UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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Item 1.01. Entry into a Material Definitive Agreement.
Extension Agreement
On March 16, 2020, Ashford Hospitality Trust, Inc. (“Ashford Trust” or the “Company”) announced entry into the Extension Agreement, dated March 13, 2020 (the “Extension Agreement”), related to the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement (the “ERFP Agreement”), among Ashford Trust, Ashford Inc. (“AINC”), Ashford Hospitality Advisors LLC, Ashford Hospitality Limited Partnership and Ashford TRS Corporation. As previously disclosed, in connection with our acquisition of The Embassy Suites New York Manhattan Times Square on January 23, 2019, AINC is committed to provide us with approximately $19.5 million, in exchange for FF&E at our properties, subject to the terms of the ERFP Agreement. As of March 13, 2020, $8.1 million had been funded and $11.4 million remains unfunded. Under the terms of the Extension Agreement, the original obligation to provide the remaining $11.4 million in funding by January 22, 2021 has been extended to December 31, 2022.
This summary description of the Extension Agreement is qualified in its entirety by the Extension Agreement, a copy of which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.
Hotel Management Letter Agreement
Pursuant to the Consolidated, Amended and Restated Hotel Master Management Agreement dated August 8, 2018, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Corporation and Remington Lodging & Hospitality, LLC (“Remington”) (the “hotel management agreement”), we pay to Remington, a subsidiary of AINC, a monthly hotel management fee equal to the greater of $14,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met and other general and administrative expense reimbursements. Under the original terms of the hotel management agreement, we paid Remington on the fifth day of each month for the base fees in the preceding month. Pursuant to the terms of the Letter Agreement dated March 13, 2020 (the “Hotel Management Letter Agreement”), in order to allow Remington to better manage its corporate working capital and to ensure the continued efficient operation of our hotels, we agreed to pay the base fee and to reimburse all expenses on a weekly basis for the preceding week, rather than on a monthly basis. The Letter Agreement went into effect on March 13, 2020 and will continue until terminated by us.
This summary description of the Hotel Management Letter Agreement is qualified in its entirety by the Hotel Management Letter Agreement, a copy of which is included as Exhibit 10.4 to this Report and is incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
Reduction in Base Salary of Executive Officers
On March 16, 2020, AINC announced that, in light of the uncertainty created by the effects of the COVID-19 novel coronavirus, the base salary paid by AINC for certain of our officers, including our Chief Executive Officer, Chief Financial Officer and our other named executive officers, will be temporarily reduced by 15%. These reductions will be effective until such time as AINC’s Chief Executive Officer, Mr. Monty J. Bennett, determines in his discretion that the effects of the COVID-19 novel coronavirus have subsided and it has been determined that the Company is in a healthy financial position. Any amounts relinquished pursuant to the temporary reduction may be paid by AINC in the future, as AINC’s Chief Executive Officer, Mr. Monty J. Bennett, determines in his discretion. The reductions in base salaries will be effective as of March 21, 2020.
Reduction in Annual Retainers for the Company’s Board of Directors
On March 16, 2020, the Company announced that, effective immediately, in light of the uncertainty created by the effects of the COVID-19 novel coronavirus, the annual cash retainer for each non-employee director serving on the Company’s Board of Directors will be temporarily reduced by 25%. This reduction will be effective until such time as the Board determines in its discretion that such effects of COVID-19 novel coronavirus have subsided. Any amounts relinquished pursuant to the temporary reduction in fees may be paid in the future, as determined by the Board in its discretion.
Dividend Policy
On March 16, 2020, the Company and its board of directors announced a suspension of its previously disclosed 2020 common stock dividend policy and that the Company will not pay a dividend on its common stock for the first quarter ended March 31, 2020. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.
On March 16, 2020, the Company issued a press release related to dividends for the first quarter ended March 31, 2020 which is Exhibit 99.1 to this Report.
Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liabilities of that Section.
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Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
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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 hereunto duly authorized.
| ASHFORD HOSPITALITY TRUST, INC. | ||
| By: | /s/ Deric S. Eubanks | |
| Deric S. Eubanks | ||
| Chief Financial Officer | ||
Date: March 16, 2020
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