Hospitality Net

DALLAS | Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the third quarter ended September 30, 2008. The proforma performance measurements for Occupancy, Average Daily Rate (ADR), revenue per available room (RevPAR), and Hotel Operating Profit (or Hotel EBITDA) include the Company's 103 hotels owned and included in continuing operations as of September 30, 2008. Unless otherwise stated, all reported results compare the third quarter ended September 30, 2008, with the third quarter ended September 30, 2007. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

As of September 30, 2008, the Company had a portfolio of direct hotel investments consisting of 103 properties classified in continuing operations. During the third quarter, 97 of the hotels included in continuing operations were not under renovation. The Company believes reporting its operating metrics for continuing operations on a proforma total basis (all 103 hotels) and proforma not-under-renovation basis (97 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its direct hotel portfolio. The Company's reporting by region and brand includes the results of all 103 hotels in continuing operations. Details of each category are provided in the tables attached to this release.

For the 97 hotels as of September 30, 2008 that were not under renovation, Proforma Hotel EBITDA (adjusted as if all hotels were included throughout both periods) increased 0.9% to $75.3 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) improved 23 basis points to 28.6%. For all 103 hotels included in continuing operations as of September 30, 2008, Proforma Hotel EBITDA decreased 1.7% to $75.4 million and Hotel EBITDA margin decreased 23 basis points to 27.1%.

Ashford believes year-over-year Hotel EBITDA and Hotel EBITDA margin comparisons are more meaningful to gauge the performance of the Company’s hotels than sequential quarter-over-quarter comparisons. Given the substantial seasonality in the Company’s portfolio and its active capital recycling, to help investors better understand this seasonality, the Company provides quarterly detail on its Proforma Hotel EBITDA and Proforma Hotel EBITDA margin for the current and certain prior-year periods based upon the number of core hotels in the portfolio as of the end of the current period. As Ashford’s portfolio mix changes from time to time so will the seasonality for Proforma Hotel EBITDA and Proforma Hotel EBITDA margin. The details of the quarterly calculations for the previous four quarters for the current portfolio of 103 hotels included in continuing operations are provided in the tables attached to this release.

Monty J. Bennett, President and CEO, commented, "The second half of the year has been more difficult for the lodging industry than projected, yet we continued to make progress on asset sales and redeploying capital to accretive opportunities such as share repurchases and a mezzanine loan purchase. Cost containment efforts at our hotels have helped mitigate declining RevPAR trends, and we have enhanced our liquidity considerably with a combination of recent asset sales, financings and a full drawdown on our credit facility."

On August 6, 2008, the Company refinanced its major debt maturity in 2009, a loan with Prudential that was secured by interests in the Capital Hilton and the Hilton Torrey Pines. These two assets are owned in a joint venture between Ashford and Hilton. The gross principal outstanding was $127.2 million, with Ashford’s share being $95.4 million. The new $160.0 million loan has an interest rate of 275 basis points over LIBOR and is for a three year term with two one-year extension options. The excess proceeds will be used to fund future renovations of the two hotels.

On September 5, 2008, the Board of Directors authorized an additional $75 million of the Company’s common stock that may be purchased under its share repurchase program. The Company had recently completed all of the repurchase of the $50 million previously allocated under its existing share repurchase program. The Board has modified its most recent authority related to the $75 million share repurchase program to include both common and preferred shares.

On September 5, 2008, the Company closed a financing of its JW Marriott San Francisco totaling $55 million. The two-year loan bears interest at a rate of 375 basis points over LIBOR with two one-year extension options. Ashford purchased a LIBOR cap at a strike rate of 5.0% for the initial term of the loan. On September 9, 2008, the Company closed a financing of its Hyatt Regency Orange County totaling $65 million. The Hyatt loan was repaid on October 2, 2008 upon the sale of the hotel property and the related interest rate cap was subsequently sold.

At September 30, 2008, the Company's net debt (defined as total debt less unrestricted cash) to total gross assets (defined as un-depreciated investment in hotel property plus notes receivable) was 59.8%. With the effect of the $1.8 billion interest rate swap, the Company’s $2.8 billion debt balance as of September 30, 2008, consisted of 95% of floating-rate debt, with a total weighted average interest rate of 6.25%. The Company’s weighted average debt maturity including extension options is 6.3 years. Since September 30, 2008, the Company made a full draw on its senior credit revolver which the Company invested in U.S. Treasuries and separately repaid the mortgage note on the Hyatt Regency Orange County. The Company as of today has total debt outstanding of $2.8 billion with a weighted average interest rate of 4.46% based on the current 30-day LIBOR rate of 1.96%. For each 10 basis point reduction in LIBOR, the Company would save approximately $2.8 million in annual interest payments. The Company currently has no debt maturing in the remainder of 2008. Assuming available extension options are exercised on all debt with initial maturities in 2009 and 2010, the only maturities will be $29.6 million in 2009 and $75 million in 2010. With the effect of the $1.8 billion interest rate swap, $2.7 billion of the Company’s $2.8 billion debt at September 30, 2008 was floating rate debt, of which $2.5 billion is subject to interest rate caps of varying time periods.

On July 14, 2008, the Company acquired a mezzanine loan participation secured by interests in 681 extended-stay hotels purchased by affiliates of the Lightstone Group and Arbor Realty Trust. The loan participation, which is part of a $400 million mezzanine loan tranche, was acquired for $98.4 million and had a face value of $164 million and an interest rate of 250 basis points over LIBOR at par. Ashford’s investment at the time of purchase is expected to yield approximately 23.9% based upon the purchase price discount to par and the forward LIBOR curve at the time purchase through the final maturity of the loan (initial maturity in June 2009 and all three one-year extension options). The loan can be prepaid at anytime. Financing on the portfolio includes $6 billion in first mortgage and mezzanine financing senior to the $400 million tranche in which Ashford is participating, $1 billion in mezzanine financing junior to Ashford’s position, and $600 million in equity, which is also junior to Ashford’s position. Based on trailing 12-month net cash flow from the portfolio, the debt service coverage ratio at closing through Ashford’s position was approximately 1.63x, and Ashford’s investment in the capital structure is approximately 75% to 80% loan to cost, or $82,142 per key.

In the third quarter, the Company sold three hotels: the Radisson Hotel in Rockland, Massachusetts, the Sheraton Milford in Milford, Massachusetts, and the Radisson Hotel MacArthur Airport in Holtsville, New York. Subsequent to quarter end, Ashford sold the Hyatt Regency Orange County in Anaheim, California. The four sales in aggregate represent a total of $148.2 million in proceeds, or pricing equating to approximately $130,000 per key, a 7.8% trailing 12-month cap rate, and a 10.6x trailing 12-month EBITDA multiple.

Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, November 6, 2008, at 11:00 a.m. ET. The number to call for this interactive teleconference is (303) 262-2053. A replay of the conference call will be available through November 14, 2008, by dialing (303) 590-3000 and entering the confirmation number, 11111808#.

The Company will also provide an online simulcast and rebroadcast of its third quarter 2008 earnings release conference call. The live broadcast of Ashford's quarterly conference call will be available online at the Company's website at www.ahtreit.com on Thursday, November 6, 2008, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue for approximately one year. A direct link to the live broadcast can be found at: http://www.videonewswire.com/event.asp?id=51628.

Substantially all of our non-current assets consist of real estate investments and debt investments secured by real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to assist in evaluating a real estate company's operations. These supplemental measures include FFO, AFFO, EBITDA, Hotel Operating Profit, and CAD. FFO is computed in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the NAREIT definition differently than us. Neither FFO, AFFO, EBITDA, Hotel Operating Profit, nor CAD represents cash generated from operating activities as determined by GAAP and should not be considered as an alternative to a) GAAP net income (loss) as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity, nor are such measures indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, management believes FFO, AFFO, EBITDA, Hotel Operating Profit, and CAD to be meaningful measures of a REIT's performance and should be considered along with, but not as an alternative to, net income and cash flow as a measure of our operating performance.

Ashford Hospitality Trust is a self-administered real estate investment trust focused on investing in the hospitality industry across all segments and at all levels of the capital structure, including direct hotel investments, second mortgages, mezzanine loans and sale-leaseback transactions. Additional information can be found on the Company's web site at www.ahtreit.com.

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, the timing for closing, the impact of the transaction on our business and future financial condition, our business and investment strategy, our understanding of our competition and current market trends and opportunities and projected capital expenditures. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford's filings with the Securities and Exchange Commission. EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA yield is defined as trailing twelve month EBITDA divided by the purchase price. A capitalization rate is determined by dividing the property's annual net operating income by the purchase price. Net operating income is the property's funds from operations minus a capital expense reserve of either 4% or 5% of gross revenues. Funds from operations ("FFO"), as defined by the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") in April 2002, represents net income (loss) computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from sales or properties and extraordinary items as defined by GAAP, plus depreciation and amortization of real estate assets, and net of adjustments for the portion of these items related to unconsolidated entities and joint ventures.

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.