Ashford Hospitality to Save $17 Million From Fee Waiver, Ends Stock Sale Program

Key Facts

Ashford Hospitality Trust said it expects to save about $17 million after its adviser, Ashford Inc., waived advisory fees as part of measures aimed at bolstering liquidity and strengthening the adviser's alignment with shareholders. The trust said in its statement that the waiver covers base and incentive fees for services provided from November 2026 to April 2027. The statement described the waiver as "irrevocable," making the fee waiver binding on the adviser during the specified period. The expected savings amount to about $2.60 per common share, according to the trust's estimates of the waiver's financial impact. Independent board members approved the fee waiver and the accompanying stock purchase agreement. The savings come from waiving payments due for advisory services, while the agreement includes a separate commitment by the adviser to buy the trust's shares in the open market.

Under the purchase agreement, Ashford Inc. committed to buying shares equivalent to 2.5% of outstanding common shares for each calendar quarter covered by the agreement, according to the trust's statement. About 6.47 million common shares were outstanding at the time of the announcement, a figure the company provided alongside details of the commitment. The first quarterly purchase commitment amounts to about 162,000 shares, with purchases to be made in the open market. The trust stressed that it "will not issue or sell" shares directly to Ashford Inc. under the agreement. The adviser's commitment therefore involves buying existing shares in the market, while the direct impact on the trust's liquidity comes from the fee waiver. The trust linked these arrangements to its goal of strengthening the adviser's alignment with shareholders, alongside bolstering liquidity.

The purchase agreement provides compensation to the trust if the adviser fails to buy the required number of shares within the purchase window, according to the terms set out in the statement. In that case, the trust is entitled to a credit against future advisory fees, calculated for each share short of the required purchases. The credit for each share not purchased equals 150% of the volume-weighted average share price during the purchase window. This provision ties the amount of the credit to the weighted average price during the execution period and the number of shares the adviser has not purchased by its end. The compensation takes the form of a credit against future fees, while open-market share purchases remain the obligation addressed by this provision if it is not fulfilled.

Alongside the adviser agreement, Ashford Hospitality Trust terminated its stock distribution agreement with Virtu Americas, the trust announced. Following the termination, the trust no longer has a program to sell additional common shares directly into the market. The decision halts the use of this sale program to issue additional shares as part of the package the trust announced alongside the fee waiver and the adviser's commitment. The termination concerns the trust's distribution agreement, while responsibility for executing open-market purchases rests with Ashford Inc. under the purchase agreement. The announcement thus combined the termination of the program to sell additional common shares, the waiver of advisory service fees and an arrangement for the adviser to purchase publicly traded shares.

The measures follow a reduction in the trust's debt during the preceding period, according to its earnings statement filed with the U.S. Securities and Exchange Commission. Total debt stood at $2.0 billion on June 30, 2026, compared with $2.6 billion at the end of the previous year. The trust put the reduction at $599.5 million, equivalent to a decline of 23.3% from the previous year-end level. In trading before the announcement, AHT shares closed the October 12, 2026 session at $1.850, down 14.75% during that session. The existing advisory relationship with Ashford Inc. has an initial term extending to December 31, 2055, according to the trust's quarterly report. That term places the limited fee waiver within an ongoing contractual relationship between the trust and its adviser.

Purchases for the first quarter covered by the agreement must be completed by March 31, 2027, according to the deadline the trust set for fulfilling the initial commitment. The stock purchase agreement runs for up to 3 years, with possible early termination in circumstances including the adviser reaching ownership limits. The agreement's continuation is therefore subject to these conditions as well as its specified maximum term. The service period covered by the fee waiver ends in April 2027, according to the announced contractual schedule. The trust said additional information about the fee waiver and stock purchase agreement will be provided in an upcoming filing with the U.S. Securities and Exchange Commission.