Ashford Hospitality Trust, Inc. (AHT)

Q4 2010 Earnings Conference Call

February 25, 2011, 11:00 am ET


Tripp Sullivan - Corporate Communications

Monty Bennett - CEO

David Kimichik – CFO

Douglas Kessler - President


Patrick Scholes - FBR Capital Markets

Ryan Meliker - Morgan Stanley

Bryan Maher - Citadel Securities

David Loeb - Robert W. Baird



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Good day ladies and gentlemen, thank you for standing by, welcome to the Ashford Hospitality fourth quarter 2010 conference call. During the presentation all participants will be in a listen only mode. Afterwards we will conduct a question-and-answer session. (Operator instructions) As a reminder this conference is being recorded Friday, February 25, 2011.

It is now my pleasure to turn the conference over to Mr. Tripp Sullivan of Corporate Communications. Please go ahead sir.

Tripp Sullivan

Thank you, welcome to the Ashford Hospitality Trust conference call to review the Company’s results for the fourth quarter of 2010. On the call today will be Monty Bennett, Chief Executive Officer, Douglas Kessler President and David Kimichik, Chief Financial Officer.

The results as well as notice to the accessibility of this conference call are on a listen only basis over the internet were released yesterday afternoon in a press release that has been covered by the financial media. As we start, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information are being made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are subject to numerous assumptions, uncertainties and known or un-known risks which could cause actual results to differ materially from those anticipated. These risk factors are more fully discussed in the section entitled risk factors and ask for the registration statement on form F-3 and other filings with the Securities and Exchange Commission. The forward looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them.

In addition certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings release and the company tables are scheduled which has been filed on form 8-K with the SEC on February 24, 2011 and may also be accessed through the company’s website at

Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. I will now turn the call over to Monty Bennett, please go ahead.

Monty Bennett

Thank you and good morning. Even though the industry is accelerating into recovery, let’s not forget that the most recent lodging downturn has been in unprecedented. In the midst of the great recession, it is worth noting how lodging REITs reacted differently. Some issue to equity of historically low prices, we however bought that half of the company shares. Some companies inadequately managed debt and interest expense, where since the beginning of 2008, we refinanced $671 million and carefully constructed various interest rate strategies that saved $126 million since inception.

Some companies appeared grid locked with regards to operating margins whereas we excelled at minimizing the impact. We did suffer losses associated with our mezzanine investment portfolio, but as a percentage of our gross assets; the total amount of the impairments equaled to a relatively small amount of 4.7%. But looking at our total investment in our mezzanine lending platform of $356 million, we anticipate that after all cash flow and return to principle is considered, we will have recovered approximately all of our initial investments, which is quite an accomplishment considering the debts of the downturn.

Our involvement in the mezz lending business has also led us to opportunities that we otherwise would not have been involved in. Our mezzanine team recognizes the inter-twines in complex relations among lodging debt and capital market variables. With this expertise, we will constantly strive to excel at minimizing losses in the downturn and maximizing the benefits of an upturn.

We believe the steps we took and will continue to take separating us from our peers and will continue to contribute to substantial shareholder value creation. We continue to demonstrate that our platform is adept at transacting across all segments in equity and debt both directly and via securities. These strategies have allowed us to outperform the peer average in terms of total shareholder returns since our IPO for the past seven, six, five, four, three, two and one years.

Our results for the fourth quarter of 2010 were strong, we finished with this record AFFO of $0.40 per share in the quarter and a record of $1.50 for the year reflecting for the year one of the best year-over-year growth rates of 34% to our lodging peer group. We have spoken before of our differentiated capital market and asset management techniques. Contributing to this performance were our operating performance, share buyback and interest rate strategy.

The fourth quarter was another good example of these strategies that worked on our hotel portfolio. We reported a 7.5% increase in RevPAR of the hotels not under renovation in the quarter. ADR was up 0.5% and occupancy was up 429 basis points. The industry is heading in the right direction now with the opportunity to drive ADR as an increasing component of RevPAR growth.

As in most cycles, some markets accelerate faster as the downturn and this recovery is no exception. Although, we see our portfolio diversity as an advantage; to date our RevPAR trend has lagged some of the growth in certain cities such as New York, Denver, New Orleans and Detroit where we have little exposure. As the lodging industry continues to improve broadly across the US, we would expect to see more of that pricing power come our way.

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