Ashford Hospitality Trust Reports Fourth Quarter Results

Ashford Hospitality Trust, Inc. (NYSE: AHT) today reported the following results and performance measures for the fourth quarter ended December 31, 2007. 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 110 hotels owned as of December 31, 2007, which excludes 2 hotel assets (the Sheraton Iowa City and the JW Marriott New Orleans) held for sale as of that date. Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2007, with the fourth quarter ended December 31, 2006. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release. FINANCIAL HIGHLIGHTS Total revenue increased 145% to $345.1 million from $141.1 million Net loss to common shareholders was $9.9 million, or $0.08 per diluted share Adjusted funds from operations (AFFO), excluding gains on sales, increased 68% to $42.8 million AFFO per diluted share increased 11.1% to $0.30 from $0.27 Cash available for distribution (CAD) increased 53% to $32.6 million CAD per diluted share was $0.23 Declared quarterly common dividend of $0.21 per diluted share Dividend coverage in 2007 was 120% of CAD and 152% of AFFO STRONG INTERNAL GROWTH Proforma RevPAR increased 7.8% for hotels not under renovation on a 5.0% increase in ADR to $137.06 and a 176-basis point improvement in occupancy Proforma RevPAR increased 6.1% for all hotels on a 5.2% increase in ADR to $140.14 and a 61-basis point improvement in occupancy Proforma same-property Hotel Operating Profit for hotels not under renovation improved 13.7% Proforma same-property Hotel Operating Profit margin for hotels not under renovation improved 175 basis points CAPITAL RECYCLING AND ASSET ALLOCATION Capex invested in the fourth quarter and in 2007 totaled $50 million and $127 million, respectively Capex for 2008 is estimated at $140 million, which includes $80 million for brand PIP’s or renovations already underway and $60 million for projects that could be deferred, additionally $50 million of ROI projects are under evaluation Five hotels sold in the fourth quarter for $155 million, bringing the total of asset sales completed in 2007 to $312 million One hotel sold to date in the first quarter for $67.5 million Repurchased 2.4 million shares of common stock in the fourth quarter for a total of $18.2 million, leaving $31.8 million outstanding under the current authorization at December 31, 2007 PORTFOLIO REVPAR GROWTH As of December 31, 2007, the Company had a portfolio of direct hotel investments consisting of 110 properties classified in continuing operations. During the fourth quarter, 99 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 110 hotels) and proforma not-under-renovation basis (99 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 110 hotels. Details of each category are provided in the tables attached to this release. RevPAR growth by region was led by: New England (4) with 11.4%; West South Central (11 hotels) with a 10.4% increase; Pacific (22) with 8.2%; West North Central (3) with 5.8%; South Atlantic (39) with 5.7%; East North Central (10) with 4.1%; Middle Atlantic (10) with 3.4%; Mountain (8) with 2.8%; East South Central (2) with 0.1%; and Canada (1) with 1.0% decrease. RevPAR growth by brand was led by: InterContinental (2 hotels) with 10.9%; Radisson (2) with 7.2%; Marriott (57) with 7.0%; Hyatt (5) with 6.1%; Hilton (35 hotels) with 5.7%; Starwood (7) with 5.1%; and independents (2) with a 38.6% decrease HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS For the 99 hotels as of December 31, 2007 that were not under renovation, Proforma Hotel EBITDA (adjusted as if all hotels were included throughout both periods) increased 13.7% to $84.4 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) improved 175 basis points to 28.48%. For all 110 hotels included in continuing operations as of December 31, 2007, Proforma Hotel EBITDA increased 8.4% to $93.4 million and Hotel EBITDA margin increased 88 basis points to 26.81%. 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 last four quarters for the current portfolio of 110 hotels are provided in the tables attached to this release. Monty J. Bennett, President and CEO, commented, "Execution of our internal growth strategies delivered strong year-over-year RevPAR growth, margin improvement, and AFFO growth in the fourth quarter. We were very active in capital recycling with $155 million of asset sales completed during the quarter and accelerated our mezzanine lending with $22 million in loans acquired or originated and another $58 million to date in the first quarter. Consistent with our objective of securing sources of capital in addition to asset sales, we formed a $400 million joint venture with PREI to pursue domestic structured debt and equity investments." CAPITAL STRUCTURE At December 31, 2007, 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 61.5%. As of December 31, 2007, the Company’s $2.7 billion debt balance consisted of 81% of fixed-rate debt, with a total weighted average interest rate of 5.94%. The Company’s weighted average debt maturity including extension options is 7.0 years. The Company’s EBITDA to fixed charge ratio was 2.4x for 2007. FOURTH QUARTER INVESTMENT ACTIVITY On October 2, 2007, the Company sold the Hilton Birmingham Perimeter Park in Birmingham, Alabama for approximately $25 million. In November 2007, the Company sold two Residence Inns in Torrance, California, and Atlanta, Georgia, for approximately $61.5 million; its Residence Inn in Kansas City, Missouri, for approximately $7.0 million; and the Marriott BWI Airport in Baltimore, Maryland, for approximately $61.5 million. As the Company acquired these properties on April 11, 2007, no gain or loss was recognized on the sales. In connection with these sales, the Company paid down $161.2 million of mortgage debt. On December 5, 2007, the Company originated a $21.5 million mezzanine loan secured by interests in the Westin La Paloma Resort & Spa in Tucson, Arizona and the Westin Hilton Head Resort in Hilton Head, South Carolina. On December 15, 2007, the Company completed an asset swap with Hilton Hotels Corporation, its partner in two joint ventures which were simultaneously dissolved, whereby the Company surrendered its majority ownership interest in two hotel properties in exchange for the joint venture partner’s minority ownership interest in nine hotel properties. In connection with this asset swap, the Company assumed $41.9 million of debt previously attributable to the joint venture partner’s minority ownership in the nine acquired hotel properties that secured such debt and surrendered $109.5 million of debt, of which $80.1 million was attributable to its majority ownership in the two surrendered hotel properties that secured such debt and the remainder attributable to the joint venture partner’s former minority ownership. SUBSEQUENT INVESTMENT ACTIVITY On January 2, 2008, the Company originated a $7.1 million mezzanine loan secured by an interest in the Hotel La Jolla in La Jolla, California. Maturing January 2011, the loan bears interest at a rate of 900 basis points over LIBOR, with interest-only payments through maturity. On January 11, 2008, the Company sold its JW Marriott in New Orleans, Louisiana, for approximately $67.5 million. As the Company acquired this property on April 11, 2007, no gain or loss will be recognized on this sale. In connection with this sale, the buyer assumed approximately $43.5 million mortgage debt, payable at an 8.08% interest rate, due August 1, 2010. On January 22, 2008, the Company formed a joint venture with Prudential Real Estate Investors ("PREI”) to invest in structured debt and equity hotel investments in the United States. The joint venture, which is expected to be funded over the next two years, will ultimately be capitalized with $300 million from investors in a fund managed by PREI and $100 million from the Company. The Company and PREI will contribute the capital required for each mezzanine investment on a 25%/75% basis, respectively. The Company will be entitled to annual management and sourcing fees, reimbursement of expenses, and a promoted yield equal to a current 1.3x the venture yield subject to maximum threshold limitations, but further enhanced by an additional promote based upon a total net return to PREI. PREI’s equity will be in a senior position on each investment. With limited exceptions, the joint venture will be the primary vehicle for the Company’s hotel lending efforts. The joint venture will have the right of first refusal on all mezzanine investment opportunities presented by the Company, provided the investment meets certain criteria. On February 6, 2008, PREI acquired a 75% interest in the Company’s $21.5 million Westin Tucson and Westin Hilton Head mezzanine loan receivable, which the Company originated December 5, 2007, and matures January 2018. Simultaneously, the Company and PREI capitalized the joint venture by contributing this $21.5 million mezzanine loan receivable to the joint venture. On February 6, 2008, the Company acquired a $38.0 million mezzanine loan secured by the Ritz-Carlton Key Biscayne in Miami, Florida, for approximately $33.0 million. Maturing in June 2017, the loan bears interest at a rate of 9.66% at par with an expected yield to the maturity to the Company of approximately 12.5%. This loan is wholly owned by the Company. On February 14, 2008, the Company’s joint venture with PREI acquired a senior mezzanine loan secured by a 29-hotel portfolio of full- and select-service hotels. The Company’s 25% of the joint venture investment equals $17.5 million and is priced to yield approximately 17.9% based upon the purchase price discount to par, the forward LIBOR curve through the initial maturity of the loan, and the joint venture promote. INVESTMENT OUTLOOK Mr. Bennett concluded, "Generating continued internal growth from our portfolio, recycling capital and finding the best risk-adjusted returns for our shareholders in accretive opportunities remain our primary objectives for 2008. We believe there continues to be a significant disconnect in perceptions of the lodging industry’s fundamentals and its underlying strength. We have positioned our capital structure with long-term, low-cost, fixed-rate debt and low LTV’s, prioritized our capital allocations and secured access to multiple capital sources to ensure that we are able to continue deleveraging and take advantage of the increasing number of very attractive investment options available. Should the current misperception of the industry eventually turn into reality, however, we already have other contingency plans in place." INVESTOR CONFERENCE CALL AND SIMULCAST Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, February 28, 2008, at 11:00 a.m. ET. The number to call for this interactive teleconference is (800) 218-9073. A replay of the conference call will be available through March 6, 2008, by dialing (303) 590-3000 and entering the confirmation number, 11105973#. The Company will also provide an online simulcast and rebroadcast of its fourth quarter 2007 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, February 28, 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=44835. 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, first 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.   ASHFORD HOSPITALITY TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In Thousands, Except Share and Per Share Amounts) (Unaudited)           Year Ended December 31, 2007 Year Ended December 31, 2006 Three Months Ended December 31, 2007 Three Months Ended December 31, 2006   REVENUE Rooms $ 817,735 $ 358,420 $ 243,193 $ 102,805 Food and beverage 245,213 79,494 82,041 29,482 Rental income from operating leases 4,548 - 1,915 - Other   48,932     17,090     15,153     5,132   Total hotel revenue 1,116,428 455,004 342,302 137,419 Interest income from notes receivable 11,005 14,858 2,411 3,341 Asset management fees from affiliates   1,334     1,266     338     331   Total Revenue 1,128,767 471,128 345,051 141,091   EXPENSES Hotel operating expenses Rooms 187,225 80,273 57,256 24,188 Food and beverage 176,052 59,099 56,691 20,832 Other direct 25,854 7,971 8,253 2,426 Indirect 307,231 134,459 94,556 41,018 Management fees   42,775     17,571     13,752     5,221   Total hotel expenses 739,137 299,373 230,508 93,685   Property taxes, insurance, and other 58,285 25,825 17,909 8,040 Depreciation and amortization 153,285 48,460 47,245 14,618 Corporate general and administrative: Stock-based compensation 6,225 5,204 1,556 1,083 Other corporate and administrative   20,728     15,155     5,593     4,317   Total Operating Expenses   977,660     394,017     302,811     121,743   OPERATING INCOME 151,107 77,111 42,240 19,348   Interest income 3,178 2,917 928 852 Interest expense (133,275 ) (43,201 ) (40,263 ) (11,937 ) Amortization of loan costs (5,838 ) (1,984 ) (2,061 ) (554 ) Write-off of loan costs and exit fees   (4,216 )   (101 )   (143 )   -   INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST 10,956 34,742 701 7,709 (Provision for) benefit from income taxes (4,981 ) 2,945 (6,394 ) 2,340 Minority interest in consolidated joint ventures (323 ) - (1,660 ) - Minority interest related to limited partners   (1,684 )   (4,540 )   402     (417 ) INCOME (LOSS) FROM CONTINUING OPERATIONS 3,968 33,147 (6,951 ) 9,632 Income (loss) from discontinued operations, net: (including gains on sales net of income taxes of approximately $28.2 million for the year ended December 31, 2007)   26,192     4,649     4,028     1,029   NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS 30,160 37,796 (2,923 ) 10,661 Preferred dividends   23,990     10,875     7,018     2,719   NET INCOME (LOSS) $ 6,170   $ 26,921   $ (9,941 ) $ 7,942     (Loss) Income From Continuing Operations Per Share Available To Common Shareholders: Basic $ (0.19 ) $ 0.36   $ (0.12 ) $ 0.10   Diluted $ (0.19 ) $ 0.36   $ (0.12 ) $ 0.08   Income From Discontinued Operations Per Share: Basic $ 0.25   $ 0.08   $ 0.03   $ 0.01   Diluted $ 0.25   $ 0.07   $ 0.03   $ 0.01   Net Income (Loss) Per Share Available To Common Shareholders: Basic $ 0.06   $ 0.44   $ (0.08 ) $ 0.11   Diluted $ 0.06   $ 0.43   $ (0.08 ) $ 0.09   Weighted Average Common Shares Outstanding: Basic   105,786,502     61,713,178     120,870,709     71,781,641   Diluted   105,786,502     62,127,948     120,870,709     85,788,414       ASHFORD HOSPITALITY TRUST, INC. CONSOLIDATED BALANCE SHEETS (In Thousands, Except Share and Per Share Amounts) (Unaudited)   December 31, December 31, 2007 2006   ASSETS Investment in hotel properties, net $ 3,885,737 $ 1,632,946 Cash and cash equivalents 92,271 73,343 Restricted cash 52,872 9,413 Accounts receivable, net 51,314 22,081 Inventories 4,100 2,110 Assets held for sale 75,739 119,342 Notes receivable 94,225 102,833 Deferred costs, net 25,714 14,143 Prepaid expenses 20,223 11,154 Other assets 6,027 7,826 Intangible assets, net 13,889 - Due from third-party hotel managers 58,300 15,964 Due from related parties   880     757   Total assets $ 4,381,291   $ 2,011,912       LIABILITIES AND OWNERS' EQUITY Indebtedness $ 2,700,775 $ 1,091,150 Capital leases payable 498 177 Accounts payable 55,177 16,371 Accrued expenses 69,519 32,591 Dividends payable 35,031 19,975 Deferred income 254 294 Deferred incentive management fees 3,557 3,744 Unfavorable management contract liabilities 23,396 15,281 Other liabilities 4,703 - Due to third-party hotel managers 4,699 1,604 Due to related parties   3,612     4,152   Total liabilities 2,901,221 1,185,339   Commitments and contingencies Minority interest in consolidated joint ventures 19,036 - Minority interest related to limited partnership interests 101,031 109,864 Preferred stock, $0.01 par value: Series B Cumulative Convertible Redeemable Preferred Stock, 7,447,865 issued and outstanding at December 31, 2007 and 2006, respectively 75,000 75,000   Preferred stock, $0.01 par value, 50,000,000 shares authorized: Series A Cumulative Preferred Stock, 2,300,000 issued and outstanding at December 31, 2007 and 2006, respectively 23 23 Series D Cumulative Preferred Stock, 8,000,000 issued and outstanding at December 31, 2007 80 - Common stock, $0.01 par value, 200,000,000 shares authorized,122,765,691 shares issued and 120,376,055 shares outstanding at December 31, 2007 and 72,942,841 shares issued and outstanding at December 31, 2006 1,228 729 Additional paid-in capital 1,455,917 708,420 Accumulated other comprehensive income (loss) (115 ) 111 Accumulated deficit (153,664 ) (67,574 ) Treasury stock, at cost (2,389,636 shares)   (18,466 )   -   Total owners' equity 1,285,003 641,709     Total liabilities and owners' equity $ 4,381,291   $ 2,011,912     ASHFORD HOSPITALITY TRUST, INC. EBITDA (In Thousands) (Unaudited)           Year Year Three Months Three Months Ended Ended Ended Ended December 31, 2007 December 31, 2006 December 31, 2007 December 31, 2006   Net income (loss) $ 30,160   $ 37,796   $ (2,923 ) $ 10,661     Add back: Interest income (3,064 ) (2,917 ) (814 ) (852 ) Interest expense and amortization of loan costs 154,338 48,457 44,483 13,285 Depreciation and amortization 166,161 52,863 48,516 15,743 Minority interest relating to limited partners 3,957 5,277 (69 ) 417 Provision for (benefit from) income taxes   5,599     (2,719 )   514     (2,027 ) 326,991 100,961 92,630 26,566         EBITDA $ 357,151   $ 138,757   $ 89,707   $ 37,227     For the year ended December 31, 2007, EBITDA has not been adjusted to deduct the amortization of the unfavorable management contract liabilities of approximately $2.3 million, add back the write-off of loan costs and exit fees of approximately $8.7 million, and deduct gains on sales of properties of approximately $35.1 million.   For the year ended December 31, 2006, EBITDA has not been adjusted to add back the write-off of loan costs of approximately $788,000 and the loss from reclassification from discontinued to continuing of approximately $863,000 or deduct the amortization of the unfavorable management contract liability of approximately $531,000.   For the three months ended December 31, 2007, EBITDA has not been adjusted to deduct the amortization of the unfavorable management contract liabilities of approximately $753,000, add back the write-off of loan costs and exit fees of approximately $2.7 million, and add back losses on sales of properties of approximately $166,000.   For the three months ended December 31, 2006, EBITDA has not been adjusted to deduct the amortization of the unfavorable management contract liability of approximately $318,000.         ASHFORD HOSPITALITY TRUST, INC. FFO and Adjusted FFO (In Thousands, Except Share And Per Share Amounts) (Unaudited)   Year Year Three Months Three Months Ended Ended Ended Ended December 31, 2007   December 31, 2006   December 31, 2007   December 31, 2006   Net income (loss) available to common shareholders $ 6,170   $ 26,921 $ (9,941 ) $ 7,942   Plus real estate depreciation and amortization 165,757 52,550 48,391 15,663 Remove gains or losses on hotel sales, net of related income taxes (28,204 ) - 166 - Remove minority interest relating to limited partners   3,957     5,277   (69 )   417 FFO available to common shareholders $ 147,680   $ 84,748 $ 38,547   $ 24,022   Add back dividends on convertible preferred stock 6,256 5,958 1,564 1,490 Add back non-cash dividends on Series C preferred stock 845 - - - Add back write-off of loan costs and exit fees 8,664 788 2,697 - Add back loss from reclassification of discontinued to continuing   -     863   -     - Adjusted FFO $ 163,445   $ 92,357 $ 42,808   $ 25,512   Adjusted FFO per diluted share available to common shareholders $ 1.28   $ 1.13 $ 0.30   $ 0.27   Diluted weighted average shares outstanding   127,194,958     81,884,419   141,721,212     93,236,279   ASHFORD HOSPITALITY TRUST, INC. CASH AVAILABLE FOR DISTRIBUTION ("CAD") (In Thousands, Except Per Share Amounts) (Unaudited)             YearEndedDecember 31,2007 (per diluted share) YearEndedDecember 31,2006 (per diluted share)   Net income available to common shareholders $ 6,170 $ 0.05 $ 26,921 $ 0.33 Add back dividends on convertible preferred stock   6,256     0.05     5,958     0.07   Total $ 12,426 $ 0.10 $ 32,879 $ 0.40   Plus real estate depreciation and amortization $ 165,757 $ 1.30 $ 52,550 $ 0.64 Plus non-cash dividends related to Series C preferred stock 845 0.01 - 0.00 Remove minority interest relating to limited partners 3,957 0.03 5,277 0.06 Plus stock-based compensation 6,225 0.05 5,204 0.06 Plus amortization of loan costs 7,781 0.06 2,038 0.02 Plus write-off of loan costs and exit fees 8,664 0.07 788 0.01 Plus loss from reclassification of discontinued to continuing - 0.00 863 0.01 Less amortization of unfavorable management contract liabilities (2,254 ) (0.02 ) (531 ) (0.01 ) Less gains on sales of properties, net of related income taxes (28,204 ) (0.22 ) - 0.00 Less capital improvements reserve   (47,309 )   (0.37 )   (18,369 )   (0.22 ) CAD $ 127,888   $ 1.01   $ 80,699   $ 0.99         Three MonthsEndedDecember 31, 2007 (per diluted share) Three MonthsEndedDecember 31, 2006 (per diluted share)   Net income (loss) available to common shareholders $ (9,941 ) $ (0.07 ) $ 7,942 $ 0.09 Add back dividends on convertible preferred stock   1,564     0.01     1,490     0.02   Total $ (8,377 ) $ (0.06 ) $ 9,432 $ 0.10   Plus real estate depreciation and amortization $ 48,391 $ 0.34 $ 15,663 $ 0.17 Remove minority interest relating to limited partners (69 ) (0.00 ) 417 0.00 Plus stock-based compensation 1,556 0.01 1,083 0.01 Plus amortization of loan costs 2,335 0.02 569 0.01 Plus write-off of loan costs and exit fees 2,697 0.02 - 0.00 Plus loss from reclassification of discontinued to continuing - 0.00 - 0.00 Less amortization of unfavorable management contract liabilities (753 ) (0.01 ) (318 ) (0.00 ) Less gains on sales of properties, net of related income taxes 166 0.00 - 0.00 Less capital improvements reserve   (13,389 )   (0.09 )   (5,552 )   (0.06 ) CAD $ 32,557   $ 0.23   $ 21,294   $ 0.23           ASHFORD HOSPITALITY TRUST, INC. KEY PERFORMANCE INDICATORS - PRO FORMA (Unaudited)       Three Months Ended Twelve Months Ended December 31, December 31, 2007 2006 % Variance 2007 2006 % Variance   ALL HOTELS INCLUDED IN CONTINUING OPERATIONS:   Room revenues (1) $ 250,133,802 $ 236,027,497 5.98% $ 969,778,636 $ 915,334,923 5.95% RevPAR (1) $ 97.26 $ 91.67 6.09% $ 103.02 $ 97.03 6.17% Occupancy 69.40% 68.79% 0.89% 73.65% 73.47% 0.26% ADR $ 140.14 $ 133.27 5.15% $ 139.86 $ 132.08 5.90%     NOTE: The above pro forma table assumes the 110 hotel properties owned and included in continuing operations at December 31, 2007 were owned as of the beginning of the periods presented.     Three Months Ended Twelve Months Ended December 31, December 31, 2007 2006 % Variance 2007 2006 % Variance   ALL HOTELS NOT UNDER RENOVATION INCLUDED IN CONTINUING OPERATIONS:   Room revenues (1) $ 216,972,161 $ 201,600,046 7.63% $ 840,064,260 $ 785,857,794 6.90% RevPAR (1) $ 95.92 $ 89.02 7.75% $ 101.61 $ 94.83 7.15% Occupancy 69.98% 68.22% 2.58% 73.74% 72.91% 1.13% ADR $ 137.06 $ 130.49 5.04% $ 137.80 $ 130.06 5.96%     NOTE: The above pro forma table assumes the 99 hotel properties owned and included in continuing operations at December 31, 2007 but not under renovation for the three and twelve months ended December 31, 2007 were owned as of the beginning of the periods presented.     Excluded Hotels Under Renovation: Sea Turtle Inn Jacksonville, JW Marriott San Francisco, Homewood Suites Mobile, Residence Inn Jacksonville, Marriott Gateway Arlington, Sheraton San Diego Mission Valley, Hilton Tucson El Conquistador, Hilton Minneapolis Airport, Residence Inn Lake Buena Vista, Embassy Suites Philadelphia Airport, Embassy Suites Walnut Creek   OTHER NOTES:   NOTE 1: On March 26, 2006, the Company converted its Radisson hotel in Ft. Worth, Texas, to a Hilton hotel, which resulted in a room count reduction from 517 to 294. Consequently, the increase in pro forma RevPAR exceeded the increase in pro forma room revenues for the twelve months ended December 31, 2007 compared to the same 2006 period.   NOTE 2: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma tables, all room revenues related to this hotel are reflected, which is consistent with the Company’s other hotels.               ASHFORD HOSPITALITY TRUST, INC. Pro Forma Hotel RevPAR by Region (Unaudited)   Three Months EndedDecember 31, Twelve Months EndedDecember 31, PercentChange in RevPAR Region Number of Hotels Number of Rooms 2007 2006 2007 2006 Quarter YTD   Pacific (1) 22 5,864 $108.81 $100.54 $115.94 $107.56 8.2% 7.8% Mountain (2) 8 1,704 $94.54 $91.97 $102.09 $97.41 2.8% 4.8% West North Central (3) 3 690 $84.66 $80.00 $89.48 $85.55 5.8% 4.6% West South Central (4) 11 2,585 $96.26 $87.23 $98.45 $88.82 10.4% 10.8% East North Central (5) 10 2,624 $76.31 $73.31 $80.82 $79.69 4.1% 1.4% East South Central (6) 2 236 $77.61 $77.54 $85.78 $83.83 0.1% 2.3% Middle Atlantic (7) 10 2,669 $103.14 $99.75 $104.09 $97.20 3.4% 7.1% South Atlantic (8) 39 8,044 $97.66 $92.43 $106.60 $100.98 5.7% 5.6% New England (9) 4 458 $69.88 $62.71 $69.16 $62.88 11.4% 10.0% Canada 1 607 $85.68 $86.53 $90.61 $95.28 -1.0% -4.9%                 Total Portfolio 110 25,481 $97.26 $91.67 $103.02 $97.03 6.1% 6.2%       (1) Includes Alaska and California (2) Includes Nevada, Arizona, New Mexico, and Utah (3) Includes Minnesota and Kansas (4) Includes Texas (5) Includes Ohio, Illinois, and Indiana (6) Includes Kentucky and Alabama (7) Includes New York and Pennsylvania (8) Includes Virginia, Florida, Georgia, Maryland, and North Carolina (9) Includes Massachusetts     NOTE 1: The above pro forma table assumes the 110 hotel properties owned and included in continuing operations as of December 31, 2007 were owned as of the beginning of the periods presented.   NOTE 2: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma table, all room revenues related to this hotel are reflected, which is consistent with the Company’s other hotels.                 ASHFORD HOSPITALITY TRUST, INC. Pro Forma Hotel RevPAR by Brand (Unaudited)   Three Months EndedDecember 31, Twelve Months EndedDecember 31, PercentChange in RevPAR Brand Number of Hotels Number of Rooms 2007 2006 2007 2006 Quarter YTD   Hilton 35 8,012 $101.67 $96.17 $110.15 $101.44 5.7% 8.6% Hyatt 5 2,591 $92.17 $86.85 $97.51 $92.81 6.1% 5.1% InterContinental 2 420 $136.86 $123.37 $148.35 $133.01 10.9% 11.5% Independent 2 317 $42.99 $70.01 $63.59 $79.29 -38.6% -19.8% Marriott 57 11,713 $99.24 $92.74 $102.35 $97.13 7.0% 5.4% Radisson 2 315 $59.28 $55.31 $61.43 $59.90 7.2% 2.6% Starwood 7 2,113 $79.14 $75.33 $88.71 $85.35 5.1% 3.9%                 Total Portfolio 110 25,481 $97.26 $91.67 $103.02 $97.03 6.1% 6.2%       NOTE 1: The above pro forma table assumes the 110 hotel properties owned and included in continuing operations as of December 31, 2007 were owned as of the beginning of the periods presented. NOTE 2: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma table, all room revenues related to this hotel are reflected, which is consistent with the Company’s other hotels.   ASHFORD HOSPITALITY TRUST, INC. PRO FORMA HOTEL OPERATING PROFIT (In Thousands) (Unaudited)         ALL HOTELS INCLUDED IN CONTINUING OPERATIONS:         Three Months Ended Twelve Months Ended December 31, 2007 December 31, 2006 % Variance December 31, 2007 December 31, 2006 % Variance   REVENUE Rooms (1) 250,134 236,027 5.98% 969,779 915,335 5.95% Food and beverage 83,316 80,889 3.00% 289,509 279,807 3.47% Other 15,017 15,483 -3.01% 59,842 60,939 -1.80% Total hotel revenue 348,467 332,400 4.83% 1,319,130 1,256,081 5.02%   EXPENSES Hotel operating expenses Rooms (1) 58,831 56,906 3.38% 221,451 216,152 2.45% Food and beverage 57,498 56,585 1.61% 208,552 203,623 2.42% Other direct 8,326 8,439 -1.33% 32,290 33,399 -3.32% Indirect 94,310 88,413 6.67% 349,923 332,152 5.35% Management fees, includes base and incentive fees 18,125 17,134 5.78% 63,906 61,140 4.52% Total hotel operating expenses 237,090 227,477 4.23% 876,121 846,466 3.50%   Property taxes, insurance, and other 17,946 18,718 -4.13% 68,945 67,800 1.69%             HOTEL OPERATING PROFIT (Hotel EBITDA) 93,431 86,205 8.38% 374,063 341,815 9.43%   Minority interest in consolidated joint ventures 1,567 1,519 3.13% 7,130 6,884 3.57% HOTEL OPERATING PROFIT (Hotel EBITDA), excluding minority interest in joint ventures 91,865 84,686 8.48% 366,933 334,931 9.55%     NOTE: The above pro forma table assumes the 110 hotel properties owned and included in continuing operations at December 31, 2007 were owned as of the beginning of the periods presented.       ALL HOTELS NOT UNDER RENOVATION INCLUDED IN CONTINUING OPERATIONS:   Three Months Ended Twelve Months Ended December 31, 2007 December 31, 2006 % Variance December 31, 2007 December 31, 2006 % Variance   REVENUE Rooms (1) 216,972 201,600 7.63% 840,064 785,858 6.90% Food and beverage 68,069 64,587 5.39% 235,951 224,937 4.90% Other 11,327 11,578 -2.17% 44,138 45,431   -2.85% Total hotel revenue 296,368 277,766 6.70% 1,120,153 1,056,226 6.05%   EXPENSES Hotel operating expenses Rooms (1) 50,720 48,065 5.52% 190,485 181,997 4.66% Food and beverage 46,852 45,418 3.16% 170,842 164,915 3.59% Other direct 5,732 5,913 -3.06% 22,150 23,070 -3.99% Indirect 78,733 74,311 5.95% 294,381 280,271 5.03% Management fees, includes base and incentive fees 15,071 14,104 6.86% 53,240 50,395   5.65% Total hotel operating expenses 197,109 187,811 4.95% 731,098 700,647 4.35%   Property taxes, insurance, and other 14,852 15,706 -5.44% 58,476 57,133 2.35%               HOTEL OPERATING PROFIT (Hotel EBITDA) 84,408 74,249 13.68% 330,579 298,446   10.77%   Minority interest in consolidated joint ventures 1,567 1,519 3.13% 7,130 6,884   3.57% HOTEL OPERATING PROFIT (Hotel EBITDA), excluding minority interest in joint ventures 82,841 72,730 13.90% 323,449 291,562   10.94%     NOTE: The above pro forma table assumes the 99 hotel properties owned and included in continuing operations at December 31, 2007 but not under renovation during the three and twelve months ended December 31, 2007 were owned as of the beginning of the periods presented. (1) On March 26, 2006, the Company converted its Radisson hotel in Ft. Worth, Texas, to a Hilton hotel, which resulted in a room count reduction from 517 to 294. Consequently, the increase in pro forma RevPAR exceeded the increase in pro forma room revenues for the twelve months ended December 31, 2007 compared to the same 2006 period.     (2) As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma tables, all operating results related to this hotel are reflected, which is consistent with the Company’s other hotels.                           ASHFORD HOSPITALITY TRUST, INC. Pro Forma Hotel Operating Profit by Region (In Thousands) (Unaudited)   Three Months EndedDecember 31, Twelve Months EndedDecember 31, Percent Change inHotel Operating Profit Region Number of Hotels Number of Rooms 2007   % Total 2006   % Total 2007   % Total 2006   % Total Quarter YTD   Pacific (1) 22 5,864 $25,020 26.8% $22,327 25.9% $102,964 27.5% $91,677 26.8% 12.1% 12.3% Mountain (2) 8 1,704 $6,158 6.6% $6,624 7.7% $25,895 6.9% $24,731 7.2% -7.0% 4.7% West North Central (3) 3 690 $2,371 2.5% $2,171 2.5% $9,867 2.6% $8,913 2.6% 9.2% 10.7% West South Central (4) 11 2,585 $9,848 10.5% $8,694 10.1% $38,029 10.2% $31,561 9.2% 13.3% 20.5% East North Central (5) 10 2,624 $6,210 6.6% $6,239 7.2% $26,822 7.2% $29,009 8.5% -0.5% -7.5% East South Central (6) 2 236 $510 0.5% $634 0.7% $2,976 0.8% $3,151 0.9% -19.5% -5.6% Middle Atlantic (7) 10 2,669 $11,170 12.0% $10,313 12.0% $37,869 10.1% $33,304 9.7% 8.3% 13.7% South Atlantic (8) 39 8,044 $30,275 32.4% $27,297 31.7% $123,114 32.9% $111,593 32.6% 10.9% 10.3% New England (9) 4 458 $871 0.9% $618 0.7% $2,989 0.8% $2,202 0.6% 40.9% 35.7% Canada 1 607 $999 1.1% $1,288 1.5% $3,538 0.9% $5,672 1.7% -22.4% -37.6%                                 Total Portfolio 110 25,481 $93,431   100.0% $86,205   100.0% $374,063   100.0% $341,815   100.0% 8.4% 9.4%       (1) Includes Alaska and California (2) Includes Nevada, Arizona, New Mexico, and Utah (3) Includes Minnesota and Kansas (4) Includes Texas (5) Includes Ohio, Illinois, and Indiana (6) Includes Kentucky and Alabama (7) Includes New York and Pennsylvania (8) Includes Virginia, Florida, Georgia, Maryland, and North Carolina (9) Includes Massachusetts     NOTE 1: The above pro forma table assumes the 110 hotel properties owned and included in continuing operations as of December 31, 2007 were owned as of the beginning of the periods presented. NOTE 2: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma table, all operating results related to this hotel are reflected, which is consistent with the Company’s other hotels.   ASHFORD HOSPITALITY TRUST, INC. PRO FORMA HOTEL OPERATING PROFIT MARGIN (Unaudited)     99 HOTELS NOT UNDER RENOVATION AND INCLUDED IN CONTINUING OPERATIONS AT DECEMBER 31, 2007 AS IF SUCH HOTELS WERE OWNED AS OF THE BEGINNING OF THE PERIODS PRESENTED:     HOTEL OPERATING PROFIT (HOTEL EBITDA) MARGIN:   4th Quarter 2007 28.48% 4th Quarter 2006 26.73% Variance 1.75%   HOTEL OPERATING PROFIT (HOTEL EBITDA) MARGIN VARIANCE BREAKDOWN:   Rooms 0.21% Food & Beverage and Other Departmental 0.74% Administrative & General 0.09% Sales & Marketing 0.32% Hospitality -0.02% Repair & Maintenance -0.04% Energy 0.17% Franchise Fee -0.23% Management Fee -0.03% Incentive Management Fee 0.02% Insurance 0.31% Property Taxes 0.33% Leases/Other -0.13% Total 1.75%       NOTE 1: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma table, all operating results related to this hotel are reflected, which is consistent with the Company’s other hotels.   ASHFORD HOSPITALITY TRUST, INC. PRO FORMA SEASONALITY TABLE (In Thousands) (Unaudited)             ALL 110 HOTELS OWNED AND INCLUDED IN CONTINUING OPERATIONS AS OF DECEMBER 31, 2007:       2007   2007   2007   2007   1st Quarter 2nd Quarter 3rd Quarter 4th Quarter TTM   Total Hotel Revenue $ 314,148 $ 342,603 $ 313,911 $ 348,467 $ 1,319,129 Hotel EBITDA $ 91,044 $ 105,768 $ 83,821 $ 93,431 $ 374,064 Hotel EBITDA Margin 29.0% 30.9% 26.7% 26.8% 28.4%   EBITDA % of Total TTM 24.3% 28.3% 22.4% 25.0% 100.0%   JV Interests in EBITDA $ 1,657 $ 2,330 $ 1,577 $ 1,567 $ 7,131     NOTE 1: The above pro forma table assumes that the 110 hotel properties owned and included in continuing operations as of December 31, 2007 were owned as of the beginning of the periods presented.   NOTE 2: As the Company’s Courtyard by Marriott hotel in Philadelphia, Pennsylvania, is leased to a third-party tenant on a triple-net lease basis, the Company only records rental income related to this operating lease for GAAP purposes. However, in the above pro-forma table, all operating results related to this hotel are reflected, which is consistent with the Company’s other hotels.       Ashford Hospitality Trust, Inc. Debt Summary As of December 31, 2007 (in millions)   Fixed-RateDebt Floating-RateDebt TotalDebt   $487.1 million mortgage note payable secured by 32 hotel properties, matures between July 1, 2015 and February 1, 2016, at an average interest rate of 5.42% $ 455.1 $ - $ 455.1 $211.5 million term loan secured by 16 hotel properties, matures between December 11, 2014 and December 11, 2015, at an average interest rate of 5.73% 211.5 - 211.5 $300.0 million secured credit facility, matures April 9, 2010, at an interest rate of LIBOR plus a range of 1.55% to 1.95% depending on the loan-to-value ratio, with two one-year extension options - 65.0 65.0 $47.5 million term loan secured by 1 hotel property, matures October 10, 2008, at an interest rate of LIBOR plus 2.0%, with interest-only payments due monthly, with three one-year extension options - 47.5 47.5 Mortgage note payable secured by one hotel property, matures December 1, 2017, at an interest rate of 7.24% through December 31, 2007 and 7.39% thereafter 50.8 - 50.8 Mortgage note payable secured by one hotel property, matures December 8, 2016, at an interest rate of 5.81% 101.0 - 101.0 Mortgage note payable secured by six hotel properties, matures December 11, 2009, at an interest rate of LIBOR plus 1.72%, with two one-year extension options - 184.0 184.0 $928.5 million mortgage loan secured by 28 hotel properties, matures April 11, 2017, at an average blended interest rate of 5.95% 928.5 - 928.5 $213.9 million loan secured by 13 hotels and mezzanine notes receivable, matures May 9, 2009, at an interest rate of LIBOR plus 1.65%, with three one-year extension options - 213.9 213.9 Mortgage loans assumed with acquisition of CNL portfolio, maturing between 2008 and 2018, with an average blended interest rate of 6.07%   405.0     -     405.0   Total Debt Excluding Premium $ 2,151.9   $ 510.4   $ 2,662.3 Mark-to-Market Premium 3.7 Plus Debt Attributable to Joint Venture Partners   34.8   Net Debt Including Premium $ 2,700.8     Percentage of Total   80.83 %   19.17 %   100.00 %   Weighted Average Interest Rate at December 31, 2007   5.94 % ASHFORD HOSPITALITY TRUST, INC. Capital Expenditures Calendar 110 Core Hotels (a)                                   2007 2008 Actual   Actual   Actual   Actual Estimated   Estimated   Estimated   Estimated Rooms   1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   Residence Inn Evansville 78 x SpringHill Suites BWI Airport 133 x SpringHill Suites Centreville 136 x SpringHill Suites Gaithersburg 162 x Courtyard Overland Park 168 x Hilton Santa Fe 157 x Hilton Garden Inn Jacksonville 119 x Marriott at Research Triangle Park 225 x x x Marriott Crystal Gateway 697 x x x x Hyatt Dulles 316 x x x Sea Turtle Inn Jacksonville 193 x x x x x x Sheraton City Center - Indianapolis 371 x x x JW Marriott San Francisco 338 x x x x x Embassy Suites Las Vegas Airport 220 x Homewood Suites Mobile 86 x x Residence Inn Lake Buena Vista 210 x x Embassy Suites Walnut Creek 249 x x x Embassy Suites Philadelphia Airport 263 x x x Sheraton San Diego Mission Valley 260 x x Hilton Tucson El Conquistador Golf Resort 428 x x x Residence Inn Jacksonville 120 x x Hilton Minneapolis Airport 300 x x x Courtyard San Francisco Downtown 405 x Courtyard Basking Ridge 235 x TownePlace Suites Manhattan Beach 144 x Embassy Suites Santa Clara - Silicon Valley 257 x x Sheraton Anchorage 375 x x Hampton Inn Jacksonville 118 x x Hampton Inn Lawrenceville 86 x x Hilton Dallas - Lincoln Centre 500 x x Hampton Inn Houston Galleria 150 x x Embassy Suites West Palm Beach 160 x x Courtyard Ft. Lauderdale Weston 174 x x Doubletree Suites Columbus 194 x x Hyatt Regency Coral Gables 242 x x Hilton Rye Town 446 x Marriott Legacy Center 404 x Hyatt Regency Orange County 654 x Courtyard Louisville Airport 150 x SpringHill Suites Manhattan Beach 164 x SpringHill Suites Charlotte 136 x SpringHill Suites Raleigh Airport 120 x SpringHill Suites Mall of Georgia 96 x SpringHill Suites Richmond 136 x Hilton Nassau Bay - Clear Lake 243 x Hilton Costa Mesa 486 x Courtyard Edison 146 x SpringHill Suites Philadelphia 199 x Marriott Bridgewater 347                               x       (a) Only hotels which have had or are expected to have significant capital expenditures during 2007 or 2008 are included in this table. This table excludes a possible $50.0 million related to ROI projects.