EXHIBIT 99.2
On May 11, 2017, Ashford Hospitality Prime, Inc. ("Ashford Prime" or the "Company") completed the acquisition of the Hotel Yountville (Hotel Yountville, LLC) in Yountville, California. The fair value of the hotel property acquired at the time of the acquisition was approximately $96.5 million. The Company has not finalized the purchase price allocation related to the assets acquired. On March 31, 2017, Ashford Prime completed the acquisition of the Park Hyatt Beaver Creek (WTCC Beaver Creek Investors V, LLC) in Beaver Creek, Colorado. The fair value of the hotel property acquired at the time of the acquisition was approximately $145.5 million.The Company has not finalized the purchase price allocation related to the assets acquired. The unaudited pro forma financial information has been prepared for informational purposes only and does not purport to be indicative of what would have resulted had the acquisitions and related transactions occurred on the date indicated or what may result in the future.
ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 2017
(in thousands, except share amounts)
Ashford Prime Consolidated Historical(A) | Hotel Yountville, LLC(B) | Adjustments | Ashford Prime Consolidated Pro Forma | ||||||||||||
| Assets | |||||||||||||||
| Investment in hotel properties, gross | $ | 1,411,428 | $ | 8,100 | $ | 96,500 | (C) (i) | $ | 1,507,928 | ||||||
| (8,100 | ) | (C) (ii) | |||||||||||||
| Accumulated depreciation | (254,168 | ) | (7,820 | ) | 7,820 | (C) (ii) | (254,168 | ) | |||||||
| Investment in hotel properties, net | 1,157,260 | 280 | 96,220 | 1,253,760 | |||||||||||
| Cash and cash equivalents | 161,314 | 1,153 | (96,500 | ) | (C) (i) | 115,383 | |||||||||
| 17 | (C) (iii) | ||||||||||||||
| 50,256 | (C) (vi) | ||||||||||||||
| (857 | ) | (C) (vii) | |||||||||||||
| Restricted cash | 35,779 | — | — | 35,779 | |||||||||||
| Accounts receivable, net of allowance | 24,912 | 228 | — | 25,140 | |||||||||||
| Inventories | 1,790 | 211 | — | 2,001 | |||||||||||
| Note receivable | 8,098 | — | — | 8,098 | |||||||||||
| Deferred costs, net | 924 | — | — | 924 | |||||||||||
| Prepaid expenses | 6,471 | — | — | 6,471 | |||||||||||
| Investment in Ashford Inc., at fair value | 11,498 | — | 11,498 | ||||||||||||
| Derivative assets | 414 | — | — | 414 | |||||||||||
| Other assets | 9,068 | 265 | — | 9,333 | |||||||||||
| Intangible asset, net | 22,760 | — | — | 22,760 | |||||||||||
| Due from related party, net | 598 | 1,055 | (1,055 | ) | (C) (iv) | 598 | |||||||||
| Due from third-party hotel managers | 9,936 | — | — | 9,936 | |||||||||||
| Total assets | $ | 1,450,822 | $ | 3,192 | $ | 48,081 | $ | 1,502,095 | |||||||
| Liabilities and Equity | |||||||||||||||
| Liabilities: | |||||||||||||||
| Indebtedness, net | $ | 856,161 | $ | 21,719 | $ | (21,719 | ) | (C) (v) | $ | 906,417 | |||||
| 51,000 | (C) (vi) | ||||||||||||||
| (744 | ) | (C) (vi) | |||||||||||||
| Accounts payable and accrued expenses | 52,939 | 1,874 | — | 54,813 | |||||||||||
| Dividends payable | 8,025 | — | — | 8,025 | |||||||||||
| Due to Ashford Trust OP, net | 6 | — | — | 6 | |||||||||||
| Due to Ashford Inc. | 3,525 | — | — | 3,525 | |||||||||||
| Due to third-party hotel managers | 962 | — | — | 962 | |||||||||||
| Intangible liability, net | 3,611 | — | — | 3,611 | |||||||||||
| Other liabilities | 1,465 | — | — | 1,465 | |||||||||||
| Total liabilities | 926,694 | 23,593 | 28,537 | 978,824 | |||||||||||
| 5.50% Series B cumulative convertible preferred stock, $.01 par value, 4,865,850 shares issued and outstanding at March 31, 2017 | 104,321 | — | 104,321 | ||||||||||||
| Redeemable noncontrolling interests in operating partnership | 48,585 | — | — | 48,585 | |||||||||||
| Equity: | |||||||||||||||
| Common stock, $0.01 par value, 200,000,000 shares authorized, 31,765,912 shares issued and outstanding at March 31, 2017 | 317 | — | — | 317 | |||||||||||
| Additional paid-in capital | 467,535 | (20,401 | ) | (280 | ) | (C) (ii) | 466,678 | ||||||||
| 17 | (C) (iii) | ||||||||||||||
| (1,055 | ) | (C) (iv) | |||||||||||||
| 21,719 | (C) (v) | ||||||||||||||
| (857 | ) | (C) (vii) | |||||||||||||
| Accumulated deficit | (91,246 | ) | — | (91,246 | ) | ||||||||||
| Total stockholders’ equity of the Company | 376,606 | (20,401 | ) | 19,544 | 375,749 | ||||||||||
| Noncontrolling interest in consolidated entities | (5,384 | ) | — | — | (5,384 | ) | |||||||||
| Total equity | 371,222 | (20,401 | ) | 19,544 | 370,365 | ||||||||||
| Total liabilities and equity | $ | 1,450,822 | $ | 3,192 | $ | 48,081 | $ | 1,502,095 | |||||||
See accompanying notes.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
| (A) | Represents the historical consolidated balance sheet of Ashford Prime as of March 31, 2017, as reported in its Quarterly Report on Form 10-Q for the three months ended March 31, 2017, filed on May 9, 2017. |
| (B) | Represents the historical balance sheet of Hotel Yountville, LLC as of December 31, 2016, as included in Exhibit 99.1 of this Current Report on Form 8-K/A. |
| (C) | Represents adjustments for Ashford Prime’s purchase of Hotel Yountville as of March 31, 2017, which includes (i) the cash consideration paid for the acquisition of the Hotel Yountville; (ii) the removal of the historical cost of the investment in hotel property of the Hotel Yountville; (iii) cash consideration received for the negative working capital assumed from the acquisition of Hotel Yountville; (iv) the removal of related party balances not acquired; (v) the removal of indebtedness not assumed; (vi) the cash proceeds and deferred loan costs associated with the financing of a mortgage loan in connection with the acquisition of Hotel Yountville; and (vii) direct and incremental transaction costs associated with the acquisition of the Hotel Yountville. |
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ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2016
(in thousands, except share and per share amounts)
| Ashford Prime Consolidated Historical (A) | WTCC Beaver Creek Investors V, LLC (B) | Adjustments | Hotel Yountville, LLC (D) | Adjustments | Ashford Prime Consolidated Pro Forma | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||
| Rooms | $ | 287,844 | $ | 18,777 | $ | — | $ | 13,148 | $ | — | $ | 319,769 | |||||||||||||
| Food and beverage | 95,618 | 11,622 | — | 2,632 | — | 109,872 | |||||||||||||||||||
| Other | 22,267 | 10,148 | — | 539 | — | 32,954 | |||||||||||||||||||
| Total hotel revenue | 405,729 | 40,547 | — | 16,319 | — | 462,595 | |||||||||||||||||||
| Other | 128 | — | — | — | — | 128 | |||||||||||||||||||
| Total revenue | 405,857 | 40,547 | — | 16,319 | — | 462,723 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||||
| Hotel operating expenses: | |||||||||||||||||||||||||
| Rooms | 65,541 | 3,880 | — | 2,925 | — | 72,346 | |||||||||||||||||||
| Food and beverage | 68,471 | 8,340 | — | 1,991 | — | 78,802 | |||||||||||||||||||
| Other expenses | 113,114 | 12,716 | — | 4,667 | — | 130,497 | |||||||||||||||||||
| Management fees | 15,456 | 3,124 | — | — | 490 | (E) (i) | 19,070 | ||||||||||||||||||
| Total hotel operating expenses | 262,582 | 28,060 | — | 9,583 | 490 | 300,715 | |||||||||||||||||||
| Property taxes, insurance and other | 20,539 | 2,354 | — | — | — | 22,893 | |||||||||||||||||||
| Depreciation and amortization | 45,897 | 3,718 | (627 | ) | (C) (i) | 1,493 | 954 | (E) (ii) | 51,435 | ||||||||||||||||
| Advisory services fee | 14,955 | — | — | — | — | 14,955 | |||||||||||||||||||
| Transaction costs | 457 | — | — | — | — | (E) (iii) | 457 | ||||||||||||||||||
| Corporate general and administrative | 14,286 | — | — | — | — | 14,286 | |||||||||||||||||||
| Total operating expenses | 358,716 | 34,132 | (627 | ) | 11,076 | 1,444 | 404,741 | ||||||||||||||||||
| Operating income (loss) | 47,141 | 6,415 | 627 | 5,243 | (1,444 | ) | 57,982 | ||||||||||||||||||
| Equity in earnings (loss) of unconsolidated entity | (2,587 | ) | — | — | — | — | (2,587 | ) | |||||||||||||||||
| Interest income | 167 | — | — | — | — | 167 | |||||||||||||||||||
| Gain (loss) on sale of hotel property | 26,359 | — | — | ||||||||||||||||||||||
| Other income (expense) | (165 | ) | — | — | — | — | (165 | ) | |||||||||||||||||
| Interest expense and amortization of premiums and loan costs | (40,881 | ) | (2,579 | ) | (138 | ) | (C) (ii) | (14 | ) | (1,684 | ) | (E) (iv) | (45,296 | ) | |||||||||||
| Write-off of loan costs and exit fees | (2,595 | ) | — | — | — | — | (2,595 | ) | |||||||||||||||||
| Unrealized gain (loss) on investment in Ashford Inc. | (1,970 | ) | — | — | — | — | (1,970 | ) | |||||||||||||||||
| Unrealized gain (loss) on derivatives | 425 | (7 | ) | 7 | (C) (iii) | — | — | 425 | |||||||||||||||||
| Income (loss) before income taxes | 25,894 | 3,829 | 496 | 5,229 | (3,128 | ) | 32,320 | ||||||||||||||||||
| Income tax (expense) benefit | (1,574 | ) | — | (440 | ) | (C) (iv) | (12 | ) | (179 | ) | (E) (v) | (2,205 | ) | ||||||||||||
| Net income (loss) | 24,320 | 3,829 | 56 | 5,217 | (3,307 | ) | 30,115 | ||||||||||||||||||
| (Income) loss from consolidated entities attributable to noncontrolling interests | (3,105 | ) | — | — | — | — | (3,105 | ) | |||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (1,899 | ) | — | (267 | ) | (C) (v) | — | (225 | ) | (E) (vi) | (2,391 | ) | |||||||||||||
| Net income (loss) attributable to the Company | 19,316 | 3,829 | (211 | ) | 5,217 | (3,532 | ) | 24,619 | |||||||||||||||||
| Preferred dividends | (3,860 | ) | — | (2,853 | ) | (F) | — | — | (6,713 | ) | |||||||||||||||
| Net income (loss) available to common stockholders | $ | 15,456 | $ | 3,829 | $ | (3,064 | ) | $ | 5,217 | $ | (3,532 | ) | $ | 17,906 | |||||||||||
| Income (loss) per share – basic: | |||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 0.57 | $ | 0.55 | |||||||||||||||||||||
| Weighted average common shares outstanding—basic | 26,648 | 5,750 | (G) | 32,398 | |||||||||||||||||||||
| Income (loss) per share – diluted: | |||||||||||||||||||||||||
| Net income (loss) attributable to common stockholders | $ | 0.55 | $ | 0.54 | |||||||||||||||||||||
| Weighted average common shares outstanding—diluted | 31,195 | 5,750 | (G) | 36,945 | |||||||||||||||||||||
| Dividends declared per common share | $ | 0.46 | $ | 0.46 | |||||||||||||||||||||
See accompanying notes.
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ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31, 2017
(in thousands, except share and per share amounts)
| Ashford Prime Consolidated Historical (A) | Yountville Investors, LLC (D) | Adjustments | Ashford Prime Consolidated Pro Forma | ||||||||||||
| Revenue | |||||||||||||||
| Rooms | $ | 67,418 | $ | 3,213 | $ | — | $ | 70,631 | |||||||
| Food and beverage | 24,473 | 653 | — | 25,126 | |||||||||||
| Other | 5,365 | 134 | — | 5,499 | |||||||||||
| Total hotel revenue | 97,256 | 4,000 | — | 101,256 | |||||||||||
| Other | 40 | — | — | 40 | |||||||||||
| Total revenue | 97,296 | 4,000 | — | 101,296 | |||||||||||
| Expenses | |||||||||||||||
| Hotel operating expenses: | |||||||||||||||
| Rooms | 15,797 | 791 | — | 16,588 | |||||||||||
| Food and beverage | 16,861 | 549 | — | 17,410 | |||||||||||
| Other expenses | 27,731 | 1,096 | — | 28,827 | |||||||||||
| Management fees | 3,545 | — | 120 | (E) (i) | 3,665 | ||||||||||
| Total hotel operating expenses | 63,934 | 2,436 | 120 | 66,490 | |||||||||||
| Property taxes, insurance and other | 5,074 | — | — | 5,074 | |||||||||||
| Depreciation and amortization | 11,971 | 218 | 375 | (E) (ii) | 12,564 | ||||||||||
| Transaction costs | 4,328 | — | (130 | ) | (E) (iii) | 4,198 | |||||||||
| Advisory services fee | 865 | — | — | 865 | |||||||||||
| Corporate general and administrative | 3,874 | — | — | 3,874 | |||||||||||
| Total operating expenses | 90,046 | 2,654 | 365 | 93,065 | |||||||||||
| Operating income (loss) | 7,250 | 1,346 | (365 | ) | 8,231 | ||||||||||
| Interest income | 112 | — | — | 112 | |||||||||||
| Other income (expense) | (157 | ) | — | — | (157 | ) | |||||||||
| Interest expense and amortization of loan costs | (8,202 | ) | (4 | ) | (464 | ) | (E) (iv) | (8,670 | ) | ||||||
| Write-off of loan costs and exit fees | (1,963 | ) | — | — | (1,963 | ) | |||||||||
| Unrealized gain (loss) on investment in Ashford Inc. | 3,091 | — | — | 3,091 | |||||||||||
| Unrealized gain (loss) on derivatives | (898 | ) | — | — | (898 | ) | |||||||||
| Income (loss) before income taxes | (767 | ) | 1,342 | (829 | ) | (254 | ) | ||||||||
| Income tax (expense) benefit | 478 | — | (44 | ) | (E) (v) | 434 | |||||||||
| Net income (loss) | (289 | ) | 1,342 | (873 | ) | 180 | |||||||||
| (Income) loss from consolidated entities attributable to noncontrolling interests | 21 | — | — | 21 | |||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 255 | — | (57 | ) | (E) (vi) | 198 | |||||||||
| Net income (loss) attributable to the Company | (13 | ) | 1,342 | (930 | ) | 399 | |||||||||
| Preferred dividends | (1,673 | ) | — | (34 | ) | (F) | (1,707 | ) | |||||||
| Net income (loss) available to common stockholders | $ | (1,686 | ) | $ | 1,342 | $ | (964 | ) | $ | (1,308 | ) | ||||
| Income (loss) per share – basic: | |||||||||||||||
| Income (loss) attributable to common stockholders | $ | (0.07 | ) | $ | (0.05 | ) | |||||||||
| Weighted average common shares outstanding—basic | 27,267 | 4,153 | (G) | 31,420 | |||||||||||
| Income (loss) per share – diluted: | |||||||||||||||
| Income (loss) attributable to common stockholders | $ | (0.07 | ) | $ | (0.05 | ) | |||||||||
| Weighted average common shares outstanding—diluted | 27,267 | 4,153 | (G) | 31,420 | |||||||||||
| Dividends declared per common share | $ | 0.16 | $ | 0.16 | |||||||||||
See accompanying notes.
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NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| (A) | Represents the historical consolidated statement of operations of Ashford Prime for the year ended December 31, 2016, as reported in its Annual Report on Form 10-K for the year ended December 31, 2016, filed on February 28, 2017 and the historical consolidated statement of operations of Ashford Prime for the three months ended March 31, 2017, as reported in its Quarterly Report on Form 10-Q for the three months ended March 31, 2017, filed on May 9, 2017. |
| (B) | Represents the historical consolidated statement of operations of WTCC Beaver Creek Investors V, LLC for the the year ended December 31, 2016, as reported in the Registrant's Current Report on Form 8-K/A filed on June 13, 2017. |
| (C) | Represents adjustments for Ashford Prime’s purchase of the Park Hyatt Beaver Creek Resort & Spa for the year ended December 31, 2016, which include; (i) adjustment to depreciation expense based on Ashford Prime's new cost basis in the acquired hotel. The estimated useful lives are 7.5 to 39 years for building and improvements and 1.5 to 5 years for furniture, fixtures and equipment; (ii) an adjustment to reflect the interest expense associated with the financing of a mortgage loan related to the acquisition of the Park Hyatt Beaver Creek; (iii) adjustment to unrealized loss on derivatives related to derivatives not acquired; (iv) adjustment to income tax expense to reflect total income tax expense as if the consolidated group filed with the Park Hyatt Beaver Creek for the year ended December 31, 2016; (v) adjustment to (income) loss attributable to redeemable noncontrolling interests in operating partnership for the incremental operating results of the Park Hyatt Beaver Creek based on ownership interests of 11.78% for the year ended December 31, 2016. |
| (D) | Represents the historical consolidated statement of operations of Hotel Yountville, LLC for the the year ended September 30, 2016 and the three months ended December 31, 2016, as included in Exhibit 99.1 of this Current Report on Form 8-K/A. |
| (E) | Represents adjustments for Ashford Prime’s purchase of the Hotel Yountville for the year ended December 31, 2016 and the three months ended March 31, 2017, which include; (i) a contractual adjustment to management fees for the management fee Ashford Prime is contracted to pay; (ii) additional depreciation expense based on Ashford Prime's new cost basis in the acquired hotel. The estimated useful lives are 44.6 to 54 years for building and improvements and 5 to 6.5 years for furniture, fixtures and equipment; (iii) elimination of nonrecurring transaction costs incurred by the Company associated with the acquisition of the hotel; (iv) an adjustment to reflect the interest expense associated with the financing of a mortgage loan related to the acquisition of the Hotel Yountville; (v) additional income tax expense to reflect total income tax expense as if the consolidated group filed with the Hotel Yountville for the the year ended December 31, 2016 and the three months ended March 31, 2017; and (vi) adjustment to (income) loss attributable to redeemable noncontrolling interests in operating partnership for the incremental operating results of the Hotel Yountville based on ownership interests of 11.78% for the year ended December 31, 2016 and 13.12% for the three months ended March 31, 2017. |
| (F) | Adjustment for preferred dividends on 2.1 million shares of our 5.50% Series B cumulative convertible preferred stock for the year ended December 31, 2016 and 100,000 shares of our 5.50% Series B cumulative convertible preferred stock for the three months ended March 31, 2017. |
| (G) | Adjustment to basic and diluted weighted average shares outstanding for the year ended December 31, 2016, for the issuance of 5.8 million shares of Ashford Prime common stock in March 2017. The adjustment for the three months ended March 31, 2017, assumes the shares were outstanding for the entire period. Additionally, the assumed conversion of the 2.1 million shares of Ashford Prime Series B cumulative convertible preferred stock into 2.7 million shares of Ashford Prime common stock has been excluded from the pro forma diluted EPS calculation for the year ended December 31, 2016 and the three months ended March 31, 2017 as the impact would be anti-dilutive. |
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