Ashford Hospitality Trust Reports Second Quarter Results

Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the second quarter ended June 30, 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 118 hotels owned as of June 30, 2007, which excludes 3 hotel assets held for sale as of that date. Unless otherwise stated, all reported results compare the second quarter ended June 30, 2007 with the second quarter ended June 30, 2006. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

FINANCIAL HIGHLIGHTS

• Total revenue increased 205% to $350.3 million from $114.8 million
• Net income available to common shareholders increased 69% to $14.1 million compared with $8.3 million in the prior-year quarter
• Adjusted funds from operations (AFFO), not including gain on sale, increased 126% to $56.5 million, or $0.44 per diluted share compared with $0.34 per diluted share in the prior-year quarter
• Cash available for distribution (CAD) increased 100% to $45.4 million, or $0.35 per diluted share compared with $0.31 per diluted share in the prior-year quarter
• Declared quarterly common dividend of $0.21 per diluted share
• CAD dividend coverage was 167% for the quarter

STRONG INTERNAL GROWTH

• Proforma RevPAR increased 6.5% for hotels not under renovation on a 5.9% increase in ADR to $140.72 and a 41-basis point improvement in occupancy
• Proforma RevPAR increased 5.8% for all hotels on a 5.8% increase in ADR to $141.28 and a 3-basis point improvement in occupancy
• Proforma same-property Hotel Operating Profit for hotels not under renovation improved 8.7%
• Proforma same-property Hotel Operating Profit margin for hotels not under renovation improved 73 basis points

CAPITAL RECYCLING AND ASSET ALLOCATION

• Capex invested in the second quarter totaled $25 million
• Capex for 2007 and 2008 estimated at $280 million for which the Company has adequate resources to fund
• 11 hotels and one office building sold in the second quarter for $115.8 million

PORTFOLIO REVPAR GROWTH

As of June 30, 2007, the Company had a portfolio of direct hotel investments consisting of 118 properties classified in continuing operations. During the second quarter, 114 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 118 hotels) and proforma not-under-renovation basis (114 hotels) is a measure that reflects a meaningful and more focused comparison of the operating results in its direct hotel portfolio. The Company's reporting by region and brand includes the results of all 118 hotels. Details of each category are provided in the tables attached to this release.

• RevPAR growth by region was led by: West South Central (12 hotels) with a 14.5% increase; Middle Atlantic (10) with 10.0%; Pacific (23) with 8.3%; West North Central (4) with 6.0%; Mountain (8) with 4.3%; East North Central (10) with 4.2%; South Atlantic (43) with 3.2%; New England (4) with 2.5%; East South Central (3) with a 0.9% decrease; and Canada (1) with a 11.1% decrease.
• RevPAR growth by brand was led by: InterContinental (2 hotels) with 9.9%; Hilton (38 hotels) with 8.2%; Starwood (6) with 7.1%; Hyatt (5) with 4.7%; Marriott (62) with 4.7%; Radisson (3) with a 6.3% decrease; and independents (2) with a 12.8% decrease.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

For the 114 hotels as of June 30, 2007 that were not under renovation, Proforma Hotel EBITDA (adjusted as if all hotels were included throughout both periods) increased 8.7% to $112.9 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) improved 73 basis points to 31.2%. For all 118 hotels included in continuing operations as of June 30, 2007, Proforma Hotel EBITDA increased 7.2% to $117.3 million and Hotel EBITDA margin increased 49 basis points to 30.9%.

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. Details of the quarterly calculations for the last four quarters for the current portfolio, including the 53 hotels acquired during the second quarter, are provided in the tables attached to this release.

Monty J. Bennett, President and CEO, commented, "The strong second quarter performance reflects continued progress with our internal growth, asset management and capital allocation strategies. With the integration of the acquired CNL Hotels and Resorts’ assets now complete, we are moving forward with the $280 million of value-added investments to further enhance the growth we are experiencing at our hotels. Over $100 million of the planned cap-ex is expected to kick off in the second half of the year. Our recent capital markets activities and asset sales have also helped us reach our deleveraging target well ahead of schedule and at very attractive terms in light of current market conditions."

FINANCING ACTIVITY

On April 24, 2007, the Company closed a follow-on offering of 48,875,000 shares of common stock at $11.75 per share. The offering raised net proceeds of approximately $548 million, which was used to pay off the following debt associated with the purchase of 51 hotels from CNL Hotels and Resorts: a $325 million term loan, $180 million of floating-rate CMBS and $45 million of existing debt.

At June 30, 2007, the Company's net debt (defined as total debt less cash) to total enterprise value (defined as net debt plus the market value of all common shares, preferred shares and operating partnership units outstanding) was 57% based upon the Company's closing stock price of $11.76. As of June 30, 2007, the Company’s $2.9 billion debt balance consisted of 78% of fixed-rate debt, with a total weighted average interest rate of 6.1%. The Company’s weighted average debt maturity is 6.4 years.

SECOND QUARTER INVESTMENT ACTIVITY

On April 11, 2007, the Company completed the acquisition of a 51-hotel, 13,640-room (net after joint venture adjustment) hotel portfolio from CNL Hotels and Resorts for approximately $2.4 billion in total consideration ($177,000 per key). The estimated forward NOI cap rate is 7.6% and the EBITDA yield is 9.0% resulting in an 11.1x EBITDA multiple. On a trailing 12-month basis, the transaction’s NOI cap rate is 7.0% with an EBITDA yield of 8.4% equating to an 11.9x EBITDA multiple.

On May 21, 2007, the Company completed the acquisition of a 120-room Residence Inn and a 118-room Hampton Inn hotel in Jacksonville, Florida for $35.8 million. On a trailing 12-month basis, the transaction’s NOI cap rate is 8.3% with an EBITDA yield of 9.1% equating to an 11.0x EBITDA multiple. The primary source of capital for this transaction was the proceeds of a 1031 tax-free exchange.

On various dates throughout the quarter, the Company completed the sale of eleven hotels and one office building for a total of $115.8 million. The hotels sold include: the seven asset TownePlace Suites portfolio, the Embassy Suites Phoenix, Arizona, the Radisson Hotel Covington, Kentucky, the Fairfield Inn Evansville, Indiana and the Radisson Airport Hotel Indianapolis, Indiana. In connection with these sales, the Company generated a net gain of $33.3 million. The tax on this gain of $6.9 million will be deferred through a section 1031 tax-free exchange.

SUBSEQUENT FINANCING AND INVESTMENT ACTIVITY

On July 18, 2007, the Company priced 8,000,000 shares of 8.45% Series D Cumulative Preferred Stock at $25.00 per share. The annual distribution for the preferred stock is $2.1125 per share, payable quarterly. Ashford used the net proceeds of the offering to redeem the Company’s Series C Preferred Stock.

INVESTMENT OUTLOOK

Mr. Bennett concluded, "The concentration of our hotels in high-growth markets, high-growth segments and in premier brands, as well as our ability to assemble and integrate portfolios at attractive returns, differentiates Ashford in today’s market. We will continue to explore new opportunities to put this advantage to work for our shareholders. However, our primary focus is internal growth opportunities within our portfolio."

INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call at 11:00 a.m. ET on August 2, 2007, to discuss the second quarter results. The number to call for this interactive teleconference is (913) 981-4911. A seven-day replay of the conference call will be available by dialing (719) 457-0820 and entering the confirmation number, 8263407.

The Company will also provide an online simulcast and rebroadcast of its first quarter 2006 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 as well as on http://www.videonewswire.com/event.asp?regd=y&id=40824 on August 2, 2007, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue for approximately one year.

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 be helpful 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 fund 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.

Contacts:

Ashford Hospitality Trust, Inc.
David Kimichik, Chief Financial Officer, 972-490-9600
or
Corporate Communications, Inc.
Tripp Sullivan, 615-254-3376