Investment in Unconsolidated Entity

Ashford Inc.

As of March 31, 2018 and December 31, 2017, we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share of Ashford Inc. common stock on the NYSE American LLC was $95.71 and $93.00 as of March 31, 2018 and December 31, 2017, respectively. This represented an approximate 9.3% ownership interest in Ashford Inc. for both March 31, 2018 and December 31, 2017. See notes 11 and 12.

We have elected to use the fair value option, under the applicable accounting guidance, to account for our investment in Ashford Inc. as the fair value is readily available since Ashford Inc. common stock is traded on a national exchange. The fair value of our investment in Ashford Inc. is included in “investment in Ashford Inc., at fair value” on our condensed consolidated balance sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our condensed consolidated statements of operations.

The following tables summarize the condensed consolidated balance sheets as of March 31, 2018 and December 31, 2017, and the condensed consolidated statements of operations for the three months ended March 31, 2018 and 2017, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)



	March 31, 2018		December 31, 2017
Total assets	$	119,597	$	114,810
Total liabilities	82,830		78,742
Redeemable noncontrolling interests	4,662		5,111
Total stockholders’ equity of Ashford Inc.	30,545		30,185
Noncontrolling interests in consolidated entities	1,560		772
Total equity	32,105		30,957
Total liabilities and equity	$	119,597	$	114,810
Our investment in Ashford Inc., at fair value	$	18,652	$	18,124

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)



	Three Months Ended March 31,
	2018			2017
Total revenue	$	48,168		$	13,013
Total operating expenses	(53,204		)	(15,149		)
Operating income (loss)	(5,036		)	(2,136		)
Realized and unrealized gain (loss) on investments	—			(75		)
Other	(93		)	118
Income tax (expense) benefit	(706		)	(630		)
Net income (loss)	(5,835		)	(2,723		)
(Income) loss from consolidated entities attributable to noncontrolling interests	173			(25		)
Net (income) loss attributable to redeemable noncontrolling interests	(61		)	363
Net income (loss) attributable to Ashford Inc.	$	(5,723	)	$	(2,385	)
Our unrealized gain (loss) on investment in Ashford Inc.	$	528		$	3,091

OpenKey

On March 28, 2018, the Company made a $2.0 million investment in OpenKey, which is controlled and consolidated by Ashford Inc., for a 8.2% ownership interest, which investment was approved by our Related Party Transactions Committee and the independent members of our board of directors. OpenKey is a hospitality focused mobile key platform that provides a universal smart phone app for keyless entry into hotel guest rooms. Our investment is recorded as a component of “investment in unconsolidated entities” in our condensed consolidated balance sheet and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance. As of March 31, 2018, our ownership interest had a carrying value of $2.0 million. For the three months ended March 31, 2018, our equity in loss of the unconsolidated entity was $3,000.