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Ashford Hospitality Trust, Inc. Message Board

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  • bsoren29 bsoren29 Oct 4, 2011 11:20 AM Flag

    Stock Buy Back

    How significant is their derivative gain/loss to their FFO? Will there be a large decline in FFO when the successful interest rate hedges end?

    Since operations/cash flow/EBITDA have not recovered much back to the 2007/08 levels, if there is now a decline in RevPAR, will the company be able to handle it as well as they did a couple years ago?

    Also it appears that the Company will not be able to access the cash flow from the Highland Hospitality Portfolio to assist with any funding needs on the AHT portfolio.

    I think there is great asset value potential, but based upon the current valuations; I must be missing something or not fully understanding the risks.

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    • There is definitely interest rate risk, but I'm not overly concerned as management was spot on with their hedges and I believe they will be able to mitigate it going forward. If interest rates rise after 2013 and REVPAV doesn't continue to grow, then FFO will take a hit. But even in that scenario, it's temporary as hotel supply isn't increasing, and in the mid-term/long-run, revenue will increase, particularly as interest rates increase due to the economy being healthy and/or inflation.

 
AHT
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