Good day everyone and welcome to today's Ashford Hospitality Trust first quarter 2016 conference call. Today's conference is being recorded. Now at this time, I would like to turn the conference over to Ms. Stacy Feit. Please go ahead.

Thanks. Good day, everyone. And welcome to today's conference call to review results for Ashford Hospitality Trust for the first quarter of 2016 to update you on recent developments. On the call today will be Monty Bennett, Chairman and Chief Executive Officer, Douglas Kessler, President, Deric Eubanks, Chief Financial Officer and Jeremy Welter, Executive Vice President of Asset Management. The results as well as notice of the accessibility of this conference call on a listen-only basis over the Internet were distributed yesterday afternoon in a press release that has been covered by the financial media. At this time let me remind you certain statements and assumptions in this conference call contain 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. Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated. These risk factors are more fully discussed in both companies' 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 releases and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on May 5, 2016 and may also be accessed through the company's websites at www.ahtreit.com. 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, sir.

Good morning everyone and thanks for joining us. Our first quarter RevPAR growth of 2.5% was in line with the industry trends. The industry as a whole was impacted by the unfavorable shift of Easter to the first quarter as well as more modest corporate transient demands and that we also have faced a relatively tough year-over-year comparison. Nevertheless, we posted solid EBITDA and AFFO growth and saw margins expand during the quarter. The industry outlook for the balance of 2016 remains strong as demand growth is expected to continue to outpace supply growth and PKF forecasts that will continue at least through 2017. Occupancy continues to be at all-time highs, which should support continued pricing power and rate growth for the industry. Given these trends and the diversity of our portfolio, we believe we are well positioned to drive strong operating performance in the portfolio for the remainder of 2016. Thinking and acting like shareholders has always distinguished Ashford Trust from others in our industry. We consider it to be an important component of our value proposition, one of our main competitive advantages and a key reason for our consistent superior long-term performance. Since our IPO, Ashford Trust has achieved a 110% total shareholder return compared to a 77% return for our peers. We are particularly shareholder focused as we are also substantial shareholders with 18% insider ownership, the highest of all hotel REITs. To put that in context, the peer average insider ownership is around 2%. Having so much of our personal capital invested in the platform has created a high level of alignment between our management team and our shareholders. Additionally, the structure of our unique advisory agreement with Ashford Inc. provides significant incentives to outperform versus our peer group. In addition to operational execution, we are…

Thanks Monty. For the first quarter of 2016, we reported AFFO per diluted share of $0.36 compared with $0.30 a year ago. This reflects a 20% growth rate over the prior year. Adjusted EBITDA totaled $105 million, reflecting an 18% growth rate over the prior year. At quarter's end, we had total assets of $5 billion in continuing operations, had $3.9 billion of mortgage debt in continuing operations with a blended average interest rate of 5.2%. Our debt is currently 28% fixed rate and 72% floating rate, all of which have interest rate caps in place. Including the market value of our equity investment in Ashford Inc., we ended the quarter with net working capital of $390 million which equates to over $3 per share of value. On the financing front, during the quarter we completed the refinancing of three mortgage loans with existing balances of approximately $268 million. The previous loans that were refinanced included $91 million UBS 2 loan, the $103 million Merrill 2 loan and the $74 million Merrill 7 loan. The new loan totals $412.5 million and resulted in excess proceeds of approximately $118 million after closing costs and reserves. The new loan is interest only and provides for a floating interest rate of LIBOR plus 5.52%. This refinancing addressed all of our 2016 debt maturities and the next hard debt maturity for the company is in April 2017. As of March 31, 2016, our portfolio consisted of 132 hotels with 27,915 net rooms. Our share count currently stands at 116.3 million fully diluted shares outstanding which is comprised of 95.7 million shares of common stock and 20.6 million OP units. We have 21.6 million OP units but as a result of the current conversion factor being less than 1:1, these units are convertible into approximately 20.6 million shares of common stock. With regard to dividends, the Board of Directors declared a first quarter 2016 cash dividend of $0.12 per share or $0.48 per share on an annualized basis. Based on the current stock price, this represents an 8.4% dividend yield, one of the highest in the hotel REIT space. The adoption of a dividend policy does not commit the company to declare future dividends. The Board will continue to review the dividend policy on a quarter-to-quarter basis. This concludes our financial review. I would now like to turn over to Jeremy to discuss our asset management activities for the quarter.

Thank you Deric. During the first quarter, we grew RevPAR by 2.5% with EBITDA flow-through of 49%. RevPAR for the portfolio was negatively impacted by the shift of the Easter holiday into the first quarter. However, our RevPAR growth outperformed its competitive sets. I would now like to discuss a few successful asset management initiatives our team has undertaken at our properties that are driving very positive results. As I have discussed on previous calls, in August of 2013, we announced a plan to convert the Beverly Hills Crowne Plaza to a Marriott. The Marriott Beverly Hills officially opened on July 1, 2015 and the renovation concluded in August, receiving an award from Marriott International for renovation excellence. From September 2015 through March 2016, total revenue grew by 67% with EBITDA flow-through of 55%. This positive trend was even more pronounced in 2016 where from January to March the hotel grew total revenue by 94% with EBITDA flow-through of 57%, gaining taking 5,400 basis points in market share versus competitors. In July of 2015, we completed the acquisition of the W Atlanta, Downtown. One of our team strategies with this property was to focus on a number of value add opportunities outside of traditional hotel operations. To-date, we have changed out the management for the on-property billboard signage that has great visibility from Interstate 75 and renegotiated guest parking arrangements which together should generate over $500,000 in incremental EBITDA. In April of 2015, we completed a full guestroom renovation at the Hyatt Regency Savannah in the Historic District. The refreshed room concept draws from the rich history of Savannah featuring a locally inspired design to provide a memorable experience for our guests. In the first quarter of 2016, the company property gained 30% in market share index on a year-over-year basis and exceeded the previous three-year first quarter average by 11.4%. This is just one of many examples of our effective deployment of capital into our portfolio. I will now hand the call over to Douglas.

Thank you Jeremy. Recently, we announced a positive first step in our strategy to divest our non-core select service hotels as we entered into a five hotel 1,396 room portfolio of select service hotels for $142 million in cash or $102,000 per key to Noble Investment Group. The portfolio is comprised of the 146 room Courtyard Edison in Edison, New Jersey, the 150 room Residence Inn Buckhead in Atlanta, the 312 room Courtyard Lake Buena Vista, 388 room Fairfield Inn Lake Buena Vista and 400 room Springhill Suites Lake Buena Vista, all in Orlando. The purchase price including projected CapEx to be invested by Noble represents a trailing 12 month cap rate of 8% on net operating income. On a trailing 12 month basis, the portfolio achieved RevPAR of $84, with occupancy of 79% and average daily rate of $106. The portfolio has an existing debt balance of approximately $98 million and we expect the net proceeds from the disposition to be approximately $37 million after debt repayment and transaction costs. We plan to use the proceeds for general corporate purposes including net debt reduction, stock buybacks or the acquisition of full-service hotels in line with trust refined investment strategy of acquiring and owning upper upscale full-service hotels. The transaction is scheduled to close in the second quarter, subject to certain closing conditions. We will continue to pursue the opportunistic sales of our other non-core select service hotels over time to maximize value for our shareholders. This transaction validates the opportunistic approach we are taking to sell our non-core select service assets. We continue to expect this refined sales process in the form of smaller portfolios and/or individual asset sales to garner higher values in the current market environment. We will keep you apprised and we will continue to execute on this strategy. That concludes our prepared remarks and we will now open it up for your questions.

[Operator Instructions]. We will go to Robin Farley with UBS.

Hi. Thank you. This is actually Arpine, in for Robin. Could you just talk a little bit about outside of Easter shift, what you saw in corporate transient demand in general across your portfolio? And when you are looking to Q2, what are you seeing in those trends? An then if you could talk a little bit about group pace for the year now versus three months ago? And then I have a quick follow-up.

So, this is Jeremy. I can comment on the first quarter. I can't really talk about what's going on in the second quarter. But I can tell you what's going on in the first quarter. So we saw a change in the mix of business. And I am going to quote you just room nights. I am not going to quote total room revenue or RevPAR, but this shift in room nights, we did have, trend here was up just a little bit in the portfolio in Q1. But that was a change in the mix. Special corporate was down for us about 4%. So that's your negotiated at corporate rate. Retail was up slightly, about 1% We did see a big increase in the discount channels of 7.6%. And that was commensurate with the rest of our competitors. But fortunately as well, wholesale was down an additional 12%. So some of the lower rate wholesale decline. And then we saw a decrease in group room night of 3% but the rate was pretty good growth. So overall group revenues were up in the first quarter. And as it relates to the balance of the year, I think our group positioning is strong. I don't know if we are counting on exactly what that looks like at this point.

All right. Thanks for the color. You talked about higher valuations for individual hotel sales or smaller portfolios. When we look at the most recent sale of five select service hotels, was that $142 million was pretty much in line with what you were expecting, because I think for the 24 hotel portfolio you had given a number of $550 million to $600 million in aggregate, which implies price per key of $125,000 to $136,000 per key and this obviously came in at $102,000 per key. Could you just comment whether that expectation is still in place in terms of that portfolio of 24 select service hotels generating about $550 million to $600 million in proceeds? Thanks.

Sure. This is Douglas. In terms of trying to do the math and reverse engineer in terms of what would be the remaining value of that portfolio, it's really necessarily the right exercise because when we reassess the portfolio trade of that group and came back and told the market that we are going to breakdown our entire portfolio of select service hotels of some 60-odd select service properties, part of the strategy was to also adjust the timing of some of the sales. And so some of those transactions that may have been part of the original group of 24 could be moved to a later point in time as we methodically put these properties either individually or in small groups of assets out into the market. The trade that we did with Noble, we thought was a market trade. Keep in mind that it's not just about the price per key component. We are looking at comparisons of maximizing the lowest possible cap rate we can get. In some cases, there is a maximum per key amounts that investors will pay. So we are trying to balance all that along with our ability to maximize net operating income of these assets in the midst of possible CapEx expenditures for certain properties or what were coming out of CapEx expenditures where we don't really leave money on the table, we want to capture some of the value add or remove the disruption from trailing 12 numbers. So it's a fairly fluid process. When we went out to the market and said that we thought the price range for that group of assets was in the range that you mentioned, you will recall that we also commented that pricing for bulk portfolios of that scale actually backed up. And we pivoted to have a view that by selling off smaller pools of assets or individual assets we would achieve better values than the values that we were getting in terms of the pricing on those assets. So we are out of the market. We are engaged with brokers on certain components of the portfolio and obviously when we made that announcement we have been responding to inbound inquiries for specific assets that buyers have targeted and have come to us on an off-market discussion. So we are looking at this in all possible ways to maximize the value and fulfill our stated strategy of selling these select service assets and making trust platform that's focused on upper upscale full-service hotels and upscale full-service hotels.

Thank you.

Our next question comes from Chris Woronka with Deutsche Bank.

Hi. Good morning guys. Just one quick follow-up on the disposition question. The transaction you announced of the five hotels, could we think about it as you found the buyer, maybe there was a geographic or other interests? Do you think it's more likely that we see small portfolios like that? Or do you think it's more likely that all of the rest of those assets are kind of one-offs?

Well, we are going to be nimble. Obviously if someone came to us and said, we are interested in a large portfolio trade, we will certainly consider that. We think that the buying audience for that segment is not as deep as it was a year ago at this time. So our strategy will be a mix of really looking at the debt pools that we have in these assets located in. And so some of them are one asset debt pool, some of them are five to six assets. And in other cases, it's a little bit larger. So we are going to try to be nimble, minimize the associated defeasance costs as we take these assets into the market. And we will find that there are groups that are interested geographically, we will find that there are groups that want brand manage, we will find probably an even bigger audience of groups that want management unencumbered assets. So we will try to modulate through all of those different buyer appetites and timing situations that I described in respond to the earlier question and do our best to maximize the value that we can obtain from these assets work for shareholders.

Okay. Fair enough. And the, just wanted to clarify, on the ROFOs with Ashford Prime on those assets, there is no expiration date to speak up on those, is there?

No. There is not an expiration.

Okay. Great. And then just wanted to quickly ask about the Marriott, Starwood merger. You guys are the big Marriott owners. Have you had any conversations with them about ensuring that there is no or minimal disruption as they get the integration done?

Sure. This is Jeremy. We are very actively involved with Marriott. We have got an incredible relationship with Marriott. And I can just say that they are very buried on the transaction. They have got a good amount of folks that are on the integration team and there are a few are issues we are working through, nothing that's really significant or material and we are closely involved with them. I think overall, do you think it's going to help our Starwood product and one of the things that we are pretty vocal on with other owners is just that the concept of brand proliferation and the fact that Marriott is going to have so many brands and working through what that means to us and as it relates to new hotel development and things like that.

Okay. Very good. Thanks guys.

Ryan Meliker with Canaccord has our next question.

Hi. Good morning guys. I was hoping and this is probably more for Jeremy, it looks like margins were down 200 basis points in the quarter. Was there anything in particular that was driving that? I apologize if I missed it earlier in your prepared remarks.

Yes. Well, overall the EBITDA for us were pretty strong and I think the margins were positive in the quarter. We did have an impact in specifically one department which was F&B. And that was mainly due to a mix of the business we had in the first quarter. As I mentioned, group room nights were down but overall group room revenues were up as we had less banquet and catering revenue.

Hi Ryan. It's Deric. I would like to just chime in here and point to the earnings release. We had to change our hotel EBITDA table. And so what you are referring to basically ties to the GAAP income statement, which doesn't have a full year of prior-year acquisitions or acquisitions that have been completed since the prior-year. So what you really need is to foreclose the comparable hotel EBITDA margin, which is an increase of 43 basis points.

Got you. And I am looking at the one that shows down 200. Okay.

Yes. That's not an apples-to-apples comparison.

I am sorry. I was looking at the comparable.

Yes. No, that make sense. I was just looking at the wrong thing. No, that's really helpful. And then congratulations on getting the portfolio sale done. Obviously I think those are what you guys were focused on. So well done and pricing looks pretty good. Can you give us any indication, was there a substantial amount of CapEx that needed to go into these assets with regards to PIPs that might make the pricing look even more attractive from a seller standpoint relative to a buyer?

The CapEx was nothing really unusual on the asset, circa $10 million to $12 million plus, that kind of range. So when we looked at this, I think and the market today, quite frankly is looking at all-in cap rates are really the focus of the buyer. They are zeroing in on what their net cap rate is based upon the future spends and not really underwriting a lot of benefit, particularly on the select service. So what we are seeing are cap rates, I would give you a broad range, of circa high-7s to mid-8s kind of net broad range and just really depends upon the age of the asset, encumbered or unencumbered, location. But that's generally what we are seeing. So we thought that this pricing was square in the middle of that.

Yes. And Ryan, jut to give a little bit of color, the major CapEx for that portfolio is the Courtyard LBV. It's to be renovated within the next probably 14 months.

Great. That's helpful. And then just the last question I had was, your stock is obviously trading at a pretty discounted value. You have got nice proceeds coming in from this portfolio of sale. How are you balancing use of proceeds from acquisitions versus stock repurchases? I know that's always a difficult question to answer and just because the stock is at a certain valuation today, it doesn't mean it's going to be at that valuation when you have that cash when you are able to deploy it? But can you just give us some color on how you are thinking about it?

Sure, Ryan. This is Monty. I think you hit the nail on the head. We don't have any cash from those sales coming in yet. And so we would just have to assess the situation as it comes in. We are above our targeted leverage levels of 55% to 60%. So let's not forget that we want to bring back down but other than that, we will just have to assess the situation when those proceeds come in.

All right. That's helpful. Thanks.

[Operator Instructions]. We will go to Bryan Maher with FBR & Co.

Good morning. I was hoping you could address on a higher level. You are comfortable with leverage, the 55% to 60% range. And I know that you have been there a long time. I know you have recovered some since the IPO. But some of your peers have just in the last six to nine months shifted down fairly dramatically to somewhere around 20% to 30% and it would seem with low interest rate that they are at now, that by doing so they are leaving earnings on the table for shareholders. Can you talk about how you think about that internally?

Sure. Thanks Bryan. Equity will always perform better the higher leverage you have got. All the PE firms use 65% to 70% to 80% leverage. The reason they do that is so they can get better equity returns doing it with the higher leverage. The risk is that you increase chance of bankruptcy and you also might have higher volatility in your stock. And so those are the trade-offs. We did go into the worst recession that we have had as a country since the Great Depression at this 60%, 65% or the 55% to 60% levels. And as you know, we came through it with flying colors and we are able to have enough cash to buy back half of our stock during the downturn. And so the rationale to have even lower leverage levels, to us, seems misplaced. It seems like if you can survive and do well during the Great Recession with leverage levels of 55% to 60% and overall your returns are going to be higher with higher leverage, why take it down. We know some investors like it that way and so I think that's why a lot of the other companies, including Prime targets lower leverage levels. But we run this platform a little more opportunistically and focused on just the returns even if this part of the platform or that part of the platform is not the way that some specific investors like.

Just to add to that comment. Our debt is nonrecourse and we do run the platform at a slightly higher cash position relative to our equity market cap and we keep that cash really for safety reasons, but also for opportunities. One of the things we learned in the last downturn was that not that we had too much debt, it was really that we just didn't have enough cash to even capitalize even more than we did than any of our peers in terms of taking advantage of that situation. We are not holding that cash because we think the market is headed in that direction but we think that what we learned from our prior execution will benefit our future execution. So just an added comment there.

Yes. And would you guys be willing to take a stab at how you view the current lodging cycle as it's stacking up now from a timing standpoint? The typical cycle is seven years, we all know, give or take. One looks to play out a little bit longer than that, would you guys be willing to speculate on what you are seeing and thinking in that regard?

Sure. We don't have typical cycles anymore. We are just around the corner on a long-term debt cycle. The typical business cycles you are aware of, the long-term debt cycles occur about every 70 years, debt to GDP peaked in the 1929, that created the crash and because of lowering GDP, it actually peaked in 1933. Then for a upper number of reasons, the debt to GDP number came down drastically and then over the ensuing decades built backup in 2008 and then we had another almost a depression with this high debt. So over the past number of years, this cycle has been unusual in that we haven't had one year of 3% growth no more. So growth in this high debt world is different. It's obviously a lot lower. So here is the question. We are deep into this recovery, but it's been a very lackluster, very tepid recovery. So what does that mean? Does that mean that we are to have even deeper downturns when they come? That's not my belief. My belief is that when the recessions come, they are going to be shallower because we never really overheated. The credit creation is not off the charts. It's a little on the higher end. It's not off the charts. And new supply growth is still modest. In all the past recessions, we have been up to about 3% new supply growth by now. And we are still at around 1.5%. So in a way, we have been kind of in a recession the past five years, right, with the supply growth being so mute. So while we think we are in a cycle, we think that we are not seeing the excesses that you usually see built up towards the end of a cycle. So this should very well go for quite some longer period of time.

Thanks Monty. That's helpful.

With no further questions in the queue, I would like to turn the conference back to Monty Bennett for additional or closing remarks.

Thank you for your participation today. We look forward to speaking with you again on our next call.