1232582--3/2/2010--ASHFORD_HOSPITALITY_TRUST

related topics

{investment, property, distribution}

{loan, real, estate}

{tax, income, asset}

{stock, price, share}

{provision, law, control}

{debt, indebtedness, cash}

{regulation, change, law}

{acquisition, growth, future}

{loss, insurance, financial}

{cost, contract, operation}

{operation, natural, condition}

{stock, price, operating}

{cost, regulation, environmental}

{personnel, key, retain}

We are subject to various risks related to our use of, and dependence on, debt. We have voluntarily elected to cease making payments on the mortgages securing two of our hotels, and we may voluntarily elect to cease making payments on additional mortgages in the future, which could reduce the number of hotels we own as well as our revenues and could affect our ability to raise equity or debt financing in the future. Our stock repurchase program could increase the volatility of the price of our common stock and utilizes our current cash on hand. Our long-term business strategy depends on our continued growth. We may be unable to return to a period of business growth, which may adversely affect our operating results. If we are able to return to a period of business growth, we may be unable to identify additional investments that meet our investment criteria or to acquire the properties we have under contract. Conflicts of interest could result in our management acting other than in our stockholders best interest. Tax indemnification obligations that apply in the event that we sell certain properties could limit our operating flexibility. Hotel franchise requirements could adversely affect distributions to our stockholders. Our investments are concentrated in particular segments of a single industry. We rely on third party property managers, including Remington Lodging, to operate our hotels and for a significant majority of our cash flow. If we cannot obtain additional financing, our growth will be limited. We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay dividends to our stockholders. Currently, our credit facility limits us from paying dividends if we do not meet certain covenants and we are not anticipating any requirement to pay dividends in the near future. We compete with other hotels for guests. We also face competition for acquisitions and sales of lodging properties and of desirable mortgage investments. We may continue to engage in derivative transactions, which can further limit our gains and increase exposure to losses. The assets associated with certain of our derivative transactions do not constitute qualified REIT assets and the related income will not constitute qualified REIT income. Significant fluctuations in the value of such assets or the related income could jeopardize our REIT status or result in additional tax liabilities. Future terrorist attacks similar in nature to the events of September 11, 2001 may negatively affect the performance of our properties, the hotel industry in general, and our future results of operations and financial condition. We may not be able to sell our investments on favorable terms. RISKS RELATED TO HOTEL INVESTMENTS We are subject to general risks associated with operating hotels. We may have to make significant capital expenditures to maintain our lodging properties. The hotel business is seasonal, which affects our results of operations from quarter to quarter. Our hotel investments may be subject to risks relating to potential terrorist activity. Our development activities may be more costly than we have anticipated. RISKS RELATED TO INVESTMENTS IN MORTGAGES AND MEZZANINE LOANS If the current economic downturn continues and the underlying hotel properties supporting our mezzanine loan portfolio are unable to generate enough cash flows for the scheduled payments, there is a possibility that our remaining mezzanine loan portfolio could be written off in its entirety, which may adversely affect our operating results. Continued significant impairment charges related to our mezzanine loan portfolio could result in our failure to satisfy certain financial ratios, which could trigger additional rights for the holder of our Series B-1 Preferred Stock. Mortgage investments that are not United States government insured involve risk of loss. We invest in non-recourse loans, which will limit our recovery to the value of the mortgaged property. Investment yields affect our decision whether to originate or purchase investments and the price offered for such investments. Volatility of values of mortgaged properties may adversely affect our mortgage loans. Mezzanine loans involve greater risks of loss than senior loans secured by income-producing properties. RISKS RELATED TO THE REAL ESTATE INDUSTRY Mortgage debt obligations expose us to increased risk of property losses, which could harm our financial condition, cash flow, and ability to satisfy our other debt obligations and pay dividends. Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition. The costs of compliance with or liabilities under environmental laws may harm our operating results. Our properties and the properties underlying our mortgage loans may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem. Compliance with the Americans with Disabilities Act and fire, safety, and other regulations may require us or our borrowers to make unintended expenditures that adversely impact our operating results. We may experience uninsured or underinsured losses. RISKS RELATED TO OUR STATUS AS A REIT If we do not qualify as a REIT, we will be subject to tax as a regular corporation and could face substantial tax liability. Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow. Complying with REIT requirements may cause us to forego otherwise attractive opportunities. Complying with REIT requirements may limit our ability to hedge effectively. Complying with REIT requirements may force us to liquidate otherwise attractive investments. Complying with REIT requirements may force us to borrow to make distributions to stockholders. We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our securities. Your investment in our securities has various federal, state, and local income tax risks that could affect the value of your investment. RISKS RELATED TO OUR CORPORATE STRUCTURE There are no assurances of our ability to make distributions in the future. Failure to maintain an exemption from the Investment Company Act would adversely affect our results of operations. Our charter does not permit ownership in excess of 9.8% of our capital stock, and attempts to acquire our capital stock in excess of the 9.8% limit without approval from our Board of Directors are void. Because provisions contained in Maryland law and our charter may have an anti-takeover effect, investors may be prevented from receiving a control premium for their shares. Offerings of debt securities, which would be senior to our common stock and any preferred stock upon liquidation, or equity securities, which would dilute our existing stockholders holdings could be senior to our common stock for the purposes of dividend distributions, may adversely affect the market price of our common stock and any preferred stock. Securities eligible for future sale may have adverse effects on the market price of our securities. We depend on key personnel with long-standing business relationships. The loss of key personnel could threaten our ability to operate our business successfully.

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1232582--3/2/2010--ASHFORD_HOSPITALITY_TRUST_INC