Ashford Hospitality Trust Inc. (NASDAQ: AHT) stock declined by 8.33% at the last close while the AHT stock price fell by 27.02% in the after-hours trading session. Ashford Hospitality Company is a real estate investment trust (REIT) that primarily invests in luxury, full-service hotels.
The Board of Directors of Ashford Hospitality Trust overwhelmingly authorized a 1-for-10 reverse split of its common shares.
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Each share of AHT’s issued and existing common stock will be automatically transferred into 1/10th of a share of AHT’s common stock as of the reverse split’s start date. The reverse stock split will take effect at the end of business on July 16, 2021, and the common stock will begin trading on the New York Stock Exchange on a split-adjusted basis on July 19, 2021. According to Maryland General Corporation Law, the above acts have been authorized by AHT’s Board of Directors, and no stockholder approval is needed.
The reverse stock split, according to AHT, will help all shareholders by addressing various issues that affect its common shares and options:
- The reverse split will boost AHT’s market price per share over the $5 per share level that many institutions demand in order to own shares.
- Some brokers restrict or raise the cost of margining a stock worth less than $5 per share.
- Option strike increments of 50% of the stock price (i.e. $2.50 on a $5 stock) have made option trading on AHT shares less appealing owing to the restricted strike prices available.
Rob Hays, Ashford Trust’s President and Chief Executive Officer said,
AHT and its shareholders are dedicated to make possessing Ashford Hospitality Trust’s common stock as shareholder-friendly as possible, and they think that adopting a reverse stock split is another essential step in that direction.
On July 16, 2021, AHT plans to reverse divide the partnership units of Ashford Hospitality Limited Partnership, AHT’s operational partnership, at a ratio of 1-to-10.