Ashford Hospitality Trust, Inc. (AHT) Q4 2022 Earnings Call Transcript

Ashford Hospitality Trust, Inc. (NYSE:AHT) Q4 2022 Earnings Conference Call February 22, 2023 11:00 AM ET

Company Participants

Jordan Jennings - Director, IR

Rob Hays - President and CEO

Deric Eubanks - CFO

Chris Nixon - EVP and Head, Asset Management

Conference Call Participants

Tyler Batory - Oppenheimer

Chris Woronka - Deutsche Bank

Bryan Maher - B. Riley

Operator

Greetings and invited to nan Ashford Hospitality Trust Fourth Quarter 2022 Results Conference Call. At this time, each participants are successful a listen-only mode. A little question-and-answer convention will travel nan general presentation. [Operator instructions] As a reminder, this convention is being recorded.

It is now my pleasance to present your big Jordan Jennings, Investor Relations. Thank you, Jordan. You whitethorn begin.

Jordan Jennings

Good time everyone and invited to today's convention telephone to reappraisal nan results for Ashford Hospitality Trust for nan 4th fourth and afloat twelvemonth 2022 and to update you connected caller developments.

On nan telephone coming will beryllium Rob Hays, President and Chief Executive Officer; Deric Eubanks, Chief Financial Officer; and Chris Nixon, Executive Vice President and Head of Asset Management.

The results arsenic good arsenic announcement of nan accessibility of this convention telephone connected a listen-only ground complete nan Internet were distributed yesterday day successful a property release. At this time, fto maine punctual you that definite statements and assumptions successful this convention telephone incorporate aliases are based upon forward-looking accusation and are being made pursuant to nan Safe Harbor provisions of nan national securities regulations.

Such forward-looking statements are taxable to galore assumptions, uncertainties, and known aliases chartless risks, which could origin existent results to disagree materially from those anticipated. These factors are much afloat discussed successful nan company's filings pinch nan Securities and Exchange Commission.

The forward-looking statements included successful this convention telephone are only made arsenic of nan day of this call, and nan institution is not obligated to publically update aliases revise them.

In addition, definite position utilized successful this telephone are non-GAAP financial measures, reconciliations of which are provided successful nan company's net merchandise and accompanying tables aliases schedules, which person been revenge on Form 8-K pinch nan SEC connected February 21st, 2023, and whitethorn besides beryllium accessed done nan company's website astatine www.ahtreit.com.

Each listener is encouraged to reappraisal those reconciliations provided successful nan net merchandise together pinch each different accusation provided successful nan release. Also, unless different stated, each reported results discussed successful this telephone comparison nan 4th fourth and afloat twelvemonth ended December 31st, 2022 pinch nan 4th fourth and afloat twelvemonth ended December 31st, 2021.

I will now move nan telephone complete to Rob Hays. Please spell ahead, sir.

Rob Hays

Good morning, and invited to our call. After my introductory comments, Deric will reappraisal our 4th fourth and afloat twelvemonth financial results and Chris will supply an operational update connected our portfolio.

The main themes for our telephone coming are; first, we saw ongoing RevPAR betterment successful nan 4th fourth versus 2019 and expect continued spot done nan first 4th of 2023.

Second, our liquidity and rate position proceed to beryllium strong. We ended nan 4th pinch astir $519 cardinal of nett moving capital, which equates to astir $14 per diluted share.

With yesterday's closing banal value of $5.69, we judge we are trading astatine a meaningful discount to some our nett plus worth per stock and our nett moving superior per share. Additionally, to nan grade location is simply a hiccup successful nan economy, we person nan elasticity to entree undrawn superior if needed via our strategical financing.

The past main taxable for our telephone is that we person commenced nan offering of our non-traded preferred equity security. Importantly, we judge this offering will supply an charismatic costs of superior and let america to accretively turn our portfolio complete time, taxable to early marketplace conditions.

We judge entree to this maturation superior is simply a important competitory advantage, peculiarly fixed nan truth that lodging REITs are presently trading astatine worldly discounts to their nett plus values.

To nan grade we are successful pinch our non-traded preferred superior raise, our penchant would beryllium to usage that superior for early growth, though we whitethorn besides usage immoderate of nan superior to salary down indebtedness arsenic needed.

We proceed to build nan syndicate for this merchandise and presently person 22 signed trader agreements representing 4,349 representatives trading this product. We are still very early successful nan superior raising process and to-date, we person issued astir $4 cardinal of gross proceeds. We expect this fund-raising momentum to accelerate arsenic we get further into 2023.

Let maine now move to nan operating capacity astatine our hotels. The lodging manufacture continues to show signs of strength. RevPAR for each hotels successful our portfolio accrued astir 25% for nan 4th fourth compared to nan anterior twelvemonth quarter. This RevPAR consequence equates to a alteration of astir 1% compared to nan 4th fourth of 2019, which is nan champion performing 4th versus 2019 successful respective years.

One of our main priorities for 2023 is maximizing our operating capacity to minimize imaginable paydowns for immoderate hold tests associated pinch our spot level debt.

We've already made awesome advancement connected this beforehand pinch our caller refinancing of nan indebtedness secured by nan Le Pavillon hotel, nan hold and modification of nan indebtedness secured by nan Hotel Indigo Atlanta, and nan hold and modification of nan JPMorgan Chase eight-hotel loan. Deric will talk astir these successful much detail.

While we consciousness well-prepared for nan remaining upcoming extensions tests, location whitethorn beryllium situations wherever we person indebtedness balances that transcend nan existent marketplace worth of nan underlying hotels. If those situations arise, we whitethorn springiness assets backmost to lenders aliases allocate further superior pinch a attraction to maximize worth for our shareholders.

Looking ahead, we judge our geographically divers portfolio, consisting of high-quality assets pinch best-in-class brands and guidance companies is well-positioned to capitalize connected nan beardown request we are seeing crossed leisure, business, and group segments.

We besides judge that our narration pinch our affiliated spot manager, Remington, really sets america apart. Remington has been capable to consistently negociate costs and optimize revenues aggressively, enabling america to outperform nan manufacture from an operations standpoint for galore years.

Additionally, superior recycling remains an important constituent of our strategy and we proceed to prosecute immoderate opportunities to waste definite non-core assets. We person identified respective assets that we whitethorn bring to marketplace for waste if marketplace conditions warrant. We expect immoderate nett proceeds from these income will spell towards paying down debt.

Turning to Investor Relations, we proceed to person a robust outreach effort to get successful beforehand of investors, pass our strategy, and explicate what we judge to beryllium an charismatic finance opportunity successful Ashford Trust.

We person attended galore manufacture and Wall Street Conferences which person led to complete 600 investor meetings complete nan past year. We person respective conferences coming up this twelvemonth and we look guardant to speaking pinch galore of you during those events.

We judge we person nan correct scheme successful spot to move guardant and maximize worth astatine Ashford Trust. This scheme includes continuing to turn liquidity crossed nan company, optimizing nan operating capacity of our assets, improving nan equilibrium expanse complete time, and looking for opportunities to put and turn our portfolio.

We person a way grounds of occurrence erstwhile it comes to spot acquisitions, associated ventures, and plus sales. We expect they will proceed to beryllium portion of our plans moving forward.

We ended nan 4th fourth pinch a important magnitude of rate connected our equilibrium expanse and pinch nan motorboat of our non-traded preferred banal offering, we are excited astir nan opportunities we spot successful beforehand of us.

I will now move nan telephone complete to Deric to reappraisal our 4th fourth financial performance.

Deric Eubanks

Thanks Rob. For nan 4th quarter, we reported a nett nonaccomplishment attributable to communal stockholders of $60.2 million, aliases $1.75 per diluted share. For nan afloat year, we reported a nett nonaccomplishment attributable to communal stockholders of $153.2 cardinal aliases $4.46 per diluted share.

For nan quarter, we reported AFFO per diluted stock of $0.16, compared to a nonaccomplishment of $0.09 per diluted stock successful nan anterior twelvemonth quarter, and for nan afloat year, we reported AFFO per diluted stock of $1.85 compared to a nonaccomplishment of $1.23 per diluted stock successful nan anterior year.

Adjusted EBITDAre for nan 4th was $69.1 million, which reflected a maturation complaint of 70% complete nan anterior twelvemonth quarter. Adjusted EBITDAre for nan afloat twelvemonth was $287.3 million, which reflected a maturation complaint of 153% complete nan anterior year.

At nan extremity of nan 4th quarter, we had $3.8 cardinal of loans pinch a blended mean liking complaint of 7.2%, taking into relationship in-the-money liking complaint caps. Considering nan existent levels of LIBOR and SOFR and nan corresponding liking complaint caps, 100% of our indebtedness is now efficaciously fixed arsenic each of our liking complaint caps are now in-the-money.

These caps are typically system to expire simultaneously pinch nan maturity dates of nan underlying loans and galore of these caps will expire during 2023 arsenic we person respective loans pinch first maturity dates successful 2023. Most of these loans person hold options that see nan request to acquisition further liking complaint caps astatine nan clip of nan extension.

In anticipation of these extensions, past year, we purchased guardant starting liking complaint caps arsenic a hedge against these early purchases. If liking rates stay elevated, nan worth of these pre-purchased caps should thief defray nan costs of immoderate caller caps we request to purchase.

On nan superior markets front, during nan quarter, we successfully refinanced a owe indebtedness secured by nan 226-room Le Pavillon Hotel successful New Orleans, Louisiana, which had an hold trial successful January 2023. The new, non-recourse indebtedness totals $37.0 million, nan aforesaid indebtedness magnitude arsenic nan erstwhile loan, and has a two-year first word pinch 3 one-year hold options, taxable to nan restitution of definite conditions. The indebtedness is liking only and provides for a floating liking complaint of SOFR positive 4.00%.

Additionally, during nan quarter, we modified and extended nan owe indebtedness secured by nan 141-room Hotel Indigo Atlanta successful Atlanta, Georgia which had an hold trial successful December 2022. As portion of this extension, we made a mini paydown of nan indebtedness and nan liking complaint was changed from LIBOR positive 2.25% to SOFR positive 2.85%.

Additionally, consequent to nan extremity of nan quarter, we successfully modified and extended our $395 cardinal JPMorgan Chase eight-hotel loan. As portion of this extension, we made a $50 cardinal main paydown and reduced nan 2024 indebtedness output hold trial from 9.25% to 8.50%, giving america importantly much elasticity for nan adjacent extension.

We only person 2 loans pinch a mixed equilibrium of astir $98 cardinal pinch last maturities successful 2023. We are presently moving pinch lenders connected these refinancings. We person further loans that are taxable to hold tests this year. And pinch our important rate equilibrium and continued betterment successful edifice operations, we judge we are well-prepared to meet immoderate imaginable indebtedness paydowns required to meet those tests.

Our property-level edifice loans are each non-recourse to nan institution and presently 79% of our hotels are successful rate traps, which is down from 85% past quarter. A rate trap intends that we are presently incapable to utilize property-level rate for corporate-related purposes.

Importantly, during nan quarter, nan Marriott Gateway and KEYS Pool D Portfolio loans came retired of their respective rate traps and astir $9 cardinal of rate that had been trapped was released to firm aft 4th end.

As nan remaining properties retrieve and meet nan various indebtedness output aliases sum thresholds, immoderate trapped rate will beryllium released to america and we will beryllium capable to utilize that rate freely astatine corporate. At nan extremity of nan 4th quarter, we had astir $34 cardinal successful these rate traps, which is reflected successful restricted rate connected our equilibrium sheet.

We ended nan 4th pinch rate and rate equivalents of $417 cardinal and restricted rate of $142 million. The immense mostly of that restricted rate is comprised of lender and manager-held reserve accounts.

At nan extremity of nan quarter, we besides had $22 cardinal successful owed from third-party edifice managers. This chiefly represents rate held by 1 of our spot managers, which is besides disposable to money edifice operating costs. We besides ended nan 4th pinch nett moving superior of astir $519 million.

As Rob mentioned, I deliberation it's important to constituent retired that this nett moving superior magnitude of $519 cardinal equates to astir $14 per share. This compares to our closing banal value from yesterday of $5.69, which is an approximate 60% discount to our nett moving superior per share.

Our nett moving superior reflects worth complete and supra nan nett worth of our hotels. As such, we judge that our existent banal value does not bespeak nan intrinsic worth of our high-quality edifice portfolio.

Rob mentioned that we person commenced nan offering for our non-traded preferred stock. We are offering this merchandise done nan Ashford Securities' level and person been pleased pinch nan advancement that's been made successful building nan syndicate of trading broker-dealers.

We presently person 22 signed trader agreements representing 4,349 reps that are presently trading this merchandise to their clients. We expect nan momentum of this superior raise to ramp up arsenic we advancement done 2023. This is charismatic superior for america that tin beryllium utilized for acquisitions, indebtedness paydowns, aliases different firm purposes, and we look guardant to reporting backmost connected our progress. As of December 31, 2022, our consolidated portfolio consisted of 100 hotels pinch 22,316 rooms.

Our stock count presently stands astatine astir 36.2 cardinal afloat diluted shares outstanding, which is comprised of 34.5 cardinal shares of communal banal and 1.7 cardinal OP units.

In nan 4th quarter, our weighted mean afloat diluted stock count utilized to cipher AFFO per stock included astir 1.7 cardinal communal shares associated pinch nan exit interest connected nan strategical financing we completed successful January 2021.

Assuming yesterday's closing banal price, our equity marketplace headdress is astir $206 million. While we are presently paying our preferred dividends quarterly, we do not expect reinstating a communal dividend for immoderate time.

Over nan past respective months, we person taken galore steps to fortify our financial position and amended our liquidity, and we are pleased pinch nan advancement that we've made.

Our rate equilibrium is solid, we person an charismatic maturity schedule, our non-traded preferred information offering is effective, and we judge nan institution is well-positioned to use from nan improving trends we are seeing successful nan lodging industry.

This concludes our financial reappraisal and I would now for illustration to move it complete to Chris to talk our plus guidance activities for nan quarter.

Chris Nixon

Thank you, Deric. I americium proud of nan activity that our plus guidance squad accomplished during nan 4th fourth to thrust operating results and adjacent retired a singular twelvemonth for capacity astatine our hotels.

Comparable RevPAR for our portfolio accrued by 25% successful nan 4th fourth compared to nan anterior twelvemonth quarter. For nan quarter, our portfolio recovered 99% of its RevPAR comparative to nan 4th fourth of 2019. Our squad has strategically positioned and enhanced our assets to efficaciously capitalize connected nan market's recovery.

We proceed to beryllium encouraged by nan acceleration we are seeing successful our municipality assets. During nan 4th quarter, 38% of our municipality assets exceeded their 2019 RevPAR. For comparison, only 10% of our municipality assets exceeded 2019 RevPAR levels during nan first 4th of 2022.

The betterment successful our municipality hotels continued done nan 4th pinch December seeing 48% of our municipality hotels execute a RevPAR supra 2019. Our squad has been laser focused connected identifying further opportunities to maximize value.

Our different section revenue, which includes valet, spa services, area pantries, and more, increased19% connected a per occupied room ground to 2019. Within our municipality hotels, different departmental revenues per occupied room successful nan 4th fourth accrued 24% comparative to 2019.

An illustration of this occurrence was demonstrated astatine The W Atlanta, wherever we utilized services specified arsenic parking, spa, and in-room intermezo to propel 4th fourth different revenues 34% supra comparable 2019 levels.

During nan 4th quarter, our portfolio exceeded group room gross comparative to nan aforesaid clip play successful 2019 by 2%, and we proceed to spot acceleration from this segment.

Group gross booked successful nan 4th fourth for nan 4th exceeded comparable 2019 by 24%. Our semipermanent group momentum shows encouraging signs, pinch group guardant bookings during nan 4th fourth exceeding nan erstwhile 3 quarters.

In fact, December was nan champion period of 2022 successful position of guardant bookings for group. Our lead measurement has besides improved each 4th this twelvemonth comparative to 2019. We are excited astir this momentum heading into 2023 and what nan favorable group measurement will mean for our portfolio.

Lastly, I would for illustration to remark connected nan grounds performances wrong our portfolio. The portfolio had 31 hotels group all-time precocious 4th fourth records successful RevPAR and 20 hotels group all-time 4th fourth records successful comparable edifice EBITDA.

Collectively, these 20 record-breaking hotels exceeded their erstwhile comparable edifice EBITDA records by 17%. We are starting to spot this grow beyond nan leisure-dominated markets into ample municipality areas.

During nan 4th quarter, we had assets successful Atlanta, Philadelphia, Baltimore, Las Vegas, Washington D.C., Denver, and New York transcend humanities highs successful summation to various leisure markets.

Moving connected to superior expenditures, we've noted successful erstwhile calls really we person taken a proactive attack to renovating and repositioning our hotels. That committedness has now resulted successful a competitory and strategical advantage arsenic request continues to accelerate. We spent astir $104 cardinal successful superior expenditures successful 2022 and presently expect spending betwixt $100 cardinal and $120 cardinal successful 2023.

We precocious completed a guestroom renewal astatine nan Marriott Fremont, arsenic good arsenic nationalist abstraction renovations astatine nan Residence Inn Fairfax Merrifield, nan Residence Inn Salt Lake City, and nan Courtyard Newark Silicon Valley arsenic good arsenic and nan gathering abstraction astatine nan Hyatt Regency Coral Gables.

Before moving connected to Q&A, I would for illustration to reiterate really encouraged we are astir nan betterment of our portfolio and nan manufacture arsenic whole. Each 4th this twelvemonth has shown improvement, pinch galore of our hotels already outpacing their 2019 performance.

During nan 4th quarter, 41% of our hotels exceeded their comparable edifice EBITDA for 2019, which is an summation complete nan 11% achieved during nan first quarter.

After gathering pinch our various partners passim nan budgeting process, we are optimistic astir our portfolio's position to capitalize connected nan manufacture revitalization.

This concludes our prepared remarks. We will now unfastened up nan telephone for Q&A.

Question-and-Answer Session

Operator

Thank you. We will now beryllium conducting a question-and-answer session. [Operator Instructions]

Our first mobility is from Tyler Batory pinch Oppenheimer. Please proceed pinch your question.

Tyler Batory

Good morning. Thank you. There's been a batch of chat truthful acold this net play astir your margins, costs structure. So, conscionable benignant of a wide mobility connected that topic. What are you seeing successful position of wages, incremental costs, and I cognize arsenic we look 2023 versus 2022 is surely beautiful favorable calm earlier successful nan year, but connected nan separator capacity you put up benignant of Q3, Q4 compared pinch 2019, I mean do you deliberation that's sustainable adjacent year?

Deric Eubanks

Yes, acknowledgment for nan question. So, we're experiencing nan akin challenges to what others are feeling. Hourly wages are continuing to increase. The labour marketplace while improving is still not rather wherever we request it to be. There's inflationary pressures that are driving costs increases. We're seeing increases successful utilities.

I deliberation erstwhile we look astatine that, nan point we're encouraged astir about this portfolio is it still has rather a spot of runway up of it successful position of its recovery. And we're seeing beardown sequential betterment each 4th and gross gains and ADR gains and occupancy gains.

And so, erstwhile we look astatine our separator capacity for Q4, we had EBITDA separator that was complete 400 bps higher than Q4 of 2021. And I deliberation we expect separator maturation to proceed arsenic we get further on successful nan betterment and recognize immoderate existent RevPAR and existent ADR maturation comparative to 2018.

The biggest point that we tin power really is our staffing models. And we've done a awesome occupation partnering pinch our hotels to benignant of revamp and zero guidelines our staffing models.

From a labour standpoint, correct now, we're astatine astir 45% of pre-COVID staffing levels. And that does see immoderate statement labour that we're optimistic we'll modulation backmost to in-house labour passim this year.

And truthful location should beryllium immoderate savings associated pinch that. But from a costs standpoint, we're seeing summation is still. We saw mid to precocious single-digit increases successful Q4. We're seeing signs that is cooling and we expect that to proceed to cool arsenic we benignant of get done nan year.

Chris Nixon

And 1 different information constituent I'd say, Tyler, is we historically speaking, typically talked astir EBITDA flows and ever effort to target benignant of 50% EBITDA flows crossed our plus guidance squad and our spot managers that we activity with.

For nan 4th quarter, I deliberation our EBITDA flows were astir conscionable complete 40% -- 41%, 42%, which is -- I thought, a beautiful beardown consequence fixed nan headwinds that they're facing.

And so, I deliberation that's astir apt much accordant pinch what we're going to proceed to effort to execute is tin we support it successful that 40% aliases higher range, but we'll see. It decidedly is reliable going retired location correct now.

Tyler Batory

Okay, great. And past successful position of nan hold trial this year, really are you emotion astir those -- thing you tin opportunity astir possibly your early conversations you're having? I'm benignant of willing immoderate high-level thoughts connected nan refinancing situation broadly, too?

Chris Nixon

Yes, absolutely. We've sewage 2 important ones really near this year. We person our Highland portfolio that is successful April and our KEYS Pools, which are successful June. And so, we've been having discussions pinch some those groups.

And we consciousness for illustration we're successful bully style that we still person immoderate activity to do, peculiarly connected nan KEYS Pools. Just because it's bigger, it's small much complicated, it's sewage different tranches. There's different people, astir players successful each tranche. So, it's a small much of a analyzable situation. But we do consciousness bully astir making progress.

Fortunately, for some of those loans, they will beryllium connected nan backmost broadside of nan first quarter. So, we'll evidently thigh nan anemic first 4th of 2022 arsenic astir of these hold tests are TTM tests. So, getting free of nan first 4th past twelvemonth is very, very adjuvant successful sizing up immoderate imaginable paydowns connected those tests.

And arsenic we proceed to spot numbers improve, I deliberation nan -- it's apt nan -- I deliberation nan Highland paydowns are astir apt reasonably small, hopefully little important than what we saw pinch our JPMorgan 8-Pool. The KEYS Pool gets a small spot much analyzable and we're still benignant of conscionable now opening substantive discussions pinch nan servicers connected that one.

Deric Eubanks

And Tyler, this is Deric. In position of nan refinancing market, it continues to beryllium a difficult clip to get edifice financing. Thankfully, we don't person a batch of last maturities this year, truthful we don't request to beryllium successful nan marketplace seeking overmuch indebtedness financing.

And nan financing that we person successful spot is beautiful charismatic from a dispersed perspective. So, we'd for illustration to support nan indebtedness that we person successful spot arsenic agelong arsenic we tin by exercising these hold options.

Hopefully, arsenic we advancement done nan twelvemonth and nan marketplace gets immoderate visibility connected what nan Fed is going to do pinch liking rates, we'll commencement to spot spreads travel down to wherever it tin beryllium a small spot much charismatic to get indebtedness financing.

And because obviously, we've sewage a batch of maturities that we will person to reside successful nan outer years and we want to get successful beforehand of those. And truthful arsenic soon arsenic we tin entree charismatic indebtedness superior to push retired maturities, we will beryllium doing that.

Tyler Batory

Okay, great. That’s each from me. Thank you.

Operator

Thank you. Our adjacent mobility is from Chris Woronka pinch Deutsche Bank. Please proceed pinch your question.

Chris Woronka

Hey, bully greeting guys. Just to benignant of revisit nan 2023 maturities you're talking about. Rob, I cognize you mentioned handing KEYS backmost is ever an option. What -- erstwhile you deliberation astir that, is it ever purely a financial decision? Or is location much of a strategical determination successful position of not conscionable what edifice tin make successful EBITDA, but your appraisal of, I guess, existent marketplace worth aliases NAV?

Rob Hays

Well, I mean, there's, I guess, a subjective facet arsenic you're trying to distill things down into a quantitative decision. I mean you're trying to fig retired wherever are those pockets of worth that possibly thing tin go thing else. But astatine nan extremity of nan day, it's still going to travel down to financial decisions.

I mean we -- we've been done situations successful our past, whether it's done nan financial situation aliases nan early stages of COVID, wherever we activity pinch lenders, effort to travel up pinch solutions successful bid to effort to support assets live and going. Sometimes you conscionable can't travel to those agreements and you extremity up giving backmost assets. And those are conscionable financial decisions.

And we -- I deliberation we gave backmost 15 assets during nan early stages of pandemic and I don't deliberation we regret immoderate 1 of those from economical standpoint arsenic we beryllium present today. So, I deliberation that's what we look at. We get -- we'll typically get BOVs from immoderate of nan large nationalist valuation firms aliases brokers to spot wherever nan marketplace is.

We benignant of look done nan strategical scheme of wherever do we deliberation this plus is, what's nan CapEx required successful it, right? Because we person immoderate assets that you're right, they're consenting to support only because you spot immoderate longer word upside aft an effective CapEx programme aliases something. And you person others that possibly you person a large CapEx numbers coming up and it conscionable doesn't make immoderate consciousness successful position of keeping nan asset. So, you benignant of wade done each of that.

And I deliberation what we effort to do is do a rebuy analysis, wherever we conscionable dress for illustration we were going to -- this superior that we're putting successful is what it would costs to return down nan plus and would we do that coming fixed what we spot and really we underwrite it.

So, we support it reasonably straightforward and to cognize wherever we deliberation worth is. And past each you tin do is going pinch bully religion pinch nan lenders and laic retired present is nan business wherever we are.

And do they person ideas and do we person immoderate ideas connected ways to that makes consciousness for everybody. And you dream that those activity because you're moving successful bully faith, but sometimes nan mathematics is what it is, and nan business is what it is, and you person to springiness it back. So, we're hopeful that, that doesn't person to happen. But we decidedly -- it's possible. So, we conscionable effort to make nan champion decisions we tin for our shareholders.

Chris Woronka

Okay, that's helpful. Thanks Rob. And past connected nan KEYS portfolio connected nan different pools, fixed that nan dates are each nan same, is location immoderate thought aliases immoderate anticipation to fundamentally restructuring nan creation of those pools astatine all?

Rob Hays

I mean I conjecture location ever is. I mean, we'll beryllium talking pinch nan servicers and pinch that loan. Given nan measurement it was securitized, is that efficaciously nan elder pieces are benignant of each securitized together truthful nan controlling holder of 1 is nan controlling older of each. So, it's a small spot much of a analyzable structure, moreover though each excavation successful its ain correct is still treated arsenic a abstracted pool.

So, there's conscionable some, I guess, complexity astir that wherever thing for illustration that, I think, is technically imaginable but I would find breaking up maturity dates and alteration successful maturity day is astir apt little apt arsenic an outcome. I deliberation it's much of -- we'll look astatine each of those six pools, what to spot wherever we spot value, look wherever nan CapEx is complete nan adjacent fewer years.

We person nan expertise successful nan documents to salary down nan loans successful bid evidently to deed these hold tests. So, we'll -- we've sewage views astir what we deliberation those are fixed different variations of forecasts and we'll talk to nan lenders astir those and spot if we can't travel to a business that useful for everybody.

Chris Woronka

Okay. Thanks Rob. Just a speedy follow-up for Deric. I astir apt -- Deric, I deliberation you mentioned that nan rate trap was released connected nan Pool D. And it looks for illustration nan nett income output connected that is nan highest, but nan EBITDA output is really higher successful nan e-pools. Is nan nett income output nan determining facet complete EBITDA?

Deric Eubanks

Correct. For nan rate trap, it's typically an NOI, which -- nan EBITDA that we show successful our net merchandise is earlier deducting an FF&E reserve. And so, nan NOI indebtedness output is calculated aft deducting an FF&E reserve, and that's what's determinative erstwhile calculating nan rate traps.

Chris Woronka

Okay, great. Thanks guys.

Operator

[Operator Instructions]

Our adjacent mobility is from Bryan Maher pinch B. Riley Securities. Please proceed pinch your question.

Bryan Maher

Good morning. A mates of questions. First, maybe, Deric, tin you springiness america an update connected nan Oaktree Financing? The thoughts pinch respect to repaying that? And if you were to repay what's presently outstanding there, could you recap that aliases could you only recap aliases headdress nan -- that's disposable now?

Deric Eubanks

Yes. So, we've presently sewage astir $196 cardinal outstanding connected it that's been paid down immoderate from an plus -- proceeds from an plus sale. It really -- that information of it became freely pre-payable successful January of this year. There was a prepayment punishment anterior to that, truthful it's now unfastened for prepayment.

If we were to salary that down, we would still person entree to nan further $250 cardinal that's available, it's evidently costly capital, and we'd alternatively not tie that if we don't request it, but it's location if we yet do request it.

And look, successful position of plans for paying that down, I deliberation we'll conscionable person to spot really nan twelvemonth progresses. We're sitting connected a batch of cash. It's 1 of nan reasons why we raised superior successful 2021 successful anticipation of wanting to salary disconnected this debt.

But past also, we knew we would beryllium facing these hold tests and location was immoderate uncertainty and location still is immoderate uncertainty successful position of nan rate that will beryllium needed to meet those hold tests.

So, I deliberation erstwhile we get past this information of hold tests, we'll astir apt person immoderate much clarity. We besides would for illustration to spot really this superior raise ramps up from our non-traded preferred, which we're still very early days on. And so, I don't cognize if Rob wants to adhd thing to that.

Rob Hays

I would conscionable say, successful my mind, it's really conscionable limited upon 3 different things. What happens connected nan trajectory of this recovery? Do we person a recession that hits america successful a important way? Right now, we're not seeing that, but that's ever a small spot of a risk. And past conscionable nan trajectory of nan betterment of nan indebtedness markets.

To nan grade that nan indebtedness markets tin heal up a small bit, past it's -- we've besides either person nan expertise to perchance refinance them retired astatine a little dispersed aliases had immoderate alternatives astir possibly different building that's materially cheaper.

And three, conscionable benignant of nan pacing arsenic Deric mentioned of this non-traded preferred. If this superior continues to accelerate arsenic we're hopeful it mightiness beryllium capable to, past location could beryllium besides immoderate proceeds that springiness america immoderate cushion to beryllium capable to deploy rate to salary it off.

So, there's conscionable a fewer of these moving pieces that we'll spot complete nan adjacent months to travel that will benignant of find I think, really quickly paid off. We'd for illustration to. And we've sewage nan rate to do it correct now, but we conscionable deliberation it's prudent to propulsion a batch of that rate until we person immoderate much clarity connected these items.

Bryan Maher

Okay. And past arsenic we deliberation astir your positioning pinch assets and perchance assets for waste and assets that you mightiness manus backmost to lenders. Why wouldn't you beryllium successful nan marketplace now pinch assets that you're benignant of connected nan fence, you mightiness extremity up handing backmost and conscionable spot if you tin execute a value supra nan indebtedness value? I'm conscionable funny arsenic to why you wouldn't beryllium successful nan marketplace pinch much assets correct now successful that regard?

Deric Eubanks

We are, Bryan. You're precisely right. I mean there's nan -- we've sewage a important -- important possibly excessively beardown a word. We've sewage a fistful of assets that we've identified internally arsenic for waste -- aliases imaginable for waste assets that are possibly not semipermanent halfway assets and are moving pinch a assortment of nan brokers to fig retired what's nan champion timing. Some of those are successful nan marketplace correct now. And immoderate were possibly astatine immoderate size and standard wherever we deliberation it's difficult to possibly execute an effective income price.

But connected immoderate of these wherever we deliberation it's questionable whether it's worth aliases not, past yes, they're retired successful nan marketplace correct now. So, we've sewage a batch of different irons successful nan occurrence pinch that. So, I deliberation our reasoning is aligned pinch you.

Bryan Maher

Okay. And past conscionable past for maine and possibly for Deric. Is location immoderate measurement to quantify what caps aliases hedges mightiness costs arsenic for this year? I cognize that you guys did immoderate worldly past twelvemonth that benignant of spills complete use you this year. But is it $10 million? Is it $20 million? Is it $100 million? Can you quantify what we should beryllium reasoning astir there?

Deric Eubanks

Yes, it's really difficult to quantify because there's a batch of factors that spell into that pricing. A, it's a onslaught value aliases immoderate nan headdress -- nan onslaught of nan headdress needs to be, it's what's nan market's guardant anticipation for wherever rates are going and past it's nan long of really agelong that headdress needs to beryllium successful spot for. So, it is very difficult to ballpark for you. And for illustration I said, we effort to get up of it by pre-purchasing of a bully chunk of those past year.

And my dream is that -- well, look, I conjecture nan existent thief is that those expire worthless, truthful we didn't request them and nan rates person travel down, but if rates enactment high, past we would dream that those pre-purchased caps offset nan worth of immoderate caller headdress that we would divide. So, from our perspective, we wouldn't really beryllium having to travel retired of pouch much. So, that's really each I tin opportunity successful position of giving immoderate benignant of guidance successful position of what those costs will beryllium going forward.

Bryan Maher

Yes, convey you.

Operator

Thank you. There are nary further questions astatine this time. I'd for illustration to move nan level backmost complete to guidance for immoderate closing comments.

Rob Hays

Thank you for joining america for nan 4th fourth telephone and we look guardant to speaking to you connected our adjacent call.

Operator

This concludes today's conference. You whitethorn disconnect your lines astatine this time. Thank you for your participation.