Ashford Hospitality Trust Reports Fourth Quarter Results.

DALLAS -- Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the fourth quarter ended December 31, 2006. The proforma performance measurements for Occupancy, Average Daily Rate (ADR), revenue per available room (RevPAR), and Hotel Operating Profit include the Company's 66 hotels owned as of December 31, 2006, which excludes 15 hotel assets held for sale as of that date. Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2006, with the fourth quarter ended December 31, 2005. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

FINANCIAL HIGHLIGHTS

* Total revenue increased 45% to $143.5 million

* Net income available to common shareholders increased to $7.9 million from a loss of $7.7 million

* Diluted net income available to common shareholders increased to $0.09 per share from a loss of $0.18 per share

* Adjusted funds from operations (AFFO) increased 50% to $25.5 million, or $0.27 per share

* Cash available for distribution (CAD) increased 49% to $21.5 million, or $0.23 per share

* Declared quarterly common dividend of $0.20 per diluted share

* Dividend coverage in 2006 reaches 124% of CAD

STRONG INTERNAL GROWTH

* Proforma RevPAR increased 10.3% for hotels not under renovation on an 8.3% increase in ADR to $129.41 and a 132-basis point improvement in occupancy

* Proforma RevPAR increased 8.7% for all hotels on an 8.3% increase in ADR to $127.88 and a 27-basis point improvement in occupancy

* Proforma same-property hotel operating profit for hotels not under renovation improved 15.5%

* Proforma same-property hotel operating profit margins for hotels not under renovation improved 206 basis points

CAPITAL RECYCLING AND ASSET ALLOCATION 

* Capex invested in fourth quarter and in 2006 totaled $18 million and $48 million, respectively

* Capital recycling (16 hotels and two office buildings) projected to generate $170 million in gross proceeds and net pre-tax gain of $33 million, or $0.35 per diluted share in 2007

* Two asset dispositions completed to date in 2007: Marriott Trumbull in Trumbull, CT, and Fairfield Inn by Marriott in Princeton, IN

EXTERNAL GROWTH CONTINUES TO ENHANCE RETURNS

* Total enterprise value increased to $2.2 billion at December 31, 2006

* Mezzanine and first mortgage loan portfolio totaled $103 million at December 31, 2006, with an average annual unleveraged yield of 13.2%

* Acquired Westin O'Hare in Rosemont, IL for $125 million in cash

* Acquired seven-hotel portfolio of upper-upscale, full-service hotels for $267.2 million in cash

* Closed on two mezzanine loans totaling $11 million secured by the Hilton Suites Galleria and Wyndham Dallas North in Dallas, TX

* Announced the acquisition of a 51-hotel portfolio of upper-upscale and premium selective service hotels for $2.4 billion

PORTFOLIO REVPAR GROWTH

As of December 31, 2006, the Company had a portfolio of direct hotel investments consisting of 66 properties classified in continuing operations. During the fourth quarter, 55 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 66 hotels) and proforma not-under-renovation basis (55 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 66 hotels. Details of each category are provided in the tables attached to this release.

* RevPAR growth by region was led by: New England (2 hotels) with a 47.4% increase; West South Central (5) with 31.6%; Mountain (5) with 14.4%; Pacific (10) with 12.6%; East North Central (8) with 12.4%; Middle Atlantic (4) with 11.3%; West North Central (3) with 8.5%; South Atlantic (27) with 0.8%; and East South Central (2) with a 2.7% decrease.

* RevPAR growth by brand was led by: Radisson (4 hotels) with a 27.2% increase; Hilton (23) with 15.6%; Starwood (5) with 15.3%; InterContinental (2) with 13.4%; independents (2) with 9.6%; Hyatt (2) with 3.6%; and Marriott (28) with 2.0%.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

For all 66 hotels as of December 31, 2006, Proforma Hotel EBITDA (adjusted as if all hotels were included in both periods) increased 11.1% to $41.3 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) improved 134 basis points to 26.1%.

Ashford believes year-over-year 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 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 EBITDA margin. For example, on May 3, 2006, Ashford reported Proforma EBITDA margins for the first quarter 2006 and 2005 for the Company's 64 core hotels that averaged 28.9%. The Company's current core portfolio contains 66 hotels, eight of which are new from first quarter 2006. Proforma Hotel EBITDA margin for these current core hotels for the first quarter 2006 and 2005 averages 27.0%. Based upon the current share count, each 60 basis point change to EBITDA margin for the current 66 core hotels affects quarterly FFO by approximately $0.01 per share. The range of current published first quarter 2007 EBITDA margins are well above the average proforma results for the previous two first quarters for the current core portfolio. Investors and analysts are encouraged to carefully consider our seasonality table when forecasting our quarterly results. Details of the quarterly calculations for the past two years for the current core portfolio are provided in tables attached to this release.

Monty J. Bennett, President and CEO, commented, "The results generated by our portfolio continue to demonstrate the value added by the over $86 million of renovations we have completed over the past two years as well as the underlying strength of our markets and their favorable supply and demand balance. By remaining an active capital recycler, we have been able to narrow the focus of our portfolio on the segments, brands, managers and markets that meet our target return and performance goals. The end result has been our strong performance in terms of RevPAR and margin improvement."

FINANCING ACTIVITY

At December 31, 2006, 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 45% based upon the Company's closing stock price of $12.45. As of December 31, 2006, the Company's $1.1 billion debt balance consisted of 78% of fixed-rate debt, with a total weighted average interest rate of 5.9%. The Company's weighted average fixed-rate debt maturity is 8 years.

FOURTH QUARTER INVESTMENT ACTIVITY

On November 9, 2006, the Company acquired the Westin O'Hare hotel property in Rosemont, Illinois, from JER Partners for approximately $125.0 million in cash. To fund this acquisition, the Company used cash available on its balance sheet and proceeds from a 10-year fixed-rate $101.0 million mortgage loan executed on November 16, 2006. The loan bears interest at 5.81% and is paid interest only for the first five years.

On December 7, 2006, the Company acquired a seven-property hotel portfolio from a partnership of affiliates of Oak Hill Capital Partners, The Blackstone Group, and Interstate Hotels and Resorts for approximately $267.2 million in cash. Of the seven acquired hotels, five are considered core hotels while two are considered non-core hotels, which the Company intends to sell. To fund this acquisition, the Company used cash available on its balance sheet, and proceeds from a 5-year floating-rate $212.0 million mortgage loan executed on December 7, 2006. The loan bears interest at LIBOR plus 172 basis points.

On December 27, 2006, the Company closed on a $7.0 million mezzanine loan receivable on the Hilton Suites Galleria, due December 2009. The loan bears interest at a rate of LIBOR plus 650 basis points for a term of three years with two one-year extension options; is interest only and locked from prepayment for the first 18 months.

On December 27, 2006, the Company closed on a $4.0 million mezzanine loan receivable on the Wyndham Dallas North, due December 2009. The loan bears interest at a rate of LIBOR plus 575 basis points for a term of three years with two one-year extension options; is interest only and locked from prepayment for the first 18 months.

SUBSEQUENT INVESTMENT ACTIVITY

On January 18, 2007, the Company entered into a definitive agreement to acquire a 51-property hotel portfolio from CNL Hotels and Resorts, Inc. ("CHR") for approximately $2.4 billion in cash. Pursuant to this agreement, the Company will own 100% of 33 properties and 70%-89% of 18 properties through existing joint ventures. The acquisition is subject to certain closing conditions including, among other things, approval by a majority of CHR's outstanding common shareholders. To fund this acquisition, the Company intends to use committed debt and equity financing with a financial institution as well as assumptions of the seller's existing debt. The components of the committed debt include approximately $1.2 billion of ten-year, fixed-rate debt at an estimated average blended interest rate of 5.95%, approximately $340 million of three-year, variable-rate debt with two one-year extension options at LIBOR plus 165 basis points, and approximately $325 million of one-year, variable-rate debt with a two year extension option at an interest rate of LIBOR plus 150 basis points. The committed equity financing represents the anticipated sale of up to 8 million shares of Series C Cumulative Redeemable Preferred Stock for up to approximately $200 million at LIBOR plus 250 basis points. The assumed debt includes approximately $463 million of fixed-rate debt, representing ten fixed-rate loans with an average blended interest rate of 6.22% and expiration dates ranging from 2008 to 2025. The acquisition is expected to close in the second quarter of 2007.

On February 6, 2007, the Company sold its Marriott located in Trumbull, Connecticut, for approximately $28.3 million. As the Company acquired this property on December 7, 2006, no gain or loss was recognized on the sale.

On February 8, 2007, the Company sold its Fairfield Inn in Princeton, Indiana, for approximately $3.2 million. In connection with this sale, the Company expects to recognize a gain of approximately $1.4 million, the income tax effects of which will be deferred through a 1031 like-kind exchange.

INVESTMENT OUTLOOK

Mr. Bennett concluded, "With the transformational acquisition of the $2.4 billion, 51-hotel portfolio from CNL Hotels & Resorts on the near horizon, we are prepared to quickly assimilate these assets into our portfolio. As evidenced by our recent announcement regarding capital recycling efforts on $170 million of existing assets and plans for additional phases of capital recycling in 2007, we are also making good progress on our deleveraging strategy. Given the projected favorable operating environment for hotels, we expect continued execution of our portfolio management and internal growth strategies to produce favorable results in 2007."

INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call at 11:00 a.m. ET on March 8, 2007, to discuss the fourth quarter results. The number to call for this interactive teleconference is [phone]. A seven-day replay of the conference call will be available by dialing [phone] and entering the confirmation number, 2646707.

The Company will also provide an online simulcast and rebroadcast of its fourth 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?id=37791 on March 8, 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, our business and investment strategy, timing for closings, our understanding of our competition, 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 the section entitled "Risk Factors" in Ashford's Registration Statement on Form S-3, (File Number 333-131878), and from time to time, in Ashford's other filings with the Securities and Exchange Commission.

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.

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