairment charges were recorded.

For the three months ended March 31, 2020, we recorded an impairment charge of $27.6 million. The impairment charge was comprised of $13.9 million at the Columbus Hampton Inn Easton, $10.0 million at the Canonsburg Homewood Suites Pittsburgh Southpointe and $3.7 million at the Phoenix Hampton Inn Airport North as ~~discontinued if~~a result of reduced estimated cash flows resulting from the ~~disposal~~COVID-19 pandemic and changes to the expected holding periods of these hotel properties. Each impairment charge was based on methodologies which include the development of the discounted cash flow method of the income approach with support based on the market approach, which are considered Level 3 valuation techniques.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

6. Investment in Unconsolidated Entity

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 ~~an entity that represents a strategic shift that has (or will have) a major effect on~~“investment in unconsolidated entity” in our ~~operations~~consolidated balance sheets and ~~cash flows. Depreciation and amortization will cease as of the date assets have met the criteria to be deemed held for sale. See note 4.~~

~~Investments in Unconsolidated Entities—Investments in entities in which we have ownership interests ranging from 16.2% to 29.6%, at September 30, 2017, are~~is accounted for under the equity method of accounting ~~by recording~~as we have been deemed to have significant influence over the ~~initial investment and our percentage~~entity under the applicable accounting guidance. As of ~~interest~~March 31, 2021, the Company has made investments in ~~the entities’ net income/loss.~~ OpenKey totaling $5.0 million.

We review ~~the investments~~our investment in ~~our unconsolidated entities~~OpenKey for impairment in 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 ~~our~~the investment. Any impairment is recorded in equity in earnings (loss) inof unconsolidated entities. NoNaN such impairment was recorded for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~.2020.

Our investments in certain unconsolidated entities are considered to be variable interests in the underlying entities. VIEs, as defined by authoritative accounting guidance, 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, (ii) an implicit financial responsibility to ensure that a VIE operates as designed,

The following table summarizes our carrying value and (iii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct the unconsolidated entities’ activities and operations, we are not considered to be the primary beneficiary of these entities on an ongoing basis and therefore such entities should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.

~~Revenue Recognition~~—Hotel revenues, including room, food, beverage, and ancillary revenues such as long-distance telephone service, laundry, parking and space rentals, are recognized when services have been rendered. Taxes collected from customers and submitted to taxing authorities are not recorded in revenue. Interest income is recognized when earned. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received when contractually due.

~~Equity-Based Compensation~~—Stock/unit-based compensation for non-employees is accounted for at fair value based on the market price of the shares at period end in accordance with applicable authoritative accounting guidance that results in recording expense, included in “advisory services fee” and “management fees” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Performance stock units (“PSUs”) and performance-based Long-Term Incentive Plan (“Performance LTIP”) units granted to certain executive officers are accounted for at fair value at period end based on a Monte Carlo simulation valuation model that results in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to independent directors are recorded at fair value based on the market price of the shares at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.

~~Recently Adopted Accounting Standards—In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-07,~~ ~~Simplifying the Transition to the Equity Method of Accounting~~ (“ASU 2016-07”), which simplifies the equity method of accounting by eliminating the requirement to retrospectively apply the equity method to an investment that subsequently qualifies for such accounting as a result of an increase in the level of ownership interest or degree of influence. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption is permitted. We adopted this standard effective January 1, 2017, and the adoption of this standard did not have any impact onin OpenKey:


	March 31, 2021			December 31, 2020
Carrying value of the investment in OpenKey (in thousands)	$	2,674		$	2,811
Ownership interest in OpenKey	17.1		%	17.5		%

The following table summarizes our ~~financial position, results of operations or cash flows.~~equity in earnings (loss) in OpenKey (in thousands):

~~In November 2016, the FASB issued ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash~~ (“ASU 2016-18”), which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We adopted this standard effective January 1, 2017 on a retrospective basis. The adoption of this standard resulted in the inclusion of restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows for all periods presented. As a result net cash provided by operating activities increased $13.1 million and net cash used in investing activities decreased $15.7 million in the nine months ended September 30, 2017. Our beginning-of-period cash, cash equivalents and restricted cash increased $144.4 million and $153.7 million in 2017 and 2016, respectively.


	Three Months Ended March 31,
Line Item	2021		2020
Equity in earnings (loss) of unconsolidated entities	$	(137)	$	(79)

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~Recently Issued Accounting Standards—In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~(“ASU 2014-09”)~~7. ASU 2014-09 is a comprehensive new revenue recognition model, which requires a company to recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The update will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU 2015-14, ~~Revenue From Contracts With Customers (Topic 606): Deferral of the Effective Date~~, which defers the effective date to fiscal periods beginning after December 15, 2017. The standard permits the use of either the full retrospective or cumulative effect (modified retrospective) transition method. We are continuing to evaluate each of our revenue streams under the new standard and because of the short-term, day-to-day nature of hotel revenues, our pattern of revenue recognition is not expected to change significantly. Additionally, we have historically disposed of hotel properties for cash sales with no contingencies and no future involvement in the hotel operations, therefore, ASU No. 2014-09 will not impact the recognition of hotel sales. We presently expect to select the modified retrospective method. We do not expect adoption of this standard will have a material impact on our consolidated financial statements. We continue to evaluate the related disclosure requirements.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities~~ ~~(“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through~~Indebtedness, net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. ASU 2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. It also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. We do not expect that ASU 2016-01 will have a material impact on our consolidated financial statements and related disclosures.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The accounting for leases under which we are the lessor remains largely unchanged. While we are currently in the initial stages of assessing the impact that ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial statements upon adoption will be the recognition, on a discounted basis, of our future minimum rentals due under noncancelable leases on our consolidated balance sheets resulting in the recording of ROU assets and lease obligations.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ ("ASU 2016-13"). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. We are currently evaluating the impact that ASU 2016-13 will have on the consolidated financial statements and related disclosures.

~~In August 2016, the FASB issued ASU 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - a consensus of the Emerging Issues Task Force~~ (“ASU 2016-15”). The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressed in this guidance include - debt payments or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact that ASU 2016-15 will have on our consolidated financial statements and related disclosures.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations (Topic 805) - Clarifying the Definition of a Business~~ (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is

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

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

~~(unaudited)~~

effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. While we are currently evaluating the potential impact of the standard, we currently expect that certain future hotel acquisitions may be considered asset acquisitions rather than business combinations, which would affect capitalization of acquisitions costs (such costs are expensed for business combinations and capitalized for asset acquisitions).

~~In February 2017, the FASB issued ASU 2017-05,~~ Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets~~(ASU “2017-05”), which clarifies the scope of~~ ~~Accounting Standard Codification (“ASC”) Subtopic 610-20,Other Income-Gains and Losses from the Derecognition of Nonfinancial Assetsand adds guidance for partial sales of nonfinancial assets.~~ ~~ASU 2017-05 is effective for fiscal years beginning after December 15, 2017.~~Early adoption is permitted. An entity may elect to apply ASU 2017-05 under a retrospective or modified retrospective approach. We are evaluating the impact that ASU 2017-05 will have on our consolidated financial statements and related disclosures.

~~3. Investments in Hotel Properties, net~~

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

September 30, 2017 December 31, 2016
Land $ 657,144
$ 663,013
Buildings and improvements 3,902,162
3,913,377
Furniture, fixtures, and equipment 442,468
434,091
Construction in progress 36,468
32,525
Condominium properties 11,896
11,558
Total cost 5,050,138
5,054,564
Accumulated depreciation (985,583 ) (894,001 )
Investments in hotel properties, net $ 4,064,555
$ 4,160,563

~~4. Hotel Dispositions, Impairment Charges and Insurance Recoveries and Assets Held For Sale~~

~~On June 1, 2016,~~ the Company sold the Noble Five Hotels, a 5-hotel portfolio of select-service hotel properties for approximately $142.0 million in cash. The sale resulted in a gain of $22.8 million for the year ended December 31, 2016. The portfolio is comprised of the Courtyard Edison in Edison, New Jersey, the Residence Inn Buckhead in Atlanta, Georgia, the Courtyard Lake Buena Vista, the Fairfield Inn Lake Buena Vista and the SpringHill Suites Lake Buena Vista in Orlando, Florida.

~~On September 1, 2016, the Company sold the Hampton Inn Gainesville for approximately $26.5 million in cash. The sale resulted in a gain of $1.6 million for the year ended December 31, 2016.~~

On October 1, 2016, the Company sold the SpringHill Suites in Gaithersburg, Maryland for approximately $13.2 million. The consideration received from the sale was a combination of cash and approximately 2.0 million Class B common units of the Company’s operating partnership. The Class B operating partnership units were redeemed at a price of $5.74 per unit, or a price of $6.05 per common share after taking into account the current conversion factor. The Company also repaid approximately $10.4 million of debt associated with the hotel property. The sale resulted in a loss of $223,000 for the year ended December 31, 2016.

On October 7, 2016, the Company sold the Courtyard and Residence Inn in Palm Desert, California for $36.0 million. The consideration received from the sale was a combination of cash and assumption of approximately $23.8 million of mortgage debt associated with the hotel properties. The sale resulted in a gain of $7.5 million for the year ended December 31, 2016.

~~On February 1, 2017,~~ the Company sold the Renaissance hotel in Portsmouth, Virginia (“Renaissance Portsmouth”) for approximately $9.2 million in cash. The sale resulted in a loss of $43,000 for the nine months ended September 30, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $20.2 million of debt associated with the hotel property. See note 6.

On March 6, 2017, the Company sold the Embassy Suites in Syracuse, New York (“Embassy Suites Syracuse”) for approximately $8.8 million in cash. The sale resulted in a loss of $40,000 for the nine months ended September 30, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $20.6 million of debt associated with the hotel property. See note 6.

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

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

~~(unaudited)~~

On June 29, 2017, the Company sold the Crowne Plaza Ravinia in Atlanta, Georgia for approximately $88.7 million in cash. The sale resulted in a gain of $14.1 million for the nine months ended September 30, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $78.7 million of debt associated with the hotel property. See note 6.

We included the results of operations for these hotel properties through the date of disposition in net income (loss). The following table includes condensed financial information from these hotel properties in the consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total hotel revenue $ 5
$ 14,293
$ 12,447
$ 67,704
Total hotel operating expenses (305 ) (9,649 ) (9,849 ) (44,581 )
Operating income (loss) (300 ) 4,644
2,598
23,123
Property taxes, insurance and other (4 ) (742 ) (617 ) (3,273 )
Depreciation and amortization —
(2,077 ) (2,588 ) (10,159 )
Impairment charge —
(5,039 ) —
(5,039 )
Gain (loss) on sale of hotel properties 15
1,448
14,024
24,428
Interest expense and amortization of loan costs —
(2,069 ) (2,361 ) (8,905 )
Write-off of loan costs and exit fees —
(972 ) (98 ) (4,913 )
Net income (loss) (289 ) (4,807 ) 10,958
15,262
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 45
673
(1,724 ) (2,138 )
Net income (loss) attributable to the Company $ (244 ) $ (4,134 ) $ 9,234
$ 13,124

~~Impairment Charges and Insurance Recoveries~~

In August and September 2017, twenty-four of our hotel properties in Texas and Florida were impacted by the effects of Hurricanes Harvey and Irma. The Company holds insurance policies that provide coverage for property damage and business interruption after meeting certain deductibles at all of its hotel properties. During the three and nine months ended September 30, 2017, the Company recognized impairment charges, net of anticipated insurance recoveries of $1.8 million. Additionally, the Company recognized remediation and other costs, net of anticipated insurance recoveries of $3.7 million, included primarily in other hotel operating expenses. As of September 30, 2017, the company has recorded an insurance receivable of $1.4 million, net of deductibles of $5.5 million, included in “accounts receivable, net” on our consolidated balance sheet, related to the anticipated insurance recoveries. The Company will not record an insurance recovery receivable for business interruption losses associated with lost profits until the amount for such recoveries is known and the amount is realizable.

~~Assets Held For Sale~~

At December 31, 2016, the Renaissance Portsmouth and the Embassy Suites Syracuse were classified as held for sale in the consolidated balance sheet based on methodologies discussed in note 2. Since the sale of the properties did not represent a strategic shift that had (or will have had) a major effect on our operations or financial results, their results of operation were not reported as discontinued operations in the consolidated financial statements. Depreciation and amortization were ceased as of the date the assets were deemed held for sale. On February 1, 2017, we completed the sale of the Renaissance Portsmouth for approximately $9.2 million. On March 6, 2017, we completed the sale of the Embassy Suites Syracuse for approximately $8.8 million.

~~Table of Contents~~

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

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

~~(unaudited)~~

~~The major classes of assets and liabilities related to the assets held for sale included in the consolidated balance sheet at December 31, 2016 were as follows:~~

December 31, 2016
Assets
Investments in hotel properties, net $ 17,232
Cash and cash equivalents 976
Restricted cash 392
Accounts receivable 305
Inventories 96
Deferred costs, net 4
Prepaid expenses 309
Other assets 274
Assets held for sale $ 19,588

Liabilities
Indebtedness, net $ 35,679
Accounts payable and accrued expenses 1,323
Due to related party, net 45
Liabilities related to assets held for sale $ 37,047

~~5. Investment in Unconsolidated Entities~~

~~Ashford Inc.~~

We held approximately 598,000 shares of Ashford Inc. common stock, which represented an approximate 29.6% ownership interest in Ashford Inc. as of September 30, 2017, with a carrying value of $2.6 million and a fair value of $36.2 million.

~~The following tables summarize the condensed consolidated balance sheets as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~ ~~and the condensed consolidated statements of operations of Ashford Inc. and our equity in earnings (loss) for the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~(in thousands):~~

~~Ashford Inc.~~

~~Condensed Consolidated Balance Sheets~~

~~(unaudited)~~

September 30, 2017 December 31, 2016
Total assets $ 84,012
$ 129,797
Total liabilities $ 49,754
$ 38,168
Redeemable noncontrolling interests 1,936
1,480
Total stockholders’ equity of Ashford Inc. 31,862
37,377
Noncontrolling interests in consolidated entities 460
52,772
Total equity 32,322
90,149
Total liabilities and equity $ 84,012
$ 129,797
Our ownership interest in Ashford Inc. $ 2,582
$ 5,873

~~Table of Contents~~

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

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

~~(unaudited)~~

~~Ashford Inc.~~

~~Condensed Consolidated Statements of Operations~~

~~(unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Total revenue $ 19,255
$ 16,538
$ 51,907
$ 48,099
Total operating expenses (21,595 ) (16,673 ) (54,965 ) (50,938 )
Operating income (loss) (2,340 ) (135 ) (3,058 ) (2,839 )
Realized and unrealized gain (loss) on investment in unconsolidated entity, net —
—
—
(1,460 )
Realized and unrealized gain (loss) on investments, net —
(441 ) (91 ) (5,889 )
Interest expense and loan amortization costs (20 ) —
(35 ) —
Other income (expense) 77
59
220
(21 )
Income tax (expense) benefit 25
(575 ) (9,248 ) (560 )
Net income (loss) (2,258 ) (1,092 ) (12,212 ) (10,769 )
(Income) loss from consolidated entities attributable to noncontrolling interests 102
486
267
6,852
Net (income) loss attributable to redeemable noncontrolling interests 300
321
995
794
Net income (loss) attributable to Ashford Inc. $ (1,856 ) $ (285 ) $ (10,950 ) $ (3,123 )
Our equity in earnings (loss) of Ashford Inc. $ (569 ) $ (85 ) $ (3,291 ) $ (959 )

~~AQUA U.S. Fund~~

The AQUA U.S. Fund was managed by Ashford Investment Management, LLC (“AIM”), an indirect subsidiary of Ashford Inc. As of June 30, 2017 and December 31, 2016, and for the three and six months ended June 30, 2017 and for the three and nine months ended September 30, 2016, the AQUA U.S. Fund was consolidated by Ashford Inc. The AQUA U.S. Fund invested substantially all of its assets in the Ashford Quantitative Alternatives Master Fund, LP (the “Master Fund”), previously named the AIM Real Estate Hedged Equity Master Fund, LP, and as a consequence of our investment in the AQUA U.S. Fund, we obtained an indirect interest in the Master Fund. Our maximum exposure of loss was limited to our investment in the AQUA U.S. Fund.

During the first quarter of 2017, we liquidated our investment in the AQUA U.S. Fund subject to a 5% hold back of $2.6 million, which was received during the second quarter of 2017. Our ownership interest in the AQUA U.S. Fund was $50.9 million at December 31, 2016. For the nine months ended September 30, 2017 our equity in earnings was $52,000. For the three and nine months ended September 30, 2016 our equity in loss was $395,000 and $3.3 million, respectively.

~~OpenKey~~

In 2016, the Company made investments totaling $2.3 million in OpenKey, which is controlled and consolidated by Ashford Inc., for a 13.3% ownership interest. On March 2, 2017 and September 12, 2017, we invested an additional $650,000 and $333,000, respectively. As of September 30, 2017, the Company has made investments totaling $3.3 million, for a 16.23% ownership interest. 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. As of September 30, 2017, our ownership interest had a carrying value of $2.7 million. For the three and nine months ended September 30, 2017, our equity in earnings (loss) in the unconsolidated entity was a loss of $111,000 and $341,000, respectively. For the three and nine months ended September 30, 2016, our equity in earnings (loss) in the unconsolidated entity was a loss of $80,000 and $196,000, respectively.

~~Table of Contents~~

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

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

~~(unaudited)~~

6. ~~Indebtedness~~

Indebtedness consisted of the following (in thousands):

Indebtedness Collateral Maturity Interest Rate September 30, 2017 December 31, 2016
Mortgage loan ⁽²⁾
1 hotel June 2017 5.98% $ —
$ 15,729
Mortgage loan ⁽³⁾
17 hotels December 2017
LIBOR ⁽¹⁾ + 5.52%
412,500
412,500
Mortgage loan ⁽⁴⁾
2 hotels January 2018 4.44% —
105,047
Mortgage loan 1 hotel January 2018 4.38% 94,722
96,169
Mortgage loan ⁽⁵⁾
8 hotels January 2018
LIBOR ⁽¹⁾ + 4.95%
376,800
376,800
Mortgage loan ⁽⁶⁾
5 hotels February 2018
LIBOR ⁽¹⁾ + 4.75%
200,000
200,000
Mortgage loan ⁽⁷⁾
1 hotel April 2018
LIBOR ⁽¹⁾ + 4.95%
33,300
33,300
Mortgage loan ^{(8) (9) (10) (11)}
22 hotels April 2018
LIBOR ⁽¹⁾ + 4.39%
971,654
1,070,560
Mortgage loan ⁽¹²⁾
1 hotel May 2018
LIBOR ⁽¹⁾ + 5.10%
25,100
25,100
Mortgage loan ⁽¹³⁾
1 hotel June 2018
LIBOR ⁽¹⁾ + 5.10%
43,750
43,750
Mortgage loan ⁽¹⁴⁾
1 hotel July 2018
LIBOR ⁽¹⁾ + 4.15%
35,200
35,200
Mortgage loan ⁽¹⁴⁾
1 hotel July 2018
LIBOR ⁽¹⁾ + 5.10%
40,500
40,500
Mortgage loan ⁽¹⁴⁾
8 hotels July 2018
LIBOR ⁽¹⁾ + 4.09%
144,000
144,000
Mortgage loan ⁽¹⁵⁾
1 hotel August 2018
LIBOR ⁽¹⁾ + 4.95%
12,000
12,000
Mortgage loan ⁽¹⁶⁾
4 hotels August 2018
LIBOR ⁽¹⁾ + 4.38%
52,530
52,530
Mortgage loan ^{(16) (17) (18)}
6 hotels August 2018
LIBOR ⁽¹⁾ + 4.35%
280,421
301,000
Mortgage loan ⁽³⁾
18 hotels October 2018
LIBOR ⁽¹⁾ + 4.55%
450,000
450,000
Mortgage loan 1 hotel July 2019 4.00% 5,361
5,436
Mortgage loan ⁽²⁾
1 hotel May 2020
LIBOR ⁽¹⁾ + 2.90%
16,100
—
Mortgage loan 1 hotel November 2020 6.26% 95,638
96,873
Mortgage loan ⁽⁴⁾
2 hotels June 2022
LIBOR ⁽¹⁾ + 3.00%
164,700
—
Mortgage loan 1 hotel May 2023 5.46% 54,020
54,685
Mortgage loan 1 hotel January 2024 5.49% 7,028
7,111
Mortgage loan 1 hotel January 2024 5.49% 10,258
10,378
Mortgage loan 1 hotel May 2024 4.99% 6,559
6,641
Mortgage loan 2 hotels August 2024 4.85% 12,288
12,427
Mortgage loan 3 hotels August 2024 4.90% 24,561
24,836
Mortgage loan 3 hotels August 2024 5.20% 66,454
67,164
Mortgage loan 2 hotels February 2025 4.45% 20,304
20,575
Mortgage loan 3 hotels February 2025 4.45% 52,517
53,293
3,708,265
3,773,604
Premiums, net 1,756
3,523
Deferred loan costs, net (11,152 ) (17,889 )
$ 3,698,869
$ 3,759,238

Indebtedness related to assets held for sale ⁽¹⁰⁾
1 hotel April 2017
LIBOR ⁽¹⁾ + 4.39%
—
16,080
Indebtedness related to assets held for sale ⁽¹⁸⁾
1 hotel August 2017
LIBOR ⁽¹⁾ + 4.35%
—
19,599
Indebtedness, net $ 3,698,869
$ 3,723,559

March 31, 2021

December 31, 2020

Indebtedness

Collateral

Maturity

Interest Rate (1)

Default Rate (2)

Debt Balance

Mortgage loan(4)

7 hotels

June 2021

LIBOR(3) + 3.65%

n/a

180,720

Mortgage loan(4)

7 hotels

June 2021

LIBOR(3) + 3.39%

n/a

174,400

Mortgage loan(4)

5 hotels

June 2021

LIBOR(3) + 3.73%

n/a

221,040

Mortgage loan(4)

5 hotels

June 2021

LIBOR(3) + 4.02%

n/a

262,640

Mortgage loan(4)

5 hotels

June 2021

LIBOR(3) + 3.68%

n/a

215,120

Mortgage loan(4)

5 hotels

June 2021

LIBOR(3) + 2.73%

n/a

160,000

Mortgage loan

1 hotel

November 2021

6.26%

n/a

81,896

84,544

Mortgage loan(5)

17 hotels

November 2021

LIBOR(3) + 3.00%

n/a

419,000

Mortgage loan(6)

1 hotel

November 2021

LIBOR(3) + 2.55%

n/a

25,000

Mortgage loan(7)

8 hotels

February 2022

LIBOR(3) + 3.07%

n/a

395,000

Mortgage loan(8)

2 hotels

March 2022

LIBOR(3) + 2.75%

n/a

240,000

Mortgage loan(9)

19 hotels

April 2022

LIBOR(3) + 3.20%

n/a

914,281

Mortgage loan(10)

1 hotel

July 2022

LIBOR(3) + 3.95%

n/a

33,200

34,200

Mortgage loan(11)

1 hotel

November 2022

LIBOR(3) + 2.00%

n/a

97,944

98,259

Mortgage loan(12)

1 hotel

December 2022

LIBOR(3) + 2.25%

n/a

16,100

Mortgage loan(13)

1 hotel

January 2023

LIBOR(3) + 3.40%

n/a

37,000

Mortgage loan

1 hotel

June 2023

LIBOR(3)+ 2.45%

n/a

73,450

Mortgage loan

1 hotel

January 2024

5.49%

n/a

6,674

6,706

Mortgage loan

1 hotel

January 2024

5.49%

n/a

9,740

9,786

Term loan(14)

Equity

January 2024

16.00%

n/a

206,663

Mortgage loan(15)

1 hotel

May 2024

4.99%

5.00%

6,260

Mortgage loan

1 hotel

June 2024

LIBOR(3) + 2.00%

n/a

8,881

Mortgage loan

2 hotels

August 2024

4.85%

n/a

11,721

11,774

Mortgage loan

3 hotels

August 2024

4.90%

n/a

23,438

23,542

Mortgage loan(15)

2 hotels

February 2025

4.45%

4.00%

19,369

Mortgage loan(15)

3 hotels

February 2025

4.45%

4.00%

50,098

Mortgage loan

1 hotel

March 2025

4.66%

n/a

24,281

24,415

3,913,916

3,711,585

Premiums (discounts), net

(41,503)

(288)

Capitalized default interest and late charges

43,266

27,444

Deferred loan costs, net

(16,588)

(9,830)

Embedded debt derivative

42,402

Indebtedness, net

3,941,493

3,728,911

^{_____________________________}

(1)Interest rates do not include default or late payment rates in effect on some mortgage loans.

(2) Default rates are presented for mortgage loans which were in default, in accordance with the terms and conditions of the applicable mortgage agreement, as of March 31, 2021. The default rate is accrued in addition to the stated interest rate.

(3) LIBOR rates were ~~1.232%~~0.111% and ~~0.772%~~0.144% at ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016~~,2020, respectively.

⁽²⁾On May 24, 2017, we refinanced this mortgage loan totaling $15.7 million set to mature in June 2017 with a new $16.1 million mortgage loan with a three-year initial term and two one-year extension options subject to the satisfaction of certain conditions. Through May 2019, the new mortgage loan is interest only and bears interest at a rate of LIBOR + 2.90%. Beginning on June 1, 2019, monthly principal payments based on a thirty-year amortization and a 6.00% interest rate are due.

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

~~Table of Contents~~

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

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

~~(unaudited)~~

⁽⁴⁾On May 10, 2017, we refinanced this mortgage loan totaling $104.3 million set to mature in January 2018 with a new $181.0 million mortgage loan, of which our initial advance was $164.7 million. The new mortgage loan is interest only and bears interest at a rate of LIBOR +3.00%. Beginning on July 1, 2020, quarterly principal payments of $750,000 are due.

⁽⁵⁾~~This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in January 2017~~

⁽⁶⁾~~This mortgage loan has threeone-year extension options, subject to satisfaction of certain conditions and a LIBOR floor of 0.20%. The second one-year extension period began in February 2017.~~

⁽⁷⁾~~This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in April 2017.~~

⁽⁸⁾~~This mortgage loan has four one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in April 2017.~~

⁽⁹⁾~~This mortgage loan had a $20.2 million pay down of principal related to the sale of the Renaissance Portsmouth that was sold on February 1, 2017.~~

⁽¹⁰⁾~~A portion of this mortgage loan at December 31, 2016 relates to the Renaissance Portsmouth that was sold on February 1, 2017. See note 4.~~

⁽¹¹⁾~~This mortgage loan had a $78.7 million pay down of principal related to the sale of the Crowne Plaza Ravinia that was sold on June 29, 2017. See note 4.~~

⁽¹²⁾~~This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in May 2017.~~

⁽¹³⁾~~This mortgage loan has three~~5 one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in June ~~2017.~~2020.

⁽¹⁴⁾(5) Effective February 9, 2021, we executed an agreement regarding existing default and extension options for this mortgage loan. In connection with the agreement, monthly FF&E escrow deposits were waived through December 2021. This mortgage loan has ~~three~~5 one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in November 2020.

(6) This mortgage loan has 3 one-year extension options, subject to satisfaction of certain conditions. The first one-year extension option began in November 2020. This mortgage loan has a LIBOR floor of 1.25%.

(7) Effective January 9, 2021, we executed a loan modification and reinstatement agreement for this mortgage loan. In connection with the agreement, monthly FF&E escrow deposits were waived from April 2020 through December 2020, and monthly tax escrow deposits were waived from April 2020 through June

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2020. This mortgage loan has 5 one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in February 2021.

(8) This mortgage loan has 5 one-year extension options, subject to satisfaction of certain conditions. The first one-year extension period began in ~~July 2017.~~March 2021.

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

⁽¹⁶⁾~~This mortgage loan has three~~5 one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in ~~August 2017.~~April 2021.

⁽¹⁷⁾(10)This mortgage loan ~~had~~has 1 one-year extension option, subject to satisfaction of certain conditions. This mortgage loan has a ~~$20.6 million pay down~~LIBOR floor of ~~principal related to the sale~~0.25%.

(11) Effective March 5, 2021, we amended this mortgage loan. Terms of the ~~Embassy Suites Syracuse that was sold on March 6, 2017. See note 4.~~agreement included monthly FF&E escrow deposits being waived through July 1, 2021.

⁽¹⁸⁾~~A portion~~(12) This mortgage loan has 2 one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.25%.

(13) This mortgage loan has 2 one-year extension options, subject to satisfaction of certain conditions.

(14) Effective January 15, 2021, we entered into a term loan agreement with an initial draw of $200 million and a total commitment of $450 million. During the initial two year term, interest shall be paid-in-kind by capitalizing the accrued amount. The initial draw of this ~~mortgage loan at December 31, 2016 relates to the Embassy Suites Syracuse that was sold on March 6, 2017. See note 4.~~

~~On February 1, 2017, we repaid $20.2 million of principal on our mortgage loan partially secured by the Renaissance Portsmouth. This hotel property was sold on February 1, 2017.~~

~~On March 6, 2017, we repaid $20.6 million of principal on our mortgage loan partially secured by the Embassy Suites Syracuse. This hotel property was sold on March 6, 2017.~~

On May 10, 2017, we refinanced a $105.0 million mortgage loan, secured by the Renaissance Nashville in Nashville, Tennessee and the Westin in Princeton, New Jersey. The new mortgage loan totals $181.0 million, of which our initial advance was $164.7 million with future advances totaling $16.3 million as reimbursement for capital expenditures. The mortgageterm loan is interest only and ~~provides for~~bears interest at a ~~floating interest~~fixed rate of ~~LIBOR + 3.00%. Beginning on July 1, 2020, quarterly principal payments of $750,000 are due.The stated maturity is June 2022, with no extension options.~~

On May 24, 2017, we refinanced a $15.7 million mortgage loan, secured by the Hotel Indigo (“Indigo Atlanta”) in Atlanta, Georgia. The new mortgage loan totals $16.1 million. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.90%16.0% for the first two years and 14.0% thereafter. This term loan has a three-year initial term and 2 one-year extension options, subject to satisfaction of certain conditions.

(15) As of March 31, 2021, this mortgage loan was in default under the terms and conditions of the mortgage loan agreement. Default interest has been accrued, in accordance with the terms of the mortgage loan agreement, and is reflected in the Company’s consolidated balance sheet and statement of operations.

On January 15, 2021, the Company entered into a ~~30-year amortization schedule based~~credit agreement (the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders” or “Oaktree”) and Oaktree Fund Administration, LLC, as administrative agent (the “Administrative Agent”). The Credit Agreement provides that, subject to the conditions set forth therein, the Lenders will make available to the borrower a senior secured term loan facility comprising of (a) initial term loans (the “Initial Term Loan”) in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million (the “Initial DDTL”) and (c) additional delayed draw term loans in an aggregate principal amount of up to $100 million (the “Additional DDTL,” and together with the Initial Term Loan and the Initial DDTL, collectively, the “Loans”), in each case to fund general corporate operations of the Company and its subsidiaries.

The Loans under the Credit Agreement will bear interest (a) with respect to the Initial Term Loan and the Initial DDTL, at an annual rate equal to 16% for the first two years, reducing to 14% thereafter and (b) with respect to the Additional DDTL, at an annual rate equal to 18.5% for the first two years, reducing to 16.5% thereafter. Interest payments on the Loans will be due and payable in arrears on the last business day of March, June, September and December of each calendar year and the maturity date. For the first two years following the closing of the Credit Agreement, the borrower will have the option to pay accrued interest “in kind” by adding such amount of accrued interest to the outstanding principal balance of the Loans (such interest, “PIK Interest”). The initial maturity date of the Credit Agreement (the “Maturity Date”) shall be three years, with 2 optional one-year extensions subject to satisfaction of certain terms and conditions. The Lenders shall, subject to certain terms, have the ability to make protective advances to the borrower pursuant to the terms of the Credit Agreement to cure defaults with respect to mortgage and mezzanine-level indebtedness of subsidiaries of the borrower having principal balances in excess of $400 million.

Based on the provisions in the Credit Agreement, the Company is required to pay an exit fee as follows: upon the earliest of the repayment of the Loans in full (including as a result of a change of control, as defined in the Credit Agreement), the Maturity Date, or the acceleration of the Loans following an event of default, as defined in the Credit Agreement, the borrower shall pay an exit fee at the Lender’s election of either:

a) A cash payment equal to 15% times the amount of Loans advanced under the credit agreement (including PIK Interest). If the Loans were not accelerated, all or any portion of the cash payment may be paid, at the borrower’s discretion, in common stock; or

b) The issuance of warrants for the purchase of 19.9% of the Company’s outstanding common stock as of the closing date (calculated on a 6%pro forma basis after giving effect to the warrants) for the Initial Term Loan (as such percentage may be increased by up to 15% dependent on the amount of delayed draw term loans drawn or decreased by up to 4% if the borrower delivers equity pledges from certain subsidiaries, in addition to ordinary course adjustments for recapitalization, stock splits and similar transactions), pursuant to a warrants certificate to be signed upon Lender’s election to take warrants.

The exit fee is considered a derivative, under the applicable accounting guidance, which results in bifurcation from the loan resulting in a discount on the loan. The Company recorded a debt discount equal to the fair value of the embedded debt derivative of $43.7 million on the issuance date. The debt discount attributed to the embedded debt derivative is being amortized using the effective interest ~~rate starting~~method over the remaining term of the Term Loans and is included in “interest expense and amortization of discounts and loan costs” in the ~~third year. The stated maturity is May 2020, with two one-year extension options.~~consolidated statement of operations. See notes 9 and 10 for further discussion.

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

On ~~June~~February 9, 2021, the Company executed an agreement regarding existing defaults and extension options for the MS 17 Pool loan pursuant to which (a) the Company paid to the lender all current and past due debt service and tax reserve contributions, and (b) the lender suspended all FF&E reserve contributions (for the furniture, fixtures and equipment reserve accounts generally reserved to finance capital improvements to the property) through December 2021. Additionally, the modification agreement lowers the debt yield extension test for the fifth extension option from 10.38% to 8.0%. Finally, the forbearance agreement provides that the second extension option is deemed exercised as of November 9, 2020.

In February 2021 the Company was informed by its lender that the lender is initiating foreclosure proceedings for the foreclosure of the SpringHill Suites Durham and SpringHill Suites Charlotte, which secures the Company’s $19.4 million mortgage loan. The foreclosure proceedings were completed on April 29, ~~2017, we repaid $78.7 million~~2021.

Additionally, as a result of the troubled debt restructurings all accrued default interest and late charges were capitalized into the applicable loan balances and will be 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 $32.6 million. The amount of the capitalized principal ~~on our mortgage loan partially secured by the Crowne Plaza Ravinia. This hotel property~~that was ~~sold on June 29, 2017.~~

~~During the three and nine months ended September 30, 2017, we recognized premium amortization of $185,000 and $1.8 million, respectively, and~~amortized during the three ~~and nine~~ months ended ~~September 30, 2016, we recognized premium~~March 31, 2021 was $16.8 million, which is included in “interest expense and amortization of ~~$527,000~~discounts and ~~$1.6 million, respectively.~~ loan costs” in the consolidated statement of operations.

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


	Three Months Ended March 31,
Line Item		2021		2020
Interest expense and amortization of discounts and loan costs		$	(2,465)	$	56

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

8. Notes Receivable, net and Other

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


	Interest Rate		March 31, 2021		December 31, 2020
Construction Financing Note (1) (5)
Face amount	7.0	%	$	4,000	$	4,000
Discount (2)			(75)		(143)
			3,925		3,857
Certificate of Occupancy Note (3) (5)
Face amount	7.0	%	$	5,250	$	5,250
Discount (4)			(767)		(844)
			4,483		4,406
Note receivable, net			$	8,408	$	8,263

(1) The outstanding principal balance and all accrued and unpaid interest shall be due and payable on or before the earlier of ~~September 30, 2017, we were in compliance in~~(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.

(2) The discount represents the imputed interest during the interest free period. Interest begins accruing on July 9, 2021.

(3) The outstanding principal balance and all ~~material respects with all covenants~~accrued and unpaid interest shall be due and payable on or ~~other requirements set forth in our debt and related agreements as amended.~~before July 9, 2025.

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

7.~~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~~(5) The notes receivable are secured by the ~~weighted average number of common shares outstanding during~~1.65-acre land parcel adjacent to the ~~period. Diluted income (loss)~~Hilton St. Petersburg Bayfront.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

NaN cash interest income was recorded for the three months ended March 31, 2021 and 2020.

~~per common share~~For the three months ended March 31, 2021 and 2020, we recognized discount amortization income of $145,000 and $135,000, respectively, which is ~~calculated using~~included in “other income (expense)” in the ~~two-class method, or treasury stock method if more dilutive,~~consolidated statements of operations.

On January 1, 2020, we adopted the provisions of ASC Topic 326, Financial Instruments - Credit Losses. Upon adoption we evaluated the notes and ~~reflects~~other receivables under the ~~potential dilution~~criteria in ASC Topic 326. Upon adoption we determined that ~~could occur if securities or~~the expected credit loss associated with the notes and other ~~contracts~~receivables was immaterial. As of March 31, 2021 and December 31, 2020, the expected credit loss associated with the notes and other receivables continues to ~~issue common shares were exercised or converted into common shares, whereby such exercise or conversion would result in lower income per share.~~be immaterial.

~~The following table reconciles~~Other consideration received from 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,
2017 2016 2017 2016
Income (loss) allocated to common stockholders:
Income (loss) attributable to the Company $ (21,808 ) $ (20,145 ) $ (37,037 ) $ 619
Less: Dividends on preferred stock (11,440 ) (8,875 ) (33,352 ) (25,856 )
Less: Extinguishment of issuance costs upon redemption of preferred stock (4,507 ) (6,124 ) (4,507 ) (6,124 )
Less: Dividends on common stock (11,439 ) (11,345 ) (34,316 ) (34,018 )
Less: Dividends on unvested performance stock units (98 ) (40 ) (294 ) (120 )
Less: Dividends on unvested restricted shares (251 ) (197 ) (709 ) (548 )
Undistributed income (loss) (49,543 ) (46,726 ) (110,215 ) (66,047 )
Add back: Dividends on common stock 11,439
11,345
34,316
34,018
Distributed and undistributed income (loss) - basic and diluted $ (38,104 ) $ (35,381 ) $ (75,899 ) $ (32,029 )

Weighted average shares outstanding:
Weighted average common shares outstanding - basic and diluted 95,332
94,531
95,169
94,384

Basic income (loss) per share:
Net income (loss) allocated to common stockholders per share $ (0.40 ) $ (0.37 ) $ (0.80 ) $ (0.34 )

Diluted income (loss) per share:
Net income (loss) allocated to common stockholders per share $ (0.40 ) $ (0.37 ) $ (0.80 ) $ (0.34 )

~~Due~~sale of the 1.65-acre parking lot adjacent to the ~~anti-dilutive effect,~~Hilton St. Petersburg Bayfront is summarized in the ~~computation of diluted income (loss) per share does not reflect adjustments for the following items (in~~table below (dollars in thousands):


	Imputed Interest Rate		March 31, 2021			December 31, 2020
Future ownership rights of parking parcel	7.0	%	$	4,100		$	4,100
Imputed interest			450			372
			4,550		(1)	4,472		(1)

(1) Included in “other assets” in the consolidated balance sheets.

For the three months ended March 31, 2021 and 2020, we recognized imputed interest income of $78,000 and $73,000, respectively, which are included in “other income (expense)” in the consolidated statements of operations. For the three months ended March 31, 2020 amortization expense of $117,000 was related to the free use of parking easement, which is included in “other income (expense)” in the consolidated statement of operations.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Income (loss) allocated to common stockholders is not adjusted for:
Income (loss) allocated to unvested restricted shares $ 251
$ 197
$ 709
$ 548
Income (loss) allocated to unvested performance stock units 98
40
294
120
Income (loss) attributable to noncontrolling interest in operating partnership units (6,940 ) (5,009 ) (13,202 ) (2,745 )
Total $ (6,591 ) $ (4,772 ) $ (12,199 ) $ (2,077 )

Weighted average diluted shares are not adjusted for:
Effect of unvested restricted shares 368
479
284
334
Effect of unvested performance stock units 250
41
97
24
Effect of assumed conversion of operating partnership units 17,551
19,252
17,367
19,046
Effect of incentive fee shares 277
—
287
—
Total 18,446
19,772
18,035
19,404
For the three months ended March 31, 2021 and 2020, we received reimbursement of $120,000 and $0 of parking fees and recognized interest income of $4,000 and $0, which is included in “other income (expense)” in the consolidated statements of operations while the parking parcel is in development.

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

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

~~(unaudited)~~

8.9. 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. The interest rate derivatives currently include interest rate caps and interest rate floors. These derivatives are subject to master netting settlement arrangements. 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.

~~During the nine months ended September 30, 2017, we~~The following table presents a summary of our interest rate derivatives entered into interest rate caps with notional amounts totaling $2.1 billion and strike rates ranging from 1.50% to 5.84%. These interest rate caps had effective dates from February 2017 to August 2017, maturity dates from February 2018 to June 2019, and a total cost of $633,000. In September 2017, we entered into an interest rate floor with a notional amount of $4.0 billion and a strike rate of 1%. This interest rate floor has a termination date of March 2019 and a total cost of $163,000. over each applicable period:


	Three Months Ended March 31,
	2021				2020
Interest rate caps:
Notional amount (in thousands)	$	1,976,000		(1)	$	432,000		(1)
Strike rate low end of range	3.15		%		3.00		%
Strike rate high end of range	4.00		%		4.00		%
Effective date range	January 2021 - March 2021				January 2020
Termination date range	November 2021 - April 2022				February 2021 - February 2022
Total cost (in thousands)	$	291			$	63

_______________

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

~~During the nine months ended September 30, 2016, we entered into~~

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

We held interest rate caps with notional amounts totaling $628.5 million and strike rates ranging from 2.00% to 4.50%. These interest rate caps had effective dates from February 2016 to August 2016, termination dates from February 2017 to December 2017, and a total cost of $104,000. instruments as summarized in the table below:


	March 31, 2021				December 31, 2020
Interest rate caps:
Notional amount (in thousands)	$	2,183,281		(1)	$	842,000		(1)
Strike rate low end of range	3.00		%		3.00		%
Strike rate high end of range	4.00		%		4.00		%
Termination date range	November 2021 - April 2022				February 2021 - February 2022
Aggregate principle balance on corresponding mortgage loans (in thousands)	$	2,030,281			$	697,000

Interest rate floors: (2)
Notional amount (in thousands)	$	25,000		(1)	$	25,000		(1)
Strike rate low end of range	1.25		%		1.25		%
Strike rate high end of range	1.25		%		1.25		%
Termination date range	November 2021				November 2021

_______________

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

As of September 30, 2017, we held interest rate caps with notional amounts totaling $3.4 billion and strike rates ranging from 1.50% to 5.84%. These instruments had maturity dates ranging from December 2017 to June 2019. These instruments cap the interest rates on our mortgage loans with principal balances of $3.3 billion and maturity dates from December 2017 to June 2022. As of September 30, 2017, we held interest rate floors with notional amounts totaling $10.0 billion and strike rates ranging from (0.25)% to 1%. These instruments have termination dates ranging from March 2019 to July 2020.

~~Credit Default Swap Derivatives~~—We use credit default swaps to hedge financial and capital market risk. A credit default swap is a derivative contract that functions like an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. As of September 30, 2017, we held credit default swaps with notional amounts totaling $212.5 million. These credit default swaps had effective dates from February 2015 to August 2017 and expected maturity dates from October 2023 to October 2026. Assuming the underlying bonds pay off at par over their remaining average life, our total exposure for these trades was approximately $8.4 million as of September 30, 2017. (2)Cash collateral is posted by us as well as our counterparties. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral.

Embedded Debt Derivative—Based on certain provisions in the Oaktree Credit Agreement, the Company is required to pay an exit fee, as described in note 7. Under the applicable accounting guidance, the exit fee is considered an embedded derivative liability that meets the criteria for bifurcation from the debt host. The ~~change in market~~embedded debt derivative will be initially measured at fair value and the fair value of ~~credit default swaps is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparties when~~ the ~~change in market value is over $250,000.~~embedded debt derivative will be estimated at each reporting period. See note 10.

~~Options on Futures Contracts~~—During the nine months ended September 30, 2016, we purchased options on Eurodollar futures for a total cost of $250,000 and maturity date of June 2017. There were no purchases during the nine months ended September 30, 2017.

9.10. 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 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.

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

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

~~(unaudited)~~

•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.

Fair values of interest rate ~~swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts/payments~~caps and ~~the discounted expected variable cash payments/receipts. Fair values of interest rate caps,~~ floors ~~flooridors, and corridors~~ are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fell below the strike rates of the floors or rise above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the ~~swaps,~~ caps, and floors are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR 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.

Fair values of credit default swaps are obtained from a third party who publishes various information including the index composition and price data (Level 2 inputs). The fair value of credit default swaps does not contain credit-risk-related adjustments as the change in fair value is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty.

Fair values of interest rate floors are calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. These expected future cash flows are probability-weighted

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

projections based on the contract terms, accounting for both the magnitude and likelihood of potential payments, which are both computed using the appropriate LIBOR forward curve and market implied volatilities as of the valuation date (Level 2 inputs).

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

The 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 provisions of the Credit Agreement, with the assistance of a valuation specialist, the Company utilized a risk neutral model to estimate the fair value of ~~options~~the embedded derivative features requiring bifurcation as of the respective issuance dates and as of the March 31, 2021 reporting date. The risk neutral model is designed to utilize market data and the Specialist’s best estimates 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 ~~futures contracts is~~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 ~~last reported settlement price~~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

•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 ~~measurement~~issuance date, and updated utilizing relevant market data including market observed option adjusted spreads as of March 31, 2021.

The following table includes a summary of the derivative liabilities measured at fair value using significant unobservable (Level ~~1 inputs). These exchange-traded options are centrally cleared, and a clearinghouse stands in between all trades to ensure that~~3) inputs during the ~~obligations involved in the trades are satisfied.~~three months ended March 31, 2021 (in thousands):



Balance at January 1, 2021	$	0
Additions	43,681
Re-measurement of fair value	(1,279)
Balance at March 31, 2021	$	42,402

Fair values of ~~marketable securities and liabilities associated with marketable securities, including public equity securities, equity put and call options, and other investments,~~hotel properties are based on ~~their quoted~~methodologies which include the development of the discounted cash flow method of the income approach with support based on the market ~~closing prices~~approach (Level 13 inputs). See note 5.

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, 2017~~,March 31, 2021, the LIBOR interest rate forward curve (Level 2 inputs) assumed an uptrend from ~~1.232%~~0.111% to ~~1.826%~~0.168% for the remaining term of our

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

derivatives. Credit spreads (Level 3 inputs) used in determining the fair values of ~~hedge and non-hedge designated~~ derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates.

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~~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)
Counterparty and Cash Collateral Netting⁽¹⁾
Total

September 30, 2017:
Assets
Derivative assets:
Interest rate derivatives - floors $ —
$ 288
$ —
$ 118
$ 406
⁽²⁾
Interest rate derivatives - caps —
44
—
—
44
⁽²⁾
Credit default swaps —
329
—
942
$ 1,271
⁽²⁾
—
661
—
1,060
1,721

Non-derivative assets:
Equity securities 11,960
—
—
—
11,960
⁽³⁾
Total $ 11,960
$ 661
$ —
$ 1,060
$ 13,681

Liabilities
Derivative liabilities:
Credit default swaps —
(146 ) —
—
(146 )
⁽⁴⁾
Net $ 11,960
$ 515
$ —
$ 1,060
$ 13,535

December 31, 2016:
Assets
Derivative assets:
Interest rate derivatives - floors $ —
$ 2,358
$ —
$ —
$ 2,358
⁽²⁾
Interest rate derivatives - caps —
24
—
—
24
⁽²⁾
Credit default swaps —
2,867
—
(1,751 ) 1,116
⁽²⁾
Options on futures contracts 116
—
—
—
116
⁽²⁾
116
5,249
—
(1,751 ) 3,614

Non-derivative assets:
Equity securities 53,185
—
—
—
53,185
⁽³⁾
Total $ 53,301
$ 5,249
$ —
$ (1,751 ) $ 56,799


	Quoted Market Prices (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Counter-party and Cash Collateral Netting(1)		Total


March 31, 2021:
Assets
Derivative assets:
Interest rate derivatives - floors	$	0	$	192	$	0	$	0	$	192	(2)
Interest rate derivatives - caps	0		3		0		0		3		(2)


Total	$	0	$	195	$	0	$	0	$	195



Liabilities

Embedded debt derivative	0		0		(42,402)		0		(42,402)		(3)

Net	$	0	$	195	$	(42,402)	$	—	$	(42,207)

December 31, 2020:
Assets
Derivative assets:
Interest rate derivatives - floors	$	0	$	263	$	0	$	0	$	263	(2)





Total	$	0	$	263	$	0	$	0	$	263

⁽¹⁾Represents net cash collateral posted between us and our counterparties.

⁽²⁾ Reported net as “derivative ~~assets, net”~~assets” in ~~the~~our consolidated balance sheets.

⁽³⁾ ~~Reported as “marketable securities” in the consolidated balance sheets.~~

⁽⁴⁾ Reported net as “derivative ~~liabilities, net”~~liabilities” in ~~the~~our consolidated balance ~~sheets.~~sheet.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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

The following ~~tables summarize~~table summarizes the effect of ~~fair-value-measured~~fair value measured assets and liabilities on ~~the~~our consolidated statements of operations ~~for the~~ ~~three and nine~~ ~~months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~(in thousands):


	Gain (Loss) Recognized in Income									Gain (Loss) Recognized in Income
	Three Months Ended September 30,									Three Months Ended March 31,
	2017				2016					2021			2020
Assets									Assets
Derivative assets:									Derivative assets:
Interest rate derivatives - floors	$	(291	)		$	(8,202	)		Interest rate derivatives - floors	$	(71)		$	377
Interest rate derivatives - caps	(96		)		(40		)		Interest rate derivatives - caps	(289)			(52)
Credit default swaps	(1,380		)	⁽⁴⁾	(1,854		)	⁽⁴⁾	Credit default swaps	0			2,430		(4)
Options on futures contracts	—				(155		)

	(1,767		)		(10,251		)			(360)			2,755
Non-derivative assets:									Non-derivative assets:
Equity	12				—				Equity	0			627
Total	(1,755		)		(10,251		)		Total	(360)			3,382
Liabilities									Liabilities
Derivative liabilities:									Derivative liabilities:
Credit default swaps	(887		)	⁽⁴⁾	—			⁽⁴⁾	Credit default swaps	0			1,442		(4)

Embedded debt derivative									Embedded debt derivative	$	1,279		0

Net	$	(2,642	)		$	(10,251	)		Net	$	919		$	4,824

Total combined									Total combined
Interest rate derivatives - floors	$	(291	)		$	(8,202	)		Interest rate derivatives - floors	$	(71)		$	602
Interest rate derivatives - caps	(96		)		(40		)		Interest rate derivatives - caps	(289)			(52)
Credit default swaps	(1,092		)		(1,307		)		Credit default swaps	0			3,872
Options on futures contracts	—				1

Embedded debt derivative									Embedded debt derivative	1,279			0
Unrealized gain (loss) on derivatives	(1,479		)	⁽¹⁾	(9,548		)	⁽¹⁾	Unrealized gain (loss) on derivatives	919		(1)	4,422		(1)
Realized gain (loss) on credit default swaps	(1,175		)	^{(2) (4)}	(547		)	^{(2) (4)}
Realized gain (loss) on options on futures contracts	—			⁽²⁾	(156		)	⁽²⁾

Realized gain (loss) on interest rate floors									Realized gain (loss) on interest rate floors	0			(225)		(2)
Unrealized gain (loss) on marketable securities	(936		)	⁽³⁾	—			⁽³⁾	Unrealized gain (loss) on marketable securities	0			(1,477)		(3)
Realized gain (loss) on marketable securities	948			⁽²⁾	—			⁽²⁾	Realized gain (loss) on marketable securities	0			2,104		(2)
Net	$	(2,642	)		$	(10,251	)		Net	$	919		$	4,824

⁽¹⁾Reported as “unrealized gain (loss) on derivatives” in ~~the~~our consolidated statements of operations.

⁽²⁾Included in “other income (expense)” in ~~the~~our consolidated statements of operations.

⁽³⁾~~Included in~~Reported as “unrealized gain (loss) on marketable securities” in ~~the~~our consolidated statements of operations.

⁽⁴⁾Excludes costs of ~~$257 and $237~~$268 for the three months ended ~~September 30, 2017 and 2016, respectively,~~March 31, 2020 included in “other income (expense)” associated with credit default swaps.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Gain (Loss) Recognized in Income
Nine Months Ended September 30,
2017 2016
Assets
Derivative assets:
Interest rate derivatives - floors $ (2,233 ) $ 4,780

Interest rate derivatives - caps (613 ) (460 )
Credit default swaps (2,100 )
⁽⁴⁾
(3,227 )
⁽⁴⁾
Options on futures contracts (116 ) (270 )
(5,062 ) 823

Non-derivative assets:
Equity (3,991 ) —

Total (9,053 ) 823

Liabilities
Derivative liabilities:
Credit default swaps (1,450 )
⁽⁴⁾
—
⁽⁴⁾
Net $ (10,503 ) $ 823

Total combined
Interest rate derivatives - floors $ (2,233 ) $ 4,780

Interest rate derivatives - caps (613 ) (460 )
Credit default swaps 615
42

Options on futures contracts 427
(114 )
Unrealized gain (loss) on derivatives (1,804 )
⁽¹⁾
4,248
⁽¹⁾
Realized gain (loss) on credit default swaps (4,165 )
^{(2) (4)}
(3,269 )
Realized gain (loss) on options on futures contracts (543 )
⁽²⁾
(156 )
Unrealized gain (loss) on marketable securities (4,813 )
⁽³⁾
—

Realized gain (loss) on marketable securities 822
⁽²⁾
—

Net $ (10,503 ) $ 823

⁽¹⁾~~Reported as “unrealized gain (loss) on derivatives” in the consolidated statements of operations.~~

⁽²⁾~~Included in “other income (expense)” in the consolidated statements of operations.~~

⁽³⁾~~Included in “unrealized gain (loss) on marketable securities” in the consolidated statements of operations.~~

⁽⁴⁾~~Excludes costs of $769 and $615 for the nine months ended September 30, 2017 and 2016, respectively, included in “other income (expense)” associated with credit default swaps.~~

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

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

~~(unaudited)~~

~~10.~~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):


	March 31, 2021				December 31, 2020
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:

Derivative assets	$	195	$	195	$	263	$	263

Embedded debt derivative	42,402		42,402		0		0

Financial assets not measured at fair value:
Cash and cash equivalents	$	225,357	$	225,357	$	92,905	$	92,905
Restricted cash	67,734		67,734		74,408		74,408
Accounts receivable, net	33,320		33,320		21,760		21,760
Notes receivable, net	8,408		$7,988 to $8,828		8,263		$7,850 to $8,676
Due from Ashford Inc., net	1,506		1,506		0		0
Due from related parties, net	8,177		8,177		5,801		5,801
Due from third-party hotel managers	11,847		11,847		9,383		9,383

Financial liabilities not measured at fair value:
Indebtedness	$	3,872,413	$3,400,661 to $3,758,625		$	3,711,297	$3,167,369 to $3,500,777
Accounts payable and accrued expenses	95,647		95,647		99,954		99,954
Accrued interest payable	43,630		43,630		98,685		98,685
Dividends and distributions payable	236		236		868		868
Due to Ashford Inc., net	0		0		13,383		13,383


Due to third-party hotel managers	436		436		184		184

September 30, 2017 December 31, 2016

Carrying
Value

Estimated
Fair Value

Carrying
Value

Estimated
Fair Value
Financial assets and liabilities measured at fair value:
Marketable securities $ 11,960
$ 11,960
$ 53,185
$ 53,185
Derivative assets, net 1,721
1,721
3,614
3,614
Derivative liabilities, net 146
146
—
—

Financial assets not measured at fair value:
Cash and cash equivalents ⁽¹⁾
$ 393,527
$ 393,527
$ 348,067
$ 348,067
Restricted cash ⁽¹⁾
133,127
133,127
144,406
144,406
Accounts receivable, net ⁽¹⁾
61,677
61,677
44,934
44,934
Due from third-party hotel managers 19,230
19,230
13,348
13,348

Financial liabilities not measured at fair value:
Indebtedness⁽¹⁾
$ 3,708,265
$3,541,070 to $3,913,817
$ 3,773,604
$3,600,691 to $3,979,713
Accounts payable and accrued expenses ⁽¹⁾
153,772
153,772
128,309
128,309
Dividends and distributions payable 25,520
25,520
24,765
24,765
Due to Ashford Inc., net 13,689
13,689
15,716
15,716
Due to Ashford Prime OP, net —
—
488
488
Due to related party, net ⁽¹⁾
326
326
1,046
1,046
Due to third-party hotel managers 2,627
2,627
2,714
2,714

⁽¹⁾~~Includes balances associated with assets held for sale and liabilities associated with assets held for sale as of December 31, 2016.~~

Cash, cash equivalents and restricted cash. These financial assets bear interest at market rates and have original maturities of less than 90 ~~days and most bear interest at market rates.~~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 ~~Ashford Prime OP, due to~~ related ~~party,~~parties, net, due toto/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 $8.4 million at March 31, 2021 and approximately 95.0% to 105.0% of the carrying value of $8.3 million as of December 31, 2020.

Derivative assets ~~net,~~ and ~~derivative liabilities, net.~~ Fair value of interest rate derivatives is determined using the net present value of expected cash flows of each derivative based on the market-based interest rate curve and adjusted for credit spreads of us and our counterparties. Fair values of credit default swap derivatives are obtained from a third party who publishes the CMBX index composition and price data. Fair values of interest rate floors are calculated using a third-party discounted cash flow model based on future cash flows that are expected to be received over the remaining life of the floor. Fair values of options on futures contracts are valued at their last reported settlement price as of the measurement date. embedded debt derivative. See notes ~~2, 8~~9 and 910 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 87.8% to 97.1% of the carrying value of $3.9 billion at March 31, 2021 and approximately 85.3% to 94.3% of the carrying value of $3.7 billion at December 31, 2020. These fair value estimates are considered a Level 2 valuation technique.

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12.Income (Loss) Per Share

~~indebtedness~~Basic income (loss) per common share is calculated using the two-class method by dividing net income (loss) attributable to ~~be approximately~~ ~~95.5%~~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 ~~105.5%~~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 March 31,
	2021			2020
Income (loss) allocated to common stockholders - basic and diluted:
Income (loss) attributable to the Company	$	(103,038)		$	(84,201)
Less: Dividends on preferred stock	—			(10,644)
Add: Dividend reversal on preferred stock, net	818		(1)	—
Add: Extinguishment of preferred stock	10,635			0


Add: Claw back of dividends on unvested performance stock units	178			378





Distributed and undistributed income (loss) allocated to common stockholders - basic and diluted	$	(91,407)		$	(94,467)












Weighted average common shares outstanding:
Weighted average common shares outstanding - basic and diluted	83,046			10,047





Basic income (loss) per share:


Net income (loss) allocated to common stockholders per share	$	(1.10)		$	(9.40)

Diluted income (loss) per share:


Net income (loss) allocated to common stockholders per share	$	(1.10)		$	(9.40)

_______________

(1)The dividend reversal on preferred stock, net results from the reversal of unpaid dividends which are relinquished upon each 3(a)(9) preferred exchange. These reversals exceeded the ~~carrying value~~amount of ~~$3.7 billion~~ at ~~September 30, 2017~~ ~~and approximately~~ ~~95.3%~~dividend expense recorded for the unpaid dividends for the remaining outstanding preferred stock.

Due to ~~105.4%~~their anti-dilutive effect, the computation of diluted income (loss) per share does not reflect adjustments for the ~~carrying value~~following items (in thousands):


	Three Months Ended March 31,
	2021			2020
Income (loss) allocated to common stockholders is not adjusted for:


Income (loss) attributable to redeemable noncontrolling interests in operating partnership	$	(2,271)	(1)	$	(17,671)

Total	$	(2,271)		$	(17,671)

Weighted average diluted shares are not adjusted for:
Effect of unvested restricted stock	11			24

Effect of assumed conversion of operating partnership units	2,015			1,939


Effect of assumed issuance of shares for term loan exit fee	14,528			0
Total	16,554			1,963

_______________

(1)Inclusive of ~~$3.8 billion~~ at ~~December~~preferred stock dividend reversal of $20for the three months ended March 31, ~~2016. This is considered a Level 2 valuation technique.~~2021, respectively, allocated to redeemable noncontrolling interests in operating partnership.

~~11.~~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 ~~unitholders~~unit

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

holders based on the weighted average ownership percentage of these limited partners’ common units of limited partnership interest in the operating partnership ~~(“common~~(the “common units”) and the units issued under our Long-Term Incentive Plan (the “LTIP units”) that are ~~vested throughout the period. Beginning one year after issuance, each~~vested. Each common unit may be redeemed for either cash or, at our sole discretion, up to ~~one~~1 share of our REIT common stock, which is ~~either~~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 Trust continues to hold 598,000 shares of Ashford Inc. common stock for the benefit of its common stockholders, and all of our remaining lodging investments are owned by Ashford Trust OP. Each common unit and LTIP unit was worth approximately 94% and 96%, respectively, of one share of our common stock at both September 30, 2017 and December 31, 2016 as a result of the specific distribution characteristics to unitholders in the Ashford Inc. spin-off.

LTIP units, which are issued to certain executives and employees of Ashford LLC as compensation, generally have vesting periods ranging from three years to five 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~~1 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 ~~approved~~may authorize the issuance of Performance LTIP units to certain executive officers ~~which have a three year cliff vesting.~~and directors from time to time. The award agreements provide for the grant of a ~~maximum~~target number of Performance LTIP units that will be settled in ~~LTIPs or~~ common units of ~~the~~ Ashford Trust OP, if, when and ~~when~~to the extent the applicable vesting criteria have been achieved following the end of the performance and service period. The ~~actual~~ number of Performance LTIP units actually earned may ~~be adjusted~~range from 0% to ~~100%~~200% of target based on achievement of a specified absolute and relative total stockholder ~~return and specified absolute total stockholder return,~~returns based on the ~~formula~~formulas determined by the Company’s ~~Compensation Committee~~compensation committee on the grant date. As of March 31, 2021, there were approximately 71,000 Performance LTIP units, representing 200% of the target number granted, outstanding. The performance criteria for the Performance LTIP units are based on market conditions under the relevant literature, and the Performance LTIP units were granted to ~~non-employees. Compensation expense of $964,000 and $1.3 million was recorded for~~non-employees. During the three ~~and nine~~ months ended ~~September 30, 2017, respectively, and expense of $290,000 and $458,000 for the three and nine months ended September 30, 2016, respectively. The Performance~~March 31, 2021, approximately 58,000 performance-based LTIP units ~~unamortized fair value~~were canceled due to the market condition criteria not being met. As a result there was a claw back of ~~$5.4 million at September 30, 2017 will be expensed over~~the previously declared dividends in the amount of $454,000.

The Company issued equity awards in the first quarter of 2021, a ~~period~~substantial majority of ~~2.5 years.~~which were issued subject to stockholder approval of an increase in the number of shares available for issuance under the Company’s Amended and Restated 2011 Stock Incentive Plan. Under the applicable accounting literature, these awards are not accounted for until shareholder approval is obtained.

As of ~~September 30, 2017,~~March 31, 2021, we have issued a total of ~~11.9~~1.3 million LTIP and Performance LTIP units, ~~all~~net of ~~which,~~Performance LTIP cancellations. All LTIP and Performance LTIP units other than approximately ~~81,000, 31,000, and 662,000~~205,000 units ~~issued in May 2017, April 2017 and March 2015, respectively,~~(50,000 of which are Performance LTIP units) have reached full economic parity with, and are convertible into, common ~~units. Expense of $980,000~~units upon vesting.

The following table presents the common units redeemed and ~~$2.4 million was recognized for~~ the ~~three~~fair value upon redemption (in thousands):


	Three Months Ended March 31,
	2021		2020
Common units converted to stock	0		(196)
Fair value of common units converted	$	0	$	959

The following table presents the redeemable noncontrolling interest in Ashford Trust and ~~nine months ended September 30, 2017, respectively, and expense of $563,000 and $1.7 million was recognized for~~ the three and nine months ended September 30, 2016, respectively, which was associated with LTIP units issued to Ashford LLC’s employees and Ashford Trust’s directors and is included in “advisory services fee” and “corporate, general and administrative,” respectively, in our consolidated statements of operations. Ascorresponding approximate ownership percentage:


	March 31, 2021			December 31, 2020
Redeemable noncontrolling interests (in thousands)	$	24,683		$	22,951
Cumulative adjustments to redeemable noncontrolling interests (1) (in thousands)	189,647			186,763
Ownership percentage of operating partnership	2.42		%	8.51		%

(1) Reflects the ~~LTIP units are issued to non-employees, the compensation expense was determined based on the share price as~~excess of the ~~end of~~redemption value over the ~~period. The fair value of the unrecognized cost of LTIP units, which was $5.2 million at September 30, 2017, will be expensed over a period of 2.5 years.~~accumulated historical costs.

~~During the nine months ended~~ ~~September 30, 2017~~, approximately 21,000 common units with an aggregate fair value of approximately $161,000 were redeemed by the holder and, at our election, we issued shares of our common stock to satisfy the redemption. During the nine months ended September 30, 2016, approximately 5,000 common units with an aggregate fair value of approximately $24,000 were redeemed by the holder and, at our election, we issued shares of our common stock to satisfy the redemption price.

~~Redeemable noncontrolling interests, including vested LTIP units, in our operating partnership as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, were~~ ~~$117.4 million~~ ~~and~~ ~~$132.8 million, respectively, which represent ownership of our operating partnership of~~ ~~15.73%~~ ~~and~~ ~~14.48%, respectively. The carrying value of redeemable noncontrolling interests as of~~ ~~September 30,~~

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~2017~~ ~~and~~ ~~December 31, 2016, included adjustments of~~ ~~$146.1 million~~ ~~and~~ ~~$144.3 million, respectively,~~We allocated net income (loss) to ~~reflect~~ the ~~excess of the redemption value over the accumulated historical costs. Redeemable~~redeemable noncontrolling interests ~~were allocated net loss of $6.9 million~~ and net loss of $13.2 million for the three and nine months ended September 30, 2017, respectively, and net loss of $5.0 million and $2.7 million for the three and nine months ended September 30, 2016, respectively. We declared aggregate cash distributions to holders of common units and holders of LTIP units, ~~of $2.6 million and $7.7 million for~~as presented in the ~~three and nine months ended September 30, 2017, respectively, and $2.9 million and $8.7 million for the three and nine months ended September 30, 2016, respectively.~~table below (in thousands):


	Three Months Ended March 31,
	2021		2020
Allocated net (income) loss to the redeemable noncontrolling interests	$	2,271	$	17,671

Performance LTIP dividend claw back upon cancellation	(454)		(1,401)

~~12.~~

14. Equity and Equity-Based Compensation

Common Stock Dividends—~~For each of the~~ ~~2017~~ ~~and~~ ~~2016~~ ~~quarters, the~~The board of directors ~~declared~~did 0t declare a quarterly ~~dividends of~~ ~~$0.12~~ ~~per outstanding share of~~ common stock ~~with an annualized target of~~ ~~$0.48~~ ~~per share for~~ ~~2017~~.dividend in 2021 or 2020.

Restricted Stock ~~Units~~—~~Stock-based~~We incur stock-based compensation expense of $1.9 million and $3.9 million was recognized for the three and nine months ended September 30, 2017, respectively, and expense of $1.1 million and $3.0 million for the three and nine months ended September 30, 2016, respectively, in connection with ~~equity awards granted~~restricted stock awarded to certain employees of Ashford LLC and its affiliates. We also issue common stock to certain ~~employees~~ of ~~Remington Lodging and Ashford Trust’s~~our independent directors, and is included in “advisory services fee,” “management fees” and “corporate, general and administrative,” respectively, in our consolidated statements of operations. At September 30, 2017, the unamortized cost of the unvestedwhich vests immediately upon issuance. In March 2021, 131,000 shares of restricted stock ~~was $10.3 million, which will be amortized over~~with a fair value of approximately $443,000 and a vesting period of ~~2.5~~three years were granted.

The Company issued equity awards in the first quarter of 2021, a substantial majority of which were issued subject to ~~future mark to market adjustments,~~stockholder approval of an increase in the number of shares available for issuance under the Company’s Amended and Restated 2011 Stock Incentive Plan. Under the applicable accounting literature, these ~~shares~~awards are ~~scheduled to vest between February 2018 and April 2020.~~not accounted for until shareholder approval is obtained.

Performance Stock Units—The compensation committee of the board of directors of the Company ~~approved PSUs~~may authorize the issuance of performance stock units (“PSUs”), which have a cliff vesting period of three years, to certain executive officers ~~which have a three year cliff vesting.~~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 ~~when~~to the extent the applicable vesting criteria have been achieved following the end of the performance and service period. The ~~target~~ number of PSUs actually earned may ~~be adjusted~~range from 0% to 200% of target based on achievement of a specified absolute and relative total stockholder ~~return and specified absolute total stockholder return,~~returns based on the ~~formula~~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, and the PSUs were granted to non-employees. ~~Compensation expense of $806,000 and $1.1 million was recorded for~~During the three ~~and nine~~ months ended ~~September 30, 2017, respectively. Compensation expense~~March 31, 2021, 29,000 PSUs were canceled due to the market condition criteria not being met. As a result there was a claw back of ~~$246,000~~the previously declared dividends in the amount of $178,000.

The Company issued equity awards in the first quarter of 2021, a substantial majority of which were issued subject to stockholder approval of an increase in the number of shares available for issuance under the Company’s Amended and ~~$389,000 was recorded~~Restated 2011 Stock Incentive Plan. Under the applicable accounting literature, these awards are not accounted for the three and nine months ended September 30, 2016. The fair value of unrecognized cost of PSUs, which was $4.5 million at September 30, 2017, will be expensed over a period of approximately 2.5 years.until shareholder approval is obtained.

~~Preferred~~

Common Stock ~~Issuance & Redemption~~Resale Agreements—On ~~August 25, 2017,~~December 7, 2020, the Company ~~issued 3.4~~and Lincoln Park Capital Fund, LLC (“Lincoln Park”), entered into a purchase agreement, pursuant to which the Company may issue or sell to Lincoln Park up to 10.6 million shares ~~of 7.50% Series H cumulative preferred stock. The Series H cumulative 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 (the 8.55% Series A cumulative preferred stock (all shares redeemed on September 18, 2017), the 8.45% Series D cumulative preferred stock (1.6 million shares redeemed on September 18, 2017), the 7.375% Series F cumulative preferred stock and the 7.375% Series G cumulative 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. On September 8, 2017, we issued 400,000 additional shares of 7.50% Series H preferred stock pursuant to the over-allotment option. Series H cumulative preferred stock has no maturity date, and we are not required to redeem the shares at any time. Series H cumulative preferred stock is redeemable at our option for cash (on or after August 25, 2022), in whole or from time to time ~~in part, at~~during the term of the purchase agreement. Meanwhile, both parties also entered into a ~~redemption price~~registration rights agreement, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of ~~$25 per share plus accrued and unpaid dividends, if any, at the redemption date. Series H cumulative preferred stock may be converted into~~ shares of ~~our~~ common stock atthat are issued to Lincoln Park under the ~~option~~Purchase Agreement. The Company filed a registration statement on Form S-11 on December 11, 2020, which was amended on December 21, 2020, and deemed effective by the SEC on December 22, 2020.

Upon entering into the Purchase Agreement, the Company issued 190,840 shares of the ~~holder, in certain limited circumstances such~~Company’s common stock as ~~a change~~consideration for Lincoln Park’s execution and delivery of ~~control. Each share of Series H cumulative preferred stock is convertible into a maximum 8.25083~~the Purchase Agreement. Under the Purchase Agreement the Company issued approximately 10.4 million shares of our common stock. The actual number is based on a formula as defined in the Series H cumulative preferred stock agreement (unless the Company exercises its right to redeem the Series H cumulative preferred shares for cash, for a limited period upon a change in control). The necessary conditions to convert the Series H preferred stock to common stock ~~have not been met as~~for gross proceeds of ~~period end. Therefore, Series H cumulative preferred stock will not impact our earnings per share.~~approximately $25.1 million.

~~Dividends on the Series H cumulative preferred stock accrue in the amount of $1.8750 per share each year, which~~The issuance activity is equivalent to 7.50% of the $25.00 liquidation preference per share of Series H cumulative preferred stock. Dividends on the Series H cumulative preferred stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day). The first dividend on the Series H cumulative preferred stock sold in this offering was paid on October 16, 2017 in the amount of $0.1875 per share.summarized below (in thousands):


	Three Months Ended March 31,
	2021

Shares sold to Lincoln Park	2,046



Gross proceeds received	$	4,590

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

On ~~September 18, 2017,~~March 12, 2021, the Company ~~redeemed~~and Lincoln Park entered into an additional purchase agreement (the “2nd Purchase Agreement”), which provided that subject to the terms and conditions set forth therein, the Company may issue or sell to Lincoln Park up to 20.7 million shares of the Company’s common stock from time to time during the term of the 2nd Purchase Agreement.

Under the terms and subject to the conditions of the 2nd Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to 20.7 million shares of common stock. Such sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over a 24-month period commencing on the date that a registration statement covering the resale of shares of common stock that are issued under the 2nd Purchase Agreement, was declared effective by the SEC and a final prospectus in connection therewith was filed and the other conditions set forth in the 2nd Purchase Agreement were satisfied. Lincoln Park has no right to require the Company to sell any common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to conditions set forth in the 2nd Purchase Agreement.

Upon entering into the 2ndPurchase Agreement, the Company issued 162,655 shares of common stock (the “Commitment Shares”) as consideration for Lincoln Park’s execution and delivery of the 2nd Purchase Agreement.

Under the 2nd Purchase Agreement, the Company may from time to time, at its ~~8.55% Series A cumulative preferred~~discretion, direct Lincoln Park to purchase on any single business day (a “Regular Purchase”) up to (i) 400,000 shares of common stock ~~at a redemption~~if the closing sale price of ~~$25.00~~the common stock is not below $5.00 per share ~~plus accrued~~on the New York Stock Exchange (the “NYSE”) or (ii) 300,000 shares of common stock if the closing sale price of the common stock is below $5.00 per share on the NYSE. In any case, Lincoln Park’s commitment in any single Regular Purchase may not exceed $3,000,000. The foregoing share amounts and ~~unpaid dividends through~~per share prices will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after the ~~redemption~~ date ~~in an amount equal to $0.4631~~of the Purchase Agreement.

The purchase price per share for ~~a total redemption~~each such Regular Purchase will be based on prevailing market prices of the common stock immediately preceding the time of sale as computed under the 2nd Purchase Agreement. Under the 2nd Purchase Agreement, the Company may not effect any sales of shares of common stock on any purchase date that the closing sale price of ~~$25.4631~~the common stock on the NYSE is less than the floor price of $1.00 per share.

~~On September 18, 2017,~~In addition to Regular Purchases, the Company ~~redeemed approximately 1.6~~may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases on the terms and subject to the conditions set forth in the 2nd Purchase Agreement.

Under applicable rules of the NYSE, in no event may the Company issue or sell to Lincoln Park under the Purchase Agreement shares of common stock in excess of 20.7 million shares (including the Commitment Shares), which represents 19.99% of the 103,356,082 shares of common stock that were outstanding immediately prior to the execution of the 2nd Purchase Agreement (the “Exchange Cap”), unless the Company obtains stockholder approval to issue shares of common stock in excess of the Exchange Cap.

The issuance activity is summarized below (in thousands):


	Three Months Ended March 31,
	2021

Shares sold to Lincoln Park	300
Additional commitment shares	163
Total shares issued to Lincoln Park	463

Gross proceeds received	$	809

Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

Common Stock Standby Equity Distribution Agreement—On January 22, 2021, the Company entered into a Standby Equity Distribution Agreement (the “SEDA”) with YA II PN, Ltd., (“YA”), pursuant to which the Company will be able to sell up to 13,718,319 shares of its ~~8.45% Series D cumulative preferred~~common stock (the “Commitment Amount”) at ~~a redemption~~the Company’s request any time during the commitment period commencing on January 22, 2021, and terminating on the earliest of (i) the first day of the month next following the 36-month anniversary of the SEDA or (ii) the date on which YA shall have made payment of Advances (as defined in the SEDA) pursuant to the SEDA for shares of the Company’s common stock equal to the Commitment Amount (the “Commitment Period”). Other than with respect to the Initial Advance (as defined below) the shares sold to YA pursuant to the SEDA would be purchased at 95% of the Market Price (as defined below) and would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock. “Market Price” shall mean the lowest daily VWAP (as defined below) of the Company’s common stock during the 5 consecutive trading days commencing on the trading day following the date the Company submits an advance notice to YA. “VWAP” means, for any trading day, the daily volume weighted average price of ~~$25.00 per share, plus accrued~~the Company’s common stock for such date on the principal market as reported by Bloomberg L.P. during regular trading hours.

At any time during the Commitment Period the Company may require YA to purchase shares of the Company’s common stock by delivering a written notice to YA setting forth the Advance Shares (as defined in the SEDA) that the Company desires to issue and ~~unpaid dividends through~~sell to YA (the “Advance Notice”). The Company shall, in its sole discretion, select the ~~redemption date,~~Advance Shares, not to exceed the Maximum Advance Shares of $5.0 million, it desires to issue and sell to the Investor in ~~an amount equal~~each Advance Notice and the time it desires to ~~$0.4577 per share,~~deliver each Advance Notice. There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof.

There are no other restrictions on future financing transactions. The SEDA does not contain any right of first refusal, participation rights, penalties or liquidated damages. We are not required to pay any additional amounts to reimburse or otherwise compensate YA in connection with the transaction except for a ~~total redemption price of $25.4577 per share.~~$10,000 structuring fee.

On October 4, 2017, the Company redeemed 379,036 shares of 8.45% Series D cumulative preferred shares at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the redemption date, in an amount equal to $0.5516 per share, for a total redemption price of $25.5516 per share.The issuance activity is summarized below (in thousands):


	Three Months Ended March 31,
	2021

Shares sold to YA II PN, Ltd.	13,718



Gross proceeds received	$	40,556

Preferred Dividends—~~During the three months ended~~ ~~September 30, 2017, the~~The board of directors declared quarterly dividends as presented below:


	Three Months Ended March 31,
	2021		2020

8.45% Series D Cumulative Preferred Stock	$	0	$	0.5281
7.375% Series F Cumulative Preferred Stock	0		0.4609
7.375% Series G Cumulative Preferred Stock	0		0.4609
7.50% Series H Cumulative Preferred Stock	0		0.4688
7.50% Series I Cumulative Preferred Stock	0		0.4688

The table below presents the accumulated but unpaid dividends in arrears as of ~~$0.5281 per share for our~~ March 31, 2021 (in thousands):



	March 31, 2021

8.45% Series D Cumulative Preferred Stock ($2.11/share)	$	3,546
7.375% Series F Cumulative Preferred Stock ($1.84/share)	3,757
7.375% Series G Cumulative Preferred Stock ($1.84/share)	5,849
7.50% Series H Cumulative Preferred Stock ($1.88/share)	3,754
7.50% Series I Cumulative Preferred Stock ($1.88/share)	3,749
Total	$	20,655

From January 1, 2021 through March 31, 2021, Ashford Trust entered into privately negotiated exchange agreements with certain holders of its 8.45% Series D ~~cumulative preferred stock, $0.4609 per share for our~~Cumulative Preferred Stock, 7.375% Series F ~~cumulative preferred stock, $0.4609 per share for our~~Cumulative Preferred Stock, 7.375% Series

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G ~~cumulative preferred stock and $0.1875 per share for our~~Cumulative Preferred Stock, 7.50% Series H ~~cumulative preferred stock.~~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 ~~Series H cumulative~~table below summarizes the activity (in thousands):


	Three Months Ended March 31, 2021
	Preferred Shares Tendered	Common Shares Issued
8.45% Series D Cumulative Preferred Stock	112	787
7.375% Series F Cumulative Preferred Stock	853	5,704
7.375% Series G Cumulative Preferred Stock	1,251	8,980
7.50% Series H Cumulative Preferred Stock	667	4,817
7.50% Series I Cumulative Preferred Stock	1,391	9,148
	4,274	29,436

Stock Repurchases—On December 5, 2017, the board of directors reapproved 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, par value $0.01 per share and preferred stock ~~dividend is pro-rated for~~having an aggregate value of up to $200 million. The board of directors’ authorization replaced any previous repurchase authorizations. NaN shares of our common stock or preferred stock were repurchased under the ~~number of days it was outstanding~~Repurchase Program during ~~the quarter. During~~ the three months ended ~~September 30, 2016~~March 31, 2021 and 2020.

15. 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 ~~declared quarterly dividends~~and chief executive officer of ~~$0.5344~~Ashford Inc.

Under our advisory agreement, we pay advisory fees to Ashford LLC. Advisory fees consist of base fees and incentive fees. Prior to January 14, 2021, the base fee was paid monthly and ranged from 0.50% to 0.70% per ~~share~~annum of our total market capitalization, ranging from less than $6.0 billion to greater than $10.0 billion plus the Net Asset Fee Adjustment, as defined in the amended and restated advisory agreement, subject to certain minimums. We are also required to pay Ashford LLC an incentive fee that is measured annually (or stub period if the advisory agreement is terminated at other than year-end). Each year that our annual total stockholder return exceeds the average annual total stockholder return for our ~~8.55%~~ ~~Series A preferred stock,~~ ~~$0.5281~~ ~~per share~~peer group we pay Ashford LLC an incentive fee over the following three years, subject to the FCCR Condition, as defined in the advisory agreement, which relates to the ratio of adjusted EBITDA to fixed charges. We also reimburse Ashford LLC for ~~our~~ ~~8.45%~~ ~~Series D cumulative preferred~~certain reimbursable overhead and internal audit, risk management advisory and asset management services, as specified in the advisory agreement. We also record equity-based compensation expense for equity grants of common stock and ~~$0.3995 per share for~~LTIP units awarded to our ~~7.375% Series F cumulative preferred stock. The Series F cumulative preferred stock dividend was pro-rated~~officers and employees of Ashford LLC in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period.

On January 4, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust: (i) an additional deferral of the payment of the base advisory fees that were previously deferred for the ~~number~~months of ~~days it was~~October 2020, November 2020 and December 2020; and (ii) a deferral of approximately $2.8 million in base advisory fees with respect to the month of January 2021. The foregoing payments were due and payable on January 11, 2021. Additionally, the Ashford Inc. directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Advisory Agreement or any damages that may have arisen in absence of such fee deferral.

On January 11, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust an additional deferral of the base advisory fees and any Lismore success fees for the months of October 2020, November 2020, December 2020 and January 2021 that were previously deferred such that all such fees would be due and payable on the earlier of (x) January 18, 2021 and (y) immediately prior to the closing of the Oaktree Credit Agreement. Additionally, the Ashford Inc. directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Advisory Agreement and Lismore Agreement or any damages that may have arisen in absence of such fee deferral. All outstanding base advisory fees and reimbursable expenses outstanding as of December 31, 2020 were paid in January 2021.

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On January 14, 2021, we entered into the Second Amended and Restated Advisory Agreement with Ashford LLC. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement, dated June 10, 2015, as amended by the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as 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 the list of peer group members; (iv) suspend the requirement that we maintain a minimum Consolidated Tangible Net Worth until the first fiscal quarter beginning after June 30, 2023; and (v) revise the criteria that would constitute a Company Change of Control in order to provide us additional flexibility to dispose of underperforming assets. In connection with the transactions contemplated by the Credit Agreement, dated as of January 15, 2021 (the “Credit Agreement”), by and among Ashford Trust, Oaktree and the lenders party thereto, on January 15, 2021, we entered into the SNDA with Ashford Inc. and Oaktree pursuant to which we agreed to subordinate to the prior repayment in full of all obligations under the Credit Agreement: (1) prior to the later of: (i) the second anniversary of the 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 ~~quarter.~~fiscal year ended December 31, 2019, (the “Advisory Fee Cap”); (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under the enhanced return funding program in connection with the termination of the advisory agreement or sale or foreclosure of assets financed thereunder; and (3) any payments to Lismore in connection with the transactions contemplated by the Credit Agreement.

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


	Three Months Ended March 31,
	2021		2020
Advisory services fee
Base advisory fee	$	8,735	$	8,917
Reimbursable expenses (1)	1,591		1,831
Equity-based compensation (2)	1,835		4,551

Total advisory services fee	$	12,161	$	15,299

________

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

(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 March 31, 2021 and December 31, 2020 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, their hotel managers, as needed, and Ashford Inc. The total loss estimates included in ~~Consolidated Entities—Our noncontrolling entity partner~~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. At the beginning of 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.

Lismore Advisory Fee

On March 20, 2020, 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 (the “Lismore Agreement”). Pursuant to the Lismore Agreement, Lismore shall, during the agreement term (which commenced on March 20, 2020 and shall end on the date that is twelve months following the commencement date, or upon it being terminated by Ashford Trust on not less than thirty days written notice) negotiate the refinancing, modification or forbearance of the existing mortgage debt on Ashford Trust’s hotels. For the purposes of the Lismore Agreement, financing shall include, without limitation, senior or subordinate loan financing, provided in any single transaction or a combination of transactions, including, mortgage loan financing, mezzanine loan financing, or subordinate loan financing encumbering the applicable hotel or unsecured loan financing.

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On July 1, 2020, the Company amended and restated the agreement with Lismore with an effective date of April 6, 2020. Pursuant to the amended and restated agreement, the term of the agreement was extended to 24 months following the commencement date. In connection with the services provided by Lismore under the amended and restated agreement, Lismore is entitled to receive a fee of approximately $2.6 million in 3 equal installments of approximately $857,000 per month beginning July 20, 2020, and ending on September 20, 2020. Lismore is also entitled to receive a fee that is calculated and payable as follows: (i) a fee equal to 25 basis points (0.25%) of the amount of a loan, payable upon the acceptance by the applicable lender of any forbearance or extension of such loan, or in the case where a third-party agent or contractor engaged by the Company has secured an extension of the maturity date equal to or greater than 12 months of any such loan, then the amount payable to Lismore shall be reduced to 10 basis points (0.10%); (ii) a fee equal to 75 basis points (0.75%) of the amount of any principal reduction of a loan upon the acceptance by any lender of any principal reduction of such loan; and (iii) a fee equal to 150 basis points (1.50%) of the implied conversion value (but in any case, no less than 50% percent of the face value of such loan or loans) of a loan upon the acceptance by any lender of any debt to equity conversion of such loan.

At the time of amendment, the Company had paid Lismore approximately $8.3 million, in the aggregate, pursuant to the original agreement. Under the amended and restated agreement, the Company is still entitled, in the event that the Company does not complete, for any reason, extensions or forbearances during the term of the agreement equal to or greater than approximately $4.1 billion, to offset, against any fees the Company or its affiliates owe pursuant to the advisory agreement, a portion of the fee previously paid by the Company to Lismore equal to the product of (x) approximately $4.1 billion minus the amount of extensions or forbearances completed during the term of the agreement multiplied by (y) 0.125%.

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 March 31, 2021, 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 $156,000 may be offset against fees under the agreement that are eligible for claw back under the agreement. As of March 31, 2021 approximately $2.7 million of the payments are included in “other assets.” Further, the Company has incurred approximately $8.7 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 months ended March 31, 2021, the Company recognized expense of $3.7 million, which is included in “write-off of premiums, loan costs and exit fees.”

On August 25, 2020, in light of the fact that Ashford Trust subsequently agreed to transfer the hotels underlying the Rockbridge Portfolio to the lender, the independent members of the board of directors of Ashford Inc. waived $540,000 of Lismore advisory fees associated with items (ii) and (iii) above with respect to the Rockbridge Portfolio loan. Also on August 25, 2020, in light of the fact that Lismore negotiated access to the FF&E reserves but no forbearance on debt service, the independent members of the board of directors of Ashford Inc. waived $94,000 of Lismore advisory fees associated with items (ii) and (iii) above with respect to the mortgage loan secured by La Posada de Santa Fe.

On January 4, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust: (i) an ~~ownership interest~~additional deferral of ~~15%~~the payment of any Lismore success fees for the months of October 2020, November 2020 and December 2020; and (ii) a deferral of any additional Lismore success fees for the month of January 2021. The foregoing payments were payable on January 11, 2021. Additionally, the Ashford Inc. Directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Lismore Agreement or any damages that may have arisen in absence of such fee deferral.

On January 11, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust an additional deferral of the Lismore success fees for the months of October 2020, November 2020, December 2020 and January 2021 that were previously deferred such that all such fees would be due and payable on the earlier of (x) January 18, 2021 and (y) immediately prior to the closing of the Oaktree Credit Agreement. Additionally, the Ashford Inc. directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Lismore Agreement or any damages that may have arisen in absence of such fee deferral. All amounts were paid in January 2021.

Ashford Securities

On September 25, 2019, Ashford Inc. announced the formation of Ashford Securities to raise retail capital in order to grow its existing and future platforms. In conjunction with the formation of Ashford Securities, Ashford Trust entered into a

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contribution agreement with Ashford Inc. pursuant to which Ashford Trust has agreed to contribute, with Braemar Hotels & Resorts Inc. (“Braemar”), up to $15 million to fund the operations of Ashford Securities.

Costs for all operating expenses of Ashford Securities that are contributed by Ashford Trust and Braemar will be expensed as incurred. These costs will be allocated initially to Ashford Trust and Braemar based on an allocation percentage of 75% to Ashford Trust and 25% to Braemar. Upon reaching the earlier of $400 million in aggregate non-listed preferred equity offerings raised or June 10, 2023, there will be a true up (the “True-up Date”) between Ashford Trust and Braemar whereby the actual capital contributions contributed by each company will be based on the actual amount of capital raised by Ashford Trust and Braemar, respectively. After the True-up Date, the capital contributions would be allocated between Ashford Trust and Braemar quarterly based on the actual capital raised through Ashford Securities. Funding advances would be expensed as the expenses are incurred by Ashford Securities.

On December 31, 2020, an Amended and Restated Contribution Agreement was entered into by Ashford Inc., Ashford Trust and Braemar with respect to expenses to be reimbursed to Ashford Securities. The Initial True-Up Date did not occur and 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 non-listed preferred equity offerings raised, or June 10, 2023, there will be an Amended and Restated true up (the “Amended and Restated True-up Date”) among Ashford Inc., Ashford Trust and Braemar whereby the actual expense reimbursement paid by each company will be based on the actual amount of capital raised by Ashford Inc., Ashford Trust and Braemar, respectively. After the Amended and Restated True-Up Date, the expense reimbursements will be allocated among Ashford Inc., Ashford Trust and Braemar quarterly based on the actual capital raised through Ashford Securities. As of March 31, 2021, Ashford Trust has funded approximately $3.0 million. As of March 31, 2021 and December 31, 2020, $66,000 and $85,000, respectively, of the pre-funded amounts were included in “other assets” on our consolidated balance sheets.

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


	Three Months Ended March 31,
Line Item	2021		2020
Corporate, general and administrative	$	19	$	698

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 sixty 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 are 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 Ashford Trust Directors 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 and Amendment No. 1 to the Amended and Restated Advisory Agreement. As a result, the ERFP Agreement will

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terminate in accordance with its terms at the end of the current term on June 26, 2021. Following expiration of the ERFP Agreement, we intend to amend the Second Amended and Restated Advisory Agreement, dated January 14, 2021, to reflect certain changes necessary in connection with the expiration of the ERFP Agreement.

Project Management Agreement

In connection with Ashford Inc.’s August 8, 2018 acquisition of Remington Lodging’s project management business, we entered into a project management agreement with Ashford Inc.’s subsidiary, Premier Project Management LLC (“Premier”), pursuant to which Premier provides project management 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 project management agreement, we pay Premier: (a) project management 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 project management 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 Agreement

On November 6, 2019, Ashford Inc. completed the acquisition of Remington Lodging’s hotel management business. As a result of the acquisition, hotel management services are provided by Remington Hotels, a subsidiary of Ashford Inc., under the respective hotel management agreement with each customer, including Ashford Trust and Braemar.

At March 31, 2021, Remington Hotels managed 68 of our 102 hotel properties and the WorldQuest condominium properties.

We pay monthly hotel management fees equal to the greater of approximately $14,000 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 ~~total carrying value~~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 ~~$760,000~~such hotel; and ~~$756,000 at~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively. Our ownership interest is reported in equity~~(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 ~~consolidated balance sheets. Noncontrolling interests in consolidated entities were allocated income~~best interest of ~~$22,000 and $4,000 for~~our Company not to engage such related party, or, based on the ~~three and nine~~ ~~months ended~~ ~~September 30, 2017, respectively, and income of $16,000 and loss of $16,000 for~~related party’s prior performance, it is believed that another manager could perform the ~~three and nine~~ ~~months ended September 30, 2016, respectively.~~management or other duties materially better.

~~13.~~16. Commitments and Contingencies

Restricted Cash—Under certain management and debt agreements for our hotel properties existing at ~~September 30, 2017,~~March 31, 2021, 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 4% to 6% of gross revenues for capital improvements. The Company is currently working 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, 2017,~~March 31, 2021, we pay franchisor royalty fees between 1%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 ~~2018~~2021 and 2047. When a franchise term expires, the franchisor has no obligation to renew the franchise. A franchise termination

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could have a material adverse effect on the operations or the underlying value of the affected hotel due to loss of associated name recognition, marketing support, and centralized reservation systems provided by the franchisor. A franchise termination could also have a material adverse effect on cash available for distribution to stockholders. 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~~3 times the average annual fees incurred for that property.

~~We incurred~~The table below summarizes the franchise fees ~~of $17.8 million and $52.6 million for the~~ ~~three and nine~~ ~~months ended September 30, 2017, respectively, and $18.2 million and $54.4 million for the~~ ~~three and nine~~ ~~months ended September 30, 2016, respectively. Franchise fees are included in “other” hotel expenses in the consolidated statements of operations.~~incurred (in thousands):


	Three Months Ended March 31,
Line Item	2021		2020
Other hotel expenses	$	5,738	$	14,059

Management Fees—Under hotel management agreements for our hotel properties existing at ~~September 30, 2017,~~March 31, 2021, we pay a) monthly ~~property~~hotel management fees equal to the greater of approximately ~~$13,000~~$14,000 per hotel (increased annually based on consumer price index adjustments) or 3% of gross revenues, or in some cases 2%1% to 7% of gross revenues, as well as annual incentive management fees, if applicable, b) project management fees of up to 4% of project costs, c) market service fees including purchasing, design and construction management not to exceed 16.5% of project management budget cumulatively, including project management fees, and d) other general fees at current market rates as approved by our independent directors, if required.applicable. These hotel management agreements expire from ~~2020~~2021 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.

Additionally, we pay: (a) project management fees of up to 4% of project costs; (b) market service fees including purchasing, design and construction management not to exceed 16.5% of project management budget cumulatively, including project management fees; and (c) other general fees at current market rates as approved by our independent directors, if required. See note 15.

Income Taxes—We and our subsidiaries file income tax returns in the federal jurisdiction and various states. Tax years ~~2013~~2016 through ~~2016~~2020 remain subject to potential examination by certain federal and state taxing authorities.

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

~~(unaudited)~~

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, no0 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 (“NLRB”) filed a complaint against Remington Lodging seeking, among other things, a ruling that Remington Lodging’s withdrawal of recognition was unlawful. ~~Pending the final determination of the NLRB complaint, including appeals, the~~The pension fund entered into a settlement agreement with Remington Lodging on November 1, 2011, providing that ~~(a)~~ Remington Lodging will continue to make monthly pension fund payments pursuant to the collective bargaining ~~agreement, and (b) if the withdrawal~~agreement. As of ~~recognition is ultimately deemed lawful,~~March 31, 2021, Remington Lodging ~~will~~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 anagreed 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 ~~shall~~would be the unfunded pension liability of $1.7 million minus $100,000 (or $1.6 million). This remaining unfunded pension liability ~~shall~~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 ~~the twenty-(20)-year~~twenty years, which is capped, ~~period,~~ unless Remington Lodging elects to pay the unfunded pension liability amount earlier. ~~We agreed to indemnify Remington Lodging for the payment of the unfunded pension liability, if any, as set forth in the settlement agreement.~~

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 in which the landlord, Palm Beach Florida Hotel and Office Building Limited Partnership, a subsidiary of the Company, claimed that the tenant had violated various lease provisions of the lease agreement and was therefore in default. The tenant counterclaimed and asserted multiple claims including that it had been wrongfully evicted. The litigation was instituted by the plaintiff in November 2008 in the Circuit Court of the Fifteenth Judicial Circuit, in and for Palm Beach County, Florida and proceeded to a jury trial on June 30, 2014. The jury entered its verdict awarding the tenant total claims of $10.8 million and ruling against the landlord on its claim of breach of contract. In 2016, the Court of Appeals reduced the original $10.8 million judgment to $8.8 million and added pre-judgment interest on the wrongful eviction judgment. The case was further appealed to the Florida Supreme Court. On May 23, 2017, the trial court issued an order compelling the company that issued the supersedeas bond, RLI Insurance Company (“RLI”), to pay approximately $10.0 million. On June 1, 2017, RLI paid Nantucket this amount and sought reimbursement from the ~~Company.~~Company, and on June 7, 2017,

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

the Company paid $2.5 million of the judgment. On June 27, 2017, the Florida Supreme Court denied the ~~Company's~~Company’s petition for review. As a result, all of the appeals were exhausted and the judgment was final with the determination and reimbursement of ~~attorney's~~attorney’s fees being the only remaining dispute. On June 29, 2017, the balance of the judgment of $3.9 million was paid to Nantucket by the Company.

On July 26, 2018, we paid $544,000 as part of a settlement on certain legal fees. The ~~Company estimates its total loss including post judgment interest and reimbursement~~negotiations relating to the potential payment of the ~~plaintiff’s~~remaining attorney’s fees are still ongoing. As of March 31, 2021, we have accrued approximately $504,000 in legal fees, ~~to be approximately $17.3 million as~~which represents the Company’s estimate of ~~September 30, 2017, resulting in additional expense of $26,000 and $4.1 million for the three and nine months ended September 30, 2017, respectively.~~

On June 29, 2017, RLI filed suit in Federal District Court in Dallas seeking to recover the amounts previously paid to Nantucket. On July 19, 2017, the Company paid approximately $10.0 million to RLI mooting RLI's claim subject only to the alleged claim for attorney fees. With the agreement for the Company to pay the negotiated settlement of RLI's attorney fees in the amount of ~~$100,000,~~potential remaining legal fees that could be owed.

On December 4, 2015, Pedro Membrives filed a ~~Stipulation~~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 ~~Dismissal was~~summary judgment on liability. The defendants appealed the summary judgment to the New York State Appellate Division, Second Department (the “Second Department”), and the appeal is still pending. By Order dated May 7, 2020, the Second Department referred the matter for mandatory mediation. The parties participated in mediation on June 22, 2020, however, they were not able to arrive at mutually acceptable settlement terms. Notwithstanding the pending appeal on the summary judgment issue, the trial court continued the litigation with respect to the plaintiffs’ alleged damages, however, the trial judge retired at the end of 2020 without deciding any issues relating to damages. The case has been re-assigned, and the new trial judge has directed the parties to explore another round of mediation. If this effort is unsuccessful, the trial court will likely schedule a hearing on the damages issue. The defendants intend to vigorously defend against the plaintiffs’ claims and the Company does not believe that an unfavorable outcome is probable. If, however, the plaintiffs’ motion for summary judgment on liability is upheld and the Company is unsuccessful in any further appeals, the Company estimates that damages could range between approximately $5.8 million and $11.9 million plus interest and attorneys’ fees. As of March 31, 2021, 0 amounts have been accrued.

In June 2020, each of the Company, Braemar, Ashford Inc., and Lismore, a subsidiary of Ashford Inc. (collectively with the Company, Braemar, Ashford Inc. and Lismore, the “Ashford Companies”), received an administrative subpoena from the SEC. The Company’s administrative subpoena requires the production of documents and other information since January 1, 2018 relating to, among other things, (1) related party transactions among the Ashford Companies (including the Lismore Agreement between the Company and Lismore pursuant to which the Company engaged Lismore to negotiate the refinancing, modification or forbearance of certain mortgage debt) or between any of the Ashford Companies and any officer, director or owner of the Ashford Companies or any entity controlled by any such person, and (2) the Company’s accounting policies, procedures, and internal controls related to such related party transactions. In addition, in October 2020, Mr. Monty J. Bennett, chairman of our board of directors, received an administrative subpoena from the SEC requiring testimony and the production of documents and other information substantially similar to the requests in the subpoenas received by the Ashford Companies. The Company and Mr. Monty J. Bennett are responding to the administrative subpoenas.

A class action lawsuit has been filed against one of the Company’s hotel management companies alleging violations of certain California employment laws, which class action affects 9 hotels owned by subsidiaries of the Company. The court has entered an order granting class certification with respect to: (1) 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 ~~November~~premises during rest breaks; and (2) 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, ~~2017.~~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. 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 March 31, 2021, 0 amounts have been accrued.

We are also engaged in other ~~various~~ legal proceedings ~~which~~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:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

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, ranges from remote to~~literature. We recognize a loss when we believe the loss is both probable and reasonably ~~possible and to probable.~~estimable. Based on ~~estimates of~~ the ~~range of potential losses associated with~~information available to us relating to these ~~matters, management does~~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, or results of ~~operations.~~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 and if~~certainty. If we ~~fail to~~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, or results of operations, or cash flows could be materially adversely affected in future periods.

~~14.~~17. Segment Reporting

We operate in ~~one~~1 business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments ~~refer~~refers 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 and exhibit similar long-term financial performance.~~characteristics. As of ~~September 30, 2017~~March 31, 2021 and December 31, ~~2016,~~2020, all of our hotel properties were domestically located.

18. Subsequent Events

From April 1, 2021 through May 6, 2021, we have issued approximately 20.2 million shares of our common stock for gross proceeds of approximately $42.6 million to Lincoln Park under the 2nd Purchase Agreement.

From April 1, 2021 through May 6, 2021, Ashford (the “Company”) 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. During this period, the Company exchanged approximately 17.2 million shares of its common stock for an aggregate of approximately 1.7 million shares of preferred stock.

In April 2021, the Company experienced a cumulative ownership change within the meaning of Section 382 of the Code. Section 382 imposes substantial restrictions on the utilization of net operating losses and other tax attributes in the event of a cumulative ownership change of a corporation of more than 50% over a three year period. Accordingly, a company’s ability to use pre-change net operating loss carryforwards and other tax attributes may be limited as prescribed under Section 382. Management does not believe that the ownership change will have a material impact on tax expense for the current year.

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

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

~~(unaudited)~~

~~15. Related Party Transactions~~

Ashford LLC, a subsidiary of Ashford Inc., acts as our advisor, and as a result, we pay advisory fees to Ashford LLC. We are required to pay Ashford LLC a quarterly base fee that is a percentage of our total market capitalization on a declining sliding scale plus the Key Money Asset Management Fee (defined in our advisory agreement as the aggregate gross asset value of all key money assets multiplied by 0.70%), subject to a minimum quarterly base fee, as payment for managing our day-to-day operations in accordance with our investment guidelines. Total market capitalization includes the aggregate principal amount of our consolidated indebtedness (including our proportionate share of debt of any entity that is not consolidated but excluding our joint venture partners’ proportionate share of consolidated debt). The range of base fees on the scale are between 0.70% and 0.50% per annum for total market capitalization that ranges from less than $6.0 billion to greater than $10.0 billion. At September 30, 2017, the quarterly base fee was 0.70% based on our current market capitalization. We are also required to pay Ashford LLC an incentive fee that is earned annually by Ashford LLC in each year that our annual total stockholder return exceeds the average annual total stockholder return for our peer group, subject to the FCCR Condition, as defined in the advisory agreement. We also reimburse Ashford LLC for certain reimbursable overhead and internal audit, insurance claims advisory and asset management services, as specified in the advisory agreement. We also record equity-based compensation expense for equity grants of common stock and LTIP units awarded to our officers and employees of Ashford LLC in connection with providing advisory services equal to the fair value of the award in proportion to the requisite service period satisfied during the period.

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Advisory services fee
Base advisory fee $ 8,579
$ 8,576
$ 25,934
$ 25,842
Reimbursable expenses ⁽¹⁾
1,641
1,485
5,800
4,550
Equity-based compensation ⁽²⁾
4,392
1,887
7,748
4,535
Total advisory services fee $ 14,612
$ 11,948
$ 39,482
$ 34,927

~~________~~


⁽¹⁾	~~Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services.~~


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

In 2016, $4.0 million of key money consideration was invested in furniture, fixtures and equipment by Ashford Inc. to be used by Ashford Trust, which represented all of the key money consideration for the Le Pavillon Hotel. The hotel advisory services and the lease are considered a multiple element arrangement, in accordance with the applicable accounting guidance. As such, a portion of the base advisory fee is allocated to lease expense equal to the estimated fair value of the lease payments that would have been made. As a result, $156,000 and $476,000 of advisory expense was allocated to lease expense and was included in “other” hotel expense in the consolidated statements of operations for the three and nine months ended September 30, 2017. No advisory expense was allocated to lease expense for the three and nine months ended September 30, 2016.

On January 19, 2017, AHT SMA, LP, a Delaware limited partnership and a wholly-owned subsidiary of Ashford Trust entered into an Investment Management Agreement (the “Agreement”) with Ashford Investment Management, LLC (“AIM”), a subsidiary of Ashford Inc., to manage all or a portion of Ashford Trust’s excess cash (the “Account”). Pursuant to the Agreement, the Company retained and appointed AIM as the investment manager for us. The Agreement will govern the relationship between Ashford Trust and AIM, as well as grant AIM certain rights, powers and duties to act on behalf of the Company. AIM will not be compensated by us for its services under the Agreement. We bear all costs and expenses of the establishment and ongoing maintenance of the Account as well as all costs and expenses of AIM. For the three and nine months ended September 30, 2017, investment management reimbursable expenses were $522,000 and $1.5 million, respectively, which are included in “corporate, general and administrative” expense in the consolidated statements of operations.

At September 30, 2017 and December 31, 2016, we had payables of $13.7 million and $15.7 million, respectively, included in due to Ashford Inc., net, associated with the advisory services fee discussed above. In addition, at March 31, 2017, we held a receivable from the AQUA U.S. Fund of $2.6 million, associated with the hold back from the AQUA U.S. Fund, of which the funds were received during the second quarter of 2017.

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

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

~~(unaudited)~~

Certain employees of Remington Lodging, who perform work on behalf of Ashford Trust, were granted approximately 173,000 shares and 131,000 shares of restricted stock under the Ashford Trust Stock Plan in 2016 and 2017, respectively. These share grants were accounted for under the applicable accounting guidance related to share-based payments granted to non-employees and are recorded as a component of “management fees” in our consolidated statements of operations. Expense of $222,000 and $439,000 was recognized for the three and nine months ended September 30, 2017, respectively, and expense of $230,000 and $372,000 for the three and nine months ended September 30, 2016, respectively. The unamortized fair value of these grants was $1.3 million as of September 30, 2017, which will be amortized over a period of 2.5 years.

~~16. Subsequent Events~~

On October 30, 2017, we refinanced our $94.7 million mortgage loan, with an outstanding balance of $94.5 million, secured by the Hilton Boston Back Bay in Boston, Massachusetts. The new mortgage loan totals $97.0 million, provides for a floating interest rate of LIBOR + 2.00%, a five-year term with no extension options and is secured by the Hilton Boston Back Bay.

On October 31, 2017, we refinanced our $412.5 million mortgage loan, secured by seventeen hotels. The new mortgage loan totals $427.0 million, is interest only, provides for a floating interest rate of LIBOR + 3.00% and has a two-year initial term with five one-year extension options. The new mortgage loan is secured by the following seventeen hotels: the Courtyard Alpharetta, Courtyard Bloomington, Courtyard Crystal City, Courtyard Foothill Ranch, Embassy Suites Austin, Embassy Suites Dallas, Embassy Suites Houston, Embassy Suites Las Vegas, Embassy Suites Palm Beach, Hampton Inn Evansville, Hilton Garden Inn Jacksonville, Hilton Nassau Bay, Hilton St. Petersburg, Residence Inn Evansville, Residence Inn Falls Church, Residence Inn San Diego and Sheraton Indianapolis.

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” or “we” or~~“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 COVID-19 and numerous governmental travel restrictions and other orders on our business including one or more possible recurrences of COVID-19 cases causing state and local governments to reinstate travel restrictions;

•our business and investment ~~strategy, including our ability to complete proposed business transactions described herein or the expected benefit of any such transactions;~~strategy;

•anticipated or expected purchases or sales of assets;

•our projected operating results;

•completion of any pending transactions;

•our ability to ~~obtain future~~restructure existing property level indebtedness;

•our ability to secure additional financing ~~arrangements;~~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;

•our understanding of our competition;

•market trends;

•projected capital expenditures; and

•the impact of technology on our operations and ~~business.~~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. 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, ~~2016,~~2020, as filed with the Securities and Exchange Commission (“SEC”) on March ~~16, 2017,~~15, 2021, 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 ~~updated in~~supplemented by our subsequent Quarterly Reports on Form ~~10-Q;~~10-Q and other filings under the Exchange Act;

~~general~~•adverse effects of the COVID-19 pandemic, including a significant reduction in business and ~~economic business conditions affecting the lodging~~personal travel and travel ~~industry;~~restrictions in regions where our hotels are located, and one or more possible recurrences of COVID-19 cases causing a further reduction in business and personal travel and potential reinstatement of travel restrictions by state or local governments;

•ongoing negotiations with our lenders regarding potential forbearance or the exercise by our lenders of their remedies for default under our loan agreements;

•actions by our lenders to accelerate loan balances and foreclose on the hotel properties that are security for our loans that are in default;

•actions by the lenders of our senior secured term loan 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;

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

Table of ~~qualified personnel to our advisor;~~Contents

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

•the degree and nature of our competition;

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

•the expenditures, disruptions and uncertainties associated with a potential proxy contest;

•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;

•our ability to implement effective internal controls;

•the timing or outcome of the SEC investigation;

•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 ~~REITs; and~~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.~~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 ~~we use words or phrases such as “will likely result,” “may,” “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” or similar expressions, we intend~~considering forward-looking statements, you should keep in mind the matters summarized under “Item 1A. Risk Factors” in Part I of our 2020 10-K 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 ~~identify~~differ significantly from those contained in our forward-looking statements. ~~You should~~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. We are~~statements, which reflect our views as of the date of this Quarterly Report. Furthermore, we do not ~~obligated~~intend to ~~publicly~~ update ~~or revise~~ any of our forward-looking statements ~~whether~~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 March 31, 2021, we owned 102 consolidated hotel properties, including 100 hotel properties directly owned, and two hotel properties owned through a ~~result~~majority-owned investment in a consolidated entity, which represents 22,569 total rooms, or 22,542 net rooms excluding those attributable to our partner. Currently, all of ~~new information, future events, or otherwise.~~

~~Overview~~

~~We believe that industry fundamentals continue to predict RevPAR growth through 2017, albeit at a slower pace. We will continue to seek ways to benefit from~~our hotel properties are located in the ~~cyclical nature of the hotel industry.~~United States.

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

~~acquisition~~•adjusting cost and operational models due to the impact of COVID-19 on the hotel ~~properties~~industry;

•maintain maximum cash and cash equivalents liquidity;

•opportunistically exchange preferred stock into common stock;

•negotiate forbearance and other agreements with lenders as necessary with respect to our loans that are ~~consistent with our investment strategy;~~in default;

•disposition of non-core hotel properties;

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

~~maintaining adequate liquidity;~~

•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;

•utilizing hedges and derivatives to mitigate risks; and

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

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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”) 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.

~~maximizing stockholder returns via capital appreciation and dividends.~~

~~Recent Developments~~

~~On January 19, 2017, AHT SMA, LP, a Delaware limited partnership and a wholly-owned subsidiary of~~We are advised by Ashford ~~Trust entered into an Investment Management Agreement (the “Agreement”) with Ashford Investment Management,~~ LLC, ~~(“AIM”),~~ 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 ~~manage all or~~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 March 31, 2021, Remington Hotels, a ~~portion~~subsidiary of Ashford ~~Trust’s excess~~Inc., managed 68 of our 102 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 March 31, 2021, owned approximately 607,743 shares of Ashford Inc. common stock, which represented an approximate 20.2% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which is exercisable (at an exercise price of $117.50 per share) into an additional approximate 3,991,191 shares of Ashford Inc. common stock, which if exercised as of March 31, 2021 would have increased the Bennetts’ ownership interest in Ashford Inc. to 65.7%, 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

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, subsequently spread to other regions of the world, and has resulted in significant travel restrictions and extended shutdown of numerous businesses in every state in the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Since late February 2020, we have experienced a significant decline in occupancy and RevPAR and we expect the significant occupancy and RevPAR declines associated with COVID-19 to continue as we are experiencing significant reservation cancellations as well as a significant reduction in new reservations. The prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry and our portfolio have experienced the postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, in March 2020, the Company temporarily suspended operations at 23 of its 116 hotels and dramatically reduced staffing and expenses at its hotels that remained operational. As of March 31, 2021, operations at one of the Company’s hotels remained temporarily suspended. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. The full financial impact of the reduction in hotel demand caused by the pandemic cannot be reasonably estimated at this time due to uncertainty as to its severity and duration. In addition, one or more possible recurrences of COVID-19 cases could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash ~~(the “Account”).~~flow throughout 2021 and for the foreseeable future. As a result, the Company suspended the quarterly cash dividend on its common stock beginning in the first quarter of fiscal year 2020, suspended the quarterly cash dividend on its preferred stock beginning in the second quarter of fiscal year 2020, reduced planned capital expenditures, and worked closely with its hotel managers to significantly reduce its hotels’ operating expenses.

Beginning on April 1, 2020, we did not make principal or interest payments under nearly all of our loans, which constituted an “Event of Default” as such term is defined under the applicable loan documents. Pursuant to the ~~Agreement,~~terms of the applicable loan documents, such an Event of Default caused an automatic increase in the interest rate on our outstanding loan balance for the period such Event of Default remains outstanding. Following an Event of Default, our lenders can generally elect to accelerate

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all principal and accrued interest payments that remain outstanding under the applicable loan agreement and foreclose on the applicable hotel properties that are security for such loans.

The Company continues to have discussions with its lenders about potential loan modifications on its property level debt. As of May 6, 2021, forbearance agreements have been executed on most, but not all of our loans. In the aggregate, we have entered into forbearance and other agreements with varying terms and conditions that conditionally waive or defer payment defaults for loans with a total outstanding principal balance of approximately $3.6 billion out of approximately $3.7 billion in property level debt outstanding as of March 31, 2021. See note 7 to our consolidated financial statements.

On January 15, 2021, the Company ~~retained~~entered into a senior secured term loan facility comprising of (a) initial term loans in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million and ~~appointed AIM~~(c) additional delayed draw term loans in an aggregate principal amount of up to $100 million. See note 7 to our consolidated financial statements.

As of March 31, 2021, the Company held cash and cash equivalents of $225.4 million and restricted cash of $67.7 million. We are currently experiencing significant variability in the operating cash flows of our hotel properties. We are also taking several steps to reduce our cash utilization and potentially raise additional capital. The Company is also working more generally to contain costs while it experiences a significant decline in occupancy and RevPAR. The Company continues to suspend its quarterly cash dividend on its common and preferred stock and to look for opportunities to renegotiate cash obligations where possible. The Company continues to work closely with its hotel managers to significantly reduce its hotel operating expenses. The Company is dependent on its hotel managers to make appropriate staffing decisions and to appropriately reduce staffing when market conditions are poor.

We cannot predict when hotel operating levels will return to normalized levels after the effects of the pandemic subside, whether our hotels will be forced to shut down operations or whether one or more governmental entities may impose additional travel restrictions due to a resurgence of COVID-19 cases in the future. As a result of these factors arising from the impact of the pandemic, we are unable to estimate future financial performance with certainty. However, based on our completed senior secured term loan facility with Oaktree Capital Management L.P. and forbearance and other agreements with our property-level lenders, our current unrestricted and restricted cash on hand, our current cash utilization and forecast of future operating results for the next 12 months from the date of this report, and the actions we have taken to improve our liquidity, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Facts and circumstances could change in the ~~investment~~future that are outside of management’s control, such as additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19.

The spread of COVID-19 and the recent developments surrounding the global pandemic are having significant negative impacts on our business. In response to the impact of COVID-19 on the hospitality industry, the Company is deploying numerous strategies and protocols to provide financial flexibility going forward to navigate this crisis, including:

•as of May 6, 2021, the Company has temporarily suspended operations at one hotel property. The Company’s remaining 101 hotel properties are open and operating;

•the Company has reduced its planned spending for capital expenditures for fiscal year 2021;

•the Company has suspended its common stock dividends;

•the Company has suspended its preferred stock dividends;

•the Company has taken proactive and aggressive actions to protect liquidity and reduce corporate expenses through the curtailment of all non-essential expenses and will continue to take all necessary additional actions to preserve capital and liquidity; and

•as of March 31, 2021, the Company held cash and cash equivalents of $225.4 million and restricted cash of $67.7 million. The vast majority of the restricted cash is comprised of lender and manager held reserves. The Company has worked with its property managers and lenders in order to utilize lender and manager held reserves to fund operating shortfalls. At March 31, 2021, there was also $11.8 million due to the Company from third-party hotel managers, which is primarily the Company’s cash held by one of its property managers which is also available to fund hotel operating costs.

2021 Developments

On January 4, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust: (i) an additional deferral of the payment of the base advisory fees that were previously deferred for ~~us.~~the months of October 2020, November 2020 and December 2020; and (ii) a deferral of approximately $2.8 million in base advisory fees with respect to the month of January 2021. The ~~Agreement will govern~~foregoing payments were due and payable on January 11, 2021. Additionally, the ~~relationship between~~Ashford Inc.

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Directors waived any claim against Ashford Trust and ~~AIM, as well as grant AIM certain rights, powers~~Ashford Trust’s affiliates and ~~duties to act on behalf~~each of their officers and directors for breach of the ~~Company. AIM will not~~Advisory Agreement or any damages that may have arisen in absence of such fee deferral.

On January 4, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust: (i) an additional deferral of the payment of any Lismore success fees for the months of October 2020, November 2020 and December 2020; and (ii) a deferral of any additional Lismore success fees for the month of January 2021. The foregoing payments were payable on January 11, 2021. Additionally, the Ashford Inc. Directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Lismore Agreement or any damages that may have arisen in absence of such fee deferral. All amounts were paid in January 2021.

On January 11, 2021, the independent members of the board of directors of Ashford Inc. granted Ashford Trust an additional deferral of the base advisory fees and any Lismore success fees for the months of October 2020, November 2020, December 2020 and January 2021 that were previously deferred such that all such fees would be ~~compensated~~due and payable on the earlier of (x) January 18, 2021 and (y) immediately prior to the closing of the Oaktree Credit Agreement. Additionally, the Ashford Inc. directors waived any claim against Ashford Trust and Ashford Trust’s affiliates and each of their officers and directors for breach of the Advisory Agreement and Lismore Agreement or any damages that may have arisen in absence of such fee deferral.

On January 14, 2021, we entered into the Second Amended and Restated Advisory Agreement with Ashford LLC. The Second Amended and Restated Advisory Agreement amends and restates the terms of the Amended and Restated Advisory Agreement, dated June 10, 2015, as amended by the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as 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 the list of peer group members; (iv) suspend the requirement that we maintain a minimum Consolidated Tangible Net Worth until the first fiscal quarter beginning after June 30, 2023; and (v) revise the criteria that would constitute a Company Change of Control in order to provide us ~~for its services~~additional flexibility to dispose of underperforming assets negatively impacted by COVID-19. In connection with the transactions contemplated by the Credit Agreement, dated as of January 15, 2021 (the “Credit Agreement”), by and among Ashford Trust, Oaktree and the lenders party thereto, on January 15, 2021, we entered into the SNDA with Ashford Inc. and Oaktree pursuant to which we agreed to subordinate to the prior repayment in full of all obligations under the ~~Agreement. We bear all costs and expenses~~Credit Agreement, (1) prior to the later of (i) the second anniversary of the ~~establishment~~Credit Agreement and ~~ongoing maintenance~~(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, (the “Advisory Fee Cap”) (2) any termination fee or liquidated damages amounts under the advisory agreement, or any amount owed under any enhanced return funding program in connection with the termination of the ~~Account~~advisory agreement or sale or foreclosure of assets financed thereunder, and (3) any payments to Lismore in connection with the transactions contemplated by the Credit Agreement.

On January 15, 2021, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders”) and Oaktree Fund Administration, LLC, as ~~well as all costs~~administrative agent (the “Administrative Agent”). The Credit Agreement provides that, subject to the conditions set forth therein, the Lenders will make available to the Borrower a senior secured term loan facility comprising of (a) initial term loans (the “Initial Term Loan”) in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million (the “Initial DDTL”) and ~~expenses~~(c) additional delayed draw term loans in an aggregate principal amount of ~~AIM.~~up to $100 million (the “Additional DDTL,” and together with the Initial Term Loan and the Initial DDTL, collectively, the “Loans”), in each case to fund general corporate operations of the Company and its subsidiaries.

The Loans under the Credit Agreement will bear interest (a) with respect to the Initial Term Loan and the Initial DDTL, at an annual rate equal to 16% for the first two years, reducing to 14% thereafter and (b) with respect to the Additional DDTL, at an annual rate equal to 18.5% for the first two years, reducing to 16.5% thereafter. Interest payments on the Loans will be due and payable in arrears on the last business day of March, June, September and December of each calendar year and the maturity date. For the first two years following the closing of the Credit Agreement, the Borrower will have the option to pay accrued interest “in kind” by adding such amount of accrued interest to the outstanding principal balance of the Loans (such interest, “PIK Interest”). The initial maturity date of the Credit Agreement (the “Maturity Date”) shall be three years, with two optional one-year extensions subject to satisfaction of certain terms and conditions. The Lenders shall, subject to certain terms, have the ability to make protective advances to the Borrower pursuant to the terms of the Credit Agreement to cure defaults with respect to mortgage and mezzanine-level indebtedness of subsidiaries of the Borrower having principal balances in excess of $400 million.

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On ~~February 1, 2017,~~ January 20, 2021, the Company sold the ~~Renaissance hotel~~Le Meridien in ~~Portsmouth, Virginia (“Renaissance Portsmouth”)~~Minneapolis, Minnesota for approximately ~~$9.2~~$7.9 million in cash. The sale resulted in a loss of $43,000 for the nine months ended September 30, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. We repaid $20.2 million of principal on our mortgage loan that was partially secured by the Renaissance Portsmouth.approximately $124,000.

On ~~February 20, 2017,~~January 22, 2021, the ~~board of directors of the~~ Company appointed Mr. Douglas A. Kessler as Chief Executive Officer of the Company, effective February 21, 2017. Also on February 20, 2017, Mr. Monty J. Bennett ceased to serve as the Company’s Chief Executive Officer. Mr. Bennett remains the Chairman of the Board. In order to provide greater focus to the Company, on April 27, 2017, Mr. Kessler resigned from the Board of Directors of Ashford Prime and no longer is President of Ashford Prime.

~~In connection with the appointment of Mr. Kessler as Chief Executive Officer of the Company, the Company and Mr. Kessler~~ entered into a ~~Restricted Stock Award~~Standby Equity Distribution Agreement (the ~~“Award Agreement”~~“SEDA”) with YA II PN, Ltd., (“YA”), pursuant to which ~~Mr. Kessler received 359,477~~the Company will be able to sell up to 13,718,319 shares of ~~Restricted Stock~~its common stock (the “Commitment Amount”) at the Company’s request any time during the commitment period commencing on January 22, 2021, and terminating on the earliest of (i) the first day of the month next following the 36-month anniversary of the SEDA or (ii) the date on which YA shall have made payment of Advances (as defined in the ~~Award Agreement)~~SEDA) pursuant to the SEDA for shares of the Company’s common stock equal to the Commitment Amount (the “Commitment Period”). Other than with respect to the Initial Advance (as defined below) the shares sold to YA pursuant to the SEDA would be purchased at 95% of the Market Price (as defined below) and would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock. “Market Price” shall mean the lowest daily VWAP (as defined below) of the Company’s common stock during the 5 consecutive trading days commencing on the trading day following the date the Company submits an advance notice to YA. “VWAP” means, for any trading day, the daily volume weighted average price of the Company’s common stock for such date on the principal market as reported by Bloomberg L.P. during regular trading hours.

At any time during the Commitment Period the Company may require YA to purchase shares of the Company’s common stock by delivering a written notice to YA setting forth the Advance Shares (as defined in the SEDA) that the Company desires to issue and sell to YA (the “Advance Notice”). The Company shall, in its sole discretion, select the Advance Shares, not to exceed the Maximum Advance Shares of $5.0 million, it desires to issue and sell to the Investor in each Advance Notice and the time it desires to deliver each Advance Notice. There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof.

Pursuant to the SEDA, we currently intend to use the net proceeds from any sale of the shares for working capital purposes, including the repayment of outstanding debt. There are no other restrictions on future financing transactions. The SEDA does not contain any right of first refusal, participation rights, penalties or liquidated damages. We are not required to pay any additional amounts to reimburse or otherwise compensate YA in connection with the transaction except for a $10,000 structuring fee. As of May 6, 2021, the Company has issued approximately 13.7 million shares of common stock for gross proceeds of approximately $40.6 million under the SEDA.

On February 9, 2021, the Company executed an agreement regarding existing defaults and extension options for the MS 17 Pool loan pursuant to which (a) the Company paid to the lender all current and past due debt service and tax reserve contributions, and (b) the lender suspended all FF&E reserve contributions (for the furniture, fixtures and equipment reserve accounts generally reserved to finance capital improvements to the property) through December 2021. Additionally, the modification agreement lowers the debt yield extension test for the fifth extension option from 10.38% to 8.0%. Finally, the forbearance agreement provides that the second extension option is deemed exercised as of November 9, 2020.

From January 1, 2021 through May 6, 2021, the Company entered into privately negotiated exchange agreements with certain holders of its 8.45% Series D Cumulative Preferred Stock, par value $0.01 per share, 7.375% Series F Cumulative Preferred Stock, par value $0.01 per share, 7.375% Series G Cumulative Preferred Stock, par value $0.01 per share, 7.50% Series H Cumulative Preferred Stock, par value $0.01 per share and 7.50% Series I Cumulative Preferred Stock, par value $0.01 per share in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. During this period, the Company exchanged a total of 46.7 million shares of its common stock, par value $0.01 per share for an aggregate of 5.9 million shares of Preferred Stock.

On March 12, 2021, Ashford Trust and Lincoln Park entered into the 2 ~~2017, we invested an additional $650,000 in OpenKey, resulting in a 15.35% total ownership interest.~~nd Purchase Agreement, which provided that subject to the terms and conditions set forth therein, the Company may issue or sell to Lincoln Park up to 20,660,880 shares of common stock, from time to time during the term of the 2nd Purchase Agreement. Upon entering into the 2nd Purchase Agreement, the Company issued 162,655 shares of common stock as consideration for Lincoln Park’s execution and delivery of the 2nd Purchase Agreement. As of May 6, 2021, the Company has issued approximately 20.5 million shares of common stock for gross proceeds of approximately $43.4 million.

On ~~March 6, 2017,~~April 20, 2021, the Company sold the Embassy Suites in Syracuse, New York (“Embassy Suites Syracuse”) for approximately $8.8 million in cash. The sale resulted in a loss of $40,000 for the six months ended September 30, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. We repaid $20.6 million of principal on our mortgage loan that was partially secured by the Embassy Suites Syracuse.

~~On March 7, 2017, AIM REHE Funds GP, LP (“AIM GP”), the general partner of the AQUA U.S. Fund, provided~~delivered written notice to Ashford ~~Trust~~LLC of its ~~election~~intention not to ~~dissolve~~renew the ~~AQUA U.S. Fund pursuant~~ERFP Agreement and Amendment No. 1 to ~~Section 6.1(a)~~the Amended and Restated Advisory Agreement, through which Ashford LLC agreed to make certain investments to facilitate the acquisition of properties by the Operating Partnership that are recommended by

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Ashford LLC. As a result, the ERFP Agreement will terminate in accordance with its terms at the end of the current term on June 26, 2021. Following expiration of the ERFP Agreement, we intend to amend the Second Amended and Restated ~~Limited Partnership~~Advisory Agreement, dated January 14, 2021, to reflect certain changes necessary in connection with the expiration of the ~~AQUA U.S. Fund~~ERFP Agreement.

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.”

Revenue per available room, or RevPAR, is a commonly used measure within the hotel industry to evaluate hotel operations. RevPAR is defined as the product of the ADR charged and the average daily occupancy achieved. RevPAR does not include revenues from food and beverage or parking, telephone, or other guest services generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many

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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 periods under comparison). 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.

The following table summarizes changes in key line items from our consolidated statements of operations (in thousands):


	Three Months Ended March 31,				Favorable/ (Unfavorable) Change
	2021		2020
Total revenue	$	115,830	$	281,877	$	(166,047)
Total hotel operating expenses	(91,547)		(201,710)		110,163
Property taxes, insurance and other	(17,471)		(20,472)		3,001
Depreciation and amortization	(57,627)		(66,350)		8,723
Impairment charges	—		(27,613)		27,613

Advisory services fee	(12,161)		(15,299)		3,138
Corporate, general and administrative	(6,997)		(3,492)		(3,505)
Gain (loss) on disposition of assets and hotel properties	(69)		3,623		(3,692)
Operating income (loss)	(70,042)		(49,436)		(20,606)
Equity in earnings (loss) of unconsolidated entities	(137)		(79)		(58)
Interest income	13		611		(598)
Other income (expense)	229		1,522		(1,293)
Interest expense and amortization of discounts and loan costs	(33,264)		(57,085)		23,821
Write-off of premiums, loan costs and exit fees	(3,379)		(95)		(3,284)

Unrealized gain (loss) on marketable securities	—		(1,477)		1,477
Unrealized gain (loss) on derivatives	919		4,422		(3,503)
Income tax (expense) benefit	271		(303)		574



Net income (loss)	(105,390)		(101,920)		(3,470)
(Income) loss attributable to noncontrolling interest in consolidated entities	81		48		33
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671		(15,400)
Net income (loss) attributable to the Company	$	(103,038)	$	(84,201)	$	(18,837)

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All hotel properties owned during the three months ended March 31, ~~2017. Pursuant to this election, we liquidated~~2021 and 2020 have been included in our ~~investment in the AQUA U.S. Fund subject to a 5% hold back~~results of ~~$2.6 million which was received~~operations during the ~~second quarter~~respective periods in which they were owned. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three months ended March 31, 2021 and 2020. 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 acquisitions and dispositions affect reporting comparability related to our consolidated financial statements:

Hotel Property

Location

Type

Date

Crowne Plaza Annapolis (1)

Annapolis, MD

Disposition

March 9, 2020

Columbus Hampton Inn Easton (1)

Columbus, OH

Disposition

August 19, 2020

Stillwater Residence Inn (1)

Stillwater, OK

Disposition

August 19, 2020

Washington Hampton Inn Pittsburgh Meadow Lands (1)

Pittsburgh, PA

Disposition

August 19, 2020

Phoenix Hampton Inn Airport North (1)

Phoenix, AZ

Disposition

August 19, 2020

Pittsburgh Hampton Inn Waterfront West Homestead (1)

Pittsburgh, PA

Disposition

August 19, 2020

Wichita Courtyard by Marriott Old Town (1)

Wichita, KS

Disposition

August 19, 2020

Canonsburg Homewood Suites Pittsburgh Southpointe (1)

Pittsburgh, PA

Disposition

August 19, 2020

Billerica Courtyard by Marriott Boston (1)

Boston, MA

Disposition

August 19, 2020

Embassy Suites New York Manhattan Times Square (1)

New York, NY

Disposition

August 19, 2020

W Minneapolis (1)

Minneapolis, MN

Disposition

September 15, 2020

Courtyard Louisville (1)

Louisville, KY

Disposition

September 21, 2020

Courtyard Ft. Lauderdale (1)

Ft. Lauderdale, FL

Disposition

September 21, 2020

Residence Inn Lake Buena Vista (1)

Lake Buena Vista, FL

Disposition

September 21, 2020

Le Meridien Minneapolis (1)

Minneapolis, MN

Disposition

January 20, 2021

(1) Collectively referred to as “Hotel Dispositions”

The following table illustrates the key performance indicators of ~~2017 upon completion~~all hotel properties and WorldQuest owned for the periods indicated:


	Three Months Ended March 31,
		2021			2020
RevPAR (revenue per available room)		$	47.4		$	94.49
Occupancy		42.22		%	58.51		%
ADR (average daily rate)		$	112.25		$	161.48

The following table illustrates the key performance indicators of the ~~audit~~102 comparable hotel properties and WorldQuest that were included for the full three months ended March 31, 2021 and 2020, respectively:


	Three Months Ended March 31,
		2021			2020
RevPAR (revenue per available room)		$	47.42		$	94.86
Occupancy		42.25		%	58.54		%
ADR (average daily rate)		$	112.25		$	162.04

Comparison of the ~~AQUA U.S. Fund’s financial statements.~~Three Months Ended March 31, 2021 and 2020

~~and provides for a floating interest rate of LIBOR + 3.00%. Beginning on July 1, 2020, quarterly principal payments of $750,000 are due.The stated maturity is June 2022, with no extension options.~~

~~On May 23, 2017, the trial court, in the matter of~~ ~~Palm Beach Florida Hotel and Office Building Limited Partnership, et al. v. Nantucket Enterprises, Inc., issued an order compelling the company that issued the supersedeas bond, RLI Insurance Company (“RLI”),~~Net Income (Loss) Attributable to ~~pay approximately $10.0 million. On June 1, 2017, RLI paid Nantucket this amount and sought reimbursement from~~ the Company. ~~On June 27, 2017,~~Net loss attributable to the Florida Supreme Court denied the Company's petition for review. As a result, all of the appeals were exhausted and the judgment was final with the determination and reimbursement of attorney's fees being the only remaining dispute. On June 29, 2017, the balance of the judgment was paid to Nantucket by the Company.

~~The~~ Company ~~estimates its total loss including post judgment interest and reimbursement of the plaintiff’s legal fees to be approximately $17.3~~increased $18.8 million ~~as of September 30, 2017, resulting in additional expense of $26,000 and $4.1~~from $84.2 million for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2020 (the “2020 quarter”) to $103.0 million for the three months ended March 31, 2021 (the “2021 quarter”) as a result of the factors discussed below.

Revenue.Rooms revenue from our hotel properties and WorldQuest decreased $118.7 million, or 55.0%, to $97.1 million in the 2021 quarter compared to the 2020 quarter. This decrease is attributable to lower rooms revenue of $102.5 million at our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and $16.2 million from our Hotel Dispositions. Our comparable hotel properties experienced a decrease of 30.7% in room rates and a decrease of 1,629 basis points in occupancy.

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Food and beverage revenue decreased $40.0 million, or 83.5%, to $7.9 million in the 2021 quarter compared to the 2020 quarter. This decrease is attributable to lower food and beverage revenue of $39.0 million at our comparable hotel properties as a result of the COVID-19 pandemic and WorldQuest and $1.0 million from our Hotel Dispositions.

Other hotel revenue, which consists mainly of Internet access, parking, spa and business interruption revenue, decreased $6.9 million, or 39.9%, to $10.4 million in the 2021 quarter compared to the 2020 quarter. This decrease is attributable to lower other revenue of $5.7 million from our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and $1.2 million from our Hotel Dispositions.

Hotel Operating Expenses. Hotel operating expenses decreased $110.2 million, or 54.6%, to $91.5 million in the 2021 quarter compared to the 2020 quarter. 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 decreased $58.9 million in the 2021 quarter compared to the 2020 quarter, which was comprised of a decrease of $53.5 million from our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and $5.4 million from our Hotel Dispositions. Direct expenses were 27.8% of total hotel revenue for the 2021 quarter and 32.4% for the 2020 quarter. Indirect expenses and management fees decreased $51.3 million in the 2021 quarter compared to the 2020 quarter, which was comprised of a decrease of $42.8 million from our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and $8.5 million from our Hotel Dispositions.

Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $3.0 million or 14.7%, to $17.5 million in the 2021 quarter compared to the 2020 quarter, which was primarily due to a decrease of $2.5 million from our Hotel Dispositions and $130,000 at our comparable hotel properties.

Depreciation and Amortization. Depreciation and amortization decreased $8.7 million or 13.1%, to $57.6 million in the 2021 quarter compared to the 2020 quarter, which consisted of lower deprecation of $5.1 million as a result of our Hotel Dispositions and lower depreciation of $3.4 million at our comparable hotel properties and WorldQuest.

Impairment Charges. Impairment charges were $0 and $27.6 million in the 2021 quarter and the 2020 quarter, respectively.

~~On June 29, 2017, RLI filed suit in Federal District Court in Dallas seeking to recover~~ In the ~~amounts previously paid to Nantucket. On July 19, 2017,~~2020 quarter we incurred an impairment charge of $27.6 million that was comprised of $13.9 million at the ~~Company paid approximately~~Columbus Hampton Inn Easton, $10.0 million ~~to RLI mooting RLI's claim subject only~~at the Canonsburg Homewood Suites Pittsburgh Southpointe and $3.7 million at the Phoenix Hampton Inn Airport North as a result of reduced estimated cash flows resulting from the COVID-19 pandemic and changes to the ~~alleged claim for attorney fees. With~~expected holding periods of these hotel properties. The impairment charges were based on methodologies which include the development of the discounted cash flow method of the income approach with support based on the market approach, which are considered Level 3 valuation techniques.

Advisory Services Fee. Advisory services fee decreased $3.1 million, or 20.5%, to $12.2 million in the 2021 quarter compared to the 2020 quarter. The advisory services fee represents fees incurred in connection with the advisory agreement ~~for~~between Ashford Inc. and the ~~Company~~Company. In the 2021 quarter, the advisory services fee was comprised of a base advisory fee of $8.7 million, equity-based compensation of $1.8 million associated with equity grants of our common stock and LTIP units awarded to ~~pay~~ the ~~negotiated settlement~~officers and employees of ~~RLI's attorney fees~~Ashford Inc. and reimbursable expenses of $1.6 million. In the 2020 quarter, the advisory services fee was comprised of a base advisory fee of $8.9 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 $1.8 million.

Corporate, General and Administrative. Corporate, general and administrative expense increased $3.5 million, or 100.4%, to $7.0 million in the ~~amount~~2021 quarter compared to the 2020 quarter. The increase was primarily attributable to higher legal and professional fees of ~~$100,000,~~$4.9 million offset by a ~~Stipulation for Dismissal was filed~~decrease of reimbursed operating expenses of Ashford Securities paid by Ashford Trust of $679,000, lower miscellaneous expenses of $615,000 and lower public company costs of $58,000.

Gain (Loss) on ~~November 2, 2017.~~

~~On May 24, 2017, we refinanced a $15.7~~Disposition of Assets and Hotel Properties. Gain (loss) on disposition of assets and hotel properties changed $3.7 million, mortgage loan, secured by the Hotel Indigo (“Indigo Atlanta”) in Atlanta, Georgia. The new loan totals $16.1 million. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.90% for the first two years with a 30-year amortization schedule based on a 6% interest rate starting in the third year. The stated maturity is June 2020, with two one-year extension options.

~~On June 29, 2017, the Company sold the Crowne Plaza Ravinia in Atlanta, Georgia for approximately $88.7 million in cash. The sale resulted in~~from a gain of ~~$14.1~~$3.6 million in the 2020 quarter to a loss of $69,000 in the 2021 quarter. The gain in 2020 was comprised of a $3.7 million related to the sale of the Annapolis Crowne Plaza.

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of unconsolidated entities, which consists of our share of earnings/loss from OpenKey, was $137,000 in the 2021 quarter compared to $79,000 in the 2020 quarter.

Interest Income. Interest income was $13,000 and $611,000 in the 2021 quarter and the 2020 quarter, respectively.

Other Income (Expense). Other income decreased $1.3 million from $1.5 million in the 2020 quarter to $229,000 in the 2021 quarter. In the 2021 quarter, we recorded miscellaneous income of $229,000. In the 2020 quarter, we recorded a realized gain of $2.1 million on the sale of marketable securities and dividend income of $31,000. This income was partially offset by

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expense of $268,000 from CMBX premiums and interest paid on collateral, a realized loss of $225,000 on interest rate floors and other expense of $119,000.

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees increased $3.3 million to $3.4 million in the 2021 quarter compared to the 2020 quarter. In the 2021 quarter, we executed several amendments with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments. Lismore fees incurred in conjunction with these amendments were $3.7 million, which were partially offset by a net credit of $316,000 related to third party fees. In the ~~three~~2020 quarter, we wrote-off unamortized loan costs of $47,000 and ~~nine~~ ~~months ended September 30, 2017 and is included in “gain~~incurred other costs of $48,000 as a result of a loan refinance

Unrealized Gain (Loss) on Marketable Securities. Unrealized gain (loss) on ~~sale of hotel properties”~~marketable securities was $0 and $(1.5) million in the 2021 quarter and the 2020 quarter, respectively, which was based on changes in closing market prices during the period. All marketable securities were sold in 2020.

Unrealized Gain (Loss) on Derivatives. Unrealized gain (loss) on derivatives decreased $3.5 million from $4.4 million in the ~~consolidated statements~~2020 quarter to $919,000 in the 2021 quarter. In the 2021 quarter, we recognized an unrealized gain of ~~operations. The Company also repaid approximately $78.7~~$1.3 million from the revaluation of the embedded debt derivative offset by unrealized losses of $71,000 from interest rate floors and $289,000 from interest rate caps. In the 2020 quarter, we recognized unrealized gains of $3.9 million related to CMBX tranches, $377,000 from interest rate floors and $225,000 associated with the ~~hotel property.~~recognition of realized losses from the termination of interest rate floors, partially offset by an unrealized loss of $52,000 associated with interest rate caps.

~~On August 25, 2017,~~Income Tax (Expense) Benefit. Income tax (expense) benefit changed $574,000, from income tax expense of $303,000 in the ~~Company issued 3.4 million shares~~2020 quarter to an income tax benefit of ~~7.50% Series H cumulative preferred stock. The Series H cumulative preferred stock ranks senior~~$271,000 in the 2021 quarter. This change was primarily due to ~~all classes or series~~a decrease in the profitability of our TRS entities in the ~~Company’s common stock~~2021 quarter compared to the 2020 quarter.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partner in consolidated entities were allocated losses of $81,000 and ~~future junior securities, on a parity with each series of~~$48,000 in the Company’s outstanding preferred stock (the 8.55% Series A cumulative preferred stock (all shares redeemed on September 18, 2017), the 8.45% Series D cumulative preferred stock (1.6 million shares redeemed on September 18, 2017), the 7.375% Series F cumulative preferred stock2021 quarter and the ~~7.375% Series G cumulative preferred stock)~~2020 quarter, respectively.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of $2.3 million and ~~with any future parity securities and junior to future senior securities and to all of~~$17.7 million in the ~~Company’s existing and future indebtedness, with respect to the payment of dividends~~2021 quarter and the ~~distribution~~2020 quarter, respectively. Redeemable noncontrolling interests represented ownership interests of amounts upon liquidation, dissolution or winding up of the Company’s affairs. On September 8, 2017, we issued 400,000 additional shares of 7.50% Series H preferred stock pursuant to the over-allotment option.

~~On August 31, 2017, we invested an additional $333,000 in OpenKey, resulting in a 16.23% total ownership interest.~~

~~Dividends on the Series H cumulative preferred stock accrue~~15.71% in the ~~amount~~operating partnership at March 31, 2021 and 2020, respectively.

Table of $1.8750 per share each year, which is equivalent to 7.50% of the $25.00 liquidation preference per share of Series H cumulative preferred stock. Dividends on the Series H cumulative preferred stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day). The first dividend on the Series H cumulative preferred stock sold in this offering was paid on October 16, 2017 in the amount of $0.1875 per share.Contents

On September 18, 2017, the Company redeemed its 8.55% Series A cumulative preferred stock at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the redemption date, in an amount equal to $0.4631 per share, for a total redemption price of $25.4631 per share.

On September 18, 2017, the Company redeemed approximately 1.6 million shares of its 8.45% Series D cumulative preferred stock at a redemption price of $25.00 per share, plus accrued and unpaid dividends through the redemption date, in an amount equal to $0.4577 per share, for a total redemption price of $25.4577 per share.

~~LIQUIDITY AND CAPITAL RESOURCES~~RESULTS OF OPERATIONS

~~Our cash position from 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 ~~affected primarily by macro industry movements~~prepared in ~~occupancy and rate~~accordance with GAAP as well as ~~our ability~~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 ~~control costs. Further, interest rates can greatly affect~~measure the ~~cost~~operating performance of our ~~debt service~~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:

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 ~~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.~~

~~Certain of our loan agreements contain cash trap provisions that may get triggered if the~~operating performance of our business. See “Non-GAAP Financial Measures.”

Revenue per available room, or RevPAR, is a commonly used measure within the hotel ~~properties declines. When these provisions are triggered, substantially all~~industry to evaluate hotel operations. RevPAR is defined as the product of the ~~profit~~ADR charged and the average daily occupancy achieved. RevPAR does not include revenues from food and beverage or parking, telephone, or other guest services generated by the ~~hotel properties securing such loan~~property. Although RevPAR does not include these ancillary revenues, it is ~~deposited directly into lockbox accounts~~generally considered the leading indicator of core revenues for many

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hotels. We also use RevPAR to compare the results of our hotels between periods and ~~then swept into cash management accounts~~to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the ~~benefit~~periods under comparison). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases in most categories of ~~our various lenders. Cash is distributed~~variable operating costs. RevPAR improvements attributable to ~~us only after certain~~increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.

The following table summarizes changes in key line items are paid, including deposits into ground lease and maintenance reserves and the payment of debt service, insurance, taxes, operating expenses, and extraordinary capital expenditures and ground lease expenses. This could affect our liquidity and our ability to make distributions to our stockholders until such time that a cash trap is no longer in effect for such loan.

~~Also, 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, 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. In connection with the Ashford Prime Spin-off, we are still jointly and severally liable under certain carve-out guarantees and environmental indemnities associated with three loans. Ashford Prime has indemnified us in the case that any of these guarantees are ever called.

~~On February 1, 2017, we repaid $20.2 million of principal on our mortgage loan that was partially secured by the Renaissance Portsmouth. This hotel property was sold on February 1, 2017.~~

~~On March 6, 2017, we repaid $20.6 million of principal on our mortgage loan that was partially secured by the Embassy Suites Syracuse. This hotel property was sold on March 6, 2017.~~

On May 10, 2017, we refinanced a $105.0 million mortgage loan, secured by the Renaissance Nashville in Nashville, Tennessee and the Westin in Princeton, New Jersey. The new mortgage loan totals $181.0 million, of which our initial advance was $164.7 million with future advances totaling $16.3 million as reimbursement for capital expenditures. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 3.00%. Beginning on July 1, 2020, quarterly principal payments of $750,000 are due.~~The stated maturity is June 2022, with no extension options.~~

On May 24, 2017, we refinanced a $15.7 million mortgage loan, secured by the Hotel Indigo (“Indigo Atlanta”) in Atlanta, Georgia. The new loan totals $16.1 million. The mortgage loan is interest only and provides for a floating interest rate of LIBOR + 2.90% for the first two years with a 30-year amortization schedule based on a 6% interest rate starting in the third year. The stated maturity is June 2020, with two one-year extension options.

~~On June 29, 2017, we repaid $78.7 million of principal on our mortgage loan partially secured by the Crowne Plaza Ravinia. This hotel property was sold on June 29, 2017.~~

On August 25, 2017, the Company issued 3.4 million shares of 7.50% Series H cumulative preferred stock. The Series H cumulative 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 (the 8.55% Series A cumulative preferred stock (all shares redeemed on September 18, 2017), the 8.45% Series D cumulative preferred stock (1.6 million shares redeemed on September 18, 2017), the 7.375% Series F cumulative preferred stock and the 7.375% Series G cumulative 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. On September 8, 2017, we issued 400,000 additional shares of 7.50% Series H preferred stock pursuant to the over-allotment option.

Dividends on the Series H cumulative preferred stock accrue in the amount of $1.8750 per share each year, which is equivalent to 7.50% of the $25.00 liquidation preference per share of Series H cumulative preferred stock. Dividends on the Series H cumulative preferred stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day). The first dividend on the Series H cumulative preferred stock sold in this offering was paid on October 16, 2017 in the amount of $0.1875 per share.

Our principal sources of funds to meet our cash requirements include: cash on hand, positive 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 operating activities, pursuant to~~ our consolidated statements of ~~cash flows,~~operations (in thousands):


	Three Months Ended March 31,				Favorable/ (Unfavorable) Change
	2021		2020
Total revenue	$	115,830	$	281,877	$	(166,047)
Total hotel operating expenses	(91,547)		(201,710)		110,163
Property taxes, insurance and other	(17,471)		(20,472)		3,001
Depreciation and amortization	(57,627)		(66,350)		8,723
Impairment charges	—		(27,613)		27,613

Advisory services fee	(12,161)		(15,299)		3,138
Corporate, general and administrative	(6,997)		(3,492)		(3,505)
Gain (loss) on disposition of assets and hotel properties	(69)		3,623		(3,692)
Operating income (loss)	(70,042)		(49,436)		(20,606)
Equity in earnings (loss) of unconsolidated entities	(137)		(79)		(58)
Interest income	13		611		(598)
Other income (expense)	229		1,522		(1,293)
Interest expense and amortization of discounts and loan costs	(33,264)		(57,085)		23,821
Write-off of premiums, loan costs and exit fees	(3,379)		(95)		(3,284)

Unrealized gain (loss) on marketable securities	—		(1,477)		1,477
Unrealized gain (loss) on derivatives	919		4,422		(3,503)
Income tax (expense) benefit	271		(303)		574



Net income (loss)	(105,390)		(101,920)		(3,470)
(Income) loss attributable to noncontrolling interest in consolidated entities	81		48		33
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671		(15,400)
Net income (loss) attributable to the Company	$	(103,038)	$	(84,201)	$	(18,837)

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All hotel properties owned during the three months ended March 31, 2021 and 2020 have been included in our results of operations during the respective periods in which ~~includes changes in balance sheet items,~~they were ~~$178.5~~owned. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three months ended March 31, 2021 and 2020. 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 acquisitions and dispositions affect reporting comparability related to our consolidated financial statements:

Hotel Property

Location

Type

Date

Crowne Plaza Annapolis (1)

Annapolis, MD

Disposition

March 9, 2020

Columbus Hampton Inn Easton (1)

Columbus, OH

Disposition

August 19, 2020

Stillwater Residence Inn (1)

Stillwater, OK

Disposition

August 19, 2020

Washington Hampton Inn Pittsburgh Meadow Lands (1)

Pittsburgh, PA

Disposition

August 19, 2020

Phoenix Hampton Inn Airport North (1)

Phoenix, AZ

Disposition

August 19, 2020

Pittsburgh Hampton Inn Waterfront West Homestead (1)

Pittsburgh, PA

Disposition

August 19, 2020

Wichita Courtyard by Marriott Old Town (1)

Wichita, KS

Disposition

August 19, 2020

Canonsburg Homewood Suites Pittsburgh Southpointe (1)

Pittsburgh, PA

Disposition

August 19, 2020

Billerica Courtyard by Marriott Boston (1)

Boston, MA

Disposition

August 19, 2020

Embassy Suites New York Manhattan Times Square (1)

New York, NY

Disposition

August 19, 2020

W Minneapolis (1)

Minneapolis, MN

Disposition

September 15, 2020

Courtyard Louisville (1)

Louisville, KY

Disposition

September 21, 2020

Courtyard Ft. Lauderdale (1)

Ft. Lauderdale, FL

Disposition

September 21, 2020

Residence Inn Lake Buena Vista (1)

Lake Buena Vista, FL

Disposition

September 21, 2020

Le Meridien Minneapolis (1)

Minneapolis, MN

Disposition

January 20, 2021

(1) Collectively referred to as “Hotel Dispositions”

The following table illustrates the key performance indicators of all hotel properties and WorldQuest owned for the periods indicated:


	Three Months Ended March 31,
		2021			2020
RevPAR (revenue per available room)		$	47.4		$	94.49
Occupancy		42.22		%	58.51		%
ADR (average daily rate)		$	112.25		$	161.48

The following table illustrates the key performance indicators of the 102 comparable hotel properties and WorldQuest that were included for the full three months ended March 31, 2021 and 2020, respectively:


	Three Months Ended March 31,
		2021			2020
RevPAR (revenue per available room)		$	47.42		$	94.86
Occupancy		42.25		%	58.54		%
ADR (average daily rate)		$	112.25		$	162.04

Comparison of the Three Months Ended March 31, 2021 and 2020

Net Income (Loss) Attributable to the Company. Net loss attributable to the Company increased $18.8 million ~~and $191.0~~from $84.2 million for the ~~nine~~three months ended ~~September 30, 2017 and~~ ~~2016, respectively. Cash flows from operations were impacted by changes in hotel operations, our hotel dispositions in 2016 and 2017, as well as~~March 31, 2020 (the “2020 quarter”) to $103.0 million for the ~~timing of collecting receivables from hotel guests, paying vendors, 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, 2017, net cash flows used in investing activities were $6.8 million. Cash outflows primarily consisted~~March 31, 2021 (the “2021 quarter”) as a result of ~~$164.1 million for capital improvements made to various~~the factors discussed below.

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Impairment Charges. Impairment charges were $0 and $27.6 million in the 2021 quarter and the 2020 quarter, respectively. In the 2020 quarter we incurred an ~~additional $983,000 investment~~impairment charge of $27.6 million that was comprised of $13.9 million at the Columbus Hampton Inn Easton, $10.0 million at the Canonsburg Homewood Suites Pittsburgh Southpointe and $3.7 million at the Phoenix Hampton Inn Airport North as a result of reduced estimated cash flows resulting from the COVID-19 pandemic and changes to the expected holding periods of these hotel properties. The impairment charges were based on methodologies which include the development of the discounted cash flow method of the income approach with support based on the market approach, which are considered Level 3 valuation techniques.

Advisory Services Fee. Advisory services fee decreased $3.1 million, or 20.5%, to $12.2 million in ~~OpenKey. Cash outflows~~the 2021 quarter compared to the 2020 quarter. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company. In the 2021 quarter, the advisory services fee was comprised of a base advisory fee of $8.7 million, equity-based compensation of $1.8 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 $1.6 million. In the 2020 quarter, the advisory services fee was comprised of a base advisory fee of $8.9 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 $1.8 million.

Corporate, General and Administrative. Corporate, general and administrative expense increased $3.5 million, or 100.4%, to $7.0 million in the 2021 quarter compared to the 2020 quarter. The increase was primarily attributable to higher legal and professional fees of $4.9 million offset by a decrease of reimbursed operating expenses of Ashford Securities paid by Ashford Trust of $679,000, lower miscellaneous expenses of $615,000 and lower public company costs of $58,000.

Gain (Loss) on Disposition of Assets and Hotel Properties. Gain (loss) on disposition of assets and hotel properties changed $3.7 million, from a gain of $3.6 million in the 2020 quarter to a loss of $69,000 in the 2021 quarter. The gain in 2020 was comprised of a $3.7 million related to the sale of the Annapolis Crowne Plaza.

Interest Income. Interest income was $13,000 and $611,000 in the 2021 quarter and the 2020 quarter, respectively.

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expense of $268,000 from CMBX premiums and interest paid on collateral, a realized loss of $225,000 on interest rate floors and other expense of $119,000.

Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $23.8 million, or 41.7%, to $33.3 million in the 2021 quarter compared to the 2020 quarter. The decrease is primarily due to a decrease of $5.9 million from our Hotel Dispositions, a decrease of $13.2 million at our comparable hotel properties primarily due to lower LIBOR rates and a credit to interest expense of $16.8 million related to the amortization of default interest and late charges recorded on mortgage loans previously in default in the 2021 quarter. These decreases were partially offset by ~~cash inflows~~an increase of ~~$105.3~~$9.4 million ~~from proceeds received from~~attributable to the ~~sales~~Oaktree term loan and an increase of ~~the Renaissance Portsmouth, Embassy Suites Syracuse~~$2.7 million due to default interest and ~~Crowne Plaza Ravinia, $50.9 million from the liquidation of our interest~~late charges on mortgage loans currently in default. The average LIBOR rates in the ~~AQUA U.S. Fund~~2021 quarter and ~~$2.4 million from property insurance. For~~ the ~~nine months ended September 30, 2016, net cash flows provided by investing activities~~2020 quarter were ~~$27.3 million. Cash inflows primarily consisted~~0.12% and 1.40%, respectively.

Write-off of ~~$168.8 million from the sales~~Premiums, Loan Costs and Exit Fees. Write-off of a five-hotel portfolio, the Hampton Inn Gainesville and a vacant lot associated with the Le Pavillon Hotel. These cash inflows were partially offset by $137.9 million for capital improvements made to various hotel properties, $2.1 million for the purchase of land underlying the San Antonio Marriott and a WorldQuest unit and a $2.0 million investment in OpenKey.

~~Net Cash Flows Provided by (Used in) Financing Activities.~~ For the nine months ended September 30, 2017, net cash flows used in financing activities were $137.5 million. Cash outflows primarily consisted of $246.1 million for repayments of indebtedness, $80.6 million for the redemption of preferred stock, $75.6 million for dividend payments to common and preferred stockholders and unitholders, $5.8 million for payments ofpremiums, loan costs and exit fees ~~$1.3~~increased $3.3 million to $3.4 million in the 2021 quarter compared to the 2020 quarter. In the 2021 quarter, we executed several amendments with various lenders, which included deferral of debt service payments and allowed the use of reserves for ~~the repurchase of common stock and $633,000 of payments for derivatives. Cash outflows~~property-level operating shortfalls and/or to cover debt service payments. Lismore fees incurred in conjunction with these amendments were $3.7 million, which were partially offset by ~~cash inflows~~a net credit of ~~$180.8 million from~~

~~borrowings on indebtedness and $91.6 million from~~$316,000 related to third party fees. In the issuance of preferred stock. For the nine months ended September 30, 2016, net cash flows used in financing activities were $179.2 million. Cash outflows primarily consisted of $141.5 million for repayments of indebtedness, $115.8 million for the redemption of preferred stock, $69.3 million for dividend payments to common and preferred stockholders and unitholders, $5.1 million for payments of2020 quarter, we wrote-off unamortized loan costs of $47,000 and ~~exit fees and $732,000 for the repurchase~~incurred other costs of ~~common stock. Cash outflows were partially offset by cash inflows of $115.8 million from the issuance of preferred stock and $37.5 million from borrowings on indebtedness.~~

We are required to maintain certain financial ratios under various debt and derivative agreements. If we violate covenants in any debt or derivative agreement, 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. Presently, our existing financial debt covenants primarily relate to maintaining minimum net worth and leverage ratios and liquidity. As of September 30, 2017, we were in compliance in all material respects with all covenants or other requirements set forth in our debt and related agreements.

Unrealized Gain (Loss) on Marketable Securities. Unrealized gain (loss) on marketable securities was $0 and $(1.5) million inthe ~~occurrence~~2021 quarter and the 2020 quarter, respectively, which was based on changes in closing market prices during the period. All marketable securities were sold in 2020.

Unrealized Gain (Loss) on Derivatives. Unrealized gain (loss) on derivatives decreased $3.5 million from $4.4 million in the 2020 quarter to $919,000 in the 2021 quarter. In the 2021 quarter, we recognized an unrealized gain of ~~certain bad acts on~~$1.3 million from the ~~part~~revaluation of the ~~borrower. However, in certain cases, carve-outs could trigger recourse obligations on~~ embedded debt derivative offset by unrealized losses of $71,000 from interest rate floors and $289,000 from interest rate caps. In the ~~part~~2020 quarter, we recognized unrealized gains of $3.9 million related to CMBX tranches, $377,000 from interest rate floors and $225,000 associated with the ~~borrower~~recognition of realized losses from the termination of interest rate floors, partially offset by an unrealized loss of $52,000 associated with ~~respect to repayment~~interest rate caps.

Income Tax (Expense) Benefit. Income tax (expense) benefit changed $574,000, from income tax expense 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$303,000 in the ~~aggregate, are likely to have a material adverse effect on our business, results of operations, or financial condition as of September 30, 2017.~~

Based on our current level of operations, management believes that our cash flow from operations and our existing cash balances will be adequate to meet upcoming anticipated requirements for interest and principal payments on debt, working capital, and capital expenditures for the next 12 months. With respect to upcoming debt maturities, we will continue to proactively address our future debt maturities. 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. In addition, we may selectively pursue debt financing on individual properties.

~~We are committed~~2020 quarter to an investment strategy where we will opportunistically 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 potential future credit facility or other loans, or proceeds from additional issuancesincome tax benefit of common stock, 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$271,000 in the ~~number or quality~~2021 quarter. This change was primarily due to a decrease in the profitability of ~~competitive hotel properties~~our TRS entities in ~~its market area. Competition could also affect~~ the ~~quality and quantity of future investment opportunities.~~

~~Dividend Policy~~. ~~During the three month periods ended September 30, 2017 and~~ ~~2016~~, the board of directors declared quarterly dividends of $0.12 per share of outstanding common stock. In December 2016, the board of directors approved our 2017 dividend policy which anticipates a quarterly dividend payment of $0.12 per share for the remainder of 2017. However, the adoption of a dividend policy does not commit our board of directors to declare future dividends. The board of directors will continue to review our dividend policy on a quarterly basis. We may incur indebtedness to meet distribution requirements imposed on REITs under the Internal Revenue Code2021 quarter compared to the ~~extent that working capital~~2020 quarter.

Net (Income) Loss Attributable to ~~fund required distributions. Alternatively, we may elect to pay dividends on our common stock~~Redeemable Noncontrolling Interests in ~~cash or a combination~~Operating Partnership. Noncontrolling interests in operating partnership were allocated net losses of ~~cash~~$2.3 million and ~~shares~~$17.7 million in the 2021 quarter and the 2020 quarter, respectively. Redeemable noncontrolling interests represented ownership interests of ~~securities as permitted under federal income tax laws governing REIT distribution requirements. We may pay dividends~~2.42% and 15.71% in ~~excess~~the operating partnership at March 31, 2021 and 2020, respectively.

Table of ~~our cash flow.~~Contents

RESULTS OF OPERATIONS

Key Indicators of Operating Performance

Table of Contents

hotels. We also use RevPAR to compare the results of our ~~hotel properties~~hotels between periods and to analyze results of our comparable ~~hotel properties~~hotels (comparable ~~hotel properties~~hotels represent ~~hotel properties~~hotels we have owned for the ~~entire period)~~periods under comparison). 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.

The following table summarizes changes in key line items from our consolidated statements of operations (in thousands):


	Three Months Ended March 31,				Favorable/ (Unfavorable) Change
	2021		2020
Total revenue	$	115,830	$	281,877	$	(166,047)
Total hotel operating expenses	(91,547)		(201,710)		110,163
Property taxes, insurance and other	(17,471)		(20,472)		3,001
Depreciation and amortization	(57,627)		(66,350)		8,723
Impairment charges	—		(27,613)		27,613

Advisory services fee	(12,161)		(15,299)		3,138
Corporate, general and administrative	(6,997)		(3,492)		(3,505)
Gain (loss) on disposition of assets and hotel properties	(69)		3,623		(3,692)
Operating income (loss)	(70,042)		(49,436)		(20,606)
Equity in earnings (loss) of unconsolidated entities	(137)		(79)		(58)
Interest income	13		611		(598)
Other income (expense)	229		1,522		(1,293)
Interest expense and amortization of discounts and loan costs	(33,264)		(57,085)		23,821
Write-off of premiums, loan costs and exit fees	(3,379)		(95)		(3,284)

Unrealized gain (loss) on marketable securities	—		(1,477)		1,477
Unrealized gain (loss) on derivatives	919		4,422		(3,503)
Income tax (expense) benefit	271		(303)		574



Net income (loss)	(105,390)		(101,920)		(3,470)
(Income) loss attributable to noncontrolling interest in consolidated entities	81		48		33
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671		(15,400)
Net income (loss) attributable to the Company	$	(103,038)	$	(84,201)	$	(18,837)

Three Months Ended September 30,
Favorable/
(Unfavorable)
Change
Nine Months Ended September 30,
Favorable/
(Unfavorable)
Change
2017 2016 2017 2016
Total revenue $ 353,325
$ 371,931
$ (18,606 ) $ 1,097,704
$ 1,150,373
$ (52,669 )
Total hotel operating expenses (226,571 ) (234,553 ) 7,982
(688,554 ) (714,692 ) 26,138
Property taxes, insurance and other (18,194 ) (17,172 ) (1,022 ) (55,293 ) (55,077 ) (216 )
Depreciation and amortization (60,135 ) (60,170 ) 35
(185,380 ) (182,411 ) (2,969 )
Impairment charges (1,785 ) (4,922 ) 3,137
(1,785 ) (4,695 ) 2,910
Transaction costs —
(124 ) 124
(11 ) (201 ) 190
Advisory services fee (14,612 ) (11,948 ) (2,664 ) (39,482 ) (34,927 ) (4,555 )
Corporate general and administrative (2,412 ) (1,968 ) (444 ) (10,836 ) (6,426 ) (4,410 )
Operating income (loss) 29,616
41,074
(11,458 ) 116,363
151,944
(35,581 )
Equity in earnings (loss) of unconsolidated entities (679 ) (560 ) (119 ) (3,580 ) (4,432 ) 852
Interest income 706
92
614
1,460
229
1,231
Gain (loss) on sale of hotel properties 15
1,448
(1,433 ) 14,024
24,428
(10,404 )
Other income (expense) (273 ) (926 ) 653
(3,539 ) (4,263 ) 724
Interest expense and amortization of loan costs (56,963 ) (55,762 ) (1,201 ) (167,224 ) (168,167 ) 943
Write-off of premiums, loan costs and exit fees —
(972 ) 972
(1,629 ) (4,913 ) 3,284
Unrealized gain (loss) on marketable securities (936 ) —
(936 ) (4,813 ) —
(4,813 )
Unrealized gain (loss) on derivatives (1,479 ) (9,548 ) 8,069
(1,804 ) 4,248
(6,052 )
Income tax (expense) benefit 1,267
16
1,251
507
(1,216 ) 1,723
Net income (loss) (28,726 ) (25,138 ) (3,588 ) (50,235 ) (2,142 ) (48,093 )
(Income) loss from consolidated entities attributable to noncontrolling interests (22 ) (16 ) (6 ) (4 ) 16
(20 )
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 6,940
5,009
1,931
13,202
2,745
10,457
Net income (loss) attributable to the Company $ (21,808 ) $ (20,145 ) $ (1,663 ) $ (37,037 ) $ 619
$ (37,656 )

Table of Contents

All hotel properties owned during the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020 have been included in our results of operations during the respective periods in which they were owned. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016.~~2020. 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 acquisitions and dispositions affect reporting comparability related to our consolidated financial statements:

Hotel Property

Location

Type

Date

~~Hotel Property~~

~~Location~~

~~Type~~

~~Date~~

~~5-hotel portfolio~~^{Crowne Plaza Annapolis (1)}

~~Various~~Annapolis, MD

Disposition

~~June 1, 2016~~March 9, 2020

Columbus Hampton Inn ~~& Suites~~^{Easton (1)}

~~Gainesville, FL~~Columbus, OH

Disposition

~~September 1, 2016~~August 19, 2020

~~SpringHill Suites Gaithersburg~~^{Stillwater Residence Inn (1)}

~~Gaithersburg, MD~~Stillwater, OK

Disposition

~~October 1, 2016~~August 19, 2020

~~2-hotel portfolio~~^{Washington Hampton Inn Pittsburgh Meadow Lands (1)}

~~Palm Desert, CA~~Pittsburgh, PA

Disposition

~~October 7, 2016~~August 19, 2020

~~Renaissance~~ ^{Phoenix Hampton Inn Airport North (1)}

~~Portsmouth, VA~~Phoenix, AZ

Disposition

~~February 1, 2017~~August 19, 2020

~~Embassy Suites~~ ^{Pittsburgh Hampton Inn Waterfront West Homestead (1)}

~~Syracuse, NY~~Pittsburgh, PA

Disposition

~~March 6, 2017~~August 19, 2020

~~Crowne Plaza Ravinia~~ ^{Wichita Courtyard by Marriott Old Town (1)}

~~Atlanta, GA~~Wichita, KS

Disposition

~~June 29, 2017~~August 19, 2020

Canonsburg Homewood Suites Pittsburgh Southpointe (1)

Pittsburgh, PA

Disposition

August 19, 2020

Billerica Courtyard by Marriott Boston (1)

Boston, MA

Disposition

August 19, 2020

Embassy Suites New York Manhattan Times Square (1)

New York, NY

Disposition

August 19, 2020

W Minneapolis (1)

Minneapolis, MN

Disposition

September 15, 2020

Courtyard Louisville (1)

Louisville, KY

Disposition

September 21, 2020

Courtyard Ft. Lauderdale (1)

Ft. Lauderdale, FL

Disposition

September 21, 2020

Residence Inn Lake Buena Vista (1)

Lake Buena Vista, FL

Disposition

September 21, 2020

Le Meridien Minneapolis (1)

Minneapolis, MN

Disposition

January 20, 2021

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

The following table illustrates the key performance indicators of all hotel properties and WorldQuest owned for the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016			2017			2016					2021			2020
RevPAR (revenue per available room)	$	124.33		$	122.24		$	125.12		$	121.51		RevPAR (revenue per available room)		$	47.4		$	94.49
Occupancy	79.60		%	79.36		%	78.52		%	78.47		%	Occupancy		42.22		%	58.51		%
ADR (average daily rate)	$	156.19		$	154.02		$	159.34		$	154.84		ADR (average daily rate)		$	112.25		$	161.48

The following table illustrates the key performance indicators of the ~~120~~102 comparable hotel properties and WorldQuest that were included for the full three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively:


	Three Months Ended March 31,
		2021			2020
RevPAR (revenue per available room)		$	47.42		$	94.86
Occupancy		42.25		%	58.54		%
ADR (average daily rate)		$	112.25		$	162.04

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
RevPAR (revenue per available room) $ 124.33
$ 124.42
$ 125.81
$ 124.3
Occupancy 79.60 % 79.65 % 78.68 % 78.63 %
ADR (average daily rate) $ 156.19
$ 156.22
$ 159.90
$ 158.09

Comparison of the Three Months Ended ~~September 30, 2017~~March 31, 2021 and ~~2016~~2020

Net Income (Loss) Attributable to the Company. Net ~~income (loss)~~loss attributable to the Company increased ~~$1.7~~$18.8 million from ~~a net loss of $20.1~~$84.2 million for the three months ended ~~September 30, 2016,~~March 31, 2020 (the ~~“2016~~“2020 quarter”) to ~~a net loss of $21.8~~$103.0 million for the three months ended ~~September 30, 2017,~~March 31, 2021 (the ~~“2017~~“2021 quarter”) as a result of the factors discussed below.

Revenue.Rooms revenue from our hotel properties and WorldQuest decreased ~~$11.9~~$118.7 million, or ~~3.9%~~55.0%, to ~~$289.0~~$97.1 million in the ~~2017~~2021 quarter compared to the ~~2016~~2020 quarter. This decrease is ~~primarily~~ attributable to lower rooms revenue of ~~$11.6~~$102.5 million ~~related to our Hotel Dispositions and lower rooms revenue of $240,000 from~~at our comparable hotel properties and WorldQuest ~~which~~as a result of the COVID-19 pandemic and $16.2 million from our Hotel Dispositions. Our comparable hotel properties experienced a decrease of 530.7% in room rates and a decrease of 1,629 basis points in occupancy.

Table of Contents

Food and beverage revenue decreased $40.0 million, or 83.5%, to $7.9 million ~~or 14.0%,~~in the 2021 quarter compared to ~~$48.3 million.~~the 2020 quarter. This decrease is attributable to lower food and beverage revenue of ~~$5.5~~$39.0 million ~~from~~at our comparable hotel properties as a result of the COVID-19 pandemic and WorldQuest ~~primarily attributable to approximately~~and $1.0 million associated with the renovation of the DFW Airport Marriott in Irving, Texas and unfavorable year over year changes in the Jewish and July 4th holiday calendar, as well as lower food and beverage revenue of $2.4 million related tofrom our Hotel Dispositions.

Other hotel revenue, which consists mainly of Internet access, parking, spa and ~~spa, increased~~ ~~$617,000~~,business interruption revenue, decreased $6.9 million, or ~~4.3%~~39.9%, to ~~$15.0 million.~~$10.4 million in the 2021 quarter compared to the 2020 quarter. This ~~increase~~decrease is attributable to ~~higher~~lower other ~~hotel~~ revenue of ~~$917,000~~$5.7 million from our comparable hotel properties and WorldQuest ~~partially offset by lower other hotel revenue~~as a result of ~~$300,000 related to~~the COVID-19 pandemic and $1.2 million from our Hotel Dispositions. ~~Other non-hotel revenue increased $528,000, or 114.5%, to $989,000 in the 2017 quarter as compared to the 2016 quarter.~~

Hotel Operating Expenses. Hotel operating expenses decreased ~~$8.0~~$110.2 million,, or ~~3.4%~~54.6%, to ~~$226.6 million.~~$91.5 million in the 2021 quarter compared to the 2020 quarter. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees. ~~We experienced~~Direct expenses decreased $58.9 million in the 2021 quarter compared to the 2020 quarter, which was comprised of a decrease of ~~$5.5~~$53.5 million from our comparable hotel properties and WorldQuest as a result of the COVID-19 pandemic and $5.4 million from our Hotel Dispositions. Direct expenses were 27.8% of total hotel revenue for the 2021 quarter and 32.4% for the 2020 quarter. Indirect expenses and management fees decreased $51.3 million in ~~direct expenses in~~ the ~~2017~~2021 quarter as compared to the ~~2016~~2020 quarter, which was comprised of a decrease of $4.6 million related to our Hotel Dispositions and a decrease of $931,000 from our comparable hotel properties and WorldQuest. Direct expenses were 30.3% of total hotel revenue for the 2017 quarter and 30.2% for the 2016 quarter. We experienced a decrease of ~~$2.5 million~~ ~~in indirect expenses and management fees in the~~ ~~2017~~ quarter as compared to the 2016 quarter, which was comprised of a decrease of $4.8 million from our Hotel Dispositions, partially offset by an increase of $2.3 million from our comparable hotel properties and WorldQuest. The increase from our comparable hotel properties and WorldQuest is primarily attributable to uninsured hurricane related costs of $3.7 million.

~~Property Taxes, Insurance and Other.~~ ~~Property taxes, insurance and other increased~~ ~~$1.0 million, or 6.0%, to~~ ~~$18.2 million~~ ~~during the 2017 quarter compared to the 2016 quarter. The increase was primarily due to an increase of $1.8~~$42.8 million from our comparable hotel properties and WorldQuest ~~partially offset by~~as a ~~$738,000 decrease~~result of the COVID-19 pandemic and $8.5 million from our Hotel Dispositions.

~~Depreciation~~Property Taxes, Insurance and ~~Amortization.~~ ~~Depreciation~~Other. Property taxes, insurance and ~~amortization~~ de~~creased~~ ~~$35,000~~,other expense decreased $3.0 million or ~~0.1%~~14.7%, to ~~$60.1~~$17.5 million ~~during~~in the ~~2017~~2021 quarter compared to the ~~2016 quarter. The decrease~~2020 quarter, which was primarily due to a decrease of ~~$2.1~~$2.5 million ~~related to~~from our Hotel Dispositions ~~partially offset by an increase~~and $130,000 at our comparable hotel properties.

Depreciation and Amortization. Depreciation and amortization decreased $8.7 million or 13.1%, to $57.6 million in the 2021 quarter compared to the 2020 quarter, which consisted of ~~$2.0~~lower deprecation of $5.1 million as a result of our Hotel Dispositions and lower depreciation ~~and amortization~~of $3.4 million at our comparable hotel properties and WorldQuest.

Impairment Charges. Impairment charges were $0 and $27.6 million in the 2021 quarter and the 2020 quarter, respectively. In the 2020 quarter we incurred an impairment charge of $27.6 million that was comprised of $13.9 million at the Columbus Hampton Inn Easton, $10.0 million at the Canonsburg Homewood Suites Pittsburgh Southpointe and $3.7 million at the Phoenix Hampton Inn Airport North as a result of reduced estimated cash flows resulting from the COVID-19 pandemic and changes to the expected holding periods of these hotel properties. The impairment charges were based on methodologies which include the development of the discounted cash flow method of the income approach with support based on the market approach, which are considered Level 3 valuation techniques.

Advisory Services Fee. Advisory services fee decreased $3.1 million, or ~~63.7%~~20.5%, to ~~$1.8~~$12.2 million in the ~~2017~~2021 quarter compared to the ~~2016 quarter. We recorded an impairment charge of $1.8 million in the 2017~~2020 quarter for damages to hotel properties from Hurricanes Harvey and Irma. We recorded an impairment charge of $4.9 million in the 2016 quarter, which is comprised of an impairment charge of $5.0 million on the SpringHill Suites Gaithersburg, partially offset by an impairment credit of $117,000 related to a valuation adjustment on a previously impaired mezzanine loan.

~~Transaction Costs.~~ ~~Transaction costs decreased $124,000, or 100.0%, to $0 during the 2017 quarter compared to the 2016 quarter.~~

~~Advisory Services Fee.~~ Advisory services fee increased $2.7 million, or 22.3%, to $14.6 million in the 2017 quarter compared to the 2016 quarter, which represented fees paid in connection with the advisory agreement between Ashford Inc. and the Company. For the 2017 quarter, the. The advisory services fee was comprised of a base advisory fee of $8.6 million, reimbursable expenses of $1.6 million and equity-based compensation of $4.4 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. For the 2016 quarter, the advisory services fee was comprised of a base advisory fee of $8.6 million, reimbursable expenses of $1.5 million and equity-based compensation of $1.9 million associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc.

~~Corporate General and Administrative.~~ Corporate general and administrative expense increased $444,000, or 22.6%, to $2.4 million during the 2017 quarter compared to the 2016 quarter. The increase was primarily attributable to higher public company costs, office expenses, professionalrepresents fees ~~and other miscellaneous expenses of $388,000 and $56,000 of transaction, acquisition and management conversion costs in the 2017 quarter compared to the 2016 quarter.~~

~~Equity in Earnings (Loss) of Unconsolidated Entities.~~ We recorded equity in loss of unconsolidated entities of $679,000 and $560,000 for the 2017 and 2016 quarters, respectively. The 2017 quarter included equity in loss of $568,000 from Ashford Inc. and $111,000 from OpenKey. The 2016 quarter included equity in loss of $395,000 from the AQUA U.S. Fund, $85,000 from Ashford Inc. and $80,000 from OpenKey.

~~Interest Income.~~ ~~Interest income was $706,000 and $92,000 for the 2017 quarter and the 2016 quarter, respectively.~~

~~Gain (Loss) on Sale of Hotel Properties.~~ Gain on sale of hotel properties was $15,000 and $1.4 million in the 2017 and 2016 quarters, respectively. The gain in the 2017 quarter was related to the sale of the Crowne Plaza Ravinia. The gain in the 2016 quarter was related to the sale of the Hampton Inn Gainesville.

~~Other Income (Expense).~~ ~~Other expense decreased $653,000, or 70.5%, to~~ ~~$273,000~~ during the 2017 quarter compared to the 2016 quarter. In the 2017 quarter, we recognized realized losses of $1.2 million related to the termination of a CMBX tranche and $257,000 related to CMBX premiums and usage fees, partially offset by a realized gain of $948,000 related to marketable securities, dividend income of $109,000 and miscellaneous income of $102,000. In the 2016 quarter, we recognized a realized

~~loss of $547,000 related to the termination of a CMBX tranche, a realized loss of $156,000 related to the maturity of options on futures contracts and $237,000 of CMBX premiums and usage fees.~~

~~Interest Expense and Amortization of Loan Costs.~~ Interest expense and amortization of loan costs increased $1.2 million, or 2.2%, to $57.0 million during the 2017 quarter compared to the 2016 quarter. The increase is primarily due to higher interest expense and amortization of loan costs of $4.3 million from refinances and an increase in LIBOR rates on our comparable hotels properties, partially offset by lower interest expense and amortization of loan costs of $3.1 million from our Hotel Dispositions. The average LIBOR rates in the 2017 quarter and the 2016 quarter were 1.23% and 0.51%, respectively.

~~Write-off of Premiums, Loan Costs and Exit Fees.~~ ~~Write-off of premiums, loan costs and exit fees decreased $1.0 million, or 100.0%, to $0 during the 2017 quarter compared to the 2016 quarter. In the 2016 quarter, we~~ incurred ~~write-off of loan costs and exit fees of $972,000 resulting from the write-off of unamortized loan costs of $460,000 and exit fees of $512,000 related to the sale of the Hampton Inn Gainesville.~~

~~Unrealized Gain (Loss) on Marketable Securities.~~ Unrealized loss on marketable securities was $936,000 in the 2017 quarter, which was based on changes in closing market prices during the quarter. There was no unrealized gain (loss) on marketable securities in the 2016 quarter.

~~Unrealized Gain (Loss) on Derivatives.~~ Unrealized loss on derivatives decreased $8.1 million, from $9.5 million in the 2016 quarter to $1.5 million in the 2017 quarter. In the 2017 quarter, we recognized unrealized losses of $2.3 million, $291,000 and $96,000 associated with CMBX tranches, interest rate floors and interest rate caps, respectively. These unrealized losses were partially offset by an unrealized gain of $1.2 million associated with the reclassification to other income (expense) for the recognition of a realized loss from a CMBX tranche termination. In the 2016 quarter, we recorded unrealized losses of $8.2 million, $1.9 million, $155,000 and $40,000 on interest rate floors, open CMBX tranches, options on futures contracts and interest rate derivatives, respectively. These unrealized losses were partially offset by unrealized gains of $547,000 and $156,000 associated with the reclassification to other income (expense) for the recognition of a realized loss from a CMBX tranche termination and maturity of an option on futures contracts, respectively. The fair value of interest rate floors and interest rate derivatives are primarily based on movements in the LIBOR forward curve and the passage of time. The fair value of options on futures contracts is determined based on the last reported settlement price as of the measurement date. The fair value of credit default swaps is based on the change in value of CMBX indices.

~~Income Tax (Expense) Benefit.~~ Income tax benefit increased $1.3 million, from $16,000 in the 2016 quarter to $1.3 million in the 2017 quarter. The increase in income tax benefit is primarily due to a decrease in taxable income recognized by our TRS entities.

~~(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests.~~ ~~Our noncontrolling interest partner in consolidated entities was allocated income of~~ ~~$22,000~~ ~~and~~ ~~$16,000~~ ~~for the~~ ~~2017~~ ~~quarter and the~~ ~~2016~~ ~~quarter, respectively.~~

~~Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership.~~ Redeemable noncontrolling interests in operating partnership were allocated net loss of $6.9 million and $5.0 million in the 2017 quarter and the 2016 quarter, respectively. Redeemable noncontrolling interests represented ownership interests of 15.73% and 14.01% in the operating partnership at September 30, 2017 and 2016, respectively.

~~Comparison of the Nine Months Ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~

~~Net Income (Loss) Attributable to the Company.~~ Net income (loss) attributable to the Company changed $37.7 million, from net income of $619,000 for the nine months ended September 30, 2016 (the “2016 period”) to a net loss of $37.0 million for the nine months ended September 30, 2017 (the “2017 period”) as a result of the factors discussed below.

~~Revenue.~~Rooms revenue from our hotel properties and WorldQuest decreased $40.5 million, or 4.4%, to $876.9 million in the 2017 period compared to the 2016 period. This decrease is primarily attributable to lower rooms revenue of $47.8 million related to our Hotel Dispositions, partially offset by higher rooms revenue of $7.3 million from our comparable hotel properties and WorldQuest, which experienced an increase of 1.1% in room rates and an increase of 5 basis points in occupancy.

Food and beverage revenue decreased $13.5 million, or 7.1%, to $175.0 million in the 2017 period compared to the 2016 period. This decrease is attributable to lower food and beverage revenue of $6.0 million related to our Hotel Dispositions and lower food and beverage revenue of $7.5 million from our comparable hotel properties and WorldQuest, primarily attributable to approximately $1.3 million associated with the renovation of the DFW Airport Marriott in Irving, Texas as well as unfavorable year over year changes in the Jewish and July 4th holiday calendar.

Other hotel revenue, which consists mainly of Internet access, parking and spa, increased $507,000, or 1.2%, to $43.7 million in the 2017 period compared to the 2016 period. This increase is primarily attributable to higher other revenue of $2.0 million

from our comparable hotel properties and WorldQuest, partially offset by lower other revenue of $1.5 million related to our Hotel Dispositions. Other non-hotel revenue increased $755,000, or 58.2%, to $2.1 million in the 2017 period.

~~Hotel Operating Expenses.~~ Hotel operating expenses decreased $26.1 million, or 3.7%, to $688.6 million in the 2017 period compared to the 2016 period. Hotel operating expenses consist of direct expenses from departments associated with revenue streams and indirect expenses associated with support departments and management fees. We experienced a decrease in direct expenses of $15.7 million in the 2017 period as compared to the 2016 period, which was comprised of a decrease of $16.4 million related to our Hotel Dispositions, partially offset by an increase of $717,000 from our comparable hotel properties and WorldQuest. Direct expenses were 29.8% of total hotel revenue for both the 2017 and 2016 periods. We experienced a decrease in indirect expenses and management fees of $10.5 million in the 2017 period as compared to the 2016 period, which was comprised of a decrease of $18.3 million from our Hotel Dispositions, partially offset by an increase of $3.8 million from our comparable hotel properties and WorldQuest, primarily attributable to uninsured hurricane related costs of $3.7 million, and $4.1 million associated with an additional accrual related to the final judgment in the lawsuit captioned ~~Palm Beach Florida Hotel and Office Building Limited Partnership, et al. v. Nantucket Enterprises, Inc.~~ ~~See note 13 to our consolidated financial statements.~~

~~Property Taxes, Insurance and Other.~~ Property taxes, insurance and other increased $216,000 or 0.4%, to $55.3 million in the 2017 period compared to the 2016 period. The increase was primarily due to $2.9 million from our comparable hotel properties and WorldQuest, partially offset by a decrease of $2.7 million from our Hotel Dispositions.

~~Depreciation and Amortization.~~ Depreciation and amortization increased $3.0 million or 1.6%, to $185.4 million in the 2017 period compared to the 2016 period. The increase was primarily due to $10.5 million of depreciation and amortization at our comparable hotel properties and WorldQuest, partially offset by a decrease of $7.6 million related to our Hotel Dispositions.

~~Impairment Charges.~~ Impairment charges decreased $2.9 million, or 62.0%, to $1.8 million in the 2017 period compared to the 2016 period, We recorded an impairment charge of $1.8 million in the 2017 period for damages to hotel properties from Hurricanes Harvey and Irma. We recorded an impairment charge of $4.7 million in the 2016 period comprised of an impairment charge of $5.0 million on the SpringHill Suites Gaithersburg, partially offset by an impairment credit of $344,000 related to a valuation adjustment on a previously impaired mezzanine loan.

~~Transaction Costs.~~ ~~Transaction costs were $11,000 in the 2017 period compared to $201,000 in the 2016 period.~~

~~Advisory Services Fee.~~ ~~Advisory services fee increased $4.6 million, or 13.0%, to $39.5 million in the 2017 period compared to the 2016 period, which represented fees paid~~ in connection with the advisory agreement between Ashford Inc. and the Company. In the ~~2017 period,~~2021 quarter, the advisory services fee was comprised of a base advisory fee of ~~$25.9~~$8.7 million, equity-based compensation of ~~$7.7~~$1.8 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 ~~$5.8~~$1.6 million. In the ~~2016 period,~~2020 quarter, the advisory services fee was comprised of a base advisory fee of ~~$25.8~~$8.9 million, ~~reimbursable expenses of $4.6 million and~~ equity-based compensation of ~~$4.5~~$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 $1.8 million.

Corporate, General and Administrative. Corporate, general and administrative expense increased ~~$4.4~~$3.5 million, or ~~68.6%~~100.4%, to ~~$10.8~~$7.0 million in the ~~2017 period~~2021 quarter compared to the ~~2016 period.~~2020 quarter. The increase was primarily attributable to higher ~~transaction, acquisition~~legal and ~~management conversion costs~~professional fees of ~~$3.0~~$4.9 million offset by a decrease of reimbursed operating expenses of Ashford Securities paid by Ashford Trust of $679,000, lower miscellaneous expenses of $615,000 and ~~higher~~lower public company costs ~~office expenses, professional fees~~of $58,000.

Gain (Loss) on Disposition of Assets and ~~other miscellaneous expenses~~Hotel Properties. Gain (loss) on disposition of ~~$1.4~~assets and hotel properties changed $3.7 million, from a gain of $3.6 million in the ~~2017 period compared~~2020 quarter to a loss of $69,000 in the 2021 quarter. The gain in 2020 was comprised of a $3.7 million related to the ~~2016 period.~~sale of the Annapolis Crowne Plaza.

Equity in Earnings (Loss) of Unconsolidated Entities. ~~We recorded equity~~Equity in loss of unconsolidated entities, which consists of ~~$3.6~~our share of earnings/loss from OpenKey, was $137,000 in the 2021 quarter compared to $79,000 in the 2020 quarter.

Interest Income. Interest income was $13,000 and $611,000 in the 2021 quarter and the 2020 quarter, respectively.

Other Income (Expense). Other income decreased $1.3 million ~~and $4.4~~from $1.5 million in the 2017 and 2016 periods, respectively. The 2017 period included equity in loss of $3.3 million from Ashford Inc. and $341,000 from OpenKey, partially offset by equity in earnings of $52,000 from the AQUA U.S. Fund. The 2016 period included equity in loss of $3.3 million from the AQUA U.S. Fund, $959,000 from Ashford Inc. and $196,000 from OpenKey.

~~Interest Income.~~ ~~Interest income was $1.5 million and~~2020 quarter to $229,000 in the ~~2017 and~~ ~~2016~~ ~~periods, respectively.~~

~~Gain (Loss) on Sale~~2021 quarter. In the 2021 quarter, we recorded miscellaneous income of ~~Hotel Properties.~~ ~~Gain on sale of hotel properties was $14.0 million and $24.4 million in~~ $229,000. In the ~~2017 and 2016 periods, respectively. The gain in the 2017 period was related to~~2020 quarter, we recorded a realized gain of ~~$14.1~~$2.1 million on the sale of ~~the Crowne Plaza Ravinia, slightly~~marketable securities and dividend income of $31,000. This income was partially offset by ~~losses related to the sale~~

Table of ~~Renaissance Portsmouth and Embassy Suites Syracuse. The gain in the 2016 period was primarily related to our Hotel Dispositions, slightly offset by a loss on the sale~~Contents

expense of ~~a vacant lot associated with the Le Pavillon Hotel in New Orleans, Louisiana.~~

~~Other Income (Expense).~~ Other expense decreased $724,000, or 17.0%, to $3.5 million in the 2017 period compared to the 2016 period. In the 2017 period, we recognized realized losses of $4.2 million related to the termination of CMBX tranches, $543,000 on the maturities of options on futures contracts and $769,000 of$268,000 from CMBX premiums and ~~usage fees. These expenses were partially offset by dividend income of $986,000,~~interest paid on collateral, a realized ~~gain~~loss of ~~$822,000~~$225,000 on ~~marketable securities~~interest rate floors and other ~~miscellaneous~~expense of $119,000.

income of $131,000. In the 2016 period, we recognized realized losses of $3.3 million related to the termination of CMBX tranches, $156,000 related to the maturity of options on futures contracts, $150,000 from an investment write-off and $615,000 of CMBX premiums and usage fees.

Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased ~~$943,000,~~$23.8 million, or ~~0.6%~~41.7%, to ~~$167.2~~$33.3 million in the ~~2017 period~~2021 quarter compared to the ~~2016 period.~~2020 quarter. The decrease is primarily due to ~~lower interest expense and amortization~~a decrease of ~~loan costs of $6.5~~$5.9 million from our Hotel Dispositions, a decrease of $13.2 million at our comparable hotel properties primarily due to lower LIBOR rates and a credit to interest expense of $16.8 million related to the amortization of default interest and late charges recorded on mortgage loans previously in default in the 2021 quarter. These decreases were partially offset by an increase of ~~$5.6~~$9.4 million ~~from higher interest expense and amortization of~~attributable to the Oaktree term loan ~~costs as a result of refinances~~ and an increase of $2.7 million due to default interest and late charges on mortgage loans currently in ~~LIBOR rates.~~default. The average LIBOR rates in the ~~2017 period~~2021 quarter and the ~~2016 period~~2020 quarter were ~~1.04%~~0.12% and ~~0.45%~~1.40%, respectively.

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees ~~decreased~~increased $3.3 million ~~or 66.8%,~~ to ~~$1.6~~$3.4 million in the ~~2017 period.~~2021 quarter compared to the 2020 quarter. In the ~~2017 period,~~2021 quarter, we executed several amendments with various lenders, which included deferral of debt service payments and allowed the use of reserves for property-level operating shortfalls and/or to cover debt service payments. Lismore fees incurred ~~write-off~~in conjunction with these amendments were $3.7 million, which were partially offset by a net credit of ~~premiums, loan costs and exit fees consisting of $1.5 million~~$316,000 related to ~~refinance a mortgage loan secured by the Nashville Renaissance and Princeton Westin and other fees of $148,000.~~third party fees. In the ~~2016 period,~~2020 quarter, we ~~incurred write-off of loan costs and exit fees of $4.9 million resulting from the write-off of~~wrote-off unamortized loan costs of ~~$570,000~~$47,000 and incurred other ~~exit fees~~costs of ~~$4.3 million related to the sale~~$48,000 as a result of a ~~five-hotel portfolio and the Hampton Inn Gainesville.~~loan refinance

Unrealized Gain (Loss) on Marketable Securities. Unrealized ~~loss~~gain (loss) on marketable securities was ~~$4.8~~$0 and $(1.5) million in the ~~2017 period,~~2021 quarter and the 2020 quarter, respectively, which was based on changes in closing market prices during the period. ~~There was no unrealized gain (loss) on~~All marketable securities were sold in ~~the 2016 period.~~2020.

Unrealized Gain (Loss) on Derivatives. Unrealized gain (loss) on derivatives ~~changed $6.1~~decreased $3.5 million ~~or 142.5%,~~ from ~~a gain of $4.2~~$4.4 million in the ~~2016 period~~2020 quarter to ~~a loss of $1.8 million~~$919,000 in the ~~2017 period.~~2021 quarter. In the ~~2017 period,~~2021 quarter, we recognized an unrealized gain of $1.3 million from the revaluation of the embedded debt derivative offset by unrealized losses of ~~$3.6 million, $2.2 million and $613,000 associated with the remaining CMBX tranches,~~$71,000 from interest rate floors and $289,000 from interest rate ~~caps, respectively, partially offset by~~caps. In the 2020 quarter, we recognized unrealized gains of ~~$4.2~~$3.9 million related to CMBX tranches, $377,000 from interest rate floors and $225,000 associated with ~~the reclassification to other income (expense) for~~ the recognition of realized losses from ~~CMBX tranche terminations and $427,000 associated with~~ the reclassification to other income (expense) for maturities of options on futures contracts. In the 2016 period, we recorded an unrealized gain of $4.8 million related to interest rate floors, a $3.3 million unrealized gain associated with the reclassification to other income (expense) for the recognition of the realized loss from CMBX tranche terminations and a $156,000 unrealized gain associated with the reclassification to other income (expense) for the maturity of options on futures contracts, partially offset by unrealized losses of $3.2 million, $270,000 and $460,000 on the remaining CMBX tranches, options on futures contracts and interest rate derivatives, respectively. The fair valuetermination of interest rate floors, ~~and~~partially offset by an unrealized loss of $52,000 associated with interest rate derivatives are primarily based on movements in the LIBOR forward curve and the passage of time. The fair value of options on futures contracts is determined based on the last reported settlement price as of the measurement date. The fair value of credit default swaps is based on the change in value of CMBX indices.caps.

Income Tax (Expense) Benefit. Income tax (expense) benefit ~~(expense)~~ changed ~~$1.7 million, or 141.7%~~$574,000, from income tax expense of ~~$1.2 million~~$303,000 in the ~~2016 period~~2020 quarter to ~~a benefit of $507,000 in the 2017 period. The change in~~an income tax benefit ~~(expense) is~~of $271,000 in the 2021 quarter. This change was primarily due to a decrease in ~~taxable income recognized by~~the profitability of our TRS ~~entities.~~entities in the 2021 quarter compared to the 2020 quarter.

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partner in consolidated entities ~~was~~were allocated ~~income~~losses of ~~$4,000~~$81,000 and ~~loss $16,000~~$48,000 in the ~~2017~~2021 quarter and ~~2016~~ ~~periods,~~the 2020 quarter, respectively.

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net ~~loss~~losses of ~~$13.2~~$2.3 million and ~~net income of $2.7~~$17.7 million in the ~~2017~~2021 quarter and ~~2016~~ ~~periods,~~the 2020 quarter, respectively. Redeemable noncontrolling interests represented ownership interests of ~~15.73%~~2.42% and ~~14.01%~~15.71% in the operating partnership at March 31, 2021 and 2020, respectively.

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LIQUIDITY AND CAPITAL RESOURCES

COVID-19, Management’s Plans and Liquidity

In December 2019, COVID-19 was identified in Wuhan, China, subsequently spread to other regions of the world, and has resulted in significant travel restrictions and extended shutdown of numerous businesses in every state in the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Since late February 2020, we have experienced a significant decline in occupancy and RevPAR and we expect the significant occupancy and RevPAR declines associated with COVID-19 to continue as we are experiencing significant reservation cancellations as well as a significant reduction in new reservations. The prolonged presence of the virus has resulted in health and other government authorities imposing widespread restrictions on travel and other businesses. The hotel industry and our portfolio have experienced the postponement or cancellation of a significant number of business conferences and similar events. Following the government mandates and health official orders, in March 2020, the Company temporarily suspended operations at 23 of its 116 hotels and dramatically reduced staffing and expenses at its hotels that remained operational. As of March 31, 2021, operations at one of the Company’s hotels remained temporarily suspended. COVID-19 has had a significant negative impact on the Company’s operations and financial results to date. The full financial impact of the reduction in hotel demand caused by the pandemic cannot be reasonably estimated at this time due to uncertainty as to its severity and duration. In addition, one or more possible recurrences of COVID-19 cases could result in further reductions in business and personal travel and could cause state and local governments to reinstate travel restrictions. The Company expects that the COVID-19 pandemic will continue to have a significant negative impact on the Company’s results of operations, financial position and cash flow throughout 2021 and for the foreseeable future. As a result, the Company suspended the quarterly cash dividend on its common stock beginning in the first quarter of fiscal year 2020, suspended the quarterly cash dividend on its preferred stock beginning in the second quarter of fiscal year 2020, reduced planned capital expenditures, and worked closely with its hotel managers to significantly reduce its hotels’ operating expenses.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, 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. 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. Beginning on April 1, 2020, we did not make principal or interest payments under nearly all of our loans, which constituted an “Event of Default” as such term is defined under the applicable loan documents. Pursuant to the terms of the applicable loan documents, such an Event of Default caused an automatic increase in the interest rate on our outstanding loan balance for the period such Event of Default remains outstanding. Following an Event of Default, our lenders can generally elect to accelerate all principal and accrued interest payments that remain outstanding under the applicable loan agreement and foreclose on the applicable hotel properties that are security for such loans.

On January 15, 2021, the Company entered into a senior secured term loan facility comprising of (a) initial term loans in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million and (c) additional delayed draw term loans in an aggregate principal amount of up to $100 million. See note 7 to our consolidated financial statements.

As of March 31, 2021, the Company held cash and cash equivalents of $225.4 million and restricted cash of $67.7 million. We are currently experiencing significant variability in the operating cash flows of our hotel properties. We are also taking several steps to reduce our cash utilization and potentially raise additional capital. The Company is also working more generally to contain costs while it experiences a significant decline in occupancy and RevPAR. The Company continues to suspend its quarterly cash dividend on its common and preferred stock and to look for opportunities to renegotiate cash obligations where possible. The Company continues to work closely with its hotel managers to significantly reduce its hotel operating expenses. The Company is dependent on its hotel managers to make appropriate staffing decisions and to appropriately reduce staffing when market conditions are poor.

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the pandemic, we are unable to estimate future financial performance with certainty. However, based on our completed senior secured term loan facility with Oaktree Capital Management L.P. and forbearance and other agreements with our property-level lenders, our current unrestricted and restricted cash on hand, our current cash utilization and forecast of future operating results for the next 12 months from the date of this report, and the actions we have taken to improve our liquidity, the Company has concluded that management’s current plan alleviates the substantial doubt about its ability to continue as a going concern. Facts and circumstances could change in the future that are outside of management’s control, such as additional government mandates, health official orders, travel restrictions and extended business shutdowns due to COVID-19.

Based on our current level of operations, our cash flow from operations and our existing cash balances may not be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity payments), 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 2021 and 2022 final debt 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.

•as of May 6, 2021, the Company has temporarily suspended operations at one hotel property. The Company’s remaining 101 hotel properties are open and operating;

•the Company has reduced its planned spending for capital expenditures for fiscal year 2021;

•the Company has suspended its common stock dividends;

•the Company has suspended its preferred stock dividends;

Pursuant to the advisory agreement between us and our advisor, we must pay our advisor on a monthly basis a base management fee, subject to a minimum base management fee. The minimum base management fee is equal to the greater of: (i) 90% of the base fee paid for the same month in the prior fiscal year; and (ii) 1/12th of the “G&A Ratio” for the most recently completed fiscal quarter multiplied by our total market capitalization on the last balance sheet date included in the most recent quarterly report on Form 10-Q or annual report on Form 10-K that we file with the SEC. Thus, even if our total market capitalization and performance decline, we will still be required to make payments to our advisor equal to the minimum base management fee, which could adversely impact our liquidity and financial condition.

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.

Certain of our loan agreements contain cash trap provisions that may get triggered if the performance of our hotels decline. 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. These cash trap provisions have been triggered on nearly all of our mortgage loans containing cash trap provisions.

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,

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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, 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 January 15, 2021, the Company entered into a credit agreement (the “Credit Agreement”) with certain funds and accounts managed by Oaktree Capital Management, L.P. (the “Lenders” or Oaktree) and Oaktree Fund Administration, LLC, as administrative agent (the “Administrative Agent”). The Credit Agreement provides that, subject to the conditions set forth therein, the Lenders will make available to the Borrower a senior secured term loan facility comprising of (a) initial term loans (the “Initial Term Loan”) in an aggregate principal amount of $200 million, (b) initial delayed draw term loans in an aggregate principal amount of up to $150 million (the “Initial DDTL”) and (c) additional delayed draw term loans in an aggregate principal amount of up to $100 million (the “Additional DDTL,” and together with the Initial Term Loan and the Initial DDTL, collectively, the “Loans”), in each case to fund general corporate operations of the Company and its subsidiaries.

The Loans under the Credit Agreement will bear interest (a) with respect to the Initial Term Loan and the Initial DDTL, at an annual rate equal to 16% for the first two years, reducing to 14% thereafter and (b) with respect to the Additional DDTL, at an annual rate equal to 18.5% for the first two years, reducing to 16.5% thereafter. Interest payments on the Loans will be due and payable in arrears on the last business day of March, June, September ~~30,~~and December of each calendar year and the maturity date. For the first two years following the closing of the Credit Agreement, the Borrower will have the option to pay accrued interest “in kind” by adding such amount of accrued interest to the outstanding principal balance of the Loans (such interest, “PIK Interest”). The initial maturity date of the Credit Agreement (the “Maturity Date”) shall be three years, with two optional one-year extensions subject to satisfaction of certain terms and conditions. The Lenders shall, subject to certain terms, have the ability to make protective advances to the Borrower pursuant to the terms of the Credit Agreement to cure defaults with respect to mortgage and mezzanine-level indebtedness of subsidiaries of the Borrower having principal balances in excess of $400 million.

Equity Transactions

On December 5, 2017, the board of directors reapproved 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, par value $0.01 per share having an aggregate value of up to $200 million. The board of directors’ authorization replaced any previous

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repurchase authorizations. No shares were repurchased during the three months ended March 31, 2021 pursuant to the Repurchase Program.

From January 1, 2021 through May 6, 2021, Ashford (the “Company”) 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 ~~2016~~7.50% Series I Cumulative Preferred Stock, in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. During this period, the Company exchanged approximately 46.7 million shares of its common stock for an aggregate of approximately 5.9 million shares of preferred stock.

On December 7, 2020, the Company and Lincoln Park Capital Fund, LLC (“Lincoln Park”), ~~respectively.~~entered into a purchase agreement (the “Purchase Agreement”), pursuant to which the Company may issue or sell to Lincoln Park up to 20.6 million of shares of the Company’s common stock from time to time during the term of the purchase agreement. Meanwhile, both parties also entered into a registration rights agreement, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of shares of common stock that are issued to Lincoln Park under the Purchase Agreement. The Company filed a registration statement on Form S-11 on December 11, 2020, which was amended on December 21, 2020, and deemed effective by the SEC on December 22, 2020.

Upon entering into the Purchase Agreement, the Company issued 190,840 shares of common stock as consideration for Lincoln Park’s execution and delivery of the Purchase Agreement. Under the Purchase Agreement the Company issued approximately 10.4 million of common stock for gross proceeds of approximately $25.1 million.

On January 22, 2021, the Company entered into the SEDA with YA, pursuant to which the Company will be able to sell the Commitment Amount at the Company’s request any time during the Commitment Period. Other than with respect to the Initial Advance (as defined below) the shares sold to YA pursuant to the SEDA would be purchased at 95% of the Market Price and would be subject to certain limitations, including that YA could not purchase any shares that would result in it owning more than 4.99% of the Company’s common stock.

At any time during the Commitment Period the Company may require YA to purchase shares of the Company’s common stock by delivering an Advance Notice. The Company shall, in its sole discretion, select the Advance Shares, not to exceed the Maximum Advance Shares of $5.0 million, it desires to issue and sell to the Investor in each Advance Notice and the time it desires to deliver each Advance Notice. There shall be no mandatory minimum Advances and no non-usages fee for not utilizing the Commitment Amount or any part thereof.

On March 12, 2021, the Company and Lincoln Park entered into an additional purchase agreement, which provided that subject to the terms and conditions set forth therein, the Company may issue or sell to Lincoln Park up to 20.7 million shares of the Company’s common stock, from time to time during the term of the 2nd Purchase Agreement. Meanwhile, both parties also entered into a registration rights agreement, pursuant to which the Company agreed to file a registration statement with the SEC covering the resale of shares of common stock that are issued to Lincoln Park under the Purchase Agreement. The Company filed a registration statement on Form S-11 on March 17, 2021, which was deemed effective by the SEC on March 31, 2021.

Under the terms and subject to the conditions of the 2nd Purchase Agreement, the Company has the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase up to 20.7 million shares of common stock. Such sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion, over a 24-month period commencing on the date that the registration statement covering the resale of shares of common stock that are issued under the 2nd Purchase Agreement was declared effective by the SEC and a final prospectus in connection therewith was filed and the other conditions set forth in the 2nd Purchase Agreement were satisfied. Lincoln Park has no right to require the Company to sell any common stock to Lincoln Park, but Lincoln Park is obligated to make purchases as the Company directs, subject to conditions set forth in the Purchase Agreement.

Upon entering into the 2nd Purchase Agreement, the Company issued 162,655 shares of common stock (the “Commitment Shares”) as consideration for Lincoln Park’s execution and delivery of the Purchase Agreement.

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Under the 2nd Purchase Agreement, the Company may from time to time, at its discretion, direct Lincoln Park to purchase on any single business day (a “Regular Purchase”) up to (i) 400,000 shares of common stock if the closing sale price of the common stock is not below $5.00 per share on the New York Stock Exchange (the “NYSE”) or (ii) 300,000 shares of common stock if the closing sale price of the common stock is below $5.00 per share on the NYSE. In any case, Lincoln Park’s commitment in any single Regular Purchase may not exceed $3,000,000. The foregoing share amounts and per share prices will be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split or other similar transaction occurring after the date of the Purchase Agreement.

The purchase price per share for each such Regular Purchase will be based on prevailing market prices of the common stock immediately preceding the time of sale as computed under the 2nd Purchase Agreement. Under the 2nd Purchase Agreement, the Company may not effect any sales of shares of common stock on any purchase date that the closing sale price of the common stock on the NYSE is less than the floor price of $1.00 per share.

In addition to Regular Purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases on the terms and subject to the conditions set forth in the 2nd Purchase 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 $(91.9) million and $11.9 million for the three months ended March 31, 2021 and 2020, respectively. Cash flows provided by/used in operations were impacted by the COVID-19 pandemic, changes in hotel operations, our hotel dispositions in 2020 and 2021 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 three months ended March 31, 2021, net cash flows used in investing activities were $1.1 million. Cash outflows consisted of $9.1 million for capital improvements made to various hotel properties, partially offset by cash inflows of $7.3 million from proceeds received from the sales of the Le Meridien Minneapolis and $670,000 of proceeds from property insurance.

For the three months ended March 31, 2020, net cash flows used in investing activities were $15.6 million. Cash outflows primarily consisted of $20.4 million for capital improvements made to various hotel properties. Cash outflows were partially offset by $4.7 million from proceeds received from the sale of the Crowne Plaza Annapolis.

Net Cash Flows Provided by (Used in) Financing Activities. For the three months ended March 31, 2021, net cash flows provided by financing activities were $218.8 million. Cash inflows consisted of $195.5 million from borrowings on indebtedness, net of commitment fee and $45.5 million of net proceeds from issuances of common stock, partially offset by cash outflows of $4.3 million for repayments of indebtedness, $17.5 million for payments of loan costs and exit fees and $292,000 of payments for derivatives.

For the three months ended March 31, 2020, net cash flows used in financing activities were $27.5 million. Cash outflows primarily consisting of $45.3 million for repayments of indebtedness, $18.0 million for dividend payments to common and preferred stockholders and unitholders, $1.2 million for payments of loan costs and exit fees, partially offset by cash inflows of $37.0 million from borrowings on indebtedness.

Dividend Policy. In December 2020, the board of directors approved our dividend policy for 2021, which continued the suspension of the Company’s dividend into 2021 in light of the ongoing uncertainty from the COVID-19 pandemic and to

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protect liquidity. The board of directors will continue to review our dividend policy and make future announcements with respect thereto.

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. ~~We anticipate~~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 the COVID-19 pandemic and government-issued travel restrictions in response, 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 ~~our~~ cash flows from ~~the~~ operations ~~of our properties and cash on hand will be sufficient~~are insufficient during any quarter to enable us to make quarterly distributions to maintain our REIT ~~status. To the extent that cash flows from operations and cash on hand are insufficient during any quarter~~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.

OFF-BALANCE SHEET ARRANGEMENTS

In the normal course of business, we form partnerships or joint ventures that operate certain ~~hotel properties.~~hotels. We evaluate each partnership and joint venture to determine whether the entity is a ~~Variable Interest Entity (“VIE”).~~VIE. If the entity is determined

to be a VIE, we assess whether we are the primary beneficiary and need to consolidate the entity. For further discussion of the ~~Company’s~~company’s VIEs, see ~~notes~~note 2 ~~and 5~~ to our consolidated financial statements.

CONTRACTUAL OBLIGATIONS

There have been no material changes, ~~since December 31, 2016,~~ outside of the ordinary course of business, as of March 31, 2021, to contractual obligations specified in the table of contractual obligations included in the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our ~~2016~~2020 Form ~~10-K.~~10-K, other than in February 2021, the Company was informed by its lender that the lender is initiating foreclosure proceedings for the foreclosure of the SpringHill Suites Durham and SpringHill Suites Charlotte, which secures the Company’s $19.4 million mortgage loan. The foreclosure process was completed on April 29, 2021. Also, the Company remains in default on its $50.1 million mortgage loan secured by the Overland Park Courtyard Kansas City, Residence Inn Salt Lake City and Residence Inn Orlando and its $6.3 million mortgage loan secured by the Manchester Courtyard.

CRITICAL ACCOUNTING POLICIES AND ~~ESTIMATES~~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 ~~2016~~2020 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 ~~EBITDA,~~EBITDAre, Funds From Operations (“FFO”) and Adjusted FFO ~~and AFFO~~ are ~~made~~presented to ~~assist~~help our investors evaluate our operating performance.

EBITDA is defined as net income (loss) ~~attributable to the Company~~ before interest expense and amortization of ~~premiums~~discounts and loan costs, net, ~~interest income other than interest income from mezzanine loans,~~ 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 ~~noncontrolling interests in the operating partnership~~gain/loss on disposition of assets and ~~after adjustments for~~hotel properties and gain/loss of unconsolidated ~~joint ventures.~~ entities to calculate EBITDAre, as defined by NAREIT.

We then further adjust ~~EBITDA~~EBITDAre to exclude certain additional items such as gain/loss on ~~sale of hotel properties, impairment charges and uninsured hurricane related costs,~~insurance settlements, write-off of premiums, loan costs and exit fees, other income/expense, net, transaction ~~acquisition~~ and ~~management~~ conversion costs, legal, ~~judgment~~advisory and ~~related legal~~settlement costs, dead deal costs, ~~software implementation~~uninsured remediation costs and non-cash items such as amortization of unfavorable contract

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liabilities, non-cash stock/unit-based compensation, unrealized ~~gain/loss~~gains/losses on marketable securities and derivative instruments, ~~and investment in the AQUA U.S Fund,~~ as well as our portion of adjustments to ~~EBITDA~~EBITDAre of unconsolidated entities. ~~We exclude items from Adjusted EBITDA that are either non-cash or are not part of our core operations in order to provide a period-over-period comparison of our operations.~~

We present EBITDA, EBITDAre and Adjusted ~~EBITDA~~EBITDAre because we believe ~~these measurements a)~~they reflect more accurately ~~reflect~~ the ongoing performance of our hotel assets and other investments b)and provide more useful information to investors as they are indicators of our ability to meet our future debt payment ~~and~~requirements, working capital requirements and c)they provide an overall evaluation of our financial condition. EBITDA, EBITDAre and Adjusted ~~EBITDA~~EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted ~~EBITDA~~EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted ~~EBITDA~~EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted ~~EBITDA~~EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to ~~a) GAAP~~operating income (loss) or net income ~~or loss~~(loss) determined in accordance with GAAP as an ~~indication~~indicator of ~~our financial~~ performance or ~~b) GAAP~~as an alternative to cash flows from operating activities as ~~a measure~~determined by GAAP as an indicator of ~~our~~ liquidity.

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


	Three Months Ended March 31, 2020
	2021		2020
Net income (loss)	$	(105,390)	$	(101,920)
Interest expense and amortization of discounts and loan costs	33,264		57,085
Depreciation and amortization	57,627		66,350
Income tax expense (benefit)	(271)		303
Equity in (earnings) loss of unconsolidated entities	137		79

Company’s portion of EBITDA of unconsolidated entities (OpenKey)	(135)		(78)
EBITDA	(14,768)		21,819
Impairment charges on real estate	—		27,613
(Gain) loss on disposition of assets and hotel properties	69		(3,623)


EBITDAre	(14,699)		45,809
Amortization of unfavorable contract liabilities	53		49



Write-off of premiums, loan costs and exit fees	3,379		95

Other (income) expense, net	(229)		(1,491)
Transaction and conversion costs	1,509		741
Legal, advisory and settlement costs	2,647		145
Unrealized (gain) loss on marketable securities	—		1,477
Unrealized (gain) loss on derivatives	(919)		(4,422)
Dead deal costs	689		101
Uninsured remediation costs	374		—
Non-cash stock/unit-based compensation	1,944		4,906


Company’s portion of adjustments to EBITDAre of unconsolidated entities (OpenKey)	10		6
Adjusted EBITDAre	$	(5,242)	$	47,416

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ (28,726 ) $ (25,138 ) $ (50,235 ) $ (2,142 )
(Income) loss from consolidated entities attributable to noncontrolling interest (22 ) (16 ) (4 ) 16
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 6,940
5,009
13,202
2,745
Net income (loss) attributable to the Company (21,808 ) (20,145 ) (37,037 ) 619
Interest income (706 ) (92 ) (1,460 ) (229 )
Interest expense and amortization of premiums and loan costs, net 56,934
55,732
167,138
168,078
Depreciation and amortization 60,075
60,108
185,197
182,227
Income tax expense (benefit) (1,271 ) (16 ) (515 ) 1,216
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership (6,940 ) (5,009 ) (13,202 ) (2,745 )
Equity in (earnings) loss of unconsolidated entities 679
85
3,632
959
Company's portion of EBITDA of unconsolidated entities (Ashford Inc.) (384 ) 165
(20 ) (207 )
Company's portion of EBITDA of unconsolidated entities (OpenKey) (113 ) —
(361 ) —
EBITDA available to the Company and OP unitholders 86,466
90,828
303,372
349,918
Amortization of unfavorable contract liabilities (363 ) (543 ) (1,151 ) (1,629 )
Impairment and uninsured hurricane losses 5,496
4,922
5,496
4,695
(Gain) loss on sale of hotel properties (15 ) (1,448 ) (14,024 ) (24,428 )
Write-off of premiums, loan costs and exit fees —
972
1,629
4,913
Other (income) expense 273
926
3,539
4,263
Transaction, acquisition and management conversion costs 202
778
3,770
1,422
Legal judgment and related legal costs 27
23
4,091
71
Unrealized (gain) loss on marketable securities 936
—
4,813
—
Unrealized (gain) loss on derivatives 1,479
9,548
1,804
(4,248 )
Dead deal costs 5
30
9
331
Software implementation costs —
—
1,034
—
Non-cash stock/unit-based compensation 4,613
2,185
8,751
5,511
Company's portion of (gain) loss of AQUA U.S. Fund —
475
(52 ) 3,473
Company's portion of adjustments to EBITDA of unconsolidated entities (Ashford Inc.) 1,703
793
3,752
2,929
Company's portion of adjustments to EBITDA of unconsolidated entities (OpenKey) 2
—
4
—
Adjusted EBITDA available to the Company and OP unitholders $ 100,824
$ 109,489
$ 326,837
$ 347,221

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We calculate FFO and ~~AFFO~~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 ~~properties,~~disposition of assets and ~~extraordinary items as defined by GAAP,~~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 ~~AFFO~~Adjusted FFO excludes gain/loss on extinguishment of preferred stock, write-off of premiums, loan costs and exit fees, other ~~impairment charges, other~~ income/expense, net transaction ~~acquisition~~ and ~~management~~ conversion costs, legal, ~~judgment~~advisory, and ~~related legal~~settlement costs, dead deal costs, ~~software implementation costs,~~ uninsured ~~hurricane related~~remediation costs and non-cash items such as non-cash stock/unit-based compensation, amortization of loan costs, amortization of the term loan discount, unrealized ~~gain/loss~~gains/losses on marketable securities and derivative instruments, ~~and investment in the AQUA U.S Fund,~~ as well as our portion of adjustments to FFO related to unconsolidated entities. We exclude items from ~~AFFO~~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 consider FFO and ~~AFFO~~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 us. FFO and ~~AFFO~~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 ~~AFFO~~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 March 31, 2020
	2021		2020
Net income (loss)	$	(105,390)	$	(101,920)
(Income) loss attributable to noncontrolling interest in consolidated entities	81		48
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership	2,271		17,671
Preferred dividends	818		(10,644)
Gain (loss) on extinguishment of preferred stock	10,635		—
Net income (loss) attributable to common stockholders	(91,585)		(94,845)
Depreciation and amortization of real estate	57,590		66,298
(Gain) loss on disposition of assets and hotel properties	69		(3,623)
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership	(2,271)		(17,671)
Equity in (earnings) loss of unconsolidated entities	137		79
Impairment charges on real estate	—		27,613

Company’s portion of FFO of unconsolidated entities (OpenKey)	(136)		(79)
FFO available to common stockholders and OP unitholders	(36,196)		(22,228)
(Gain) loss on extinguishment of preferred stock	(10,635)		—
Write-off of premiums, loan costs and exit fees	3,379		95



Other (income) expense, net	(229)		(1,491)
Transaction and conversion costs	1,883		741
Legal, advisory and settlement costs	2,647		145
Unrealized (gain) loss on marketable securities	—		1,477
Unrealized (gain) loss on derivatives	(919)		(4,422)
Dead deal costs	689		101
Uninsured remediation costs	374		—
Non-cash stock/unit-based compensation	1,944		4,906
Amortization of term loan discount	2,449		—
Amortization of loan costs	4,891		6,580


Company’s portion of adjustments to FFO of unconsolidated entities (OpenKey)	10		6
Adjusted FFO available to common stockholders and OP unitholders	$	(29,713)	$	(14,090)

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Net income (loss) $ (28,726 ) $ (25,138 ) $ (50,235 ) $ (2,142 )
(Income) loss from consolidated entities attributable to noncontrolling interest (22 ) (16 ) (4 ) 16
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 6,940
5,009
13,202
2,745
Preferred dividends (11,440 ) (8,875 ) (33,352 ) (25,856 )
Extinguishment of issuance costs upon redemption of preferred stock (4,507 ) (6,124 ) (4,507 ) (6,124 )
Net income (loss) attributable to common stockholders (37,755 ) (35,144 ) (74,896 ) (31,361 )
Depreciation and amortization of real estate 60,075
60,108
185,197
182,227
(Gain) loss on sale of hotel properties (15 ) (1,448 ) (14,024 ) (24,428 )
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership (6,940 ) (5,009 ) (13,202 ) (2,745 )
Equity in (earnings) loss of unconsolidated entities 679
85
3,632
959
Impairment charges on real estate 1,785
5,039
1,785
5,039
Company's portion of FFO of unconsolidated entities (Ashford Inc.) (570 ) (85 ) (3,265 ) (597 )
Company's portion of FFO of unconsolidated entities (OpenKey) (116 ) —
(366 ) —
FFO available to common stockholders and OP unitholders 17,143
23,546
84,861
129,094
Extinguishment of issuance costs upon redemption of preferred stock 4,507
6,124
4,507
6,124
Write-off of premiums, loan costs and exit fees —
972
1,629
4,913
Other impairment charges —
(117 ) —
(344 )
Uninsured hurricane related costs 3,711
—
3,711
—
Other (income) expense 273
926
3,539
4,263
Transaction, acquisition and management conversion costs 202
778
3,770
1,422
Legal judgment and related legal costs 27
23
4,091
71
Unrealized (gain) loss on marketable securities 936
—
4,813
—
Unrealized (gain) loss on derivatives 1,479
9,548
1,804
(4,248 )
Dead deal costs 5
30
9
331
Software implementation costs —
—
1,034
—
Non-cash stock/unit-based compensation 4,613
2,185
8,751
5,511
Company's portion of (gain) loss of AQUA U.S. Fund —
475
(52 ) 3,473
Company's portion of adjustments to FFO of unconsolidated entities (Ashford Inc.) 1,580
793
6,130
2,929
Company's portion of adjustments to FFO of unconsolidated entities (OpenKey) 2
—
4
—
Adjusted FFO available to common stockholders and OP unitholders $ 34,478
$ 45,283
$ 128,601
$ 153,539

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HOTEL PORTFOLIO

The following table presents certain information related to our hotel properties as of ~~September 30, 2017:~~March 31, 2021:


Hotel Property	Location	Service Type	Total Rooms	% Owned		Owned Rooms

Fee Simple Properties
Embassy Suites	Austin, TX	Full service	150	100	%	150
Embassy Suites	Dallas, TX	Full service	150	100		150
Embassy Suites	Herndon, VA	Full service	150	100		150
Embassy Suites	Las Vegas, NV	Full service	220	100		220
Embassy Suites	Flagstaff, AZ	Full service	119	100		119
Embassy Suites	Houston, TX	Full service	150	100		150
Embassy Suites	West Palm Beach, FL	Full service	160	100		160
Embassy Suites	Philadelphia, PA	Full service	263	100		263
Embassy Suites	Walnut Creek, CA	Full service	249	100		249
Embassy Suites	Arlington, VA	Full service	269	100		269
Embassy Suites	Portland, OR	Full service	276	100		276
Embassy Suites	Santa Clara, CA	Full service	258	100		258
Embassy Suites	Orlando, FL	Full service	174	100		174
Hilton Garden Inn	Jacksonville, FL	Select service	119	100		119
Hilton Garden Inn	Austin, TX	Select service	254	100		254
Hilton Garden Inn	Baltimore, MD	Select service	158	100		158
Hilton Garden Inn	Virginia Beach, VA	Select service	176	100		176
Hilton	Houston, TX	Full service	242	100		242
Hilton	St. Petersburg, FL	Full service	333	100		333
Hilton	Santa Fe, NM	Full service	158	100		158
Hilton	Bloomington, MN	Full service	300	100		300
Hilton	Costa Mesa, CA	Full service	486	100		486
Hilton	Boston, MA	Full service	390	100		390
Hilton	Parsippany, NJ	Full service	353	100		353
Hilton	Tampa, FL	Full service	238	100		238
Hilton	Alexandria, VA	Full service	252	100		252
Hilton	Santa Cruz, CA	Full service	178	100		178
Hilton	Ft. Worth, TX	Full service	294	100		294
Hampton Inn	Lawrenceville, GA	Select service	85	100		85
Hampton Inn	Evansville, IN	Select service	140	100		140
Hampton Inn	Parsippany, NJ	Select service	152	100		152
Hampton Inn	Buford, GA	Select service	92	100		92
Marriott	Beverly Hills, CA	Full service	260	100		260
Marriott	Durham, NC	Full service	225	100		225
Marriott	Arlington, VA	Full service	701	100		701
Marriott	Bridgewater, NJ	Full service	349	100		349
Marriott	Dallas, TX	Full service	265	100		273
Marriott	Fremont, CA	Full service	357	100		357
Marriott	Memphis, TN	Full service	232	100		232
Marriott	Irving, TX	Full service	499	100		491
Marriott	Omaha, NE	Full service	300	100		300
Marriott	Sugarland, TX	Full service	300	100		300
SpringHill Suites by Marriott	Baltimore, MD	Select service	133	100		133
SpringHill Suites by Marriott	Kennesaw, GA	Select service	90	100		90
SpringHill Suites by Marriott	Buford, GA	Select service	97	100		97
SpringHill Suites by Marriott	Charlotte, NC	Select service	136	100		136
SpringHill Suites by Marriott	Durham, NC	Select service	120	100		120
SpringHill Suites by Marriott	Manhattan Beach, CA	Select service	164	100		164

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Hotel Property

Location
Service Type
Total Rooms
% Owned Owned Rooms
Fee Simple Properties
Embassy Suites Austin, TX Full service 150
100 % 150
Embassy Suites Dallas, TX Full service 150
100
150
Embassy Suites Herndon, VA Full service 150
100
150
Embassy Suites Las Vegas, NV Full service 220
100
220
Embassy Suites Flagstaff, AZ Full service 119
100
119
Embassy Suites Houston, TX Full service 150
100
150
Embassy Suites West Palm Beach, FL Full service 160
100
160
Embassy Suites Philadelphia, PA Full service 263
100
263
Embassy Suites Walnut Creek, CA Full service 249
100
249
Embassy Suites Arlington, VA Full service 267
100
267
Embassy Suites Portland, OR Full service 276
100
276
Embassy Suites Santa Clara, CA Full service 257
100
257
Embassy Suites Orlando, FL Full service 174
100
174
Hilton Garden Inn Jacksonville, FL Select service 119
100
119
Hilton Garden Inn Austin, TX Select service 254
100
254
Hilton Garden Inn Baltimore, MD Select service 158
100
158
Hilton Garden Inn Virginia Beach, VA Select service 176
100
176
Hilton Garden Inn Wisconsin Dells, WI Select service 128
100
128
Hilton Houston, TX Full service 242
100
242
Hilton St. Petersburg, FL Full service 333
100
333
Hilton Santa Fe, NM Full service 158
100
158
Hilton Bloomington, MN Full service 300
100
300
Hilton Costa Mesa, CA Full service 486
100
486
Hilton Boston, MA Full service 390
100
390
Hilton Parsippany, NJ Full service 353
100
353
Hilton Tampa, FL Full service 238
100
238
Hampton Inn Lawrenceville, GA Select service 85
100
85
Hampton Inn Evansville, IN Select service 140
100
140
Hampton Inn Parsippany, NJ Select service 152
100
152
Hampton Inn Buford, GA Select service 92
100
92
Hampton Inn Phoenix, AZ Select service 106
100
106
Hampton Inn - Waterfront Pittsburgh, PA Select service 113
100
113
Hampton Inn - Washington Pittsburgh, PA Select service 103
100
103
Hampton Inn Columbus, OH Select service 145
100
145
Marriott Beverly Hills, CA Full service 260
100
260
Marriott Durham, NC Full service 225
100
225
Marriott Arlington, VA Full service 698
100
698
Marriott Bridgewater, NJ Full service 347
100
347
Marriott Dallas, TX Full service 265
100
265
Marriott Fremont, CA Full service 357
100
357
Marriott Memphis, TN Full service 232
100
232
Marriott Irving, TX Full service 491
100
491
Marriott Omaha, NE Full service 300
100
300
Marriott San Antonio, TX Full service 251
100
251


Hotel Property	Location	Service Type	Total Rooms	% Owned	Owned Rooms

SpringHill Suites by Marriott	Plymouth Meeting, PA	Select service	199	100	199
Fairfield Inn by Marriott	Kennesaw, GA	Select service	86	100	86
Courtyard by Marriott	Bloomington, IN	Select service	117	100	117
Courtyard by Marriott - Tremont	Boston, MA	Select service	315	100	315
Courtyard by Marriott	Columbus, IN	Select service	90	100	90
Courtyard by Marriott	Denver, CO	Select service	202	100	202
Courtyard by Marriott	Gaithersburg, MD	Select service	210	100	210
Courtyard by Marriott	Crystal City, VA	Select service	272	100	272
Courtyard by Marriott	Overland Park, KS	Select service	168	100	168
Courtyard by Marriott	Foothill Ranch, CA	Select service	156	100	156
Courtyard by Marriott	Alpharetta, GA	Select service	154	100	154
Courtyard by Marriott	Oakland, CA	Select service	156	100	156
Courtyard by Marriott	Scottsdale, AZ	Select service	180	100	180
Courtyard by Marriott	Plano, TX	Select service	153	100	153
Courtyard by Marriott	Newark, CA	Select service	181	100	181
Courtyard by Marriott	Manchester, CT	Select service	90	85	77
Courtyard by Marriott	Basking Ridge, NJ	Select service	235	100	235
Marriott Residence Inn	Evansville, IN	Select service	78	100	78
Marriott Residence Inn	Orlando, FL	Select service	350	100	350
Marriott Residence Inn	Falls Church, VA	Select service	159	100	159
Marriott Residence Inn	San Diego, CA	Select service	150	100	150
Marriott Residence Inn	Salt Lake City, UT	Select service	144	100	144
Marriott Residence Inn	Las Vegas, NV	Select service	256	100	256
Marriott Residence Inn	Phoenix, AZ	Select service	200	100	200
Marriott Residence Inn	Plano, TX	Select service	126	100	126
Marriott Residence Inn	Newark, CA	Select service	168	100	168
Marriott Residence Inn	Manchester, CT	Select service	96	85	82
Marriott Residence Inn	Jacksonville, FL	Select service	120	100	120
TownePlace Suites by Marriott	Manhattan Beach, CA	Select service	143	100	143
One Ocean	Atlantic Beach, FL	Full service	193	100	193
Sheraton Hotel	Ann Arbor, MI	Full service	197	100	197
Sheraton Hotel	Langhorne, PA	Full service	186	100	186
Sheraton Hotel	Minneapolis, MN	Full service	220	100	220
Sheraton Hotel	Indianapolis, IN	Full service	378	100	378
Sheraton Hotel	Anchorage, AK	Full service	370	100	370
Sheraton Hotel	San Diego, CA	Full service	260	100	260
Hyatt Regency	Coral Gables, FL	Full service	254	100	254
Hyatt Regency	Hauppauge, NY	Full service	358	100	358
Hyatt Regency	Savannah, GA	Full service	351	100	351
Renaissance	Nashville, TN	Full service	673	100	673
Annapolis Historic Inn	Annapolis, MD	Full service	124	100	124
Lakeway Resort & Spa	Austin, TX	Full service	168	100	168
Silversmith	Chicago, IL	Full service	144	100	144
The Churchill	Washington, D.C.	Full service	173	100	173
The Melrose	Washington, D.C.	Full service	240	100	240
Le Pavillon	New Orleans, LA	Full service	226	100	226
The Ashton	Ft. Worth, TX	Full service	39	100	39
Westin	Princeton, NJ	Full service	296	100	296
W	Atlanta, GA	Full service	237	100	237
Hotel Indigo	Atlanta, GA	Full service	141	100	141
Ritz-Carlton	Atlanta, GA	Full service	444	100	444
La Posada de Santa Fe	Santa Fe, NM	Full service	157	100	157

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Hotel Property

Location
Service Type
Total Rooms
% Owned Owned Rooms
Marriott Sugarland, TX Full service 300
100
300
SpringHill Suites by Marriott Jacksonville, FL Select service 102
100
102
SpringHill Suites by Marriott Baltimore, MD Select service 133
100
133
SpringHill Suites by Marriott Kennesaw, GA Select service 90
100
90
SpringHill Suites by Marriott Buford, GA Select service 97
100
97
SpringHill Suites by Marriott Centreville, VA Select service 136
100
136
SpringHill Suites by Marriott Charlotte, NC Select service 136
100
136
SpringHill Suites by Marriott Durham, NC Select service 120
100
120
SpringHill Suites by Marriott Manhattan Beach, CA Select service 164
100
164
SpringHill Suites by Marriott Plymouth Meeting, PA Select service 199
100
199
SpringHill Suites by Marriott Glen Allen, VA Select service 136
100
136
Fairfield Inn by Marriott Kennesaw, GA Select service 86
100
86
Courtyard by Marriott Bloomington, IN Select service 117
100
117
Courtyard by Marriott - Tremont Boston, MA Select service 315
100
315
Courtyard by Marriott Columbus, IN Select service 90
100
90
Courtyard by Marriott Denver, CO Select service 202
100
202
Courtyard by Marriott Louisville, KY Select service 150
100
150
Courtyard by Marriott Gaithersburg, MD Select service 210
100
210
Courtyard by Marriott Crystal City, VA Select service 272
100
272
Courtyard by Marriott Ft. Lauderdale, FL Select service 174
100
174
Courtyard by Marriott Overland Park, KS Select service 168
100
168
Courtyard by Marriott Savannah, GA Select service 156
100
156
Courtyard by Marriott Foothill Ranch, CA Select service 156
100
156
Courtyard by Marriott Alpharetta, GA Select service 154
100
154
Courtyard by Marriott Oakland, CA Select service 156
100
156
Courtyard by Marriott Scottsdale, AZ Select service 180
100
180
Courtyard by Marriott Plano, TX Select service 153
100
153
Courtyard by Marriott Newark, CA Select service 181
100
181
Courtyard by Marriott Manchester, CT Select service 90
85
77
Courtyard by Marriott Basking Ridge, NJ Select service 235
100
235
Courtyard by Marriott Wichita, KS Select service 128
100
128
Courtyard by Marriott - Billerica Boston, MA Select service 210
100
210
Homewood Suites Pittsburgh, PA Select service 148
100
148
Marriott Residence Inn Lake Buena Vista, FL Select service 210
100
210
Marriott Residence Inn Evansville, IN Select service 78
100
78
Marriott Residence Inn Orlando, FL Select service 350
100
350
Marriott Residence Inn Falls Church, VA Select service 159
100
159
Marriott Residence Inn San Diego, CA Select service 150
100
150
Marriott Residence Inn Salt Lake City, UT Select service 144
100
144
Marriott Residence Inn Las Vegas, NV Select service 256
100
256
Marriott Residence Inn Phoenix, AZ Select service 200
100
200
Marriott Residence Inn Plano, TX Select service 126
100
126
Marriott Residence Inn Newark, CA Select service 168
100
168
Marriott Residence Inn Manchester, CT Select service 96
85
82
Marriott Residence Inn Jacksonville, FL Select service 120
100
120
Marriott Residence Inn Stillwater, OK Select service 101
100
101
Marriott Residence Inn Tampa, FL Select service 109
100
109
TownePlace Suites by Marriott Manhattan Beach, CA Select service 143
100
143
One Ocean Atlantic Beach, FL Full service 193
100
193

Hotel Property

Location

Service Type

Total Rooms

% Owned

Owned Rooms

Ground Lease Properties

Crowne Plaza (1) (2)

Key West, FL

Full service

160

100

160

Renaissance (3)

Palm Springs, CA

Full service

410

100

410

Total

22,569

22,542

________

(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 to be converted to an Autograph property by July 1, 2022.

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

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Hotel Property

Location
Service Type
Total Rooms
% Owned Owned Rooms
Sheraton Hotel Ann Arbor, MI Full service 197
100
197
Sheraton Hotel Langhorne, PA Full service 186
100
186
Sheraton Hotel Minneapolis, MN Full service 220
100
220
Sheraton Hotel Indianapolis, IN Full service 378
100
378
Sheraton Hotel Anchorage, AK Full service 370
100
370
Sheraton Hotel San Diego, CA Full service 260
100
260
Hyatt Regency Coral Gables, FL Full service 253
100
253
Hyatt Regency Hauppauge, NY Full service 358
100
358
Hyatt Regency Savannah, GA Full service 351
100
351
Renaissance Nashville, TN Full service 673
100
673
Annapolis Historic Inn Annapolis, MD Full service 124
100
124
Lakeway Resort & Spa Austin, TX Full service 168
100
168
Silversmith Chicago, IL Full service 144
100
144
The Churchill Washington, DC Full service 173
100
173
The Melrose Washington, DC Full service 240
100
240
Le Pavillon New Orleans, LA Full service 226
100
226
The Ashton Ft. Worth, TX Full service 39
100
39
Westin Princeton, NJ Full service 296
100
296
W Atlanta, GA Full service 237
100
237
W Minneapolis, MN Full service 229
100
229
Le Meridien Minneapolis, MN Full service 60
100
60
Hotel Indigo Atlanta, GA Full service 140
100
140
Ground Lease Properties
Crowne Plaza Key West, FL Full service 160
100
160
Crowne Plaza Annapolis, MD Full service 196
100
196
Hilton Ft. Worth, TX Full service 294
100
294
Renaissance Palm Springs, CA Full service 410
100
410
Ritz-Carlton Atlanta, GA Full service 444
100
444
Total 25,055
25,028


~~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, 2017,~~March 31, 2021, our total indebtedness of ~~$3.7~~$3.9 billion included ~~$3.3~~$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, 2017~~March 31, 2021 would be approximately ~~$8.1~~$8.7 million annually. Interest rate changes have no impact on the remaining ~~$449.7~~$440.2 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, 2017 and December~~March 31, ~~2016, respectively,~~2021, 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.

We use credit default swaps to hedge financial and capital market risk. We have entered into credit default swap transactions, excluding those that have terminated, for notional amounts totaling $212.5 million, to hedge financial and capital market risk. A credit default swap is a derivative contract that functions likehold an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. Assuming the underlying bonds pay off at par over their remaining average life, our total exposure for these trades was approximately $8.4 million at September 30, 2017.

~~We hold~~ interest rate ~~floors~~floor with a notional ~~amounts~~amount totaling ~~$10.0 billion~~$25.0 million and a strike ~~rates ranging from (0.25)% to 1%~~rate of 1.25%. Our total exposure is capped at our initial upfront costs totaling ~~$9.5 million. These instruments have~~$19,000. This instrument has a termination ~~dates ranging from March 2019 to July 2020.~~date of November 2021.


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

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 ~~Securities~~ Exchange ~~Act of 1934 (the “Exchange Act”))~~Act) as of ~~September 30, 2017~~March 31, 2021 (“Evaluation Date”). Based upon that evaluation, ~~our~~the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures ~~are~~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 ~~Securities and Exchange Commission~~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~~

ITEM 1. LEGAL PROCEEDINGS

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order compelling the company that issued the supersedeas bond, RLI Insurance Company (“RLI”), to pay approximately $10.0 million. On June 1, 2017, RLI paid Nantucket this amount and sought reimbursement from the ~~Company.~~Company, and on June 7, 2017, the Company paid $2.5 million of the judgment. On June 27, 2017, the Florida Supreme Court denied the ~~Company's~~Company’s petition for review. As a result, all of the appeals were exhausted and the judgment was final with the determination and reimbursement of ~~attorney's~~attorney’s fees being the only remaining dispute. On June 29, 2017, the balance of the judgment of $3.9 million was paid to Nantucket by the Company.

On June 29, 2017, RLI filed suit in Federal District Court in Dallas seeking to recover the amounts previously paid to Nantucket. On July 19, 2017, the Company paid approximately $10.0 million to RLI mooting RLI's claim subject only to the alleged claim for attorneys fee. With the agreement for the Company to pay the negotiated settlement of RLI's attorney fees in the amount of ~~$100,000,~~potential remaining legal fees that could be owed.

A class action lawsuit has been filed against one of the Company’s hotel management companies 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) 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 ~~November~~premises during rest breaks; and (2) 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, ~~2017.~~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. 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 March 31, 2021, no amounts have been accrued.

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~~ITEM 1A.~~	~~RISK FACTORS~~

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, ~~2016,~~2020, 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. ~~At September 30, 2017, there have been no material changes to~~The risk factors set forth below update, and should be read together with, the risk factors ~~set forth~~described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2020.

In light of the downturn of our business and Ashford Inc.’s business occasioned by COVID-19, we may not realize the anticipated benefits of the Enhanced Return Funding Program.


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

On June 26, 2018, we entered into the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement (the “ERFP Agreement”) with Ashford Inc. and Ashford LLC, which generally provides that Ashford LLC will provide funding to facilitate the acquisition of properties by us 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).

In light of the downturn of our business and Ashford Inc.’s business occasioned by COVID-19, we may not realize the anticipated benefits of the ERFP Agreement. On April 20, 2021, we delivered written notice to Ashford Inc. of our intention not to renew the ERFP Agreement. As a result, the ERFP Agreement will terminate in accordance with its terms at the end of the current term on June 26, 2021. We continue to be entitled to receive an additional $11.4 million in payments from Ashford LLC with respect to our purchase of the Embassy Suites New York Manhattan Times Square in 2019. On March 13, 2020, an extension agreement was entered into whereby the due date for such payment was extended to December 31, 2022. It is uncertain whether Ashford LLC will be able to make this payment and, if such payment is made, the timing of such payment. Furthermore, if Ashford Inc. and Ashford LLC do not fulfill their contractual obligations pursuant to the ERFP Agreement or the extension agreement, we may choose not to enforce, or to enforce less vigorously, our rights because of our desire to maintain our ongoing relationship with Ashford Inc. and Ashford LLC, and legal action against either party could negatively impact that relationship.

Additionally, under the terms of the Advisory Agreement, we are required on a going forward basis to pay an asset management fee to our advisor, Ashford Inc., with respect to any hotel purchased with money funded pursuant to the ERFP Agreement, even after such hotel is disposed of, including as a result of foreclosure. As a result, if any hotel purchased with funds provided pursuant to the ERFP Agreement is foreclosed upon or otherwise disposed of, including the Embassy Suites New York Manhattan Times Square or the Hilton Scotts Valley hotel in Santa Cruz, California (the property level secured debt of which is in default and has been accelerated by the lender), we will still be obligated to pay Ashford Inc. an asset management fee as if we continued to own the hotels. Additionally, we would be required to replace the furniture, fixtures and equipment (“FF&E”) we previously sold to Ashford Inc. in any hotel that was foreclosed upon with new FF&E from a different hotel. These obligations will continue after expiration of the ERFP Agreement although additional hotels will not be purchased pursuant to the ERFP Agreement after June 26, 2021. On August 21, 2020, we announced that the Embassy Suites New York Manhattan Times Square was sold subject to the loan and the proceeds of the sale were used to repay the mezzanine loans for the properties. On November 5, 2020, the independent members of the board of directors of Ashford Inc. waived the requirement of the Company to provide replacement FF&E.

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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 ~~2017:~~2021:


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
Common stock:								Common stock:
July 1 to July 31	1,840	$	—	⁽²⁾	—	$	200,000,000
August 1 to August 31	6,438	—		⁽²⁾	—	200,000,000
September 1 to September 30	5,924	—		⁽²⁾	—	200,000,000
January 1 to January 31								January 1 to January 31	1,998	(3)	$	2.43	(2)	—	$	200,000,000
February 1 to February 28								February 1 to February 28	62		—		(2)	—	200,000,000
March 1 to March 31								March 1 to March 31	14,211	(3)	3.26		(2)	—	200,000,000
Total	14,202	$	—		—			Total	16,271		$	3.25		—

____________________

(1)On December 5, 2017, the board of directors reapproved the Repurchase Program pursuant to which the board of directors granted a repurchase authorization to acquire shares of the Company’s common stock having an aggregate value of up to $200 million. The board of directors’ authorization replaced any previous repurchase authorizations.

(2)There is no cost associated with the forfeiture of 1,998, 62 and 13 restricted shares of our common stock in January, February and March, respectively.

(3)Includes 108 and 14,090 shares in January and March, respectively, 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

As a result of the turmoil in the financial markets resulting from the spread of the novel coronavirus and the global COVID-19 pandemic, in order to preserve liquidity, the Company suspended the quarterly cash dividend on its preferred stock beginning with the second quarter of fiscal year 2020. As of the date of this report, the total arrearage of unpaid cash dividends due on each of our 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 is approximately $3,546,000, $3,757,000, $5,849,000, $3,754,000 and $3,749,000 respectively.

ITEM 4.MINE SAFETY DISCLOSURES

None.

ITEM 5.OTHER INFORMATION

None.

ITEM 6.EXHIBITS

⁽¹⁾

In September 2011, our board of directors announced the reinstatement of our 2007 share repurchase program and authorized an increase in repurchase plan authorization from the remaining $58.4 million to $200.0 million. The plan provides for: (i) the repurchase of shares of our common stock, Series A preferred stock and Series D preferred stock, and /or (ii) discounted purchases of outstanding debt obligations, including debt secured by hotel assets. No shares of common or preferred stock have been repurchased under this program since September 2011 and none are authorized for purchase without further authorization from our board of directors.


⁽²⁾	~~There is no cost associated with the forfeiture of restricted shares of 1,840, 6,438 and 5,924 of our common stock in July, August and September, respectively.~~


~~ITEM 3.~~	~~DEFAULT UPON SENIOR SECURITIES~~

~~None.~~


~~ITEM 4.~~	~~MINE SAFETY DISCLOSURES~~

~~None.~~


~~ITEM 5.~~	~~OTHER INFORMATION~~

~~None.~~


~~ITEM 6.~~	~~EXHIBITS~~



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 on May 15, 2015) ~~(File No. 333-204235)~~

3.2		Amendment Number Two to Articles of Amendment and Restatement ~~of Ashford Hospitality Trust, Inc.~~ (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		Second Amended and Restated Bylaws, as amended by Amendment No. 1 on October 26, 2014, by Amendment ~~No.2~~No. 2 on October 19, 2015 and by Amendment No. 3 on August 2, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8-K, filed on August 8, 2016) (File No. 001-31775)
10.1
~~10.1~~	Amendment No. 37 to Seventh Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Limited Partnership, dated ~~August 25, 2017~~July 15, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K, filed on ~~August 25, 2017)~~July 15, 2020) (File No. 001-31775)

12*10.2		~~Statement Regarding Computation~~Amendment No. 4 to the 2011 Stock Incentive Plan of ~~Ratios of Earnings~~Ashford Hospitality Trust, Inc. (incorporated by reference to ~~Combined Fixed Charges and Preferred Stock Dividends~~Exhibit 10.2 to the Registrant’s Form 8-K, filed on July 15, 2020) (File No. 001-31775)

31.1*

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Exhibit			Description
10.1			Second Amended and Restated Advisory Agreement, dated as of January 14, 2021, by and between 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 of Form 8-K, filed on January 15, 2021)(File No. 001-31775)

10.2***			Credit Agreement, dated as of January 15, 2021, by and among Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, OPPS AHT Holdings, LLC, ROF8 AHT PT, LLC, Oaktree Phoenix Investment Fund AIF (Delaware), L.P., and Oaktree Fund Administration, LLC, as administrative agent (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on January 15, 2021)(File No. 001-31775)

10.3			Investor Agreement, dated as of January 15, 2021, by and among Ashford Hospitality Trust, Inc., OPPS AHT Holdings, LLC and ROF8 AHT PT, LLC (incorporated by reference to Exhibit 10.2 of Form 8-K, filed on January 15, 2021)(File No. 001-31775)

10.4			Subordination and Non-Disturbance Agreement, dated as of January 15, 2021, by and among Oaktree Fund Administration, LLC as the Administrative Agent and collateral agent on behalf of the Lenders, Ashford Inc., Ashford Hospitality Advisors LLC, Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Remington Lodging & Hospitality, LLC, Premier Project Management, LLC and Lismore Capital II LLC (incorporated by reference to Exhibit 10.3 of Form 8-K, filed on January 15, 2021)(File No. 001-31775)

10.5			Standby Equity Distribution Agreement, dated as of January 22, 2021, by and between Ashford Hospitality Trust, Inc. and YA II PN, Ltd (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on January 22, 2021)(File No. 001-31775)

10.6			Purchase Agreement, dated as of March 12, 2021, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.1 of Form 8-K, filed on March 15, 2021)(File No. 001-31775)

10.7			Registration Rights Agreement, dated as of March 12, 2021, by and between the Company and Lincoln Park Capital Fund, LLC (incorporated by reference to Exhibit 10.2 of Form 8-K, filed on March 15, 2021)(File No. 001-31775)

10.8*†			Form of Performance LTIP Unit Award Agreement

10.9*†			Form of Performance Stock Unit Award Agreement

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

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

99.1			Second Amended and Restated Employment Agreement, by and among Ashford Inc., Ashford Hospitality Advisors, LLC, and J. Robison Hays, III, dated as of January 4, 2021 (incorporated by reference to Exhibit 99.1 of Form 8-K, filed on January 5, 2021)(File No. 001-31775)
The following materials from the Company’s ~~quarterly report~~Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2017~~March 31, 2021 are formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income (Loss); (iii) Consolidated ~~Statement~~Statements of Equity; (iv) Consolidated Statements of Cash Flows; and (v) 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 ~~Securities~~ Exchange Act, ~~of 1934 (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 of 1933 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.SCH~~101.CAL			Inline XBRL Taxonomy Extension ~~Schema~~Calculation Linkbase Document	Submitted electronically with this report.
~~101.CAL~~101.DEF			~~XBRL Taxonomy 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.

*** Certain of the schedules have been omitted from this filing pursuant to Item 601(a)(5) of Regulation S-K. The Company will furnish copies of any such schedules to the Securities and Exchange Commission upon request.

†Management contract or compensatory plan or arrangement.

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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:

May 10, 2021

By:

/s/ J. ROBISON HAYS, III

J. Robison Hays, III

President and Chief Executive Officer

Date:

~~November 7, 2017~~May 10, 2021

By:

~~/s/ DOUGLAS A. KESSLER~~

~~Douglas A. Kessler~~

~~President and Chief Executive Officer~~

~~Date:~~

~~November 7, 2017~~

~~By:~~

/s/ DERIC S. EUBANKS

Deric S. Eubanks

Chief Financial Officer

5363



	September 30, 2017			December 31, 2016
Assets
Investments in hotel properties, net	$	4,064,555		$	4,160,563
Cash and cash equivalents	393,527			347,091
Restricted cash	133,127			144,014
Marketable securities	11,960			53,185
Accounts receivable, net of allowance of $609 and $690, respectively	61,677			44,629
Inventories	4,384			4,530
Investment in unconsolidated entities	5,240			58,779
Deferred costs, net	2,845			2,846
Prepaid expenses	24,198			17,578
Derivative assets, net	1,721			3,614
Other assets	14,225			11,718
Intangible assets, net	9,972			10,061
Due from third-party hotel managers	19,230			13,348
Assets held for sale	—			19,588
Total assets	$	4,746,661		$	4,891,544
Liabilities and Equity
Liabilities:
Indebtedness, net	$	3,698,869		$	3,723,559
Accounts payable and accrued expenses	153,772			126,986
Dividends and distributions payable	25,520			24,765
Unfavorable management contract liabilities	345			1,380
Due to Ashford Inc., net	13,689			15,716
Due to Ashford Prime OP, net	—			488
Due to related party, net	326			1,001
Due to third-party hotel managers	2,627			2,714
Intangible liabilities, net	15,928			16,195
Derivative liabilities, net	146			—
Other liabilities	18,203			16,548
Liabilities related to assets held for sale	—			37,047
Total liabilities	3,929,425			3,966,399
Commitments and contingencies (note 13)
Redeemable noncontrolling interests in operating partnership	117,434			132,768
Equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized:
Series A Cumulative Preferred Stock, 0 and 1,657,206 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	—			17
Series D Cumulative Preferred Stock, 7,904,353 and 9,468,706 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	79			95
Series F Cumulative Preferred Stock, 4,800,000 shares issued and outstanding at September 30, 2017 and December 31, 2016	48			48
Series G Cumulative Preferred Stock, 6,200,000 shares issued and outstanding at September 30, 2017 and December 31, 2016	62			62
Series H Cumulative Preferred Stock, 3,800,000 and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	38			—
Common stock, $0.01 par value, 400,000,000 shares authorized, 97,416,095 and 96,376,827 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	974			964
Additional paid-in capital	1,783,912			1,764,450
Accumulated deficit	(1,086,071		)	(974,015		)
Total stockholders’ equity of the Company	699,042			791,621
Noncontrolling interests in consolidated entities	760			756
Total equity	699,802			792,377
Total liabilities and equity	$	4,746,661		$	4,891,544



	Preferred Stock																									Additional Paid In Capital			Accumulated Deficit			Noncontrolling Interests In Consolidated Entities		Total			Redeemable Noncontrolling Interests in Operating Partnership
	Series A					Series D					Series F			Series G			Series H				Common Stock
	Shares		Amount			Shares		Amount			Shares	Amount		Shares	Amount		Shares		Amount		Shares		Amount
Balance at January 1, 2017	1,657		$	17		9,469		$	95		4,800	$	48	6,200	$	62	$	—	$	—	96,377		$	964		$	1,764,450		$	(974,015	)	$	756	$	792,377		$	132,768
Purchases of common stock	—		—			—		—			—	—		—	—		—		—		(203	)	(2		)	(1,271		)	—			—		(1,273		)	—
Equity-based compensation	—		—			—		—			—	—		—	—		—		—		—		—			5,002			—			—		5,002			3,749
Forfeitures of restricted shares	—		—			—		—			—	—		—	—		—		—		(49	)	—			—			—			—		—			—
Issuance of restricted shares/units	—		—			—		—			—	—		—	—		—		—		1,271		12			(12		)	—			—		—			94
Redemption of preferred shares	(1,657	)	(17		)	(1,565	)	(16		)	—	—		—	—		—		—		—		—			(76,014		)	(4,507		)	—		(80,554		)	—
Issuances of preferred shares	—		—			—		—			—	—		—	—		3,800		38		—		—			91,596			—			—		91,634			—
Dividends declared - common shares	—		—			—		—			—	—		—	—		—		—		—		—			—			(35,319		)	—		(35,319		)	—
Dividends declared - preferred shares- Series A	—		—			—		—			—	—		—	—		—		—		—		—			—			(2,539		)	—		(2,539		)	—
Dividends declared - preferred shares- Series D	—		—			—		—			—	—		—	—		—		—		—		—			—			(14,891		)	—		(14,891		)	—
Dividends declared – preferred shares- Series F	—		—			—		—			—	—		—	—		—		—		—		—			—			(6,637		)	—		(6,637		)	—
Dividends declared – preferred shares- Series G	—		—			—		—			—	—		—	—		—		—		—		—			—			(8,573		)	—		(8,573		)	—
Dividends declared – preferred shares- Series H	—		—			—		—			—	—		—	—		—		—		—		—			—			(712		)	—		(712		)	—
Distributions to noncontrolling interests	—		—			—		—			—	—		—	—		—		—		—		—			—			—			—		—			(7,655		)
Redemption/conversion of operating partnership units	—		—			—		—			—	—		—	—		—		—		20		—			161			—			—		161			(161		)
Redemption value adjustment	—		—			—		—			—	—		—	—		—		—		—		—			—			(1,841		)	—		(1,841		)	1,841
Net income (loss)	—		—			—		—			—	—		—	—		—		—		—		—			—			(37,037		)	4		(37,033		)	(13,202		)
Balance at September 30, 2017	—		$	—		7,904		$	79		4,800	$	48	6,200	$	62	3,800		$	38	97,416		$	974		$	1,783,912		$	(1,086,071	)	$	760	$	699,802		$	117,434



	September 30, 2017				December 31, 2016
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Financial assets and liabilities measured at fair value:
Marketable securities	$	11,960	$	11,960	$	53,185	$	53,185
Derivative assets, net	1,721		1,721		3,614		3,614
Derivative liabilities, net	146		146		—		—

Financial assets not measured at fair value:
Cash and cash equivalents ⁽¹⁾	$	393,527	$	393,527	$	348,067	$	348,067
Restricted cash ⁽¹⁾	133,127		133,127		144,406		144,406
Accounts receivable, net ⁽¹⁾	61,677		61,677		44,934		44,934
Due from third-party hotel managers	19,230		19,230		13,348		13,348

Financial liabilities not measured at fair value:
Indebtedness⁽¹⁾	$	3,708,265	$3,541,070 to $3,913,817		$	3,773,604	$3,600,691 to $3,979,713
Accounts payable and accrued expenses ⁽¹⁾	153,772		153,772		128,309		128,309
Dividends and distributions payable	25,520		25,520		24,765		24,765
Due to Ashford Inc., net	13,689		13,689		15,716		15,716
Due to Ashford Prime OP, net	—		—		488		488
Due to related party, net ⁽¹⁾	326		326		1,046		1,046
Due to third-party hotel managers	2,627		2,627		2,714		2,714