ASHFORD HOSPITALITY TRUST ANNOUNCES REVERSE STOCK SPLIT TO MAINTAIN LISTING ON THE NYSE

Rhea-AI Summary

Ashford Hospitality Trust (NYSE: AHT) announced plans for a 1-for-10 reverse stock split to maintain its NYSE listing after receiving notice of non-compliance with the $1.00 minimum share price requirement. The company has a six-month cure period to regain compliance by achieving a closing share price of at least $1.00 and a 30-day average closing price of $1.00.

AHT believes the reverse split will benefit shareholders by:

• Continuing NYSE trading
• Increasing market price above the $5 threshold for institutional investors
• Addressing margin limitations on sub-$5 stocks
• Attracting a broader range of investors and analysts

The stock will trade under 'AHT.BC' during the non-compliance period. The notice does not affect business operations, SEC reporting, or trigger debt breaches.

Positive

• Implementing a 1-for-10 reverse stock split to maintain NYSE listing
• Potential to attract more institutional investors with higher share price
• Opportunity to increase demand for common stock
• No impact on ongoing business operations or debt obligations

Negative

• Non-compliance with NYSE's minimum $1.00 share price requirement
• Risk of delisting if compliance is not regained within six months
• Added '.BC' designation to stock symbol indicating non-compliance

Insights

Financial Analyst

This reverse stock split announcement is a critical move for Ashford Hospitality Trust to maintain its NYSE listing. The 1-for-10 split aims to boost the share price above the $1 threshold, addressing compliance issues. While this doesn't change the company's fundamental value, it could have significant implications:

• Improved perception: A higher share price may attract more institutional investors and reduce the stigma associated with penny stocks.
• Liquidity concerns: The reduced number of outstanding shares might decrease trading volume, potentially affecting liquidity.
• Investor sentiment: Reverse splits are often viewed negatively, as they're typically employed by struggling companies.

The move to surpass the $5 per share mark is strategic, potentially broadening the investor base and reducing margin restrictions. However, investors should note that this action doesn't address underlying financial challenges or improve the company's operational performance. The success of this strategy depends on AHT's ability to sustain the higher share price post-split, which will require improved financial results and market confidence.

Market Research Analyst

Ashford Hospitality Trust's decision to implement a reverse stock split reflects broader challenges in the hospitality REIT sector. The move comes amid:

• Ongoing recovery in the hotel industry post-pandemic
• Rising interest rates impacting real estate valuations
• Shifts in business travel patterns affecting upper upscale hotels

While the split addresses immediate listing concerns, it doesn't solve fundamental issues. Investors should consider:

• AHT's debt levels and ability to refinance in the current rate environment
• Occupancy and RevPAR trends in its upper upscale portfolio
• Potential for asset sales or portfolio restructuring to improve financial health

The market's reaction to this move will be crucial. A sustained price above $1 post-split would be a positive sign, but failure to maintain this could lead to further delisting risks. This situation underscores the importance of monitoring both company-specific factors and broader industry trends in the hospitality REIT space.

DALLAS, Sept. 26, 2024 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the "Company") today announced that it was notified by the New York Stock Exchange (the "NYSE") on September 23, 2024, that it is not in compliance with Section 802.01C of the NYSE's Listed Company Manual, which requires listed companies to maintain an average closing share price of at least $1.00 over a consecutive 30 trading day period.

The Company plans to notify the NYSE within 10 business days of receipt of the notice that it intends to execute a 1-for-10 reverse stock split in order to regain compliance. The Company can regain compliance at any time within a six-month cure period following its receipt of the notice if, on the last trading day of any calendar month during such cure period, the Company has both: (i) a closing share price of at least $1.00 and (ii) an average closing share price of at least $1.00 over the 30 trading-day period ending on the last trading day of the applicable calendar month.

The Company believes the reverse stock split will benefit all shareholders by addressing several items impacting its common stock:

• It will allow the Company's common stock to continue trading on the NYSE.
• The Company anticipates that the reverse stock split will meaningfully increase the Company's market price per share above the $5 per share threshold required by many institutions to hold shares.
• Some brokers limit the ability or increase the cost to margin a stock under $5 per share.

By implementing a reverse stock split, the Company and its Board of Directors believes it can realize increased incremental demand for its common stock while also making the Company's shares more attractive to a broader range of potential long-term institutional investors, individual investors, and buy-side analysts.

The Company's common stock will continue to be listed and traded on the NYSE during this period, subject to the Company's compliance with other NYSE continued listing standards. The Company's common stock will continue to trade under the symbol "AHT," but will have an added designation of ".BC" to indicate that the Company is not currently in compliance with NYSE continued listing standards.

The notice does not affect the Company's ongoing business operations or its Securities and Exchange Commission reporting requirements, nor does it trigger a breach of the Company's material debt obligations. The Company can provide no assurances that it will be able to satisfy any of the steps outlined above and maintain the listing of its shares on the NYSE.

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Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels.

Forward-Looking Statements

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature: our business and investment strategy; anticipated or expected purchases, sales or dispositions of assets; our projected operating results; completion of any pending transactions; our plan to pay off strategic financing; our ability to restructure existing property-level indebtedness; our ability to secure additional financing to enable us to operate our business; our understanding of our competition; projected capital expenditures; the impact of technology on our operations and business; the risk that the notice and noncompliance with NYSE continued listing standards may impact the Company's results of operations, business operations and reputation and the trading prices and volatility of the Company's common stock; and the Company's ability to regain compliance with the NYSE continued listing standards. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. These and other risk factors are more fully discussed in the Company's filings with the SEC.

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We will not publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise except to the extent required by law.

View original content:https://www.prnewswire.com/news-releases/ashford-hospitality-trust-announces-reverse-stock-split-to-maintain-listing-on-the-nyse-302260495.html

SOURCE Ashford Hospitality Trust, Inc.

FAQ

Why is Ashford Hospitality Trust (AHT) implementing a reverse stock split?

AHT is implementing a 1-for-10 reverse stock split to regain compliance with NYSE's minimum $1.00 share price requirement and maintain its listing on the exchange.

What is the deadline for AHT to regain compliance with NYSE listing standards?

AHT has a six-month cure period from September 23, 2024, to regain compliance by achieving a closing share price of at least $1.00 and a 30-day average closing price of $1.00.

How will the reverse stock split affect AHT's stock symbol?

AHT's stock will continue to trade under the symbol 'AHT' but will have an added designation of '.BC' to indicate non-compliance with NYSE continued listing standards.

What are the potential benefits of AHT's reverse stock split for shareholders?

The reverse split may increase the stock price above $5, potentially attracting more institutional investors, addressing margin limitations, and increasing demand for the common stock.