Ashford (US:AINC)2021-03-15 16:00Revenue Generation - For the year ended December 31, 2020, advisory services revenues were $34.7 million from Ashford Trust and $10.0 million from Braemar, with no incentive fees earned[26]. - Hotel management revenues for the year ended December 31, 2020, were $15.9 million from Ashford Trust and $1.0 million from Braemar[28]. - Project management revenues for the year ended December 31, 2020, totaled $5.0 million from Ashford Trust, $2.1 million from Braemar, and $1.8 million from third-party clients[30]. - Audio visual revenues from event technology services were $37.9 million for the year ended December 31, 2020, down from $110.6 million in 2019[31]. - Revenue from mobile room keys and keyless entry solutions was $1.5 million for the year ended December 31, 2020, compared to $987,000 in 2019[32]. - Watersports, travel, concierge, and transportation services generated $9.7 million in revenue for the year ended December 31, 2020, slightly up from $9.4 million in 2019[32]. - Pure Wellness generated revenue of $1.9 million in 2020, down from $3.1 million in 2019, indicating a decline of approximately 38.7%[34]. - Lismore earned revenue of $8.4 million in 2020, significantly up from $2.0 million in 2019, representing a growth of 320%[34]. - Ashford Securities reported cost reimbursement revenue of $2.7 million in 2020, an increase from $1.2 million in 2019, reflecting a growth of 125%[36]. Company Strategy and Growth - The company aims to grow by increasing assets under management and pursuing third-party business for its products and services[23]. - The company acquired Remington Lodging & Hospitality, LLC on November 6, 2019, enhancing its hotel management capabilities[14]. - The company is focused on investing in full-service hotels in the upscale and upper upscale segments, with Ashford Trust targeting properties with RevPAR generally less than twice the national average[24]. Advisory Agreements and Terms - The advisory agreements require the Company to manage the business affairs of Ashford Trust and Braemar, with all officers being employees of the Company[38]. - The Second Amended and Restated Advisory Agreement established a fixed base fee percentage of 0.70% based on the Total Market Capitalization of Ashford Trust[45]. - The Second Amended and Restated Advisory Agreement replaced the existing perpetual term with an initial 10-year term, allowing for up to 7 successive additional 10-year renewal terms[42]. - The advisory agreements allow for termination without a fee under certain conditions, including a change of control or material breach[66]. - Ashford Trust's advisory agreement has a term of 10 years, with potential for up to 7 successive 10-year renewals[68]. - Termination fees for Ashford Trust's advisory agreement can be up to 1.1 times the greater of specified earnings calculations[68]. - The Company agreed to subordinate its right to receive fees under the advisory agreement to obligations under Ashford Trust's senior secured credit facility[69]. Financial Commitments and Conditions - The Company agreed to provide $50 million to each of Ashford Trust and Braemar under the ERFP Agreements, with the option to increase to $100 million upon mutual agreement[51]. - Ashford Trust's acquisition commitments under the ERFP Agreement included approximately $11.1 million for the Hilton Old Town Alexandria and $5.0 million for La Posada de Santa Fe, totaling $16.1 million[53]. - The requirement for Ashford Trust to maintain a minimum Consolidated Tangible Net Worth has been suspended until the first fiscal quarter beginning after June 30, 2023[47]. - The remaining ERFP commitment funding deadline was extended from January 22, 2021, to December 31, 2022[54]. - As of January 15, 2021, the Company received $14.4 million from Ashford Trust for previously deferred fees[54]. Management Agreements - Remington manages 68 of Ashford Trust's 103 hotel properties under the Ashford Trust Master Hotel Management Agreement[103]. - The base management fee for each hotel is either $14,105 or 3% of gross revenues, whichever is greater[105]. - The incentive management fee is capped at 1% of gross revenues or the amount by which actual house profit exceeds target house profit[106]. - The Ashford Trust Master Hotel Management Agreement has an initial term of 10 years, with options for renewal[104]. - The annual operating budget must be submitted at least 45 days prior to the fiscal year, detailing an estimated profit and loss statement for the next 12 months[123]. - Remington is required to prepare a capital improvement budget for necessary expenditures for property and equipment replacement and repairs for the following fiscal year[124]. Exclusivity and Investment Opportunities - Ashford Trust has granted Remington a first right of refusal for lodging investment opportunities, including hotel acquisitions and developments, provided Ashford Trust has not materially modified its investment guidelines[132]. - If Ashford Trust accepts an investment opportunity from Remington, it must reimburse Remington for actual out-of-pocket costs, excluding finder's fees and brokerage fees[133]. - Ashford Trust is obligated to hire Remington for hotel management services unless independent directors unanimously decide otherwise based on special circumstances or prior performance[134]. - Certain investment opportunities are excluded from the exclusivity rights, including those where independent directors vote not to engage Remington[135]. Project Management Agreements - The Ashford Trust Project Management Agreement stipulates a project management fee of 4% of total project costs, reducing to 3% if costs exceed 5% of gross revenues[145]. - Premier is appointed as the exclusive manager for capital improvement projects for Ashford Trust Hotels, with specific fees for various services outlined in the agreement[143]. - The term of the Ashford Trust Project Management Agreement is initially 10 years, with options for renewal for up to 25 additional years[146]. Investor Rights and Governance - The Investor Rights Agreement governs the relationship post-acquisition of the hotel management business, replacing a previous agreement[201]. - Covered Investors holding at least 20% of common stock can nominate board members, with specific rights for Mr. Monty J. Bennett and Mr. Archie Bennett, Jr.[202]. - Transfer restrictions prevent Covered Investors from transferring shares to anyone who would own 10% or more of the common stock for five years post-transaction[205]. - Voting limitations apply to Covered Investors, ensuring their voting power does not exceed 40% of the combined voting power of all outstanding securities[206].