Activist investor takes aim at Ashford Hospitality CEO Monty Bennett

Activist investor Blackwells Capital is waging a scorching proxy battle to oust Monty Bennett from the boards of two of his real estate firms. 

Blackwells alleges that shares of Ashford Hospitality Trust and Braemar Hotels and Resorts are performing poorly as a result of a “self-dealing external advisory agreement that makes Montgomery Bennett rich at the expense of stockholders.”

Blackwells is asking shareholders of both Ashford Hospitality Trust and Braemar not to re-elect Bennett and the rest of the board later this month. 

The relationship between Ashford, Braemar and Bennett is convoluted but central to Blackwells’ complaint. Braemar is a publicly traded investor in luxury hotels and resorts. As part of an agreement with Ashford Hospitality Advisors, Ashford advises Braemar for an annual fee. 

Last year, Braemar paid Ashford $48.9 million for its services, according to the trust’s most recent annual filing. Bennett is the chairman of both companies’ boards, and the CEO and Chairman of Ashford Inc, which advises both.

Blackwells holds a little over 10,000 shares of Braemar and 1,000 shares of Ashford Hospitality Trust, less than $30,000 in present value. But Blackwells argues that Ashford’s fees to Braemar have risen 575 percent since 2013, while its share price has fallen by about 91 percent.

Ashford recently delisted its stock, sold off several properties to pay down debts and faced foreclosure at others. But the firm has its own side of the story, as it laid out in a lawsuit against Blackwells. 

Bennett’s firm argues that Blackwells violated company bylaws by failing to disclose that it had tried to buy Braemar before launching the campaign and offering its own nominees for the board. In March, it filed a lawsuit seeking to block Blackwells’ slate of board nominees and prevent the company from nominating any others.

The conflict began in October, when Blackwells wrote a letter to Braemar alleging breaches of fiduciary duty. At the time, Blackwells owned 100 shares in Braemar. The board established a review committee of two independent directors, according to the suit, but the committee recommended not taking action. 

The next month, an article ran on Bennett’s news site, the Dallas Express, titled “Vinson & Elkins Helps New York Activist Investor Invade Texas.” 

The article, whose byline was “Dallas Express,” rather than an individual human author, attacks Blackwell’s takeover bid and Vinson & Elkins, the law firm hired by Blackwells. 

“[Blackwells’ founder Jason] Aintabi operates with family money almost exclusively. He hopes that by harassing other firms he can prove that he’s worthy of managing his parents’ money,” Bennett says in the article. 

“The risky move by V&E to represent Blackwells Capital in its activist strategy could raise serious questions from its Texas client base as to whether the firm, which posted revenue of nearly $1 billion in 2022, remains committed to the Texas corporate community that has sustained it since its founding in Houston in 1917.”

Aintabi later sued Bennett over his use of the outlet, saying he used it to influence shareholders. 

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In December, Blackwells sent another letter, titled “Proposal for Acquisition of Braemar.” It offered to buy all of the outstanding equity interests in Braemar for $4.50 per share. 

In its response to the Braemar lawsuit, Blackwells wrote, “Given that Braemar’s incumbent directors have overseen a nearly 90 percent collapse in Braemar’s stock price over the last decade, their fear of an open election against Blackwells’ highly qualified nominees is not surprising.”

Together, Braemar and Ashford own 105 hotels with more than 25,000 keys, according to Ashford’s website. Blackwells has been involved in proxy fights against major corporations including Disney, Peloton and cell tower operator IHS.