Ashford Hospitality Trust Inc (AHT) 2004 Q1 法說會逐字稿

Good day, everyone, and welcome to the Ashford Hospitality Trust conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Mr. Tripp Sullivan. Please go ahead, sir.

Thank you. Good afternoon and welcome to this Ashford Hospitality Trust conference call to review the Company's results for the first-quarter of 2004. On the call this morning will be Monty Bennett, President and Chief Executive Officer; Doug Kessler, Chief Operating Officer and Head of Acquisitions; and David Kimichik, Chief Financial Officer and Head of Asset Management.

The results as well as notice to (ph) the accessibility of this conference call in a listen-only basis over the Internet were released this morning in a press release that has been covered by the financial media.

As we start let me express that certain statements and assumptions in this conference call contain or are based upon forward-looking information, and are being made pursuant to the Safe Harbor provisions in the Private Securities Litigation Reform Act of 1995.

When we use the words will, likely, result, may, anticipate, estimate, should, expect, believe, intend, or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control. These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated -- including, without limitation -- general volatility of the Capital Markets, and the market price of our common stock, changes in our business or investment strategy, availability, terms and deployment of capital, availability of qualified personnel, changes in our industry and the market in which we operate, interest rates or the general economy, and the degree and nature of our competition. These and other risk factors are more fully discussed in the section entitled risk factors in Ashford's registration statement on Form S-11 as amended, and from time to time in Ashford’s other filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call -- investors should not place undue reliance on these forward-looking statements. We're not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

I will now turn the call over to Monty Bennett. Please go ahead, Monty.

Thank you, Tripp. Good afternoon.

During the first quarter, we have been very active on the investment front. This afternoon, we would like to update you on this new investment activity, discuss our operating performance in the quarter, provide an assessment on the current state of the lodging market, talk about how we're financing our growth, and share with you the current state of our investment pipeline.

Ashford Hospitality is a unique lodging vehicle and has dedicated itself to be the premier capital provider to the hospitality industry.

As such, Ashford is the only REIT dedicated to investing at all levels of the capital structure of hotel properties.

Diversification is our hallmark. We seek diversification by geography, brand, service sector, and capital structure position. We believe that we're in the early recovery of the lodging cycle, and are therefore focused primarily on direct hotel investments and mezzanine loans within the hospitality space. As the industry rolls through its cycle, we anticipate changing our mix of assets within the hospitality sector.

Our mezzanine lending program is unique as well. We underwrite these loans with a view to either service a performing loan, or gain title to an asset at an attractive position in the capital structure.

The first quarter transactions have positioned us closer to being fully invested. We continue to be very pleased with our transaction pace, with trailing EBITDAs consistent with what we had previously shared.

As we have previously communicated, we anticipate to be fully invested within twelve months of our IPO in August of this past year. At the end of the first quarter, we have announced or closed on $384 million worth of acquisitions -- well on our way to completing our target of 500 to 550 million of investments.

We also shared that would be targeting a portfolio comprised 60 to 80 percent of direct hotel investments, with the balance in mezzanine loan investments.

Currently, 82 percent of our assets are direct hotel investments with the remainder in mezzanine loans.

Further, we indicated that the direct hotel investments would be purchased in the range of 9.5 to 10.5 percent T-12 (ph) EBITDA yields. And mezzanine loans would have initial unleveraged yields in the 11 to 12 percent range.

True to form, the direct hotel investments made after the IPO have an average trailing EBITDA yield at the time of announcement of approximately 10.8 percent. Our closed mezzanine loans have initial unleveraged yields that average 11.5 percent.

Further, our mezzanine loans are in the more conservative position in the capital structure than originally targeted.

For the total portfolio, operational highlights include -- RevPAR, or revenue per available room, was up 2.2 percent for all 16 hotels. Occupancy increased to 69.7 percent from 69.5 percent a year ago.

ADR, or average daily rate, was up by 1.9 percent to $103.57. The six contributive or initial assets RevPAR was up 4.6 percent, while the acquired assets RevPAR increased 35 basis points.

Total portfolio revenue in the first quarter was up 126.3 percent versus our predecessor, influenced by the 9.1 million of revenues added by the 10 new hotels acquired since the IPO and the continued transition to new management at several of our hotels.

As we discussed last quarter, that change doesn't always have an immediate impact on revenue -- typically a two to four quarter lag. But, as the 304,000 growth in hotel operating profit on a pro forma basis shows, we can usually make a quick impact on the expense side.

The outlook for the hotel industry continues to be an optimistic one. The Travel Industry Association of America’s Spring 2004 travel forecast is bullish for spring travel, predicting Americans will take 270.2 million trips during March, April and May -- an increase of 3.3 percent over last year.

The forecast calls for the strongest spring travel season since the spring of 2001. TIA predicts Spring 2004 leisure travel will show a positive growth of 3.1 percent over last spring -- the highest volume of spring person trips in five years.

On the business side, TIA forecasts a 5 percent hike in business and convention travel volume this spring compared with last year.

American business travelers plan on taking nearly 45 million business trips going more than 50 miles -- the highest number since spring of 2001. While the impact of this travel will be felt in different degrees across the country, we have no doubt that it will be a net positive for our bookings in the next several months. We believe our diversified portfolio is well positioned to benefit from these trends.

There still remain a few cost pressures in our industry -- most notably, energy and labor costs. But for the most part we have been able to keep a tight rein on our operating costs at both the corporate and hotel level.

Again, as we demonstrated in this quarter's results, our cost structure enables us to achieve measurable margin gains on a pro forma basis on incremental revenue. As indicated for the quarter we were able to achieve a 1 point increase in hotel operating profit percentage in spite of 375,000 in unfavorable expense comparison for franchise fees resulting from the FelCor transaction.

As you are aware, on April 7th we filed a registration statement for a secondary offering, and as such, are in a waiting period. Therefore, we will be unable to give any forward-looking guidance or projections to you on this call, or during the registration period.

The competitive environment for acquisitions and lending opportunities has not changed since our call in March. It continues to be competitive in the mezzanine arena. But as we described last quarter it is primarily focused in the institutional type deals. While we still selectively provide financing for this segment, our main focus continues to be on the rest of the market, where spreads are wider for the same LTV.

As we demonstrated in the first quarter, there are a number of good opportunities for single asset mezzanine and first mortgage originations and purchases. In terms of direct hotel acquisitions, we're seeing quite a few opportunities right now. This is not surprising, given where we are in the early stages of the recovery.

We were pleased to declare our first dividend during the first quarter -- 6 cents per share. As we shared with you in March, this was three months ahead of schedule. With the level of invested and committed capital today, we remain on track as we stated in our first dividend release, to grow the dividend through 2004.

Our dividend policy will continue to target a payout in the range of 80 to 85 percent of cash available for distribution on an annualized basis. And we expect our dividend declarations to be made in the last month of each quarter to shareholders of record at the end of the quarter.

I will now turn the call over to David Kimichik for the financial review.

Thank you, Monty. I would like to highlight some data from our release, and provide a few comparisons that will hopefully help you in understanding our financial results.

I will first talk about our financial statements, and then the combined operating results table for the first quarter. First, I will talk about our balance sheet.

As of March 31st, the Company had total assets of $321 million including $37 million of cash. At the end of the quarter, the Company had 100 million of mortgage debt, all but 6.4 million of that debt is variable-rate debt. Our blended cost of leverage as of March 31st was 4.9 percent.

As of April 2nd, we owned 17 hotels, comprised of 7 Embassy Suites, 2 Radisson Hotels, 2 Doubletree Guest Suites, a Hampton Inn, a SpringHill Suites by Marriott, a Hilton Garden Inn, a Homewood Suites, one independent and one Residence Inn by Marriott -- for a total of 2,784 guestrooms.

Thirteen of these hotels are managed by Remington Lodging and Hospitality, and four of these hotels are managed by Noble Investment Group.

As of March 31st, we also owned four mezzanine loans and one first mortgage participation, for a total of $72 million. Our blended yield on our loan portfolio is currently 11.5 percent.

During the quarter we committed approximately $4 million towards renovation plans, primarily for the assets required from FelCor. This represents approximately 50 percent of that total plan.

Currently, we have 31.7 million fully diluted shares and units outstanding.

Now, I will talk a little bit about our income statement.

During the first quarter we reported net income of $554,000 or 2 cents per share. That results in a gross FFO calculation of $2,435,000 or 8 cents per share.

On March 15, we announced a dividend of 6 cents per share, and on April 15th, we paid $1.9 million to our shareholders of record of March 31st. This equaled 77 percent of our first quarter FFO, and 80 percent of cash (ph). Additionally we had an EBITDA calculation of $3,209,000 compared with 1,794,000 for our predecessor.

As was the case in the previous two quarters, our year-over-year comparisons are not very meaningful. Since the Company began with a limited number of assets, with much of our cash left to be deployed, we believe that comparisons of earnings per share, FFO and EBITDA to our predecessor on a pro forma basis would not be meaningful to shareholders.

Also affecting this comparison is the fact that our predecessor did not have corporate level G&A expense, which further distorts the comparison of these measures in the tables attached to our earnings release.

Additionally, the year-over-year hotel performance compared to our predecessor for the quarter is not going to be meaningful, because it's not an apples-to-apples comparison, as our predecessor had 6 assets, and at the quarter-end we owned 16 assets plus five mezzanine loans.

The statistics that we think are meaningful and are apples-to-apples are the year-over-year comparison for RevPAR and hotel operating profit for the entire portfolio and they're attached on a pro forma basis as schedules to our earnings release.

First quarter RevPAR for the portfolio was up 2.2 percent compared to the first quarter '03 as the result of a 1.9 percent increase in ADR and a 21 basis point increase in occupancy. RevPAR for the six contributive assets was up 4.6 percent during the quarter, while the acquired assets were up 35 basis points as we're still transitioning with new management and the implementation of our CapEx plans for these assets.

On an apples-to-apples basis, for all 16 properties, we were able to increase the operating profit on a pro forma basis by $304,000 compared to first quarter '03 -- which equates to almost a 1 point margin increase.

Overall, we saw slight improvement in rooms flowthrough, a 10 point improvement in food and beverage flowthrough. These efficiencies were somewhat offset by 375,000 of additional indirect costs, which were franchise fee variances, due to the relationships we have with Hilton as compared to FelCor for those assets. FelCor did not have franchise fees, in some cases, as they had a parent Company management agreement.

I would now like to turn the call over to Doug Kessler to discuss our investment highlights.

Thank you, David, and good afternoon.

As you may have noted from the number of announcements over the last two months, and the level of activity described in our call in March, our diversified investment strategy has generated a tremendous amount of opportunities for us. A total of $384 million invested or committed to date.

As of today, it has also led to approximately $200 million of additional investments under conditional contract, letter of intent or in the case of mezzanine investments, bids out.

The face of investment activity in the industry as a whole is well above what it was at the time of our IPO. As Monty mentioned earlier, we have seen more competition for the larger trophy type asset acquisitions, and for some segments of the mezz market.

However, for the type of assets we're acquiring, we have not seen a meaningful impact on pricing, and have certainly not seen a drop in quality. We believe the quality and quantity of our investments to date, and those we have under conditional contract or letters of intent, highlight our ability to source the best yielding investments -- whether through widely marketed transactions, or privately negotiated means.

In the area of direct investments, we closed two acquisitions and announced two others that should close shortly. They're well diversified by market, brand and segment, as well as by degree of stabilization.

As I discuss each of the following transactions, cap rate, EBITDA multiples and EBITDA yield figures are as of the announcement dates.

In March, we closed on the 210 room Residence Inn in Lake Buena Vista, Florida, for $25.3 million in cash. The trailing twelve-month EBITDA multiple is 9.7 times, and the asset will require very little in the way of CapEx -- only about $250,000 for minor cosmetic upgrades.

In April, we closed on the acquisition of the Sea Turtle Inn in Atlantic Beach, Florida, for total consideration of $23,050,000, based upon a trailing twelve-month EBITDA multiple of 10.1 times.

However, the first year EBITDA multiple is without the benefit of the improved expense controls to be implemented by Remington Lodging and Hospitality. The structure of this transaction included 106,675 operating partnership units valued at approximately $1.1 million, or $10.08 per unit, $6,275,000 in cash and $15.7 million in assumed mortgage debt at an interest rate of 7.25 percent.

In March, we announced the planned acquisition of the 187 room Sheraton Bucks County and adjacent 56,000 square foot office building, in suburban Philadelphia, for $16.7 million in cash. The purchase price equates to a trailing twelve-month EBITDA multiple of 7.6 times, which does not give credit to the planned sale of the office building.

These calculations assume no EBITDA contribution from the office building -- only from the hotel.

We also intend to immediately begin investing approximately 5.65 million in renovating the hotel once the acquisition is completed.

We also announced in March an agreement to acquire the 133-suite SpringHill Suites at Baltimore Washington International Airport for total consideration of $15.9 million based on a trailing twelve-month EBITDA multiple of 10.3 times. The purchase price includes $9.1 million in cash, and approximately $6.8 million in assumed debt at 350 basis points over the thirty-day commercial paper yield based upon a twenty-year amortization schedule. That also offers the option to borrow additional funds.

With all of these acquisitions, our direct portfolio will include 19 hotels totaling 3,104 rooms. At a total value of $313 million, this portfolio accounts for approximately 81 percent of our current capital base.

As we described last quarter, we expect hotel acquisitions to remain around 60 to 80 percent of our invested capital for the foreseeable future. We have exceeded our target yields of 9.5 to 10.5 percent trailing twelve-month EBITDA with a 10.8 percent T12 EBITDA yield on our investments closed subsequent to the IPO.

Turning now to our mezzanine investments, we originated one mezzanine loan and closed on three others during the first quarter for a total of $61.6 million -- bringing our total portfolio to approximately $72 million at a blended yield on our loans of approximately 11.5 percent -- which is at the midpoint of our targeted range.

Our first transaction of the quarter was a $15 million subordinated participation and a first mortgage loan secured by the 1,225-room Adam's Mark Hotel in Denver. The loan bears interest at 900 basis points over LIBOR, matures in February 2006, provides debt service coverage of 3.9 times with an initial unleveraged yield in excess of 10 percent.

Next, we closed on a $25 million mezzanine loan receivable secured by a portfolio of 17 full-service hotels, totaling 5,354 rooms. The loan that matures in July 2005 bears interest at 870 basis points over LIBOR, with a 2.5 percent LIBOR floor and provides an initial unleveraged yield of 11.2 percent. We followed this with a $15 million mezzanine loan origination on the 273 suite Embassy Suites at Boston's Logan Airport. The loan bears interest at 1,025 basis points over LIBOR, with a 1.75 percent floor providing an initial unleveraged yield of 12 percent. The loan matures in April 2007.

Finally, we closed on a $6.6 million mezzanine loan receivable on the Northland Inn and Executive Conference Center in the Minneapolis suburb of Brooklyn Park. The loan, which matures in January 2006, bears interest at 1,000 basis points over LIBOR, with a 2 percent LIBOR floor. It also has a 15 percent accrual feature at maturity.

Similar to our direct investments, the mezzanine and first mortgage portfolio exhibits a high degree of diversification. It includes purchases, originations, high-quality assets, well-known owners, and a healthy blend of single asset and portfolio collateral.

We have also established relationships with leading real estate lenders who have experienced the benefits of teaming up with Ashford.

Our target allocation for mezzanine investments remains at 20 to 40 percent of the portfolio. With our strong closing history, we are now a more recognized leader in the industry, and have quickly become known as a reliable and responsive source of capital in this market.

We've also proven to the much larger players in this market that we have a niche in this arena and we plan to continue to exploit it.

In addition to the $384 million of completed and committed investments, we currently have entered into conditional contracts, letters of intent, or are engaged in a discussion or negotiations with several hotel owners and borrowers with respect to possible acquisition or financing transactions totaling $200 million.

These assets are a mix of full and limited service, are geographically diverse, and are primarily Hilton and Marriott family branded products.

If all these assets successfully complete our underwriting process and are closed, the combined purchase price equates to a blended EBITDA yield on trailing twelve-month basis consistent with the Company's prior transactions since the IPO.

With the accelerated pace of our transaction volume, we have commenced our plan to tap into the debt capital markets. On the mezzanine front, we have identified two lenders to provide in excess of $130 million of warehouse capacity for our expanding mezzanine program at competitive rates with flexible terms. We expect to close in late May or early June.

Our direct hotel investment leverage capacity will be increased with the expansion of the existing credit facility revolver from $60 million to $75 million that we are currently seeking. This increase was contemplated in the existing loan agreement.

We're also in the market with a long-term, fixed-rate debt strategy to finance an existing portfolio as well as some of the assets under contract.

We point out that the consummation of any potential acquisition or financing transaction described above -- including transactions under the conditional contracts or letters of intent which the Company has entered into -- are subject to various significant conditions -- including, but not limited to, the Company's approval of the underwriting of any property to be acquired or financed, completion of due diligence, negotiation of terms for specific properties, and execution of definitive agreements if under letters of intent.

Accordingly, there can be no assurances that any such potential transactions will be completed or if completed, what the terms or timing of any such transactions will be. Although we cannot give a time frame for when these transactions could close, the important point to make is that neither the level of investment activity, nor the quality of the assets has diminished.

I'll now turn the call back to Monty for brief concluding remarks.

Thank you, Doug. During the first quarter we announced or closed almost $150 million in transactions. With the conditional transactions discussed by Doug we're well on our way to achieving our initial target investment range of 500 to $550 million, assuming our ultimate target of 50 to 60 percent leverage on our gross assets.

The bottom line is that the hotel industry fundamentals are improving. With market awareness of the unique competitive advantages of our investment strategy increasing, we believe we are better positioned to benefit from the overall improvement.

We offer distinct advantages to hotel owners, investors, lenders and developers who desire a partner with the experience, long-term vision, flexibility and wealth of options to meet their unique capital needs.

We're in a position to offer strong FFO and dividend growth as we begin to realize returns on the significant investment activity of the last two quarters.

We're very excited about the growth opportunities we see for Ashford Hospitality Trust. As we stated during our IPO, we believe the lodging cycle is at a point where demand is outpacing supply, attractive core (ph) returns with substantial upside are available, and most indicators appear to be showing we're moving off the bottom.

That covers our prepared remarks. We will now be happy to answer any questions that you may have.

(Operator Instructions). Peter Fore (ph) Fore Partners (ph).

I was confused by the call. I'm trying to understand whether or not you intend to proceed with a secondary, but don't want to talk about it? Or whether you're not proceeding -- given that everybody here has a loss in the thing, it would strike me that it would make sense to let us understand what the strategy here is -- if this environment doesn't improve, do you have the ability to walk away from certain properties? Or are you committed? I'm just uncomfortable with the lack of understanding as to whether or not we're all in the same situation or have the same concern about the share price? And how you are going to handle what is happening going forward here --?

If I understood your question, let me try and address it.

We are in registration. That still is out there. We are in the process here of, shortly, of filing our 10-Q. As I'm sure you are aware, once we do that we're going to have to update the offering with that information, which will take a few weeks.

So, while no definitive decision has been made about the status of that offering, at the very least, it will be sometime before we can move forward with it. I think you had another question --

Well, it has to do with the nature of the contracts, or the -- this pipeline you are referring to. The fact that -- to go forward and to purchase these things, you need more capital. So either you are going to go forward and raise capital below the previous $9 price, or you're going to walk away from some of these things or stretch them out and keep your fingers crossed that nine months from now the world is a better place.

In the meantime, we shareholders -- whether we try or not, we're not getting any information on this. And I suspect the stock is going to be going down unless we do.

As far as those existing contracts, they are not what we call hard contracts, meaning that there is no firm deposit up on them. So, if we were to not consummate some of those transactions, actually all of the transactions are without penalty at this point.

And in fact, they have not completed the underwriting process.

So, we still have to work through underwriting on all those transactions. We don't know what percentage of that $200 million will successfully complete the underwriting process. And, of course, there is a capital question as far as what we do at that point. But that's some time off and it's just premature to talk about what would be best course of action at that time.

Okay.

(Operator Instructions). David Loeb, Friedman, Billings Ramsey & Co.

I don't want to beat dead horse here. But, would you just go ahead and put assets under hard contract when you completed that underwriting due diligence?

We will not put an asset under contract -- a hard contract unless we have the intention of -- and the ability, immediately, there to close upon it.

But by your own numbers, in terms of how much capacity you have, you have somewhere in the neighborhood of 150 million of existing capacity from debt on the existing assets. So, it seems like you have got the ability to come pretty close to closing all of that 200-ish million.

Right.

So, I guess, what I'm asking is -- would you do that now? Or would you -- is your plan to wait to close on those? Or put those under contract?

We're moving forward with the underwriting process. I don't know if that answers your question, David.

Nope.

(multiple speakers)

I really want to know -- I guess, to put a fine point on it -- I understand that the capital rates would be delayed by the fact that you put these under hard contract, because you would need to go out and get audits. Is that something you're planning to do, A, or B, willing to do?

I see what you're saying. It’s regard to updating the offering, if we go hard on these.

We have not decided exactly what the course of action is on that, David. We've got a lot of moving parts on that.

So, we do have capacity. If you look at the approximate $250 million or so of equity on a gross assets basis that we have, leveraged up to 60 percent at the higher end of our leverage range, that is really closer to 600 -- maybe even above 600 million in assets.

So, even if we exceeded our investment target of 500 to 550 -- if you just do the straight math, it’s 384 plus 200 -- we are still within our capacity. That's just not what we are thinking about right now as being our target.

But as far as the timing and what we go hard with and what we update our registration with -- we just haven't worked that out yet.

Okay. So it's still out there, I guess. And to echo Peter's question. Then -- you are not in a position to give us any information about whether the chicken or the egg comes first?

That's right.

Okay.

It’s just a fluid process, David. There are so many variables involved there. Whatever we tell you today could very well change the next day, depending upon what makes it through underwriting, what the sellers of these assets or borrowers are up to, and what they want to do. It’s just -- the situation in the capital markets -- it’s just very, very fluid.

Can you handicap at all what degree of likelihood there is on the 200 million of closing -- what kind of stages you have to go through yet?

David, it's Douglas. How are you?

The likelihood of closing on these is really just like with any assets that we underwrite. Our intention is to close on assets that qualify through our very thorough due diligence process. So we really cannot give any indication at this time until we complete that entire process.

So, it's really premature for us to give you any guidance as to the closing likelihood of those assets.

Okay. Can you give us an idea on the volume of assets that you have got out for bid as opposed to under some degree of contract or letter of intent?

Yes. We can give some indication on that. Of this $200 million, the good majority, or the vast majority, is under some type of control. That's for direct asset purchases, which makes up the predominant share of this $200 million.

On a mezzanine loan, you put in bids, and you're not really closed until you're closed. So, those are a little harder to predict. Because you never know what the bar is going to end up doing.

But, most of that $200 million -- the characterization -- is under some type of control.

And beyond that 200 million, do you also have other assets that you have got bids in for?

Yes.

Any idea on the scope of that?

Gosh -- I would be guessing off the top of my head. But, the amount of activity in the marketplace is substantial. So -- and it's always so fluid. But it's definitely a big number out there that we're in the process of bidding, have bid on, etc.

Okay. Thanks.

Ray Guria (ph), Askia (ph).

I have a question in terms of not so much timing and assets and balance sheet capacity and so forth, but in your thinking in terms of proceeding with an offering, how much weight will you give to where the stock price is and at what price you are raising capital in terms of your decision to proceed -- because you obviously have the ability to let what you have got in the pipeline close and season and generate a dividend yield such that, obviously, at some point, the stock will move up to reflect that.

You bet. Let me address that.

We are sensitive to existing shareholders. And so where the stock price is, is definitely a major factor in our decision-making process.

Without saying exactly under what circumstances we will move forward, because we're still weighing all of the variables. But that is important to us. And we're also in touch with our underwriter and they are sensitive to these matters as well.

So, I don't know if I could assign a percentage to it, Ray, but it's important to us.

Well, would you go so far to say that if the stock price is at today's level, you're not going to raise capital at this level because it doesn't make any sense?

I would not go forward and say that. But at the same time, we have had the opportunity to move forward in the past few weeks and have not. But, we just -- I cannot tell you exactly what will do or will not do. I just want to be careful about that.

Okay. And I had one minor question (multiple speakers) in going through the release. It says that you acquired and agreed to acquire almost 87 million under the direct hotel category.

And if I add up all the things in this list of first quarter investment activity, I don't get to that number. And I am curious as to whether -- and I assume that you were not including the completed acquisition in April, because that's not in the first quarter.

This is David Kimichik. What we put in the release was two components of investment activity. One was 86 million of direct hotel acquisitions that were agreed to acquire or acquired. And 62 million of mezzanine loans that we funded in the first quarter as well.

Right. But if I go through the list, I get to like 63 million for hotels. And, it suspiciously seems like the difference is the 23 million. I'm just trying to figure out whether the acquisition that you listed in April is included in that 87 or whether it is not.

Yes it is. That was announced in the first quarter.

It was closed in the first quarter or announced in the first quarter, and that acquisition that was closed in April was announced in the first quarter.

As well as two transactions that were announced that have yet to close. One is the SpringHill Suites at (multiple speakers) Airport and one is the Bucks County.

Okay, yeah, that I see. That I get -- that explains what I needed to know.

And then, in terms of -- are there any other -- other than the ones listed here in the first quarter, are there any hotel deals that have been previously announced but not in this release, that you expect to close in the second quarter?

We've got the two that are under hard contract, that David Kimichik just shared with you. All of our other transactions are under conditional contract. And so it's hard to say exactly when they will close.

Typically, when you put an asset under contract, you've got 30 to 45 days of initial due diligence, and 30 days of closing. I would say that's typical, and sometimes that can get stretched out a little bit. So it's hard to predict exactly when those transactions will close if they actually make it through the underwriting process.

But we do have a number of those that are in stages of that -- in that due diligence phase. You go harder in the middle of that time-frame there, typically. We have not done that. So, there are some assets in that 30 to 45 day due diligence period. And I hope that answers your question or comes close to it.

We've been counseled not to give predictions on exactly what will close, because of being in the waiting period. But, hopefully, that color kind of gives you an indication of where we are.

All right. I just wanted to know whether there was anything -- you've got this list of things that have been announced or closed in the first quarter. And my question has nothing to do with a prediction about closing exactly. Are there any that have been announced prior to the first quarters that have not yet closed?

No.

That was my question. Thank you.

(Operator Instructions). Mr. Bennett, it appears that there are no further questions. I will turn the conference back over to you.

Okay. Thank you very much. Thank you today for your participation and your interest in Ashford Hospitality Trust.

And that does conclude today's conference. Thank you for your participation.