UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-31775

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland		86-1062192
(State or other jurisdiction of incorporation or organization)		(IRS employer identification number)
14185 Dallas Parkway, Suite 1100 Dallas, Texas		75254
(Address of principal executive offices)		(Zip code)

(972) 490-9600
(Registrant’s telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act):

Large accelerated Filer o		Accelerated filer þ		Non-accelerated Filer o		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Common Stock, $0.01 par value per share		68,030,940
(Class)		Outstanding at August 5, 2011

 

 

ASHFORD HOSPITALITY TRUST, INC
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2011

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (Unaudited)			3
Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010			3
Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2011 and 2010			4
Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2011 and 2010			5
Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2011			6
Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2011 and 2010			7
Notes to Consolidated Financial Statements			8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			34
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			45
ITEM 4. CONTROLS AND PROCEDURES			45
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS			46
ITEM 1A. RISK FACTORS			46
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			46
ITEM 6. EXHIBITS			47
SIGNATURES			48
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

		June 30,				December 31,
		2011				2010
		(Unaudited)
Assets
Investments in hotel properties, net		$	2,983,582			$	3,023,736
Cash and cash equivalents			154,221				217,690
Restricted cash			74,257				67,666
Accounts receivable, net of allowance of $191 and $298, respectively			39,758				27,493
Inventories			2,583				2,909
Notes receivable			3,039				20,870
Investment in unconsolidated joint ventures			190,824				15,000
Assets held for sale			10,032				144,511
Deferred costs, net			16,883				17,519
Prepaid expenses			15,134				12,727
Interest rate derivatives			72,327				106,867
Other assets			4,092				7,502
Intangible assets, net			2,854				2,899
Due from third-party hotel managers			55,248				49,135
Total assets		$	3,624,834			$	3,716,524
Liabilities and Equity
Liabilities:
Indebtedness		$	2,445,424			$	2,518,164
Indebtedness of assets held for sale			—				50,619
Capital leases payable			12				36
Accounts payable and accrued expenses			86,663				79,248
Dividends payable			15,165				7,281
Unfavorable management contract liabilities			14,928				16,058
Due to related party			1,656				2,400
Due to third-party hotel managers			2,270				1,870
Other liabilities			4,567				4,627
Other liabilities of assets held for sale			—				2,995
Total liabilities			2,570,685				2,683,298
Commitments and contingencies (Note 13)
Preferred stock, $0.01 par value, 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			163,021				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 at June 30, 2011 and December 31, 2010			15				15
Series D Cumulative Preferred Stock, 8,966,797 shares issued and outstanding at June 30, 2011 and December 31, 2010			90				90
Series E Cumulative Preferred Stock, 3,350,000 shares issued and outstanding at June 30, 2011			34				—
Common stock, $0.01 par value, 200,000,000 shares authorized, 124,896,765 and 122,403,893 shares issued at June 30, 2011 and December 31, 2010; 61,030,940 and 58,999,324 shares outstanding at June 30, 2011 and December 31, 2010			1,249				1,234
Additional paid-in capital			1,654,956				1,552,657
Accumulated other comprehensive loss			(287	)			(550	)
Accumulated deficit			(589,434	)			(543,788	)
Treasury stock, at cost, 63,865,825 and 64,404,569 shares at June 30, 2011 and December 31, 2010			(190,650	)			(192,850	)
Total shareholders’ equity of the Company			875,973				816,808
Noncontrolling interests in consolidated joint ventures			15,155				16,710
Total equity			891,128				833,518
Total liabilities and equity		$	3,624,834			$	3,716,524

See Notes to Consolidated Financial Statements.

ASHFORD HOSPITAL ITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(Unaudited)
Revenue
Rooms		$	177,040			$	164,762			$	339,789			$	315,820
Food and beverage			41,242				40,817				79,649				76,986
Rental income from operating leases			1,484				1,454				2,704				2,543
Other			10,253				10,122				19,599				19,923
Total hotel revenue			230,019				217,155				441,741				415,272
Interest income from notes receivable			—				346				—				683
Asset management fees and other			80				138				148				212
Total revenue			230,099				217,639				441,889				416,167
Expenses
Hotel operating expenses:
Rooms			39,205				36,716				76,251				71,215
Food and beverage			27,121				27,119				53,602				52,601
Other expenses			68,928				68,091				134,402				130,529
Management fees			9,184				8,834				18,043				17,166
Total hotel operating expenses			144,438				140,760				282,298				271,511
Property taxes, insurance and other			11,769				12,313				22,656				25,390
Depreciation and amortization			33,027				32,906				65,804				66,749
Impairment charges			(4,316	)			(1,188	)			(4,656	)			(1,957	)
Gain on insurance settlement			(1,905	)			—				(1,905	)			—
Transaction acquisition costs			406				—				(818	)			—
Corporate general and administrative			11,005				8,323				24,888				14,981
Total expenses			194,424				193,114				388,267				376,674
Operating income			35,675				24,525				53,622				39,493
Equity in earnings (loss) of unconsolidated joint ventures			(2,301	)			664				25,824				1,322
Interest income			23				51				59				112
Other income			18,157				15,652				66,160				31,171
Interest expense and amortization of loan costs			(34,808	)			(35,321	)			(69,386	)			(70,385	)
Unrealized gain (loss) on derivatives			(17,694	)			16,534				(34,511	)			30,442
Income (loss) from continuing operations before income taxes			(948	)			22,105				41,768				32,155
Income tax expense			(285	)			(414	)			(1,329	)			(458	)
Income (loss) from continuing operations			(1,233	)			21,691				40,439				31,697
Loss from discontinued operations			(6,029	)			(14,189	)			(3,819	)			(18,970	)
Net income (loss)			(7,262	)			7,502				36,620				12,727
(Income) loss from consolidated joint ventures attributable to noncontrolling interests			(438	)			427				(1,369	)			1,129
Net (income) loss attributable to noncontrolling interests in operating partnership			3,389				(1,129	)			(1,729	)			(1,921	)
Net income (loss) attributable to the Company			(4,311	)			6,800				33,522				11,935
Preferred dividends			(24,771	)			(4,831	)			(31,326	)			(9,661	)
Net income (loss) attributable to common shareholders		$	(29,082	)		$	1,969			$	2,196			$	2,274
Income (loss) per share — Basic
Income (loss) from continuing operations attributable to common shareholders		$	(0.40	)		$	0.27			$	0.11			$	0.34
Loss from discontinued operations attributable to common shareholders			(0.09	)			(0.23	)			(0.07	)			(0.30	)
Net income (loss) attributable to common shareholders		$	(0.49	)		$	0.04			$	0.04			$	0.04
Income (loss) per share — Diluted
Income (loss) from continuing operations attributable to common shareholders		$	(0.40	)		$	0.25			$	0.11			$	0.33
Loss from discontinued operations attributable to common shareholders			(0.09	)			(0.19	)			(0.07	)			(0.26	)
Net income (loss) attributable to common shareholders		$	(0.49	)		$	0.06			$	0.04			$	0.07
Weighted average common shares outstanding — basic			59,482				50,716				58,157				51,953
Weighted average common shares outstanding — diluted			59,482				72,981				58,157				59,401
Dividends declared per common share		$	0.10			$	—			$	0.20			$	—
Amounts attributable to common shareholders:
Income from continuing operations, net of tax		$	969			$	18,659			$	37,768			$	27,871
Loss from discontinued operations, net of tax			(5,280	)			(11,859	)			(4,246	)			(15,936	)
Preferred dividends			(24,771	)			(4,831	)			(31,326	)			(9,661	)
Net income (loss) attributable to common shareholders		$	(29,082	)		$	1,969			$	2,196			$	2,274

See Notes to Consolidated Financial Statements.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2011				2010				2011				2010
						(Unaudited)
Net income (loss)		$	(7,262	)		$	7,502			$	36,620			$	12,727
Other comprehensive income, net of tax:
Change in unrealized loss on derivatives			(24	)			(84	)			(16	)			(254	)
Reclassification to interest expense			206				164				392				275
Total other comprehensive income			182				80				376				21
Comprehensive income (loss)			(7,080	)			7,582				36,996				12,748
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated joint ventures			(479	)			402				(1,445	)			1,096
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership			3,372				(1,138	)			(1,766	)			(1,920	)
Comprehensive income (loss) attributable to the Company		$	(4,187	)		$	6,846			$	33,785			$	11,924

See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)

																																																														Redeemable
																																										Accumulated												Noncontrolling								Noncontrolling
		Preferred Stock																																Additional								Other												Interests in								Interests in
		Series A								Series D								Series E								Common Stock								Paid-in				Accumulated				Comprehensive				Treasury Stock								Consolidated								Operating
		Shares				Amounts				Shares				Amounts				Shares				Amounts				Shares				Amounts				Capital				Deficit				Income/(Loss)				Shares				Amounts				Joint Ventures				Total				Partnership
Balance at January 1, 2011			1,488			$	15				8,967			$	90				—			$	—				123,404			$	1,234			$	1,552,657			$	(543,788	)		$	(550	)			(64,404	)		$	(192,850	)		$	16,710			$	833,518			$	126,722
Reissuance of treasury shares			—				—				—				—				—				—				—				—				1,472				—				—				300				1,342				—				2,814				—
Issuance of Series E preferred stock			—				—				—				—				3,350				34				—				—				80,798				—				—				—				—				—				80,832				—
Conversion of Series B-1 preferred stock			—				—				—				—				—				—				1,393				14				17,349				(17,363	)			—				—				—				—				—				—
Forfeiture of restricted shares			—				—				—				—				—				—				—				—				10				—				—				(27	)			(284	)			—				(274	)			—
Issuance of restricted shares/units under equity-based compensation			—				—				—				—				—				—				—				—				(1,142	)			—				—				265				1,142				—				—				111
Equity-based compensation expense			—				—				—				—				—				—				—				—				1,923				—				—				—				—				—				1,923				3,441
Net income			—				—				—				—				—				—				—				—				—				33,522				—				—				—				1,369				34,891				1,729
Shareholder short swing profit payments			—				—				—				—				—				—				—				—				859				—				—				—				—				—				859				—
Dividends declared — Common shares			—				—				—				—				—				—				—				—				—				(12,044	)			—				—				—				—				(12,044	)			—
Dividends declared — Preferred A shares			—				—				—				—				—				—				—				—				—				(1,590	)			—				—				—				—				(1,590	)			—
Dividends declared — Preferred B-1 shares			—				—				—				—				—				—				—				—				—				(1,374	)			—				—				—				—				(1,374	)			—
Dividends declared — Preferred D shares			—				—				—				—				—				—				—				—				—				(9,470	)			—				—				—				—				(9,470	)			—
Dividends declared — Preferred E shares			—				—				—				—				—				—				—				—				—				(1,529	)			—				—				—				—				(1,529	)			—
Unrealized loss on derivatives			—				—				—				—				—				—				—				—				—				—				(14	)			—				—				—				(14	)			(2	)
Reclassification to interest expense			—				—				—				—				—				—				—				—				—				—				277				—				—				76				353				39
Distributions to noncontrolling interests			—				—				—				—				—				—				—				—				—				—				—				—				—				(3,000	)			(3,000	)			(3,786	)
Redemption/conversion of operating partnership units			—				—				—				—				—				—				100				1				1,030				(66	)			—				—				—				—				965				(965	)
Operating partnership units redemption value adjustments			—				—				—				—				—				—				—				—				—				(35,732	)			—				—				—				—				(35,732	)			35,732
Balance at June 30, 2011			1,488			$	15				8,967			$	90				3,350			$	34				124,897			$	1,249			$	1,654,956			$	(589,434	)		$	(287	)			(63,866	)		$	(190,650	)		$	15,155			$	891,128			$	163,021

See Notes to Consolidated Financial Statements.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

		Six Months Ended
		June 30,
		2011				2010
		(Unaudited)
Cash Flows from Operating Activities
Net income		$	36,620			$	12,727
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation and amortization			66,196				73,478
Impairment charges			1,581				10,111
Equity in earnings of unconsolidated joint venture			(25,824	)			(1,322	)
Gain on insurance settlements			(1,905	)			—
Distributions of earnings from unconsolidated joint venture			—				414
Income from derivatives			(36,160	)			(31,241	)
Amortization of loan costs, write-off of loan costs and exit fees			3,338				2,998
Gain on disposition of hotel properties			(2,961	)			—
Unrealized (gain) loss on derivatives			34,511				(30,442	)
Equity-based compensation expense			5,360				3,239
Changes in operating assets and liabilities
Restricted cash			(6,591	)			5,336
Accounts receivable and inventories			(12,148	)			(11,658	)
Prepaid expenses and other assets			(3,247	)			(2,783	)
Accounts payable and accrued expenses			8,844				24,018
Due to/from related parties			(744	)			400
Due to/from third-party hotel managers			(5,713	)			2,267
Other liabilities			(1,080	)			(745	)
Net cash provided by operating activities			60,077				56,797
Cash Flows from Investing Activities
Repayments of notes receivable			22,487				21,984
Proceeds from sale/disposition of properties			144,077				—
Investment in unconsolidated joint venture			(145,750	)			—
Acquisition of condominium properties			(12,000	)			—
Improvements and additions to hotel properties			(28,348	)			(33,491	)
Insurance proceeds			748				—
Net cash used in investing activities			(18,786	)			(11,507	)
Cash Flows from Financing Activities
Borrowings on senior credit facility			25,000				—
Repayments of indebtedness and capital leases			(150,494	)			(5,426	)
Payments of deferred loan costs			(2,369	)			(2,465	)
Issuance of preferred stock			80,832				—
Issuance of common stock			2,814				—
Contributions from noncontrolling interests in unconsolidated joint ventures			—				1,034
Distributions to noncontrolling interests in consolidated joint ventures			(3,000	)			(181	)
Payments of dividends			(21,909	)			(11,133	)
Payments for derivatives			(25	)			(52	)
Cash income from derivatives			36,407				31,413
Repurchase of Series B-1 convertible preferred stock			(72,986	)			—
Repurchases of treasury stock			—				(45,087	)
Redemption of operating partnership units			—				(3,763	)
Issuance of operating partnership units and other			970				54
Net cash used in financing activities			(104,760	)			(35,606	)
Net increase (decrease) in cash and cash equivalents			(63,469	)			9,684
Cash and cash equivalents at beginning of period			217,690				165,168
Cash and cash equivalents at end of period		$	154,221			$	174,852
Supplemental Cash Flow Information
Interest paid		$	66,273			$	67,147
Income taxes paid		$	1,551			$	1,163
Supplemental Disclosure of Non-Cash Investing and Financing Activity
Accrued interest added to principal of indebtedness		$	2,111			$	2,031
Asset contributed to unconsolidated joint venture		$	15,000			$	—

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Description of Business

     Ashford Hospitality Trust, Inc., together with its subsidiaries (“Ashford”), is a self-advised real estate investment trust (“REIT”) focused on investing in the hospitality industry across all segments and in all methods including direct real estate, securities, equity, and debt. We commenced operations in August 2003 with the acquisition of six hotels in connection with our initial public offering. We own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership, our operating partnership. Ashford OP General Partner LLC, a wholly-owned subsidiary of Ashford, serves as the sole general partner of our operating partnership. In this report, the terms “the Company,” “we,” “us” or “our” mean Ashford Hospitality Trust, Inc. and all entities included in its consolidated financial statements.

     As of June 30, 2011, we owned 92 hotel properties directly, and five hotel properties through majority-owned investments in joint ventures, which represents 20,774 total rooms, or 20,458 net rooms excluding those attributable to our joint venture partners. All of these hotel properties are located in the United States. In March 2011, we acquired 96 units of hotel condominiums at WorldQuest Resort in Orlando, Florida for $12.0 million. Also in March 2011, with an investment of $150.0 million, we converted our interest in a joint venture that held a mezzanine loan into a 71.74% common equity interest and a $25.0 million preferred equity interest in a new joint venture (the “PIM Highland JV”) that holds 28 high quality full and select service hotel properties with 8,084 total rooms, or 5,800 net rooms excluding those attributable to our joint venture partner. See Notes 3 and 6. At June 30, 2011, we also wholly owned a mezzanine loan receivable with a carrying value of $3.0 million.

     For federal income tax purposes, we elected to be treated as a REIT, which imposes limitations related to operating hotels. As of June 30, 2011, 96 of our 97 hotel properties were leased or owned by our wholly-owned subsidiaries that are treated as taxable REIT subsidiaries for federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”). Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts. Hotel operating results related to these properties are included in the consolidated statements of operations. As of June 30, 2011, one hotel property was leased on a triple-net lease basis to a third-party tenant who operates the hotel. Rental income from this operating lease is included in the consolidated results of operations. With respect to our unconsolidated joint venture, PIM Highland JV, the 28 hotels are leased to its wholly-owned subsidiary that is treated as a taxable REIT subsidiary for federal income tax purposes.

     Remington Lodging & Hospitality, LLC (“Remington Lodging”), our primary property manager, is beneficially wholly owned by Mr. Archie Bennett, Jr., our Chairman, and Mr. Monty J. Bennett, our Chief Executive Officer. As of June 30, 2011, Remington Lodging managed 46 of our 97 legacy hotel properties, while third-party management companies managed the remaining 51 hotel properties. In addition, Remington Lodging also managed 16 of the 28 PIM Highland JV hotel properties and Remington Parsippany Employers LLC managed one of the 28 PIM Highland JV.

2. Significant Accounting Policies

     Basis of Presentation — The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements include the accounts of Ashford, its majority-owned subsidiaries and its majority-owned joint ventures in which it has a controlling interest. All significant inter-company accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements.

     These financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our 2010 Annual Report to Shareholders on Form 10-K.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The following items affect our reporting comparability related to our consolidated financial statements:

	•		Some of our properties’ operations have historically been seasonal. This seasonality pattern causes fluctuations in the operating results. Consequently, operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
	•		Marriott International, Inc. (“Marriott”) manages 40 of our properties. For these Marriott-managed hotels, the fiscal year reflects twelve weeks of operations in each of the first three quarters of the year and sixteen weeks for the fourth quarter of the year. Therefore, in any given quarterly period, period-over-period results will have different ending dates. For Marriott-managed hotels, the second quarters of 2011 and 2010 ended June 17 and June 18, respectively.

     Use of Estimates — The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

     Investments in Hotel Properties — Hotel properties are generally stated at cost. However, the remaining four hotel properties contributed upon Ashford’s formation in 2003 that are still owned by Ashford (the “Initial Properties”) are stated at the predecessor’s historical cost, net of impairment charges, if any, plus a noncontrolling interest partial step-up related to the acquisition of noncontrolling interests from third parties associated with four of the Initial Properties. For hotel properties owned through our majority-owned joint ventures, the carrying basis attributable to the joint venture partners’ minority ownership is recorded at the predecessor’s historical cost, net of any impairment charges, while the carrying basis attributable to our majority ownership is recorded based on the allocated purchase price of our ownership interests in the joint ventures. All improvements and additions which extend the useful life of the hotel properties are capitalized.

     Impairment of Investment in Hotel Properties — Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. We test impairment by using current or projected cash flows over the estimated useful life of the asset. In evaluating the impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period and expected useful life. We may also use fair values of comparable assets. If an asset is deemed to be impaired, we record an impairment charge for the amount that the property’s net book value exceeds its estimated fair value. No impairment charges were recorded for investment in hotel properties included in our continuing operations for the three and six months ended June 30, 2011 and 2010.

     Notes Receivable — We provide mezzanine and first-mortgage financing in the form of notes receivable. These loans are held for investment and are intended to be held to maturity and accordingly, are recorded at cost, net of unamortized loan origination costs and fees, loan purchase discounts and net of the allowance for losses when a loan is deemed to be impaired. Premiums, discounts, and net origination fees are amortized or accreted as an adjustment to interest income using the effective interest method over the life of the loan. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Payments received on impaired nonaccrual loans are recorded as adjustments to impairment charges. No interest income was recorded for the three and six months ended June 30, 2011, and $346,000 and $683,000 interest income was recognized for the three and six months ended June 30, 2010, respectively.

     Variable interest entities, as defined by authoritative accounting guidance, must be consolidated by their controlling interest beneficiaries if the variable interest entities do not effectively disperse risks among the parties involved. Our mezzanine and first-mortgage notes receivable are each secured by various hotel properties or partnership interests in hotel properties and are subordinate to the controlling interest in the secured hotel properties. All such notes receivable are considered to be variable interests in the entities that own the related hotels. However, we are not considered to be the primary beneficiary of these hotel properties as a result of holding these loans. Therefore, we do not consolidate the hotels for which we have provided financing. We will evaluate the interests in entities acquired or created in the future

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to determine whether such entities should be consolidated. In evaluating variable interest entities, our analysis involves considerable management judgment and assumptions.

     Impairment of Notes Receivable — We review notes receivables for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts recorded as assets on the balance sheet. We apply normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment.

     When a loan is impaired, we measure impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the balance sheet. We may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral dependent. If a loan is deemed to be impaired, we record a valuation allowance through a charge to earnings for any shortfall. Our assessment of impairment is based on considerable judgment and estimates. No impairment charges were recorded during the three and six months ended June 30, 2011 or 2010. Valuation adjustments of $4.3 million and $4.7 million on previously impaired notes were credited to impairment charges during the three and six months ended June 30, 2011, respectively. Valuation adjustments credited to impairment charges for the three and six months ended June 30, 2010 were $1.2 million and $2.0 million, respectively.

     Investments in Unconsolidated Joint Ventures — Investments in joint ventures in which we have ownership interests ranging from 14.4% to 71.74% are accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the joint venture’s net income (loss). We review the investment in our unconsolidated joint ventures for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. The investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity earnings (loss) in unconsolidated joint venture. No such impairment was recorded in the three and six months ended June 30, 2011 and 2010. We adopted the equity accounting method for our investment in the PIM Highland JV due to the fact that we do not control the joint venture. Although we have the majority ownership of 71.74% in the joint venture, all the major decisions related to the joint venture, including establishment of policies and operating procedures with respect to business affairs, incurring obligations and expenditures, are subject to the approval of an executive committee, which is comprised of four persons with us and our joint venture partner each designating two of those persons. Our investment in PIM Highland JV had a carrying value of $190.8 million at June 30, 2011, which was based on our share of PIM Highland JV’s equity. As discussed further in Note 6, the PIM Highland JV is in the process of finalizing their purchase price allocation. Our share of the PIM Highland JV’s equity has been based on the preliminary purchase price allocation.

     Assets Held for Sale and Discontinued Operations — We classify assets as held for sale when management has obtained a firm commitment from a buyer, and consummation of the sale is considered probable and expected within one year. In addition, we deconsolidate a property when it becomes subject to the control of a government, court, administrator or regulator and we effectively lose control of the property/subsidiary. When deconsolidating a property/subsidiary, we recognize a gain or loss in net income measured as the difference between the fair value of any consideration received, the fair value of any retained noncontrolling investment in the former subsidiary at the date the subsidiary is deconsolidated, and the carrying amount of the former property/subsidiary. The related operations of assets held for sale are reported as discontinued if a) such operations and cash flows can be clearly distinguished, both operationally and financially, from our ongoing operations, b) such operations and cash flows will be eliminated from ongoing operations once the disposal occurs, and c) we will not have any significant continuing involvement subsequent to the disposal.

     During the six months ended June 30, 2011, we completed the sale of three hotel properties that were reclassified as assets held for sale at December 31, 2010, and recorded a net gain of $3.0 million. In June 2011, we recorded an impairment charge of $6.2 million for a hotel property that was under contract to sell at June 30, 2011. The hotel property has been classified as assets held for sale.

     Revenue Recognition — Hotel revenues, including room, food, beverage, and ancillary revenues such as long-distance telephone service, laundry, and space rentals, are recognized when services have been rendered. Rental income represents income from leasing hotel properties to third-party tenants on triple-net operating leases. Base rent on the

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

triple-net lease is recognized on a straight-line basis over the lease terms and variable rent is recognized when earned. Interest income, representing interest on the mezzanine and first mortgage loan portfolio (including accretion of discounts on certain loans using the effective interest method), is recognized when earned. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Asset management fees are recognized when services are rendered. Taxes collected from customers and submitted to taxing authorities are not recorded in revenue. For the hotel leased to a third party, we report deposits into our escrow accounts for capital expenditure reserves as income.

     Derivative Financial Instruments and Hedges — We primarily use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in LIBOR (London Interbank Offered Rate) and RevPAR (Revenue per Available Room). The interest rate derivatives include swaps, caps, floors, flooridors and corridors. All derivatives are recorded on the consolidated balance sheets at fair value in accordance with the applicable authoritative accounting guidance and reported as “Interest rate derivatives.” Accrued interest on the non-hedge designated derivatives is included in “Accounts receivable, net” on the consolidated balance sheets. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value is reported as a component of “Accumulated Other Comprehensive Income (Loss)” (“OCI”) in the equity section of the consolidated balance sheets. The amount recorded in OCI is reclassified to interest expense in the same period or periods during which the hedged transaction affects earnings, while the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings as “Unrealized gain (loss) on derivatives” in the consolidated statements of operations. For derivatives that are not designated as cash flow hedges, the changes in the fair value are recognized in earnings as “Unrealized gain (loss) on derivatives” in the consolidated statements of operations. We assess the effectiveness of each hedging relationship by comparing the changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. Derivatives subject to master netting arrangements are reported net in the consolidated balance sheets.

     Recently Adopted Accounting Standards — In December 2010, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update to require a public entity to disclose pro forma information for business combinations that occurred in the current reporting period. The disclosures include pro forma revenue and earnings of the combined entity for the current reporting period as though the acquisition date for all business combinations that occurred during the year had been as of the beginning of the annual reporting period. If comparative financial statements are presented, the pro forma revenue and earnings of the combined entity for the comparable prior reporting period should be reported as though the acquisition date for all business combinations that occurred during the current year had been as of the beginning of the comparable prior annual reporting period. The new disclosures are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The pro forma disclosures related to our acquisition of the 28-hotel portfolio through the PIM Highland JV in Note 16 are made in accordance with the new requirements. The adoption did not have an impact on our financial position and results of operations.

     Recently Issued Accounting Standards — In May 2011, FASB issued an accounting guidance for common fair value measurement and disclosure requirements. The guidance requires disclosures of (i) quantitative information about the significant unobservable inputs used for level 3 measurements; (ii) description of the valuation processes surrounding level 3 measurements; (iii) narrative description of the sensitivity of recurring level 3 measurements to unobservable inputs; (iv) hierarchy classification for items whose fair value is only disclosed in the footnotes; and (v) any transfers between level 1 and 2 of fair value hierarchy. The new accounting guidance is effective during interim and annual periods beginning after December 15, 2011. We do not expect a material impact on our financial position and results of operations from the adoption of this accounting guidance, but will make required additional disclosures upon adoption.

     In June 2011, FASB issued an accounting guidance for presentation of comprehensive income. The accounting update requires an entity to present each component of net income along with total net income, each component of other comprehensive income along with a total for other comprehensive income, and a total amount for comprehensive income. The entity has the option to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The new accounting guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. We do not expect a material impact on our financial position

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and results of operations from the adoption of this accounting guidance, but will make required presentation of net income and comprehensive income upon adoption.

     Reclassifications — Certain amounts in the consolidated financial statements for the three and six months ended June 30, 2010 have been reclassified for discontinued operations. These reclassifications have no effect on the results of operations or financial position previously reported.

3. Summary of Significant Transactions

     Pending Sale of Hotel Property — In June 2011, we entered into an agreement for the sale of the Hampton Inn hotel property in Jacksonville, Florida. Based on the selling price, we recorded an impairment charge of $6.2 million. The sale was completed in July 2011. The hotel property has been reclassified as assets held for sale in the consolidated balance sheet at June 30, 2011, and its operating results, including the impairment charge, for all periods presented have been reported as discontinued operations in the consolidated statements of operations.

     Investments in Securities — We continually seek new and alternative strategies to leverage our industry and capital markets knowledge in ways that we believe will be accretive to our company. We believe that we can utilize the same real-time information we use to manage our portfolio and capital structure to invest capital in the public markets within the hospitality industry. To implement this investment strategy, in the three months ended June 2011, our Board of Directors authorized the formation of an investment subsidiary to invest in public securities of lodging entities. This investment will be carried at fair market value. The maximum aggregate investment amount that can be made by this subsidiary is currently $20.0 million.

     Preferred Stock Offering and Redemption of Series B-1 Convertible Preferred Stock — In April 2011, we completed the offering of 3.35 million shares (including 350,000 shares pursuant to the underwriters’ exercise of an over-allotment option) of our 9.00% Series E Cumulative Preferred Stock at a net price of $24.2125 per share, and we received net proceeds of $80.8 million after underwriting fees. Of the net proceeds from the offering, $73.0 million was used to redeem 5.9 million shares of the total 7.3 million shares of our Series B-1 convertible preferred stock outstanding on May 3, 2011. The remaining proceeds were used for other general corporate purposes. The remaining 1.4 million outstanding Series B-1 convertible preferred shares were converted into 1.4 million shares of our common stock, which was treated as a dividend of $17.4 million paid to the Series B-1 preferred shareholder in accordance with the applicable accounting guidance.

     Repayment of a Mezzanine Loan — In April 2011, we entered into a settlement agreement with the borrower of the mezzanine loan which was secured by a 105-hotel property portfolio and scheduled to mature in April 2011. The borrower paid off the loan for $22.1 million. The difference between the settlement amount and the carrying value of $17.9 million was recorded as a credit to impairment charges in accordance with applicable accounting guidance. We used $20.0 million of the settlement proceeds to pay down our senior credit facility.

     Acquisition of Hotel Properties Securing Mezzanine Loans Held in Unconsolidated Joint Ventures — In July 2010, as a strategic complement to our existing joint venture with Prudential Real Estate Investors (“PREI”) formed in 2008, we contributed $15.0 million for an ownership interest in a new joint venture with PREI. The new joint venture acquired a portion of the tranche 4 mezzanine loan associated with JER Partners’ 2007 privatization of the JER/Highland Hospitality portfolio (the “Highland Portfolio”). The mezzanine loan was secured by the same 28 hotel properties as our then existing joint venture investment in the tranche 6 mezzanine loan. Both of these mezzanine loans were in default since August 2010. After negotiating with the borrowers, senior secured lenders and senior mezzanine lenders for a restructuring, we, through another new joint venture, the PIM Highland JV, with PRISA III Investments, LLC (“PRISA III”) (an affiliate of PREI), invested $150.0 million and PRISA III invested $50.0 million of new capital to acquire the 28 high quality full and select service hotel properties comprising the Highland Portfolio on March 10, 2011. We and PRISA III have ownership interests of 71.74% and 28.26%, respectively, in the new joint venture. In addition to the common equity splits, we and PRISA III each have a $25.0 million preferred equity interest earning an accrued but unpaid 15% annual return with priority over common equity distributions. Our investment in the PIM Highland JV is accounted for using the equity method and the carrying value was $190.8 million at June 30, 2011. The PIM Highland JV recognized a gain of $75.4 million at acquisition, of which our share was $43.2 million, based on the preliminary assessment of the fair value of the assets acquired and the liabilities assumed. The purchase price has been

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

allocated to the assets acquired and liabilities assumed on a preliminary basis using estimated fair value information currently available. The allocation of the purchase price to the assets and liabilities will be finalized as soon as practicable upon completion of the analysis of the fair values of the assets acquired and liabilities assumed, which could result in adjustments to the gain recognized based on the preliminary assessment. See Note 6.

     Litigation Settlement — In March 2011, we entered into a Consent and Settlement Agreement (the “Settlement Agreement”) with Wells Fargo Bank, N.A. (“Wells”) to resolve potential disputes and claims between us and Wells relating to our purchase of a participation interest in certain mezzanine loans. Wells denied the allegations in our complaint and further denies any liability for the claims asserted by us; however, the Settlement Agreement was entered into to resolve our claims against Wells and to secure Wells’ consent to our participation in the Highland Hospitality Portfolio restructuring. Pursuant to the Settlement Agreement, Wells agreed to pay us $30.0 million over the next five years, or earlier, if certain conditions are satisfied. As part of the Settlement Agreement, we and Wells have agreed to a mutual release of claims. We received the settlement payment of $30.0 million and paid legal costs of $6.9 million in June 2011 ($5.5 million of the legal costs were accrued at March 31, 2011). The settlement amount was recorded as “Other income” and the legal costs of $6.9 million were recorded as “Corporate general and administrative expenses” in the consolidated statements of operations.

     Acquisition of Condominium Properties — In March 2011, we acquired real estate and certain other rights in connection with the acquisition of the WorldQuest Resort, a condominium hotel project. More specifically, we acquired 96 condominium units, hotel amenities, land and improvements, developable raw land, developer rights and Rental Management Agreements (“RMA’s”) with third party owners of condominium units in the project. Units owned by third parties with RMA’s and 62 of the 96 units we acquired participate in a rental pool program whereby the units are rented to guests similar to a hotel operation. Under the terms of the RMA’s, we share in a percentage of the guest room revenues and are reimbursed for certain costs. The remaining 34 units that we own are currently being finished out and will be added to the rental pool when completed. All of these units are included in “Investment in hotel properties, net” in the consolidated balance sheet.

     Resumption of Common Dividends — In February 2011, the Board of Directors accepted management’s recommendation to resume paying cash dividends on our outstanding shares of common stock with an annualized target of $0.40 per share for 2011. For the six months ended June 30, 2011, we have declared dividends of $0.20 per share, subsequent payments will be reviewed on a quarterly basis.

     Completion of Sales of Hotel Properties — In the six months ended June 30, 2011, we completed the sale of the three hotel properties which were classified as assets held for sale at December 31, 2010, the JW Marriott hotel in San Francisco, California, the Hilton hotel in Rye Town, New York and the Hampton Inn hotel in Houston, Texas. We received net proceeds of $93.9 million (net of repayments of related mortgage debt of $50.2 million). We used the net proceeds to reduce $70.0 million of the borrowings on our senior credit facility.

     Sale of Additional Shares of Our Common Stock — In January 2011, an underwriter purchased 300,000 shares of our common stock through the partial exercise of the underwriter’s 1.125 million share over-allotment option in connection with the issuance of 7.5 million shares of common stock completed in December 2010, and we received net proceeds of $2.8 million.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. Investments in Hotel Properties

     Investments in hotel properties consisted of the following (in thousands):

		June 30,				December 31,
		2011				2010
Land		$	487,200			$	488,901
Buildings and improvements			2,770,209				2,774,822
Furniture, fixtures and equipment			402,685				383,860
Construction in progress			2,090				4,473
Condominium properties			12,736				—
Total cost			3,674,920				3,652,056
Accumulated depreciation			(691,338	)			(628,320	)
Investment in hotel properties, net		$	2,983,582			$	3,023,736

     In March 2011, we acquired real estate and certain other rights in connection with the acquisition of the WorldQuest Resort, a condominium hotel project. More specifically, we acquired 96 condominium units, hotel amenities, land and improvements, developable raw land, developer rights and Rental Management Agreements (“RMA’s”) with third party owners of condominium units in the project. Units owned by third parties with RMA’s and 62 of the 96 units we acquired participate in a rental pool program whereby the units are rented to guests similar to a hotel operation. Under the terms of the RMA’s, we share in a percentage of the guest room revenues and are reimbursed for certain costs. The remaining 34 units that we own are currently being finished out and will be added to the rental pool when completed. All of these units are included in “Investment in hotel properties, net” in the consolidated balance sheets.

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

     The following table presents certain information related to our hotel properties as of June 30, 2011:

				Service		Total				%				Owned
Hotel Property		Location		Type		Rooms				Owned				Rooms
Fee Simple Properties
Embassy Suites		Austin, TX		Full			150				100	%			150
Embassy Suites		Dallas, TX		Full			150				100	%			150
Embassy Suites		Herndon, VA		Full			150				100	%			150
Embassy Suites		Las Vegas, NV		Full			220				100	%			220
Embassy Suites		Syracuse, NY		Full			215				100	%			215
Embassy Suites		Flagstaff, AZ		Full			119				100	%			119
Embassy Suites		Houston, TX		Full			150				100	%			150
Embassy Suites		West Palm Beach, FL		Full			160				100	%			160
Embassy Suites		Philadelphia, PA		Full			263				100	%			263
Embassy Suites		Walnut Creek, CA		Full			249				100	%			249
Embassy Suites		Arlington, VA		Full			267				100	%			267
Embassy Suites		Portland, OR		Full			276				100	%			276
Embassy Suites		Santa Clara, CA		Full			257				100	%			257
Embassy Suites		Orlando, FL		Full			174				100	%			174
Hilton Garden Inn		Jacksonville, FL		Limited			119				100	%			119
Hilton		Houston, TX		Full			243				100	%			243
Hilton		St. Petersburg, FL		Full			333				100	%			333
Hilton		Santa Fe, NM		Full			157				100	%			157
Hilton		Bloomington, MN		Full			300				100	%			300
Hilton		Washington DC		Full			544				75	%			408
Hilton		Costa Mesa, CA		Full			486				100	%			486
Hilton		Tucson, AZ		Full			428				100	%			428
Homewood Suites		Mobile, AL		Limited			86				100	%			86
Hampton Inn		Lawrenceville, GA		Limited			86				100	%			86
Hampton Inn		Evansville, IN		Limited			141				100	%			141
Hampton Inn		Terre Haute, IN		Limited			112				100	%			112
Hampton Inn		Buford, GA		Limited			92				100	%			92
Hampton Inn		Jacksonville, FL		Limited			118				100	%			118
Marriott		Durham, NC		Full			225				100	%			225
Marriott		Arlington, VA		Full			697				100	%			697
Marriott		Seattle, WA		Full			358				100	%			358
Marriott		Bridgewater, NJ		Full			347				100	%			347
Marriott		Plano, TX		Full			404				100	%			404
Marriott		Dallas, TX		Full			266				100	%			266
SpringHill Suites by Marriott		Jacksonville, FL		Limited			102				100	%			102
SpringHill Suites by Marriott		Baltimore, MD		Limited			133				100	%			133
SpringHill Suites by Marriott		Kennesaw, GA		Limited			90				100	%			90
SpringHill Suites by Marriott		Buford, GA		Limited			96				100	%			96
SpringHill Suites by Marriott		Gaithersburg, MD		Limited			162				100	%			162
SpringHill Suites by Marriott		Centreville, VA		Limited			136				100	%			136
SpringHill Suites by Marriott		Charlotte, NC		Limited			136				100	%			136
SpringHill Suites by Marriott		Durham, NC		Limited			120				100	%			120
SpringHill Suites by Marriott		Orlando, FL		Limited			400				100	%			400
SpringHill Suites by Marriott		Manhattan Beach, CA		Limited			164				100	%			164
SpringHill Suites by Marriott		Plymouth Meeting, PA		Limited			199				100	%			199
SpringHill Suites by Marriott		Glen Allen, VA		Limited			136				100	%			136
Fairfield Inn by Marriott		Kennesaw, GA		Limited			87				100	%			87
Fairfield Inn by Marriott		Orlando, FL		Limited			388				100	%			388
Courtyard by Marriott		Bloomington, IN		Limited			117				100	%			117
Courtyard by Marriott		Columbus, IN		Limited			90				100	%			90
Courtyard by Marriott		Louisville, KY		Limited			150				100	%			150
Courtyard by Marriott		Crystal City, VA		Limited			272				100	%			272
Courtyard by Marriott		Ft. Lauderdale, FL		Limited			174				100	%			174
Courtyard by Marriott		Overland Park, KS		Limited			168				100	%			168
Courtyard by Marriott		Palm Desert, CA		Limited			151				100	%			151
Courtyard by Marriott		Foothill Ranch, CA		Limited			156				100	%			156
Courtyard by Marriott		Alpharetta, GA		Limited			154				100	%			154
Courtyard by Marriott		Philadelphia, PA		Limited			498				89	%			443
Courtyard by Marriott		Seattle, WA		Limited			250				100	%			250
Courtyard by Marriott		San Francisco, CA		Limited			405				100	%			405

ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

				Service		Total				%				Owned
Hotel Property		Location		Type		Rooms				Owned				Rooms
Courtyard by Marriott		Orlando, FL		Limited			312				100	%			312
Courtyard by Marriott		Oakland, CA		Limited			156				100	%			156
Courtyard by Marriott		Scottsdale, AZ		Limited			180				100	%			180
Courtyard by Marriott		Plano, TX		Limited			153				100	%			153
Courtyard by Marriott		Edison, NJ		Limited			146				100	%			146
Courtyard by Marriott		Newark, CA		Limited			181				100	%			181
Courtyard by Marriott		Manchester, CT		Limited			90				85	%			77
Courtyard by Marriott		Basking Ridge, NJ		Limited			235				100	%			235
Marriott Residence Inn		Lake Buena Vista, FL		Limited			210				100	%			210
Marriott Residence Inn		Evansville, IN		Limited			78				100	%			78
Marriott Residence Inn		Orlando, FL		Limited			350				100	%			350
Marriott Residence Inn		Falls Church, VA		Limited			159				100	%			159
Marriott Residence Inn		San Diego, CA		Limited			150				100	%			150
Marriott Residence Inn		Salt Lake City, UT		Limited			144				100	%			144
Marriott Residence Inn		Palm Desert, CA		Limited			130				100	%			130
Marriott Residence Inn		Las Vegas, NV		Limited			256				100	%			256
Marriott Residence Inn		Phoenix, AZ		Limited			200				100	%			200
Marriott Residence Inn		Plano, TX		Limited			126				100	%			126
Marriott Residence Inn		Newark, CA		Limited			168				100	%			168
Marriott Residence Inn		Manchester CT		Limited			96				85	%			82
Marriott Residence Inn Buckhead		Atlanta, GA		Limited			150				100	%			150
Marriott Residence Inn		Jacksonville, FL		Limited			120				100	%			120
TownePlace Suites by Marriott		Manhattan Beach, CA		Limited			144				100	%			144
One Ocean		Atlantic Beach, FL		Full			193				100	%			193
Sheraton Hotel		Langhorne, PA		Full			187				100	%			187
Sheraton Hotel		Minneapolis, MN		Full			222				100	%			222
Sheraton Hotel		Indianapolis, IN		Full			371				100	%			371
Sheraton Hotel		Anchorage, AK		Full			370				100	%			370
Sheraton Hotel		San Diego, CA		Full			260				100	%			260
Hyatt Regency		Coral Gables, FL		Full			242				100	%			242
Crowne Plaza		Beverly Hills, CA		Full			260				100	%			260
Annapolis Historic Inn		Annapolis, MD		Full			124				100	%			124
Air Rights/Ground Lease Properties
Doubletree Guest Suites		Columbus, OH		Full			194				100	%			194
Hilton		Ft. Worth, TX		Full			294				100	%			294
Hilton		La Jolla, CA		Full			394				75	%			296
Crowne Plaza		Key West, FL		Full			160				100	%			160
Renaissance		Tampa, FL		Full			293				100	%			293
Total							20,774								20,458