Ashford Hospitality Trust Reports Fourth Quarter and Year End Results

8th Consecutive Quarterly Year Over Year Increase In AFFO Per Share

Record Fourth Quarter AFFO Per Share

Record Full Year AFFO Per Share

Feb 22, 2012, 16:20 ET from Ashford Hospitality Trust, Inc.

DALLAS, Feb. 22, 2012 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) today reported the following results and performance measures for the fourth quarter ended December 31, 2011.  The performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel Operating Profit (or Hotel EBITDA) are proforma.  Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2011, with the fourth quarter ended December 31, 2010 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

FINANCIAL HIGHLIGHTS

  • Adjusted funds from operations (AFFO) was $0.42 per diluted share for the quarter, the Company's 8th consecutive quarterly year over year increase and a record for the fourth quarter
  • Adjusted funds from operations (AFFO) was a record $1.86 per diluted share for the entire year
  • RevPAR increased 5.4% for all Legacy hotels in continuing operations, driven by a 3.5% increase in ADR and a 122 basis point increase in occupancy
  • RevPAR increased 3.3% for the 25 hotels in the Highland Hospitality Portfolio not under renovation in continuing operations, driven by a 2.4% increase in ADR and a 58 basis point increase in occupancy
  • Hotel operating profit margin increased 143 basis points for all Legacy hotels in continuing operations
  • Hotel operating profit margin increased 177 basis points for the 25 hotels in the Highland Hospitality Portfolio not under renovation in continuing operations
  • Net loss attributable to common shareholders was $18.3 million, or $0.28 per diluted share, compared with net loss attributable to common shareholders of $111.5 million, or $2.17 per diluted share, in the prior-year quarter
  • Fixed charge coverage ratio was 1.70x under the senior credit facility covenant versus a required minimum of 1.35x
  • In December, Ashford successfully restructured its $203.4 million mortgage loan and extended the maturity date from December 2011 to March 2014 with a one-year extension option
  • Subsequent to the end of the fourth quarter, the Company increased the size of its senior credit facility from $105 million to $145 million with the option to expand it further to a maximum size of $225 million
  • The Company's only recourse obligation is its senior credit facility, which currently has no outstanding balance
  • At the end of the fourth quarter, Ashford had cash and cash equivalents of $167.6 million
  • In December, the Board of Directors approved a 10% increase in the Company's dividend policy for 2012; Ashford expects to pay a quarterly dividend of $0.11 per share for 2012

CAPITAL ALLOCATION

  • Capex invested in the quarter for the Legacy portfolio was $21.9 million and $67.8 million for the full-year
  • Capex invested in the quarter for the Highland Hospitality Portfolio was $6.1 million and $13.6 million for the full-year

CAPITAL STRUCTURE

As previously disclosed, on October 12, 2011 the Company priced an underwritten public offering of 1,280,000 shares of its existing 9.00% Series E Cumulative Preferred Stock at $23.47 per share including accrued dividends; receiving net proceeds of $28.9 million after underwriting fees.  The net proceeds from the sale of these securities are being used for general corporate purposes, including, without limitation, repayment of debt or other maturing obligations, financing future hotel-related investments, capital expenditures and working capital.  Net proceeds may also be used for repurchasing shares of common stock under Ashford's repurchase program.

On December 12, 2011, Ashford announced it had successfully restructured its $203.4 million mortgage loan and extended the maturity date from December 2011 to March 2014.  There is also a one-year extension option subject to the satisfaction of certain conditions.  The restructuring provides for a new interest rate of LIBOR + 4.50%, with no LIBOR Floor.  At the closing of the restructuring, the Company paid down the loan by $25 million to $178.4 million.  Additionally, terms include that 85% of excess cash flow after debt service, working capital, and approved capital expenditures will be used to pay down the debt balance and thereby further deleverage the portfolio.

Ashford has successfully addressed debt maturities and is well positioned regarding the next few years.  The Company is engaged in negotiations with the existing lenders to restructure and extend the $167.2 million non-recourse portfolio mortgage loan that matures in May 2012.  On a parallel path, the Company is also in discussion with third party lenders to refinance this loan.  There appears to be a high likelihood of a viable restructure or refinance under current market conditions given the level of existing cash held in reserve for a possible debt pay down for this loan.

The Company previously announced entering into a new $105 million revolving credit facility for three years that replaced the Company's pre-existing credit line that was scheduled to mature in April 2012.  Subsequent to the end of the fourth quarter, the company upsized the facility to $145 million with the option to further expand the facility to an aggregate size of $225 million.  The facility is currently undrawn.  All other Company debt is non-recourse.

HIGHLAND HOSPITALITY PORTFOLIO UPDATE  

The Highland Hospitality portfolio experienced RevPAR growth of 2.6% during the fourth quarter of 2011, with RevPAR growth for hotels not under renovation in continuing operations of 3.3%.  This performance was negatively impacted by property manager changes at the Hyatt Regency Windwatch and the Hilton Boston Back Bay.  While this created a short-term revenue disruption during the fourth quarter, these initiatives were part of the continuing integration of the Highland Hospitality Portfolio into the Company's total portfolio and are expected to create long-term value through enhanced productivity and cost savings, as well as higher exit value given removal of brand management encumbrances.    

The Company expects both the revenue and EBITDA performance of the Highland Hospitality Portfolio to continue to improve as the hotels in the Portfolio continue to be fully integrated into Ashford's total portfolio.

PORTFOLIO REVPAR

As of December 31, 2011, the Company's Legacy portfolio consisted of direct hotel investments with 96 properties classified in continuing operations.  During the fourth quarter, 63 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 96 hotels) and proforma not-under-renovation basis (63 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 96 hotels in continuing operations.  Details of each category are provided in the tables attached to this release.

  • Proforma RevPAR increased 5.4% to $86.66 for all hotels in the Legacy portfolio on a 3.5% increase in ADR and a 122 basis point increase in occupancy
  • Proforma RevPAR increased 4.6% to $83.03 for hotels not under renovation in the Legacy portfolio on a 2.1% increase in ADR and a 161 basis point increase in occupancy
  • Proforma RevPAR increased 3.3% to $91.82 for hotels not under renovation in the Highland Hospitality Portfolio on a 2.4% increase in ADR and a 58 basis point increase in occupancy
  • Proforma RevPAR increased 2.6% to $91.11 for all hotels in the Highland Hospitality Portfolio on a 2.4% increase in ADR and an 11 basis point increase in occupancy

Through December 1, 2011, one hotel property held by a joint venture in which Ashford had an ownership interest of 89% was leased on a triple-net lease basis to a third-party tenant who operated the hotel property. Effective December 2, 2011, Ashford converted its 89% interest in a triple-net lease to a 100% ownership position and the triple-net lease was converted to a long-term management contract at no cost to the Company. The Company recognized a gain of $9.7 million for this transaction, consisting of the assignments of an $8.1 million note receivable and $1.6 million security deposits, which is included in "Other income" in the consolidated statements of operations.

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

Hotel operating profit (Hotel EBITDA) for all Legacy hotels increased 11.0%, for the quarter.  For the 63 hotels that were not under renovation, Proforma Hotel EBITDA increased 10.4% to $39.8 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 127 basis points to 28.1%.  For all 96 Legacy hotels included in continuing operations as of December 31, 2011, Proforma Hotel EBITDA increased 11.0% to $67.1 million and Hotel EBITDA margin increased 143 basis points to 28.3%.

For the Company's 71.74% share of the 25 hotels in the Highland Hospitality Portfolio that were not under renovation, Proforma Hotel EBITDA increased 10.0% to $17.7 million.  Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 177 basis points to 25.5%.  For all 28 hotels in the Highland Hospitality Portfolio, Proforma Hotel EBITDA increased 6.4% to $19.0 million.  Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 114 basis points to 25.4%.  

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 well as its pro-rata share of the Highland 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 96 Legacy hotels included in continuing operations together with Ashford's pro-rata share of the Highland portfolio are provided in the table attached to this release.

COMMON STOCK DIVIDEND

On December 15, 2011, Ashford announced that its Board of Directors had declared a common stock dividend for the fourth quarter ended December 31, 2011, of $0.10 per diluted share, payable January 16, 2012, for shareholders of record on December 31, 2011.

The Board also approved the Company's dividend policy for 2012.  The Company expects to pay a quarterly cash dividend of $0.11 per common share for 2012, or $0.44 per common share on an annualized basis.  While this policy results in ample dividend coverage on a historical basis, the Company believes a more conservative approach is prudent during this time of global economic uncertainty.  The adoption of a dividend policy does not commit the Board of Directors to declare future dividends or the amount thereof. The Board will continue to review its dividend policy on a quarter-to-quarter basis.  

Monty J. Bennett, Chief Executive Officer, commented, "This was a record quarter and year for Ashford in several respects.  It represents seven out of eight years of record AFFO per share performance, including our eighth consecutive quarterly year over year AFFO per share increase and another record fourth quarter of AFFO per share.  We believe significant upside exists given the early stages of the economic recovery, improving macroeconomic fundamentals and the lack of new supply over the next few years.  Further, we continue to maintain a conservative approach to capital and liquidity so that we are prepared for economic uncertainties, while positioning ourselves to take advantage of opportunistic investments as they arise.  Our strategic approach has served us well during this economic environment, but our focus on improved operating performance and maximizing shareholder returns remains a constant."

INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday February 23, 2012, at 11 a.m. ET.  The number to call for this interactive teleconference is (480) 629-9722. A replay of the conference call will be available through Thursday, March 1, 2012, by dialing (303) 590-3030 and entering the confirmation number, 4508934.

The Company will also provide an online simulcast and rebroadcast of its fourth quarter 2011 earnings release conference call.  The live broadcast of Ashford Hospitality Trust's quarterly conference call will be available online at the Company's web site, www.ahtreit.com on Thursday February 23, 2012, beginning at 11 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 assist in evaluating a real estate company's operations. These supplemental measures include FFO, AFFO, EBITDA, and Hotel Operating Profit.  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, nor Hotel Operating Profit 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, and Hotel Operating Profit 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 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.  Additional information can be found on the Company's website 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 of 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. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

December 31,

2011

2010

(Unaudited)

ASSETS

Investment in hotel properties, net

$ 2,957,899

$ 3,023,736

Cash and cash equivalents

167,609

217,690

Restricted cash

84,069

67,666

Accounts receivable, net

28,623

27,493

Inventories

2,371

2,909

Notes receivable

11,199

20,870

Investment in unconsolidated joint ventures

179,527

15,000

Assets held for sale

-

144,511

Investments in securities and other

21,374

-

Deferred costs, net

17,421

17,519

Prepaid expenses

11,308

12,727

Derivative assets

37,918

106,867

Other assets

4,851

7,502

Intangible assets, net

2,810

2,899

Due from third-party hotel managers

62,747

49,135

Total assets

$ 3,589,726

$ 3,716,524

LIABILITIES AND EQUITY

Liabilities

Indebtedness of continuing operations

$ 2,362,458

$ 2,518,164

Indebtedness of assets held for sale

-

50,619

Capital leases payable

-

36

Accounts payable and accrued expenses

82,282

79,248

Dividends payable

16,941

7,281

Unfavorable management contract liabilities

13,611

16,058

Due to related parties

2,569

2,400

Due to third-party hotel managers

1,602

1,870

Liabilities associated with investments in securities and other

2,246

-

Other liabilities

5,400

4,627

Other liabilities of assets held for sale

-

2,995

Total liabilities

2,487,109

2,683,298

Series B-1 Cumulative Convertible Redeemable Preferred stock, 7,247,865 shares

issued and outstanding at December 31, 2010

-

72,986

Redeemable noncontrolling interests in operating partnership

112,796

126,722

Equity:

Shareholders' equity of the Company

Preferred stock, $0.01 par value, 50,000,000 shares authorized:

Series A Cumulative Preferred Stock, 1,487,900 shares issued and outstanding

15

15

Series D Cumulative Preferred Stock, 8,966,797 shares issued and outstanding

90

90

Series E Cumulative Preferred Stock, 4,630,000 shares issued and outstanding

at December 31, 2011

46

-

Common stock, $0.01 par value, 200,000,000 shares authorized, 124,896,765 shares

and 123,403,893 shares issued, respectively, 68,032,289 and 58,999,324 shares

outstanding, respectively

1,249

1,234

Additional paid-in capital

1,746,259

1,552,657

Accumulated other comprehensive loss

(184)

(550)

Accumulated deficit

(609,272)

(543,788)

Treasury stock, at cost (56,864,476 shares and 64,404,569 shares, respectively)

(164,796)

(192,850)

Total shareholders' equity of the Company

973,407

816,808

Noncontrolling interests in consolidated joint ventures

16,414

16,710

Total equity

989,821

833,518

Total liabilities and equity

$ 3,589,726

$ 3,716,524

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

(Unaudited)

(Unaudited)

REVENUE

Rooms

$ 176,634

$  166,100

$ 685,568

$ 640,989

Food and beverage

45,123

42,187

158,258

151,105

Rental income from operating leases

1,333

1,708

5,341

5,436

Other

10,086

9,848

40,268

39,291

Total hotel revenue

233,176

219,843

889,435

836,821

Interest income from notes receivable

-

346

-

1,378

Asset management fees and other

145

113

362

425

Total  Revenue

233,321

220,302

889,797

838,624

EXPENSES

Hotel operating expenses

Rooms

42,531

39,721

158,645

148,308

Food and beverage

30,204

28,474

108,961

105,229

Other direct

5,792

5,845

23,367

23,576

Indirect

68,588

64,680

253,766

242,623

Management fees

9,631

9,468

36,140

34,909

Total hotel operating expenses

156,746

148,188

580,879

554,645

Property taxes, insurance, and other

11,805

11,701

46,758

49,389

Depreciation and amortization

34,302

32,875

133,882

132,651

Impairment charges

(93)

47,667

(4,841)

46,404

Gain on insurance settlement

(130)

-

(2,035)

-

Transaction acquisition and contract termination costs

(2)

7,001

(793)

7,001

Corporate general and administrative:

Stock/unit-based compensation

3,963

1,899

12,391

7,067

Other general and administrative

6,577

6,039

32,131

23,552

Total Operating Expenses

213,168

255,370

798,372

820,709

OPERATING INCOME (LOSS)

20,153

(35,068)

91,425

17,915

Equity in earnings (loss) of unconsolidated joint ventures

(5,068)

(21,590)

14,528

(20,265)

Interest income

15

57

85

283

Other income

26,015

15,781

109,524

62,826

Interest expense

(33,515)

(33,906)

(133,922)

(135,685)

Amortization of loan costs

(1,116)

(1,079)

(4,625)

(4,924)

Write-off of premiums, loan costs and exit fees

-

(3,893)

(729)

(3,893)

Unrealized loss on investments

(1,614)

-

(391)

-

Unrealized gain (loss) on derivatives

(17,473)

(18,540)

(70,286)

12,284

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(12,603)

(98,238)

5,609

(71,459)

Income tax (expense) benefit

787

591

(1,620)

155

INCOME (LOSS) FROM CONTINUING OPERATIONS

(11,816)

(97,647)

3,989

(71,304)

Income (loss) from discontinued operations

63

(24,538)

(4,106)

9,512

NET LOSS

(11,753)

(122,185)

(117)

(61,792)

(Income) loss from consolidated joint ventures attributable to noncontrolling interests

(73)

262

(610)

1,683

Net loss attributable to redeemable noncontrolling interests in operating partnership

1,629

16,979

2,836

8,369

NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

(10,197)

(104,944)

2,109

(51,740)

Preferred dividends

(8,135)

(6,545)

(46,876)

(21,194)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$ (18,332)

$ (111,489)

$ (44,767)

$ (72,934)

INCOME (LOSS) PER SHARE – BASIC AND DILUTED:

Loss from continuing operations attributable to common shareholders

$     (0.28)

$       (1.76)

$     (0.66)

$     (1.59)

Income (loss) from discontinued operations attributable to common shareholders

-

(0.41)

(0.07)

0.16

Net loss attributable to common shareholders

$     (0.28)

$       (2.17)

$     (0.73)

$     (1.43)

Weighted average common shares outstanding – basic and diluted

67,132

51,407

61,954

51,159

Amounts attributable to common shareholders:

Income (loss) from continuing operations, net of tax

$ (10,253)

$   (83,725)

$     6,609

$ (60,158)

Income (loss) from discontinued operations, net of tax

56

(21,219)

(4,500)

8,418

Preferred dividends

(8,135)

(6,545)

(46,876)

(21,194)

Net loss attributable to common shareholders

$ (18,332)

$ (111,489)

$ (44,767)

$ (72,934)

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO EBITDA

(in thousands)

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

Net loss

$    (11,753)

$  (122,185)

$         (117)

$    (61,792)

(Income) loss from consolidated joint ventures attributable to noncontrolling interests

(73)

262

(610)

1,683

Net loss attributable to redeemable noncontrolling interests in operating partnership

1,629

16,979

2,836

8,369

Net income (loss) attributable to the Company

(10,197)

(104,944)

2,109

(51,740)

Interest income

(14)

(57)

(84)

(273)

Interest expense and amortization of loan costs

34,233

35,819

137,466

147,233

Depreciation and amortization  

33,485

34,706

130,995

141,547

Income tax expense

(787)

(649)

1,705

(132)

Impairment charges

(93)

71,249

1,395

82,055

Net loss attributable to redeemable noncontrolling interests in operating partnership

(1,629)

(16,979)

(2,836)

(8,369)

Equity in (earnings) loss of unconsolidated joint ventures

5,068

21,590

(14,528)

20,265

Company's portion of EBITDA of unconsolidated joint ventures

18,622

-

104,807

1,325

EBITDA

78,688

40,735

361,029

331,911

Amortization of unfavorable management contract liabilities

(753)

(753)

(2,447)

(2,447)

Gain on sale/disposition of properties

(5)

-

(2,655)

(55,931)

Non-cash gain on insurance settlements

(130)

-

(1,287)

-

Write-off of premiums, loan costs and exit fees

-

3,893

1,677

3,893

Other income (1)

(26,015)

(15,786)

(109,524)

(62,906)

Transaction acquisition and contract termination costs

(2)

7,001

(793)

7,001

Legal costs related to litigation settlement (2)

-

-

6,875

-

Debt restructuring costs

823

-

823

-

Unrealized loss on investments

1,614

-

391

-

Unrealized (gain) loss on derivatives

17,473

18,540

70,286

(12,284)

Company's portion of adjustments to EBITDA of unconsolidated joint ventures

(683)

-

(42,248)

-

Adjusted EBITDA

$      71,010

$      53,630

$    282,127

$    209,237

RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS ("FFO")

(in thousands, except per share amounts)

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

2011

2010

Net loss

$    (11,753)

$  (122,185)

$         (117)

$    (61,792)

(Income) loss from consolidated joint ventures attributable to noncontrolling interests

(73)

262

(610)

1,683

Net loss attributable to redeemable noncontrolling interests in operating partnership

1,629

16,979

2,836

8,369

Preferred dividends

(8,135)

(6,545)

(46,876)

(21,194)

Net loss attributable to common shareholders

(18,332)

(111,489)

(44,767)

(72,934)

Depreciation and amortization on real estate

33,419

34,642

130,741

141,285

Gain on sale/disposition of properties

(5)

-

(2,655)

(55,931)

Non-cash gain on insurance settlements

(130)

-

(1,287)

-

Impairment charges

(93)

71,249

1,395

82,055

Net loss attributable to redeemable noncontrolling interests in operating partnership

(1,629)

(16,979)

(2,836)

(8,369)

Equity in (earnings) loss of unconsolidated joint ventures

5,068

21,590

(14,528)

20,265

Company's portion of FFO of unconsolidated joint ventures

4,671

-

8,125

1,325

FFO available to common shareholders

22,969

(987)

74,188

107,696

Dividends on convertible preferred stock

-

1,015

1,374

4,143

Write-off of premiums, loan costs and exit fees

-

3,893

1,677

3,893

Transaction acquisition and contract termination costs

(2)

7,001

(793)

7,001

Other income (1)

(9,515)

-

(38,663)

-

Legal costs related to litigation settlement (2)

-

-

6,875

-

Debt restructuring costs

823

-

823

-

Unrealized loss on investments

1,614

-

391

-

Unrealized (gain) loss on derivatives

17,473

18,540

70,286

(12,284)

Non-cash dividends on Series B-1 preferred stock (3)

-

-

17,363

-

Company's portion of adjustments to FFO of unconsolidated joint ventures

1,568

-

16,682

-

Adjusted FFO available to common shareholders

$      34,930

$      29,462

$    150,203

$    110,449

Adjusted FFO per diluted share available to common shareholders

$          0.42

$          0.40

$          1.86

$          1.50

Weighted average diluted shares

83,850

73,956

80,597

73,833

(1)  Other income related to income from interest rate derivatives is excluded from the Adjusted EBITDA for all periods presented. In addition, the gain from litigation settlement, the net investment loss on investments in securities and other, the premiums and fees associated with credit default swaps, and other income recognized on the acquisition of 11% of noncontrolling interest in a consolidated joint venture are also excluded from Adjusted EBITDA for 2011.

For 2011, the gain from litigation settlement, the net investment loss, the premiums and fees associated with credit default swaps, and other income recognized on the acquisition of 11% of noncontrolling interest in a consolidated joint venture are excluded for Adjusted FFO calculation.

(2)  The legal costs associated with the litigation settlement are also excluded from Adjusted EBITDA and Adjusted FFO for the year ended December 31, 2011.

(3)  Represents the conversion of 1.4 million shares of the Series B-1 preferred stock to shares of our common stock that was treated as a dividend in accordance with applicable accounting guidance.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

SUMMARY OF INDEBTEDNESS OF CONTINUING OPERATIONS

DECEMBER 31, 2011

(dollars in thousands)

(Unaudited)

Fixed-Rate

Floating-Rate

Total

Indebtedness

Collateral

Maturity

Interest Rate

Debt

Debt

Debt

Mortgage loan

10 hotels

May 2012

LIBOR + 1.65%

$                 -

$           167,202

167,202

Mortgage loan

2 hotels

August 2013

LIBOR + 2.75%

-

145,667

145,667

Mortgage loan

5 hotels

March 2014

LIBOR + 4.50%

-

178,400

(1)

178,400

Mortgage loan

1 hotel

May 2014

8.32%

5,476

-

5,476

Senior credit facility

Various

September 2014

LIBOR + 2.75% to 3.5%

-

-

-

Mortgage loan

1 hotel

December 2014

Greater of 5.5% or LIBOR + 3.5%

-

19,740

19,740

Mortgage loan

8 hotels

December 2014

5.75%

106,863

-

106,863

Mortgage loan

10 hotels

July 2015

5.22%

155,831

-

155,831

Mortgage loan

8 hotels

December 2015

5.70%

98,786

-

98,786

Mortgage loan

5 hotels

December 2015

12.72%

151,185

-

151,185

Mortgage loan

5 hotels

February 2016

5.53%

112,453

-

112,453

Mortgage loan

5 hotels

February 2016

5.53%

93,257

-

93,257

Mortgage loan

5 hotels

February 2016

5.53%

80,782

-

80,782

Mortgage loan

1 hotel

April 2017

5.91%

35,000

-

35,000

Mortgage loan

2 hotels

April 2017

5.95%

128,251

-

128,251

Mortgage loan

3 hotels

April 2017

5.95%

260,980

-

260,980

Mortgage loan

5 hotels

April 2017

5.95%

115,600

-

115,600

Mortgage loan

5 hotels

April 2017

5.95%

103,906

-

103,906

Mortgage loan

5 hotels

April 2017

5.95%

158,105

-

158,105

Mortgage loan

7 hotels

April 2017

5.95%

126,466

-

126,466

TIF loan

1 hotel

June 2018

12.85%

8,098

-

8,098

Mortgage loan

1 hotel

November 2020

6.26%

103,759

-

103,759

Mortgage loan

1 hotel

April 2034

Greater of 6% or Prime + 1%

-

6,651

6,651

Total indebtedness

$    1,844,798

$           517,660

$     2,362,458

Percentage

78.1%

21.9%

100.0%

Weighted average interest rate at December 31, 2011

6.41%

3.43%

5.75%

Total indebtedness with effect of interest rate swaps

$    2,344,233

$             18,225

2,362,458

Percentage with the effect of interest rate swaps

99.2%

0.8%

100.0%

Weighted average interest rate with the effect of interest rate swaps

2.59%

(2)

3.41%

(2)

2.77%

(1) This mortgage loan has a one-year extension option beginning March 2014, subject to satisfaction of certain conditions.

(2) These rates are calculated assuming the LIBOR rate stays at the December 31, 2011 level and with the effect of our interest rate derivatives.

PIM HIGHLAND HOLDING LLC

SUMMARY OF INDEBTEDNESS

DECEMBER 31, 2011

(dollars in thousands)

(Unaudited)

Fixed-Rate

Floating-Rate

Total

Indebtedness

Collateral

Maturity

Interest Rate

Debt

Debt

Debt

Mortgage loan

1 hotel

January 2013

5.96%

$         64,268

$                    -

$          64,268

Mortgage loan

1 hotel

April 2013

6.11%

46,023

46,023

Mortgage loan

1 hotel

February 2013

5.97%

32,651

32,651

Mortgage loan

25 hotels

March 2014

LIBOR + 2.75%

-

530,000

(1)

530,000

Mezzanine loan

28 hotels

March 2014

Greater of 6.50% or LIBOR + 6.00%

-

144,594

(1)

144,594

Mezzanine loan

28 hotels

March 2014

Greater of 7.5% or LIBOR + 7.00%

-

137,650

(1)

137,650

Mezzanine loan

28 hotels

March 2014

Greater of 10.00% or LIBOR + 9.50%

-

117,986

(1)

117,986

Mezzanine loan

28 hotels

March 2014

LIBOR + 2.00%

18,425

(1)

18,425

Total indebtedness

142,942

948,655

1,091,597

Ashford's proportionate obligations

x 71.74%

x 71.74%

x 71.74%

$       102,547

$           680,565

$        783,112

Percentage

13.1%

86.9%

100.0%

Weighted average interest rate at December 31, 2011

6.01%

5.07%

5.19%

Percentage with the effect of interest rate swaps

100.0%

0.0%

100.0%

Total indebtedness of Ashford plus Ashford's 71.74% share of PIM Highland Holding LLC

$    1,947,345

$        1,198,225

$     3,145,570

Percentage with the effect of interest rate swaps

99.4%

0.6%

100.0%

Weighted average interest rate with the effect of interest rate swaps

2.77%

4.37%

3.38%

(1) Each of these loans has two one-year extension options beginning March 2014.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

INDEBTEDNESS BY MATURITY ASSUMING EXTENSION OPTIONS ARE EXERCISED

DECEMBER 31, 2011

(in thousands)

(Unaudited)

2012

2013

2014

2015

2016

Thereafter

Total

Mortgage loan secured by 10 hotel properties, Wachovia Floater

$ 167,202

$           -

$           -

$           -

$           -

$               -

$    167,202

Mortgage loan secured by two hotel properties

-

145,667

-

-

-

-

145,667

Mortgage loan secured by five hotel properties

-

178,400

-

-

178,400

Mortgage loan secured by Manchester Courtyard

-

-

5,476

-

-

-

5,476

Senior credit facility

-

-

-

-

-

-

-

Mortgage loan secured by El Conquistador Hilton

-

-

19,740

-

-

-

19,740

Mortgage loan secured by eight hotel properties, UBS Pool 1

-

-

106,863

-

-

-

106,863

Mortgage loan secured by 10 hotel properties, Merrill Lynch Pool 1

-

-

-

155,831

-

-

155,831

Mortgage loan secured by eight hotel properties, UBS Pool 2

-

-

-

98,786

-

-

98,786

Mortgage loan secured by five hotel properties

-

-

-

151,185

-

-

151,185

Mortgage loan secured by five hotel properties, Merrill Lynch Pool 2

-

-

-

-

112,453

-

112,453

Mortgage loan secured by five hotel properties, Merrill Lynch Pool 3

-

-

-

-

93,257

-

93,257

Mortgage loan secured by five hotel properties, Merrill Lynch Pool 7

-

-

-

-

80,782

-

80,782

Mortgage loan secured by Philadelphia Courtyard, Wachovia Stand-Alone

-

-

-

-

-

35,000

35,000

Mortgage loan secured by two hotel properties, Wachovia Fixed Rate Pool 3

-

-

-

-

-

128,251

128,251

Mortgage loan secured by three hotel properties, Wachovia Fixed Rate Pool 7

-

-

-

-

-

260,980

260,980

Mortgage loan secured by five hotel properties, Wachovia Fixed Rate Pool 1

-

-

-

-

-

115,600

115,600

Mortgage loan secured by five hotel properties, Wachovia Fixed Rate Pool 5

-

-

-

-

-

103,906

103,906

Mortgage loan secured by five hotel properties, Wachovia Fixed Rate Pool 6

-

-

-

-

-

158,105

158,105

Mortgage loan secured by seven hotel properties, Wachovia Fixed Rate Pool 2

-

-

-

-

-

126,466

126,466

Mortgage loan secured by Philadelphia Courtyard

-

-

-

-

-

8,098

8,098

Mortgage loan secured by Arlington Marriott

-

-

-

-

-

103,759

103,759

Mortgage loan secured by Jacksonville Residence Inn

-

-

-

-

-

6,651

6,651

Total indebtedness of continuing operations

$ 167,202

$ 145,667

$ 132,079

$ 584,202

$ 286,492

$   1,046,816

$ 2,362,458

NOTE: These maturities assume no event of default would occur.

PIM HIGHLAND HOLDING LLC

INDEBTEDNESS BY MATURITY

ASSUMING EXTENSION OPTIONS ARE EXERCISED

DECEMBER 31, 2011

(in thousands)

(Unaudited)

2012

2013

2014

2015

2016

Thereafter

Total

Mortgage loan secured by Boston Hilton

$           -

$   64,268

$           -

$           -

$           -

$               -

$      64,268

Mortgage loan secured by Nashville Renaissance

-

46,023

-

-

-

-

46,023

Mortgage loan secured by Princeton Westin

-

32,651

-

-

-

-

32,651

Mortgage loan secured by 25 hotel properties

-

-

-

-

530,000

-

530,000

Mezzanine loan

-

-

-

-

144,594

-

144,594

Mezzanine loan

-

-

-

-

137,650

-

137,650

Mezzanine loan

-

-

-

-

117,986

-

117,986

Mezzanine loan

-

-

-

-

18,425

-

18,425

Total indebtedness

-

142,942

-

-

948,655

-

1,091,597

Ashford's proportionate obligations

x 71.74%

x 71.74%

x 71.74%

x 71.74%

x 71.74%

x 71.74%

x 71.74%

$           -

$ 102,547

$           -

$           -

$ 680,565

$               -

$    783,112

Total indebtedness of continuing operations plus Ashford's 71.74% share of PIM Highland Holding LLC

$ 167,202

$ 248,214

$ 132,079

$ 584,202

$ 967,057

$   1,046,816

$ 3,145,570

ASHFORD HOSPITALITY TRUST, INC.

KEY PERFORMANCE INDICATORS - PRO FORMA

LEGACY PORTFOLIO ONLY

(dollars in thousands)

(Unaudited)

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

% Variance

2011

2010

% Variance

ALL HOTELS INCLUDED IN CONTINUING OPERATIONS:

Room revenues (in thousands)

$ 181,176

$ 171,877

5.41%

$ 702,118

$ 659,315

6.49%

RevPAR

$     86.66

$     82.22

5.40%

$     93.21

$     87.53

6.49%

Occupancy

68.11%

66.89%

1.22%

72.17%

70.33%

1.84%

ADR

$   127.25

$   122.91

3.53%

$   129.16

$   124.46

3.78%

NOTES:

The above pro forma table assumes the 96 hotel properties owned and included in continuing operations as of December 31, 2011 were owned as of the

beginning of the first comparative reporting period.

ALL HOTELS NOT UNDER RENOVATION INCLUDED IN

CONTINUING OPERATIONS:

Room revenues (in thousands)

$ 108,036

$ 103,286

4.60%

$ 425,695

$ 405,365

5.02%

RevPAR

$     83.03

$     79.37

4.61%

$     90.18

$     85.87

5.02%

Occupancy

68.55%

66.94%

1.61%

72.38%

71.03%

1.35%

ADR

$   121.11

$   118.58

2.13%

$   124.60

$   120.89

3.07%

NOTES:

 (1) The above pro forma table assumes the 63 hotel properties owned and included in continuing operations as of December 31, 2011, but not under renovation for the three months and year ended December 31, 2011, were owned as of the beginning of the first comparative reporting period.  

 (2) Excluded Hotels Under Renovation: Capital Hilton, Courtyard Basking Ridge, Courtyard Foothill Ranch Irvine, Courtyard Legacy Park    Courtyard Louisville Airport, Courtyard Newark, Courtyard Oakland Airport, Courtyard Old Town Scottsdale, Courtyard Philadelphia Downtown,    Courtyard San Francisco Downtown, Courtyard Seattle Downtown, Crown Plaza La Concha-Key West, Embassy Suites Austin Arboretum,    Embassy Suites Dallas Galleria, Embassy Suites Flagstaff, Embassy Suites Houston, Embassy Suites Portland Downtown, Embassy Suites Walnut Creek,    Hilton Costa Mesa, Hilton Nassau Bay Clear Lake, Hilton Santa Fe, Hilton Tucson El Conquistador Golf Resort, Marriott Bridgewater,    Marriott Legacy Center, Residence Inn Jacksonville, Residence Inn Las Vegas, Sheraton San Diego Mission Valley, SpringHill Suites Charlotte,    SpringHill Suites Buford Mall of Georgia, SpringHill Suites Manhattan Beach, SpringHill Suites Philadelphia, SpringHill Suites Raleigh Airport,    SpringHill Suites Richmond  

PIM HIGHLAND HOLDING LLC

KEY PERFORMANCE INDICATORS - PRO FORMA

(dollars in thousands)

(Unaudited)

THE FOLLOWING TABLE PRESENTS THE PRO FORMA PERFORMANCE OF THE HOTEL PORTFOLIO INCLUDED IN PIM HIGHLAND

HOLDING LLC AS IF THEY WERE OWNED AS OF THE BEGINNING OF THE FIRST COMPARATIVE REPORTING PERIOD.

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

% Variance

2011

2010

% Variance

71.74% PRO-RATA SHARE OF ALL HOTELS

Room revenues (in thousands)

$   51,076

$   49,792

2.58%

$ 202,506

$ 194,426

4.16%

RevPAR

$     91.11

$     88.81

2.59%

$     95.74

$     91.91

4.17%

Occupancy

66.79%

66.68%

0.11%

70.64%

69.38%

1.26%

ADR

$   136.40

$   133.19

2.41%

$   133.54

$   132.48

0.80%

NOTES:

The above pro forma table assumes the 28 hotel properties owned as of December 31, 2011 were owned as of the beginning of the first comparative reporting period.

71.74% PRO-RATA SHARE OF ALL HOTELS NOT UNDER

RENOVATION

Room revenues (in thousands)

$   47,089

$   45,609

3.24%

$ 184,825

$ 175,766

5.15%

RevPAR

$     91.82

$     88.92

3.26%

$     95.98

$     91.27

5.16%

Occupancy

67.13%

66.55%

0.58%

70.57%

69.00%

1.57%

ADR

$   136.78

$   133.61

2.37%

$   136.01

$   132.28

2.82%

NOTES:

 (1) The above pro forma table assumes the 25 hotel properties owned as of December 31, 2011, but not under renovation for the three months and year ended December 31, 2011, were owned as of the beginning of the first comparative reporting period.  

 (2) Excluded Hotels Under Renovation: Marriott Omaha, Marriott San Antonio Plaza, The Churchill Washington DC  

ASHFORD HOSPITALITY TRUST, INC.

PRO FORMA HOTEL OPERATING PROFIT

LEGACY PORTFOLIO ONLY

(dollars in thousands)

(Unaudited)

ALL HOTELS INCLUDED IN CONTINUING OPERATIONS:

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

% Variance

2011

2010

% Variance

REVENUE

Rooms

$ 181,176

$ 171,877

5.4%

$ 702,118

$ 659,315

6.5%

Food and beverage

46,041

43,192

6.6%

161,136

154,175

4.5%

Other

9,681

9,742

-0.6%

38,884

38,884

0.0%

Total hotel revenue

236,898

224,811

5.4%

902,138

852,374

5.8%

EXPENSES

Rooms

43,336

40,977

5.8%

161,931

152,545

6.2%

Food and beverage

30,804

29,123

5.8%

111,016

107,320

3.4%

Other direct

5,794

5,872

-1.3%

23,388

23,674

-1.2%

Indirect  

66,845

65,663

1.8%

253,033

244,939

3.3%

Management fees, includes base and incentive fees

11,048

10,662

3.6%

40,395

39,365

2.6%

Total hotel operating expenses

157,827

152,297

3.6%

589,763

567,843

3.9%

Property taxes, insurance, and other

12,021

12,114

-0.8%

47,865

50,386

-5.0%

HOTEL OPERATING PROFIT (Hotel EBITDA)

67,050

60,400

11.0%

264,510

234,145

13.0%

Hotel EBITDA Margin

28.30%

26.87%

1.43%

29.32%

27.47%

1.85%

Minority interest in earnings of consolidated joint ventures

1,366

1,215

12.4%

6,133

4,872

25.9%

HOTEL OPERATING PROFIT (Hotel EBITDA),

excluding minority interest in joint ventures

$   65,684

$   59,185

11.0%

$ 258,377

$ 229,273

12.7%

 NOTE:   The above pro forma table assumes the 96 hotel properties owned and included in continuing operations as of December 31, 2011 were owned as of the beginning of the first comparative reporting period.    

ALL HOTELS NOT UNDER RENOVATION INCLUDED IN CONTINUING OPERATIONS:

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

% Variance

2011

2010

% Variance

REVENUE

Rooms

$ 108,036

$ 103,286

4.6%

$ 425,695

$ 405,365

5.0%

Food and beverage

27,881

25,445

9.6%

95,539

91,630

4.3%

Other

5,463

5,410

1.0%

21,282

20,816

2.2%

Total hotel revenue

141,380

134,141

5.4%

542,516

517,811

4.8%

EXPENSES

Rooms

25,781

24,561

5.0%

96,957

92,187

5.2%

Food and beverage

17,848

16,892

5.7%

64,262

62,342

3.1%

Other direct

3,178

3,101

2.5%

12,359

12,244

0.9%

Indirect  

40,131

39,635

1.3%

152,795

149,051

2.5%

Management fees, includes base and incentive fees

7,233

6,994

3.4%

25,910

26,125

-0.8%

Total hotel operating expenses

94,171

91,183

3.3%

352,283

341,949

3.0%

Property taxes, insurance, and other

7,444

6,929

7.4%

30,003

30,077

-0.2%

HOTEL OPERATING PROFIT (Hotel EBITDA)

39,765

36,029

10.4%

160,230

145,785

9.9%

Hotel EBITDA Margin

28.13%

26.86%

1.27%

29.53%

28.15%

1.38%

Minority interest in earnings of consolidated joint ventures

526

558

-5.7%

2,413

2,030

18.9%

HOTEL OPERATING PROFIT (Hotel EBITDA),

  excluding minority interest in joint ventures

$   39,239

$   35,471

10.6%

$ 157,817

$ 143,755

9.8%

NOTES:

  (1) The above pro forma table assumes the 63 hotel properties owned and included in continuing operations as of December 31, 2011, but not under    renovation during the three months ended December 31, 2011 were owned as of the beginning of the first comparative reporting period.    

  (2) Excluded Hotels Under Renovation: Capital Hilton, Courtyard Basking Ridge, Courtyard Foothill Ranch Irvine, Courtyard Legacy Park       Courtyard Louisville Airport, Courtyard Newark, Courtyard Oakland Airport, Courtyard Old Town Scottsdale, Courtyard Philadelphia Downtown,       Courtyard San Francisco Downtown, Courtyard Seattle Downtown, Crown Plaza La Concha-Key West, Embassy Suites Austin Arboretum,       Embassy Suites Dallas Galleria, Embassy Suites Flagstaff, Embassy Suites Houston, Embassy Suites Portland Downtown, Embassy Suites Walnut Creek,       Hilton Costa Mesa, Hilton Nassau Bay Clear Lake, Hilton Santa Fe, Hilton Tucson El Conquistador Golf Resort, Marriott Bridgewater,       Marriott Legacy Center, Residence Inn Jacksonville, Residence Inn Las Vegas, Sheraton San Diego Mission Valley, SpringHill Suites Charlotte,       SpringHill Suites Buford Mall of Georgia, SpringHill Suites Manhattan Beach, SpringHill Suites Philadelphia, SpringHill Suites Raleigh Airport,    

  SpringHill Suites Richmond    

PIM HIGHLAND HOLDING LLC

PRO FORMA HOTEL OPERATING PROFIT

(dollars in thousands)

(Unaudited)

71.74% PRO-RATA SHARE OF ALL HOTELS INCLUDED IN PIM HIGHLAND PORTFOLIO:

Three Months Ended

Year Ended

December 31,

December 31,

2011

2010

% Variance

2011

2010

% Variance

REVENUE

Rooms

$ 51,076

$ 49,792

2.6%

$ 202,506

$ 194,426

4.2%

Food and beverage

21,049

21,089

-0.2%

74,096

70,958

4.4%

Other

2,734

2,803

-2.5%

11,437

11,274

1.4%

Total hotel revenue

74,859

73,684

1.6%

288,039

276,658

4.1%

EXPENSES

Rooms

11,926

12,185

-2.1%

47,204

47,579

-0.8%

Food and beverage

13,696

14,404

-4.9%

50,618

50,776

-0.3%

Other direct

1,370

1,386

-1.2%

5,449

5,325

2.3%

Indirect  

22,097

21,773

1.5%

83,982

81,143