The Board of Directors of Ashford Hospitality Trust formed a Special Committee solely comprised of independent directors to evaluate this transaction. The Special Committee was authorized to retain independent advisors and to review, evaluate, negotiate, and approve the transaction. The Special Committee retained independent advisors Hogan and Hartson L.L.P. as legal advisors, and Citigroup Global Markets Inc. as financial advisors. The Special Committee unanimously approved the acquisition. Morgan Stanley served as the exclusive financial advisor to the Fisher, Getty, and Soros entities.

The acquisition total consideration of $250 million is comprised of $35.0 million in cash, the issuance of $50.3 million in operating partnership units, and the assumption of $164.7 million in debt. The purchase price equates to an 8.9x trailing twelve-month EBITDA multiple, an EBITDA yield of 11.2% and a trailing twelve-month net operating income capitalization rate of 9.3% on the entire 21-hotel portfolio based on a trailing 12-month NOI of $23.3 million. The average cost of the debt is 7.4%, which may be reduced to 7.1% following the expected repayment of approximately a $14.7 million mezzanine loan. The acquisition is expected to close by February 2005. The operating partnership units were priced at $10.07 using the 20-day average closing price calculated 5 business days prior to the signing of the documents. Ashford management, comprising approximately 22% of the selling entity, structured approximately 100% of their net consideration in the form of operating partnership units. The Fisher, Getty, and Soros entities, comprising approximately 78% of the ownership interests in the selling entity, structured approximately 50% of their consideration in cash and 50% in operating partnership units.

The core portfolio consists of 13 hotels across 5 brands and one independent comprising 3,099 total rooms: 

Houston Embassy Suites Galleria in Houston, TX; 
Houston Hilton NASA/Clearlake in Houston, TX; 
Fort Worth Radisson in Fort Worth, TX; 
St. Petersburg Hilton in St. Petersburg, FL; 
West Palm Beach Embassy Suites and Admiralty Office Building in West Palm Beach, FL; 
Key West Crowne Plaza LaConcha in Key West, FL; 
Sheraton Minneapolis West in Minnetonka, MN; 
Beverly Hills Crowne Plaza in Los Angeles, CA; 
Rockland Radisson Hotel Boston/South Shore in Rockland, MA; 
Milford Radisson in Milford, MA; 
Indianapolis Airport Radisson Hotel in Indianapolis, IN; 
Indianapolis Radisson Hotel City Centre in Indianapolis, IN; and 
the Historic Inns in Annapolis, MD. 

The estimated $35-$40 million budgeted capital improvement plan that commenced earlier in 2004 for these properties remains underway, and will be completed under Ashford's ownership by early 2006. The scope and completion dates vary by property, but should largely be completed by the first quarter 2006.

Ashford is evaluating strategic alternatives for eight smaller hotels that contribute a relatively small portion of NOI to the portfolio. The trailing 12-month NOI contribution of $800,000 equates to less than 3.5% of the total portfolio's NOI. The strategic alternatives for these smaller assets include a potential sale, repositioning, and re-branding. These hotels include: 

Coral Gables Holiday Inn in Coral Gables, FL; 
Warner Robins Ramada Inn in Warner Robins, GA; 
Yarmouth Gull Wing Suites in South Yarmouth, MA; 
Hyannis Ramada Inn Regency in Hyannis, MA; 
Falmouth Inn on the Square in Falmouth, MA; 
Commack Howard Johnson in Commack, NY; 
Westbury Howard Johnson in Jericho, NY; and 
Dallas Best Western in Dallas, TX.

"The ability to complete this transaction with the issuance of such a large percentage of OP units to high caliber, sophisticated real estate investment entities controlled by the Fisher Brothers, the Gordon Getty Trust, and George Soros is a further testament to the investment interest in Ashford's business strategy.

"We are pleased with the opportunity to convert a large portion of our ownership in this high quality portfolio to an equity interest in Ashford's more diversified lodging platform," stated Richard L. Fisher, the seller's managing general partner. "We've had a long, successful relationship with this management team and have high confidence in their ability to create value for shareholders throughout lodging cycles."

The private placement of Series B cumulative convertible preferred stock to Security Capital Preferred Growth is a two-stage transaction for up to $75 million in proceeds. The liquidation preference is set at $10.07 per share, which is the same as the operating partnership unit pricing for the 21- property hotel acquisition. The conversion ratio is at 1:1 with a three-year call option, or a two-year "soft call" subject to achieving performance thresholds. The preferred dividend is set at the greater of $0.14 per share per quarter or the prevailing quarterly common stock dividend.

The first tranche is for $20 million, with an initial $10 million to be funded prior to December 31, 2004, and the remainder available for disbursement by June 30, 2005. The second tranche is for $55 million and its availability is contingent upon the closing of the announced 21-property acquisition, provided the closing occurs prior to March 31, 2005. Initially, $14.7 million will be funded at Security Capital's election at the closing of the acquisition, with another $20 million by June 30, 2005, and the remainder available for disbursement by December 23, 2005. Proceeds from the issuance may be used specifically for this 21-property acquisition or drawn over time for new acquisitions or debt repayment.

Mr. Bennett added, "The importance of this transaction with Security Capital cannot be underestimated. We have been able to secure an attractive and very cost effective source of capital that provides significant flexibility for funding our acquisition of this 21-hotel portfolio as well as future investment opportunities over the next year. This structure enables Ashford to access funds on an as-needed basis concurrent with transaction closings and removes capital market risk for this 21-property acquisition by locking in capital in advance. We are pleased with the low cost of this transaction and most importantly the funding options it affords Ashford over time. In addition, Security Capital has established a long track record of successful real estate investing, particularly with publicly traded REITs, and we are very pleased to have them as a long-term shareholder."

"We are delighted to become a significant equity investor in Ashford," said Anthony R. Manno, Jr., CEO of Security Capital Research & Management Incorporated, the investment advisor to Security Capital Preferred Growth. "Since 1997, Security Capital Preferred Growth has been a leading provider of growth capital to dynamic real estate companies. Ashford's outstanding management team and unique business model have positioned this company to be a leader in the lodging sector, and we view this investment as the beginning of a long and mutually-rewarding relationship."

Ashford Hospitality Trust is a self-administered real estate investment trust focused on investing in the hospitality industry across all segments and at all levels of the capital structure, including direct hotel investments, first mortgages, mezzanine loans and sale-leaseback transactions. Additional information can be found on the Company's web site at http://www.ahtreit.com/.

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.