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Ashford Hospitality Trust, Inc. Message Board

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  • bluebuick2003 bluebuick2003 Apr 29, 2012 4:39 AM Flag

    Earnings Disaster (worst FFO since '07)

    i'm not an expert on hotel reits, specifically the FFO versus EBITDA debate (i think deducting cap ex from EBITDA gives you FFO but that is only a guess). but here is how i see it.

    if EBITDA for Q1 was 70. annualize that to get 280. apply a cap rate of 8% to get a portfolio value of 3600 (which is what they claim the value is). they have debt of 2400 against it. so leverage is roughly 70%.

    then they have the unconsolidated entity (highlands). which they claim has a value of 1000 and debt of 700. so again, 70%. i didn't see anything to help support their claim of 1000 value in the earnings release. so can't be sure.

    they certainly don't seem overly leveraged if you believe the 3600 asset value.

    if you consider enterprise value (market cap plus total debt) you get 600 (market cap) plus 2500 (total debt) or 3100 total value. i think that means the stock (market cap) could increase by 500 such that the enterprise value is equal to the total asset value. not sure these will ever be exactly equal but it seems to imply there is upside to the stock rather than downside.

    i hold AHT shares now and am planning on buying more. i like the prospects here.

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