Sessa Capital is trying to take control of the Board of Directors of Ashford Hospitality Prime (NYSE:AHP). In mounting its challenge, it offered up many complaints but no actual strategic plan regarding changes it would make.
Sessa claims that the track record at AHT is irrelevant from AHP’s track record. Nothing could be further from the truth.
Now, it continues to distract from its lack of a plan, and is publicly lying about AHP, and its predecessor, Ashford Hospitality Trust (NYSE:AHT).
Lies and Facts
Sessa Capital Lie: “A majority of [AHP] seven incumbent directors have neither held any position at Ashford Trust nor had any duties or responsibilities there.”
Ashford Fact: All seven incumbent directors were at Ashford Hospitality Trust
Sessa Capital Lie: “Ashford Trust’s IPO was priced on August 26, 2003 at $9.00 per share. Nearly 12.5 years later, as of January 11, 2016, a long term “buy and hold” investor would hold shares in Ashford Trust, plus spin-offs Ashford Prime and Ashford Inc, with a combined value of only $9.15”
Ashford Fact: Sessa deliberately ignores the $5.83 in AHT dividends that have been paid over that time, as well as the $0.70 in AHP dividends. Thus, the total return would put AHT stock at $15.53. In addition, Sessa fails to mention the enormous returns on investment shareholders have seen as a result of AHT stock buybacks during the financial crisis.
Sessa Capital Lie: “Ashford Trust experienced a significant period of distress, at one point dropping over 90% from its highs and even trading as a penny stock during the first quarter of 2009. Some return periods used by Ashford Prime ignore this drop and show only the subsequent recovery.”
Ashford Fact: Implicit in this description is the fact that, not only were most hotel REITs trading for under $1 during the financial crisis, AHT management steered the company during this historic downturn, and AHT stock eventually returned 17x one’s investment off the lows. Also note Sessa’s disingenuous use of the phrase “penny stock” – a term normally used to describe shady companies – in a transparent attempt to sway unwary shareholders.
It’s ironic that Sessa accuses AHP management of “destruction of shareholder value”, when one of its own nominees literally ran another public company into the ground when he was CEO. Philip B. Livingston took over Ambassadors Group.
Under Livingston, Ambassador’s Group stock fell from $4.15 to $1.70, its final liquidation value. Philip Livingston brought absolutely no value to the company, and arguably ran it into the ground. It lost over $17 million in FY14. When the company finally blew up in late 2015, he had presumably collected about $450,000 in compensation (his $300,000 annual salary x 1.5 years), along with a full year’s $300,000 salary (according to his employment agreement), as well as having his COBRA health coverage paid for a full year.
That’s a pretty sweet deal — $750,000 for 18 months work in which he destroyed what company value remained for its shareholders.
This is one of the nominees Sessa Capital has put up for the AHP Board of Directors.
Please take note that Sessa spends its entire press release lying about AHP and AHT, but offers NO STRATEGIC PLAN for what it would do if it gained control of the company.
Finally, Sessa Capital says it “calls upon Ashford Prime to disclose the details supporting the assumptions behind its return calculation assumptions, which are inadequately footnoted as: “Source: SNL”. Apparently, Sessa Capital – a hip and trendy hedge fund – does not recognize that SNL is the website for SNL Financial, now part of S&P Global Intelligence.
If they don’t even know this, how can shareholders expect them to run a hospitality company – especially when none of the directors has any hospitality experience.
Vote the GOLD PROXY card and retain AHP management.