Ashford Hospitality Trust Reports First Quarter Results

Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the first quarter ended March 31, 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 109 hotels owned and included in continuing operations as of March 31, 2008, which excludes 1 hotel asset as of that date. Unless otherwise stated, all reported results compare the first quarter ended March 31, 2008, with the first quarter ended March 31, 2007. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

FINANCIAL HIGHLIGHTS

• Total revenue increased 111.4% to $314.5 million from $148.7 million
• Net loss available to common shareholders was $833,000, or $0.01 per diluted share
• Adjusted funds from operations (AFFO) increased 39.6% to $39.9 million
• AFFO per diluted share was $0.29
• Cash available for distribution (CAD) increased 26.7% to $30.6 million
• CAD per diluted share was $0.22
• Declared quarterly common dividend of $0.21 per diluted share
• AFFO Dividend coverage was 136% for the quarter
• CAD Dividend coverage was 105%

STRONG INTERNAL GROWTH

• Proforma RevPAR increased 2.6% for hotels not under renovation on a 3% increase in ADR to $145.53 and a 26-basis point decline in occupancy
• Proforma RevPAR increased 0.8% for all hotels on a 3.3% increase in ADR to $147.43 and a 168-basis point decline in occupancy
• Proforma Hotel Operating Profit for hotels not under renovation improved 6.5%
• Proforma Hotel Operating Profit margin for hotels not under renovation improved 80 basis points

CAPITAL RECYCLING AND ASSET ALLOCATION

• Capex invested in the first quarter totaled $32.6 million
• Two hotels and one office building sold in the first quarter for $81 million
• One hotel under contract for sales price of $78 million

PORTFOLIO REVPAR GROWTH

As of March 31, 2008, the Company had a portfolio of direct hotel investments consisting of 109 properties classified in continuing operations. During the first quarter, 96 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 109 hotels) and proforma not-under-renovation basis (96 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 109 hotels in continuing operations. Details of each category are provided in the tables attached to this release.

• RevPAR growth by region was led by: New England (4 hotels) with 13.8%; Canada (1) with 10.4% ; East South Central (2) with 5.9%; West South Central (11) with a 4.3% increase; Mountain (8) with 2.2%; Middle Atlantic (10) with 1.2%; Pacific (22) with 0.5%; South Atlantic (38) with 0.4% decrease; East North Central (10) with 1.4% decrease; and West North Central (3) with 4.6% decrease.
• RevPAR growth by brand was led by: Radisson (2 hotels) with 4.6%; Marriott (57) with 4.1%; Hyatt (4) with 0.9%; Hilton (35) with 1.0% decrease; Starwood (7) with 3.5% decrease; InterContinental (2) with 4.5% decrease; and independents (2) with 45.9% decrease.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

For the 96 hotels as of March 31, 2008 that were not under renovation, Proforma Hotel EBITDA (adjusted as if all hotels were included throughout both periods) increased 6.5% to $80.4 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) improved 80 basis points to 30.0%. For all 109 hotels included in continuing operations as of March 31, 2008, Proforma Hotel EBITDA increased 0.4% to $88.9 million and Hotel EBITDA margin decreased 37 basis points to 28.2%.

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 109 hotels included in continuing operations are provided in the tables attached to this release.

Monty J. Bennett, President and CEO, commented, "In the lodging industry today we see RevPAR growth continuing to slow due to economic headlines weighing heavily on both business and leisure travelers. Historically a weaker seasonality period for our portfolio, the first quarter comparisons also suffered from a shift of the Easter holiday to March this year compared to April last year. However, we were still able to execute our contingency plans to deliver positive RevPAR and operating margin growth for our hotels not under renovation."

CAPITAL STRUCTURE

On March 12, 2008, the Company executed a five-year swap on $1.8 billion of fixed-rate debt at a weighted average interest rate of 5.84% for a floating interest rate of LIBOR plus 264 basis points, or an equivalent savings of 34 basis points assuming the March 12 LIBOR rate of 2.86%. In conjunction with the swap execution, Ashford sold a five-year LIBOR floor notional amount of $1.8 billion at 1.25% and purchased a LIBOR cap notional amount of $1 billion at 3.75% for the first three years. The net upfront cost of the swap, LIBOR cap, and floor transactions was approximately $4.6 million and was capitalized as an asset on the Balance Sheet. The unrealized change in market value of this transaction will be reflected in the Statement of Operations each quarter. The Company will continue to monitor additional interest rate cap transactions as conditions warrant.

At March 31, 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 61.5%. Following the $1.8 billion interest rate swap, the Company’s $2.7 billion debt balance, as of March 31, 2008, consisted of 89% of floating-rate debt, with a total weighted average interest rate of 5.19%. The Company’s weighted average debt maturity including extension options is 6.5 years.

FIRST QUARTER 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 joint venture has currently funded $91.4 million of mezzanine investments. 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.

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 related to the JER Partners acquisition of Highland Hospitality. The Company’s 25% of the joint venture investment equals $17.5 million and is priced to yield approximately 18.3% based upon the purchase price discount to par, the forward LIBOR curve through the initial maturity of the loan, and the joint venture promote.

On February 29, 2009, the Company sold its building held for sale in Fort Worth, Texas for approximately $4.1 million.

On March 25, 2008, the Company sold its Sheraton Iowa City Hotel in Iowa City, Iowa, for approximately $9.5 million.

SUBSEQUENT INVESTMENT ACTIVITY

On March 26, 2008, the Company placed under contract its Hyatt Dulles Airport in Herndon, Virginia, for a sales price of $78 million. Accordingly this property was reclassified to Discontinued Operations. The transaction is expected to close in June 2008.

INVESTMENT OUTLOOK

Mr. Bennett concluded, “We remain focused on two core strategies. The first is to enhance dividend coverage by growing EBITDA and swapping our debt to floating rate during these tougher economic times. We look to grow EBITDA by implementing our hotel asset contingency plans to cut costs, appealing all property tax assessments, locking down our insurance for two years, and continuing to lock down energy costs for 18 – 24 months. The second strategy involves capital allocation. We continue to harvest or preserve capital by selling hotel assets, cutting back on discretionary capex programs, and creating joint ventures while deploying capital into debt reduction, share buybacks, and mezzanine investments. These strategies serve to protect the dividend while also improving our asset profile.”

INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, May 1, 2008, at 11:00 a.m. ET. The number to call for this interactive teleconference is (303) 262-2142. A replay of the conference call will be available through May 8, 2008, by dialing (303) 590-3000 and entering the confirmation number, 11111805#.

The Company will also provide an online simulcast and rebroadcast of its first 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, May 1, 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=47145.

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.

Contacts:

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