Good day and welcome to the Ashford Hospitality Trust and Ashford Prime Fourth Quarter 2014 Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Scott Eckstein. Please go ahead, sir.

Thank you, operator. Good day everyone and welcome to today’s conference call to review results for both Ashford Hospitality Trust and Ashford Hospitality Prime for the fourth quarter of 2014 and 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 press releases that are being covered by the financial media. At this time, let me remind you that certain statements and assumptions in this conference call 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. 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 companies 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 February 26, 2015 and may also be accessed through both companies’ websites at www.ahtreit.com and www.ahpreit.com. Each listener is encouraged to review those reconciliations provided in the earnings releases together with all other information provided in the releases. I will now turn the call over to Monty Bennett. Please go ahead, sir.

Good morning everybody and thank you for joining us. Both the fourth quarter and the full year 2014 were exciting and profitable periods for the Ashford Group of companies. From an operational perspective both Ashford Trust and Ashford Prime demonstrated strong operating performance, reflecting the positive trends that we continue to see in the lodging sector. Additionally both companies were active from the acquisitions market as well as the capital markets and completed several value enhancing transactions in an effort to grow the companies as well as to put them on the even more sound financial putting. We believe the best way to measure our management team by the value it creates for its shareholders. The Ashford management team has a long track record of creating shareholder value since Ashford Trust's IPO in 2003. Over the years we have worked to find new and innovative ways to maximize the value of our existing assets while also looking for accretive opportunities to further invest in the hospitality space. This focus has paid off for our shareholders. Since our 2003 IPO Ashford Trust has achieved a 233% total shareholder return compared with a 170% return for our peers over the same period. We are particularly dedicated to shareholder value because as many of you know we are substantial shareholders in all of the Ashford Group of companies. Insider ownership currently stands at 14% for Ashford Trust and 13% for Ashford Prime. The next closest hotel REIT peer has 4% insider ownership. So it’s clear why we think and act like shareholders when our own capital is at a risk with yours. It’s something that has always distinguished Ashford from others in the space and we consider it one of our main competitive advantages. In the fourth quarter of 2014 and early 2015…

Thanks, Monty. For the fourth quarter of 2014, Ashford Trust reported AFFO per diluted share of $0.17 compared with $0.14 a year ago. Ashford Prime reported AFFO per diluted share of $0.21 compared with $0.09 a year ago. For the fourth quarter, we reported Adjusted EBITDA of $71.7 million for Ashford Trust and $17.5 million for Ashford Prime. This adjusted EBITDA result for Ashford Prime reflected a 64% increase over the prior year. At quarter’s end, Ashford Trust had total assets of $2.8 billion in continuing operations, and $3.6 billion including the Highland portfolio which is not consolidated. It had $2.0 billion of mortgage debt in continuing operations and $2.8 billion overall including Highland. The total combined debt for Ashford Trust currently has a blended average interest rate of 5.3%, and is currently 46.7% fixed rate and 53.3% floating rate, all of which have interest rate caps in place. Including the market value of Ashford Trust’s equity investment in Ashford Prime and Ashford Inc., and it's pro rata share of the net working capital of the Highland portfolio, Ashford Trust ended the quarter with net working capital of $542 million. Ashford Prime, at quarter's end, had total assets of $1.2 billion in continuing operations. It had $765 million of mortgage debt in continuing operations, of which $49.4 million related to our joint venture partner's share of the debt on the Capital Hilton and Hilton La Jolla Torrey Pines. Ashford Prime’s total combined debt had a blended average interest rate of 4.99% and is currently 54.7% fixed rate and 45.3% floating rate, all of which have interest rate caps in place. As of December 31, 2014 the Ashford Trust portfolio consisted of 115 hotels with 23,004 net rooms and the Ashford Prime portfolio consisted of 10 hotels with 3,472 net rooms.…

Thank you Deric. I'm excited to share today a second consecutive quarter with double-digit RevPAR growth across both portfolios. The robust transient demand seen across the industry in the third quarter persisted through the end of the year driving strong top-line results. We are particularly pleased with the strength in the Washington DC market where our assets across both portfolios grew RevPAR by 13.2%. Though corporate transient demand was the most significant driver, we have also seen substantial improvement in a government segment which is essential to long-term health of the DC market. Additionally Ashford’s revenue optimization strategies continue to yield positive results in the fourth quarter, leaving our properties in both portfolios to outgrow their competitive sets with Ashford Trust and Ashford Prime posting combined RevPAR index growth of over 200 basis points. Focusing on the Ashford Prime portfolio, RevPAR growth in the quarter was 11%; EBITDA flow through was 52% in the quarter. Continued strength on the West Coast combined with resurgent transient demand in Washington DC and Philadelphia drove the second consecutive double-digit RevPAR growth for Ashford Prime. November marked the one year anniversary of the Ashford Prime spin-off from Ashford Trust, and I would like to take some time to discuss the highlights of the portfolio’s first year as Standalone Company. In the first quarter Ashford Prime added two additional hotels, the Sofitel Chicago Water Tower and the Pier House Resort in Key West. Major projects completed during the year include a complete guest room innovation at the Courtyard Philadelphia Downtown, lobby renovations at the Marriott Seattle and the Renaissance Tampa, and a strategic project to create additional rooms at the Capital Hilton. Most important though are the outstanding operating results these properties continue to generate. Moving to the Ashford Trust side, during the fourth quarter…

Thank you Jeremy. As Deric mentioned earlier, in the fourth quarter, Ashford Trust continued to identify unique opportunities created by attractive debt market conditions to proactively manage our upcoming debt maturities. This has allowed us to generate substantial excess proceeds and further strengthen our liquidity position. We intend to put these excess proceeds to good use. During the fourth quarter, we announced an agreement to acquire the remaining 28.26% ownership interest of the Highland Hospitality portfolio from our joint venture partner for $250.1 million. The total transaction value is $1.735 billion or $215,000 per key. On a forward 12-month basis, the purchase price represents a cap rate of 7.4% on net operating income and an 11.6 times forward EBITDA multiple. This purchase will be funded with cash and is expected to be completed in the next couple of weeks, simultaneous with an anticipated refinancing of the Highland portfolio. Ashford Trust continued executing on its investment strategy in 2015 with the acquisitions of the 168 room Lakeway Resort & Spa for a total consideration of $33.5 million or $199,000 per key and the 232-room Memphis Marriott East hotel for $43.5 million or $187,500 per key. The Lakeway Resort & Spa has a unique lakefront location in Austin, Texas, one of the fastest growing MSA's in the country in both population and job growth. By installing Remington as property manager, we believe we will be able to capitalize on the recent renovations and growth in the market to drive better bottom line performance. On a forward 12-month basis, the purchase price represents an estimated cap rate of 8.7% on net operating income, which equates to an estimated 9.5 times forward EBITDA multiple. The Marriott Memphis East acquisition offered us a great opportunity to add an asset in a solid submarket with no…

(Operator Instructions). And we will take our first question from Ryan Meliker with MLV & Company. Please go ahead, your line is open.

Quick question, I guess the couple for you. First of call can you give us, and I apologize if I missed this, can you give any update on the Philadelphia sale for Ashford Prime? Can you also -- if you can talk to us a little bit about the Highland refinancing? My understanding is you guys are out in the market looking for CMBS debt for the Highland portfolio. Obviously you're not going to give us any information in terms of how things are coming out but just give us an idea what we should expect, whether you're going to take out excess proceeds, or you're going to try to unencumber some assets. Things along those lines would be helpful in terms of how we model that? And then the third thing was can you little bit about Ashford Inc. and the structure for how Select is going to progress, whether it’s going to be, it sounds like it’s going to be private capital that you are being raised. How much of that’s been raised thus far? When you expect to finish raising that capital? How big you want it to be? And what type of structure and then how the fee structure to Ashford Inc. might unfold? I know it’s a lot but hopefully that will take few minutes.

Thanks Ryan. This is Monty. Jeremy and his crew and the team over at Remington had really worked their tails off in the past year and a half with all these revenue initiatives we're been mentioning and they're producing fantastic results. So we're very proud of those. Regarding our Courtyard Phili, we're still marketing it more sale. It’s still out in the marketplace. It’s going along. Although with the Ashford Select initiative, we are looking at it and just keep it in the back of our minds whether it would be an appropriate asset for Ashford Select or not as an alternative. So that’s currently in our minds but no decision has been made regardless which way. For Highland, we are in the process of closing a transaction, buying out our partner and then refinancing the portfolio simultaneously. It is a use of cash to buy out our partners. The financing itself will produce proceeds. It’s just how much of those proceeds -- will those proceeds be enough to pay for some or all or more than all of the purchase price to our partners. And we should have some details on it to you soon. I know you'd like some more details but we should be wrapping it up in the not too distant future and that way we should be able to give you all the detail that you're looking at. But we are in the throes of trying to get that closed here in the pretty near future. And regarding Ashford Select, unfortunately we're just prevented from a securities laws from commenting very much on that. That’s just something that we can’t talk about in the broad audience. So we wish we could give you more details on it but we just can’t at this point in time. But as soon as we can please note that we absolutely will because we know how important it is for your guys to dig your models both for Ashford Trust and Ashford Inc.

And then so in terms of timing for selecting the transactions out of trust and Select and a decision on Philadelphia for Ashford Select, is 2Q a reasonable expectation for when those transactions could occur?

Yes, I think so. I think Q2 is reasonable. Of course never know but I'd say that, that’s pretty reasonable.

And sure and then with regards to the Highland refi, I appreciate some of that color. Are you planning to encumber a few of the assets and would they be assets that Prime has a rofo [ph] on.

Not necessarily. What we are trying to do is make sure that we've got plenty of abilities to release assets. So in a way the same thing right, flexibility, because we do want to have the flexibility to have assets going to Prime and or into Select as that gets formed. So we are definitely working to include that kind of flexibility.

And our next question comes from David Loeb with Baird. Please go ahead, your line is open.

I won’t beat the dead horse about Select although that’s clearly an interest. Just in terms of the strategy for the Highland refinancing, are you looking at one big CMBS package or are you looking to split that up and finance a number of assets differently, separately?

David its Deric. Three of the assets in the portfolio have existing fixed rate debt on them. So we are not looking refinance those. The remaining assets we're looking to finance and it will probably be a big pool, but as Monty mentioned, we're seeking a lot of flexibility in terms of our ability to move some assets around. So again we hope to have some more information for you here pretty soon.

And Monty I heard you on the Phili sale process for Prime and particularly the potential that that could be interesting for Select. But I wonder if you could just talk more broadly, from the Prime perspective the results of that hotel were spectacular this past quarter. You're still running off of the renovation benefit there. How do you evaluate time versus the interest in getting that property sold, and do you think there's additional value to be had by waiting to sell it given the ramp or do you think that buyers are likely to pay for that anyway in the near-term?

David well you hit right on it. And as we went to market to the asset, trailing numbers are something that buyers are much-much more willing to pay for than hopefully anticipated future numbers, no matter how positive that might look. And here in the fourth quarter we saw it just being -- shaping up as a fantastic quarter for that asset. And we started marketing process. Many times you had to use numbers that are few months old for a number of reasons. And so we wanted to make sure that that value creation in the years to the full benefit of Ashford Prime. And so that's why we aren’t in a dead rush to go market it and to sell it, although that our process. We want to make sure we're getting full value. So the point you bring up is exactly why we're still marketing it, but we just want to see how everything works out because we do want full value for those private shareholders.

Great. And Monty could you also give us a view on your thoughts of markets that have energy exposure, like Houston or other parts of Texas, Denver other markets. What do you think about the outlook for those and how does it impact your acquisition efforts?

Sure, we're just gun shy about those markets. Doug and I grew up in Houston in the 70s and the 80s and so we saw the great run-ups and the great run-downs. And while the chatter is that the markets are much more diversified now and in some cases they are, we just don't see the need to take risks in markets that have question marks on them, when there's so many other markets and assets for selling pretty attractive prices. So as we look to buy assets, we're going to generally be a string away from Texas and Colorado and any other markets, although many times when you chase portfolios, there is a few assets in these markets and that’s fine. We're not completely red lining them but we do have a very strong cautious stance towards them for the reasons that I shared. We've been beat up once before. We don't need it again. So we're going to be careful. As far as our existing assets in Houston we're seeing some softening. The business on the books is not as strong as it was at this time of last year. So it just has a question mark on it. So we're just being careful.

And then finally can you just talk a little bit more about your acquisition pipeline, how optimistic are you that you'll be able to find acquisitions for Trust, for Select, for anything?

We're pretty optimistic. A number of years ago in 2009, 2010 it was a great time to buy assets but no one will sell, because everyone knows that it's a low time in the industry. And that's why as you know we went and bought back so much of our stock, because that was the best opportunity at the time. Right now it's interesting because values have come back and they've come back strongly and sellers can sell assets at decent profits from whenever they might have bought it or built it and therefore can making some money. But we're pretty optimistic for the next numbers of years and the industry which some people are and some people aren't. Well that gives us a great dynamic, where do you have sellers in the marketplace selling, and so volumes of assets are rising and are very, very strong. Yet it's not in our opinion close to the peak of the market and therefore the wrong time to buy. So we see products available for all platforms and we're out aggressively looking at products and underwriting them, Doug do you want to comment?

If I could add just one thing. With the platforms that we have Prime, Trust and soon Select, we're seeing portfolios in the market that often times have mixed assets, full-service and select-service or higher RevPAR and more middle of the road RevPAR assets. We believe that our Ashford Group of companies gives us a competitive advantage. Sellers typically like to sell to one group rather than to engage in multiple groups that attempt a cherry pick. And there already are a couple of those opportunities like that in the market where the competitive landscape is significantly reduced and we're obviously one of the groups that's participating.

And our last question comes from Chris Woronka with Deutsche Bank. Please go ahead. Your line is open.

Just want to ask on the Courtyard Phili, assuming you do sell it, thoughts on use of proceeds there? I think you have about $40 million of debt and some $11 million of EBITDA last year. Your price will be well in excess of that. So just thoughts on what you might do of the proceeds?

Sure. We're out in the marketplace mining for opportunities for Prime and we think there's some great opportunities for Prime. So we're going to keep looking for good quality high-end assets to buy. So there's a chance to recycle the capital out of lower RevPAR assets and to reinvest it into assets that are more in line with Prime strategy.

And is that going to be a part of a 1031? Is that the idea?

If we can and if it’s helpful. We absolutely want to take advantage of that when and where we can. It depends upon a number of factors as you know. I'm sure you are familiar with all the rents around it.

And then just as we think about you touched on it on the last question. So don’t want to spend too much time on it, but I mean as we think about Trust, and you have clear criteria for Prime and you have clear criteria Select. Do you think there are opportunities out there for Trust to still acquire? Obviously you did a few things in the fourth quarter and early this year, but is it a fairly wide ban still or are the criteria making it more narrow and difficult for Trust to find things that might fit.

Good question and just to be clear, we have very clear criteria for Prime and for Select. But that also gives very clear criteria for Trust, because that means it’s everything else that doesn’t fit in those other two clear criterias. So the criteria for Trust is very clear and we do see opportunities. We just closed on the Lakeway in Austin acquisition, we just closed on the on the Marriott in the Memphis acquisition and we're looking at an opportunity right now that's a full service asset and looking at few others. So there's no question. There's plenty, plenty of hotels in the United States that are full service that are below twice the national average.

I think just one thing to add to it is that the race to RevPAR has been exhibited by many of our REIT peers. We've created that dynamic by separating our platforms to address opportunities across all RevPAR segments. With respect to Ashford Trust, we believe that this focused strategy actually reduces some of the competition because when we look at some of the opportunities such as that property in Memphis, I don’t believe that there were many REIT peers that were bidding on it, and yet we feel like we bought it at a very attractive cap rate for the RevPAR that it delivers with the potential upside opportunity by bringing in our affiliated manager, Remington. So we continue to see many opportunities, less competition and arguably more value add opportunities given that many of these types of assets are run by regional or local managers that don’t necessarily have the same competitive advantages that we bring at the table given our scale and operational knowhow. So all three platforms have a good pipeline of opportunities right now.

And it look like we have time for one last question. And we'll go to Robin Farley with UBS. Please go ahead. Your line is open.

It's [indiscernible] for Robin. Just two quick questions. Good flow through in the quarter, could you give us some color what’s driving management fees to be down year-over-year? And then on the transaction market, at this point in the cycle there are not that many [indiscernible] remaining in the U.S. Do you expect to be a net buyer this year?

We do expect to be a net buyer. Doug, if you want to hit the transaction and then Jeremy you can talk about the first question.

Sure, we view that we're at point in the cycle where there is still plenty of runway and we also view that with the performance of the assets, given where we are with respect to the relative contribution of occupancy and ADR to RevPAR growth, clearly ADR is contributing more to the growth because we're running at peak occupancy as an industry and obviously that ADR growth drops to the bottom-line with greater profitability. So we view this to be -- and you can look at the RevPAR performance out of our assets which has been exceptional, not necessarily the best time to sell while we have been a net buyer. We've clearly sold onesies and twosies such as the mobile property and we continue to evaluate the same the Phili Courtyard but you can see our discipline in evaluating that sale given the strength of the RevPAR growth performance that it had. So we will be strategic and very, very selective sellers at this phase of the cycle. We prefer to capitalize on what we see to be the net growth opportunities for the industry overall, continue to implement our value-add asset management strategies which have been clearly demonstrated this quarter and be disciplined in how and what we buy allocating capital to the appropriate risk adjusted returns in each one of these platforms. Jeremy?

Can you give me a little more clarity on your question on management fees, because at least for Trust they are right in line with what they were in the prior quarter?

I'm just looking as the consolidated $7.5 million versus $8.4 million last year.

Okay, I see what you're looking at. So last year we had some of the Prime assets consolidated. And I think what you're looking at is maybe a consolidated. It include some incentive fees. So not just base management fees and incentive fees clearly are up in the portfolio.

I guess that’s exactly what I was looking for. Could you guys give some color on how much?

For incentive fees?

Yes.

They are based on prices -- as a percentage of revenue all the increases that you see in the management fees are comprised of incentive fees.

And it does look like we have no further questions at this time, we will now hand it back over to management for any additional or closing remarks.

Thank you this Monty. Just one clarification on that last call. If you don't mind giving a call to our CFO, because in looking at Ashford Trust last year, the management fee levels that included for a lot of the year Ashford Prime management fees or -- management fees that now Ashford Prime pays, so you kind of have to look at it on a pro-forma basis. So that might help. So otherwise thank you everybody for your participation today and we look forward to speaking with you again on our next call.

And that does conclude today’s program. Those that wish to listen to the replay, you can do so by dialing 719-457-0820. That is 719-457-0820 and enter confirmation number 6219218. That is 6219218. And again that does conclude today’s program. We would like to thank you and have a wonderful day. You may disconnect at any time.