Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number: 001-31775

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland
 
86-1062192
(State or other jurisdiction of incorporation or organization)
 
(IRS employer identification number)
 
 
 
14185 Dallas Parkway, Suite 1100
 
 
Dallas, Texas
 
75254
(Address of principal executive offices)
 
(Zip code)

(972) 490-9600
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). þ Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
þ
Non-accelerated filer
¨
Smaller reporting company
¨
 
 
Emerging growth company
¨
    
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes þ No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Stock, $0.01 par value per share
 
101,038,430
(Class)
 
Outstanding at October 31, 2018


ASHFORD HOSPITALITY TRUST, INC
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2018
TABLE OF CONTENTS


 
 
 


Table of Contents

PART I. FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS (unaudited)
ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
 
September 30, 2018
 
December 31, 2017
Assets
 
Investments in hotel properties, net
$
4,089,985

 
$
4,035,915

Cash and cash equivalents
325,839

 
354,805

Restricted cash
141,092

 
116,787

Marketable securities
24,173

 
26,926

Accounts receivable, net of allowance of $608 and $770, respectively
60,208

 
44,257

Inventories
4,223

 
4,244

Investment in unconsolidated entities
4,514

 
2,955

Deferred costs, net
3,427

 
2,777

Prepaid expenses
29,662

 
19,269

Derivative assets, net
2,969

 
2,010

Other assets
18,117

 
14,152

Intangible assets, net
9,854

 
9,943

Due from third-party hotel managers
19,277

 
17,387

Assets held for sale
—

 
18,423

Total assets
$
4,733,340

 
$
4,669,850

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Indebtedness, net
$
3,894,447

 
$
3,696,300

Accounts payable and accrued expenses
147,808

 
132,401

Dividends and distributions payable
28,095

 
25,045

Due to Ashford Inc., net
5,176

 
15,146

Due to related party, net
1,078

 
1,067

Due to third-party hotel managers
2,745

 
2,431

Intangible liabilities, net
15,572

 
15,839

Derivative liabilities, net
205

 
—

Other liabilities
19,613

 
18,376

Liabilities related to assets held for sale
—

 
13,977

Total liabilities
4,114,739

 
3,920,582

Commitments and contingencies (note 14)


 


Redeemable noncontrolling interests in operating partnership
118,663

 
116,122

Equity:
 
 
 
Preferred stock, $0.01 par value, 50,000,000 shares authorized:
 
 
 
Series D Cumulative Preferred Stock, 2,389,393 shares issued and outstanding at September 30, 2018 and December 31, 2017
24

 
24

Series F Cumulative Preferred Stock, 4,800,000 shares issued and outstanding at September 30, 2018 and December 31, 2017
48

 
48

Series G Cumulative Preferred Stock, 6,200,000 shares issued and outstanding at September 30, 2018 and December 31, 2017
62

 
62

Series H Cumulative Preferred Stock, 3,800,000 shares issued and outstanding at September 30, 2018 and December 31, 2017
38

 
38

Series I Cumulative Preferred Stock, 5,400,000 shares issued and outstanding at September 30, 2018 and December 31, 2017
54

 
54

Common stock, $0.01 par value, 400,000,000 shares authorized, 101,038,430 and 97,409,113 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
1,010

 
974

Additional paid-in capital
1,811,391

 
1,784,997

Accumulated deficit
(1,313,327
)
 
(1,153,697
)
Total stockholders’ equity of the Company
499,300

 
632,500

Noncontrolling interests in consolidated entities
638

 
646

Total equity
499,938

 
633,146

Total liabilities and equity
$
4,733,340

 
$
4,669,850

See Notes to Consolidated Financial Statements.

2
Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Revenue
 
 
 
Rooms
$
288,016

 
$
289,017

 
$
868,090

 
$
876,927

Food and beverage
49,396

 
48,313

 
164,869

 
175,005

Other hotel revenue
17,309

 
15,006

 
51,358

 
43,720

Total hotel revenue
354,721

 
352,336

 
1,084,317

 
1,095,652

Other
1,209

 
989

 
2,984

 
2,052

Total revenue
355,930

 
353,325

 
1,087,301

 
1,097,704

Expenses
 
 
 
 
 
 
 
Hotel operating expenses:
 
 
 
 
 
 
 
Rooms
64,197

 
63,950

 
187,497

 
188,857

Food and beverage
37,649

 
37,173

 
116,270

 
121,619

Other expenses
109,992

 
112,421

 
332,629

 
337,978

Management fees
13,198

 
13,027

 
40,306

 
40,100

Total hotel expenses
225,036

 
226,571

 
676,702

 
688,554

Property taxes, insurance, and other
20,774

 
18,194

 
59,363

 
55,293

Depreciation and amortization
64,923

 
60,135

 
192,536

 
185,380

Impairment charges
(27
)
 
1,785

 
1,652

 
1,785

Transaction costs
—

 
—

 
11

 
11

Advisory services fee
12,805

 
14,612

 
52,961

 
39,482

Corporate general and administrative
3,090

 
2,412

 
8,450

 
10,836

Total expenses
326,601

 
323,709

 
991,675

 
981,341

Operating income (loss)
29,329

 
29,616

 
95,626

 
116,363

Equity in earnings (loss) of unconsolidated entities
310

 
(679
)
 
892

 
(3,580
)
Interest income
1,150

 
706

 
2,779

 
1,460

Gain (loss) on sale of hotel properties
(9
)
 
15

 
394

 
14,024

Other income (expense)
(202
)
 
(273
)
 
80

 
(3,539
)
Interest expense and amortization of premiums and loan costs
(60,731
)
 
(56,963
)
 
(173,680
)
 
(167,224
)
Write-off of premiums, loan costs and exit fees
(1,572
)
 
—

 
(9,316
)
 
(1,629
)
Unrealized gain (loss) on marketable securities
68

 
(936
)
 
(758
)
 
(4,813
)
Unrealized gain (loss) on derivatives
(2,085
)
 
(1,479
)
 
(3,672
)
 
(1,804
)
Income (loss) before income taxes
(33,742
)
 
(29,993
)
 
(87,655
)
 
(50,742
)
Income tax (expense) benefit
(519
)
 
1,267

 
(2,606
)
 
507

Net income (loss)
(34,261
)
 
(28,726
)
 
(90,261
)
 
(50,235
)
(Income) loss from consolidated entities attributable to noncontrolling interest
(10
)
 
(22
)
 
8

 
(4
)
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
6,682

 
6,940

 
18,087

 
13,202

Net income (loss) attributable to the Company
(27,589
)
 
(21,808
)
 
(72,166
)
 
(37,037
)
Preferred dividends
(10,645
)
 
(11,440
)
 
(31,933
)
 
(33,352
)
Extinguishment of issuance costs upon redemption of preferred stock
—

 
(4,507
)
 
—

 
(4,507
)
Net income (loss) attributable to common stockholders
$
(38,234
)
 
$
(37,755
)
 
$
(104,099
)
 
$
(74,896
)
 
 
 
 
 
 
 
 
Income (loss) per share - basic and diluted:
 
 
 
 
 
 
 
Basic:
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
(0.40
)
 
$
(0.40
)
 
$
(1.09
)
 
$
(0.80
)
Weighted average common shares outstanding – basic
97,467

 
95,332

 
96,591

 
95,169

Diluted:
 
 
 
 
 
 
 
Net income (loss) attributable to common stockholders
$
(0.40
)
 
$
(0.40
)
 
$
(1.09
)
 
$
(0.80
)
Weighted average common shares outstanding – diluted
97,467

 
95,332

 
96,591

 
95,169

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.12

 
$
0.12

 
$
0.36

 
$
0.36

See Notes to Consolidated Financial Statements.

3
Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(unaudited, in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Net income (loss)
$
(34,261
)
 
$
(28,726
)
 
$
(90,261
)
 
$
(50,235
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Total other comprehensive income (loss)
—

 
—

 
—

 
—

Comprehensive income (loss)
(34,261
)
 
(28,726
)
 
(90,261
)
 
(50,235
)
Less: Comprehensive (income) loss attributable to noncontrolling interest in consolidated entities
(10
)
 
(22
)
 
8

 
(4
)
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership
6,682

 
6,940

 
18,087

 
13,202

Comprehensive income (loss) attributable to the Company
$
(27,589
)
 
$
(21,808
)
 
$
(72,166
)
 
$
(37,037
)
See Notes to Consolidated Financial Statements.

4
Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF EQUITY
(unaudited, in thousands)
 
Preferred Stock
 
 
Additional
Paid-in
Capital
 
Accumulated
Deficit
 
Noncontrolling
Interests In
Consolidated
Entities
 
Total
 
Redeemable Noncontrolling
Interests in
Operating
Partnership
 
Series D
 
Series F
 
Series G
 
Series H
 
Series I
 
Common Stock
 
 
 
 
 
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
Shares
 
Amount
 
 
 
 
 
Balance at January 1, 2018
2,389

 
$
24

 
4,800

 
$
48

 
6,200

 
$
62

 
3,800

 
$
38

 
5,400

 
$
54

 
97,409

 
$
974

 
$
1,784,997

 
$
(1,153,697
)
 
$
646

 
$
633,146

 
$
116,122

Purchases of common stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(249
)
 
(3
)
 
(1,595
)
 
—

 
—

 
(1,598
)
 
—

Equity-based compensation
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
13,329

 
—

 
—

 
13,329

 
8,617

Forfeitures of restricted shares
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(46
)
 
—

 
—

 
—

 
—

 
—

 
—

Issuance of restricted shares/units
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
1,490

 
15

 
108

 
—

 
—

 
123

 
53

Cost for issuances of preferred shares
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(60
)
 
—

 
—

 
(60
)
 
—

Issuance of common stock
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
2,434

 
24

 
14,612

 
—

 
—

 
14,636

 
—

Dividends declared - common shares
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(36,144
)
 
—

 
(36,144
)
 
—

Dividends declared - preferred shares- Series D
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(3,785
)
 
—

 
(3,785
)
 
—

Dividends declared – preferred shares- Series F
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(6,637
)
 
—

 
(6,637
)
 
—

Dividends declared – preferred shares- Series G
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(8,573
)
 
—

 
(8,573
)
 
—

Dividends declared – preferred shares- Series H
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(5,344
)
 
—

 
(5,344
)
 
—

Dividends declared – preferred shares- Series I
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(7,594
)
 
—

 
(7,594
)
 
—

Distributions to noncontrolling interests
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(7,429
)
Redemption value adjustment
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(19,387
)
 
—

 
(19,387
)
 
19,387

Net income (loss)
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(72,166
)
 
(8
)
 
(72,174
)
 
(18,087
)
Balance at September 30, 2018
2,389

 
$
24

 
4,800

 
$
48

 
6,200

 
$
62

 
3,800

 
$
38

 
5,400

 
$
54

 
101,038

 
$
1,010

 
$
1,811,391

 
$
(1,313,327
)
 
$
638

 
$
499,938

 
$
118,663

See Notes to Consolidated Financial Statements.

5
Table of Contents

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 
Nine Months Ended September 30,
 
2018
 
2017
Cash Flows from Operating Activities
 
 
 
Net income (loss)
$
(90,261
)
 
$
(50,235
)
Adjustments to reconcile net income (loss) to net cash flow from operating activities:
 
 
 
Depreciation and amortization
192,536

 
185,380

Impairment charges
1,652

 
1,785

Amortization of intangibles
(178
)
 
(178
)
Recognition of deferred income
(432
)
 
(593
)
Bad debt expense
1,527

 
1,441

Deferred income tax expense (benefit)
(603
)
 
(1,683
)
Equity in (earnings) loss of unconsolidated entities
(892
)
 
3,580

(Gain) loss on sale of hotel properties, net
(394
)
 
(14,024
)
Realized and unrealized (gain) loss on marketable securities
585

 
3,991

Purchases of marketable securities
(11,434
)
 
(38,889
)
Sales of marketable securities
13,602

 
76,123

Net settlement of trading derivatives
(1,323
)
 
(3,840
)
Realized and unrealized (gain) loss on derivatives
3,672

 
6,512

Amortization of loan costs and premiums, write-off of premiums, loan costs and exit fees
23,726

 
10,783

Equity-based compensation
21,946

 
8,751

Changes in operating assets and liabilities, exclusive of the effect of acquisitions and dispositions of hotel properties:
 
 
 
Accounts receivable and inventories
(16,524
)
 
(14,169
)
Prepaid expenses and other assets
(10,775
)
 
(6,852
)
Accounts payable and accrued expenses
21,551

 
18,573

Due to/from related party
(987
)
 
(734
)
Due to/from third-party hotel managers
(1,515
)
 
(5,969
)
Due to/from Braemar OP, net
—

 
(488
)
Due to/from Ashford Inc., net
(9,970
)
 
(2,027
)
Other liabilities
1,743

 
1,213

Net cash provided by (used in) operating activities
137,252

 
178,451

Cash Flows from Investing Activities
 
 
 
Investment in unconsolidated entity
(667
)
 
(983
)
Acquisition of hotel properties and assets, net of cash and restricted cash acquired
(114,877
)
 
(110
)
Improvements and additions to hotel properties
(164,726
)
 
(164,075
)
Net proceeds from sales of assets and hotel properties
40,573

 
105,267

Liquidation of AQUA U.S. Fund
—

 
50,942

Payments for initial franchise fees
(380
)
 
(225
)
Proceeds from property insurance
651

 
2,369

Net cash provided by (used in) investing activities
(239,426
)
 
(6,815
)
Cash Flows from Financing Activities
 
 
 
Borrowings on indebtedness
2,676,881

 
180,800

Repayments of indebtedness
(2,461,279
)
 
(246,139
)
Payments for loan costs and exit fees
(55,152
)
 
(5,813
)
Payments for dividends and distributions
(72,333
)
 
(75,571
)
Purchases of common stock
(1,598
)
 
(1,273
)
Redemption of preferred stock
—

 
(80,554
)
Payments for derivatives
(3,103
)
 
(633
)
Proceeds from common stock offering
13,624

 
—

Proceeds from preferred stock offering
—

 
91,634

Preferred stock offering costs
(60
)
 
—

Other
53

 
94

Net cash provided by (used in) financing activities
97,033

 
(137,455
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(5,141
)
 
34,181

Cash, cash equivalents and restricted cash at beginning of period
472,072

 
492,473

Cash, cash equivalents and restricted cash and at end of period
$
466,931


$
526,654


6
Table of Contents

 
Nine Months Ended September 30,
 
2018
 
2017
Supplemental Cash Flow Information
 
 
 
Interest paid
$
158,832

 
$
158,443

Income taxes paid (refunded)
1,527

 
1,610

Supplemental Disclosure of Non-Cash Investing and Financing Activity
 
 
 
Accrued but unpaid capital expenditures
$
13,970

 
$
18,300

Non-cash dividends paid
123

 
—

Unsettled common stock offering proceeds
1,075

 
—

Dividends and distributions declared but not paid
28,095

 
25,520

Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash
 
 
 
Cash and cash equivalents at beginning of period
$
354,805

 
$
347,091

Cash and cash equivalents at beginning of period included in assets held for sale
78

 
976

Restricted cash at beginning of period
116,787

 
144,014

Restricted cash at beginning of period included in assets held for sale
402

 
392

Cash, cash equivalents and restricted cash at beginning of period
$
472,072

 
$
492,473

 
 
 
 
Cash and cash equivalents at end of period
$
325,839

 
$
393,527

Restricted cash at end of period
141,092

 
133,127

Cash, cash equivalents and restricted cash at end of period
$
466,931

 
$
526,654

See Notes to Consolidated Financial Statements.

7
Table of Contents
ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)



1. Organization and Description of Business
Ashford Hospitality Trust, Inc., together with its subsidiaries (“Ashford Trust”), is a real estate investment trust (“REIT”) focused on investing in full-service hotels in the upscale and upper upscale segments in domestic and international markets that have revenue per available room (“RevPAR”) generally less than twice the U.S. national average, and in all methods including direct real estate, equity, and debt. We own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership (“Ashford Trust OP”), our operating partnership. Ashford OP General Partner LLC, a wholly-owned subsidiary of Ashford Trust, serves as the sole general partner of our operating partnership. In this report, terms such as the “Company,” “we,” “us,” or “our” refer to Ashford Hospitality Trust, Inc. and all entities included in its consolidated financial statements.
We are advised by Ashford Hospitality Advisors LLC (“Ashford LLC”), a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.
As of September 30, 2018, we owned interests in the following assets:
•
118 consolidated hotel properties, including 116 directly owned and two owned through a majority-owned investment in a consolidated entity, which represent 24,930 total rooms (or 24,903 net rooms excluding those attributable to our partner);
•
90 hotel condominium units at WorldQuest Resort in Orlando, Florida (“WorldQuest”);
•
a 25.1% ownership in Ashford Inc. common stock with a carrying value of $1.8 million and a fair value of $45.4 million; and
•
a 16.3% ownership in OpenKey with a carrying value of $2.8 million.
For federal income tax purposes, we have elected to be treated as a REIT, which imposes limitations related to operating hotels. As of September 30, 2018, our 118 hotel properties were leased or owned by our wholly-owned or majority-owned subsidiaries that are treated as taxable REIT subsidiaries for federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”). Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts. Hotel operating results related to these properties are included in the consolidated statements of operations.
As of September 30, 2018, Remington Lodging & Hospitality, LLC, together with its affiliates (“Remington Lodging”), which is beneficially wholly owned by Mr. Monty J. Bennett, our Chairman, and Mr. Archie Bennett, Jr., our Chairman Emeritus, managed 80 of our 118 hotel properties and WorldQuest Resort. Third-party management companies managed the remaining hotel properties. On August 8, 2018, Ashford Inc., the parent company of the advisor, completed its acquisition of Remington Holdings, L.P.’s project management business. See note 16.
2. Significant Accounting Policies
Basis of Presentation—The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements include the accounts of Ashford Hospitality Trust, Inc., its majority-owned subsidiaries, and its majority-owned joint ventures in which it has a controlling interest. All significant inter-company accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP in the accompanying unaudited consolidated financial statements. We believe the disclosures made herein are adequate to prevent the information presented from being misleading. However, the financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2017 Annual Report to Stockholders on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 14, 2018.
Ashford Trust OP is considered to be a variable interest entity (“VIE”), as defined by authoritative accounting guidance. A VIE must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. All major decisions related to Ashford Trust OP that most significantly impact its economic performance, including but not limited to operating procedures with respect to business affairs and any acquisitions,

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

dispositions, financings, restructurings or other transactions with sellers, purchasers, lenders, brokers, agents and other applicable representatives, are subject to the approval of our wholly-owned subsidiary, Ashford Trust OP General Partner LLC, its general partner. As such, we consolidate Ashford Trust OP.
Historical seasonality patterns at some of our hotel properties cause fluctuations in our overall operating results. Consequently, operating results for the three and nine months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.
The following acquisitions and dispositions affect reporting comparability of our consolidated financial statements:
Hotel Property 
 
Location 
 
Type
 
Date
Renaissance
 
Portsmouth, VA
 
Disposition
 
February 1, 2017
Embassy Suites
 
Syracuse, NY
 
Disposition
 
March 6, 2017
Crowne Plaza Ravinia
 
Atlanta, GA
 
Disposition
 
June 29, 2017
SpringHill Suites
 
Glen Allen, VA
 
Disposition
 
February 20, 2018
SpringHill Suites
 
Centreville, VA
 
Disposition
 
May 1, 2018
Residence Inn Tampa
 
Tampa, FL
 
Disposition
 
May 10, 2018
Hilton Alexandria Old Town
 
Alexandria, VA
 
Acquisition
 
June 29, 2018
Use of Estimates—The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Restricted Cash—Restricted cash includes reserves for debt service, real estate taxes, and insurance, as well as excess cash flow deposits and reserves for furniture, fixtures, and equipment replacements of approximately 4% to 6% of property revenue for certain hotels, as required by certain management or mortgage debt agreement restrictions and provisions.
Impairment of Investments in Hotel Properties—Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property’s net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. Asset write-downs resulting from property damage are recorded up to the amount of the allocable property insurance deductible in the period that the property damage occurs. See note 5.
Hotel Dispositions—Discontinued operations are defined as the disposal of components of an entity that represents strategic shifts that have (or will have) a major effect on an entity’s operations and financial results. We believe that individual dispositions of hotel properties do not represent a strategic shift that has (or will have) a major effect on our operations and financial results as most will not fit the definition.
Assets Held for Sale—We classify assets as held for sale when we have obtained a firm commitment from a buyer, and consummation of the sale is considered probable and expected within one year. The related operations of assets held for sale are reported as discontinued if the disposal is a component of an entity that represents a strategic shift that has (or will have) a major effect on our operations and cash flows. Depreciation and amortization will cease as of the date assets have met the criteria to be deemed held for sale. See note 5.
Investments in Unconsolidated Entities—Investments in entities in which we have ownership interests ranging from 16.3% to 25.1%, at September 30, 2018, are accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review the investments in our unconsolidated entities for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity in earnings (loss) in unconsolidated entities. No such impairment was recorded for the three and nine months ended September 30, 2018 and 2017.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

Our investments in certain unconsolidated entities are considered to be variable interests in the underlying entities. Each VIE, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct the unconsolidated entities’ activities and operations, we are not considered to be the primary beneficiary of these entities on an ongoing basis and therefore such entities should not be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions.
Equity-Based Compensation—Prior to the adoption of Accounting Standards Update (“ASU”) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) in the third quarter of 2018, stock/unit-based compensation for non-employees was accounted for at fair value based on the market price of the shares at period end that resulted in recording expense, included in “advisory services fee” and “management fees,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Performance stock units (“PSUs”) and performance-based Long-Term Incentive Plan (“Performance LTIP”) units granted to certain executive officers were accounted for at fair value at period end based on a Monte Carlo simulation valuation model that resulted in recording expense, included in “advisory services fee,” equal to the fair value of the award in proportion to the requisite service period satisfied during the period. Stock/unit grants to independent directors are recorded at fair value based on the market price of the shares at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.
After the adoption of ASU 2018-07 in the third quarter of 2018, stock/unit-based compensation for non-employees is measured at the grant date and expensed ratably over the vesting period based on the original measurement as of the grant date. This results in the recording of expense, included in “advisory services fee” and “management fees,” equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. PSUs and Performance LTIP units granted to certain executive officers vest based on market conditions and are measured at the grant date fair value based on a Monte Carlo simulation valuation model. The subsequent expense is then ratably recognized over the service period as the service is rendered regardless of when, if ever, the market conditions are satisfied. This results in recording expense, included in “advisory services fee,” equal to the ratable amount of the grant date fair value based on the requisite service period satisfied during the period. Stock/unit grants to independent directors are measured at the grant date based on the market price of the shares at grant date, which amount is fully expensed as the grants of stock/units are fully vested on the date of grant.
Recently Adopted Accounting Standards—In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”). ASU 2014-09 is a comprehensive new revenue recognition model, which requires a company to recognize revenue to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. The update replaces most existing revenue recognition guidance in U.S. GAAP. The standard permits the use of either the full retrospective or cumulative effect (modified retrospective) transition method. This standard, referred to as “Topic 606,” does not materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales. Additionally, we have historically disposed of hotel properties for cash sales with no contingencies and no future involvement in the hotel operations. Therefore, Topic 606 does not impact the recognition of hotel sales. We adopted this standard effective January 1, 2018, under the modified retrospective method, and the adoption of this standard did not have a material impact on our consolidated financial statements. See related disclosures in note 3.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. ASU 2016-01 provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. It also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. ASU 2016-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Certain provisions of ASU 2016-01 are eligible for early adoption. We adopted this standard effective January 1, 2018. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments - a Consensus of the Emerging Issues Task Force (“ASU 2016-15”). The new guidance is intended to reduce

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

diversity in practice in how certain transactions are classified in the statement of cash flows. Certain issues addressed in this guidance include - debt payments or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, distributions received from equity method investments and beneficial interests in securitization transactions. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. We adopted this standard effective January 1, 2018 on a prospective basis as there were no required changes as a result of adoption. The adoption of this standard did not have a material impact on our consolidated statements of cash flows.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) - Clarifying the Definition of a Business (“ASU 2017-01”), which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether a transaction should be accounted for as an acquisition (or disposal) of an asset or a business. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. We adopted this standard effective January 1, 2018. Under the new standard, certain future hotel acquisitions may be considered asset acquisitions rather than business combinations, which would affect capitalization of acquisitions costs (such costs are expensed for business combinations and capitalized for asset acquisitions). Asset acquisitions are accounted for by allocating the cost of the acquisition to the individual assets acquired and liabilities assumed on a relative fair value basis. We concluded that our hotel acquisition completed in the second quarter of 2018 is the acquisition of assets because substantially all of the fair value of the gross assets acquired were concentrated in a single identifiable asset or a group of similar identifiable assets. As such, acquisition costs were capitalized as part of the transaction. See note 4.
In February 2017, the FASB issued ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets (ASU “2017-05”), which clarifies the scope of ASC Subtopic 610-20, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets and adds guidance for partial sales of nonfinancial assets. ASU 2017-05 is effective for fiscal years beginning after December 15, 2017. Early adoption is permitted. An entity may elect to apply ASU 2017-05 under a retrospective or modified retrospective method. We adopted this standard effective January 1, 2018, under the modified retrospective method. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures.
In June 2018, the FASB issued ASU 2018-07, which expanded the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees and aligns the guidance for share-based payments to non-employees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We adopted ASU 2018-07 effective July 1, 2018. The adoption of ASU 2018-07 has a material impact on our consolidated financial statements because the compensation expense related to our equity awards is now determined based on the grant date fair value of the awards and will be ratably recognized over the service period as the service is rendered as opposed to being marked-to-market in periods prior to adoption. For all existing equity awards, future equity-based compensation expense is based on the fair value of the awards on July 1, 2018. See the Equity-Based Compensation section included above in our Significant Accounting Policies for further details.
Recently Issued Accounting Standards—In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). The new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases (“ASU 2018-10”) and ASU 2018-11, Leases (Topic 842), Targeted Improvements (“ASU 2018-11”). The amendments in ASU 2018-10 affect only narrow aspects of the guidance issued in the amendments in ASU 2016-02, including but not limited to lease residual value guarantees, the rate implicit in the lease, lease term and purchase options. The amendments in ASU 2018-11 provide an optional transition method for adoption of the new standard, which will allow entities to continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption. ASU 2016-02 is effective for annual and interim periods for fiscal years beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of 2019 on a modified retrospective basis. The accounting for leases under which we are the lessor remains largely unchanged. While we continue evaluating our lease portfolio to assess the impact that ASU 2016-02 will have on our consolidated financial statements, we expect the primary impact to our consolidated financial statements upon adoption will be the recognition, on a discounted basis, of our future minimum rentals due under noncancelable leases on our consolidated balance sheets resulting in the recording of ROU assets and lease obligations. We disclosed $123.7 million in undiscounted future minimum rentals due under non-cancelable leases in note 12 of our most recent 10-K. We are involving our property managers and implementing repeatable processes to manage ongoing lease data collection and analysis, and evaluating accounting policies and internal controls that will be impacted by the new standards. We have also engaged in a third party valuation expert to assist us in determining the value of our ROU assets and operating lease liabilities including the

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

determination of our incremental borrowing rate. We expect to use the transition method that includes the practical expedient that allows us to adopt effective January 1, 2019 and not reevaluate or recast prior periods, however we are still evaluating the available transition methods.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The ASU sets forth an “expected credit loss” impairment model to replace the current “incurred loss” method of recognizing credit losses. The standard requires measurement and recognition of expected credit losses for most financial assets held. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for periods beginning after December 15, 2018. We are currently evaluating the impact that ASU 2016-13 will have on our consolidated financial statements and related disclosures.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 modifies certain disclosure requirements related to fair value measurements including requiring disclosures on changes in unrealized gains and losses in other comprehensive income for recurring Level 3 fair value measurements and a requirement to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact that ASU 2018-13 will have on the consolidated financial statements.
3. Revenue
On January 1, 2018, we adopted Topic 606 using the modified retrospective method. As the adoption of this standard did not have a material impact on our consolidated financial statements, no adjustments to opening retained earnings were made as of January 1, 2018. Results for reporting periods beginning after January 1, 2018, are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Accounting Standards Codification (“ASC”) Topic 605-Revenue Recognition.
Rooms revenue represents revenue from the occupancy of our hotel rooms and is driven by the occupancy and average daily rate charged. Rooms revenue includes revenue for guest no-shows, day use, and early/late departure fees. The contracts for room stays with customers are generally short in duration and revenues are recognized as services are provided over the course of the hotel stay.
Food & Beverage (“F&B”) revenue consists of revenue from the restaurants and lounges at our hotel properties, In-room dining and mini-bars revenue, and banquet/catering revenue from group and social functions. Other F&B revenue may include revenue from audio-visual equipment/services, rental of function rooms, and other F&B related revenue. Revenue is recognized as the services or products are provided. Our hotel properties may employ third parties to provide certain services at the property, for example, audio visual services. We evaluate each of these contracts to determine if the hotel is the principal or the agent in the transaction, and record the revenue as appropriate (i.e. gross vs. net).
Other revenue consists of ancillary revenue at the property, including attrition and cancellation fees, resort and destination fees, spas, parking, entertainment and other guest services, as well as rental revenue; primarily consisting of leased retail outlets at our hotel properties. Attrition and cancellation fees are recognized for non-cancellable deposits when the customer provides notification of cancellation within established management policy time frames. For the three and nine months ended September 30, 2018, we recorded $0 and $2.5 million of business interruption income for the St. Petersburg Hilton and Key West Crowne Plaza related to a settlement for lost profits from the BP Deepwater Horizon oil spill in the Gulf of Mexico in 2010.
Taxes collected from customers and submitted to taxing authorities are not recorded in revenue. Interest income is recognized when earned. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received when contractually due.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

The following tables presents our revenue disaggregated by geographical areas (in thousands):
 
 
Three Months Ended September 30, 2018
Primary Geographical Market
 
Number of Hotels
 
Rooms
 
Food and Beverage
 
Other Hotel
 
Other
 
Total
Atlanta, GA Area
 
9

 
$
16,843

 
$
3,800

 
$
1,379

 
$
—

 
$
22,022

Boston, MA Area
 
3

 
18,274

 
2,102

 
944

 
—

 
21,320

Dallas / Ft. Worth Area
 
7

 
14,412

 
3,333

 
921

 
—

 
18,666

Houston, TX Area
 
3

 
6,378

 
1,720

 
183

 
—

 
8,281

Los Angeles, CA Metro Area
 
6

 
19,336

 
3,382

 
1,302

 
—

 
24,020

Miami, FL Metro Area
 
3

 
5,072

 
1,652

 
232

 
—

 
6,956

Minneapolis - St. Paul, MN - WI Area
 
4

 
9,930

 
2,308

 
1,242

 
—

 
13,480

Nashville, TN Area
 
1

 
12,854

 
3,581

 
341

 
—

 
16,776

New York / New Jersey Metro Area
 
6

 
19,661

 
5,031

 
796

 
—

 
25,488

Orlando, FL Area
 
3

 
6,242

 
371

 
356

 
—

 
6,969

Philadelphia, PA Area
 
3

 
6,898

 
1,000

 
250

 
—

 
8,148

San Diego, CA Area
 
2

 
5,228

 
254

 
269

 
—

 
5,751

San Francisco - Oakland, CA Metro Area
 
6

 
21,684

 
1,862

 
658

 
—

 
24,204

Tampa, FL Area
 
2

 
4,585

 
1,263

 
257

 
—

 
6,105

Washington DC - MD - VA Area
 
9

 
28,214

 
5,142

 
2,089

 
—

 
35,445

Other Areas
 
51

 
91,492

 
12,565

 
5,815

 
—

 
109,872

Orlando WorldQuest
 
—

 
913

 
30

 
275

 
—

 
1,218

Corporate
 
—

 
—

 
—

 
—

 
1,209

 
1,209

Total
 
118

 
$
288,016

 
$
49,396

 
$
17,309

 
$
1,209

 
$
355,930

 
 
Three Months Ended September 30, 2017
Primary Geographical Market
 
Number of Hotels
 
Rooms
 
Food and Beverage
 
Other Hotel
 
Other
 
Total
Atlanta, GA Area
 
9

 
$
16,831

 
$
3,533

 
$
1,373

 
$
—

 
$
21,737

Boston, MA Area
 
3

 
17,427

 
1,992

 
903

 
—

 
20,322

Dallas / Ft. Worth Area
 
7

 
14,827

 
2,950

 
800

 
—

 
18,577

Houston, TX Area
 
3

 
6,902

 
1,954

 
169

 
—

 
9,025

Los Angeles, CA Metro Area
 
6

 
19,074

 
3,263

 
1,193

 
—

 
23,530

Miami, FL Metro Area
 
3

 
5,383

 
1,418

 
250

 
—

 
7,051

Minneapolis - St. Paul, MN - WI Area
 
4

 
10,408

 
2,457

 
1,148

 
—

 
14,013

Nashville, TN Area
 
1

 
12,820

 
3,567

 
414

 
—

 
16,801

New York / New Jersey Metro Area
 
6

 
20,301

 
4,995

 
717

 
—

 
26,013

Orlando, FL Area
 
3

 
6,743

 
415

 
179

 
—

 
7,337

Philadelphia, PA Area
 
3

 
6,601

 
960

 
237

 
—

 
7,798

San Diego, CA Area
 
2

 
5,139

 
462

 
212

 
—

 
5,813

San Francisco - Oakland, CA Metro Area
 
6

 
20,814

 
1,949

 
520

 
—

 
23,283

Tampa, FL Area
 
3

 
4,744

 
1,088

 
185

 
—

 
6,017

Washington DC - MD - VA Area
 
9

 
25,376

 
4,421

 
1,334

 
—

 
31,131

Other Areas
 
52

 
91,740

 
12,857

 
4,993

 
—

 
109,590

Orlando WorldQuest
 
—

 
1,062

 
31

 
284

 
—

 
1,377

Sold properties
 
3

 
2,825

 
1

 
95

 
—

 
2,921

Corporate
 
—

 
—

 
—

 
—

 
989

 
989

Total
 
123

 
$
289,017

 
$
48,313

 
$
15,006

 
$
989

 
$
353,325


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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

 
 
Nine Months Ended September 30, 2018
Primary Geographical Market
 
Number of Hotels
 
Rooms
 
Food and Beverage
 
Other Hotel
 
Other
 
Total
Atlanta, GA Area
 
9

 
$
51,131

 
$
12,233

 
$
4,127

 
$
—

 
$
67,491

Boston, MA Area
 
3

 
45,046

 
5,619

 
2,625

 
—

 
53,290

Dallas / Ft. Worth Area
 
7

 
47,427

 
12,525

 
2,620

 
—

 
62,572

Houston, TX Area
 
3

 
20,599

 
6,933

 
602

 
—

 
28,134

Los Angeles, CA Metro Area
 
6

 
59,912

 
11,601

 
3,534

 
—

 
75,047

Miami, FL Metro Area
 
3

 
22,014

 
6,728

 
764

 
—

 
29,506

Minneapolis - St. Paul, MN - WI Area
 
4

 
28,228

 
7,188

 
3,613

 
—

 
39,029

Nashville, TN Area
 
1

 
38,151

 
9,430

 
1,181

 
—

 
48,762

New York / New Jersey Metro Area
 
6

 
56,696

 
17,154

 
2,159

 
—

 
76,009

Orlando, FL Area
 
3

 
21,763

 
1,160

 
887

 
—

 
23,810

Philadelphia, PA Area
 
3

 
18,587

 
3,226

 
675

 
—

 
22,488

San Diego, CA Area
 
2

 
14,224

 
755

 
744

 
—

 
15,723

San Francisco - Oakland, CA Metro Area
 
6

 
61,564

 
5,378

 
1,752

 
—

 
68,694

Tampa, FL Area
 
2

 
17,555

 
4,746

 
1,293

 
—

 
23,594

Washington DC - MD - VA Area
 
9

 
86,948

 
16,939

 
4,886

 
—

 
108,773

Other Areas
 
51

 
271,241

 
43,146

 
18,847

 
—

 
333,234

Orlando WorldQuest
 
—

 
3,486

 
107

 
920

 
—

 
4,513

Sold properties
 
3

 
3,518

 
1

 
129

 
—

 
3,648

Corporate
 
—

 
—

 
—

 
—

 
2,984

 
2,984

Total
 
121

 
$
868,090

 
$
164,869

 
$
51,358

 
$
2,984

 
$
1,087,301

 
 
Nine Months Ended September 30, 2017
Primary Geographical Market
 
Number of Hotels
 
Rooms
 
Food and Beverage
 
Other Hotel
 
Other
 
Total
Atlanta, GA Area
 
9

 
$
50,878

 
$
12,727

 
$
3,739

 
$
—

 
$
67,344

Boston, MA Area
 
3

 
44,637

 
6,036

 
2,418

 
—

 
53,091

Dallas / Ft. Worth Area
 
7

 
46,205

 
12,668

 
2,462

 
—

 
61,335

Houston, TX Area
 
3

 
21,052

 
6,538

 
532

 
—

 
28,122

Los Angeles, CA Metro Area
 
6

 
59,130

 
11,683

 
3,481

 
—

 
74,294

Miami, FL Metro Area
 
3

 
21,256

 
6,488

 
689

 
—

 
28,433

Minneapolis - St. Paul, MN - WI Area
 
4

 
27,936

 
7,358

 
3,326

 
—

 
38,620

Nashville, TN Area
 
1

 
38,687

 
14,575

 
1,266

 
—

 
54,528

New York / New Jersey Metro Area
 
6

 
55,934

 
17,863

 
1,786

 
—

 
75,583

Orlando, FL Area
 
3

 
22,824

 
1,536

 
562

 
—

 
24,922

Philadelphia, PA Area
 
3

 
18,082

 
2,951

 
601

 
—

 
21,634

San Diego, CA Area
 
2

 
14,102

 
1,174

 
549

 
—

 
15,825

San Francisco - Oakland, CA Metro Area
 
6

 
59,206

 
5,744

 
1,529

 
—

 
66,479

Tampa, FL Area
 
3

 
18,172

 
5,166

 
599

 
—

 
23,937

Washington DC - MD - VA Area
 
9

 
86,682

 
16,899

 
3,855

 
—

 
107,436

Other Areas
 
52

 
270,209

 
42,265

 
14,888

 
—

 
327,362

Orlando WorldQuest
 
—

 
3,934

 
121

 
951

 
—

 
5,006

Sold properties
 
6

 
18,001

 
3,213

 
487

 
—

 
21,701

Corporate
 
—

 
—

 
—

 
—

 
2,052

 
2,052

Total
 
126

 
$
876,927

 
$
175,005

 
$
43,720

 
$
2,052

 
$
1,097,704


14
Table of Contents
ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

4. Investments in Hotel Properties, net
Investments in hotel properties, net consisted of the following (in thousands):
 
September 30, 2018
 
December 31, 2017
Land
$
665,578

 
$
653,293

Buildings and improvements
4,033,508

 
3,895,112

Furniture, fixtures, and equipment
494,583

 
468,420

Construction in progress
30,960

 
35,273

Condominium properties
12,173

 
12,196

Total cost
5,236,802

 
5,064,294

Accumulated depreciation
(1,146,817
)
 
(1,028,379
)
Investments in hotel properties, net
$
4,089,985

 
$
4,035,915

Acquisitions
Hilton Alexandria Old Town
On June 29, 2018, the Company acquired a 100% interest in the 252-room Hilton Alexandria Old Town in Alexandria, Virginia for $111.0 million. We accounted for this transaction as an asset acquisition because substantially all of the fair value of the gross assets acquired were concentrated in a group of similar identifiable assets. We allocated the cost of the acquisition including transaction costs to the individual assets acquired and liabilities assumed on a relative fair value basis, which is considered a Level 3 valuation technique, as noted in the following table (in thousands):
Land
$
14,459

Buildings and improvements
94,535

Furniture, fixtures and equipment
2,479

 
$
111,473

Net other assets (liabilities)
$
194

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. The table below summarizes the total revenue and net income (loss) of the hotel property in our consolidated statements of operations for the three and nine months ended September 30, 2018:
 
Three Months Ended September 30, 2018
 
Nine Months Ended September 30, 2018
Total revenue
$
4,523

 
$
4,523

Net income (loss)
194

 
194

5. Hotel Dispositions, Impairment Charges, Insurance Recoveries and Assets Held For Sale
Hotel Dispositions
On February 1, 2017, the Company sold the Renaissance hotel in Portsmouth, Virginia (“Renaissance Portsmouth”) for approximately $9.2 million in cash. The sale resulted in a loss of $43,000 for the year ended December 31, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $20.2 million of debt associated with the hotel property. See note 7.
On March 6, 2017, the Company sold the Embassy Suites in Syracuse, New York (“Embassy Suites Syracuse”) for approximately $8.8 million in cash. The sale resulted in a loss of $40,000 for the year ended December 31, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $20.6 million of debt associated with the hotel property. See note 7.

15
Table of Contents
ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

On June 29, 2017, the Company sold the Crowne Plaza Ravinia in Atlanta, Georgia for approximately $88.7 million in cash. The sale resulted in a gain of $14.1 million for the year ended December 31, 2017 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $78.7 million of debt associated with the hotel property. See note 7.
On February 20, 2018, we completed the sale of the SpringHill Suites Glen Allen for approximately $10.9 million in cash. The sale resulted in a loss of approximately $13,000 for the nine months ended September 30, 2018 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $7.6 million of debt associated with the hotel property. See note 7.
On May 1, 2018, we completed the sale of the SpringHill Suites Centreville for approximately $7.5 million in cash. The sale resulted in a gain of approximately $16,000 for the nine months ended September 30, 2018 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $6.6 million of debt associated with the hotel property. See note 7.
On May 10, 2018, we completed the sale of the Residence Inn Tampa for approximately $24.0 million in cash. The sale resulted in a gain of approximately $400,000 for the nine months ended September 30, 2018 and is included in “gain (loss) on sale of hotel properties” in the consolidated statements of operations. The Company also repaid approximately $22.5 million of debt associated with the hotel property. See note 7.
We included the results of operations for these hotel properties through the date of disposition in net income (loss). The following table includes condensed financial information from these hotel properties in the consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017 (in thousands):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Total hotel revenue
$
—

 
$
2,921

 
$
3,648

 
$
21,701

Total hotel operating expenses
75

 
(2,302