Ashford Hospitality Trust Reports Third Quarter Results RevPAR Growth of 6.6% for All Legacy Hotels

Adjusted EBITDA Increased 14.4% for the Third Quarter

Hotel EBITDA Margin Improved 216 Basis Points for All Hotels

DALLAS, Oct. 31, 2012 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) today reported the following results and performance measures for the third quarter ended September 30, 2012.  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 third quarter ended September 30, 2012, with the third quarter ended September 30, 2011 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

FINANCIAL HIGHLIGHTS

  • Adjusted EBITDA increased $10.1 million or 14.4% during the quarter
  • RevPAR increased 6.6% for all Legacy hotels in continuing operations, driven by a 5.2% increase in ADR and a 102 basis point increase in occupancy
  • RevPAR for all hotels in continuing operations, including the Highland Hospitality portfolio, increased 5.9% during the quarter
  • RevPAR increased 3.4% for all hotels in the Highland Hospitality portfolio, driven by a 4.7% increase in ADR
  • RevPAR for hotels in the Washington D.C. market area increased 6.1% during the quarter
  • Hotel operating profit for all hotels, including the Highland Hospitality portfolio, increased by $10.3 million, or 13.0%
  • Hotel operating profit margin increased 249 basis points for all Legacy hotels not under renovation in continuing operations
  • Hotel operating profit margin increased 230 basis points for all Highland Hospitality hotels not under renovation in continuing operations
  • Net loss attributable to common shareholders was $23.6 million, or $0.35 per diluted share, compared with net loss attributable to common shareholders of $28.6 million, or $0.43 per diluted share, in the prior-year quarter
  • Adjusted funds from operations (AFFO) was $0.31 per diluted share for the quarter as compared with $0.38 from the prior-year quarter; Interest Rate Derivative Income decreased by $10.2 million as the benefits from our Flooridor terminated in 2011, impacting AFFO per share by $0.12
  • In September 2012, the Company added a new participant to its senior credit facility, upsizing this facility to $165 million from $145 million
  • During the quarter a receiver was appointed to take over operations of the Hilton El Conquistador Resort in Tucson, AZ; the receiver now has full control of the hotel operations and cash flows; hotel cash flows since the appointment of the receiver have been excluded for purposes of calculating Adjusted EBITDA and AFFO
  • At the end of the third quarter 2012, Ashford had cash and cash equivalents of $146 million

CAPITAL ALLOCATION  

  • Capex invested in the quarter for the Legacy portfolio was $18.5 million bringing the year-to-date total to $62.6 million
  • Ashford's pro rata share of capex invested in the quarter for the Highland Hospitality portfolio was $6.7 million bringing the year-to-date total to $19.9 million

CAPITAL STRUCTURE
At September 30, 2012, Ashford had total assets of $3.5 billion in continuing operations and $4.5 billion overall including the Highland Hospitality portfolio which is not consolidated.  As of September 30, 2012, the Company had $2.3 billion of mortgage debt in continuing operations and $3.1 billion overall including Highland Hospitality. The Company's total combined debt had a blended average interest rate of 4.9%, with a weighted average debt maturity of 3.6 years.

During the third quarter of 2012, Ashford added a new participant to its senior credit facility, upsizing the revolving commitments under this facility to $165 million from $145 million.  The terms of the credit facility remain unchanged including the option, subject to lender approval, to further expand the revolving commitments under the facility to an aggregate size of $225 million.  As part of the expansion, Bank of America Merrill Lynch has been added to the syndicate of banks supporting the facility, which now consists of six banks including Bank of America Merrill Lynch, Deutsche Bank, Morgan Stanley, UBS, Credit Suisse, and KeyBank as lead agent.  The senior credit facility remains undrawn and all other Company debt is non-recourse.

Ashford continues to make progress regarding the refinancing or extension of its $101 million of loans in the Highland Hospitality portfolio set to mature in early 2013.  The trailing 12-month NOI debt yield on this high quality portfolio is currently 17.5%.  At this time, given the potential loan proceeds, there is no anticipated pay down required.  Further, Ashford has been in discussions with lenders regarding the refinancing of its $154 million non-recourse loan set to mature in December 2015, with a combined interest rate of 12.72%.  Given the current favorable interest rate environment and improved hotel performance, Ashford believes it is an appropriate time to address this portfolio loan.  The loan is secured by five hotels including: the Embassy Suites Crystal City, Embassy Suites Orlando Airport, Embassy Suites Santa Clara, Embassy Suites Portland and the Hilton Costa Mesa. 

During the quarter a receiver was appointed to take over the Hilton El Conquistador in Tucson, AZ.  The receiver has been granted possession and full control of the property including all accounts and cash flow.  Despite Ashford having no control of the property or cash flows and no ongoing liability, for GAAP purposes, the property will continue to be included in our consolidated financial statements until title to the property has been transferred from Ashford.  For purposes of calculating Adjusted EBITDA and AFFO, we have adjusted the results of operations for the period beginning when the receiver was appointed and Ashford no longer had any control or financial obligations for the hotel.  At the time the receiver was appointed, the hotel had $19.7 million of non-recourse mortgage debt and a trailing twelve-month EBITDA of negative $1.7 million.  By transferring this hotel to the lender, the Company will lower its overall debt level while increasing both EBITDA and AFFO. 

The Company also received a payment of $5 million during the quarter from a guarantor on a previously impaired mezzanine loan.  This payment is reflected on the income statement as a negative impairment charge and has been excluded for purposes of calculating Adjusted EBITDA and AFFO.

PORTFOLIO REVPAR
As of September 30, 2012, the Company's Legacy portfolio consisted of direct hotel investments with 95 properties classified in continuing operations, excluding the Hilton El Conquistador.  During the third quarter of 2012, 86 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 95 hotels) and proforma not under renovation basis (86 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its direct hotel portfolio.  Details of each category are provided in the tables attached to this release.

  • Proforma RevPAR increased 6.6% to $101.93 for all hotels in the Legacy portfolio on a 5.2% increase in ADR and a 102 basis point increase in occupancy
  • Proforma RevPAR increased 7.3% to $105.01 for hotels not under renovation in the Legacy portfolio on a 5.3% increase in ADR and a 148 basis point increase in occupancy
  • Proforma RevPAR increased 3.4% to $100.59 for all hotels in the Highland Hospitality portfolio on a 4.7% increase in ADR and a 90 basis point decrease in occupancy
  • Proforma RevPAR increased 4.3% to $100.00 for hotels not under renovation in the Highland Hospitality portfolio on a 4.7% increase in ADR and a 30 basis point decrease in occupancy

HIGHLAND HOSPITALITY PORTFOLIO UPDATE 
The Highland Hospitality portfolio experienced RevPAR growth of 3.4% during the third quarter of 2012, with RevPAR growth for hotels not under renovation in continuing operations of 4.3%.  The Highland Hospitality portfolio continued to experience strong EBITDA flow-through during the third quarter as a result of improved property management and the benefits of capital expenditures previously completed.  For all 28 hotels in the Highland Hospitality portfolio, Hotel EBITDA Margin increased 189 bps and Hotel EBITDA flow-through was 97%.  For the 25 hotels not under renovation during the third quarter 2012, Hotel EBITDA Margin increased 230 basis points and Hotel EBITDA flow-through was 95%.  Hotel EBITDA increased 10.5% in the third quarter for all hotels in the Highland Hospitality portfolio, and since the closing of the acquisition, trailing 12-month EBITDA has increased 18.5%. 

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS
During the quarter, Hotel operating profit (Hotel EBITDA) for all Legacy hotels increased 13.8% to $70.2 million.  For the 86 hotels that were not under renovation, Proforma Hotel EBITDA increased 15.2% to $65.9 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 249 basis points to 31.8% for the 86 Legacy hotels not under renovation.  For all 95 Legacy hotels included in continuing operations, Proforma Hotel EBITDA margin increased 221 basis points to 31.2%.

For the Company's 71.74% share of all hotels in the Highland Hospitality portfolio, Hotel operating profit (Hotel EBITDA) increased 10.5% to $19.4 million.  For the 25 hotels in the Highland Hospitality portfolio that were not under renovation, Proforma Hotel EBITDA increased 13.1% to $16.7 million.  Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 230 basis points to 26.7% for the 25 Highland Hospitality hotels not under renovation.  For all 28 Highland Hospitality hotels included in continuing operations, Proforma Hotel EBITDA margin increased 189 basis points to 27.0%.

Starting with its second quarter 2012 financial results, the Company added additional disclosure information regarding property level trailing 12-month Hotel EBITDA by debt pool.  The Company believes this additional disclosure will assist the investment community in analyzing Ashford and help analysts and investors see the benefits of the non-recourse nature of its property level debt.  Prior to providing this information, the investment community could only reference the Company's total EBITDA and total debt when applying a valuation multiple.  With this additional disclosure, analysts and investors can analyze the EBITDA of the Company by debt pool and when using a valuation multiple approach, can see where the market might be inadvertently implying negative equity value to certain debt pools.  Implied negative equity value in any debt pools may underestimate the benefits of non-recourse debt, and all of the Company's property level debt is non-recourse. 

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 Hospitality 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 95 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 September 14, 2012, Ashford announced that its Board of Directors had declared a quarterly cash dividend of $0.11 per diluted share for the Company's common stock for the third quarter ending September 30, 2012, payable October 15, 2012, to shareholders of record as of September 28, 2012.

Monty J. Bennett, Chief Executive Officer, commented, "Our third quarter results demonstrate the continuing improvement in the U.S. lodging industry as we make further progress in key areas such as operating margin expansion, RevPAR growth, and risk mitigation.  Year to date, our capital markets strategies continued to focus on improving our financial liquidity while addressing near-term debt maturities, both of which are top priorities for us.  Given the improving trends we are seeing in the real estate and debt markets, now is an opportune time for us to take advantage of these attractive interest rates to actively address our debt maturity schedule.  We remain committed to these objectives, which we consider essential to creating both near term and long term shareholder value within an environment where we continue to see improving trends in the hotel industry and the U.S. economy in general."

INVESTOR CONFERENCE CALL AND SIMULCAST
Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, November 1, 2012, at 11:00 a.m. ET.  The number to call for this interactive teleconference is (480) 629-9819.  A replay of the conference call will be available through Thursday November 8, 2012, by dialing (303) 590-3030 and entering the confirmation number, 4569160.

The Company will also provide an online simulcast and rebroadcast of its third quarter 2012 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, November 1, 2012, 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 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)








September 30,


December 31,



2012


2011



 (Unaudited) 



ASSETS





Investment in hotel properties, net

$     2,911,638


$     2,957,899


Cash and cash equivalents

146,393


167,609


Restricted cash

76,878


84,069


Accounts receivable, net of allowance of $224 and $212, respectively

35,399


28,623


Inventories

2,369


2,371


Notes receivable

11,297


11,199


Investment in unconsolidated joint ventures

161,873


179,527


Investments in securities and other

24,298


21,374


Deferred costs, net

16,581


17,421


Prepaid expenses

11,304


11,308


Derivative assets

14,247


37,918


Other assets

5,773


4,851


Intangible asset, net

2,743


2,810


Due from third-party hotel managers

64,239


62,747











Total assets

$     3,485,032


$     3,589,726









LIABILITIES AND EQUITY




Liabilities:





Indebtedness

$     2,312,208


$     2,362,458


Accounts payable and accrued expenses

100,285


82,282


Dividends payable

18,259


16,941


Unfavorable management contract liabilities

11,918


13,611


Due to related party, net

2,456


2,569


Due to third-party hotel managers

2,035


1,602


Liabilities associated with investments in securities and other

3,028


2,246


Other liabilities

5,938


5,400











Total liabilities

2,456,127


2,487,109









Redeemable noncontrolling interests in operating partnership

129,918


112,796









Equity:







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







Series A Cumulative Preferred Stock, 1,657,206 shares issued and outstanding at








September 30, 2012 and 1,487,900 shares issued and outstanding at December 31, 2011

17


15




Series D Cumulative Preferred Stock, 9,468,706 shares issued and outstanding at








September 30, 2012 and 8,966,797 shares issued and outstanding at December 31, 2011

95


90




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

46


46



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







issued, 68,159,616 and 68,032,289 shares outstanding, respectively 

1,249


1,249



Additional paid-in capital

1,762,755


1,746,259



Accumulated other comprehensive loss

(283)


(184)



Accumulated deficit

(716,316)


(609,272)



Treasury stock, at cost (56,737,149 shares and 56,864,476 shares, respectively)

(164,846)


(164,796)




Total shareholders' equity of the Company

882,717


973,407


Noncontrolling interests in consolidated joint ventures

16,270


16,414











Total equity

898,987


989,821












Total liabilities and equity

$     3,485,032


$     3,589,726









 

 

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)
















 Three Months Ended 


 Nine Months Ended 





 September 30, 


 September 30, 





2012


2011


2012


2011





 (Unaudited) 


 (Unaudited) 

REVENUE









Rooms

$    184,966


$    169,145


$    553,702


$    508,934


Food and beverage

35,034


33,486


121,151


113,135


Rental income from operating leases

-


1,304


-


4,008


Other

10,069


10,583


30,084


30,182














Total hotel revenue

230,069


214,518


704,937


656,259


Asset management fees and other

100


69


252


217














Total  Revenue

230,169


214,587


705,189


656,476












EXPENSES









Hotel operating expenses










Rooms

42,677


39,863


125,268


116,114



Food and beverage

25,911


25,155


83,311


78,757



Other expenses

72,121


68,351


217,182


202,753



Management fees 

9,378


8,466


28,576


26,509















Total hotel operating expenses

150,087


141,835


454,337


424,133













Property taxes, insurance, and other

11,876


12,297


34,556


34,953


Depreciation and amortization

34,200


33,776


102,739


99,580


Impairment charges

(5,066)


(92)


(1,133)


(4,748)


Gain on insurance settlement

-


-


-


(1,905)


Transaction acquisition costs

-


27


-


(791)


Corporate, general, and administrative:










Stock/unit-based compensation

4,332


3,069


13,701


8,428



Other general and administrative

6,519


6,025


19,327


25,554















Total Operating Expenses

201,948


196,937


623,526


585,204












OPERATING INCOME

28,221


17,650


81,663


71,272













Equity in earnings (loss) of unconsolidated joint ventures

(7,373)


(6,228)


(17,654)


19,596


Interest income

30


11


84


70


Other income

8,671


17,349


22,988


83,509


Interest expense

(35,928)


(33,388)


(105,045)


(100,384)


Amortization of loan costs

(1,612)


(1,142)


(4,289)


(3,532)


Write-off of deferred loan costs

-


(729)


-


(729)


Unrealized gain (loss) on investments

(48)


(352)


3,365


(314)


Unrealized loss on derivatives

(9,353)


(16,727)


(26,753)


(51,276)












INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

(17,392)


(23,556)


(45,641)


18,212


Income tax expense

(639)


(1,077)


(2,884)


(2,407)












INCOME (LOSS) FROM CONTINUING OPERATIONS

(18,031)


(24,633)


(48,525)


15,805

Loss from discontinued operations

-


(351)


-


(4,170)












NET INCOME (LOSS)

(18,031)


(24,984)


(48,525)


11,635

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

219


832


444


(537)

Net (income) loss attributable to redeemable noncontrolling interests in operating partnership

2,665


2,935


6,902


1,207












NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY

(15,147)


(21,217)


(41,179)


12,305

Preferred dividends

(8,490)


(7,415)


(25,312)


(38,741)












NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$    (23,637)


$    (28,632)


$    (66,491)


$    (26,436)












INCOME PER SHARE – BASIC AND DILUTED:









Basic:










Income (loss) from continuing operations attributable to common shareholders

$        (0.35)


$        (0.43)


$        (0.99)


$        (0.37)



Loss from discontinued operations attributable to common shareholders

-


-


-


(0.07)














Net income (loss) attributable to common shareholders

$        (0.35)


$        (0.43)


$        (0.99)


$        (0.44)














Weighted average common shares outstanding – basic

67,659


66,801


67,484


60,601













Diluted:










Income (loss) from continuing operations attributable to common shareholders

$        (0.35)


$        (0.43)


$        (0.99)


$        (0.37)



Loss from discontinued operations attributable to common shareholders

-


$              -


-


(0.07)














Net income (loss) attributable to common shareholders

$        (0.35)


$        (0.43)


$        (0.99)


$        (0.44)














Weighted average common shares outstanding – diluted

67,659


66,801


67,484


60,601













Dividends declared per common share:

$          0.11


$          0.10


$          0.33


$          0.30












Amounts attributable to common shareholders:









Income (loss) from continuing operations, net of tax

$    (15,147)


$    (20,906)


$    (41,179)


$      16,862


Loss from discontinued operations, net of tax

-


(311)


-


(4,557)


Preferred dividends

(8,490)


(7,415)


(25,312)


(38,741)













Net income (income) attributable to common shareholders

$    (23,637)


$    (28,632)


$    (66,491)


$    (26,436)












 

 ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES 

 RECONCILIATION OF NET INCOME (LOSS) TO EBITDA 

 (in thousands) 

 (Unaudited) 












 Three Months Ended 


 Nine Months Ended 




 September 30, 


 September 30, 




2012


2011


2012


2011











 Net income (loss) 

$    (18,031)


$    (24,984)


$    (48,525)


$      11,635

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

219


832


444


(537)

 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 

2,665


2,935


6,902


1,207

 Net income (loss) attributable to the Company 

(15,147)


(21,217)


(41,179)


12,305












 Interest income 

(30)


(11)


(84)


(70)


 Interest expense and amortization of loan costs 

37,190


34,071


108,280


103,233


 Depreciation and amortization  

33,434


32,947


100,451


97,510


 Impairment charges 

(5,066)


(92)


(1,133)


1,489


 Income tax expense 

639


1,077


2,884


2,492


 Net income (loss) attributable to redeemable noncontrolling interests in operating partnership 

(2,665)


(2,935)


(6,902)


(1,207)


 Equity in (earnings) loss of unconsolidated joint ventures 

7,373


6,228


17,654


(19,596)


 Company's portion of EBITDA of unconsolidated joint ventures 

17,996


18,276


57,676


86,185











 EBITDA 


73,724


68,344


237,647


282,341












 Amortization of unfavorable management contract liabilities 

(565)


(565)


(1,694)


(1,694)


 Gain on sale/disposition of properties 

-


311


-


(2,650)


 Non-cash gain on insurance settlements 

-


-


-


(1,157)


 Write-off of loan costs, premiums, and exit fees, net 

-


729


-


1,677


 Other income (1) 

(8,671)


(17,349)


(22,988)


(83,509)


 Transaction acquisition costs 

-


27


-


(791)


 Legal costs related to litigation settlements (2) 

755


-


2,463


6,875


 Unrealized (gain) loss on investments 

48


352


(3,365)


314


 Unrealized loss on derivatives 

9,353


16,727


26,753


51,276


 El Conquistador results since appointment of receiver 

897


-


897


-


 Equity-based compensation 

4,332


3,069


13,701


8,428


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

81


(1,772)


225


(41,566)











 Adjusted EBITDA 

$      79,954


$      69,873


$    253,639


$    219,544











(1)

Other income primarily consisting of income from interest rate derivatives in both periods, net realized (gain) loss on investments in securities and other in both periods, and a $30.0 million litigation settlement in the nine months ended September 30, 2011 are excluded from Adjusted EBITDA.  


(2)

Legal costs associated with litigation settlements are excluded from Adjusted EBITDA.











 NOTE:  

The above table excludes the operating results for the Hilton El Conquistador in Tucson, AZ after August 15, 2012.  During the third quarter 2012, a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.











 











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

 (in thousands, except per share amounts) 

 (Unaudited) 














 Three Months Ended 


 Nine Months Ended 




 September 30, 


 September 30, 




2012


2011


2012


2011











 Net income (loss)   

$    (18,031)


$    (24,984)


$    (48,525)


$      11,635

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

219


832


444


(537)

 Net (income) loss attributable to redeemable noncontrolling interests in operating partnership 

2,665


2,935


6,902


1,207

 Preferred dividends 

(8,490)


(7,415)


(25,312)


(38,741)











 Net income (loss) attributable to common shareholders 

(23,637)


(28,632)


(66,491)


(26,436)












 Depreciation and amortization on real estate 

33,398


32,883


100,289


97,322


 Impairment charges 

(5,066)


(92)


(1,133)


1,489


 Gain on sale/dispoistion of properties 

-


311


-


(2,650)


 Non-cash gain on insurance settlements 

-


-


-


(1,157)


 Net income (loss) attributable to redeemable noncontrolling interests in operating partnership 

(2,665)


(2,935)


(6,902)


(1,207)


 Equity in (earnings) loss of unconsolidated joint ventures 

7,373


6,228


17,654


(19,596)


 Company's portion of FFO of unconsolidated joint ventures 

5,845


4,453


21,255


3,454











 FFO available to common shareholders 

15,248


12,216


64,672


51,219












 Dividends on convertible preferred stock 

-


-


-


1,374


 Write-off of loan costs, premiums, and exit fees, net 

-


729


-


1,677


 Transaction acquisition costs 

-


27


-


(791)


 Legal costs related to litigation settlements (2) 

755


-


2,463


6,875


 Other income (1) 

(607)


853


1,065


(29,147)


 Unrealized (gain) loss on investments 

48


352


(3,365)


314


 Unrealized loss on derivatives 

9,353


16,727


26,753


51,276


 Non-cash dividends on Series B-1 preferred stock 

-


-


-


17,363


 El Conquistador results, interest, and amortization of deferred loan costs since appointment of receiver 

1,144


-


1,144


-


 Equity-based compensation adjustment related to modified employment terms 

-


-


480


-


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

89


836


233


15,114











 Adjusted FFO available to common shareholders 

$      26,030


$      31,740


$      93,445


$    115,274











 Adjusted FFO per diluted share available to common shareholders 

$          0.31


$          0.38


$          1.10


$          1.44











 Weighted average diluted shares 

85,344


83,512


84,976


79,885











(1)

Other income primarily consisting of net realized (gain) loss on investments in securities and other in both periods and a $30.0 million litigation settlement in the nine months ended September 30, 2011 are excluded from Adjusted FFO.  














(2)

 Legal costs associated with litigation settlements are excluded from Adjusted FFO.


















 NOTE:

The above table excludes the operating results for the Hilton El Conquistador in Tucson, AZ after August 15, 2012.  During the third quarter 2012, a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.









ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

LEGACY PORTFOLIO ONLY

SUMMARY OF INDEBTEDNESS OF CONTINUING OPERATIONS

SEPTEMBER 30, 2012

(dollars in thousands)

(Unaudited)





































 Fixed-Rate 


 Floating-Rate 


 Total 


 TTM Hotel 


 TTM EBITDA 

Indebtedness


Maturity


Interest Rate


 Debt 


 Debt 


 Debt 


 EBITDA 


 Debt Yield 
















 Aareal - 2 hotels 


August 2013


LIBOR + 2.75%


$                 -


$           142,667


$                142,667


$               24,533


17.2%

 BoA MIP - 5 hotels 


March 2014


LIBOR + 4.50%


-


175,083

(1)

175,083


18,548


10.6%

 JPM Floater - 9 hotels 


May 2014


LIBOR + 6.50%


-


135,000

(2)

135,000


16,098


11.9%

 GEMSA Manchester - 1 hotel 


May 2014


8.32%


5,350


-


5,350


509


9.5%

 Senior credit facility - Various 


September 2014


LIBOR + 2.75% to 3.5%


-


-


-


 N/A 


N/A

 UBS 1 - 8 hotels 


December 2014


5.75%


105,246


-


105,246


12,292


11.7%

 Merrill 1 - 10 hotels 


July 2015


5.22%


153,638


-


153,638


19,246


12.5%

 UBS 2 - 8 hotels 


December 2015


5.70%


97,394


-


97,394


13,190


13.5%

 Prudential/Wheelock - 5 hotels 


December 2015


12.72%


153,859


-


153,859


24,170


15.7%

 Merrill 2 - 5 hotels 


February 2016


5.53%


110,945


-


110,945


17,065


15.4%

 Merrill 3 - 5 hotels 


February 2016


5.53%


92,007


-


92,007


15,133


16.4%

 Merrill 7 - 5 hotels 


February 2016


5.53%


79,699


-


79,699


12,635


15.9%

 Wachovia Philly CY - 1 hotel 


April 2017


5.91%


34,838


-


34,838


9,637


27.7%

 Wachovia 3 - 2 hotels 


April 2017


5.95%


127,665


-


127,665


13,882


10.9%

 Wachovia 7 - 3 hotels 


April 2017


5.95%


259,786


-


259,786


23,354


9.0%

 Wachovia 1 - 5 hotels 


April 2017


5.95%


115,071


-


115,071


10,508


9.1%

 Wachovia 5 - 5 hotels 


April 2017


5.95%


103,431


-


103,431


9,316


9.0%

 Wachovia 6 - 5 hotels 


April 2017


5.95%


157,382


-


157,382


15,022


9.5%

 Wachovia 2 - 7 hotels 


April 2017


5.95%


125,887


-


125,887


11,424


9.1%

 TIF Philly CY - 1 hotel 


June 2018


12.85%


8,098


-


8,098


 N/A 


N/A

 GACC Gateway - 1 hotel 


November 2020


6.26%


102,877


-


102,877


16,485


16.0%

 Zion Jacksonville RI - 1 hotel 


April 2034


Greater of 6% or Prime + 1%


-


6,545


6,545


1,099


16.8%

 Unencumbered hotels 






-


-


-


2,724


N/A
















 Total 






$    1,833,173


$           459,295


$             2,292,468


$             286,870


12.5%
















 Percentage 






80.0%


20.0%


100.0%




















 Weighted average interest rate 


6.44%


4.78%


6.11%




















 Total indebtedness with effect of interest rate swaps 


$    1,833,173


$           459,295


$             2,292,468




















 Percentage with the effect of interest rate swaps 


80.0%


20.0%


100.0%




















 Weighted average interest rate with the effect of interest rate swaps 


4.72%

(3)

4.78%

(3)

4.73%




















All indebtedness is non-recourse with the exception of the credit facility.










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







(2)This mortgage loan has three one-year extension options beginning May 2014, subject to satisfaction of certain conditions.








(3)These rates are calculated assuming the LIBOR rate stays at the September 30, 2012 level and with the effect of our interest rate derivatives.






















NOTE:  The above table excludes the debt associated with the Hilton El Conquistador in Tucson, AZ.  During the third quarter a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.
































HIGHLAND HOSPITALITY PORTFOLIO

(PIM HIGHLAND HOLDING LLC)

SUMMARY OF INDEBTEDNESS

ASHFORD'S PRO RATA 71.74% SHARE

SEPTEMBER 30, 2012

(dollars in thousands)

(Unaudited)





































 Fixed-Rate 


 Floating-Rate 


 Total 


 TTM Hotel 


 TTM EBITDA 

Indebtedness


Maturity


Interest Rate


 Debt 


 Debt 


 Debt 


 EBITDA 


 Debt Yield 
















 CIGNA Boston Back Bay - 1 hotel 


January 2013


5.96%


$         45,426


$                    -


$                  45,426


$                 9,003


19.8%

 CIGNA Westin Princeton - 1 hotel 


February 2013


5.97%


23,081


-


23,081


3,396


14.7%

 CIGNA Nashville Renaissance - 1 hotel 


April 2013


6.11%


32,330


-


32,330


8,247


25.5%

 Wells Senior - 25 hotels 


March 2014


LIBOR + 2.75%


-


380,222

(1)

380,222


60,392


15.9%

 Mezz 1 - 28 hotels 


March 2014


Greater of 7.00% or LIBOR + 6.00%


-


103,512

(1)

103,512


81,038


13.9%

 Mezz 2 - 28 hotels 


March 2014


Greater of 8.00% or LIBOR + 7.00%


-


98,541

(1)

98,541


81,038


11.9%

 Mezz 3 - 28 hotels 


March 2014


Greater of 10.50% or LIBOR + 9.50%


-


84,464

(1)

84,464


81,038


10.6%

 Mezz 4 - 28 hotels 


March 2014


LIBOR + 2.00%




13,218

(1)

13,218


81,038


10.4%
















 Total (Ashford's 71.74% share only) 






$       100,837


$           679,957


$                780,794


$               81,038


10.4%
















 Percentage 






12.9%


87.1%


100.0%




















 Weighted average interest rate 






6.01%


5.23%


5.33%




















 Percentage with the effect of interest rate swaps 





12.9%


87.1%


100.0%




















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


$    1,934,010


$        1,139,252


$             3,073,262


$             367,908


12.0%
















 Percentage with the effect of interest rate swaps 




62.9%


37.1%


100.0%




















 Weighted average interest rate with the effect of interest rate swaps 



4.79%


5.05%


4.88%





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


























NOTE:  The above table excludes the debt associated with the Hilton El Conquistador in Tucson, AZ.  During the third quarter a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.

 ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES 

LEGACY PORTFOLIO ONLY

 INDEBTEDNESS BY MATURITY ASSUMING EXTENSION OPTIONS ARE EXERCISED 

 SEPTEMBER 30, 2012 

 (in thousands) 

 (Unaudited) 







































2012


2013


2014


2015


2016


 Thereafter 


 Total 


















 Aareal - 2 hotels 



$              -


$        140,167


$               -


$              -


$              -


$                  -


140,167

 GEMSA Manchester - 1 hotel 


-


-


5,004


-


-


-


5,004

 Senior credit facility - Various 


-


-


-


-


-


-


-

 UBS 1 - 8 hotels 



-


-


100,119


-


-


-


100,119

 BoA MIP - 5 hotels 


-


-


-


176,400


-


-


176,400

 Merrill 1 - 10 hotels 


-


-


-


142,922


-


-


142,922

 UBS 2 - 8 hotels 



-


-


-


90,680


-


-


90,680

 Prudential/Wheelock - 5 hotels 

-


-


-


147,683


-


-


147,683

 Merrill 2 - 5 hotels 


-


-


-


-


101,740


-


101,740

 Merrill 3 - 5 hotels 


-


-


-


-


84,374


-


84,374

 Merrill 7 - 5 hotels 


-


-


-


-


73,086


-


73,086

 JPM Floater - 9 hotels 


-


-


-


-


-


135,000


135,000

 Wachovia Philly CY - 1 hotel 


-


-


-


-


-


32,532


32,532

 Wachovia 3 - 2 hotels 


-


-


-


-


-


119,245


119,245

 Wachovia 7 - 3 hotels 


-


-


-


-


-


242,201


242,201

 Wachovia 1 - 5 hotels 


-


-


-


-


-


107,351


107,351

 Wachovia 5 - 5 hotels 


-


-


-


-


-


96,491


96,491

 Wachovia 6 - 5 hotels 


-


-


-


-


-


146,823


146,823

 Wachovia 2 - 7 hotels 


-


-


-


-


-


117,441


117,441

 TIF Philly CY - 1 hotel 


-


-


-


-


-


8,098


8,098

 GACC Gateway - 1 hotel 


-


-


-


-


-


89,886


89,886

 Zion Jacksonville RI - 1 hotel 


-


-


-


-


-


-


-


















 Principal due in future periods 


$              -


$         140,167


$      105,123


$    557,685


$    259,200


$     1,095,068


$     2,157,243


















 Scheduled amortization payments remaining 

10,507


31,030


30,978


28,230


16,723


17,757


135,225


















 Total indebtedness of continuing operations 

$     10,507


$         171,197


$      136,101


$    585,915


$    275,923


$     1,112,825


$     2,292,468


















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

























 NOTE:  The above table excludes the debt associated with the Hilton El Conquistador in Tucson, AZ.  During the third quarter a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.


















































HIGHLAND HOSPITALITY PORTFOLIO

 (PIM HIGHLAND HOLDING LLC) 

 INDEBTEDNESS BY MATURITY 

 ASSUMING EXTENSION OPTIONS ARE EXERCISED 

 ASHFORD'S PRO RATA 71.74% SHARE 

 SEPTEMBER 30, 2012 

 (in thousands) 

 (Unaudited) 







































2012


2013


2014


2015


2016


 Thereafter 


 Total 


















 CIGNA Boston Back Bay - 1 hotel 

$               -


$            45,215


$               -


$               -


$               -


$                  -


$          45,215

 CIGNA Westin Princeton - 1 hotel 

-


22,939


-


-


-


-


22,939

 CIGNA Nashville Renaissance - 1 hotel 

-


31,774


-


-


-


-


31,774

 Wells Senior - 25 hotels 


-


-


-


-


380,222


-


380,222

 Mezz 1 - 28 hotels 


-


-


-


-


103,512


-


103,512

 Mezz 2 - 28 hotels 


-


-


-


-


98,541


-


98,541

 Mezz 3 - 28 hotels 


-


-


-


-


84,464


-


84,464

 Mezz 4 - 28 hotels 


-


-


-


-


13,218


-


13,218


















 Principal due in future periods 


$               -


$            99,928


$               -


$               -


$    679,957


$                  -


$        779,885


















 Scheduled amortization payments remaining 

447


462


-


-


-


-


909


















 Total indebtedness of continuing operations (Ashford's 71.74% share only) 

$           447


$          100,390


$               -


$               -


$    679,957


$                  -


$        780,794


















 Total indebtedness of continuing operations plus Ashford's 














     71.74% share of PIM Highland Holding LLC 

$      10,954


$          271,587


$    136,101


$    585,915


$    955,880


$    1,112,825


$     3,073,262


















 NOTE:  The above table excludes the debt associated with the Hilton El Conquistador in Tucson, AZ.  During the third quarter a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.










 

ASHFORD HOSPITALITY TRUST, INC.

KEY PERFORMANCE INDICATORS - PRO FORMA

LEGACY PORTFOLIO ONLY

(dollars in thousands)

(Unaudited)
































Three Months Ended


Nine Months Ended




September 30,


September 30,




2012


2011


% Variance


2012


2011


% Variance















ALL HOTELS INCLUDED IN CONTINUING OPERATIONS:












Room revenues (in thousands)

$       182,019


$       170,699


6.63%


$      542,244


$      512,928


5.72%



RevPAR

$         101.93


$           95.59


6.63%


$        101.63


$          96.32


5.51%



Occupancy

76.46%


75.44%


1.02%


75.40%


74.10%


1.30%



ADR

$         133.32


$         126.71


5.22%


$        134.78


$        129.99


3.68%















NOTES:














(1)

The above pro forma table assumes the 95 hotel properties owned and included in continuing operations at September 30, 2012 were owned as of the



beginning of the period presented.



























(2)

The above table excludes the operating results for the Hilton El Conquistador in Tucson, AZ.  During the third quarter 2012, a receiver was appointed to take over this hotel and the receiver now has full control of the hotel operations and cash flow.







ALL HOTELS NOT UNDER RENOVATION













INCLUDED IN CONTINUING OPERATIONS: