S-3

As filed with the Securities and Exchange Commission on September 1, 2005

Registration No. 333-                    

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its governing instruments)

Maryland
(State of jurisdiction of incorporation or organization) 86-1062192
(I.R.S. Employer Identification No.)

14185 Dallas Parkway, Suite 1100 Dallas, Texas 75254 (972) 490-9600	Montgomery J. Bennett David A. Brooks 14185 Dallas Parkway, Suite 1100 Dallas, Texas 75254 (972) 490-9600
(Address including zip code, and telephone number, including area code, of registrant’s principal executive offices)	(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
David Barbour
Muriel C. McFarling
Andrews Kurth LLP
1717 Main Street, Suite 3700
Dallas, Texas 75201
(214) 659-4400

     Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. þ

     If the Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If the Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

     If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

					Proposed
	Amount		Proposed		maximum
	to be		maximum offering		aggregate offering		Amount of
Title of each class of securities to be registered	registered		price per unit(1)		price		registration fee
Common Stock, $0.01 par value per share		333,333		$11.42		$3,806,663		$448

(1) Estimated solely for the purpose of determining the registration fee pursuant to Rule 457(b), based on the average of the high and low prices of the common stock as reported on the New York Stock Exchange on August 31, 2005.

     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed or supplemented. We cannot sell any of the securities described in this prospectus until the registration statement that we have filed to cover the securities has become effective under the rules of the Securities and Exchange Commission. This prospectus is not an offer to sell the securities, nor is it a solicitation of an offer to buy the securities, in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 1, 2005

PROSPECTUS

333,333 Shares of Common Stock

     Ashford Hospitality Trust, Inc. is a real estate investment trust, or REIT, that was formed in May 2003 to invest in the hospitality industry at all levels of the capital structure. We are self-advised and own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership, our operating partnership.

     This prospectus relates to the possible issuance, from time to time, of up to 333,333 shares of our common stock, par value $0.01 per share, which we may issue in exchange for the redemption of an equal number of units of limited partnership interest, or units, in our operating partnership. We may issue the common stock covered by this prospectus to the holders of these units to the extent that the holders redeem their units and we elect to issue common stock in connection with the redemption. We may also elect to pay cash for redeemed units in lieu of issuing common stock. This prospectus also relates to the offer and resale, from time to time, by the persons receiving shares of our common stock covered by this prospectus upon redemption of units. These persons are referred to in this prospectus as selling stockholders.

     We will not receive any proceeds from the issuance of shares of common stock in exchange for units or from the sale of any common stock offered by the selling stockholders, but we have agreed to pay certain registration expenses. The registration of shares of common stock covered by this prospectus and described above does not necessarily mean that any of the units will be submitted for redemption or that any of the shares of common stock that may be issued upon such redemption will be offered or sold by the selling stockholders. The registration statement of which this prospectus is a part is being filed pursuant to our contractual obligations.

     Our common stock is listed on the New York Stock Exchange under the symbol “AHT.” The last reported sale price of our common stock on the New York Stock Exchange on August 31, 2005 was $11.49 per share.

     To assist us in complying with certain federal income tax requirements applicable to REITs, our charter contains certain restrictions relating to the ownership and transfer of our stock, including an ownership limit of 9.8% on our common stock.

     Investing in our common stock involves risks. See “Risk Factors” beginning on page 1 of this prospectus to read about risks you should consider before buying our common stock.

     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is September __, 2005.

TABLE OF CONTENTS

WHERE YOU CAN FIND MORE INFORMATION	ii
INCORPORATION OF INFORMATION BY REFERENCE	ii
A WARNING ABOUT FORWARD-LOOKING STATEMENTS	iii
OUR COMPANY		1
SECURITIES THAT MAY BE OFFERED		1
RISK FACTORS		1
USE OF PROCEEDS		19
REDEMPTION OF UNITS		19
DESCRIPTION OF CAPITAL STOCK		23
MATERIAL PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS		27
PARTNERSHIP AGREEMENT		31
COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK		35
FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT		40
PLAN OF DISTRIBUTION		61
EXPERTS		62
LEGAL MATTERS		63
Registration Rights Agreement
Opinion/Consent of Andrews Kurth LLP
Consent of Ernst & Young LLP
Consent of Holland Shipes Vann, P.C.
Consent of Berdon LLP
Consent of PricewaterhouseCoopers LLP

     You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized anyone else to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. An offer to sell these securities will not be made in any jurisdiction where the offer and sale is not permitted. You should assume that the information appearing in this prospectus, as well as information we previously filed with the Securities and Exchange Commission and incorporated by reference, is accurate as of the date on the front cover of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

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WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and current reports, proxy statements and other documents with the Securities and Exchange Commission under the Securities Exchange Act of 1934. You may read and copy any materials that we file with the SEC without charge at the public reference room of the Securities and Exchange Commission, 450 Fifth Street, N.W., Room 1024, Washington, DC 20549. Information about the operation of the public reference room may be obtained by calling the Securities and Exchange Commission at 1-800-SEC-0300. Also, the SEC maintains an internet website that contains reports, proxy and information statements, and other information regarding issuers, including Ashford, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at www.sec.gov.

     We also make available free of charge on or through our internet website (www.ahtreit.com) our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

     This prospectus is part of a registration statement on Form S-3 that we filed with the Securities and Exchange Commission. This prospectus does not contain all of the information set forth in the registration statement and exhibits and schedules to the registration statement. For further information with respect to our company and our common stock, reference is made to the registration statement, including the exhibits and schedules to the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that contract is an exhibit to the registration statement, each statement is qualified in all respects by reference to the exhibit to which the reference relates.

INCORPORATION OF INFORMATION BY REFERENCE

     The SEC allows us to “incorporate by reference” the information we file with them, which means that we can disclose important information to you by referring you to other documents that we file with the SEC. These incorporated documents contain important business and financial information about us that is not included in or delivered with this prospectus. The information incorporated by reference is considered to be part of this prospectus, and later information filed with the SEC will update and supersede this information.

     We incorporate by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until the offering of securities covered by this prospectus is complete:

•	our Annual Report on Form 10-K for the year ended December 31, 2004, as amended by Amendment No. 1 to our Annual Report on Forms 10-K/A filed with the SEC on August 10, 2005 and August 24, 2005;
•	our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005 and June 30, 2005; and
•	our Current Reports on Form 8-K, filed with the SEC on January 4, 2005, January 10, 2005, January 11, 2005, January 14, 2005, January 20, 2005 (both Current Reports filed on such date), February 10, 2005, March 14, 2005, March 18, 2005, March 22, 2005, March 29, 2005, March 31, 2005 (pursuant to Item 8.01), April 1, 2005, April 5, 2005, April 29, 2005, May 9, 2005, June 21, 2005 (pursuant to Items 1.01, 2.01, 2.03, 3.02, 8.01 and 9.01), July 6, 2005, August 26, 2005 and August 30, 2005.
	You may obtain copies of these documents at no cost by writing or telephoning us at the following address:

Investor Relations

Ashford Hospitality Trust, Inc.

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

(972) 490-9600

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A WARNING ABOUT FORWARD-LOOKING STATEMENTS

     We make forward-looking statements in this prospectus, and in the information incorporated by reference into this prospectus, that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. Statements regarding the following subjects are forward-looking by their nature:

• our business and investment strategy;

• our projected operating results;

• completion of any pending transactions;

• our ability to obtain future financing arrangements;

• our understanding of our competition;

• market trends;

• projected capital expenditures; and

• the impact of technology on our operations and business.

     The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our common stock. Additionally, the following factors could cause actual results to vary from our forward-looking statements:

• the factors discussed in this prospectus, and in the information incorporated by reference into this prospectus, including those set forth under the section titled “Risk Factors;”

• general volatility of the capital markets and the market price of our securities;

• changes in our business or investment strategy;

• availability, terms and deployment of capital;

• availability of qualified personnel;

• changes in our industry and the market in which we operate, interest rates or the general economy; and

• the degree and nature of our competition.

When we use the words “will likely result,” “may,” “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” or similar expressions, we intend to identify forward-looking statements. You should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.s

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OUR COMPANY

     We are a Maryland corporation that was formed in May 2003 to invest in the hospitality industry at all levels of the capital structure. Since our initial public offering in August 2003, we have actively acquired hotel assets. Our portfolio includes 79 hotel properties containing 12,868 rooms, one office building and $102 million of debt investments. Our hotel investments are currently focused on the upscale and upper-upscale lodging segments and are concentrated among Marriott, Hilton, Hyatt and Starwood brands.

     Our business strategy is to target specific opportunities created by the current strengthening lodging market while retaining the flexibility to invest in the most attractive risk-reward opportunities as they develop in the lodging business cycle. Our target investments include (i) direct hotel investments; (ii) mezzanine financing through origination or through acquisition in secondary markets; (iii) first lien mortgage financing through origination or through acquisition in secondary markets; and (iv) sale-leaseback transactions.

     We are self-advised and own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership, our operating partnership. We are the sole general partner of our operating partnership.

          We have elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes. Our principal executive offices are located at 14185 Dallas Parkway, Suite 1100, Dallas, Texas 75254. Our telephone number is (972) 490-9600. Our website is http://www.ahtreit.com. The contents of our website are not a part of this prospectus. Our shares of common stock are traded on the New York Stock Exchange, or the “NYSE,” under the symbol “AHT.”

SECURITIES THAT MAY BE OFFERED

     This prospectus relates to the possible issuance or resale, from time to time, of up to 333,333 shares of common stock, if and to the extent that the holders of units elect to tender up to an aggregate of 333,333 units in our operating partnership for redemption commencing on September 1, 2005. We are registering the shares of common stock covered by this prospectus to permit the holders thereof to sell such shares without restriction in the open market or otherwise, but the registration of these shares does not necessarily mean that any of the units will be tendered for redemption or that any of such shares will be offered or sold by the recipients.

     We will not receive any proceeds from the issuance or resale of the shares of common stock covered by this prospectus.

RISK FACTORS

     An investment in our securities involves various risks. You should carefully consider the following risk factors in conjunction with the other information contained in this prospectus before purchasing our securities. The risks discussed in this prospectus can adversely affect our business, liquidity, operating results, prospects and financial condition. This could cause the market price of our securities to decline and could cause you to lose all or part of your investment. The risk factors described below are not the only risks that may affect us. Additional risks and uncertainties not presently known to us also may adversely affect our business, liquidity, operating results, prospects and financial condition.

Risks Related to Exchange of Common Units for Common Stock

The exchange of units of limited partnership interest for our common stock is a taxable transaction.

     The exchange of units of limited partnership for shares of our common stock will be treated for United States federal income tax purposes as a sale of the units by the limited partner making the exchange. A limited partner will recognize gain or loss for United States federal income tax purposes in an amount equal to the difference between the “amount realized” by the limited partner in the exchange and the limited partner’s adjusted tax basis in the units exchanged. Generally, the amount realized by a limited partner on an exchange will be the fair

market value of the shares of our common stock received in the exchange, plus the amount of our operating partnership’s liabilities allocable to the units being exchanged at the time of the exchange. The recognition of any loss resulting from an exchange of units of limited partnership interest for shares of our common stock is subject to a number of limitations set forth in the Internal Revenue Code of 1986, as amended, or the Code. It is possible that the amount of gain recognized or even the tax liability resulting from the gain could exceed the value of the shares of our common stock received upon the exchange. In addition, the ability of a limited partner to sell a substantial number of shares of our common stock in order to raise cash to pay tax liabilities associated with the exchange of our units may be restricted and, as a result of stock price fluctuations, the price the holder receives for the shares of our common stock may not equal the value of the common units at the time of the exchange. See “Redemption of Units – Tax Consequences of Redemption” for more information on these tax consequences.

An investment in our common stock is different from an investment in units of limited partnership interest in our operating partnership.

     If a limited partner exchanges his or her units of limited partnership interest in our operating partnership for shares of our common stock, he or she will become one of our stockholders rather than a limited partner in our operating partnership. Although the nature of an investment in our common stock is similar to an investment in units, there are also differences between ownership of units of limited partnership interest and ownership of our common stock. These differences, some of which may be material to you, include:

• form of organization;

• management control;

• voting and consent rights;

• liquidity; and

• federal income tax considerations.

These differences are further discussed in “Comparison of Ownership of Units and Common Stock.”

Risks Related to Our Business

Our business strategy depends on our continued growth. We may fail to integrate recent and additional investments into our operations or otherwise manage our planned growth, which may adversely affect our operating results.

     Our business plan contemplates a period of continued growth in the next several years. We cannot assure you that we will be able to adapt our management, administrative, accounting and operational systems, or hire and retain sufficient operational staff to successfully integrate our recent investments into our portfolio and manage any future acquisitions of additional assets without operating disruptions or unanticipated costs. Acquisition of any additional portfolio of properties or mortgages would generate additional operating expenses that we will be required to pay. As we acquire additional assets, we will be subject to the operational risks associated with owning new lodging properties. Our failure to successfully integrate our recent acquisitions as well as any future acquisitions into our portfolio could have a material adverse effect on our results of operations and financial condition and our ability to pay dividends to stockholders.

We may be unable to identify additional real estate investments that meet our investment criteria or to acquire the properties we have under contract.

     We cannot assure you that we will be able to identify real estate investments that meet our investment criteria, that we will be successful in completing any investment we identify or that any investment we complete will produce a return on our investment. Moreover, we will have broad authority to invest in any real estate investments

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that we may identify in the future. We also cannot assure you that we will acquire the properties we currently have under firm purchase contracts or that the acquisition terms we have negotiated will not change.

Conflicts of interest could result in our management acting other than in our stockholders’ best interest.

     Conflicts of interest relating to Remington Hotel Corporation and Remington Lodging may lead to management decisions that are not in the stockholders’ best interest. The Chairman of our board of directors, Mr. Archie Bennett, Jr., serves as the Chairman of the board of directors of Remington Hotel Corporation, and our Chief Executive Officer and President, Mr. Montgomery Bennett, serves as the Chief Executive Officer and President of Remington Hotel Corporation. Messrs. Archie and Montgomery Bennett own 100% of Remington Hotel Corporation. Remington Lodging, which is also 100% owned by Messrs. Archie and Montgomery Bennett, manages 30 of our 79 properties and provides related services, including property management services and project development services. Additionally, Messrs. Archie and Montgomery Bennett own minority interests in several lodging properties not transferred to our operating partnership.

     Messrs. Archie and Montgomery Bennett’s ownership interests in and management obligations to Remington Hotel Corporation and Remington Lodging present them with conflicts of interest in making management decisions related to the commercial arrangements between us and Remington Lodging and will reduce the time and effort they each spend managing us. Our board of directors has adopted a policy that requires all management decisions relating to the management agreements with Remington Lodging be approved by a majority or, in certain circumstances, all of our independent directors.

     Holders of units in our operating partnership, including members of our management team, may suffer adverse tax consequences upon our sale of certain properties. Therefore, holders of units, either directly or indirectly, including Messrs. Archie and Montgomery Bennett, Mr. David Brooks, our Chief Legal Officer, Mr. Mark Nunneley, our Chief Accounting Officer, and Mr. Martin L. Edelman (or his family members), one of our directors, may have different objectives regarding the appropriate pricing and timing of a particular property’s sale. These officers and directors of ours may influence us not to sell or refinance certain properties, even if such sale or refinancing might be financially advantageous to our stockholders, or to enter into tax deferred exchanges with the proceeds of such sales when such a reinvestment might not otherwise be in our best interest.

     In addition, we have agreed to indemnify contributors of properties contributed to us in exchange for operating partnership units, including (indirectly) Messrs. Archie and Montgomery Bennett, Brooks, Nunneley and Edelman (or his family members), against the income tax they may incur if we dispose of the specified contributed properties. Because of this indemnification, our indemnified management team members may make decisions about selling any of these properties that are not in our stockholders’ best interest.

     We are a party to a master hotel management agreement and an exclusivity agreement with Remington Lodging. Of our 79 hotels, 30 are currently managed by Remington Lodging. The management agreement describes the terms of Remington Lodging’s management of the 30 hotels, as well as any future hotels we may acquire that will be managed by Remington Lodging. If we terminate the management agreement as to any of our hotels that are subject to the management agreement, we will be required to pay Remington Lodging a substantial termination fee. For example, if we were to terminate the management agreement with respect to all 30 of our hotels that are currently being managed by Remington Lodging because we elected to sell those hotels, the fee would be approximately $10.6 million. The exclusivity agreement requires us to engage Remington Lodging, unless our independent directors either (i) unanimously vote to hire a different manager or developer, or (ii) by a majority vote, elect not to engage Remington Lodging because they have determined that special circumstances exist or that, based on Remington Lodging’s prior performance, another manager or developer could perform the duties materially better. As the sole owners of Remington Lodging, which would receive any development, management and management termination fees payable by us under the management agreement, Messrs. Archie and Montgomery Bennett may influence our decisions to sell a hotel or acquire or develop a hotel when it is not in the best interests of our stockholders to do so.

     In addition, Ashford Financial Corporation, an affiliate, contributed to us asset management and consulting agreements that relate to management and consulting services that Ashford Financial Corporation agreed to perform for hotel property managers with respect to 27 identified hotel properties in which Messrs. Archie and Montgomery

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Bennett held, or continue to hold, a minority interest. Ashford Financial Corporation is 100% owned by Messrs. Archie and Montgomery Bennett. The agreements provided for annual payments to us, as the assignee of Ashford Financial Corporation, in consideration for our performance of certain asset management and consulting services. We recently completed the acquisition of 21 of the 27 hotel properties for which we previously provided the asset management and consulting services, and the remaining six hotels have either been sold or are currently being marketed for sale. In connection with our acquisition of 21 of the properties and any subsequent sale of the remaining six properties, the asset management and consulting agreements for these properties were, or will be, terminated, and we will no longer receive any fees under the terminated agreements. The exact amount of the consideration due to us under any remaining asset management and consulting agreements is contingent upon the revenue generated by the hotels underlying the asset management and consulting agreements. Ashford Financial Corporation has guaranteed a minimum payment to us of $1.2 million per year, subject to adjustments based on the consumer price index, which expires in 2008. We do not expect the remaining hotel properties for which we provide asset management and consulting services to generate sufficient revenue to result in at least $1.2 million in fees to us per year of the agreement. Accordingly, we anticipate collecting the balance of the guaranteed minimum payment of $1.2 million per year from Ashford Financial Corporation under its guarantee.

     Each of the management companies that continues to manage the remaining properties subject to the asset management and consulting is either owned 100% by Messrs. Archie and Montgomery Bennett, or is a wholly-owned subsidiary of Remington Hotel Corporation, which is owned 100% by Messrs. Archie and Montgomery Bennett. Messrs. Archie and Montgomery Bennett also have a minority ownership interest in the hotel properties benefiting from the services provided pursuant to the asset management and consulting agreements. Although they do not own a controlling interest in such properties, Messrs. Archie and Montgomery Bennett may benefit from a future sale of the properties.

Tax indemnification obligations that apply in the event that we sell certain properties could limit our operating flexibility.

     If we dispose of any of the five properties that were contributed to us in exchange for units in our operating partnership in connection with our initial public offering, we may be obligated to indemnify the contributors, including Messrs. Archie and Monty Bennett whom have substantial ownership interests, against the tax consequences of the sale. We have agreed to pay a contributor’s tax liability if we dispose of a property contributed by a contributor in a taxable transaction before the earlier of:

• 10 years after the contribution of such property, and

• the date on which the contributor no longer owns, in the aggregate, at least 25% of the units we issued to the contributor at the time of its contribution of property to our operating partnership.

     This tax indemnity will be equal to the amount of the federal and state income tax liability the contributor incurs with respect to the gain allocated to the contributor. The terms of the contribution agreements also require us to gross up the tax indemnity payment for the amount of income taxes due as a result of the tax indemnity payment.

     In addition, under the tax indemnification agreements, we have agreed for a period of 10 years to use commercially reasonable efforts to maintain non-recourse mortgage indebtedness in the amount of at least $16.0 million, which will allow the contributors to defer recognition of gain in connection with the contribution of the Las Vegas hotel property as part of our formation.

     Additionally, we are prohibited from selling or transferring the Sea Turtle Inn in Atlantic Beach, Florida, until April 1, 2007 if, as a result, the entity from whom we acquired the property would recognize gain for federal tax purposes. If we sell or transfer this property after April 1, 2007, but prior to April 1, 2009, and the sale or transfer results in the entity that sold us the property having to recognize gain for federal tax purposes, we must pay $180,000 to that entity. However, this amount will be reduced by $7,500 for each passing month from April 1, 2007 until April 1, 2009.

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     Also, if we dispose, in a taxable transaction, of any of the 19 properties that were contributed to us in exchange for units in our operating partnership in March 2005, we may be obligated to indemnify the contributors or their specified assignees against the tax consequences of the sale. We have agreed to pay a contributor’s tax liability with respect to these properties if we dispose of a property contributed by a contributor in a taxable transaction before the earlier of:

• 7 years after the contribution of such property, and

• the date on which the contributor or any of its specified transferees no longer owns, in the aggregate, at least 10% of the units we issued to the contributor at the time of its contribution of property to our operating partnership.

     This tax indemnity will be equal to the amount of the federal, state and local income tax liability the contributor or its specified assignee incurs with respect to the gain allocated to the contributor. The terms of the contribution agreements also require us to gross up the tax indemnity payment for the amount of income taxes due as a result of the tax indemnity payment.

     While the tax indemnities generally do not contractually limit our ability to conduct our business in the way we desire, we are less likely to sell any of the contributed properties for which we have agreed to the tax indemnities described above in a taxable transaction during the applicable indemnity period. Instead, we would either hold the property for the entire indemnity period or seek to transfer the property in a tax-deferred like-kind exchange. In addition, a condemnation of one of our properties could trigger our tax indemnification obligations.

Hotel franchise requirements could adversely affect distributions to our stockholders.

     We must comply with operating standards, terms and conditions imposed by the franchisors of the hotel brands under which our hotels operate. The franchisors periodically inspect their licensed hotels to confirm adherence to their operating standards. The failure of a hotel to maintain such standards could result in the loss or cancellation of a franchise license. With respect to operational standards, we rely on our property managers to conform to such standards. The franchisors may also require us to make certain capital improvements to maintain the hotel in accordance with system standards, the cost of which can be substantial. It is possible that a franchisor could condition the continuation of a franchise based on the completion of capital improvements that our management or board of directors determines are too expensive or otherwise not economically feasible in light of general economic conditions or the operating results or prospects of the affected hotel. In that event, our management or board of directors may elect to allow the franchise to lapse or be terminated which could result in a change in brand franchising or operation of the hotel as an independent hotel.

     In addition, when the term of a franchise expires, the franchisor has no obligation to issue a new franchise. The loss of a franchise could have a material adverse effect on the operations or the underlying value of the affected hotel because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. The loss of a franchise could also have a material adverse effect on cash available for distribution to stockholders.

Future terrorist attacks similar in nature to the events of September 11, 2001 may negatively affect the performance of our properties and the hotel industry and may negatively affect our future results of operations and financial condition.

     The terrorist attacks of September 11, 2001, their after-effects and the resulting U.S.-led military action in Iraq substantially reduced business and leisure travel throughout the United States and hotel industry revenue per available room, or RevPAR, generally during the period following September 11, 2001. We cannot predict the extent to which additional terrorist attacks, acts of war or similar events may occur in the future or how such events would directly or indirectly impact the hotel industry or our operating results. Future terrorist attacks, acts of war or similar events could have further material adverse effects on the hotel industry at large and our operations in particular.

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Our investments will be concentrated in particular segments of a single industry.

     Our entire business is hotel related. Our current investment strategy is to acquire or develop mid to upscale hotels, acquire first mortgages on hotel properties, invest in other mortgage-related instruments such as mezzanine loans to hotel owners and operators and participate in hotel sale-leaseback transactions. Adverse conditions in the hotel industry will have a material adverse effect on our operating and investment revenues and cash available for distribution to our stockholders.

We rely on third party property managers, especially Remington Lodging, to operate our hotels and for a significant majority of our cash flow.

     For us to continue to qualify as a REIT, third parties must operate our hotels. A REIT may lease its hotels to taxable REIT subsidiaries in which the REIT can own up to a 100% interest. A taxable REIT subsidiary, or TRS, pays corporate level income tax and may retain any after-tax income. A REIT must satisfy certain conditions to use the TRS structure. One of those conditions is that the TRS must hire, to manage the hotels, an “eligible independent contractor” (“EIC”) that is actively engaged in the trade or business of managing hotels for parties other than the REIT. An EIC cannot (i) own more than 35% of the REIT, (ii) be owned more than 35% by persons owning more than 35% of the REIT or (iii) provide any income to the REIT (i.e., the EIC cannot pay fees to the REIT, and the REIT cannot own any debt or equity securities of the EIC).

     Accordingly, while we may lease hotels to a TRS that we own, the TRS must engage a third-party operator to manage the hotels and our ability to direct and control how our hotels are operated is less than if we were able to manage our hotels directly. We have entered into a management agreement with Remington Lodging, which is owned 100% by Messrs. Archie and Montgomery Bennett, to manage 30 of our 79 lodging properties, and we have hired unaffiliated third party property managers to manage the remaining 49 properties we currently own. We do not supervise any of the property managers or their respective personnel on a day-to-day basis, and we cannot assure you that the property managers will manage our properties in a manner that is consistent with their respective obligations under the applicable management agreement or our obligations under our hotel franchise agreements. We also cannot assure you that our property managers will not be negligent in their performance, will not engage in other criminal or fraudulent activity, or will not otherwise default on their respective management obligations to us. If any of the foregoing occurs, our relationships with the franchisors may be damaged, we may be in breach of the franchise agreement, and we could incur liabilities resulting from loss or injury to our property or to persons at our properties. Any of these circumstances could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders.

If we cannot obtain additional financing, our growth will be limited.

     We are required to distribute to our stockholders at least 90% of our taxable income, excluding net capital gains, each year to continue to qualify as a REIT. As a result, our retained earnings available to fund acquisitions, development or other capital expenditures are nominal. Eventually, we will rely upon the availability of additional debt or equity capital to fund these activities. Our long-term ability to grow through acquisitions or development of hotel-related assets will be limited if we cannot obtain additional financing. Market conditions may make it difficult to obtain financing, and we cannot assure you that we will be able to obtain additional debt or equity financing or that we will be able to obtain it on favorable terms.

We may be unable to generate sufficient revenue from operations to pay our operating expenses and to pay dividends to our stockholders.

     As a REIT, we are required to distribute at least 90% of our taxable income each year to our stockholders. We intend to distribute to our stockholders all or substantially all of our taxable income each year so as to qualify for the tax benefits accorded to REITs, but our ability to make distributions may be adversely affected by the risk factors described in this prospectus. We cannot assure you that we will be able to make distributions in the future. In the event of continued or future downturns in our operating results and financial performance or unanticipated capital improvements to our hotels or declines in the value of our mortgage portfolio, we may be unable to declare or pay distributions to our stockholders. The timing and amount of distributions are in the sole discretion of our

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board of directors, which will consider, among other factors, our financial performance, debt service obligations applicable debt covenants, and capital expenditure requirements.

We are subject to various risks related to our use of, and dependence on, debt.

     The amount we have to pay on variable rate debt increases as interest rates increase, which may decrease cash available for distribution to stockholders. We cannot assure you that we will be able to meet our debt service obligations. If we do not meet our debt service obligations, we risk the loss of some or all of our assets to foreclosure. Changes in economic conditions or our financial results or prospects could (i) result in higher interest rates on variable rate debt, (ii) reduce the availability of debt financing generally or debt financing at favorable rates, (iii) reduce cash available for distribution to stockholders and (iv) increase the risk that we could be forced to liquidate assets to repay debt, any of which could have a material adverse affect on us.

     If we violate covenants in any debt agreements, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. Violations of certain debt covenants may result in us being unable to borrow unused amounts under our line of credit, even if repayment of some or all the borrowings is not required.

     In any event, financial covenants under our current or future debt obligations could impair our planned business strategies by limiting our ability to borrow beyond certain amounts or for certain purposes.

     Our governing instruments do not contain any limitation on our ability to incur indebtedness.

An interest rate mismatch could occur between asset yields and borrowing rates, resulting in decreased yields on our investment portfolio.

     Our operating results will depend in part on differences between the income from our assets (net of credit losses) and our borrowing costs. We intend to fund the origination and acquisition of a portion of our assets with borrowings that have interest rates that reset relatively rapidly, such as monthly or quarterly. We anticipate that, in many cases, the income from our assets will respond more slowly to interest rate fluctuations than the cost of our borrowings, creating a mismatch between asset yields and borrowing rates. Consequently, changes in interest rates, particularly short-term interest rates, may influence our net income. Increases in these rates will tend to decrease our net income and market value of our mortgage assets. We will incur operating losses if interest rate fluctuations result in our interest expense exceeding interest income.

We compete with other hotels for guests. We will also face competition for acquisitions of lodging properties and of desirable mortgage investments.

     The mid to upscale segments of the hotel business are competitive. Our hotels compete on the basis of location, room rates, quality, service levels, reputation and reservation systems, among many other factors. New hotels may be constructed and these additions to supply create new competitors, in some cases without corresponding increases in demand for hotel rooms. The result in some cases may be lower revenue, which would result in lower cash available for distribution to stockholders.

     We compete for hotel acquisitions with entities that have similar investment objectives as we do. This competition could limit the number of suitable investment opportunities offered to us. It may also increase the bargaining power of property owners seeking to sell to us, making it more difficult for us to acquire new properties on attractive terms or on the terms contemplated in our business plan.

     We also compete for mortgage asset investments with numerous public and private real estate investment vehicles, such as mortgage banks, pension funds, other REITs, institutional investors and individuals. Mortgages and other investments are often obtained through a competitive bidding process. In addition, competitors may seek to establish relationships with the financial institutions and other firms from which we intend to purchase such assets. Competition may result in higher prices for mortgage assets, lower yields and a narrower spread of yields over our borrowing costs.

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     Many of our competitors are larger than us, may have access to greater capital, marketing and other resources, may have personnel with more experience than our officers, may be able to accept higher levels of debt or otherwise may tolerate more risk than us, may have better relations with hotel franchisors, sellers or lenders and may have other advantages over us in conducting certain business and providing certain services.

We may engage in hedging transactions, which can limit our gains and increase exposure to losses.

     We may enter into hedging transactions to protect us from the effects of interest rate fluctuations on floating rate debt and also to protect our portfolio of mortgage assets from interest rate and prepayment rate fluctuations. Our hedging transactions may include entering into interest rate swap agreements or interest rate cap or floor agreements, purchasing or selling futures contracts, purchasing put and call options on securities or securities underlying futures contracts, or entering into forward rate agreements. Hedging activities may not have the desired beneficial impact on our results of operations or financial condition. No hedging activity can completely insulate us from the risks associated with changes in interest rates and prepayment rates. Moreover, interest rate hedging could fail to protect us or adversely affect us because, among other things:

• Available interest rate hedging may not correspond directly with the interest rate risk for which protection is sought.

• The duration of the hedge may not match the duration of the related liability.

• The party owing money in the hedging transaction may default on its obligation to pay.

• The credit quality of the party owing money on the hedge may be downgraded to such an extent that it impairs our ability to sell or assign our side of the hedging transaction.

• The value of derivatives used for hedging may be adjusted from time to time in accordance with accounting rules to reflect changes in fair value. Downward adjustments, or “mark-to-market losses,” would reduce our stockholders’ equity.

     Hedging involves risk and typically involves costs, including transaction costs, that may reduce our overall returns on our investments. These costs increase as the period covered by the hedging increases and during periods of rising and volatile interest rates. These costs will also limit the amount of cash available for distributions to stockholders. We generally intend to hedge as much of the interest rate risk as management determines is in our best interests given the cost of such hedging transactions. The REIT qualification rules may limit our ability to enter into hedging transactions by requiring us to limit our income from hedges. Although we intend to structure any hedging transactions in a manner that does not jeopardize our status as a REIT, if we are unable to hedge effectively because of the REIT rules, we will face greater interest rate exposure than may be commercially prudent.

We may not be able to sell our investments on favorable terms.

     We may decide to sell investments for a variety of reasons. We cannot assure you that we will be able to sell any of our investments on favorable terms, or that our investments will not be sold for a loss.

Risks Related to Hotel Investments

We are subject to general risks associated with operating hotels.

     Our hotels (and the hotels underlying our mortgage and mezzanine loans) are subject to various operating risks common to the hotel industry, many of which are beyond our control, including the following:

• our hotels compete with other hotel properties in their geographic markets and many of our competitors have substantial marketing and financial resources;

• over-building in our markets, which adversely affects occupancy and revenues at our hotels;

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• dependence on business and commercial travelers and tourism; and

• adverse effects of general, regional and local economic conditions and increases in energy costs or labor costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists.

     These factors could adversely affect our hotel revenues and expenses, as well as the hotels underlying our mortgage and mezzanine loans, which in turn would adversely affect our ability to make distributions to our stockholders.

We may have to make significant capital expenditures to maintain our lodging properties.

     Our hotels have an ongoing need for renovations and other capital improvements, including replacements of furniture, fixtures and equipment. The franchisors of our hotels may also require periodic capital improvements as a condition of keeping the franchise licenses. Generally, we are responsible for the costs of these capital improvements, which gives rise to the following risks:

• cost overruns and delays;

• renovations can be disruptive to operations and can displace revenue at the hotels, including revenue lost while rooms under renovation are out of service;

• the cost of funding renovations and the possibility that financing for these renovations may not be available on attractive terms; and

• the risk that the return on our investment in these capital improvements will not be what we expect.

     If we have insufficient cash flow from operations to fund needed capital expenditures, then we will need to borrow to fund future capital improvements.

The hotel business is seasonal, which will affect our results of operations from quarter to quarter.

     The hotel industry is seasonal in nature. Generally, occupancy rates and hotel revenues are greater in the second and third quarters than in the first and fourth quarters. This seasonality can cause quarterly fluctuations in our revenues.

Our development activities may be more costly than we have anticipated.

     As part of our growth strategy, we may develop additional hotels. Hotel development involves substantial risks, including that:

• actual development costs may exceed our budgeted or contracted amounts;

• construction delays may prevent us from opening hotels on schedule;

• we may not be able to obtain all necessary zoning, land use, building, occupancy and construction permits;

• our developed properties may not achieve our desired revenue or profit goals; and

• we may incur substantial development costs and then have to abandon a development project before completion.

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Risks Relating to Investments in Mortgages and Mezzanine Loans

Mortgage investments that are not United States government insured and non-investment grade mortgage assets involve risk of loss.

     As part of our business strategy, we originate and acquire lodging-related uninsured and non-investment grade mortgage loans and mortgage assets, including mezzanine loans. While holding these interests, we are subject to risks of borrower defaults, bankruptcies, fraud and losses and special hazard losses that are not covered by standard hazard insurance. Also, the costs of financing the mortgage loans could exceed the return on the mortgage loans. In the event of any default under mortgage loans held by us, we will bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount of the mortgage loan. To the extent we suffer such losses with respect to our investments in mortgage loans, our value and the price of our securities may be adversely affected.

We invest in non-recourse loans, which will limit our recovery to the value of the mortgaged property.

     Our mortgage loan assets are generally non-recourse. With respect to our non-recourse mortgage loan assets, in the event of a borrower default, the specific mortgaged property and other assets, if any, pledged to secure the relevant mortgage loan, may be less than the amount owed under the mortgage loan. As to those mortgage loan assets that provide for recourse against the borrower and its assets generally, we cannot assure you that the recourse will provide a recovery in respect of a defaulted mortgage loan greater than the liquidation value of the mortgaged property securing that mortgage loan.

Interest rate fluctuations affect the value of our mortgage assets, net income and securities.

     Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control. Interest rate fluctuations can adversely affect our income and value of our securities in many ways and present a variety of risks including the risk of variances in the yield curve, a mismatch between asset yields and borrowing rates, and changing prepayment rates.

     Variances in the yield curve may reduce our net income. The relationship between short-term and longer-term interest rates is often referred to as the “yield curve.” Short-term interest rates are ordinarily lower than longer-term interest rates. If short-term interest rates rise disproportionately relative to longer-term interest rates (a flattening of the yield curve), our borrowing costs may increase more rapidly than the interest income earned on our assets. Additionally, to the extent cash flows from investments that return scheduled and unscheduled principal are reinvested in mortgage loans, the spread between the yields of the new investments and available borrowing rates may decline, which would likely decrease our net income. It is also possible that short-term interest rates may exceed longer-term interest rates (a yield curve inversion), in which event our borrowing costs may exceed our interest income and we could incur operating losses.

Prepayment rates on our mortgage loans may adversely affect our yields.

     The value of our mortgage loan assets may be affected by prepayment rates on investments. Prepayment rates are influenced by changes in current interest rates and a variety of economic, geographic and other factors beyond our control, and consequently, such prepayment rates cannot be predicted with certainty. To the extent we originate mortgage loans, we expect that such mortgage loans will have a measure of protection from prepayment in the form of prepayment lock-out periods or prepayment penalties. However, this protection may not be available with respect to investments that we acquire but do not originate. The majority of the mortgage loans assets we currently have in our investment portfolio have some combination of prepayment lock-out periods or prepayment penalties; however, we cannot assure you that these lock-out periods or penalties will sufficiently protect us from prepayment risk or that future mortgage loans we acquire will have prepayment protection mechanisms.

     In periods of declining mortgage interest rates, prepayments on mortgages generally increase. If general interest rates decline as well, the proceeds of prepayments received during such periods are likely to be reinvested

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by us in assets yielding less than the yields on the investments that were prepaid. In addition, the market value of mortgage investments may, because of the risk of prepayment, benefit less from declining interest rates than from other fixed-income securities. Conversely, in periods of rising interest rates, prepayments on mortgages generally decrease, in which case we would not have the prepayment proceeds available to invest in assets with higher yields. Under certain interest rate and prepayment scenarios we may fail to fully recoup our cost of acquisition of certain investments.

     In making any investment, we consider the expected yield of the investment and the factors that may influence the yield actually obtained on such investment. These considerations affect our decision whether to originate or purchase an investment and the price offered for that investment. No assurances can be given that we can make an accurate assessment of the yield to be produced by an investment. Many factors beyond our control are likely to influence the yield on the investments, including, but not limited to, competitive conditions in the local real estate market, local and general economic conditions and the quality of management of the underlying property. Our inability to accurately assess investment yields may result in our purchasing assets that do not perform as well as expected, which may adversely affect the price of our securities.

Volatility of values of mortgaged properties may adversely affect our mortgage loans.

     Lodging property values and net operating income derived from lodging properties are subject to volatility and may be affected adversely by a number of factors, including the risk factors described in this prospectus relating to general economic conditions, operating lodging properties and owning real estate investments. In the event its net operating income decreases, a borrower may have difficulty paying our mortgage loan, which could result in losses to us. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our mortgage loans, which could also cause us to suffer losses.

     Mezzanine loans involve greater risks of loss than senior loans secured by income producing properties.

     We make and acquire mezzanine loans. These types of mortgage loans are considered to involve a higher degree of risk than long-term senior mortgage lending secured by income-producing real property due to a variety of factors, including the loan becoming unsecured as a result of foreclosure by the senior lender. We may not recover some or all of our investment in these loans. In addition, mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans resulting in less equity in the property and increasing the risk of loss of principal.

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.

     Incurring mortgage debt increases our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by lenders and ultimately our loss of the property securing any loans for which we are in default. For tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure but would not receive any cash proceeds. As a result, we may be required to identify and utilize other sources of cash for distributions to our stockholders of that income.

     In addition, our default under any one of our mortgage debt obligations may result in a default on our other indebtedness. If this occurs, our financial condition, cash flow and ability to satisfy our other debt obligations or ability to pay dividends may be harmed.

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.

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     Because real estate investments are relatively illiquid, our ability to promptly sell one or more properties or mortgage loans in our portfolio in response to changing economic, financial and investment conditions is limited. The real estate market is affected by many factors that are beyond our control, including:

• adverse changes in national and local economic and market conditions;

• changes in interest rates and in the availability, cost and terms of debt financing;

• changes in governmental laws and regulations, fiscal policies and zoning and other ordinances and costs of compliance with laws and regulations;

• the ongoing need for capital improvements, particularly in older structures;

• changes in operating expenses; and

• civil unrest, acts of war and natural disasters, including earthquakes and floods, which may result in uninsured and underinsured losses.

     We cannot predict whether we will be able to sell any property or loan for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a property or loan. Because we intend to offer more flexible terms on our mortgage loans than some providers of commercial mortgage loans, we may have more difficulty selling or participating our loans to secondary purchasers than would these more traditional lenders.

     We may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In acquiring a property, we may agree to lock-out provisions that materially restrict us from selling that property for a period of time or impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that property. These factors and any others that would impede our ability to respond to adverse changes in the performance of our properties could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders.

The costs of compliance with or liabilities under environmental laws may harm our operating results.

     Our properties and the properties underlying our loan assets may be subject to environmental liabilities. An owner of real property, or a lender with respect to a property that exercises control over the property, can face liability for environmental contamination created by the presence or discharge of hazardous substances on the property. We may face liability regardless of:

• our knowledge of the contamination;

• the timing of the contamination;

• the cause of the contamination; or

• the party responsible for the contamination of the property.

     There may be environmental problems associated with our properties or properties underlying our loan assets of which we are unaware. Some of our properties or the properties underlying our loan assets use, or may have used in the past, underground tanks for the storage of petroleum-based or waste products that could create a potential for release of hazardous substances. If environmental contamination exists on a property, we could become subject to strict, joint and several liability for the contamination if we own the property or if we foreclose on the property or otherwise have control over the property.

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     The presence of hazardous substances on a property we own or have made a loan with respect to may adversely affect our ability to sell or foreclose on the property, and we may incur substantial remediation costs. The discovery of environmental liabilities attached to our properties or the properties underlying our loan assets could have a material adverse effect on our results of operations and financial condition and our ability to pay dividends to stockholders.

     We have environmental insurance policies on each of our owned properties, and we intend to obtain environmental insurance for any other properties that we may acquire. However, if environmental liabilities are discovered during the underwriting of the insurance policies for any property that we may acquire in the future, we may be unable to obtain insurance coverage for the liabilities at commercially reasonable rates or at all, and we may experience losses. In addition, we generally do not require our borrowers to obtain environmental insurance on the properties they own that secure their loans from us.

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.

     When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has been increasing as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic or other reactions. As a result, the presence of significant mold at any of our properties or the properties underlying our loan assets could require us or our borrowers to undertake a costly remediation program to contain or remove the mold from the affected property. In addition, the presence of significant mold could expose us or our borrowers to liability from guests, employees and others if property damage or health concerns arise.

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.

     All of our properties and the properties underlying our mortgage loans are required to comply with the Americans with Disabilities Act, or the ADA. The ADA requires that “public accommodations” such as hotels be made accessible to people with disabilities. Compliance with the ADA requirements could require removal of access barriers and non-compliance could result in imposition of fines by the U.S. government or an award of damages to private litigants, or both. We or our borrowers may be required to expend funds to comply with the provisions of the ADA at our hotels or the hotels underlying our loan assets, which could adversely affect our results of operations and financial condition and our ability to make distributions to stockholders. In addition, we and our borrowers are required to operate our properties in compliance with fire and safety regulations, building codes and other land use regulations, as they may be adopted by governmental agencies and bodies and become applicable to our properties. We and our borrowers may be required to make substantial capital expenditures to comply with those requirements, and these expenditures could have a material adverse effect on our operating results and financial condition, as well as our ability to pay dividends to stockholders.

We may experience uninsured or underinsured losses.

     We have property and casualty insurance with respect to our properties and other insurance, in each case, with loss limits and coverages deemed reasonable by our management (and with the intent to satisfy the requirements of lenders and franchisors). In doing so, we have made decisions with respect to what deductibles, policy limits and terms are reasonable based on management’s experience, our risk profile, the loss history of our property managers and our properties, the nature of our properties and our businesses, our loss prevention efforts and the cost of insurance.

     Various types of catastrophic losses may not be insurable or may not be economically insurable. In the event of a substantial loss, our insurance coverage may not cover the full current market value or replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors might cause insurance proceeds to be insufficient to fully replace or renovate a hotel after it has been damaged or destroyed. Accordingly, there can be no assurance (i) that the insurance coverage thresholds that we have obtained will fully protect us against insurable losses (i.e., losses may exceed coverage limits); (ii) that we will

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not incur large deductibles that will adversely affect our earnings; (iii) that we will not incur losses from risks that are not insurable or that are not economically insurable; or (iv) that current coverage thresholds will continue to be available at reasonable rates. We do not intend to maintain terrorism insurance on any of our properties. As a result, one or more large uninsured or underinsured losses could have a material adverse affect on us.

     Each of our current lenders requires us to maintain certain insurance coverage thresholds, and we anticipate that future lenders will have similar requirements. We believe that we have complied with the insurance maintenance requirements under the current governing loan documents and we intend to comply with any such requirements in any future loan documents. However, a lender may disagree, in which case the lender could obtain additional coverage thresholds and seek payment from us, or declare us in default under the loan documents. In the former case, we could spend more for insurance than we otherwise deem reasonable or necessary, or, in the latter case, subject us to a foreclosure on hotels collateralizing one or more loans. In addition, a material casualty to one or more hotels collateralizing loans may result in (i) the insurance company applying to the outstanding loan balance insurance proceeds that otherwise would be available to repair the damage caused by the casualty, which would require us to fund the repairs through other sources, or (ii) the lender foreclosing on the hotels if there is a material loss that is not insured.

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 face substantial tax liability.

     We operate so as to qualify as a REIT under the Internal Revenue Code. However, qualification as a REIT involves the application of highly technical and complex Internal Revenue Code provisions for which only a limited number of judicial or administrative interpretations exist. Even a technical or inadvertent mistake could jeopardize our REIT status. Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for us to qualify as a REIT. If we fail to qualify as a REIT in any tax year, then:

• we would be taxed as a regular domestic corporation, which, among other things, means being unable to deduct distributions to stockholders in computing taxable income and being subject to federal income tax on our taxable income at regular corporate rates;

• we would also be subject to federal alternative minimum tax and, possibly, increased state and local taxes;

• any resulting tax liability could be substantial and would reduce the amount of cash available for distribution to stockholders; and

• unless we were entitled to relief under applicable statutory provisions, we would be disqualified from treatment as a REIT for the subsequent four taxable years following the year during which we lost our qualification, and, thus, our cash available for distribution to stockholders would be reduced for each of the years during which we did not qualify as a REIT.

     If we fail to qualify as a REIT, we will not be required to make distributions to stockholders to maintain our tax status. As a result of all of these factors, our failure to qualify as a REIT would impair our ability to raise capital, expand our business and make distributions to our stockholders and would adversely affect the value of our securities.

Even if we remain qualified as a REIT, we may face other tax liabilities that reduce our cash flow.

     Even if we remain qualified for taxation as a REIT, we may be subject to certain federal, state and local taxes on our income and assets. For example:

• We will be required to pay tax on undistributed REIT taxable income.

• We may be required to pay the “alternative minimum tax” on our items of tax preference.

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• If we have net income from the disposition of foreclosure property held primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay tax on that income at the highest corporate rate.

• If we sell a property in a “prohibited transaction,” our gain from the sale would be subject to a 100% penalty tax. A “prohibited transaction” would be a sale of property, other than a foreclosure property, held primarily for sale to customers in the ordinary course of business.

• Our taxable REIT subsidiaries, including Ashford TRS Corporation and Ashford TRS VI Corporation, are fully taxable corporations and will be required to pay federal and state taxes on their income.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities.

     To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. We may be required to make distributions to stockholders at disadvantageous times or when we do not have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with REIT requirements may limit our ability to hedge effectively.

     The REIT provisions of the Internal Revenue Code may limit our ability to hedge mortgage securities and related borrowings by requiring us to limit our income in each year from qualified hedges, together with any other income not generated from qualified real estate assets, to no more than 25% of our gross income. In addition, we must limit our aggregate income from nonqualified hedging transactions, from our provision of services and from other non-qualifying sources to no more than 5% of our annual gross income. As a result, we may have to limit our use of advantageous hedging techniques. This could result in greater risks associated with changes in interest rates than we would otherwise want to incur. If we were to violate the 25% or 5% limitations, we may have to pay a penalty tax equal to the amount of income in excess of those limitations, multiplied by a fraction intended to reflect our profitability. If we fail to satisfy the REIT gross income tests, unless our failure was due to reasonable cause and not due to willful neglect, we could lose our REIT status for federal income tax purposes.

Complying with REIT requirements may force us to liquidate otherwise attractive investments.

     To qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 20% of the value of our total securities can be represented by securities of one or more taxable REIT subsidiaries. If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments.

Complying with REIT requirements may force us to borrow to make distributions to stockholders.

     As a REIT, we must distribute at least 90% of our annual taxable income (subject to certain adjustments) to our stockholders. To the extent that we satisfy the distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws.

     From time to time, we may generate taxable income greater than our net income for financial reporting purposes due to, among other things, amortization of capitalized purchase premiums, or our taxable income may be

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greater than our cash flow available for distribution to stockholders. If we do not have other funds available in these situations, we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the distribution requirement and to avoid corporate income tax and the 4% excise tax in a particular year. These alternatives could increase our costs or reduce our equity.

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our securities.

     At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a stockholder. On May 28, 2003, the President signed the Jobs and Growth Tax Relief Reconciliation Act of 2003, which we refer to as the Jobs and Growth Tax Act. Effective for taxable years beginning after December 31, 2002, the Jobs and Growth Tax Act reduced the maximum rate of tax applicable to individuals on dividend income from regular C corporations from 38.6% to 15.0%. This reduced substantially the so-called “double taxation” (that is, taxation at both the corporate and stockholder levels) that has generally applied to corporations that are not taxed as REITs. Generally, dividends from REITs will not qualify for the dividend tax reduction. The implementation of the Jobs and Growth Tax Act could cause individual investors to view stocks of non-REIT corporations as more attractive relative to shares of REITs than was the case previously because the dividends paid by non-REIT corporations would be subject to lower tax rates for the individual. We cannot predict whether in fact this will occur or whether, if it occurs, what the impact will be on the value of our securities.

Your investment in our common stock has various federal, state and local income tax risks that could affect the value of your investment.

     Although the provisions of the Internal Revenue Code relevant to your investment in our securities are generally described in “Federal Income Tax Consequences of Our Status as a REIT,” we strongly urge you to consult your own tax advisor concerning the effects of federal, state and local income tax law on an investment in our securities, because of the complex nature of the tax rules applicable to REITs and their stockholders.

Risk Factors Related to Our Corporate Structure

There are no assurances of our ability to make distributions in the future.

     We intend to continue paying quarterly dividends and to make distributions to our stockholders in amounts such that all or substantially all of our taxable income in each year, subject to certain adjustments, is distributed. This, along with other factors, should enable us to qualify for the tax benefits accorded to a REIT under the Internal Revenue Code. However, our ability to pay dividends may be adversely affected by the risk factors described in this prospectus. All distributions will be made at the discretion of our board of directors and will depend upon our earnings, our financial condition, maintenance of our REIT status and such other factors as our board of directors may deem relevant from time to time. There are no assurances of our ability to pay dividends in the future. In addition, some of our distributions may include a return of capital.

Failure to maintain an exemption from the Investment Company Act would adversely affect our results of operations.

     We believe that we will conduct our business in a manner that allows us to avoid registration as an investment company under the Investment Company Act of 1940, or the 1940 Act. Under Section 3(c)(5)(C) of the 1940 Act, entities that are primarily engaged in the business of purchasing or otherwise acquiring “mortgages and other liens on and interests in real estate” are not treated as investment companies. The SEC staff’s position generally requires us to maintain at least 55% of our assets directly in qualifying real estate interests to be able to rely on this exemption. To constitute a qualifying real estate interest under this 55% requirement, a real estate interest must meet various criteria. Mortgage securities that do not represent all of the certificates issued with respect to an underlying pool of mortgages may be treated as securities separate from the underlying mortgage loans and, thus, may not qualify for purposes of the 55% requirement. Our ownership of these mortgage securities,

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therefore, is limited by the provisions of the 1940 Act and SEC staff interpretive positions. There are no assurances that efforts to pursue our intended investment program will not be adversely affected by operation of these rules.

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.

     For the purpose of preserving our REIT qualification, our charter prohibits direct or constructive ownership by any person of more than 9.8% of the lesser of the total number or value of the outstanding shares of our common stock or more than 9.8% of the lesser of the total number or value of the outstanding shares of our preferred stock. Our charter’s constructive ownership rules are complex and may cause the outstanding stock owned by a group of related individuals or entities to be deemed to be constructively owned by one individual or entity. As a result, the acquisition of less than 9.8% of the outstanding stock by an individual or entity could cause that individual or entity to own constructively in excess of 9.8% of the outstanding stock, and thus be subject to our charter’s ownership limit. Any attempt to own or transfer shares of our common or preferred stock in excess of the ownership limit without the consent of the board of directors will be void, and could result in the shares being automatically transferred to a charitable trust.

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.

     Provisions contained in our charter and Maryland general corporation law may have effects that delay, defer or prevent a takeover attempt, which may prevent stockholders from receiving a “control premium” for their shares. For example, these provisions may defer or prevent tender offers for our common stock or purchases of large blocks of our common stock, thereby limiting the opportunities for our stockholders to receive a premium for their common stock over then-prevailing market prices. These provisions include the following:

• Ownership limit: The ownership limit in our charter limits related investors, including, among other things, any voting group, from acquiring over 9.8% of our common stock without our permission.

• Classification of preferred stock: Our charter authorizes our board of directors to issue preferred stock in one or more classes and to establish the preferences and rights of any class of preferred stock issued. These actions can be taken without soliciting stockholder approval. The issuance of preferred stock could have the effect of delaying or preventing someone from taking control of us, even if a change in control were in our stockholders’ best interests.

     Maryland statutory law provides that an act of a director relating to or affecting an acquisition or a potential acquisition of control of a corporation may not be subject to a higher duty or greater scrutiny than is applied to any other act of a director. Hence, directors of a Maryland corporation are not required to act in takeover situations under the same standards as apply in Delaware and other corporate jurisdictions.

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 and may 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.

     We have offered preferred stock and may offer debt securities. Additionally, in the future, we may attempt to increase our capital resources by making additional offerings of debt or equity securities, including commercial paper, medium-term notes, senior or subordinated notes and classes of preferred stock or common stock or classes of preferred units. Upon liquidation, holders of our debt securities or preferred units and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of shares of preferred stock or common stock, and holders of our debt securities and shares of preferred stock or preferred units and lenders with respect to other borrowings will receive a distribution of our available assets prior to the holders of our common stock. Additional equity offerings may dilute the holdings of our existing stockholders or reduce the market price of our common or preferred stock, or both. Our preferred stock or preferred units, if issued, could have a preference on liquidating distributions or a preference on dividend payments that could limit our ability to make a dividend

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distribution to the holders of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future offerings reducing the market price of our securities and diluting their securities holdings in us.

Securities eligible for future sale may have adverse effects on the market price of our securities.

     We cannot predict the effect, if any, of future sales of securities, or the availability of securities for future sales, on the market price of our outstanding securities. Sales of substantial amounts of common stock (including up to (i) 11,092,075 shares of common stock which are currently issuable, at our option, in exchange for outstanding units in our operating partnership, (ii) 781,658 shares of common stock which were issued in connection with our initial public offering, (iii) 298,239 shares of common stock which were issued to certain of our directors, executive officers and employees of the company and its affiliates and are now fully vested and unrestricted, (iv) 878,878 restricted shares, issued to certain of our executive officers and employees of the company and its affiliates, which are subject to continued employment by such officer or employee and (v) restricted shares issuable to executive officers only if specified performance criteria are satisfied), or the perception that these sales could occur, may adversely affect prevailing market prices for our securities.

     We also may issue from time to time additional securities or units of our operating partnership in connection with the acquisition of properties and we may grant additional demand or piggyback registration rights in connection with these issuances. Sales of substantial amounts of our securities or the perception that these sales could occur may adversely affect the prevailing market price for our securities or may impair our ability to raise capital through a sale of additional debt or equity securities.

We depend on key personnel with long-standing business relationships, the loss of whom could threaten our ability to operate our business successfully.

     Our future success depends, to a significant extent, upon the continued services of our management team. In particular, the lodging industry experience of Messrs. Archie and Montgomery Bennett, Kessler, Brooks, Kimichik and Nunneley and the extent and nature of the relationships they have developed with hotel franchisors, operators and owners and hotel lending and other financial institutions are critically important to the success of our business. We do not maintain key person life insurance on any of our officers. Although these officers currently have employment agreements with us through 2006 (2007 for Mr. Montgomery Bennett), we cannot assure you of the continued employment of all of our officers. The loss of services of one or more members of our corporate management team could harm our business and our prospects.

An increase in market interest rates may have an adverse effect on the market price of our securities.

     One of the factors that investors may consider in deciding whether to buy or sell our securities is our dividend rate as a percentage of our share or unit price, relative to market interest rates. If market interest rates increase, prospective investors may desire a higher dividend or interest rate on our securities or seek securities paying higher dividends or interest. The market price of our securities likely will be based primarily on the earnings and return that we derive from our investments and income with respect to our properties and our related distributions to stockholders, and not from the market value or underlying appraised value of the properties or investments themselves. As a result, interest rate fluctuations and capital market conditions can affect the market price of our securities. For instance, if interest rates rise without an increase in our dividend rate, the market price of our common or preferred stock could decrease because potential investors may require a higher dividend yield on our common or preferred stock as market rates on interest-bearing securities, such as bonds, rise. In addition, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting cash flow and our ability to service our indebtedness and pay dividends.

Our major policies, including our policies and practices with respect to investments, financing, growth, debt capitalization, REIT qualification and distributions, are determined by our board of directors. Although we have no present intention to do so, our board of directors may amend or revise these and other policies from time to time without a vote of our stockholders. Accordingly, our stockholders will have limited control over changes in our policies and the changes could harm our business, results of operations and share price.

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     Changes in our strategy or investment or leverage policy could expose us to greater credit risk and interest rate risk or could result in a more leveraged balance sheet. We cannot predict the effect any changes to our current operating policies and strategies may have on our business, operating results and stock price. However, the effects may be adverse.

USE OF PROCEEDS

     We will not receive any of the proceeds from the issuance or resale of the common stock offered by this prospectus; however, we will pay certain registration expenses related to this offering.

REDEMPTION OF UNITS

General

     Each unit holder may, subject to certain limitations and only after certain specified dates, require that our operating partnership redeem all or a portion of the units held by such unit holder for cash, or at the general partner’s election, for shares of our common stock (on a one-for-one basis, subject to certain adjustments). The number of shares of common stock which may be redeemed for units is subject to adjustment in the event of stock splits, stock dividends, issuance of certain rights, certain dividends and distributions and similar events.

     Each unit holder must notify the general partner of its desire to require the operating partnership to redeem its units by delivering a notice of redemption, in substantially the form attached as an exhibit to the partnership agreement, to the general partner. Such holder shall have the right to receive an amount of cash from the operating partnership equal to the Cash Amount (as defined in the partnership agreement). The operating partnership shall have up to 120 days following exercise of the redemption right to pay the Cash Amount. However, if the general partner elects to acquire such tendered units in exchange for shares of our common stock, the holder shall have no right to cause the operating partnership to redeem the units for cash. Such an acquisition of the units by the general partner should be treated as a sale of the units by the redeeming unit holders to us for federal income tax purposes. See “—Tax Consequences of Redemption” below. Upon redemption of the units, the holder’s rights to receive distributions with respect to the units will cease (but if such units are redeemed for shares of our common stock, the holder will have rights as our stockholder from the time of its acquisition of the shares of common stock) and such holder will cease to be a limited partner of the operating partnership as to those units redeemed.

     If the general partner elects to satisfy any redemption right exercised by a unit holder through issuance of our common stock, the shares of common stock will be delivered as duly authorized, validly issued, fully paid and nonassessable shares, free of any pledge, lien, encumbrance or restriction, other than those provided in our charter and bylaws, the Securities Act of 1933, as amended, and relevant state securities or blue sky laws with respect to such shares of common stock. Notwithstanding any delay in such delivery, a holder shall be deemed the owner of such shares of common stock and rights for all purposes, including, without limitation, rights to vote or consent, receive dividends, and exercise rights, as of the redemption date.

Certain Conditions to Redemption

     Notwithstanding anything contained herein to the contrary, the redemption rights are subject to certain conditions, including, but not limited to, the following:

• In order to protect our status as a REIT, no unit holder shall be entitled to effect a redemption, if such redemption would cause such holder or any other person to violate the provisions of our charter.

• No unit holder may effect a redemption for less than 1,000 units, or if such holder holds less than 1,000 units, all of the units held by such holder.

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Registration Rights

     We have filed the registration statement of which this prospectus is a part pursuant to our obligations under a registration rights agreement we entered into in connection with the acquisition of nine of our hotel properties. Under the registration rights agreement, we are obligated to use our reasonable efforts to keep the registration statement continuously effective for a period expiring on the date on which all shares of common stock covered by this prospectus (i) have been disposed of by the recipient pursuant to this registration statement; (ii) have been sold pursuant to Rule 144 under the Securities Act of 1933; (iii) may be sold pursuant to Rule 144 under the Securities Act of 1933 and could be sold in one transaction in accordance with the volume limitations contained in Rule 144(e)(1)(i) under the Securities Act of 1933; or (iv) have been otherwise transferred in a transaction that would constitute a sale under the Securities Act, we have delivered a new certificate or other evidence of ownership for such shares not bearing the Securities Act of 1933 restricted stock legend and such shares may be resold without restriction under the Securities Act.

     We have no obligation under these agreements to retain any underwriter to effect the sale of the common stock covered by the registration rights agreement, and the registration statement will not be available for use for an underwritten public offering of such shares.

     Pursuant to the registration rights agreement, we agreed to pay all expenses of effecting the registration of the shares of common stock covered by this prospectus, other than underwriting fees, discounts and commissions, or any out-of-pocket expenses of the holders of the units or any transfer taxes relating to the registration or sale of the shares of common stock covered by this prospectus.

Tax Consequences of Redemption

     The following discussion summarizes certain federal income tax considerations that may be relevant to a holder who exercises such holder’s right to require the redemption of such holder’s units. (A holder’s right to require the redemption of units is referred to in the remainder of this section as the “Redemption Right.”) Because the specific tax consequences to a holder exercising such holder’s Redemption Right will depend upon the specific circumstances of that holder, each holder considering exercising the Redemption Right is strongly urged to consult such holder’s own tax advisor regarding the specific federal, state, local and non-U.S. tax consequences to such holder of the exercise of the Redemption Right in light of such holder’s specific circumstances.

Tax Treatment of Redemption of Units

     To the extent that we assume and perform the redemption obligation, the redemption likely would be treated for tax purposes as a sale of units to us in a fully taxable transaction, although the matter is not free from doubt. In that event, such sale will be fully taxable to the redeeming holder and such redeeming holder will be treated as realizing for tax purposes an amount equal to the value of the common stock received in the exchange plus the amount of partnership nonrecourse liabilities allocable to the redeemed units at the time of the redemption. The determination of the amount of gain or loss in the event of sale treatment is discussed more fully below.

     To the extent that we do not elect to assume the obligation to redeem a holder’s units, our operating partnership will redeem such units for cash. If the operating partnership redeems units for cash that we contribute to the partnership to effect such redemption, the redemption of those units likely would be treated for tax purposes as a sale of such units to us in a fully taxable transaction, although the matter is not free from doubt. In that event, the redeeming holder would be treated as realizing an amount equal to the sum of the cash received in the exchange plus the amount of partnership nonrecourse liabilities allocable to the redeemed units at the time of the redemption. The determination of the amount of gain or loss in the event of sale treatment is discussed more fully below.

     If, instead, the partnership redeems a holder’s units for cash that is not contributed by us to effect the redemption, the tax consequences would be the same as described in the previous paragraph, except that if the holder redeems less than all of a holder’s units, the holder would not be permitted to recognize any loss occurring on the transaction and would recognize taxable gain only to the extent that the cash, plus the share of partnership

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nonrecourse liabilities allocable to the redeemed units, exceeded the holder’s adjusted basis in all of such holder’s units immediately before the redemption.

Tax Treatment of Disposition of Units by a U.S. Holder Generally

     As used in the remainder of this discussion, the term “U.S. holder” means a beneficial owner of the units that is for United States federal income tax purposes:

• a citizen or resident of the United States;

• a corporation or partnership (including an entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of a political subdivision thereof;

• an estate whose income is subject to U.S. federal income taxation regardless of its source; or

• any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.

     Generally, in the case of a partnership that holds units, any partner that would be a U.S. holder if it held units directly is also a U.S. holder. A “non-U.S. holder” is a holder, including any partner in a partnership that holds our units, that is not a U.S. holder.

     If a unit is redeemed from a U.S. holder in a manner that is treated as a sale of the unit, or a U.S. holder otherwise disposes of a unit, the determination of gain or loss from the sale or other disposition will be based on the difference between the amount considered realized for tax purposes and the tax basis in such unit. See “Basis of Units” below. Upon the sale of a unit, the “amount realized” will be measured by the sum of the cash and fair market value of other property (e.g., common stock) received plus the portion of partnership nonrecourse liabilities allocable to the unit sold. To the extent that the amount of cash or property received plus the allocable share of partnership nonrecourse liabilities exceeds the holder’s basis for the unit disposed of, such holder will recognize gain. It is possible that the amount of gain recognized or even the tax liability resulting from such gain could exceed the amount of cash and the value of any other property (e.g., shares of common stock) received upon such disposition.

     Except as described below, any gain recognized by a unit holder, other than a “dealer” in units, upon a redemption of units held for more than one year will generally be treated as capital gain or loss. To the extent, however, that the amount realized upon the sale of a unit attributable to a holder’s share of “unrealized receivables” of the partnership (as defined in Section 751 of the Code) exceeds the basis attributable to those assets, such excess will be treated as ordinary income. Unrealized receivables include, to the extent not previously included in partnership income, any rights to payment for services rendered or to be rendered. Unrealized receivables also include amounts that would be subject to recapture as ordinary income, such as depreciation recapture, if the partnership had sold its assets at their fair market value at the time of the transfer of a unit. Each holder is strongly urged to consult such holder’s own tax advisor regarding the specific federal, state, local and non-U.S. tax consequences to such holder resulting from a redemption of units.

Tax Treatment of Disposition of Units by a Non-U.S. Holder Generally

     If a unit is redeemed by a non-U.S. holder in a manner that is treated as a sale of the unit, or a non-U.S. holder otherwise disposes of a unit, the non-U.S. holder generally will be subject to regular U.S. income tax in the same manner as a taxable U.S. holder to the extent that either (a) the assets held by the partnership constitute either U.S. real property interests within the meaning of the Foreign Investments in Real Property Tax Act of 1980 (“FIRPTA”) or (b) the assets are considered to be effectively connected with the partnership’s U.S. trade or business. Most of our assets will be U.S. real property interests and some of our remaining assets that are not U.S. real property interests will be considered to be effectively connected with a U.S. trade or business. As a result, a

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non-U.S. holder will be subject to regular U.S. income tax in the same manner as a taxable U.S. holder with respect to most, if not all, of the gain recognized on such sale.

     Further, the purchaser of the units from a non-U.S. holder (including us in the case of a redemption) will be required to withhold 10% of the amount realized from the sale. As noted previously, the amount realized is equal to the sum of the cash price paid to the seller, the fair market value of other property transferred to the seller (e.g., common stock) and the outstanding amount of any liability assumed by the purchaser or to which the U.S. real property interest is subject immediately before and after the transfer (e.g., the portion of partnership nonrecourse liabilities allocated to the units sold). As a result, we will withhold at least a portion of the cash or common stock that would have been otherwise been paid to the non-U.S. holder upon a redemption by the non-U.S. holder to satisfy this withholding requirement. This withholding requirement does not relieve the non-U.S. holder from filing any U.S. federal income tax return that may have otherwise been required. However, any amounts withheld under these withholding rules will be allowed as a credit against the non-U.S. holder’s U.S. federal income tax and may entitle the non-U.S. holder to a refund, provided that the required information is furnished to the Internal Revenue Service. A party redeeming the units may seek a determination from the Internal Revenue Service regarding that party’s maximum tax liability that may reduce the amount required to be withheld. A party that desires to seek such a determination should consult such party’s own tax advisor.

Basis of Units

     In general, a holder who received units upon liquidation of a partnership had an initial tax basis in such units (“Initial Basis”) equal to the basis in the liquidated partnership interest at the time of such liquidation. Similarly, in general, a holder who contributed a partnership interest or other property in exchange for units had an Initial Basis in the units equal to the basis in the contributed partnership interest or property. A holder’s Initial Basis in units generally is increased by (a) such holder’s share of partnership taxable income, (b) increases in such holder’s share of liabilities of the partnership and (c) such holder’s subsequent contributions. Generally, such holder’s Initial Basis in units is decreased (but not below zero) by (i) its share of partnership distributions, (ii) decreases in such holder’s share of liabilities of the partnership, (iii) such holder’s share of losses of the partnership, and (iv) such holder’s share of nondeductible expenditures of the partnership that are not chargeable to capital.

Potential Application of the Disguised Sale Regulations to a Redemption of Units

     In the case of a limited partner who contributed property to the partnership in exchange for units, there is a possibility that a redemption of units might cause the original transfer of property to the partnership in exchange for units to be treated as a “disguised sale” of property. The Code and the Treasury regulations thereunder (the “Disguised Sale Regulations”) generally provide that, unless one of the prescribed exceptions is applicable, a partner’s contribution of property to a partnership and a simultaneous or subsequent transfer of money or other consideration (including the assumption of or taking subject to a liability) from the partnership to the partner will be presumed to be a sale, in whole or in part, of such property by the partner to the partnership. The Disguised Sale Regulations also provide, however, that if two years have passed between the transfer of money or other consideration (for example, common stock) and the contribution of property, the transactions will not be presumed to be a sale unless the facts and circumstances clearly establish that the transfers constitute a sale. If two years have not passed between the transfer of money or other consideration (for example, common stock) and the contribution of property, the transactions will be presumed to be a sale unless the facts and circumstances clearly establish that the transfers do not constitute a sale.

     Accordingly, if the partnership redeems a unit, the IRS could contend that the redemption should be treated as a disguised sale because the redeeming unit holder will receive cash or shares of common stock after having contributed property to the partnership. If the IRS took that position successfully, the issuance of the units in exchange for the contributed property could be taxable as a disguised sale under the Disguised Sale Regulations. Each holder should consult with such holder’s own tax advisor to determine whether a redemption of units could be subject to the Disguised Sale Regulations.

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SELLING STOCKHOLDERS

     This prospectus relates to the issuance or resale, from time to time, of up to 333,333 shares of our common stock by the selling stockholders described below.

     We may issue up to 333,333 shares of the common stock covered by this prospectus in exchange for units of limited partnership interest in our operating partnership if and to the extent that the holders of the units redeem the units and we elect to issue shares of common stock in exchange for such units. The persons receiving shares of our common stock upon the redemption of units, and their respective pledgees, donees, and other successors in interest, may offer and resell such shares from time to time pursuant to this prospectus.

     The following table sets forth certain information with respect to the selling stockholders and their ownership of shares of our common stock as of the date hereof. The registration statement of which this prospectus is a part shall also cover any additional shares of our common stock which become issuable in connection with the shares registered for sale by such registration statement by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of our outstanding shares of common stock. Although the selling stockholders may sell none, some or all of the shares offered hereby, and although there are currently no agreements, arrangements or understandings with respect to the sale of any of such shares, for purposes of the table set forth below, we have assumed that each selling stockholder will sell all of the shares of such stockholder offered by this prospectus.

	Number of		Number of
	Shares Owned		Shares
	Prior to the		Offered		Shares Owned Following
Selling Stockholder	Offering(1)		Hereby(2)		the Offering
					Shares		Percent
Dunn Family Associates, LLP, as sole beneficiary under Land Trust Agreement dated July 16, 1990		60,320		60,320		—		—
Hotel Investment, LLC		12,052		12,052		—		—
Encore Hotels of Bloomington, Inc.		94,425		94,425		—		—
Encore Hotels of Terre Haute, LLC		19,498		19,498		—		—
Encore Residential Hotels of Evansville, LLC		34,994		34,994		—		—
Encore Hotels of Columbus, LLC		37,800		37,800		—		—
Encore Hotels of Horse Cave, LLC		40		40		—		—
Encore Hotels of Princeton II, LLC		110		110		—		—
Dunn Hospitality Group, LLC		74,094		74,094		—		—
		333,333		333,333		—		—

(1)	Represents shares of common stock currently owned by the selling stockholder or issuable in exchange for an equal number of currently redeemable units of limited partnership interest in our operating partnership owned by the selling stockholder.
(2)	Assumes that all units held by the selling stockholder are exchanged for shares of common stock and that all such shares of common stock are being resold pursuant to this prospectus.

DESCRIPTION OF CAPITAL STOCK

General

     We were formed under the laws of the State of Maryland. Rights of our stockholders are governed by the Maryland General Corporation Law, or MGCL, our charter and our bylaws. The following is a summary of the material provisions of our capital stock. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

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Authorized Stock

     Our charter provides that we may issue up to 200 million shares of voting common stock, par value $.01 per share, and 50 million shares of preferred stock, par value $.01 per share.

Common Stock

     All shares of our common stock covered by this prospectus will be duly authorized, fully paid and nonassessable. Subject to the preferential rights of any other class or series of stock and to the provisions of the charter regarding the restrictions on transfer of stock, holders of shares of our common stock are entitled to receive dividends on such stock when, as and if authorized by our board of directors out of funds legally available therefor and declared by us and to share ratably in the assets of our company legally available for distribution to our stockholders in the event of our liquidation, dissolution or winding up after payment of or adequate provision for all known debts and liabilities of our company, including the preferential rights on dissolution of any class or classes of preferred stock.

     Subject to the provisions of our charter regarding the restrictions on transfer of stock, each outstanding share of our common stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors and, except as provided with respect to any other class or series of stock, the holders of such shares will possess the exclusive voting power. There is no cumulative voting in the election of our board of directors, which means that the holders of a plurality of the outstanding shares of our common stock can elect all of the directors then standing for election and the holders of the remaining shares will not be able to elect any directors.

     Holders of shares of our common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any securities of our company. Subject to the provisions of the charter regarding the restrictions on transfer of stock, shares of our common stock will have equal dividend, liquidation and other rights.

     Under the MGCL, a Maryland corporation generally cannot dissolve, amend its charter, merge, consolidate, transfer all or substantially all of its assets, engage in a statutory share exchange or engage in similar transactions outside the ordinary course of business unless declared advisable by the board of directors and approved by the affirmative vote of stockholders holding at least two-thirds of the shares entitled to vote on the matter unless a lesser percentage (but not less than a majority of all of the votes entitled to be cast on the matter) is set forth in the corporation’s charter. Our charter does not provide for a lesser percentage for these matters. However, Maryland law permits a corporation to transfer all or substantially all of its assets without the approval of the stockholders of the corporation to one or more persons if all of the equity interests of the person or persons are owned, directly or indirectly, by the corporation. Because operating assets may be held by a corporation’s subsidiaries, as in our situation, this may mean that a subsidiary of a corporation can transfer all of its assets without a vote of the corporation’s stockholders.

     Our charter authorizes our board of directors to reclassify any unissued shares of our common stock into other classes or series of classes of stock and to establish the number of shares in each class or series and to set the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications or terms or conditions of redemption for each such class or series.

Preferred Stock

     Our charter authorizes our board of directors to classify any unissued shares of preferred stock and to reclassify any previously classified but unissued shares of any series. Prior to issuance of shares of each series, our board of directors is required by the MGCL and our charter to set the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms or conditions of redemption for each such series. Thus, our board of directors could authorize the issuance of shares of preferred stock with terms and conditions which could have the effect of delaying, deferring or preventing a transaction or a change of control of our company that might involve a premium price for holders of our common stock or otherwise

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be in their best interest. As of the date hereof, no shares of preferred stock are outstanding and we have no current plans to issue any preferred stock.

Power to Issue Additional Shares of Our Common Stock and Preferred Stock

     We believe that the power of our board of directors, without stockholder approval, to issue additional authorized but unissued shares of our common stock or preferred stock and to classify or reclassify unissued shares of our common stock or preferred stock and thereafter to cause us to issue such classified or reclassified shares of stock provides us with flexibility in structuring possible future financings and acquisitions and in meeting other needs which might arise. The additional classes or series, as well as the common stock, will be available for issuance without further action by our stockholders, unless stockholder consent is required by applicable law or the rules of any stock exchange or automated quotation system on which our securities may be listed or traded. Although our board of directors does not intend to do so, it could authorize us to issue a class or series that could, depending upon the terms of the particular class or series, delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for our stockholder or otherwise be in their best interest.

Restrictions on Ownership and Transfer

     In order for us to qualify as a REIT under the Internal Revenue Code or “Code,” not more than 50% of the value of the outstanding shares of our stock may be owned, actually or constructively, by five or fewer individuals (as defined in the Code to include certain entities) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made by us). In addition, if we, or one or more owners (actually or constructively) of 10% or more of us, actually or constructively owns 10% or more of a tenant of ours (or a tenant of any partnership in which we are a partner), the rent received by us (either directly or through any such partnership) from such tenant will not be qualifying income for purposes of the REIT gross income tests of the Code. Our stock must also be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months or during a proportionate part of a shorter taxable year (other than the first year for which an election to be a REIT has been made by us).

     Our charter contains restrictions on the ownership and transfer of our capital stock that are intended to assist us in complying with these requirements and continuing to qualify as a REIT. The relevant sections of our charter provide that, subject to the exceptions described below, no person or persons acting as a group may own, or be deemed to own by virtue of the attribution provisions of the Code, more than (i) 9.8% of the lesser of the number or value of shares of our common stock outstanding or (ii) 9.8% of the lesser of the number or value of the issued and outstanding preferred or other shares of any class or series of our stock. We refer to this restriction as the “ownership limit.”

     The ownership attribution rules under the Code are complex and may cause stock owned actually or constructively by a group of related individuals and/or entities to be owned constructively by one individual or entity. As a result, the acquisition of less than 9.8% of our common stock (or the acquisition of an interest in an entity that owns, actually or constructively, our common stock) by an individual or entity, could, nevertheless cause that individual or entity, or another individual or entity, to own constructively in excess of 9.8% of our outstanding common stock and thereby subject the common stock to the ownership limit.

     Our board of directors may, in its sole discretion, waive the ownership limit with respect to one or more stockholders who would not be treated as “individuals” for purposes of the Code if it determines that such ownership will not cause any “individual’s” beneficial ownership of shares of our capital stock to jeopardize our status as a REIT (for example, by causing any tenant of ours to be considered a “related party tenant” for purposes of the REIT qualification rules).

     As a condition of our waiver, our board of directors may require an opinion of counsel or IRS ruling satisfactory to our board of directors, and/or representations or undertakings from the applicant with respect to preserving our REIT status.

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     In connection with the waiver of the ownership limit or at any other time, our board of directors may decrease the ownership limit for all other persons and entities; provided, however, that the decreased ownership limit will not be effective for any person or entity whose percentage ownership in our capital stock is in excess of such decreased ownership limit until such time as such person or entity’s percentage of our capital stock equals or falls below the decreased ownership limit, but any further acquisition of our capital stock in excess of such percentage ownership of our capital stock will be in violation of the ownership limit. Additionally, the new ownership limit may not allow five or fewer “individuals” (as defined for purposes of the REIT ownership restrictions under the Code) to beneficially own more than 49.0% of the value of our outstanding capital stock.

     Our charter provisions further prohibit:

• any person from actually or constructively owning shares of our capital stock that would result in us being “closely held” under Section 856(h) of the Code or otherwise cause us to fail to qualify as a REIT; and

• any person from transferring shares of our capital stock if such transfer would result in shares of our stock being beneficially owned by fewer than 100 persons (determined without reference to any rules of attribution).

     Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our common stock that will or may violate any of the foregoing restrictions on transferability and ownership will be required to give notice immediately to us and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing provisions on transferability and ownership will not apply if our board of directors determines that it is no longer in our best interests to qualify, or to continue to qualify, as a REIT.

     Pursuant to our charter, if any purported transfer of our capital stock or any other event would otherwise result in any person violating the ownership limits or the other restrictions in our charter, then any such purported transfer will be void and of no force or effect with respect to the purported transferee or owner (collectively referred to hereinafter as the “purported owner”) as to that number of shares in excess of the ownership limit (rounded up to the nearest whole share). The number of shares in excess of the ownership limit will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us. The trustee of the trust will be designated by us and must be unaffiliated with us and with any purported owner. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violative transfer or other event that results in a transfer to the trust. Any dividend or other distribution paid to the purported owner, prior to our discovery that the shares had been automatically transferred to a trust as described above, must be repaid to the trustee upon demand for distribution to the beneficiary of the trust and all dividends and other distributions paid by us with respect to such “excess” shares prior to the sale by the trustee of such shares shall be paid to the trustee for the beneficiary. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent violation of the applicable ownership limit, then our charter provides that the transfer of the excess shares will be void. Subject to Maryland law, effective as of the date that such excess shares have been transferred to the trust, the trustee shall have the authority (at the trustee’s sole discretion and subject to applicable law) (i) to rescind as void any vote cast by a purported owner prior to our discovery that such shares have been transferred to the trust and (ii) to recast such vote in accordance with the desires of the trustee acting for the benefit of the beneficiary of the trust, provided that if we have already taken irreversible action, then the trustee shall not have the authority to rescind and recast such vote.

     Shares of our capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price paid by the purported owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares of our capital stock at market price, the market price on the day of the event which resulted in the transfer of such shares of our capital stock to the trust) and (ii) the market price on the date we, or our designee, accepts such offer. We have the right to accept such offer until the trustee has sold the shares of our capital stock held in the trust pursuant to the clauses discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates and the trustee must distribute the net proceeds of the sale to the purported owner and any dividends or other distributions held by the trustee with respect to such capital stock will be paid to the charitable beneficiary.

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     If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits. After that, the trustee must distribute to the purported owner an amount equal to the lesser of (i) the net price paid by the purported owner for the shares (or, if the event which resulted in the transfer to the trust did not involve a purchase of such shares at market price, the market price on the day of the event which resulted in the transfer of such shares of our capital stock to the trust) and (ii) the net sales proceeds received by the trust for the shares. Any proceeds in excess of the amount distributable to the purported owner will be distributed to the beneficiary.

     Our charter also provides that “Benefit Plan Investors” (as defined in our charter) may not hold, individually or in the aggregate, 25% or more of the value of any class or series of shares of our capital stock to the extent such class or series does not constitute “Publicly Offered Securities” (as defined in our charter).

     All persons who own, directly or by virtue of the attribution provisions of the Code, more than 5% (or such other percentage as provided in the regulations promulgated under the Code) of the lesser of the number or value of the shares of our outstanding capital stock must give written notice to us within 30 days after the end of each calendar year. In addition, each stockholder will, upon demand, be required to disclose to us in writing such information with respect to the direct, indirect and constructive ownership of shares of our stock as our board of directors deems reasonably necessary to comply with the provisions of the Code applicable to a REIT, to comply with the requirements or any taxing authority or governmental agency or to determine any such compliance.

     All certificates representing shares of our capital stock bear a legend referring to the restrictions described above.

     These ownership limits could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price over the then prevailing market price for the holders of some, or a majority, of our outstanding shares of common stock or which such holders might believe to be otherwise in their best interest.

Transfer Agent and Registrar

     The transfer agent and registrar for our common stock and preferred stock is Equiserve Trust Company, N.A.

MATERIAL PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS

     The following is a summary of certain provisions of Maryland law and of our charter and bylaws. Copies of our charter and bylaws are filed as exhibits to the registration statement of which this prospectus is a part. See “Where You Can Find More Information.”

The Board of Directors

     Our bylaws provide that the number of directors of our company may be established by our board of directors but may not be fewer than the minimum number permitted under the MGCL nor more than 15. Any vacancy will be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the remaining directors.

     Pursuant to our charter, each member of our board of directors will serve one year terms and until their successors are elected and qualified. Holders of shares of our common stock will have no right to cumulative voting in the election of directors. Consequently, at each annual meeting of stockholders at which our board of directors is elected, the holders of a plurality of the shares of our common stock will be able to elect all of the members of our board of directors.

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Business Combinations

     Maryland law prohibits “business combinations” between a corporation and an interested stockholder or an affiliate of an interested stockholder for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, statutory share exchange, or, in circumstances specified in the statute, certain transfers of assets, certain stock issuances and transfers, liquidation plans and reclassifications involving interested stockholders and their affiliates as asset transfer or issuance or reclassification of equity securities. Maryland law defines an interested stockholder as:

• any person who beneficially owns 10% or more of the voting power of our voting stock; or

• an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner of 10% or more of the voting power of the then-outstanding voting stock of the corporation.

     A person is not an interested stockholder if the board of directors approves in advance the transaction by which the person otherwise would have become an interested stockholder. However, in approving the transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board of directors.

     After the five year prohibition, any business combination between a corporation and an interested stockholder generally must be recommended by the board of directors and approved by the affirmative vote of at least:

• 80% of the votes entitled to be cast by holders of the then outstanding shares of common stock; and

• two-thirds of the votes entitled to be cast by holders of the common stock other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or shares held by an affiliate or associate of the interested stockholder.

     These super-majority vote requirements do not apply if certain fair price requirements set forth in the MGCL are satisfied.

     The statute permits various exemptions from its provisions, including business combinations that are approved by the board of directors before the time that the interested stockholder becomes an interested stockholder.

     Our charter includes a provision excluding the corporation from these provisions of the MGCL and, consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations between us and any interested stockholder of ours unless we later amend our charter, with stockholder approval, to modify or eliminate this provision. Any such amendment may not be effective until 18 months after the stockholder vote and may not apply to any business combination involving us and an interested stockholder (or affiliate) who became an interested stockholder on or before the date of the vote. We believe that our ownership restrictions will substantially reduce the risk that a stockholder would become an “interested stockholder” within the meaning of the Maryland business combination statute.

Control Share Acquisitions

     The MGCL provides that “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved at a special meeting by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in respect of which any of the following persons is entitled to exercise or direct the exercise of the voting power of shares of stock of the corporation in the election of directors: (i) a person who makes or proposes to make a control share acquisition, (ii) an officer of the corporation or (iii) an employee of the corporation who is also a director of the corporation. “Control shares” are voting shares of stock which, if aggregated with all other such shares of stock previously acquired by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power

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(except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power: (i) one-tenth or more but less than one-third, (ii) one-third or more but less than a majority, or (iii) a majority or more of all voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A “control share acquisition” means the acquisition of control shares, subject to certain exceptions.

     A person who has made or proposes to make a control share acquisition, upon satisfaction of certain conditions (including an undertaking to pay expenses), may compel our board of directors to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

     If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then, subject to certain conditions and limitations, the corporation may redeem any or all of the control shares (except those for which voting rights have previously been approved) for fair value determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of such shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

     The control share acquisition statute does not apply (i) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction or (ii) to acquisitions approved or exempted by the charter or bylaws of the corporation.

     Our charter contains a provision exempting from the control share acquisition statute any and all acquisitions by any person of our common stock and, consequently, the applicability of the control share acquisitions unless we later amend our charter, with stockholder approval, to modify or eliminate this provision.

Amendment to Our Charter

     Our charter may be amended only if declared advisable by the board of directors and approved by the affirmative vote of the holders of at least two-thirds of all of the votes entitled to be cast on the matter.

Dissolution of Our Company

     The dissolution of our company must be declared advisable by the board of directors and approved by the affirmative vote of the holders of not less than two-thirds of all of the votes entitled to be cast on the matter.

Advance Notice of Director Nominations and New Business

     Our bylaws provide that:

• with respect to an annual meeting of stockholders, the only business to be considered and the only proposals to be acted upon will be those properly brought before the annual meeting:

- pursuant to our notice of the meeting;

- by, or at the direction of, a majority of our board of directors; or

- by a stockholder who is entitled to vote at the meeting and has complied with the advance notice procedures set forth in our bylaws;

• with respect to special meetings of stockholders, only the business specified in our company’s notice of meeting may be brought before the meeting of stockholders unless otherwise provided by law; and

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• nominations of persons for election to our board of directors at any annual or special meeting of stockholders may be made only:

- by, or at the direction of, our board of directors; or

- by a stockholder who is entitled to vote at the meeting and has complied with the advance notice provisions set forth in our bylaws.

Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws

     The advance notice provisions of our bylaws could delay, defer or prevent a transaction or a change of control of our company that might involve a premium price for holders of our common stock or otherwise be in their best interest. Likewise, if our company’s charter were to be amended to avail the corporation of the business combination provisions of the MGCL or to remove or modify the provision in the charter opting out of the control share acquisition provisions of the MGCL, these provisions of the MGCL could have similar anti-takeover effects.

Indemnification and Limitation of Directors’ and Officers’ Liability

     Our charter and the partnership agreement provide for indemnification of our officers and directors against liabilities to the fullest extent permitted by the MGCL, as amended from time to time.

     The MGCL permits a corporation to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that:

• an act or omission of the director or officer was material to the matter giving rise to the proceeding and:

- was committed in bad faith; or

- was the result of active and deliberate dishonesty;

• the director or officer actually received an improper personal benefit in money, property or services; or

• in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

     However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation (other than for expenses incurred in a successful defense of such an action) or for a judgment of liability on the basis that personal benefit was improperly received. In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of:

• a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation; and

• a written undertaking by the director or on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.

     The MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision which eliminates such liability to the maximum extent permitted by Maryland law.

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     Our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

• any present or former director or officer who is made a party to the proceeding by reason of his or her service in that capacity; or

• any individual who, while a director or officer of our company and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee and who is made a party to the proceeding by reason of his or her service in that capacity.

     Our bylaws also obligate us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described in second and third bullet points above and to any employee or agent of our company or a predecessor of our company.

     The partnership agreement of our operating partnership provides that we, as general partner, and our officers and directors are indemnified to the fullest extent permitted by law. See “Partnership Agreement — Exculpation and Indemnification of the General Partner.”

     Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

PARTNERSHIP AGREEMENT

Management

     Ashford Hospitality Limited Partnership, our operating partnership, has been organized as a Delaware limited partnership. One of our wholly-owned subsidiaries is the sole general partner of this partnership, and one of our subsidiaries holds limited partnership units in this partnership. The substantial majority of the limited partnership units not owned by our company are owned by certain of our executives, employees and employees of our affiliates. In the future, we may issue additional interests in our operating partnership to third parties.

     Pursuant to the partnership agreement of the operating partnership, we, as the sole general partner, generally have full, exclusive and complete responsibility and discretion in the management, operation and control of the partnership, including the ability to cause the partnership to enter into certain major transactions, including acquisitions, developments and dispositions of properties, borrowings and refinancings of existing indebtedness. No limited partner may take part in the operation, management or control of the business of the operating partnership by virtue of being a holder of limited partnership units.

     Our subsidiary may not be removed as general partner of the partnership. Upon the bankruptcy or dissolution of the general partner, the general partner shall be deemed to be removed automatically.

     The limited partners of our operating partnership have agreed that in the event of a conflict in the fiduciary duties owed (i) by us to our stockholders and (ii) by us, as general partner of the operating partnership, to those limited partners, we may act in the best interests of our stockholders without violating our fiduciary duties to the limited partners of the operating partnership or being liable for any resulting breach of our duties to the limited partners.

Transferability of Interests

     General Partner. The partnership agreement provides that we may not transfer our interest as a general partner (including by sale, disposition, merger or consolidation) except:

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• in connection with a merger of the operating partnership, a sale of substantially all of the assets of the operating partnership or other transaction in which the limited partners receive a certain amount of cash, securities or property; or

• in connection with a merger of us or the general partner into another entity, if the surviving entity contributes substantially all its assets to the operating partnership and assumes the duties of the general partner under the operating partnership agreement.

     Limited Partner. The partnership agreement prohibits the sale, assignment, transfer, pledge or disposition of all or any portion of the limited partnership units without our consent, which we may give or withhold in our sole discretion. However, an individual partner may donate his units to his immediate family or a trust wholly owned by his immediate family, without our consent. In addition, the partnerships contributing our initial hotel properties to us in exchange for units in our operating partnership may transfer those units to their partners, without our consent. The partnership agreement contains other restrictions on transfer if, among other things that transfer:

• would cause us to fail to comply with the REIT rules under the Internal Revenue Code, or

• would cause us to become a publicly-traded partnership under the Internal Revenue Code.

Capital Contributions

     The partnership agreement provides that if the partnership requires additional funds at any time in excess of funds available to the partnership from borrowing or capital contributions, we may borrow such funds from a financial institution or other lender and lend such funds to the partnership. Under the partnership agreement, we are obligated to contribute the proceeds of any offering of stock as additional capital to the partnership. The operating partnership is authorized to cause the partnership to issue partnership interests for less than fair market value if we conclude in good faith that such issuance is in both the partnership’s and our best interests.

     The partnership agreement provides that we may make additional capital contributions, including properties, to the partnership in exchange for additional partnership units. If we contribute additional capital to the partnership and receive additional partnership interests for such capital contribution, our percentage interests will be increased on a proportionate basis based on the amount of such additional capital contributions and the value of the partnership at the time of such contributions. Conversely, the percentage interests of the other limited partners will be decreased on a proportionate basis. In addition, if we contribute additional capital to the partnership and receive additional partnership interests for such capital contribution, the capital accounts of the partners will be adjusted upward or downward to reflect any unrealized gain or loss attributable to our properties as if there were an actual sale of such properties at the fair market value thereof. Limited partners have no preemptive right to make additional capital contributions.

     The operating partnership could issue preferred partnership interests in connection with acquisitions of property or otherwise. Any such preferred partnership interests would have priority over common partnership interests with respect to distributions from the partnership, including the partnership interests that our wholly-owned subsidiaries own.

Redemption Rights

     Under the partnership agreement, we have granted to each limited partner (other than our subsidiary) the right to redeem their limited partnership units. This right may be exercised at the election of that limited partner by giving us written notice, subject to some limitations. The purchase price for the limited partnership units to be redeemed will equal the fair market value of our common stock. The purchase price for the limited partnership units may be paid in cash, or, in our discretion, by the issuance by us of a number of shares of our common stock equal to the number of limited partnership units with respect to which the rights are being exercised. However, no limited partner will be entitled to exercise its redemption rights to the extent that the issuance of common stock to the redeeming partner would be prohibited under our charter or, if after giving effect to such exercise, would cause any

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person to own, actually or constructively, more than 9.8% of our common stock, unless such ownership limit is waived by us in our sole discretion.

     In all cases, however, no limited partner may exercise the redemption right for fewer than 1,000 partnership units or, if a limited partner holds fewer than 1,000 partnership units, all of the partnership units held by such limited partner.

     Currently, the aggregate number of shares of common stock issuable upon exercise of the redemption rights is 11,092,075, and this prospectus relates to 333,333 such shares. The number of shares of common stock issuable upon exercise of the redemption rights will be adjusted to account for share splits, mergers, consolidations or similar pro rata share transactions.

Operations

     The partnership agreement requires the partnership to be operated in a manner that enables us to satisfy the requirements for being classified as a REIT, to minimize any excise tax liability imposed by the Internal Revenue Code and to ensure that the partnership will not be classified as a “publicly traded partnership” taxable as a corporation under Section 7704 of the Code.

     In addition to the administrative and operating costs and expenses incurred by the partnership, the partnership will pay all of our administrative costs and expenses. These expenses will be treated as expenses of the partnership and will generally include:

• all expenses relating to our continuity of existence;

• all expenses relating to offerings and registration of securities;

• all expenses associated with the preparation and filing of any of our periodic reports under federal, state or local laws or regulations;

• all expenses associated with our compliance with laws, rules and regulations promulgated by any regulatory body; and

• all of our other operating or administrative costs incurred in the ordinary course of its business on behalf of the partnership.

Distributions

     The partnership agreement provides that the partnership will make cash distributions in amounts and at such times as determined by us in our sole discretion, to us and other limited partners in accordance with the respective percentage interests of the partners in the partnership.

     Upon liquidation of the partnership, after payment of, or adequate provisions for, debts and obligations of the partnership, including any partner loans, any remaining assets of the partnership will be distributed to us and the other limited partners with positive capital accounts in accordance with the respective positive capital account balances of the partners.

Allocations

     Profits and losses of the partnership (including depreciation and amortization deductions) for each fiscal year generally are allocated to us and the other limited partners in accordance with the respective percentage interests of the partners in the partnership. All of the foregoing allocations are subject to compliance with the provisions of Internal Revenue Code sections 704(b) and 704(c) and Treasury Regulations promulgated thereunder. The partnership will use the “traditional method” under Internal Revenue Code section 704(c) for allocating items

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with respect to which the fair market value at the time of contribution differs from the adjusted tax basis at the time of contribution for a hotel.

Amendments

     Generally, we, as the general partner of the operating partnership, may amend the partnership agreement without the consent of any limited partner to clarify the partnership agreement, to make changes of an inconsequential nature, to reflect the admission, substitution or withdrawal of limited partners, to reflect the issuance of additional partnership interests or if, in the opinion of counsel, necessary or appropriate to satisfy the Code with respect to partnerships or REITs or federal or state securities laws. However, any amendment which alters or changes the distribution or redemption rights of a limited partner (other than a change to reflect the seniority of any distribution or liquidation rights of any preferred units issued in accordance with the partnership agreement), changes the method for allocating profits and losses, imposes any obligation on the limited partners to make additional capital contributions or adversely affects the limited liability of the limited partners requires the consent of holders of 66 2/3% of the limited partnership units, excluding our indirect ownership of limited partnership units. Other amendments require approval of the general partner and holders of 50% of the limited partnership units.

     In addition, the operating partnership may be amended, without the consent of any limited partner, in the event that we or any of our subsidiaries engages in a merger or consolidation with another entity and immediately after such transaction the surviving entity contributes to the operating partnership substantially all of the assets of such surviving entity and the surviving entity agrees to assume our subsidiary’s obligation as general partner of the partnership. In such case, the surviving entity will amend the operating partnership agreement to arrive at a new method for calculating the amount a limited partner is to receive upon redemption or conversion of a partnership unit (such method to approximate the existing method as much as possible).

Exculpation and Indemnification of the General Partner

     The partnership agreement of our operating partnership provides that neither the general partner, nor any of its directors and officers will be liable to the partnership or to any of its partners as a result of errors in judgment or mistakes of fact or law or of any act or omission, if the general partner acted in good faith.

     In addition, the partnership agreement requires our operating partnership to indemnify and hold the general partner and its directors, officers and any other person it designates, harmless from and against any and all claims arising from operations of the operating partnership in which any such indemnitee may be involved, or is threatened to be involved, as a party or otherwise, unless it is established that:

• the act or omission of the indemnitee was material to the matter giving rise to the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty,

• the indemnitee actually received an improper personal benefit in money, property or services, or

• in the case of any criminal proceeding, the indemnitee had reasonable cause to believe that the act or omission was unlawful.

     No indemnitee may subject any partner of our operating partnership to personal liability with respect to this indemnification obligation as this indemnification obligation will be satisfied solely out of the assets of the partnership.

Term

     The partnership has a perpetual life, unless dissolved upon:

• the general partner’s bankruptcy or dissolution or withdrawal (unless the limited partners elect to continue the partnership);

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• the passage of 90 days after the sale or other disposition of all or substantially all the assets of the partnership;

• the redemption of all partnership units (other than those held by us, if any); or

• an election by us in our capacity as the sole owner of the general partner.

Tax Matters

     The general partner is the tax matters partner of the operating partnership. We have the authority to make tax elections under the Internal Revenue Code on behalf of the partnership. The net income or net loss of the operating partnership will generally be allocated to us and the limited partners in accordance with our respective percentage interests in the partnership, subject to compliance with the provisions of the Internal Revenue Code.

COMPARISON OF OWNERSHIP OF UNITS AND COMMON STOCK

     Although the nature of an investment in our common stock is similar to an investment in units, there are also differences between ownership of units of limited partnership interest and ownership of our common stock. The information below highlights a number of the significant differences between the partnership and the company relating to, among other things, form of organization, policies and restrictions, management structure, compensation and fees, voting rights, liability of investors, liquidity and federal income tax considerations. These comparisons are intended to assist holders of units in understanding how their investment will be changed if they exchange their units for shares of our common stock.

     THE FOLLOWING DISCUSSION IS A SUMMARY AND DOES NOT CONSTITUTE A COMPLETE DISCUSSION OF THESE MATTERS, AND HOLDERS OF UNITS SHOULD CAREFULLY REVIEW THE BALANCE OF THIS PROSPECTUS, THE REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART, THE PARTNERSHIP AGREEMENT AND OUR CHARTER FOR ADDITIONAL IMPORTANT INFORMATION ABOUT US.

PARTNERSHIP	COMPANY
Form of Organization and Purposes
The partnership is organized as a Delaware limited partnership. The partnership’s purpose is to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Delaware Revised Uniform Limited Partnership Act, provided that such business is to be limited to and conducted in such a manner as to permits us at all times to be qualified as a REIT under the Code unless our board of directors determines to cease to qualify as a REIT. The general partner may cause the partnership to take, or to refrain from taking, any action that, in the good faith belief of the general partner, is necessary or advisable in order (i) to protect the ability of the company to continue to qualify as a REIT, or (ii) to prevent the company from incurring any taxes under Section 857 or Section 4981 of the Code.	We are a Maryland corporation. We have elected to be taxed as a REIT under the Code and intend to maintain our qualification as a REIT. Under our charter, we may engage in any lawful act or activity for which corporation may be organized under the MGCL.

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PARTNERSHIP	COMPANY
Length of Investment
The partnership has a perpetual term and intends to continue operations for an indefinite time period.	We have a perpetual term and intend to continue our operations for an indefinite time period.
Additional Equity
The partnership is authorized to issue units in exchange for additional capital contributions as determined by the general partner, in its sole discretion. In exchange for such capital contributions, the partnership may issue partnership interests to the general partner, may issue additional units to existing limited partners, and may admit third parties as additional limited partners.	The board of directors may issue, in its discretion, additional equity securities consisting of common stock or preferred stock; provided, that the total number of shares issued does not exceed the authorized number of shares of stock set forth in our charter.
Borrowing Policies
The partnership has no restrictions on borrowings, and the general partner has full power and authority to borrow money on behalf of the partnership; provided that the term of any loan from the general partner or any affiliate of the general partner must be substantially equivalent to the terms that could be obtained from a third party on an arm’s-length basis.	Neither our charter nor our bylaws impose any restrictions on our ability to incur borrowings. However, our revolving credit and secured term loan facilities contain certain financial covenants and operating covenants, including, among other things, limitations on our ability to incur secured and unsecured debt.
Other Investment Restrictions
Other than restrictions precluding investments by the partnership that would adversely affect our qualification as a REIT and restrictions on transactions with affiliates, the partnership agreement does not generally restrict the partnership’s authority to enter into certain transactions, including, among others, making investments, lending partnership funds, or reinvesting the partnership’s cash flow and net sale or refinancing proceeds.	Neither our charter nor our bylaws impose any restrictions upon the types of investments made by us.
Management Control
All management powers over the business and affairs of the partnership are vested in the general partner, and generally no limited partner of the partnership has any right to participate in or exercise control or management power over the business and affairs of the partnership, except as otherwise set forth in the partnership agreement. The general partner may not be removed by the limited partners of the partnership with or without cause.	The board of directors has exclusive control over our business and affairs subject only to the restrictions in our charter and bylaws. At each annual meeting of the stockholders, the stockholders elect directors. The policies adopted by the board of directors may be altered or eliminated without a vote of the stockholders. Accordingly, except for their vote in the elections of directors, stockholders have no control over our ordinary business policies.
Fiduciary Duties of General Partners and Directors
Under Delaware law, the general partner of the partnership is accountable to the partnership as a fiduciary and, consequently, is required to exercise	Under the MGCL, the directors must perform their duties in good faith, in a manner that they reasonably believe to be in the best interests of the company and

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PARTNERSHIP	COMPANY
good faith and integrity in all of its dealings with respect to partnership affairs. However, under the partnership agreement, the general partner is not liable for monetary damages for losses sustained, liabilities incurred or benefits not derived by partners as a result of errors in judgment or of any act or omission, provided that the general partner has acted in good faith.	with the care of an ordinarily prudent person in a like position. Any director who acts in such a manner generally will not be liable to the company for monetary damages arising from his or her activities as a director of the company.
Management Liability and Indemnification
As a matter of Delaware law, the general partner has liability for the payment of the obligations and debts of the partnership unless limitations upon such liability are stated in the document or instrument evidencing the obligations. Under the partnership agreement, the partnership has agreed to indemnify the general partner and any director, officer, employee or agent of the partnership or the general partner from and against all losses, claims, damages, liabilities (joint or several), expenses (including legal fees and expenses), judgments, fines, settlements and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, that relate to the operations of the partnership, unless: (i) the act or omission was material to the matter giving rise to the proceeding and with was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the party actually received an improper personal benefit in money, property or services; or (iii) in the case of any criminal proceeding, the party had reasonable cause to believe that the act or omission was unlawful. The reasonable expenses incurred by an indemnitee may be reimbursed by the partnership in advance of the final disposition of the proceeding upon receipt by the partnership of (i) a written affirmation by the indemnitee of his, her or its good faith belief that the standard of conduct necessary for indemnification has been met and (ii) a written undertaking by or on behalf of the indemnitee to repay the amount if it is determined that the standard of conduct was not met.	Our charter contains a provision which eliminates the liability of our directors and officers to the company and its stockholders to the maximum extent permitted by Maryland law. Our bylaws require us, to the maximum extent permitted by Maryland law, to indemnify and, without a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (i) any individual who is a present or former director or officer of the company, (ii) any individual who, while a director or officer of the company and at the request of the company, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee.
Anti-takeover Provisions
Except in limited circumstances (see “—Voting Rights” below), the general partner of the partnership has exclusive management power over the business and affairs of the partnership. The general partner may not be removed by the limited partners with or without cause. Except with respect to certain limited partners and after certain specified dates, a limited partner may generally transfer its limited partnership interest only with the approval of the general partner, and the general partner may, in its sole discretion,	Our charter and bylaws contain a number of provisions that may have the effect of delaying or discouraging an unsolicited proposal for the acquisition of the company or the removal of incumbent management. These provisions include, among others: (i) authorized stock that may be issued as preferred stock in the discretion of the board of directors, with superior voting or other rights to the common stock; and (ii) provisions designed to avoid concentration of share ownership in a manner that would jeopardize our status as a REIT

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PARTNERSHIP	COMPANY
prevent the admission to the partnership of substituted limited partners.	under the Code. The MGCL also contains certain provisions which could have the effect of delaying, deferring or preventing a change in control of the company or other transaction. See “Material Provisions of Maryland Law and of Our Charter and Bylaws.”
Voting Rights
Under the partnership agreement, the limited partners have voting rights in limited circumstances, including as to the election of a new general partner upon the dissolution or withdrawal of the existing general partner and as to certain amendments to the partnership agreement, as described more fully below. Otherwise, all decisions relating to the operation and management of the partnership are made by the general partner.	Our business and affairs are managed under the direction of our board of directors. Each director is to be elected by the stockholders at annual meetings. The MGCL requires that certain major corporate transactions, including most amendments to our charter, may not be consummated without the approval of stockholders as set forth below. All shares of our common stock and all shares of our Series B-1 preferred stock have one vote per share, and our charter permits the board of directors to classify and issue preferred stock in one or more series having voting power which may differ from that of the common stock.
The following is a comparison of the voting rights of the holders of units and our stockholders as they relate to certain major transactions:
Amendment of the Partnership Agreement or our Charter
The partnership agreement may be amended by the general partner without the approval of any limited partner if such amendment (i) is for the purpose of clarification or is of an inconsequential nature; (ii) is to reflect the admission, substitution or withdrawal of limited partners or to reflect the issuance of additional partnership interests or to amend the calculation of the Cash Amount and the Conversion Factor (as such terms are defined in the partnership agreement) following a merger or consolidation of the partnership with another entity. Amendments that adversely affect the limited liability of the limited partners, impose on the limited partners any obligation to make additional capital contributions, change the method of allocation of profit and loss or the distribution provisions, seek to impose personal liability on the limited partners or affect the operation of the conversion factor of the redemption right must be approved by limited partners holding more than 66 2/3% of the outstanding units. Any other amendment to the partnership agreement must be approved by the general partner and by limited partners holding a majority in interest of the units.	Under the MGCL and our charter, amendments to our charter generally must be advised by the board of directors and approved by the holders of at least a majority of the votes entitled to be cast on the matter.
Vote Required to Dissolve the Partnership or the Company
The partnership will be dissolved upon (i) an event of bankruptcy as to the general partner or the dissolution	Under the MGCL and our charter, dissolution of the Company must be advised by the board of directors and

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PARTNERSHIP	COMPANY
or withdrawal of the general partner (unless within 90 days thereafter limited partners holding more than 50% of the units elect to continue the partnership and elect a new general partner), (ii) 90 days following the sale of all or substantially all of the partnership’s assets, (iii) the redemption of all units (other than any units held by the general partner or the company), or (iv) the election by the general partner (but only in accordance with and as permitted by applicable law).	approved by the holders of at least a majority of the votes entitled to be cast on the matter.
Vote Required to Sell Assets or Merge
Under the partnership agreement, the general partner has the full power and authority to effectuate the sale, transfer, exchange or other disposition of any of the partnership’s assets or the merger, consolidation, reorganization or other combination of the partnership with or into another entity.	Under the MGCL and our charter, the sale of all or substantially all of our assets, or our merger or consolidation, requires the approval of the board of directors and the holders of at least a majority of the votes entitled to be cast on the matter. No approval is required for the sale of less than all or substantially all of our assets.
Compensation and Fees
The general partner does not receive any compensation for its services as general partner of the partnership. The partnership will reimburse the general partner for all expenses incurred relating to the ongoing operation of the partnership.	Our officers and outside directors receive compensation for their services.
Liability of Investors
Under the partnership agreement and applicable Delaware law, the liability of the limited partners for the partnership’s debts and obligations is generally limited to the amount of their investment in the partnership.	Under Maryland law, stockholders generally are not personally liable for the debts or obligations of the Company.
Potential Dilution of Rights
The general partner of the partnership is authorized, in its sole discretion and without limited partner approval, to cause the partnership to issue additional limited partnership interests for any partnership purpose at any time to the limited partners or to other persons (including the general partner).	The board of directors may issue, in its discretion, additional shares of common stock or preferred stock, or securities convertible into shares of its common or preferred stock. The issuance of additional shares of either common stock or preferred stock or other convertible securities may result in the dilution of the interests of the stockholders.
Liquidity
Except with respect to certain limited partners and after certain specified dates, a limited partner may generally transfer its limited partnership interest only with the approval of the general partner, and the general partner may, in its sole discretion, prevent the admission to the partnership of substituted limited	The shares of common stock issued upon redemption of the units will be freely transferable as registered securities under the Securities Act of 1933. Our common stock is listed on the New York Stock Exchange under the symbol “AHT.” The breadth and strength of this secondary market will depend, among other things, upon the number of shares of common

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PARTNERSHIP	COMPANY
partners.	stock outstanding, our financial condition, performance and prospects, the market for similar securities issued by REITs, and our dividend yield compared to that of other debt and equity securities.
Federal Income Taxation
The partnership itself is not subject to federal income taxes. Instead, each holder of units includes its allocable share of the partnership’s taxable income or loss in determining its individual federal income tax liability. The maximum federal income tax rate for individuals under current law is 35%.	We have elected to be taxed as a REIT for federal income tax purposes. A REIT generally is not subject to federal income tax on the income that it distributes to stockholders if it meets the applicable REIT distribution requirements and other requirements for qualification as a REIT. Even a REIT, however, is subject to federal income tax on income that is not distributed and also may be subject to federal income and excise taxes in certain circumstances. The maximum federal income tax rate for corporations under current law is 35%. Stockholders generally will be subject to taxation on dividends (other than designated “capital gains dividends” and “qualified dividend income”) at rates applicable to ordinary income, instead of at lower capital gain rates that generally apply to dividends received from a regular C corporation.
Depending on certain facts, a unit holder’s allocable share of income and loss from the partnership may be subject to the “passive activity” limitations. Under the “passive activity” rules, a unit holder’s allocable share of income and loss from the partnership that is considered “passive income” generally can be offset against a holder’s income and loss from other investments that constitute “passive activities.” Cash distributions from the partnership are generally not taxable to a holder of units except to the extent they exceed such holder’s basis in its interest in the partnership (which will include such holder’s allocable share of the partnership’s nonrecourse debt). See “ – Basis of Units.”	Dividends paid by us will be treated as “portfolio” income and generally cannot be offset with losses from “passive activities.” Distributions made by us to our taxable domestic stockholders out of current or accumulated earnings and profits (and not designated as capital gain dividends) will be taken into account by them as ordinary income. Distributions that are properly designated by us as capital gain dividends or “qualified dividend income” may be taxed at long-term capital gain rates, subject to certain exceptions. Distributions (not designated as capital gain dividends) in excess of current and accumulated earnings and profits will first be treated as a non-taxable return of capital to the extent of a stockholder’s adjusted basis in its stock, with the excess taxed as capital gain (if the stock has been held as a capital asset). See “Federal Income Tax Consequences of our Status as a REIT — Taxation of Taxable U.S. Stockholders.”
Holders of units are required, in some cases, to file state income tax returns and/or pay state income taxes in the states in which the partnership owns property, even if they are not residents of those states.	Stockholders who are individuals generally will not be required to file state income tax returns and/or pay state income taxes outside of their state of residence with respect to our operations and distributions. We may be required to pay state income taxes in certain states.

FEDERAL INCOME TAX CONSEQUENCES OF OUR STATUS AS A REIT

     The following discussion is a summary of the material federal income tax considerations that may be relevant to a prospective holder of common stock, and, unless otherwise noted in the following discussion, expresses

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the opinion of Andrews Kurth LLP insofar as it relates to matters of United States federal income tax law and legal conclusions with respect to those matters. The discussion does not address all aspects of taxation that may be relevant to particular stockholders in light of their personal investment or tax circumstances, or to certain types of stockholders that are subject to special treatment under the federal income tax laws, such as insurance companies, financial institutions or broker-dealers, tax-exempt organizations (except to the limited extent discussed in “— Taxation of Tax-Exempt Stockholders”), of foreign corporations and persons who are not citizens or residents of the United States (except to the limited extent discussed in “— Taxation of Non-U.S. Stockholders”).

          The statements of law in this discussion and the opinion of Andrews Kurth LLP are based on current provisions of the Internal Revenue Code of 1986, as amended, or the “Code,” existing temporary and final Treasury regulations thereunder, and current administrative rulings and court decisions. No assurance can be given that future legislative, judicial, or administrative actions or decisions, which may be retroactive in effect, will not affect the accuracy of any statements in this prospectus with respect to the transactions entered into or contemplated prior to the effective date of such changes.

          On October 22, 2004, President Bush signed into law the American Jobs Creation Act of 2004 (the “Jobs Act”). In general, starting with our 2005 taxable year, the Jobs Act modifies the REIT income tests, asset tests and other requirements for maintaining REIT qualification. In addition, the Jobs Act will affect the treatment of non-U.S. stockholders. The Jobs Act also contains a number of relief provisions that make it easier for REITs to satisfy some of the REIT income and asset tests, while other relief provisions enable REITs to prevent terminations of their REIT status due to inadvertent violations of some of the technical REIT requirements. As with any new legislation, there may be some uncertainties regarding the particular application of the new provisions.

          We urge you to consult your own tax advisor regarding the specific tax consequences to you of ownership of our common stock and of our election to be taxed as a REIT. Specifically, we urge you to consult your own tax advisor regarding the federal, state, local, foreign, and other tax consequences of such ownership and election and regarding potential changes in applicable tax laws.

Taxation of Our Company

          We are currently taxed as a REIT under the federal income tax laws. We believe that we are organized and operate in such a manner as to qualify for taxation as a REIT under the Code, and we intend to continue to operate in such a manner, but no assurance can be given that we will operate in a manner so as to continue to qualify as a REIT. This section discusses the laws governing the federal income tax treatment of a REIT and its stockholders. These laws are highly technical and complex.

          Andrews Kurth LLP has acted as our counsel in connection with the offering. In the opinion of Andrews Kurth LLP, for the taxable years ending December 31, 2003 and December 31, 2004, we qualified to be taxed as a REIT pursuant to sections 856 through 860 of the Code, and our organization and present and proposed method of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT under the Code. Investors should be aware that Andrews Kurth LLP’s opinion is based upon customary assumptions, is conditioned upon certain representations made by us as to factual matters, including representations regarding the nature of our properties and the future conduct of our business, and is not binding upon the Internal Revenue Service or any court. In addition, Andrews Kurth LLP’s opinion is based on existing federal income tax law governing qualification as a REIT, which is subject to change either prospectively or retroactively. Moreover, our continued qualification and taxation as a REIT depend upon our ability to meet on a continuing basis, through actual annual operating results, certain qualification tests set forth in the federal tax laws. Those qualification tests involve the percentage of income that we earn from specified sources, the percentage of our assets that falls within specified categories, the diversity of our share ownership, and the percentage of our earnings that we distribute. While Andrews Kurth LLP has reviewed those matters in connection with the foregoing opinion, Andrews Kurth LLP will not review our compliance with those tests on a continuing basis. Accordingly, no assurance can be given that the actual results of our operation for any particular taxable year will satisfy such requirements. For a discussion of the tax consequences of our failure to qualify as a REIT, see “— Failure to Qualify.”

          If we qualify as a REIT, we generally will not be subject to federal income tax on the taxable income that we distribute to our stockholders. The benefit of that tax treatment is that it avoids the “double taxation,” or taxation

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at both the corporate and stockholder levels, that generally results from owning stock in a corporation. However, we will be subject to federal tax in the following circumstances:

• We will pay federal income tax on taxable income, including net capital gain, that we do not distribute to our stockholders during, or within a specified time period after, the calendar year in which the income is earned.

• Under certain circumstances, we may be subject to the “alternative minimum tax” on items of tax preference.

• We will pay income tax at the highest corporate rate on (1) net income from the sale or other disposition of property acquired through foreclosure (“foreclosure property”) that we hold primarily for sale to customers in the ordinary course of business and (2) other non-qualifying income from foreclosure property.

• We will pay a 100% tax on net income from sales or other dispositions of property, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business.

• If we fail to satisfy the 75% gross income test or the 95% gross income test, as described below under “— Income Tests,” and nonetheless continue to qualify as a REIT because we meet other requirements, we will pay a 100% tax on (1) the gross income attributable to the greater of the amounts by which we fail the 75% and 95% gross income tests, multiplied by (2) a fraction intended to reflect our profitability.

• If we fail to distribute during a calendar year at least the sum of (1) 85% of our REIT ordinary income for such year, (2) 95% of our REIT capital gain net income for such year, and (3) any undistributed taxable income from prior periods, we will pay a 4% excise tax on the excess of this required distribution over the amount we actually distributed.

• We may elect to retain and pay income tax on our net long-term capital gain. In that case, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain (to the extent that a timely designation of such gain is made by us to the stockholder) and would receive a credit or refund for its proportionate share of the tax we paid.

• If we acquire any asset from a C corporation, or a corporation that generally is subject to full corporate-level tax, in a merger or other transaction in which we acquire a basis in the asset that is determined by reference to the C corporation’s basis in the asset, we will pay tax at the highest regular corporate rate applicable if we recognize gain on the sale or disposition of such asset during the 10-year period after we acquire such asset. The amount of gain on which we will pay tax generally is the lesser of: (1) the amount of gain that we recognize at the time of the sale or disposition; or (2) the amount of gain that we would have recognized if we had sold the asset at the time we acquired the asset.

• We will incur a 100% excise tax on transactions with a “taxable REIT subsidiary” that are not conducted on an arm’s-length basis.

• After 2004, if we fail to satisfy certain asset tests, described below under “- Asset Tests,” by more than a de minimis threshold, and nonetheless continue to qualify as a REIT because we meet certain other requirements, we will be subject to a tax of the greater of $50,000 or at the highest corporate rate on the income generated by the non-qualifying assets.

• After 2004, we may be subject to a $50,000 tax for each such failure if we fail to satisfy certain REIT qualification requirements, other than income tests or asset tests, and such failure is due to reasonable cause and not willful neglect.

Requirements for Qualification

A REIT is a corporation, trust, or association that meets the following requirements:

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          1. it is managed by one or more trustees or directors;

          2. its beneficial ownership is evidenced by transferable shares or by transferable certificates of beneficial interest;

          3. it would be taxable as a domestic corporation but for the REIT provisions of the federal income tax laws;

          4. it is neither a financial institution nor an insurance company subject to special provisions of the federal income tax laws;

          5. at least 100 persons are beneficial owners of its shares or ownership certificates;

          6. no more than 50% in value of its outstanding shares or ownership certificates is owned, directly or indirectly, by five or fewer individuals, as defined in the federal income tax laws to include certain entities, during the last half of each taxable year;

          7. it elects to be a REIT, or has made such election for a previous taxable year, and satisfies all relevant filing and other administrative requirements established by the Internal Revenue Service that must be met to elect and maintain REIT status;

          8. it uses a calendar year for federal income tax purposes and complies with the recordkeeping requirements of the federal income tax laws; and

          9. it meets certain other qualification tests, described below, regarding the nature of its income and assets and the amount of its distributions.

          We must meet requirements 1 through 4 during our entire taxable year and must meet requirement 5 during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. If we comply with all the requirements for ascertaining the ownership of our outstanding shares in a taxable year and have no reason to know that we violated requirement 6, we will be deemed to have satisfied requirement 6 for such taxable year. For purposes of determining share ownership under requirement 6, an “individual” generally includes a supplemental unemployment compensation benefits plan, a private foundation, or a portion of a trust permanently set aside or used exclusively for charitable purposes. An “individual,” however, generally does not include a trust that is a qualified employee pension or profit sharing trust under the federal income tax laws, and beneficiaries of such a trust will be treated as holding shares of our common stock in proportion to their actuarial interests in the trust for purposes of requirement 6.

          We have issued sufficient common stock with enough diversity of ownership to satisfy requirements 5 and 6 set forth above. In addition, our charter restricts the ownership and transfer of the common stock so that we should continue to satisfy requirements 5 and 6. The provisions of our charter restricting the ownership and transfer of the common stock are described in “Description of Our Capital Stock — Restrictions on Ownership and Transfer.”

          A corporation that is a “qualified REIT subsidiary” is not treated as a corporation separate from its parent REIT. All assets, liabilities, and items of income, deduction, and credit of a “qualified REIT subsidiary” are treated as assets, liabilities, and items of income, deduction, and credit of the REIT. A “qualified REIT subsidiary” is a corporation, other than a taxable REIT subsidiary (“TRS”), all of the capital stock of which is owned by the REIT. Thus, in applying the requirements described in this section, any “qualified REIT subsidiary” that we own will be ignored, and all assets, liabilities, and items of income, deduction, and credit of that subsidiary will be treated as our assets, liabilities, and items of income, deduction, and credit. Similarly, any wholly owned limited liability company that we own will be disregarded, and all assets, liabilities and items of income, deduction and credit of such limited liability company will be treated as ours.

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          In the case of a REIT that is a partner in a partnership, in general, the REIT is treated as owning its proportionate share (based on capital interests) of the assets of the partnership and as earning its allocable share of the gross income of the partnership for purposes of the applicable REIT qualification tests. Thus, our proportionate share of the assets, liabilities, and items of income of our operating partnership and of any other partnership, joint venture, or limited liability company that is treated as a partnership for federal income tax purposes in which we own or will acquire an interest, directly or indirectly (each, a “Partnership” and, together, the “Partnerships”), are treated as our assets and gross income for purposes of applying the various REIT qualification requirements.

          Subject to restrictions on the value of TRS securities held by the REIT, a REIT is permitted to own up to 100% of the stock of one or more TRSs. A TRS is a fully taxable corporation. A TRS may not directly or indirectly operate or manage any hotels or health care facilities or provide rights to any brand name under which any hotel or health care facility is operated but is permitted to lease hotels from a related REIT as long as the hotels are operated on behalf of the TRS by an “eligible independent contractor.” We formed and made a timely election with respect to two TRSs, Ashford TRS Corporation (and each of its corporate subsidiaries) and Ashford TRS VI Corporation. Each of our properties is leased or owned by one of our TRSs. Additionally, we may form or acquire one or more additional TRSs in the future. See “— Taxable REIT Subsidiaries.”

Income Tests

          We must satisfy two gross income tests annually to maintain our qualification as a REIT. First, at least 75% of our gross income for each taxable year must consist of defined types of income that we derive, directly or indirectly, from investments relating to real property or mortgages on real property or temporary investment income. Qualifying income for purposes of that 75% gross income test generally includes:

• rents from real property;

• interest on debt secured by mortgages on real property or on interests in real property;

• dividends and gain from the sale of shares in other REITs; and

• gain from the sale of real estate assets.

          Second, in general, at least 95% of our gross income for each taxable year must consist of income that is qualifying income for purposes of the 75% gross income test, other types of dividends and interest, gain from the sale or disposition of stock or securities, income from certain hedging transactions, or any combination of the foregoing. Note that for taxable years beginning after December 31, 2004, if we enter into a transaction in the normal course of business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets and we properly identify the hedges as required by Treasury regulations, the income from the transaction will be excluded from gross income for purposes of the 95% gross income test (but not for purposes of the 75% gross income test). Gross income from our sale of any property that we hold primarily for sale to customers in the ordinary course of business is excluded from both income tests. The following paragraphs discuss the specific application of the gross income tests to us.

          Rents from Real Property. Rent that we receive from real property that we own and lease to tenants will qualify as “rents from real property,” which is qualifying income for purposes of the 75% and 95% gross income tests, only if the following conditions are met:

• First, the rent must not be based, in whole or in part, on the income or profits of any person but may be based on a fixed percentage or percentages of gross receipts or gross sales.

• Second, neither we nor a direct or indirect owner of 10% or more of our shares of common stock may own, actually or constructively, 10% or more of a tenant other than a TRS from whom we receive rent.

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• Third, if the rent attributable to personal property leased in connection with a lease of real property exceeds 15% of the total rent received under the lease, then the portion of rent attributable to that personal property will not qualify as “rents from real property.”

• Fourth, we generally must not operate or manage our real property or furnish or render services to our tenants, other than through an “independent contractor” who is adequately compensated, from whom we do not derive revenue, and who does not, directly or through its stockholders, own more than 35% of our shares of common stock, taking into consideration the applicable ownership attribution rules. However, we need not provide services through an “independent contractor,” but instead may provide services directly to our tenants, if the services are “usually or customarily rendered” in the geographic area in connection with the rental of space for occupancy only and are not considered to be provided for the tenants’ convenience. In addition, we may provide a minimal amount of “non-customary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services (valued at not less than 150% of our direct cost of performing such services) does not exceed 1% of our income from the related property. Furthermore, we may own up to 100% of the stock of a TRS which may provide customary and noncustomary services to our tenants without tainting our rental income from the related properties. See “— Taxable REIT Subsidiaries.”

          Pursuant to percentage leases, a TRS leases each of our properties not owned by a TRS. The percentage leases provide that a TRS is obligated to pay to the Partnerships (1) a minimum base rent plus percentage rent based on gross revenue and (2) “additional charges” or other expenses, as defined in the leases. Percentage rent is calculated by multiplying fixed percentages by room revenues for each of the hotels. Both base rent and the thresholds in the percentage rent formulas will be adjusted for inflation.

          In order for the base rent, percentage rent, and additional charges to constitute “rents from real property,” the percentage leases must be respected as true leases for federal income tax purposes and not treated as service contracts, joint ventures, or some other type of arrangement. The determination of whether the percentage leases are true leases depends on an analysis of all the surrounding facts and circumstances. In making such a determination, courts have considered a variety of factors, including the following:

• the intent of the parties;

• the form of the agreement;

• the degree of control over the property that is retained by the property owner, or whether the lessee has substantial control over the operation of the property or is required simply to use its best efforts to perform its obligations under the agreement; and

• the extent to which the property owner retains the risk of loss with respect to the property, or whether the lessee bears the risk of increases in operating expenses or the risk of damage to the property or the potential for economic gain or appreciation with respect to the property.

          In addition, federal income tax law provides that a contract that purports to be a service contract or a partnership agreement will be treated instead as a lease of property if the contract is properly treated as such, taking into account all relevant factors, including whether or not:

• the service recipient is in physical possession of the property;

• the service recipient controls the property;

• the service recipient has a significant economic or possessory interest in the property, or whether the property’s use is likely to be dedicated to the service recipient for a substantial portion of the useful life of the property, the recipient shares the risk that the property will decline in value, the recipient shares in any appreciation in the value of the property, the recipient shares in savings in the property’s operating costs, or the recipient bears the risk of damage to or loss of the property;

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• the service provider bears the risk of substantially diminished receipts or substantially increased expenditures if there is nonperformance under the contract;

• the service provider uses the property concurrently to provide significant services to entities unrelated to the service recipient; and

• the total contract price substantially exceeds the rental value of the property for the contract period.

          Since the determination whether a service contract should be treated as a lease is inherently factual, the presence or absence of any single factor will not be dispositive in every case.

          We believe that the percentage leases will be treated as true leases for federal income tax purposes. Such belief is based, in part, on the following facts:

• the Partnerships, on the one hand, and a TRS, on the other hand, intend for their relationship to be that of a lessor and lessee, and such relationship is documented by lease agreements;

• a TRS has the right to the exclusive possession, use, and quiet enjoyment of the hotels during the term of the percentage leases;

• a TRS bears the cost of, and is responsible for, day-to-day maintenance and repair of the hotels and generally dictates how the hotels are operated, maintained, and improved;

• a TRS bears all of the costs and expenses of operating the hotels, including the cost of any inventory used in their operation, during the term of the percentage leases, other than real estate;

• a TRS benefits from any savings in the costs of operating the hotels during the term of the percentage leases;

• a TRS generally has indemnified the Partnerships against all liabilities imposed on the Partnerships during the term of the percentage leases by reason of (1) injury to persons or damage to property occurring at the hotels, (2) the TRS’ use, management, maintenance, or repair of the hotels, (3) any environmental liability caused by acts or grossly negligent failures to act of the TRS, (4) taxes and assessments in respect of the hotels that are the obligations of the TRS, or (5) any breach of the percentage leases or of any sublease of a hotel by the TRS;

• a TRS is obligated to pay substantial fixed rent for the period of use of the hotels;

• a TRS stands to incur substantial losses or reap substantial gains depending on how successfully it operates the hotels;

• the Partnerships cannot use the hotels concurrently to provide significant services to entities unrelated to a TRS; and

• the total contract price under the percentage leases does not substantially exceed the rental value of the hotels for the term of the percentage leases.

          Investors should be aware that there are no controlling Treasury regulations, published rulings, or judicial decisions involving leases with terms substantially the same as the percentage leases that discuss whether such leases constitute true leases for federal income tax purposes. If the percentage leases are characterized as service contracts or partnership agreements, rather than as true leases, part or all of the payments that the Partnerships receive from a TRS may not be considered rent or may not otherwise satisfy the various requirements for qualification as “rents from real property.” In that case, we likely would not be able to satisfy either the 75% or 95% gross income test and, as a result, would lose our REIT status.

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          As described above, in order for the rent received by us to constitute “rents from real property,” several other requirements must be satisfied. One requirement is that the percentage rent must not be based in whole or in part on the income or profits of any person. The percentage rent, however, will qualify as “rents from real property” if it is based on percentages of gross receipts or gross sales and the percentages:

• are fixed at the time the percentage leases are entered into;

• are not renegotiated during the term of the percentage leases in a manner that has the effect of basing percentage rent on income or profits; and

• conform with normal business practice.

          More generally, the percentage rent will not qualify as “rents from real property” if, considering the percentage leases and all the surrounding circumstances, the arrangement does not conform with normal business practice, but is in reality used as a means of basing the percentage rent on income or profits. Since the percentage rent is based on fixed percentages of the gross revenues from the hotels that are established in the percentage leases, and we have represented to Andrews Kurth LLP that the percentages (1) will not be renegotiated during the terms of the percentage leases in a manner that has the effect of basing the percentage rent on income or profits and (2) conform with normal business practice, the percentage rent should not be considered based in whole or in part on the income or profits of any person. Furthermore, we have represented to Andrews Kurth LLP that, with respect to other hotel properties that we acquire in the future, we will not charge rent for any property that is based in whole or in part on the income or profits of any person, except by reason of being based on a fixed percentage of gross revenues, as described above.

          Another requirement for qualification of our rent as “rents from real property” is that we must not own, actually or constructively, 10% or more of the stock of any corporate lessee or 10% or more of the assets or net profits of any non-corporate lessee (a “related party tenant”). This rule, however, does not apply to rents for hotels leased to a TRS if an “eligible independent contractor” operates the hotel for the TRS.

          A third requirement for qualification of our rent as “rents from real property” is that the rent attributable to the personal property leased in connection with the lease of a hotel must not be greater than 15% of the total rent received under the lease. The rent attributable to the personal property contained in a hotel is the amount that bears the same ratio to total rent for the taxable year as the average of the fair market values of the personal property at the beginning and at the end of the taxable year bears to the average of the aggregate fair market values of both the real and personal property contained in the hotel at the beginning and at the end of such taxable year (the “personal property ratio”). With respect to each hotel, we believe either that the personal property ratio is less than 15% or that any income attributable to excess personal property will not jeopardize our ability to qualify as a REIT. There can be no assurance, however, that the Internal Revenue Service would not challenge our calculation of a personal property ratio or that a court would not uphold such assertion. If such a challenge were successfully asserted, we could fail to satisfy the 95% or 75% gross income test and thus could lose our REIT status.

          A fourth requirement for qualification of our rent as “rents from real property” is that, other than within the 1% de minimis exception described above (i.e., we may provide a minimal amount of “non-customary” services to the tenants of a property, other than through an independent contractor, as long as our income from the services does not exceed 1% of our income from the related property) and other than through a TRS, we cannot furnish or render noncustomary services to the tenants of our hotels, or manage or operate our hotels, other than through an independent contractor who is adequately compensated and from whom we do not derive or receive any income. Provided that the percentage leases are respected as true leases, we should satisfy that requirement, because the Partnerships will not perform any services other than customary services for a TRS. Furthermore, we have represented that, with respect to other hotel properties that we acquire in the future, we will not perform noncustomary services for a TRS.

          If a portion of our rent from a hotel does not qualify as “rents from real property” because the rent attributable to personal property exceeds 15% of the total rent for a taxable year, the portion of the rent that is attributable to personal property will not be qualifying income for purposes of either the 75% or 95% gross income

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test. Thus, if such rent attributable to personal property, plus any other income that is nonqualifying income for purposes of the 95% gross income test, during a taxable year exceeds 5% of our gross income during the year, we could lose our REIT status. If the rent from a particular hotel does not qualify as “rents from real property” because either (1) the percentage rent is considered based on the income or profits of the related lessee, (2) the lessee is a related party tenant other than a TRS, or (3) we furnish noncustomary services to the tenants of the hotel, or manage or operate the hotel, other than through an eligible independent contractor or a TRS, none of the rent from that hotel would qualify as “rents from real property.” In that case, we likely would be unable to satisfy either the 75% or 95% gross income test and, as a result, could lose our REIT status. However, in either situation we may still qualify as a REIT if the relief described below under “—Failure to Satisfy Gross Income Tests” is available to us.

          In addition to the rent, a lessee is required to pay to the Partnerships certain additional charges. To the extent that such additional charges represent either (1) reimbursements of amounts that the Partnerships are obligated to pay to third parties or (2) penalties for nonpayment or late payment of such amounts, such charges should qualify as “rents from real property.” However, to the extent that such charges represent interest that is accrued on the late payment of the rent or additional charges, such charges will not qualify as “rents from real property,” but instead should be treated as interest that qualifies for the 95% gross income test.

Interest

          The term “interest” generally does not include any amount received or accrued, directly or indirectly, if the determination of such amount depends in whole or in part on the income or profits of any person. However, an amount received or accrued generally will not be excluded from the term “interest” solely by reason of being based on a fixed percentage or percentages of receipts or sales. Furthermore, to the extent that interest from a loan that is based on the residual cash proceeds from the sale of the property securing the loan constitutes a “shared appreciation provision,” income attributable to such participation feature will be treated as gain from the sale of the secured property.

          While certain of our existing mezzanine loans are not secured by a direct interest in real property, other of our mezzanine loans are, and future mezzanine loans may be. In Revenue Procedure 2003-65, the Internal Revenue Service established a safe harbor under which interest from loans secured by a first priority security interest in ownership interests in a partnership or limited liability company owning real property will be treated as qualifying income for both the 75% and 95% gross income tests, provided several requirements are satisfied. Although we anticipate that most or all of any mezzanine loans that we make or acquire will qualify for the safe harbor requirements in Revenue Procedure 2003-65, it is possible that we may make or acquire some mezzanine loans that do not qualify for the safe harbor. In those cases, the interest income from the loans will be qualifying income for purposes of the 95% gross income test but potentially will not be qualifying income for purposes of the 75% gross income test. We will make or acquire mezzanine loans that do not qualify for the safe harbor in Revenue Procedure 2003-65 only to the extent that the interest from those loans, combined with our other nonqualifying income, will not cause us to fail to satisfy the 75% gross income test.

Prohibited Transactions

          A REIT will incur a 100% tax on the net income derived from any sale or other disposition of property, other than foreclosure property, that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. Whether a REIT holds an asset “primarily for sale to customers in the ordinary course of a trade or business” depends on the facts and circumstances in effect from time to time, including those related to a particular asset. We believe that none of the assets owned by the Partnerships is held for sale to customers and that a sale of any such asset would not be in the ordinary course of the owning entity’s business. We will attempt to comply with the terms of safe-harbor provisions in the federal income tax laws prescribing when an asset sale will not be characterized as a prohibited transaction. We cannot provide assurance, however, that we can comply with such safe-harbor provisions or that the Partnerships will avoid owning property that may be characterized as property held “primarily for sale to customers in the ordinary course of a trade or business.”

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Foreclosure Property

          We will be subject to tax at the maximum corporate rate on any income from foreclosure property, other than income that would be qualifying income for purposes of the 75% gross income test, less expenses directly connected with the production of such income. However, gross income from such foreclosure property will qualify for purposes of the 75% and 95% gross income tests. “Foreclosure property” is any real property, including interests in real property, and any personal property incident to such real property:

• that is acquired by a REIT as the result of such REIT having bid in such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or default was imminent on a lease of such property or on an indebtedness that such property secured; and

• for which such REIT makes a proper election to treat such property as foreclosure property.

          However, a REIT will not be considered to have foreclosed on a property where the REIT takes control of the property as a mortgagee-in-possession and cannot receive any profit or sustain any loss except as a creditor of the mortgagor. Property generally ceases to be foreclosure property with respect to a REIT at the end of the third taxable year following the taxable year in which the REIT acquired such property, or longer if an extension is granted by the Secretary of the Treasury. The foregoing grace period is terminated and foreclosure property ceases to be foreclosure property on the first day:

• on which a lease is entered into with respect to such property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test or any amount is received or accrued, directly or indirectly, pursuant to a lease entered into on or after such day that will give rise to income that does not qualify for purposes of the 75% gross income test;

• on which any construction takes place on such property, other than completion of a building, or any other improvement, where more than 10% of the construction of such building or other improvement was completed before default became imminent; or

• which is more than 90 days after the day on which such property was acquired by the REIT and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income.

          As a result of the rules with respect to foreclosure property, if a lessee defaults on its obligations under a percentage lease, we terminate the lessee’s leasehold interest, and we are unable to find a replacement lessee for the hotel within 90 days of such foreclosure, gross income from hotel operations conducted by us from such hotel would cease to qualify for the 75% and 95% gross income tests unless we are able to hire an independent contractor to manage and operate the hotel. In such event, we might be unable to satisfy the 75% and 95% gross income tests and, thus, might fail to qualify as a REIT.

Hedging Transactions

          From time to time, we may enter into hedging transactions with respect to one or more of our assets or liabilities. Our hedging activities may include entering into interest rate swaps, caps, and floors, options to purchase such items, and futures and forward contracts. For taxable years beginning before January 1, 2005, to the extent that we entered into an interest rate swap or cap contract, option, futures contract, forward rate agreement, or any similar financial instrument to hedge our indebtedness incurred to acquire or carry “real estate assets,” any periodic income or gain from the disposition of such contract should be qualifying income for purposes of the 95% gross income test, but not the 75% gross income test. To the extent that we hedge with other types of financial instruments during such years, or in other situations, it is not entirely clear how the income from those transactions will be treated for purposes of the gross income tests. For taxable years beginning after December 31, 2004, if we enter into a transaction in the normal course of business primarily to manage risk of interest rate or price changes or currency fluctuations with respect to borrowings under or to be made to acquire or carry real estate assets and we properly

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identify the transactions as required by Treasury regulations, the income from the transaction and any gain from the disposition of such transaction are excluded from gross income in applying the 95% gross income test but not the 75% gross income test. We intend to structure any hedging transactions in a manner that does not jeopardize our status as a REIT. The REIT income and asset rules may limit our ability to hedge loans or securities acquired as investments.

Failure to Satisfy Gross Income Tests

          If we fail to satisfy one or both of the gross income tests for any taxable year, we nevertheless may qualify as a REIT for such year if we qualify for relief under certain provisions of the federal income tax laws. Those relief provisions generally will be available if:

• our failure to meet such tests is due to reasonable cause and not due to willful neglect;

• for years ending before January 1, 2005, we attach a schedule of the sources of our income to our tax return; and any incorrect information on the schedule was not due to fraud with intent to evade tax; and

• for years beginning after December 31, 2004, following our identification of the failure to meet one or both gross income tests for a taxable year, a description of each item of our gross income included in the 75% and 95% gross income tests is set forth in a schedule for such taxable year filed as specified by Treasury regulations.

          We cannot predict, however, whether in all circumstances we would qualify for the relief provisions. In addition, as discussed above in “— Taxation of our Company,” even if the relief provisions apply, we would incur a 100% tax on the gross income attributable to the greater of the amounts by which we fail the 75% and 95% gross income tests, multiplied by a fraction intended to reflect our profitability.

Asset Tests

          To maintain our qualification as a REIT, we also must satisfy the following asset tests at the close of each quarter of each taxable year:

• First, at least 75% of the value of our total assets must consist of:

- cash or cash items, including certain receivables;

- government securities;

- interests in real property, including leaseholds and options to acquire real property and leaseholds;

- interests in mortgages on real property;

- stock in other REITs; and

- investments in stock or debt instruments during the one-year period following our receipt of new capital that we raise through equity offerings or offerings of debt with at least a five-year term.

• Second, of our investments not included in the 75% asset class, the value of our interest in any one issuer’s securities may not exceed 5% of the value of our total assets.

• Third, we may not own more than 10% of the voting power or value of any one issuer’s outstanding securities.

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• Fourth, no more than 20% of the value of our total assets may consist of the securities of one or more TRSs.

          For purposes of the second and third asset tests, the term “securities” does not include stock in another REIT, equity or debt securities of a qualified REIT subsidiary or TRS, or equity interests in a partnership. The 10% value test does not take into account “straight debt” issued by an individual, an estate or certain corporations or partnerships.

          We believe that our existing mezzanine loans that are secured only by ownership interests in an entity owning real property qualify for the safe harbor in Revenue Procedure 2003-65, pursuant to which mezzanine loans secured by a first priority security interest in ownership interests in a partnership or limited liability company will be treated as qualifying assets for purposes of the 75% asset test. We may make or acquire some mezzanine loans that are secured only by a first priority security interest in ownership interests in a partnership or limited liability company and that do not qualify for the safe harbor in Revenue Procedure 2003-65 relating to the 75% asset test and that do not qualify as “straight debt” for purposes of the 10% value test. We will make or acquire mezzanine loans that do not qualify for the safe harbor in Revenue Procedure 2003-65 or as “straight debt” securities only to the extent that such loans will not cause us to fail the asset tests described above.

          If we failed to satisfy the asset tests at the end of a calendar quarter prior to January 1, 2005, we would not lose our REIT status if (1) we satisfied the asset tests at the close of the preceding calendar quarter and (2) the discrepancy between the value of our assets and the asset test requirements arose from changes in the market values of our assets and was not wholly or partly caused by the acquisition of one or more non-qualifying assets. If we did not satisfy the condition described in clause (2) of the preceding sentence, we still could avoid disqualification as a REIT by eliminating any discrepancy within 30 days after the close of the calendar quarter in which the discrepancy arose. Beginning in 2005, if we fail to satisfy the 5% or 10% asset tests for a particular quarter and do not correct it within the 30 day period described in the prior sentence, we will not lose our REIT status if the failure is due to the ownership of assets the total value of which does not exceed the lesser of (i) 1% of the total value of our assets at the end of the quarter for which such measurement is done or (ii) $10,000,000; provided in either case that we either dispose of the assets within 6 months after the last day of the quarter in which we identify the failure (or such other time period prescribed by the Treasury), or otherwise meet the requirements of those rules by the end of such time period. In addition, if we fail to meet any asset test for a particular quarter and the failure exceeds the de minimis threshold described above, we still will be deemed to have satisfied the requirements if: (i) following our identification of the failure, we file a schedule with a description of each asset that caused the failure in accordance with regulations prescribed by the Treasury; (ii) the failure was due to reasonable cause and not to willful neglect; (iii) we dispose of the assets within 6 months after the last day of the quarter in which the identification occurred, or such other time period prescribed by the Treasury, or the requirements of the rules are otherwise met within such period; and (iv) we pay a tax on the failure which is the greater of $50,000 or an amount determined by multiplying the highest rate of income tax for corporations, by the net income generated by the assets for the period beginning on the first date of the failure and ending on the date we have disposed of the assets or otherwise satisfy the requirements.

Distribution Requirements

          Each taxable year, we must distribute dividends, other than capital gain dividends and deemed distributions of retained capital gain, to our stockholders in an aggregate amount at least equal to:

• the sum of (1) 90% of our “REIT taxable income,” computed without regard to the dividends paid deduction and our net capital gain or loss, and (2) 90% of our after-tax net income, if any, from foreclosure property; minus

• the sum of certain items of non-cash income.

          We must pay such distributions in the taxable year to which they relate, or in the following taxable year if we declare the distribution before we timely file our federal income tax return for such year and pay the distribution on or before the first regular dividend payment date after such declaration. Any dividends declared in the last three

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months of the taxable year, payable to stockholders of record on a specified date during such period, will be treated as paid on December 31 of such year if such dividends are distributed during January of the following year.

          We will pay federal income tax on taxable income, including net capital gain, that we do not distribute to our stockholders. Furthermore, if we fail to distribute during a calendar year, or by the end of January following such calendar year in the case of distributions with declaration and record dates falling in the last three months of the calendar year, at least the sum of:

• 85% of our REIT ordinary income for such year;

• 95% of our REIT capital gain income for such year; and

• any undistributed taxable income from prior periods,

we will incur a 4% nondeductible excise tax on the excess of such required distribution over the amounts we actually distributed. We may elect to retain and pay income tax on the net long-term capital gain we receive in a taxable year. See “— Taxation of Taxable U.S. Stockholders.” If we so elect, we will be treated as having distributed any such retained amount for purposes of the 4% excise tax described above. We intend to make timely distributions sufficient to satisfy the annual distribution requirements.

          It is possible that, from time to time, we may experience timing differences between (1) the actual receipt of income and actual payment of deductible expenses, and (2) the inclusion of that income and deduction of such expenses in arriving at our REIT taxable income. For example, under some of the percentage leases, the percentage rent is not due until after the end of the calendar quarter. In that case, we still would be required to recognize as income the excess of the percentage rent over the base rent paid by the lessee in the calendar quarter to which such excess relates. In addition, we may not deduct recognized capital losses from our “REIT taxable income.” Any taxes or penalties paid as a result of our failure to satisfy one or more requirements for REIT qualification, other than the 95% and 75% income tests and the asset tests, are deducted from our “REIT taxable income.” Further, it is possible that, from time to time, we may be allocated a share of net capital gain attributable to the sale of depreciated property that exceeds our allocable share of cash attributable to that sale. As a result of the foregoing, we may have less cash than is necessary to distribute all of our taxable income and thereby avoid corporate income tax and the excise tax imposed on certain undistributed income. In such a situation, we may need to borrow funds or issue additional common or preferred stock.

          Under certain circumstances, we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the Internal Revenue Service based upon the amount of any deduction we take for deficiency dividends.

Recordkeeping Requirements

          To avoid a monetary penalty, we must request on an annual basis information from our stockholders designed to disclose the actual ownership of our outstanding shares of common stock. We intend to comply with such requirements.

Failure to Qualify

          If we were to fail to qualify as a REIT in any taxable year, and no relief provision applied, we would be subject to federal income tax on our taxable income at regular corporate rates and any applicable alternative minimum tax. In calculating our taxable income in a year in which we failed to qualify as a REIT, we would not be able to deduct amounts paid out to stockholders. In fact, we would not be required to distribute any amounts to stockholders in such year. In such event, to the extent of our current and accumulated earnings and profits, all distributions to stockholders would be taxable as regular corporate dividends. Subject to certain limitations of the federal income tax laws, corporate stockholders might be eligible for the dividends received deduction. Unless we

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qualified for relief under specific statutory provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year during which we ceased to qualify as a REIT. We cannot predict whether in all circumstances we would qualify for such statutory relief.

Taxation of Taxable U.S. Stockholders

          As used herein, the term “U.S. stockholder” means a holder of our common stock that for U.S. federal income tax purposes is:

• a citizen or resident of the United States;

• a corporation or partnership (including an entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States or of a political subdivision thereof;

• an estate whose income is subject to U.S. federal income taxation regardless of its source; or

• any trust if (1) a U.S. court is able to exercise primary supervision over the administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.

          As long as we qualify as a REIT, (1) a taxable “U.S. stockholder” must take into account distributions that are made out of our current or accumulated earnings and profits and that we do not designate as capital gain dividends or retained long-term capital gain as ordinary income, and (2) a U.S. stockholder will not qualify for the dividends received deduction generally available to corporations. In addition, dividends paid to a U.S. stockholder generally will not qualify for the new 15% tax rate for “qualified dividend income.” The Jobs and Growth Tax Relief Reconciliation Act of 2003 reduced the maximum tax rate for non-corporate taxpayers on qualified dividend income from 38.6% to 15% for tax years 2003 through 2008. Without future congressional action, the maximum tax rate on qualified dividend income will move to 35% in 2009 and 39.6% in 2011. Qualified dividend income generally includes most U.S. noncorporate stockholders but does not generally include REIT dividends. As a result, our ordinary REIT dividends will continue to be taxed at the higher tax rate applicable to ordinary income. Currently, the highest marginal individual income tax rate on ordinary income is 35%. However, the 15% tax rate for qualified dividend income will apply to our ordinary REIT dividends, if any, that are (1) attributable to dividends received by us from non-REIT corporations, such as our TRS, and (2) attributable to income upon which we have paid corporate income tax (e.g., to the extent that we distribute less than 100% of our taxable income). In general, to qualify for the reduced tax rate on qualified dividend income, a stockholder must hold our common stock for more than 60 days during the 121-day period beginning on the date that is 60 days before the date on which our common stock becomes ex-dividend.

          A U.S. stockholder generally will report distributions that we designate as capital gain dividends as long-term capital gain without regard to the period for which the U.S. stockholder has held our common stock. We generally will designate our capital gain dividends as either 15% or 25% rate distributions. A corporate U.S. stockholder, however, may be required to treat up to 20% of certain capital gain dividends as ordinary income.

          We may elect to retain and pay income tax on the net long-term capital gain that we receive in a taxable year. In that case, a U.S. stockholder would be taxed on its proportionate share of our undistributed long-term capital gain, to the extent that we designate such amount in a timely notice to such stockholder. The U.S. stockholder would receive a credit or refund for its proportionate share of the tax we paid. The U.S. stockholder would increase the basis in its common stock by the amount of its proportionate share of our undistributed long-term capital gain, minus its share of the tax we paid.

          To the extent that we make a distribution in excess of our current and accumulated earnings and profits, such distribution will not be taxable to a U.S. stockholder to the extent that it does not exceed the adjusted tax basis of the U.S. stockholder’s common stock. Instead, such distribution will reduce the adjusted tax basis of such common stock. To the extent that we make a distribution in excess of both our current and accumulated earnings

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and profits and the U.S. stockholder’s adjusted tax basis in its common stock, such stockholder will recognize long-term capital gain, or short-term capital gain if the common stock has been held for one year or less, assuming the common stock is a capital asset in the hands of the U.S. stockholder. In addition, if we declare a distribution in October, November, or December of any year that is payable to a U.S. stockholder of record on a specified date in any such month, such distribution shall be treated as both paid by us and received by the U.S. stockholder on December 31 of such year, provided that we actually pay the distribution during January of the following calendar year.

          Stockholders may not include in their individual income tax returns any of our net operating losses or capital losses. Instead, we would carry over such losses for potential offset against our future income generally. Taxable distributions from us and gain from the disposition of our common stock will not be treated as passive activity income, and, therefore, stockholders generally will not be able to apply any “passive activity losses,” such as losses from certain types of limited partnerships in which the stockholder is a limited partner, against such income. In addition, taxable distributions from us and gain from the disposition of the common stock generally will be treated as investment income for purposes of the investment interest limitations.

          We will notify stockholders after the close of our taxable year as to the portions of the distributions attributable to that year that constitute ordinary income, return of capital, and capital gain.

Taxation of U.S. Stockholders on the Disposition of Common Stock

          In general, a U.S. stockholder who is not a dealer in securities must treat any gain or loss realized upon a taxable disposition of our common stock as long-term capital gain or loss if the U.S. stockholder has held the common stock for more than one year and otherwise as short-term capital gain or loss. However, a U.S. stockholder must treat any loss upon a sale or exchange of common stock held by such stockholder for six months or less as a long-term capital loss to the extent of any actual or deemed distributions from us that such U.S. stockholder previously has characterized as long-term capital gain. All or a portion of any loss that a U.S. stockholder realizes upon a taxable disposition of the common stock may be disallowed if the U.S. stockholder purchases other common stock within 30 days before or after the disposition.

Capital Gains and Losses

          A taxpayer generally must hold a capital asset for more than one year for gain or loss derived from its sale or exchange to be treated as long-term capital gain or loss. The highest marginal individual income tax rate is 35%. The maximum tax rate on long-term capital gain applicable to non-corporate taxpayers is 15% for sales and exchanges of assets held for more than one year. The maximum tax rate on long-term capital gain from the sale or exchange of “section 1250 property,” or depreciable real property, is 25% to the extent that such gain would have been treated as ordinary income if the property were “section 1245 property.” With respect to distributions that we designate as capital gain dividends and any retained capital gain that we are deemed to distribute, we generally may designate whether such a distribution is taxable to our non-corporate stockholders at a 15% or 25% rate. Thus, the tax rate differential between capital gain and ordinary income for non-corporate taxpayers may be significant. In addition, the characterization of income as capital gain or ordinary income may affect the deductibility of capital losses. A non-corporate taxpayer may deduct capital losses not offset by capital gains against its ordinary income only up to a maximum annual amount of $3,000. A non-corporate taxpayer may carry forward unused capital losses indefinitely. A corporate taxpayer must pay tax on its net capital gain at ordinary corporate rates. A corporate taxpayer may deduct capital losses only to the extent of capital gains, with unused losses being carried back three years and forward five years.

Information Reporting Requirements and Backup Withholding

          We will report to our stockholders and to the Internal Revenue Service the amount of distributions we pay during each calendar year and the amount of tax we withhold, if any. Under the backup withholding rules, a stockholder may be subject to backup withholding at the rate of 28% with respect to distributions unless such holder:

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• is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact; or

• provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with the applicable requirements of the backup withholding rules.

          A stockholder who does not provide us with its correct taxpayer identification number also may be subject to penalties imposed by the Internal Revenue Service. Any amount paid as backup withholding will be creditable against the stockholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain distributions to any stockholders who fail to certify their non-foreign status to us. See “— Taxation of Non-U.S. Stockholders.”

Taxation of Tax-Exempt Stockholders

          Tax-exempt entities, including qualified employee pension and profit sharing trusts and individual retirement accounts, generally are exempt from federal income taxation. However, they are subject to taxation on their unrelated business taxable income. While many investments in real estate generate unrelated business taxable income, the Internal Revenue Service has issued a published ruling that dividend distributions from a REIT to an exempt employee pension trust do not constitute unrelated business taxable income, provided that the exempt employee pension trust does not otherwise use the shares of the REIT in an unrelated trade or business of the pension trust. Based on that ruling, amounts that we distribute to tax-exempt stockholders generally should not constitute unrelated business taxable income. However, if a tax-exempt stockholder were to finance its acquisition of our common stock with debt, a portion of the income that it receives from us would constitute unrelated business taxable income pursuant to the “debt-financed property” rules. Furthermore, social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans that are exempt from taxation under special provisions of the federal income tax laws are subject to different unrelated business taxable income rules, which generally will require them to characterize distributions that they receive from us as unrelated business taxable income. Finally, if we are a “pension-held REIT,” a qualified employee pension or profit sharing trust that owns more than 10% of our shares of common stock is required to treat a percentage of the dividends that it receives from us as unrelated business taxable income. That percentage is equal to the gross income that we derive from an unrelated trade or business, determined as if we were a pension trust, divided by our total gross income for the year in which we pay the dividends. That rule applies to a pension trust holding more than 10% of our shares of common stock only if:

• the percentage of our dividends that the tax-exempt trust would be required to treat as unrelated business taxable income is at least 5%;

• we qualify as a REIT by reason of the modification of the rule requiring that no more than 50% of our common stock be owned by five or fewer individuals that allows the beneficiaries of the pension trust to be treated as holding our common stock in proportion to their actuarial interests in the pension trust (see “— Requirements for Qualification” above); and

• either (1) one pension trust owns more than 25% of the value of our common stock or (2) a group of pension trusts individually holding more than 10% of the value of our common stock collectively owns more than 50% of the value of our common stock.

          The ownership and transfer restrictions in our charter reduce the risk that we may become a “pension-held REIT.”

Taxation of Non-U.S. Stockholders

          The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships, and other foreign stockholders (collectively, “non-U.S. stockholders”) are complex. This section is only a summary of such rules. We urge non-U.S. stockholders to consult their own tax advisors to

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determine the impact of federal, state, and local income tax laws on ownership of our common stock, including any reporting requirements.

          A non-U.S. stockholder that receives a distribution that is not attributable to gain from our sale or exchange of U.S. real property interests, as defined below, and that we do not designate as a capital gain dividend will recognize ordinary income to the extent that we pay such distribution out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the distribution ordinarily will apply to such distribution unless an applicable tax treaty reduces or eliminates the tax. However, if a distribution is treated as effectively connected with the non-U.S. stockholder’s conduct of a U.S. trade or business, the non-U.S. stockholder generally will be subject to federal income tax on the distribution at graduated rates, in the same manner as U.S. stockholders are taxed with respect to such distributions. A non-U.S. stockholder that is a corporation also may be subject to the 30% branch profits tax with respect to the distribution. We plan to withhold U.S. income tax at the rate of 30% on the gross amount of any such distribution paid to a non-U.S. stockholder unless either:

• a lower treaty rate applies and the non-U.S. stockholder files an IRS Form W-8BEN evidencing eligibility for that reduced rate with us; or

• the non-U.S. stockholder files an IRS Form W-8ECI with us claiming that the distribution is effectively connected income.

          A non-U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the excess portion of such distribution does not exceed the adjusted basis of its common stock. Instead, the excess portion of such distribution will reduce the adjusted basis of such common stock. A non-U.S. stockholder will be subject to tax on a distribution that exceeds both our current and accumulated earnings and profits and the adjusted basis of its common stock, if the non-U.S. stockholder otherwise would be subject to tax on gain from the sale or disposition of its common stock, as described below. Because we generally cannot determine at the time we make a distribution whether or not the distribution will exceed our current and accumulated earnings and profits, we normally will withhold tax on the entire amount of any distribution at the same rate as we would withhold on a dividend. However, a non-U.S. stockholder may obtain a refund of amounts that we withhold if we later determine that a distribution in fact exceeded our current and accumulated earnings and profits.

          We must withhold 10% of any distribution that exceeds our current and accumulated earnings and profits. Consequently, although we intend to withhold at a rate of 30% on the entire amount of any distribution, to the extent that we do not do so, we will withhold at a rate of 10% on any portion of a distribution not subject to withholding at a rate of 30%.

          For taxable years beginning after December 31, 2004, a non-U.S. stockholder will incur tax on any distribution made by us to the extent attributable to gain from sales or exchanges of “U.S. real property interests” under special provisions of the federal income tax laws referred to as “FIRPTA.” The term “U.S. real property interests” includes certain interests in real property and stock in corporations at least 50% of whose assets consists of interests in real property. Under those rules, a non-U.S. stockholder is taxed on distributions attributable to gain from sales of U.S. real property interests as if such gain were effectively connected with a U.S. business of the non-U.S. stockholder. Any class of stock which is regularly traded on an established securities market located in the United States, such as our common stock, shall not be treated as gain recognized from the sale or exchange of a U.S. real property interest if the non-U.S. stockholder did not own more than 5% of such class of stock at any time during the taxable year within which the distribution is received. The distribution will be treated as an ordinary dividend to the non-U.S. stockholder and taxed as an ordinary dividend that is not a capital gain. A non-U.S. stockholder is not required to file a U.S. federal income tax return by reason of receiving such a distribution, and the branch profits tax no longer applies to such a distribution. However, the distribution will be subject to U.S. federal income tax withholding as an ordinary dividend as described above.

          A non-U.S. stockholder generally will not incur tax under FIRPTA with respect to gain realized upon a disposition of our common stock as long as at all times non-U.S. persons hold, directly or indirectly, less than 50% in value of our common stock. We cannot assure you that that test will be met. However, a non-U.S. stockholder that owned, actually or constructively, 5% or less of our common stock at all times during a specified testing period

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will not incur tax under FIRPTA with respect to any such gain if the common stock is “regularly traded” on an established securities market. To the extent that our common stock will be regularly traded on an established securities market, a non-U.S. stockholder will not incur tax under FIRPTA unless it owns more than 5% of our common stock. If the gain on the sale of the common stock were taxed under FIRPTA, a non-U.S. stockholder would be taxed in the same manner as U.S. stockholders with respect to such gain, subject to applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals. Furthermore, a non-U.S. stockholder will incur tax on gain not subject to FIRPTA if (1) the gain is effectively connected with the non-U.S. stockholder’s U.S. trade or business, in which case the non-U.S. stockholder will be subject to the same treatment as U.S. stockholders with respect to such gain, or (2) the non-U.S. stockholder is a nonresident alien individual who was present in the U.S. for 183 days or more during the taxable year and has a “tax home” in the United States, in which case the non-U.S. stockholder will incur a 30% tax on his capital gains.

Other Tax Consequences

Tax Aspects of Our Investments in the Partnerships

          The following discussion summarizes certain federal income tax considerations applicable to our direct or indirect investments in the Partnerships. The discussion does not cover state or local tax laws or any federal tax laws other than income tax laws.

          Classification as Partnerships. We are entitled to include in our income our distributive share of each Partnership’s income and to deduct our distributive share of each Partnership’s losses only if such Partnership is classified for federal income tax purposes as a partnership (or an entity that is disregarded for federal income tax purposes if the entity has only one owner or member), rather than as a corporation or an association taxable as a corporation. An organization with at least two owners or members will be classified as a partnership, rather than as a corporation, for federal income tax purposes if it:

• is treated as a partnership under Treasury regulations, effective January 1, 1997, relating to entity classification (the “check-the-box regulations”); and

• is not a “publicly traded” partnership.

          Under the check-the-box regulations, an unincorporated entity with at least two owners or members may elect to be classified either as an association taxable as a corporation or as a partnership. If such an entity fails to make an election, it generally will be treated as a partnership for federal income tax purposes. Each Partnership intends to be classified as a partnership (or an entity that is disregarded for federal income tax purposes if the entity has only one owner or member) for federal income tax purposes, and no Partnership will elect to be treated as an association taxable as a corporation under the check-the-box regulations.

          A publicly traded partnership is a partnership whose interests are traded on an established securities market or are readily tradable on a secondary market or the substantial equivalent thereof. A publicly traded partnership will not, however, be treated as a corporation for any taxable year if 90% or more of the partnership’s gross income for such year consists of certain passive-type income, including real property rents (which includes rents that would be qualifying income for purposes of the 75% gross income test, with certain modifications that make it easier for the rents to qualify for the 90% passive income exception), gains from the sale or other disposition of real property, interest, and dividends (the “90% passive income exception”).

          Treasury regulations (the “PTP regulations”) provide limited safe harbors from the definition of a publicly traded partnership. Pursuant to one of those safe harbors (the “private placement exclusion”), interests in a partnership will not be treated as readily tradable on a secondary market or the substantial equivalent thereof if (1) all interests in the partnership were issued in a transaction or transactions that were not required to be registered under the Securities Act of 1933, as amended, and (2) the partnership does not have more than 100 partners at any time during the partnership’s taxable year. In determining the number of partners in a partnership, a person owning an interest in a partnership, grantor trust, or S corporation that owns an interest in the partnership is treated as a partner in such partnership only if (1) substantially all of the value of the owner’s interest in the entity is attributable

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to the entity’s direct or indirect interest in the partnership and (2) a principal purpose of the use of the entity is to permit the partnership to satisfy the 100-partner limitation. Each Partnership qualifies for the private placement exclusion.

          We have not requested, and do not intend to request, a ruling from the Internal Revenue Service that the Partnerships will be classified as partnerships (or disregarded entities, if the entity has only one owner or member) for federal income tax purposes. If for any reason a Partnership were taxable as a corporation, rather than as a partnership or a disregarded entity, for federal income tax purposes, we likely would not be able to qualify as a REIT. See “Federal Income Tax Consequences of Our Status as a REIT — Income Tests” and “— Asset Tests.” In addition, any change in a Partnership’s status for tax purposes might be treated as a taxable event, in which case we might incur tax liability without any related cash distribution. See “Federal Income Tax Consequences of Our Status as a REIT — Distribution Requirements.” Further, items of income and deduction of such Partnership would not pass through to its partners, and its partners would be treated as stockholders for tax purposes. Consequently, such Partnership would be required to pay income tax at corporate rates on its net income, and distributions to its partners would constitute dividends that would not be deductible in computing such Partnership’s taxable income.

Income Taxation of the Partnerships and Their Partners

          Partners, Not the Partnerships, Subject to Tax. A partnership is not a taxable entity for federal income tax purposes. Rather, we are required to take into account our allocable share of each Partnership’s income, gains, losses, deductions, and credits for any taxable year of such Partnership ending within or with our taxable year, without regard to whether we have received or will receive any distribution from such Partnership.

          Partnership Allocations. Although a partnership agreement generally will determine the allocation of income and losses among partners, such allocations will be disregarded for tax purposes if they do not comply with the provisions of the federal income tax laws governing partnership allocations. If an allocation is not recognized for federal income tax purposes, the item subject to the allocation will be reallocated in accordance with the partners’ interests in the partnership, which will be determined by taking into account all of the facts and circumstances relating to the economic arrangement of the partners with respect to such item. Each Partnership’s allocations of taxable income, gain, and loss are intended to comply with the requirements of the federal income tax laws governing partnership allocations.

          Tax Allocations With Respect to Contributed Properties. Income, gain, loss, and deduction attributable to appreciated or depreciated property that is contributed to a partnership in exchange for an interest in the partnership must be allocated in a manner such that the contributing partner is charged with, or benefits from, respectively, the unrealized gain or unrealized loss associated with the property at the time of the contribution. The amount of such unrealized gain or unrealized loss (“built-in gain” or “built-in loss”) is generally equal to the difference between the fair market value of the contributed property at the time of contribution and the adjusted tax basis of such property at the time of contribution (a “book-tax difference”). Such allocations are solely for federal income tax purposes and do not affect the book capital accounts or other economic or legal arrangements among the partners. The U.S. Treasury Department has issued regulations requiring partnerships to use a “reasonable method” for allocating items with respect to which there is a book-tax difference and outlining several reasonable allocation methods.

          Under our operating partnership’s partnership agreement, depreciation or amortization deductions of the operating partnership generally will be allocated among the partners in accordance with their respective interests in the operating partnership, except to the extent that the operating partnership is required under the federal income tax laws governing partnership allocations to use a method for allocating tax depreciation deductions attributable to contributed properties that results in our receiving a disproportionate share of such deductions. In addition, gain or loss on the sale of a property that has been contributed, in whole or in part, to the operating partnership will be specially allocated to the contributing partners to the extent of any built-in gain or loss with respect to such property for federal income tax purposes.

          Basis in Partnership Interest. Our adjusted tax basis in our partnership interest in the operating partnership generally is equal to:

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• the amount of cash and the basis of any other property contributed by us to the operating partnership;

• increased by our allocable share of the operating partnership’s income and our allocable share of indebtedness of the operating partnership; and

• reduced, but not below zero, by our allocable share of the operating partnership’s loss and the amount of cash distributed to us, and by constructive distributions resulting from a reduction in our share of indebtedness of the operating partnership.

          If the allocation of our distributive share of the operating partnership’s loss would reduce the adjusted tax basis of our partnership interest in the operating partnership below zero, the recognition of such loss will be deferred until such time as the recognition of such loss would not reduce our adjusted tax basis below zero. To the extent that the operating partnership’s distributions, or any decrease in our share of the indebtedness of the operating partnership, which is considered a constructive cash distribution to the partners, reduce our adjusted tax basis below zero, such distributions will constitute taxable income to us. Such distributions and constructive distributions normally will be characterized as long-term capital gain.

          Depreciation Deductions Available to the Operating Partnership. To the extent that the operating partnership acquires its hotels in exchange for cash, its initial basis in such hotels for federal income tax purposes generally was or will be equal to the purchase price paid by the operating partnership. The operating partnership depreciates such depreciable hotel property under either the modified accelerated cost recovery system of depreciation (“MACRS”) or the alternative depreciation system of depreciation (“ADS”). The operating partnership uses MACRS for furnishings and equipment. Under MACRS, the operating partnership generally depreciates such furnishings and equipment over a seven-year recovery period using a 200% declining balance method and a half-year convention. If, however, the operating partnership places more than 40% of its furnishings and equipment in service during the last three months of a taxable year, a mid-quarter depreciation convention must be used for the furnishings and equipment placed in service during that year. The operating partnership uses ADS for buildings and improvements. Under ADS, the operating partnership generally depreciates such buildings and improvements over a 40-year recovery period using a straight-line method and a mid-month convention.

          To the extent that the operating partnership acquires hotels in exchange for its units of limited partnership interest, its initial basis in each hotel for federal income tax purposes should be the same as the transferor’s basis in that hotel on the date of acquisition. Although the law is not entirely clear, the operating partnership generally depreciates such depreciable property for federal income tax purposes over the same remaining useful lives and under the same methods used by the transferors. The operating partnership’s tax depreciation deductions are allocated among the partners in accordance with their respective interests in the operating partnership, except to the extent that the operating partnership is required under the federal income tax laws to use a method for allocating depreciation deductions attributable to the hotels or other contributed properties that results in our receiving a disproportionately large share of such deductions.

Sale of a Partnership’s Property

          Generally, any gain realized by us or a Partnership on the sale of property held for more than one year will be long-term capital gain, except for any portion of such gain that is treated as depreciation or cost recovery recapture. Any gain or loss recognized by a Partnership on the disposition of contributed properties will be allocated first to the partners who contributed such properties to the extent of their built-in gain or loss on those properties for federal income tax purposes. The partners’ built-in gain or loss on such contributed properties will equal the difference between the partners’ proportionate share of the book value of those properties and the partners’ tax basis allocable to those properties at the time of the contribution. Any remaining gain or loss recognized by the Partnership on the disposition of the contributed properties, and any gain or loss recognized by the Partnership on the disposition of the other properties, will be allocated among the partners in accordance with their respective percentage interests in the Partnership.

          Our share of any gain realized by a Partnership on the sale of any property held by the Partnership as inventory or other property held primarily for sale to customers in the ordinary course of the Partnership’s trade or

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business will be treated as income from a prohibited transaction that is subject to a 100% penalty tax. Such prohibited transaction income also may have an adverse effect upon our ability to satisfy the income tests for REIT status. See “Federal Income Tax Consequences of Our Status as a REIT — Income Tests.” We, however, do not presently intend to acquire or hold or to allow any Partnership to acquire or hold any property that represents inventory or other property held primarily for sale to customers in the ordinary course of our or such Partnership’s trade or business.

Taxable REIT Subsidiaries

          As described above, we own 100% of the stock of two TRSs, Ashford TRS Corporation and Ashford TRS VI Corporation. A TRS is a fully taxable corporation for which a TRS election is properly made. A TRS may lease hotels from us under certain circumstances, provide services to our tenants, and perform activities unrelated to our tenants, such as third-party management, development, and other independent business activities. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% of the value of our assets may consist of securities of one or more TRSs, and no more than 25% of the value of our assets may consist of the securities of TRSs and other assets that are not qualifying assets for purposes of the 75% asset test.

          A TRS may not directly or indirectly operate or manage any hotels or health care facilities or provide rights to any brand name under which any hotel or health care facility is operated. However, rents received by us from a TRS pursuant to a hotel lease will qualify as “rents from real property” as long as the hotel is operated on behalf of the TRS by a person who satisfies the following requirements:

• such person is, or is related to a person who is, actively engaged in the trade or business of operating “qualified lodging facilities” for any person unrelated to us and the TRS;

• such person does not own, directly or indirectly, more than 35% of our common stock;

• no more than 35% of such person is owned, directly or indirectly, by one or more persons owning 35% or more of our common stock; and

• we do not directly or indirectly derive any income from such person.

          A “qualified lodging facility” is a hotel, motel, or other establishment more than one-half of the dwelling units in which are used on a transient basis, unless wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility. A “qualified lodging facility” includes customary amenities and facilities operated as part of, or associated with, the lodging facility as long as such amenities and facilities are customary for other properties of a comparable size and class owned by other unrelated owners.

          The TRS rules limit the deductibility of interest paid or accrued by a TRS to us to assure that the TRS is subject to an appropriate level of corporate taxation. Further, the rules impose a 100% excise tax on transactions between a TRS and us or our tenants that are not conducted on an arm’s-length basis.

          We have formed and made a timely election with respect to Ashford TRS Corporation (and each of its corporate subsidiaries) and Ashford TRS VI Corporation, which lease or own each of our properties. Additionally, we may form or acquire additional TRSs in the future.

State and Local Taxes

          We and/or you may be subject to state and local tax in various states and localities, including those states and localities in which we or you transact business, own property, or reside. The state and local tax treatment in such jurisdictions may differ from the federal income tax treatment described above. Consequently, you should consult your own tax advisor regarding the effect of state and local tax laws upon an investment in our common stock.

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PLAN OF DISTRIBUTION

          This prospectus relates to the possible issuance or sale of up to 333,333 shares of our common stock if, and to the extent that, the holders of an equal number of units in our operating partnership submit such units for redemption and we issue shares of common stock in exchange for such redeemed units. We will not receive any proceeds from any issuance of common stock in exchange for the units or from the sale of the common stock by the selling stockholder.

          We are registering the shares of common stock covered by this prospectus to permit the selling stockholders, or their pledgees, donees, transferees or other successors in interest, to sell such shares without restriction, in the open market or otherwise. Registration does not, however, necessarily mean that any of the units will be submitted for redemption or that any of the shares of common stock to be issued upon such redemption will be offered or sold by the selling stockholders.

          The selling stockholders, or their pledgees, donees, transferees or other successors in interest, may offer and sell the common stock covered by this prospectus in the following manner:

• on the New York Stock Exchange or other national exchange or quotation system on which our shares of common stock are listed or traded at the time of sale;

• in the over-the-counter market;

• in privately negotiated transactions;

• in underwritten transactions; or

• otherwise, at prices then prevailing or related to the then current market price or at negotiated prices.

The offering price of the shares of common stock covered by this prospectus and offered from time to time will be determined by the selling stockholders and, at the time of determination, may be higher or lower than the market price of the common stock on the New York Stock Exchange.

          The selling stockholders also may resell all or a portion of the common stock covered by this prospectus in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided they meet the criteria and conform to the requirements of such rule.

          In connection with an underwritten offering, underwriters or agents may receive compensation in the form of discounts, concessions or commissions from a selling stockholder or from purchasers of offered shares of common stock for whom they may act as agents, and underwriters may sell offered shares of common stock to or through dealers, and such dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers from whom they may act as agents.

          Offered shares of common stock may be sold directly or through broker-dealers acting as principal or agent, or pursuant to a distribution by one or more underwriters on a firm commitment or best-efforts basis. The methods by which common stock may be sold include:

• a block trade in which the broker-dealer so engaged will attempt to sell common stock as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker-dealer as principal and resale by such broker-dealer for its own account pursuant to this prospectus;

• ordinary brokerage transactions and transactions in which the broker solicits purchases;

• an exchange distribution in accordance with the rules of the exchange or quotation system;

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• privately negotiated transactions; and

• underwritten transactions.

          The selling stockholders and any underwriters, dealer or agents participating in the distribution of offered common stock may be deemed to be “underwriters” within the meaning of the Securities Act of 1933. Any profit on the sale of offered shares of common stock by the selling stockholders and any commissions received by any such broker-dealers may be deemed to be underwriting commissions under the Securities Act of 1933.

          When a selling shareholder elects to make a particular offer of shares of common stock, a prospectus supplement, if required, will be distributed that identifies any underwriters, dealers or agents and any discounts, commissions and other terms constituting compensation from such selling stockholder and any other required information.

          In order to comply with state securities laws, if applicable, offered shares of common stock may be sold only through registered or licensed brokers or dealers. In addition, in certain states, offered shares of common stock may not be sold unless they have been registered or qualified for sale in such state or an exemption from such registration or qualification requirement is available and complied with.

          We have agreed to pay all costs and expenses incurred in connection with the registration under the Securities Act of 1933 of the shares of common stock covered by this prospectus, including, but not limited to, all registration and filing fees, printing expenses and fees and disbursements of our legal counsel and accountants. The selling stockholders will pay any brokerage fees and commissions, fees and disbursements of legal counsel for the selling stockholders and stock transfer and other taxes attributable to the sale of shares of common stock covered by this prospectus.

EXPERTS

          The consolidated and combined financial statements of Ashford Hospitality Trust, Inc. and the predecessor appearing in Ashford Hospitality Trust, Inc.’s Annual Report (Form 10-K) for the year ended December 31, 2004 (including the schedule appearing therein), and Ashford Hospitality Trust, Inc. management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2004 included therein, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their reports thereon, included therein, and incorporated herein by reference. Such consolidated financial statements and management’s assessment are incorporated herein by reference in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

          The historical summaries of revenue and direct operating expenses for the year ended December 31, 2003 of Marriott Residence Inn in Lake Buena Vista, Florida, Sea Turtle Inn in Atlantic Beach, Florida, Sheraton Bucks County Hotel and adjacent office complex in Philadelphia, Pennsylvania and SpringHill Suites by Marriott in Baltimore, Maryland, incorporated by reference into this prospectus, have been audited by Ernst & Young LLP, independent auditors, as set forth in their reports, which are also incorporated by reference into this prospectus, and are included in reliance upon such reports given on the authority of such firm as experts in accounting and auditing.

          The combined historical summary of revenue and direct operating expenses of Hampton Inn in Buford, Georgia, SpringHill Suites by Marriott in Buford, Georgia, Fairfield Inn & Suites in Kennesaw, Georgia and SpringHill Suites by Marriott in Kennesaw, Georgia, incorporated by reference into this prospectus, have been audited by Holland Shipes Vann, P.C., independent auditors, as set forth in their report, which is also incorporated by reference into this prospectus, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

          The combined historical summary of revenue and direct operating expenses of Hampton Inn in Evansville, Indiana, Hampton Inn in Terre Haute, Indiana, Hampton Inn in Horse Cave, Kentucky, Fairfield Inn in Evansville, Indiana, Fairfield Inn in Princeton, Indiana, Courtyard by Marriott in Bloomington, Indiana, Courtyard by Marriott in Columbus, Indiana, Courtyard by Marriott in Louisville, Kentucky, and Residence Inn in Evansville, Indiana,

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incorporated by reference into this prospectus, have been audited by Holland Shipes Vann, P.C., independent auditors, as set forth in their report, which is also incorporated by reference into this prospectus, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

          The historical summary of revenue and direct operating expenses of Hyatt Regency Orange County, in Anaheim, California, incorporated by reference into this prospectus, has been audited by Holland Shipes Vann, P.C., independent auditors, as set forth in their report, which is also incorporated by reference into this prospectus, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

          The combined historical summaries of revenue and direct operating expenses of Historic Inns in Annapolis, Maryland, Holiday Inn in Coral Gables, Florida, Inn on the Square in Falmouth, Massachusetts, Crowne Plaza in Key West, Florida, Sheraton in Minnetonka, Minnesota, Radisson in Rockland, Massachusetts, Gull Wing Suites in South Yarmouth, Massachusetts, Best Western in Dallas, Texas, Radisson in Ft. Worth, Texas, Crowne Plaza in Los Angeles, California, Radisson Airport in Indianapolis, Indiana, Radisson City Center in Indianapolis, Indiana, Radisson in Milford, Massachusetts, Embassy Suites in Houston, Texas, Nassau Bay Hilton in Nassau Bay, Texas, Hilton in St. Petersburg, Florida, Embassy Suites and Admiralty Office Building in Palm Beach, Florida, Howard Johnson in Commack, New York and Howard Johnson in Westbury, New York, incorporated by reference into this prospectus, have been audited by Berdon LLP, independent auditors, as set forth in their report, which is also incorporated by reference into this prospectus, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

          The balance sheets of RST4 Tenant, LLC as of August 6, 2004, January 2, 2004 and January 3, 2003, and the related statements of operations, cash flows and members’ capital for the period January 3, 2004 through August 6, 2004 and the fiscal years ended January 2, 2004 and January 3, 2003, incorporated by reference into this prospectus, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report, which is also incorporated by reference into this prospectus, and is included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

          The audited historical financial statements of Crystal City Courtyard by Marriott, the CNL Hotels and the RFS Hotels included in our Current Report on Form 8-K/A, filed on August 30, 2005, have been incorporated by reference into this prospectus in reliance on the reports of PricewaterhouseCoopers LLP, independent certified public accountants, given on the authority of said firm as experts in auditing and accounting.

LEGAL MATTERS

          Certain legal matters in connection with this offering will be passed upon for us by Andrews Kurth LLP, Dallas, Texas. In addition, the description of federal income tax consequences contained in the section of the prospectus entitled “Federal Income Tax Consequences of Our Status as a REIT” is based on the opinion of Andrews Kurth LLP. Certain Maryland law matters in connection with this offering will be passed upon for us by Hogan & Hartson L.L.P., Baltimore, Maryland. Andrews Kurth LLP will rely on the opinion of Hogan & Hartson L.L.P., Baltimore, Maryland as to all matters of Maryland law.

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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

          The following table itemizes the expenses incurred by us in connection with the issuance and registration of the securities being registered hereunder. All amounts shown are estimates except the Securities and Exchange Commission registration fee.

SEC Registration Fee	$	448
Legal Fees and Expenses (other than Blue Sky)		25,000	*
Accounting and Fees and Expenses		10,000	*
Miscellaneous		1,552	*
Total	$	37,000

* Fees are estimates only.

Item 15. Indemnification of Directors and Officers.

          Our charter and the partnership agreement provide for indemnification of our officers and directors against liabilities to the fullest extent permitted by the MGCL, as amended from time to time.

          The MGCL requires a corporation (unless its charter provides otherwise, which our company’s charter does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the defense of any proceeding to which he or she is made a party by reason of his or her service in that capacity. The MGCL permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that:

• an act or omission of the director or officer was material to the matter giving rise to the proceeding and:

- was committed in bad faith; or

- was the result of active and deliberate dishonesty;

• the director or officer actually received an improper personal benefit in money, property or services; or

• in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful.

          However, under the MGCL, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition, the MGCL permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of:

• a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation; and

• a written undertaking by the director or on the director’s behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the director did not meet the standard of conduct.

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          The MGCL permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from actual receipt of an improper benefit or profit in money, property or services or active and deliberate dishonesty established by a final judgment as being material to the cause of action. Our charter contains such a provision which eliminates such liability to the maximum extent permitted by Maryland law.

          Our bylaws obligate us, to the fullest extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to:

• any present or former director or officer who is made a party to the proceeding by reason of his or her service in that capacity; or

• any individual who, while a director or officer of our company and at our request, serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership,

          Our charter and bylaws also permit us to indemnify and advance expenses to any person who served a predecessor of ours in any of the capacities described above and to any employee or agent of our company or a predecessor of our company.

          The partnership agreement of our operating partnership provides that we, as general partner, and our officers and directors are indemnified to the fullest extent permitted by law.

          Insofar as the foregoing provisions permit indemnification of directors, officers or persons controlling us for liability arising under the Securities Act, we have been informed that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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Item 16. Exhibits.

          The following exhibits are filed as part of, or incorporated by reference into, this registration statement on Form S-3:

Exhibit
Number	Description of Exhibit
4.1	Articles of Amendment and Restatement of the Charter of the Company (incorporated by reference to Exhibit 3.1 of Form S-11 /A, filed on July 31, 2003)
4.2	Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 of Form S-11/A, filed on July 31, 2003)
4.3	Amendment No. 1 to Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2.2 to the Registrant’s Form 10-K for the year ended December 31, 2003)
4.4	Articles Supplementary classifying 3,000,000 shares of preferred stock as 8.55% Series A Cumulative Preferred Stock (incorporated by reference to Exhibit 4.4 to the Registrant’s Form 8-K, dated September 15, 2004, for the event dated September 21, 2004)
4.5	Articles Supplementary classifying 7,447,865 shares of preferred stock as Series B-1 Cumulative Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K, dated January 4, 2005, for the event dated December 28, 2004)
4.6	Articles Supplementary classifying 2,285,865 shares of preferred stock as Series B-2 Cumulative Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-K, dated January 4, 2005, for the event dated December 28, 2004)
*4.7	Registration Rights Agreement, dated as of September 2, 2004, by and between Ashford Hospitality Trust, Inc. and the Unitholders (as defined therein).
**5.1	Opinion of Hogan & Hartson with respect to the legality of the shares being registered
*8.1	Opinion of Andrews Kurth LLP with respect to tax matters
**23.1	Consent of Hogan & Hartson (included in Exhibit 5.1)
*23.2	Consent of Andrews Kurth (included in Exhibit 8.1)
*23.3	Consent of Ernst & Young LLP
*23.4	Consent of Holland Shipes Vann, P.C.
*23.5	Consent of Berdon LLP
*23.6	Consent of PricewaterhouseCoopers LLP
*24.1	Power of Attorney (included on signature page)

*	Filed herewith.
**	To be filed by amendment.

Item 17. Undertakings.

          (a) The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii)	To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in

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volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in this registration statement;

provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act that are incorporated by reference in the registration statement.

          (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (b) The undersigned registrant hereby further undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 15 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

          (d) The undersigned registrant hereby further undertakes that:

     (1) For purposes of determining any liability under the Securities Act of 1933 the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) under the Securities Act of 1933 shall be deemed to be part of this registration statement as of the time it was declared effective.

     (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that the registrant meets all of the requirements for filing on Form S-3 and has duly caused this Form S-3 Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on this 1^st day of September, 2005.

ASHFORD HOSPITALITY TRUST, INC.
By:	/s/ David Kimichik
	David Kimichik
	Chief Financial Officer

POWER OF ATTORNEY

          KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Montgomery J. Bennett, David A. Brooks and David Kimichik, and each of them, with full power to act without the other, such person’s true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this Registration Statement, and any and all pre-effective and post-effective amendments thereto as well as any related registration statements (or amendment thereto) filed pursuant to Rule 462(b) promulgated under the Securities Act of 1933, as amended, and to file the same, with exhibits and schedules thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Archie Bennett, Jr.	Chairman of the Board of	August 31, 2005
Archie Bennett, Jr.	Directors
/s/ Montgomery J. Bennett	Chief Executive Officer, President and Director	August 31, 2005
Montgomery J. Bennett	(Principal Executive Officer)
/s/ David Kimichik David Kimichik	Chief Financial Officer (Principal Financial Officer)	August 31, 2005
/s/ Mark Nunneley Mark Nunneley	Chief Accounting Officer (Principal Accounting Officer)	August 31, 2005
/s/ Martin L. Edelman		August 31, 2005
Martin L. Edelman	Director
/s/ W.D. Minami		August 31, 2005
W.D. Minami	Director
/s/ W. Michael Murphy		August 31, 2005
W. Michael Murphy	Director
/s/ Philip S. Payne		August 31, 2005
Philip S. Payne	Director
/s/ Charles P. Toppino		August 31, 2005
Charles P. Toppino	Director

EX-4.7

Exhibit 4.7

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT, dated as of September 2, 2004, is entered into by and between Ashford Hospitality Trust, Inc., a Maryland corporation (the “Company”) and the holders of common partnership units in Ashford Hospitality Limited Partnership, a Delaware limited partnership (the “Operating Partnership”) whose names are set forth on the signature page hereto (the “Unit Holders”).

RECITALS

     WHEREAS, pursuant to that certain Agreement of Purchase and Sale dated as of May 19, 2004, as amended by that certain (i) First Amendment to Agreement of Purchase and Sale dated July 1, 2004, (ii) Second Amendment to Agreement of Purchase and Sale dated July 23, 2004, (iii) Third Amendment to Agreement of Purchase and Sale dated August 4, 2004, and (iv) Fourth Amendment to Agreement of Purchase and Sale dated September 2, 2004, closed on September 2, 2004 (the “Closing Date”), between the Operating Partnership and the Unit Holder, the Operating Partnership and the Unit Holders will engage in a transaction (the “Transaction”) whereby the Unit Holders will convey to the Operating Partnership their respective interests in certain properties in exchange for common partnership units (“OP Units”) in the Operating Partnership;

     WHEREAS, pursuant to the Partnership Agreement (as defined below), OP Units owned by the Unit Holder will be redeemable for cash or exchangeable for shares of Common Stock of the Company upon the terms and subject to the conditions contained in the Partnership Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

     Section 1.1 Definitions. In addition to the definitions set forth above, the following terms, as used herein, have the following meanings:

     “Affiliate” of any Person means any other Person directly or indirectly controlling or controlled by or under common control with such Person. For the purposes of this definition, “control” when used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

     “Agreement” means this Registration Rights Agreement, as it may be amended, supplemented or restated from time to time.

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     “Articles of Incorporation” means the Articles of Amendment and Restatement of the Company as filed with the Secretary of State of the State of Maryland on July 28, 2003, as the same may be amended, modified or restated from time to time.

     “Business Day” means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which banking institutions in Dallas, Texas are authorized or required by law, regulation or executive order to close.

     “Commission” means the Securities and Exchange Commission.

     “Common Stock” means the Company’s common stock, $0.01 par value.

     “Demand Registration” means a Demand Registration as defined in Section 2.2.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

     “Exchangeable OP Units” means OP Units which may be redeemable for cash or, at the sole and absolute discretion of the Company, exchangeable for Common Stock pursuant to Section 7.4 of the Partnership Agreement (without regard to any limitations on the exercise of such exchange right as a result of the Ownership Limit Provisions).

     “Holder” means any Initial Holder who is the record or beneficial owner of any Registrable Security or any assignee or transferee of such Registrable Security (including assignments or transfers of Registrable Securities to such assignees or transferees as a result of the foreclosure on any loans secured by such Registrable Securities) to the extent (x) permitted under the Partnership Agreement and (y) such assignee or transferee agrees in writing to be bound by all the provisions hereof, unless such Registrable Security is acquired in a public distribution pursuant to a registration statement under the Securities Act or pursuant to transactions exempt from registration under the Securities Act where securities sold in such transaction may be resold without subsequent registration under the Securities Act.

     “Immediate Family” of any individual means such individual’s estate and heirs or current spouse, or former spouse, parents, parents-in-law, children (whether natural or adoptive or by marriage), siblings and grandchildren and any trust or estate, all of the beneficiaries of which consist of such individual or any of the foregoing.

     “Initial Holder” means (i) the Unit Holders, (ii) any partner, member or stockholder of a Unit Holder, (iii) any Affiliate of any such partner, member or stockholder, and (iv) the Immediate Family of any of the foregoing.

     “Ownership Limit Provisions” mean the various provisions of the Company’s Charter set forth in ARTICLE VI thereof restricting the ownership of Common Stock by Persons to specified percentages of the outstanding Common Stock.

     “Partnership Agreement” means the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership dated as of April 6, 2004, as the same may be amended, modified or restated from time to time.

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     “Person” means an individual or a corporation, partnership, limited liability company, association, trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

     “Piggy-Back Registration” means a Piggy-Back Registration as defined in Section 2.3.

     “Registrable Securities” means shares of Common Stock of the Company at any time owned, either of record or beneficially, by any Holder which are issuable or issued upon exchange of Exchangeable OP Units issued pursuant to the Transaction and any additional Common Stock issued as a dividend, distribution or exchange for, or in respect of such shares until

     (i) a registration statement covering such shares has been declared effective by the Commission and such shares have been disposed of pursuant to such effective registration statement;

     (ii) such shares are sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or under which such shares may be sold pursuant to Rule 144(k);

     (iii) such shares held by such Person may be sold pursuant to Rule 144 under the Securities Act and could be sold in one transaction in accordance with the volume limitations contained in Rule 144(e)(1)(i) under the Securities Act; or

     (iv) such shares have been otherwise transferred in a transaction that would constitute a sale thereof under the Securities Act, the Company has delivered a new certificate or other evidence of ownership for such shares not bearing the Securities Act restricted stock legend and such shares may be resold without restriction under the Securities Act;

provided, however, that “Registrable Securities” for purposes of the indemnification obligations contained in Sections 2.7 and 2.8 shall mean all shares that are registered on the applicable Shelf Registration, Demand Registration or Piggy-Back Registration, notwithstanding that such shares may not otherwise be “Registrable Securities” by operation of clause (iii) above.

     “Securities Act” means the Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.

     “Selling Holder” means a Holder who is selling Registrable Securities pursuant to a registration statement under the Securities Act.

     “Shelf Registration Statement” means a shelf registration statement as defined in Section 2.1.

     “Underwriter” means a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer’s market-making activities.

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ARTICLE II
REGISTRATION RIGHTS

     Section 2.1 Shelf Registration. Commencing on or after the date which is fifty weeks after the Closing Date, the Company shall prepare and file a “shelf” registration statement with respect to the issuance and the resale of the shares of Common Stock issuable upon the exchange of Exchangeable OP Units issued to the Unit Holders in the Transaction and the resale of any other Registrable Securities on an appropriate form for an offering to be made on a continuous basis pursuant to Rule 415 under the Securities Act (the “Shelf Registration Statement”) and shall use its best efforts to cause the Shelf Registration Statement to be declared effective on or as soon as practicable thereafter, and to keep such Shelf Registration Statement continuously effective for a period ending when all shares of Common Stock covered by the Shelf Registration Statement are no longer Registrable Securities. In the event that the Company fails to file, or if filed fails to maintain the effectiveness of, a Shelf Registration Statement, the Holders of Registrable Securities may make a written request for a Demand Registration (as defined below) pursuant to Section 2.2 herein or participate in a Piggy Back Registration (as defined below) pursuant to Section 2.3 herein; provided, further, that if and so long as a Shelf Registration Statement is on file and effective, then the Company shall have no obligation to effect a Demand Registration or allow participation in a Piggy Back Registration.

     Section 2.2 Demand Registration.

     (a) Request for Registration. Subject to Section 2.1 hereof, commencing on or after the date which is one year after the Closing Date, Holders of Registrable Securities may make a written request for registration under the Securities Act of all or part of its or their Registrable Securities (a “Demand Registration”); provided, that the Company shall not be obligated to effect more than one Demand Registration in any twelve month period and not more than two such Demand Registrations in total; and provided, further, that the Holders making such written request number shall propose the sale of at least 100,000 shares of Registrable Securities (such number to be adjusted successively in the event the Company effects any stock split, stock consideration or recapitalization after the date hereof) or such lesser number of Shares if such lesser number is all of the Registrable Shares owned by the Holders. Any such request will specify the number of shares of Registrable Securities proposed to be sold and will also specify the intended method of disposition thereof. Within ten (10) days after receipt of such request, the Company will give written notice of such registration request to all other Holders of the Registrable Securities and include in such registration all such Registrable Securities with respect to which the Company has received written requests for inclusion therein within twenty (20) Business Days after the receipt by the applicable Holder of the Company’s notice. Each such request will also specify the number of shares of Registrable Securities to be registered and the intended method of disposition thereof.

     (b) Effective Registration. A registration will not count as a Demand Registration until it has become effective and has remained effective and available for at least 180 days.

     (c) Selling Holders Become Party to Agreement. Each Holder acknowledges that by asserting or participating in its registration rights pursuant to this Article II, he or she may

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become a Selling Holder and thereby will be deemed a party to this Agreement and will be bound by each of its terms.

(d) Priority on Demand Registrations. If the Holders of a majority of shares of the Registrable Securities to be registered in a Demand Registration so elect by written notice to the Company, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. The Company shall select the book-running managing Underwriter in connection with any such Demand Registration; provided that such managing Underwriter must be reasonably satisfactory to the Holders of a majority of the shares of the Registrable Securities. The Company may select any additional investment banks and managers to be used in connection with the offering; provided that such additional investment bankers and managers must be reasonably satisfactory to a majority of the Holders making such Demand Registration. To the extent 10% or more of the Registrable Securities so requested to be registered are excluded from the offering in accordance with Section 2.4, the Holders of such Registrable Securities shall have the right to one additional Demand Registration under this Section in such twelve-month period with respect to such Registrable Securities.

     Section 2.3 Piggy-Back Registration. Subject to Section 2.1 hereof, if the Company proposes to file a registration statement under the Securities Act with respect to an underwritten equity offering by the Company for its own account or for the account of any of its respective securityholders of any class of security other than (i) any registration statement filed by the Company under the Securities Act relating to an offering of Common Stock for its own account as a result of the exercise of the exchange rights set forth in Section 7.4 of the Partnership Agreement, (ii) any registration statement filed in connection with a demand registration other than a Demand Registration under this Agreement or (iii) a registration statement on Form S-4 or S-8 (or any substitute form that may be adopted by the Commission) filed in connection with an exchange offer or offering of securities solely to the Company’s existing securityholders, then the Company shall give written notice of such proposed filing to the Holders of Registrable Securities as soon as practicable (but in no event less than ten (10) days before the anticipated filing date), and such notice shall offer such Holders the opportunity to register such number of shares of Registrable Securities as each such Holder may request (a “Piggy-Back Registration”). The Company shall use commercially reasonable efforts to cause the managing Underwriter or Underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration to be included on the same terms and conditions as any similar securities of the Company included therein.

     Section 2.4 Reduction of Offering. Notwithstanding anything contained herein, if the managing Underwriter or Underwriters of an offering described in Section 2.2 or 2.3 deliver a written opinion to the Company and the Holders of the Registrable Securities included in such offering that (i) the size of the offering that the Holders, the Company and such other persons intend to make or (ii) the kind of securities that the Holders, the Company and/or any other Persons intend to include in such offering are such that the success of the offering would be materially and adversely affected by inclusion of the Registrable Securities requested to be included, then

     (A) if the size of the offering is the basis of such Underwriter’s opinion, the amount of securities to be offered for the accounts of Holders shall be

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reduced pro rata (according to the number of Registrable Securities proposed for registration) to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing Underwriter or Underwriters; provided that, in the case of a Piggy-Back Registration, if securities are being offered for the account of other Persons as well as the Company, then with respect to the Registrable Securities intended to be offered by Holders, the proportion by which the amount of such class of securities intended to be offered by Holders is reduced shall not exceed the proportion by which the amount of such class of securities intended to be offered by such other Persons is reduced; and

     (B) if the combination of securities to be offered is the basis of such Underwriter’s opinion, (x) the Registrable Securities to be included in such offering shall be reduced as described in clause (A) above (subject to the proviso in clause (A)) or (y) if the actions described in clause (x) would, in the judgment of the managing Underwriter, be insufficient to substantially eliminate the adverse effect that inclusion of the Registrable Securities requested to be included would have on such offering, such Registrable Securities will be excluded from such offering.

     Section 2.5 Registration Procedures; Filings; Information. In connection with any Shelf Registration Statement under Section 2.1 or whenever Holders request that any Registrable Securities be registered pursuant to Section 2.2 hereof, the Company will use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and in connection with any such request:

     (a) The Company will as expeditiously as possible prepare and file with the Commission a registration statement on Form S-3 if registered pursuant to Section 2.1 and if registered pursuant to any other section of this Agreement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its best efforts to cause such filed registration statement to become and remain effective for a period of not less than 270 days; provided that if the Company shall furnish to the Holders making a request pursuant to Section 2.2 a certificate signed by either its Chairman, Chief Executive Officer or President stating that in his or her good faith judgment it would be significantly disadvantageous to the Company or its shareholders for such a registration statement to be filed as expeditiously as possible, the Company shall have a period of not more than 180 days within which to file such registration statement measured from the date of receipt of the request in accordance with Section 2.2.

     (b) The Company will, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to each Selling Holder and each Underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter furnish to such Selling Holder and Underwriter, if any, such number of conformed copies

Page 6

of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such Selling Holder or Underwriter may reasonably request to facilitate the disposition of the Registrable Securities owned by such Selling Holder.

     (c) After the filing of the registration statement, the Company will promptly notify each Selling Holder of Registrable Securities covered by such registration statement of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered.

     (d) The Company will use its best efforts to (i) register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States (where an exemption does not apply) as any Selling Holder or managing Underwriter or Underwriters, if any, reasonably (in light of such Selling Holder’s intended plan of distribution) requests and (ii) cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be reasonably necessary or advisable to enable such Selling Holder to consummate the disposition of the Registrable Securities owned by such Selling Holder; provided that the Company will not be required to (A) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction.

     (e) The Company will immediately notify each Selling Holder of such Registrable Securities, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and promptly make available to each Selling Holder any such supplement or amendment.

     (f) The Company will enter into customary agreements (including an underwriting agreement, if any, in customary form) and take such other actions as are reasonably required to expedite or facilitate the disposition of such Registrable Securities.

     (g) The Company will make available for inspection by any Selling Holder of such Registrable Securities, any Underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by any such Selling Holder or Underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise

Page 7

their due diligence responsibility, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. Records which the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction. Each Selling Holder of such Registrable Securities agrees that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such is made generally available to the public. Each Selling Holder of such Registrable Securities further agrees that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential.

     (h) The Company will furnish to each Selling Holder and to each Underwriter, if any, a signed counterpart, addressed to such Selling Holder or Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii) if eligible under SAS 100, a comfort letter or comfort letters from the Company’s independent public accountants, each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as the Holders of a majority of the Registrable Securities included in such offering or the managing Underwriter or Underwriters therefor reasonably requests.

     (i) The Company will otherwise comply with all applicable rules and regulations of the Commission, and make available to its securityholders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder (or any successor rule or regulation hereafter adopted by the Commission).

     (j) The Company will use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed.

     The Company may require each Selling Holder of Registrable Securities to promptly furnish in writing to the Company such information regarding such Selling Holder, the Registrable Securities held by it and the intended method of distribution of the Registrable Securities as the Company may from time to time reasonably request and such other information as may be legally required in connection with such registration.

     Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 2.5(e) hereof, such Selling Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Selling Holder’s receipt of the copies of the

Page 8

supplemented or amended prospectus contemplated by Section 2.5(e) hereof, and, if so directed by the Company, such Selling Holder will deliver to the Company all copies, other than permanent file copies then in such Selling Holder’s possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. Each Selling Holder of Registrable Securities agrees that it will immediately notify the Company at any time when a prospectus relating to the registration of such Registrable Securities is required to be delivered under the Securities Act of the happening of an event as a result of which information previously furnished by such Selling Holder to the Company in writing expressly for inclusion in such prospectus contains an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances in which they were made. In the event the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective (including the period referred to in Section 2.5(a) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 2.5(e) hereof to the date when the Company shall make available to the Selling Holders of Registrable Securities covered by such registration statement a prospectus supplemented or amended to conform with the requirements of Section 2.5(e) hereof.

     Section 2.6 Registration Expenses. In connection with any registration statement required to be filed hereunder, the Company shall pay the following registration expenses incurred in connection with the registration hereunder (the “Registration Expenses”): (i) all registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) the fees and expenses incurred in connection with the listing of the Registrable Securities, (vi) reasonable fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters requested pursuant to Section 2.5(h) hereof), and (vii) the reasonable fees and expenses of any special experts retained by the Company in connection with such registration. The Company shall have no obligation to pay any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities, or any out-of-pocket expenses of the Holders (or the agents who manage their accounts) or any transfer taxes relating to the registration or sale of the Registrable Securities.

     Section 2.7 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Selling Holder of Registrable Securities, its officers, directors and agents, and each Person, if any, who controls such Selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading,

Page 9

except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to the Company by such Selling Holder or on such Selling Holder’s behalf expressly for inclusion therein. The Company also agrees to indemnify any Underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Selling Holders provided in this Section 2.7, provided that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Underwriter of the Registrable Securities from whom the person asserting any such losses, claims, damages or liabilities purchased the Registrable Securities which are the subject thereof if such person did not receive a copy of the prospectus (or the prospectus as supplemented) at or prior to the confirmation of the sale of such Registrable Securities to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the prospectus (or the prospectus as supplemented). The indemnity provided for in this Section 2.7 shall remain in full force and effect regardless of any investigation made by or on behalf of any Selling Holder.

     Section 2.8 Indemnification by Holders of Registrable Securities. Each Selling Holder agrees, severally but not jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each Person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to such Selling Holder, but only with respect to information relating to such Selling Holder furnished in writing by such Selling Holder or on such Selling Holder’s behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus. In case any action or proceeding shall be brought against the Company or its officers, directors or agents or any such controlling person, in respect of which indemnity may be sought against such Selling Holder, such Selling Holder shall have the rights and duties given to the Company, and the Company or its officers, directors or agents or such controlling person shall have the rights and duties given to such Selling Holder, by Section 2.7. Each Selling Holder also agrees to indemnify and hold harmless Underwriters of the Registrable Securities, their officers and directors and each Person who controls such Underwriters within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of the Company provided in this Section 2.8. The liability of any Selling Holder pursuant to this Section 2.8 may, in no event, exceed the net proceeds received by such Selling Holder from sales of Registrable Securities giving rise to the indemnification obligations of such Selling Holder.

     Section 2.9 Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 2.7 or 2.8, such person (an “Indemnified Party”) shall promptly notify the person against whom such indemnity may be sought (an “Indemnifying Party”) in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel

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shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by (i) in the case of Persons indemnified pursuant to Section 2.7 hereof, the Selling Holders which owned a majority of the Registrable Securities sold under the applicable registration statement and (ii) in the case of Persons indemnified pursuant to Section 2.8, the Company. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Party shall have requested an Indemnifying Party to reimburse the Indemnified Party for fees and expenses of counsel as contemplated by the third sentence of this paragraph, the Indemnifying Party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 Business Days after receipt by such Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party shall not have reimbursed the Indemnified Party in accordance with such request prior to the date of such settlement. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding.

     Section 2.10 Contribution. If the indemnification provided for in Section 2.7 or 2.8 hereof is unavailable to an Indemnified Party or insufficient in respect of any losses, claims, damages or liabilities referred to herein, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) as between the Company and the Selling Holders on the one hand and the Underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other from the offering of the securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of the Company and the Selling Holders on the one hand and of the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations and (ii) between the Company on the one hand and each Selling Holder on the other, in such proportion as is appropriate to reflect the relative fault of the Company and of each Selling Holder in connection with such statements or omissions which resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Selling Holders on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by the Company and the Selling Holders bear to the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of the Company and the Selling Holders

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on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Selling Holders or by the Underwriters. The relative fault of the Company on the one hand and of each Selling Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

     The Company and the Selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 2.10 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 2.10, no Underwriter shall be required to contribute any amount in excess of the amount by which the total commissions and discounts received by such Underwriter in connection with the sale of the securities underwritten by it and distributed to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and no Selling Holder shall be required to contribute any amount in excess of the amount by which the net proceeds from the sale of the securities of such Selling Holder to the public exceeds the amount of any damages which such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Selling Holder’s obligations to contribute pursuant to this Section 2.10 are several in proportion to the net proceeds of the offering received by such Selling Holder bears to the total net proceeds of the offering received by all the Selling Holders and not joint.

     Section 2.11 Participation in Underwritten Registrations. No Person may participate in any underwritten registration hereunder unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and these registration rights provided for in this Article II.

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     Section 2.12 Rule 144. The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act and that it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

     Section 2.13 Holdback Agreements.

     (a) Restrictions on Public Sale by Holder of Registrable Securities. To the extent not inconsistent with applicable law and except with respect to a shelf registration (including the Shelf Registration Statement), each Holder whose securities are included in a registration statement agrees not to effect any sale or distribution of the issue being registered or a similar security of the Company, or any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to, and during the 90-day period beginning on, the effective date of such registration statement (except as part of such registration), if and to the extent requested in writing by the Company in the case of a non-underwritten public offering or if and to the extent requested in writing by the managing Underwriter or Underwriters in the case of an underwritten public offering.

     (b) Restrictions on Public Sale by the Company and Others. The Company agrees that any agreement entered into after the date of this Agreement pursuant to which the Company issues or agrees to issue any privately placed securities shall contain a provision under which holders of such securities agree not to effect any sale or distribution of any securities similar to those being registered in accordance with Section 2.2 or Section 2.3 hereof, or any securities convertible into or exchangeable or exercisable for such securities, during the 14 days prior to, and during the 90-day period beginning on, the effective date of any registration statement (except as part of such registration statement where the Holders of a majority of the Registrable Securities to be included in such registration statement consent or as part of registration statements filed as set forth in Section 2.3(i) or (iii)), if and to the extent requested in writing by the Company in the case of a non-underwritten public offering or if and to the extent requested in writing by the managing Underwriter or Underwriters in the case of an underwritten public offering, in each case including a sale pursuant to Rule 144 under the Securities Act (except as part of any such registration, if permitted); provided, however, that the provisions of this paragraph (b) shall not prevent the conversion or exchange of any securities pursuant to their terms into or for other securities.

     (c) Temporary Suspension of Rights to Sell Based on Confidential Information. If the Company determines in its good faith judgment that the filing of the Shelf Registration Statement under Section 2.1 or a Demand Registration under Section 2.2 hereof or the use of any related prospectus would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential or the disclosure of which would impede the Company’s ability to consummate a significant transaction (the “Confidential Information”), and that the Company is not otherwise required by applicable securities laws or

Page 13

regulations to disclose, upon written notice of such determination by the Company, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or a Demand Registration or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement or a Demand Registration shall be suspended until the earlier of (i) the date upon which the Company notifies the Holders in writing that suspension of such rights for the grounds set forth in this Section 2.12(c) is no longer necessary and (ii) 180 days; provided, however, no such 180-day period shall be successive with respect to the same Confidential Information. The Company agrees to give such notice as promptly as practicable following the date that such suspension of rights is no longer necessary. Nothing in this Section 2.12(c) shall prevent a Holder from offering, selling or distributing pursuant to Rule 144 at any time.

     (d) Temporary Suspension of Rights to Sell Based on Exchange Act Reports not yet Filed or Regulation S-X. If all reports required to be filed by the Company pursuant to the Exchange Act have not been filed by the required date without regard to any extension, or if the consummation of any business combination by the Company has occurred or is probable for purposes of Rule 3-05 or Article 11 of Regulation S-X under the Act, upon written notice thereof by the Company to the Holders, the rights of the Holders to offer, sell or distribute any Registrable Securities pursuant to the Shelf Registration Statement or a Demand Registration or to require the Company to take action with respect to the registration or sale of any Registrable Securities pursuant to the Shelf Registration Statement or a Demand Registration shall be suspended until the date on which the Company has filed such reports or obtained and filed the financial information required by Rule 3-05 or Article 11 of Regulation S-X to be included or incorporated by reference, as applicable, in the Shelf Registration Statement, and the Company shall notify the Holders as promptly as practicable when such suspension is no longer required. Nothing in this Section 2.12(d) shall prevent a Holder from offering, selling or distributing pursuant to Rule 144 at any time.

ARTICLE III
MISCELLANEOUS

     Section 3.1 New York Stock Exchange Listing. In the event that the Company shall issue any Common Stock in exchange for OP Units pursuant to Section 7.4 of the Partnership Agreement, then in any such case the Company agrees to cause any such shares of Common Stock to be listed on the New York Stock Exchange prior to or concurrently with the issuance thereof by the Company.

     Section 3.2 Remedies. In addition to being entitled to exercise all rights provided herein and granted by law, including recovery of damages, the Holders shall be entitled to specific performance of the rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

     Section 3.3 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, in each case without the

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written consent of the Company and the Holders of a majority of the Registrable Securities. No failure or delay by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon any breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

     Section 3.4 Notices. All notices and other communications in connection with this Agreement shall be made in writing by hand delivery, registered first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery to the address set forth on the signature page hereto, or to such other address and to such other Persons as any party hereto may hereafter specify in writing.

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when received if deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.

     Section 3.5 Successors and Assigns. Except as expressly provided in this Agreement the rights and obligations of the Initial Holders under this Agreement shall not be assignable by any Initial Holder to any Person that is not an Initial Holder. This Agreement shall be binding upon the parties hereto and their respective successors and assigns.

     Section 3.6 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Each party shall become bound by this Agreement immediately upon affixing its signature hereto.

     Section 3.7 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Texas without regard to the choice of law provisions thereof.

     Section 3.8 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

     Section 3.9 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Registrable Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

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     Section 3.10 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

     Section 3.11 No Third Party Beneficiaries. Nothing express or implied herein is intended or shall be construed to confer upon any person or entity, other than the parties hereto and their respective successors and assigns, any rights, remedies or other benefits under or by reason of this Agreement.

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

COMPANY: ASHFORD HOSPITALITY TRUST, INC., a Maryland corporation
By:	/s/ David A. Brooks
	David A. Brooks
	Chief Legal Officer
Address: 14185 Dallas Parkway, Suite 1100 Dallas, TX 75254

Registration Rights Agreement – Signature Page -1-
Ashford Hospitality LP/Dunn

UNIT HOLDERS:

DUNN FAMILY ASSOCIATES, LLP, an

Indiana limited liability partnership, as Sole

Beneficiary under Land Trust Agreement

dated July 16, 1990

By:	/s/ John M. Dunn
	John M. Dunn,
	as Agent and Attorney in Fact for
	Beneficiary and as General Partner

Address:

HOTEL INVESTMENT, LLC, an

Indiana limited liability company

By:	Evansville Hotel Corporation,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn
		President

Address:

Registration Rights Agreement – Signature Page -2-
Ashford Hospitality LP/Dunn

ENCORE HOTELS OF BLOOMINGTON, INC.,
an Indiana corporation (Sub-S)
By:	/s/ John M. Dunn John M. Dunn
	President

Address:

ENCORE HOTELS OF TERRE HAUTE, LLC,
an Indiana limited liability company
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn
		President

Address:

Registration Rights Agreement – Signature Page -3-
Ashford Hospitality LP/Dunn

ENCORE RESIDENTIAL HOTELS OF EVANSVILLE, LLC, an
Indiana limited liability company
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn President

Address:

ENCORE HOTELS OF COLUMBUS, LLC, an Indiana
limited liability company
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn
		President

Address:

Registration Rights Agreement – Signature Page -4-
Ashford Hospitality LP/Dunn

ENCORE HOTELS OF HORSE CAVE, LLC, a
Kentucky limited liability company
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn
		President

Address:

ENCORE HOTELS OF PRINCETON II, LLC, an Indiana
limited liability company
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn
		President

Address:

Registration Rights Agreement – Signature Page -5-
Ashford Hospitality LP/Dunn

DUNN HOSPITALITY GROUP, LLC, an Indiana
limited liability partnership
By:	Dunn Hospitality Group Manager, Inc.,
	its Manager
	By:	/s/ John M. Dunn John M. Dunn President

Address:

Registration Rights Agreement – Signature Page -6-
Ashford Hospitality LP/Dunn

EX-8.1

Exhibit 8.1

September 1, 2005

Ashford Hospitality Trust, Inc.
14185 Dallas Parkway, Suite 1100
Dallas, Texas 75254

Ladies and Gentlemen:

     We have acted as counsel to Ashford Hospitality Trust, Inc., a Maryland corporation (the “Company”), in connection with the preparation of a Form S-3 (the “Registration Statement”) with respect to the issuance and resale (the “Offering”) of up to 333,333 shares of common stock of the Company, par value $0.01 per share (the “Common Stock”) issuable upon exchange for the redemption of an equal number of units of limited partnership interest in Ashford Hospitality Limited Partnership, the Company’s operating partnership, such Registration Statement as filed with the Securities and Exchange Commission (“SEC”) on August September 1, 2005. You have requested our opinion as to certain United States federal income tax matters in connection with the Offering.

     In connection with our opinion, we have examined and relied upon the following:

     1. the Company’s Articles of Amendment and Restatement, in the form filed as an exhibit to the Registration Statement;

     2. the Company’s Articles Supplementary (Series A Preferred Stock), in the form filed as an exhibit to the Registration Statement;

     3. the Company’s Articles Supplementary (Series B Preferred Stock), in the form filed as an exhibit to the Registration Statement;

     4. the Company’s Amended and Restated Bylaws, as amended by Amendment No. 1 thereto, in the form filed as an exhibit to the Registration Statement;

     5. the Registration Statement, including the prospectus (the “Prospectus”) contained as a part thereof;

     6. the Certificate of Limited Partnership of Ashford Hospitality Limited Partnership (the “Operating Partnership”) effective July 25, 2003, as certified by the Secretary of State of the State of Delaware;

Ashford Hospitality Trust, Inc.
September 1, 2005
Page 2

     7. the Second Amended and Restated Limited Partnership Agreement of the Operating Partnership between Ashford OP General Partner LLC, as the general partner, and Ashford OP Limited Partner LLC, and certain officers, directors and others as the limited partners (the “Operating Partnership Agreement”), as amended through September 1, 2005, as certified by the Secretary of the Company, as the sole member of the general partner of the Operating Partnership;

     8. the leases entered into between any taxable REIT subsidiary of the Company and the Partnership/Limited Liability Company Subsidiaries, a form of which is attached to the Officer’s Certificate (as defined below);

     9. the articles of incorporation, bylaws and stock ownership information of each corporation and its subsidiaries in which the Company directly or indirectly owns an interest, as set forth in the Officer’s Certificate (the “Corporate Subsidiaries”);

     10. the certificate of formation, if applicable, and the partnership agreement or limited liability company operating agreement, as applicable, of each partnership or limited liability company in which the Company directly or indirectly owns an interest (other than through Ashford TRS Corporation or Ashford TRS VI Corporation), as set forth in the Officer’s Certificate (the “Partnership/Limited Liability Company Subsidiaries”); and

     11. such other documents, records and matters of law as we have deemed necessary or appropriate for rendering this opinion.

     In our examination, we have assumed (i) the authenticity and completeness of all original documents reviewed by us in original or copy form, (ii) the conformity to the original documents of all documents reviewed by us as copies, including electronic copies, (iii) the authority and capacity of the individual or individuals who executed any document on behalf of any person or entity to so execute such document, (iv) the genuineness of all signatures on documents examined by us, and (v) the accuracy and completeness of all records made available to us. We have assumed that each unexecuted document submitted to us for our review will be executed in a form materially identical to the form we reviewed. In connection with the opinion rendered below, we also have relied upon the correctness of the factual representations contained in the Officer’s Certificate, and have assumed that all representations made “to the best knowledge of” any person will be true, correct and complete as if made without that qualification. We have also assumed, with your consent, that:

     1. for its taxable years ending December 31, 2003, and December 31, 2004, and in future taxable years, the Company did and will operate in a manner that will make the representations contained in a certificate, dated September 1, 2005, and executed by a duly appointed officer of the Company (the “Officer’s Certificate”), true for such years;

     2. the Company has not made and will not make any amendments to its organization documents or allow amendments to the Operating Partnership Agreement or

Ashford Hospitality Trust, Inc.
September 1, 2005
Page 3

organization documents of the Corporate Subsidiaries or partnership agreements of the Partnership/Limited Liability Company Subsidiaries after the date of this opinion that would affect its qualification as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), for any taxable year; and

     3. no action has been or will be taken by the Company, the Operating Partnership, the Partnership/Limited Liability Company Subsidiaries or the Corporate Subsidiaries after the date hereof that would have the effect of altering the facts upon which the opinion set forth below is based.

     Based on the documents and assumptions set forth above, the representations set forth in the Officer’s Certificate, and the discussion in the Prospectus under the caption “Federal Income Tax Consequences Of Our Status As A REIT” (which is incorporated herein by reference), we are of the opinion that:

     (a) for the Company’s taxable years ending on December 31, 2003, and December 31, 2004, the Company qualified to be taxed as a REIT pursuant to sections 856 through 860 of the Code, and the Company’s organization and present and proposed method of operation will enable it to continue to meet the requirements for qualification and taxation as a REIT under the Code; and

     (b) the descriptions of the law and the legal conclusions contained in the Prospectus under the caption “Federal Income Tax Consequences Of Our Status As A REIT” are correct in all material respects, and the discussion thereunder expresses the opinion of Andrews Kurth LLP insofar as it relates to matters of United States federal income tax law and legal conclusions with respect to those matters.

     We will not review on a continuing basis the Company’s compliance with the documents or assumptions set forth above, or the representations set forth in the Officer’s Certificate. Accordingly, no assurance can be given that the actual results of the Company’s operations for any given taxable year will satisfy the requirements for qualification and taxation as a REIT.

     The foregoing opinions are limited to the United States federal income tax matters addressed herein, and no other opinions are rendered with respect to other United States federal tax matters or to any issues arising under the tax laws of any other country, or any state or locality. The foregoing opinions are based on current provisions of the Code and the Treasury regulations thereunder (the “Regulations”), published administrative interpretations thereof, and published court decisions, all of which are subject to change and new interpretation, both prospectively and retroactively. The Internal Revenue Service has not issued Regulations or administrative interpretations with respect to various provisions of the Code relating to REIT qualification. No assurance can be given that the law will not change in a way that will prevent the Company from qualifying as a REIT. Although the conclusions set forth herein represent our best judgment as to the probable outcome on the merits of such matters, the Internal Revenue Service and the

Ashford Hospitality Trust, Inc.
September 1, 2005
Page 4

courts are not bound by, and may disagree with, the conclusions set forth herein. This opinion is rendered only as of the date hereof, and we assume no obligation to update our opinion to address other facts or any changes in law or interpretation thereof that may hereafter occur or hereafter come to our attention. If any one of the statements, representations, warranties or assumptions that we have relied upon to issue these opinions is incorrect in a material respect, our opinions might be adversely affected and may not be relied upon.

     We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. We also consent to the references to Andrews Kurth LLP under the captions “Federal Income Tax Consequences Of Our Status As A REIT” and “Legal Matters” in the Prospectus. In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the SEC.

Very truly yours,
 

/s/ Andrews Kurth LLP  

TWF; TRP

OFFICER’S CERTIFICATE TO COUNSEL

FOR ASHFORD HOSPITALITY TRUST, INC.
REGARDING CERTAIN INCOME TAX MATTERS

September 1, 2005

     I, David Kimichik, Chief Financial Officer and Treasurer of Ashford Hospitality Trust, Inc. (the “Company”), in connection with the preparation of a registration statement on Form S-3 (the “Registration Statement”) with respect to the issuance and resale of up to 333,333 shares of common stock of the Company, par value $0.01 per share (the “Common Stock”) issuable upon exchange for the redemption of an equal number of units of limited partnership interest in Ashford Hospitality Limited Partnership, the Company’s operating partnership, such Registration Statement as filed with the Securities and Exchange Commission (“SEC”) on September 1, 2005, hereby certify to Andrews Kurth LLP that to the best of my knowledge following independent investigation, each of the following statements is true and correct for the period commencing with formation of the Company in 2003 through the date of this Certificate (the “Relevant Period”) and, to the best of my knowledge, will be true and correct for all future years, unless the board of directors of the Company makes a decision not to qualify and operate as a REIT for federal income tax purposes.

     The Company holds a capital interest in Ashford OP General Partner LLC, Ashford OP Limited Partner LLC and indirectly a capital interest in Ashford Hospitality Limited Partnership and the subsidiary partnerships and limited liability companies owned by Ashford Hospitality Limited Partnership (Ashford Hospitality Limited Partnership and the subsidiary partnerships and limited liability companies constitute the “Partnerships”). Exhibit “A” contains a list of all of the Company’s corporate and partnership/limited liability company subsidiaries. For each of the following statements and definitions, the Company will, according to its relevant, direct or indirect, capital interest in the Partnerships, (1) be deemed to own a proportionate share of each of the assets of the Partnerships and (2) be deemed entitled to the income attributable to such interest in the Partnerships. If the Company owns any Qualified REIT Subsidiary, all assets, liabilities, and items of income, deduction, and credit of the Qualified REIT Subsidiary shall be treated as assets, liabilities, and such items (as the case may be) of the Company. Terms which are not defined in this Certificate are defined in Exhibit “B.”

     1. One hundred (100) or more persons held and will hold the beneficial ownership of the Company during at least three hundred and thirty-five (335) days of each complete taxable year of the Company (or during a proportionate part of a taxable year of less than twelve (12) months) (other than the taxable year ended December 31, 2003). During each entire taxable year of the Company, (i) the Company was and will be managed by one or more directors, (ii) beneficial ownership in the Company was and will be evidenced by transferable shares, (iii) the Company would have been and would be taxable as a domestic corporation but for the REIT provisions of the Code, and (iv) the Company neither was nor will be a financial institution nor an insurance company subject to special provisions of the federal income tax laws.

     2. After applying the Attribution Rules, five (5) or fewer Persons did not and will not own either directly or indirectly more than fifty percent (50%) in value of the Company’s outstanding stock at any time during the last half of any of its taxable years (other than the

taxable year ended December 31, 2003). Subparagraphs (ii), (iii) and (vi) of the Attribution Rules shall only be applied for this purpose if the effect is to cause five (5) or fewer Persons to own directly or indirectly more than fifty percent (50%) in value of the Company’s outstanding stock during the last half of any of its taxable years.

     3. The Company has timely filed with its federal income tax return for the taxable period ended December 31, 2003, an election to be a REIT and such election will not be Revoked nor knowingly terminated.

     4. Other than the Qualified REIT Subsidiary, Ashford Hospitality Finance General Partner Corp., owned by the Company from November 20, 2003, to April 6, 2004, neither the Company nor the Partnerships own or have owned any interest in any corporation other than Ashford TRS Corporation (“TRS”) or Ashford TRS VI Corporation (“TRS VI”) and will not own any other corporations other than a Qualified REIT Subsidiary or a Taxable REIT Subsidiary. TRS and TRS VI are fully taxable corporations. TRS and TRS VI have not and will not directly or indirectly operate or manage any hotels or provide rights to any brand name. TRS and TRS VI have and will lease hotels from the Partnerships, but the hotels have been and will be operated on behalf of TRS and TRS VI by one or more Eligible Independent Contractors. The Company has made a valid, timely election to classify TRS and TRS VI and will make a valid, timely election to classify each other corporate subsidiary not constituting a Qualified REIT Subsidiary as a Taxable REIT Subsidiary.

     5. The following statements are true for each taxable year during the Relevant Period ending before January 1, 2005, and, based upon the facts as they exist on the date of this Certificate, I have no reason to believe the following statements will not be true for taxable years beginning after December 31, 2004:

     (a) At least ninety-five percent (95%) of the gross income of the Company (excluding gross income from Prohibited Transactions) was and will be derived from (i) dividends, (ii) interest, (iii) rents from real property, (iv) gain from the sale or other disposition of stock, securities and real property (including Interests in Real Property and interests in mortgages on real property) which is not Section 1221(a)(1) Property, (v) abatements and refunds of taxes on real property, (vi) income and gain derived from Foreclosure Property, (vii) amounts (other than amounts the determination of which depends in whole or in part on income or profits of any person) received or accrued as consideration for entering into agreements (A) to make loans secured by mortgages on real property or on Interests in Real Property, or (B) to purchase or lease real property (including Interests in Real Property and interests in mortgages on real property), and (viii) gain from the sale or other disposition of a Real Estate Asset which is not a Prohibited Transaction.

     (b) At least seventy-five percent (75%) of the gross income of the Company (excluding gross income from Prohibited Transactions) was and will be derived from (i) rents from real property, (ii) interest on obligations secured by mortgages on real property or on Interests in Real Property, (iii) gain from the sale or other disposition of real property (including Interests in Real Property and interests in mortgages on real property) which is not Section 1221(a)(1) Property, (iv) dividends or other distributions on, and

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gain (other than gain from Prohibited Transactions) from the sale or other disposition of transferable shares (or transferable certificates of beneficial interests) in other REITs, (v) abatements and refunds of taxes on real property, (vi) income and gain derived from Foreclosure Property, (vii) amounts (other than amounts, the determination of which depends in whole or in part on the income or profits of any person) received or accrued as consideration for entering into agreements (A) to make loans secured by mortgages on real property or on Interests in Real Property, or (B) to purchase or lease real property (including Interests in Real Property and interests in mortgages on real property), (viii) gain from the sale or other disposition of a Real Estate Asset which is not a Prohibited Transaction, and (ix) Qualified Temporary Investment Income.

     (c) The deduction for dividends paid by the Company (without regard to capital gains dividends) was equal to or exceeded and will equal or exceed (A) the sum of (i) ninety percent (90%) of the Company’s taxable income for the taxable year (determined without regard to the deduction for dividends paid and by excluding any net capital gain), and (ii) ninety percent (90%) of the excess of the net income from Foreclosure Property over the tax imposed on such income, minus (B) any Excess Noncash Income.

     (d) If the Company has any dividend reinvestment plans (“Plans”), the Company and the plan administrator under the Plans have administered and will administer each Plan in accordance with the terms of such Plan throughout the portion of the Relevant Period during which the Plans are in existence.

     (e) The dividends paid by the Company on the Company’s stock were and will be made pro rata, with no preference to any share of a class of stock as compared with other shares of such class of stock. The differences in amounts and preferences paid with respect to each class of the Company’s stock will be in accordance with the Company’s Articles of Incorporation. Notwithstanding the foregoing, stock of the Company may be issued from time to time pursuant to the related Plan at a discount not exceeding five percent (5%) of the fair market value of such stock on the applicable dividend payment date.

     6. At the close of each quarter of each taxable year (i) at least seventy-five percent (75%) of the value of the total assets of the Company was and will be represented by Real Estate Assets, cash and cash items (including receivables), and government securities, and (ii) (A) not more than twenty-five percent (25%) of the value of the total assets of the Company was or will be represented by securities (other than government securities), (B) not more than twenty percent (20%) of the value of the Company’s total assets was or will be represented by securities of one or more Taxable REIT Subsidiaries, (C) except with respect to a Taxable REIT Subsidiary and government securities (or Qualified REIT Subsidiaries)—(I) not more than five percent (5%) of the value of the total assets of the Company was or will be represented by securities of any one issuer, (II) the Company did not and will not hold securities having a value of more than ten percent (10%) of the total voting power of the outstanding securities of any one issuer, and (III) the Company did not and will not hold securities possessing more than ten percent (10%) of the total value of the outstanding securities of any one issuer.

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     7. The Company has satisfied and will satisfy the record keeping requirements applicable to REITs which are set forth in Treasury Regulation section 1.857-8, a copy of which is attached as Exhibit “C.”

     8. The Company has always had and will always have a taxable year ending on December 31.

     9. The Company has no current or accumulated earnings and profits, as determined pursuant to section 312 of the Code, arising from any taxable year of the Company, or any predecessor of the Company (or any corporation liquidated or merged into the Company in a tax-free transaction), during which the Company and such predecessor were not treated as a REIT for federal income tax purposes.

     10. The Company has not issued and will not issue any shares of the Company’s preferred stock if the stock is redeemable under the Company’s Articles of Incorporation, as amended, at a premium to its issue price at the Company’s option and if: (i) the stock is issued to a holder that is related to the Company within the meaning of sections 267(b) or 707(b) of the Code (for purposes of applying sections 267(b) and 707(b) of the Code, the phrase “20 percent” shall be substituted for the phrase “50 percent”), (ii) there is any plan, arrangement or agreement that effectively requires or is intended to compel the Company to redeem such stock, or (iii) exercise of the right to redeem will reduce the yield of such stock. The Company has not issued and will not issue any shares of the Company’s preferred stock at a price less than the respective redemption price of such shares under the Company’s Articles of Incorporation, as amended, if (A) the Company is required to redeem the stock at a premium to its issue price at a specified time or (B) the holder has the option to require the Company to redeem the stock, unless in each case the Company’s obligation to redeem or the holder’s ability to require the Company to redeem is subject to a contingency that is beyond the legal or practical control of either the holder or the holders as a group (or through a related party within the meaning of sections 267(b) and 707(b) of the Code) and that, based on all of the facts and circumstances as of the issue date, renders remote the likelihood of redemption.

     11. Neither the Company, nor a direct or indirect owner of ten percent (10%) of more of the Company’s shares, owns or will own, actually or constructively, ten percent (10%) or more of a tenant, other than a Taxable REIT Subsidiary, from whom the Company or the Partnerships receives rent.

     10. With regard to any leases entered into between any Taxable REIT Subsidiary of the Company and any of the Partnerships (the “Leases,” a form of which is attached as Exhibit “D”):

     (a) TRS or another Taxable REIT Subsidiary has been and will be in physical possession of the property subject to the Leases and the Taxable REIT Subsidiary has had and will have the right to exclusive possession, use and quiet enjoyment of the properties during the term of the Leases;

4

     (b) Rent under the Leases has been and will be determined based on a minimum base rent (which may be adjusted over the term of the Lease pursuant to a fixed formula) plus fixed percentage rent based on gross revenues plus additional charges;

     (c) The percentages of gross revenues payable under the Leases has been and will be fixed at the time the Leases are entered into, have not been and will not be renegotiated during the term of the Leases in such a way that has the effect of basing percentage rent on income or profits, and has conformed and will conform with normal business practices;

     (d) TRS or another Taxable REIT Subsidiary has bore and will bear the cost of, and has been and will be responsible for, day-to-day maintenance and repair of the property subject to the Leases and, subject to any related management agreement, generally has dictated and will dictate how the property subject to each Lease was and will be operated, maintained and improved;

     (e) TRS or another Taxable REIT Subsidiary has bore and will bear the costs and expenses of operating the properties subject to the Leases, including the cost of any inventory used in their operation, other than real estate taxes, certain property insurance and capital improvements;

     (f) TRS or another Taxable REIT Subsidiary has benefited and will benefit from any savings in the costs of operating the hotels during the term of any percentage leases;

     (g) TRS or another Taxable REIT Subsidiary has been obligated and will be obligated to pay substantial fixed rent for the period of use of the properties;

     (h) The total rent payments under the Leases have not substantially exceeded and will not substantially exceed the rental value of the hotels for the term of the Leases;

     (i) Rent attributable to personal property under each Lease has not exceeded and will not exceed fifteen percent (15%) of the total rent received under such Lease. Rent attributable to personal property is the amount that bears the same ratio to total rents for the taxable year as the average of the fair market values of the personal property at the beginning and end of each taxable year bears to the average of the aggregate fair market values of both real and personal property subject to the Lease at the beginning and end of such taxable year.

     13. With respect to any hotel or other properties the Company or the Partnerships owns or acquires in the future, neither the Partnerships nor the Company has charged or received or will charge or receive rent for any property that is based in whole or in part on the income or profits of any person, except by reason of being based on a fixed percentage of gross revenues as described in paragraph 12.

     14. The Partnerships have not performed and will not perform any services, other than customary services, for TRS or any other Taxable REIT Subsidiary either with respect to hotel properties already owned or those acquired in the future. Services are considered

5

customary if, in the geographic market in which the property is located, tenants of the property which are of a similar class are customarily provided the service. Notwithstanding the previous sentence, in no event have the Partnerships managed or operated or will the Partnerships manage or operate any hotel property leased by a Taxable REIT Subsidiary of the Company.

     15. The Company and the Partnerships have not entered into any hedging transactions other than those on Exhibit “E”. The Company and the Partnerships intend to structure any hedging transactions either enters into in a manner that does not jeopardize the Company’s status as a REIT.

     16. Neither the Company nor any subsidiary of the Company has elected nor shall elect to treat any subsidiary of the Company as a corporation for federal income tax purposes, other than TRS, TRS VI, any other corporation intended to qualify as a Taxable REIT Subsidiary and for which a valid, timely election is made to be treated as a Taxable REIT Subsidiary, and any Qualified REIT Subsidiary.

     17. The following loans are secured by either a first or second lien on Real Estate Assets:

     (a) a $6.6 million junior loan related to Northland Inn and Executive Conference Center; and

     (b) a $15 million junior participation in a loan related to Adam’s Mark Hotel – Denver.

     18. The following loans are within the Safe Harbor Provisions of Revenue Procedure 2003-65:

     (a) a $25 million junior participation in a Junior Mezzanine Loan related to 17 Wyndham Hotels;

     (b) a $10 million junior loan related to Hilton — Times Square;

     (c) a $15 million junior loan related to Embassy Suites – Logan Airport;¹

     (d) an $11 million junior loan related to the Westin Westminster Hotel;

     (e) a $5 million loan related to Hotel Teatro;

     (f) an $8 million loan related to Viceroy Hotel;

     (g) an $8 million loan related to Penn’s Landing;

     (h) an $8.5 million loan related to Garden Grove;

¹ This loan is additionally secured by a Guaranty and Additional Collateral Letters of Credit (as such terms are defined in the Mezzanine Loan Agreement) but is otherwise within the Safe Harbor Provisions of Revenue Procedure 2003-65.

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     (i) a $4 million loan related to Marriott Cool Springs; and

     (j) a $5.6 million loan related to Sheraton Gunter.

     19. The fair market value of the Real Estate Assets securing each loan described in paragraph 17 equals or exceeds the amount of the loan or participation, after reducing the fair market value of such Real Estate Assets by any senior liens encumbering such Real Estate Assets.

     20. Any fees the Company received in connection with the loans described in paragraphs 17 and 18 include only an amount that constitutes compensation for the use or forbearance of money and the determination of the amount does not depend in whole or in part on the income or profits of any person.

     21. Neither the Company nor any subsidiary of the Company has any loans that were made or entered into or acquired by the Company or any subsidiary of the Company with an intent to evict or foreclose, or when the Company or any subsidiary of the Company knew or had reason to know that default would occur.

     22. Noble Management Group, LLC, Remington Lodging and Hospitality, L.P., Pollin/Miller Hospitality Strategies, Inc., Day Hospitality Group, Inc., Dunn Hospitality Group Manager, Inc., Hyatt Corporation and Marriott International, Inc. have each qualified and will each qualify as Eligible Independent Contractors and the TRS has not had any other managers of its leased hotels.

     23. Exhibits “F” and “G” contain a true and correct listing of all Leases and loans (assets) to which the Company or TRS is or was a party during the Relevant Period. No other Leases or loans (assets) to which the Company or TRS is or will be a party are pending as of the date of this Certificate.

     24. The Company and the Ashford Hospitality Limited Partnership and their respective direct and indirect subsidiaries will continue to operate in a manner to make the representations contained in this Certificate true in the future.

     25. The Company will not make any amendments to its organization documents or allow amendments to the partnership agreement of Ashford Hospitality Limited Partnership or to the organization documents, partnership agreements or limited liability agreements of any of the Partnerships or other subsidiaries of the Company or the Partnerships after the date of this Certificate that would adversely affect the Company’s qualification as a REIT or that would cause Ashford Hospitality Limited Partnership to be classified for federal income tax purposes as an association taxable as a corporation or as a publicly traded partnership taxable as a corporation.

[Signature Page Follows]

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     IN WITNESS WHEREOF, I have executed this Certificate as of the date first above written.

/s/ David Kimichik

David Kimichik,

as Chief Financial Officer and Treasurer of

Ashford Hospitality Trust, Inc.

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EXHIBIT “A”

Corporate and Partnership/Limited Liability Company Subsidiaries

I. Taxable REIT Subsidiaries and their Subsidiaries:

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ashford TRS Corporation (“TRS”)	Delaware	7/21/03	N/A
Ashford TRS I LLC2	Delaware	11/13/03	N/A
Ashford TRS II LLC2	Delaware	3/16/04	N/A
Ashford TRS III LLC2	Delaware	1/28/05	N/A
Ashford TRS IV LLC2	Delaware	1/28/05	N/A
Ashford TRS V LLC2	Delaware	1/28/05	N/A
Ashford TRS VI Corporation (“TRS VI”)	Delaware	5/26/05	N/A
Ashford TRS Lessee LLC2	Delaware	7/6/04	N/A
Ashford TRS Lessee I LLC3	Delaware	5/26/05	N/A
Ashford TRS Lessee II LLC3	Delaware	5/26/05	N/A
Ashford TRS Lessee III LLC3	Delaware	5/26/05	N/A
Ashford TRS Lessee IV LLC4	Delaware	6/2/05	6/20/05
			(dissolved)
Ashford TRS Lessee V LLC4	Delaware	6/2/05	6/20/05
			(dissolved)
Ashford TRS Lessee VI LLC4	Delaware	6/2/05	6/20/05
			(dissolved)
Austin Embassy Beverage, Inc.2	Texas	3/9/98	N/A
		(acq. 8/26/03)
BC Office General Partner LLC2	Delaware	6/4/04	1/19/05
BC Office Limited Partner LP5	Delaware	6/4/04	1/19/05
Bucks County Office LP5	Delaware	5/18/04	1/19/05

2	TRS subsidiary.
3	TRS VI subsidiary.
4	Certificate of formation filed with Secretary of State of Delaware but never organized.
5	This TRS subsidiary is a partnership.

Exhibit A-1

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ruby Senior General Partner I LLC3	Delaware	5/26/05	N/A
Ruby Senior General Partner II LLC3	Delaware	5/26/05	N/A
Ruby Senior General Partner III LLC3	Delaware	5/26/05	N/A
Ruby Fishkill LP6	Delaware	5/27/05	N/A
Ruby Orlando International LP6	Delaware	5/27/05	N/A
Ruby Ft. Worth River Plaza LP6	Delaware	5/27/05	N/A
Ruby Tyler Hotel LP6	Delaware	5/27/05	N/A
Ruby Sacramento Cal Expo LP6	Delaware	5/27/05	N/A
Ruby Wilmington Newark LP6	Delaware	5/27/05	N/A
Ruby Providence Warwick LP6	Delaware	5/27/05	N/A
Ruby Ann Arbor LP6	Delaware	5/27/05	N/A
Ruby Miami Airport LP6	Delaware	5/27/05	N/A
Ruby Miami Lakes LP6	Delaware	5/27/05	N/A
Ruby Mt. Laurel LP6	Delaware	5/27/05	N/A
Ruby Ft. Worth Southwest LP6	Delaware	5/27/05	N/A
Ruby Newark LP6	Delaware	5/27/05	N/A
Ruby Portland Scarborough LP6	Delaware	5/27/05	N/A
Ruby Boston Tewksbury LP6	Delaware	5/27/05	N/A

⁶ This TRS VI subsidiary is a partnership.

Exhibit A-2

II. Partnership/Limited Liability Company Subsidiaries:

A. Direct Subsidiaries of Ashford Hospitality Trust, Inc.

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ashford OP General Partner LLC	Delaware	5/13/03	N/A
Ashford OP Limited Partner LLC	Delaware	5/13/03	N/A
Ashford Hospitality Limited Partnership	Delaware	5/13/03	N/A

Exhibit A-3

B. Direct or Indirect Subsidiaries of Ashford Hospitality Limited Partnership (other than Taxable REIT Subsidiaries and their Subsidiaries)

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ashford Hospitality Finance General Partner LLC	Delaware	11/20/03	N/A
Ashford Mezz Borrower LLC	Delaware	7/12/04	N/A
Ashford Properties General Partner LLC	Delaware	7/16/03	N/A
Ashford Hospitality Finance LP	Delaware	11/20/03	N/A
Ashford Finance Subsidiary I General Partner LLC	Delaware	7/2/04	N/A
Ashford Finance Subsidiary I LP	Delaware	7/2/04	N/A
Bucks County Member LLC	Delaware	6/4/04	N/A
Ashford Bucks County LLC	Delaware	6/4/04	N/A
Ashford Senior General Partner LLC	Delaware	7/12/04	N/A
Ashford Senior General Partner I LLC	Delaware	5/26/05	N/A
Ashford Senior General Partner II LLC	Delaware	5/26/05	N/A
Ashford Senior General Partner III LLC	Delaware	5/26/05	N/A
Ashford Credit Holding LLC	Delaware	5/26/05	N/A
Ashford 1031 GP LLC	Delaware	5/26/05	N/A
Ashford Hospitality Finance California LP	Delaware	4/15/05	N/A
Ashford Hospitality Finance California General Partner LLC	Delaware	4/15/05	N/A
Ashford Properties General Partner Sub I LLC	Delaware	11/13/03	N/A
Ashford Jacksonville I LP	Delaware	10/27/03	N/A
Ashford Properties General Partner Sub II LLC	Delaware	3/16/04	N/A
Ashford Atlantic Beach LP	Delaware	2/11/04	N/A
Ashford Properties General Partner Sub III LLC	Delaware	5/12/04	N/A
Ashford BWI Borrower LLC	Delaware	5/12/04	N/A

Exhibit A-4

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ashford BWI Airport LP	Delaware	5/12/04	N/A
Ashford Anaheim LP d/b/a AHT Anaheim LP in California	Delaware	9/22/04	N/A
Ashford Austin LP	Delaware	7/16/03	N/A
Ashford Bloomington LP	Delaware	7/14/04	N/A
Ashford Buena Vista LP	Delaware	1/26/04	N/A
Ashford Buford I LP	Delaware	6/25/04	N/A
Ashford Buford II LP	Delaware	6/25/04	N/A
Ashford Columbus LP	Delaware	9/25/03	N/A
Ashford Covington LP	Delaware	7/16/03	N/A
Ashford Dallas LP	Delaware	7/16/03	N/A
Ashford Dayton LP	Delaware	9/25/03	N/A
Ashford Dulles LP	Delaware	7/16/03	N/A
Ashford Evansville I LP	Delaware	7/14/04	N/A
Ashford Evansville II LP	Delaware	7/14/04	N/A
Ashford Evansville III LP	Delaware	7/14/04	N/A
Ashford Flagstaff LP	Delaware	9/25/03	N/A
Ashford Holtsville LP	Delaware	7/16/03	N/A
Ashford Horse Cave LP	Delaware	7/14/04	N/A
Ashford Jacksonville II LP	Delaware	10/27/03	N/A
Ashford Kennesaw I LP	Delaware	6/25/04	N/A
Ashford Kennesaw II LP	Delaware	6/25/04	N/A
Ashford Las Vegas LP	Delaware	7/16/03	N/A
Ashford Lawrenceville LP	Delaware	10/27/03	N/A

Exhibit A-5

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
Ashford Louisville LP	Delaware	7/14/04	N/A
Ashford Mobile LP	Delaware	10/27/03	N/A
Ashford Phoenix LP	Delaware	9/25/03	N/A
Ashford Princeton LP	Delaware	7/14/04	N/A
Ashford Syracuse LP	Delaware	9/25/03	N/A
Ashford Terre Haute LP	Delaware	7/14/04	N/A
Ashford Tipton Lakes LP	Delaware	7/14/04	N/A
New Clear Lake Hotel GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
New Clear Lake Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)
Ashford Indy Airport LP	Delaware	1/28/05	N/A
Ashford Indy Airport GP LLC	Delaware	1/28/05	N/A
St. Petersburg Florida Hotel LP	Delaware	7/12/94	N/A
		(acq. 3/16/05)
FL/NY GP LLC	Delaware	11/4/03	N/A
		(acq. 3/16/05)
Ashford Milford LP	Delaware	1/28/05	N/A
Ashford Milford GP LLC	Delaware	1/28/05	N/A
New Beverly Hills Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)
New Beverly Hills GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
New Fort Tower I Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)
New Fort Tower II Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)

Exhibit A-6

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
New Fort Tower I GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
New Fort Tower II GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
Minnetonka Minnesota Hotel LP	Delaware	5/25/93	N/A
		(acq. 3/16/05)
Minnetonka Hotel GP LLC	Delaware	1/28/05	N/A
Rockland Massachusetts Hotel LP	Delaware	3/8/93	N/A
		(acq. 3/16/05)
Rockland Hotel GP LLC	Delaware	1/28/05	N/A
Dallas Texas Hotel LP	Delaware	5/25/93	N/A
		(acq. 3/16/05)
Dallas Hotel GP LLC	Delaware	1/28/05	6/29/05
			(dissolved)
Georgia Peach Hotel LP	Delaware	11/10/92	N/A
		(acq. 3/16/05)
Georgia Hotel GP LLC	Delaware	1/28/05	N/A
Key West Florida Hotel LP	Delaware	5/21/96	N/A
		(acq. 3/16/05)
Key West Hotel GP LLC	Delaware	1/28/05	N/A
New Houston Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)
New Houston GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
Palm Beach Florida Hotel & Office Building LP	Delaware	3/28/95	N/A
		(acq. 3/16/05)
Annapolis Maryland Hotel LP	Delaware	10/12/93	N/A
		(acq. 3/16/05)
Annapolis Hotel GP LLC	Delaware	1/28/05	N/A

Exhibit A-7

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
New Indianapolis Downtown Hotel LP	Delaware	10/3/00	N/A
		(acq. 3/16/05)
New Indianapolis Downtown GP LLC	Delaware	9/8/00	N/A
		(acq. 3/16/05)
Ashford Santa Fe LP	Delaware	1/11/05	N/A
Coral Gables Hotel GP LLC	Delaware	1/28/05	N/A
Massachusetts Hotel GP LLC	Delaware	1/28/05	N/A
Ashford Orlando Sea World LP	Delaware	5/27/05	N/A
Ashford Salt Lake LP	Delaware	5/27/05	N/A
Ashford Ruby Palm Desert I LP	Delaware	5/27/05	N/A
Ashford Ruby Palm Desert II LP	Delaware	5/27/05	6/24/05
			(dissolved)
Ashford Charlotte LP	Delaware	5/27/05	N/A
Ashford Falls Church LP	Delaware	5/27/05	N/A
Ashford Gaithersburg LP	Delaware	6/1/05	N/A
Ashford Mira Mesa San Diego LP	Delaware	5/27/05	N/A
Ashford Irvine Spectrum Foothill Ranch LP	Delaware	5/27/05	N/A
Ashford Raleigh LP	Delaware	5/27/05	N/A
Ashford Centreville LP	Delaware	6/1/05	N/A
Ashford Crystal City LP	Delaware	5/27/05	N/A
Ashford Overland Park LP	Delaware	5/27/05	N/A
Ashford Alpharetta LP	Delaware	5/27/05	N/A
Ashford Hospitality Finance Gunter General Partner LLC	Delaware	7/5/05	N/A
Ashford Hospitality Finance Gunter LP	Delaware	7/5/05	N/A

Exhibit A-8

C. Subsidiaries of Ashford TRS Corporation (1%) and Ashford Hospitality Limited Partnership (99%)

	Jurisdiction of	Date of
	Formation/	Formation/	Date of
Name	Incorporation	Acquisition	Disposition
South Yarmouth Massachusetts Hotel LP	Delaware	1/20/94	N/A
		(acq. 3/16/05)
Coral Gables Florida Hotel LP	Delaware	5/21/96	N/A
		(acq. 3/16/05)
Hyannis Massachusetts Hotel LP	Delaware	11/10/92	N/A
		(acq. 3/16/05)
Falmouth Square Inn LP	Delaware	2/22/93	N/A
		(acq. 3/16/05)
Commack New York Hotel LP	Delaware	4/13/94 (acq. 3/16/05)	N/A
Westbury New York Hotel LP	Delaware	4/13/94	N/A
		(acq. 3/16/05)
Ashford Ft. Lauderdale Weston I LLC7	Delaware	6/1/05	N/A
Ashford Ft. Lauderdale Weston II LLC8	Delaware	6/1/05	N/A
Ashford Ft. Lauderdale Weston III LLC9	Delaware	6/1/05	N/A

7	Wholly-owned by Hyannis Massachusetts Hotel LP.
8	Wholly-owned by Coral Gables Florida Hotel LP.
9	Wholly-owned by South Yarmouth Massachusetts Hotel LP.

Exhibit A-9

EXHIBIT “B”

Definitions

“Attribution Rules” means that

(i) stock owned directly or indirectly by or for a corporation, partnership, estate, or trust shall be considered as being owned proportionately by its shareholders, partners, or beneficiaries;

(ii) an individual shall be considered as owning the stock owned, directly or indirectly by or for his family. For purposes of this paragraph, the family of an individual includes only his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants;

(iii) if any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock;

(iv) stock constructively owned by a person by reason of the application of paragraph (i) or (iii) shall, for purposes of applying paragraph (i) or (ii), be treated as actually owned by such person; but stock constructively owned by an individual by reason of the application of paragraph (ii) shall not be treated as owned by him for purposes of again applying such paragraph in order to make another the constructive owner of such stock;

(v) if stock may be considered as owned by an individual under either paragraph (ii) or (iii) it shall be considered as owned by him under paragraph (iii); and

(vi) outstanding securities convertible into stock (whether or not convertible during the taxable year) shall be considered as outstanding stock.

“Code” means the Internal Revenue Code of 1986, as amended.

     “Eligible Independent Contractor” means, with respect to any Qualified Lodging Facility, any Independent Contractor if, at the time the Independent Contractor enters into a management agreement or other similar service contract with the Taxable REIT Subsidiary to operate (including manage) the Qualified Lodging Facility, such Independent Contractor (or any related person) is actively engaged in the trade or business of operating Qualified Lodging Facilities for any person who is not a related person with respect to the Company or any of its Taxable REIT Subsidiaries. For this purpose, persons are related to each other if they are treated as a single employer under subsections (a) or (b) of section 52 of the Code as set forth below.

Exhibit B-1

I. Section 52(a).

(A) Under section 52(a), all employees of all corporations which are members of the same controlled group of corporations are treated as employed by a single employer. A controlled group of corporations means any group of:

     (1) a parent-subsidiary group of corporations, which means one or more chains of corporations connected through stock ownership with a common parent corporation if -

(a) stock possessing at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or at least fifty percent (50%) of the total value of shares of all classes of stock of each of the corporations, except the common parent corporation, is owned by one or more of the other corporations; and

(b) the common parent corporation owns stock possessing at least fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or at least fifty percent (50%) of the total value of             shares of all classes of stock of at least one of the other corporations, excluding, in computing such voting power or value, stock owned directly by such other corporations.

     (2) a brother-sister controlled group, which means two (2) or more corporations if five (5) or fewer persons who are individuals, estates, or trusts own stock possessing-

(a) at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote or at least eighty percent (80%) of the total value of shares of all classes of the stock of each corporation; and

(b) more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock of each corporation, taking into account the stock ownership of each such person only to the extent such stock ownership is identical with respect to each such corporation.

(3) a combined group, which means three (3) or more corporations each of which is a member of a group of corporations described in paragraphs (A)(1) or (2), and one of which –

(a) is a common parent corporation included in a group of corporations described in paragraph (A)(1) and also

(b) is included in a group of corporations described in paragraph (A)(2).

(B) In applying these rules, the following constructive ownership rules apply:

Exhibit B-2

(1) If any person has an option to acquire stock, such stock shall be considered as owned by such person.

(2) Stock owned, directly or indirectly, by or for a partnership shall be considered as owned by any partner having an interest of five percent (5%) or more in either the capital or profits of the partnership in proportion to his interest in capital or profits, whichever is greater.

(3) Stock owned, directly or indirectly, by or for an estate or trust shall be considered as owned by any beneficiary who has an actuarial interest of five percent (5%) or more in such stock, to the extent of such actuarial interest. Also, stock owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner (such as grantor trusts) shall be considered as owned by such person.

(4) Stock owned, directly or indirectly, by or for a corporation shall be considered as owned by any person who owns (under these constructive ownership rules) five percent (5%) or more in value of its stock in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation.

(5) An individual shall be considered as owning stock in a corporation owned, directly or indirectly, by or for his spouse (other than a spouse legally separated from the individual), except in the case of a corporation with respect to which each of the following conditions is satisfied for its taxable year –

(a) the individual does not, at any time during the taxable year, own directly any stock in such corporation;

(b) the individual is not a director or employee and does not participate in the management of such corporation at any time during such taxable year;

(c) not more than fifty percent (50%) of such corporation’s gross income for such taxable year was derived from royalties, rents, dividends, interest, and annuities; and

(d) such stock in such corporation is not, at any time during such taxable year, subject to conditions which substantially restrict or limit the spouse’s right to dispose of such stock and which run in favor of the individual or his children who have not attained the age of twenty-one (21) years.

(6) An individual is considered as owning stock owned, directly or indirectly, by or for his children who have not attained twenty-one (21) years of age, and, if the individual has not attained twenty-one (21) years of age, the stock owned, directly or indirectly, by or for his parents. An individual who owns (without regard to this paragraph (6)), more than fifty percent (50%) of the total combined

Exhibit B-3

voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of shares of all classes of stock in a corporation shall be considered as owning the stock in such corporation owned, directly or indirectly, by or for his parents, grandparents, grandchildren, and children who have not attained twenty-one (21) years of age. For purposes of these rules, a legally adopted child of an individual is treated as a child of such individual by blood.

(C) Furthermore, in applying the constructive ownership rules , the following operating rules apply:

(1) Stock owned constructively by a person by reason of paragraphs (B)(1), (2), (3), (4), (5) or (6) shall, for purposes of applying these rules, be treated as actually owned by such person, but stock owned constructively by an individual by reason of paragraphs (B)(5) or (6), shall not be treated as owned by him for purposes of again applying such paragraphs in order to make another the constructive owner of such stock.

(2) If stock is considered owned by a person under paragraph (B)(1) and another paragraph, it shall be considered as owned by him under paragraph (B)(1). If stock is owned by two (2) or more persons, the stock is considered as owned by the person whose ownership of such stock results in the corporation being a component member of a controlled group. If by reason of the previous sentence, a corporation would become a component member of two controlled groups, it shall be treated as a component member of one controlled group.

II. Section 52(b).

     Under section 52(b), all employees of trades or businesses which are under common control are treated as employed by a single employer. The term “trades or businesses that are under common control” means any group of trades or businesses that is either a “parent-subsidiary group under common control,” a “brother-sister group under common control,” or a “combined group under common control.” For these purposes, an organization includes a sole proprietorship, a partnership, a trust, an estate or a corporation, and an organization may be a member of only one group of trades or businesses under common control.

(A) (1) The term “parent-subsidiary group under common control” means one or more chains of organizations conducting trades or businesses that are connected through ownership of a controlling interest with a common parent organization if a controlling interest in each of the organizations, except the common parent organization, is owned (directly and by considering any interest subject to an option as actually owned by the person holding the option) by one or more of the other organizations, and the common parent organization owns (directly and by considering any interest subject to an option as actually owned by the person holding the option) a controlling interest in at least one of the other organizations.

Exhibit B-4

(2) The term “controlling interest” for purposes of determining whether organizations are considered a parent-subsidiary group under common control means:

(a) in the case of a corporation, ownership of stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of the shares of all classes of stock of the corporation;

(b) in the case of a trust or estate, ownership of an actuarial interest of more than fifty percent (50%) of the estate or trust;

(c) in the case of a partnership, ownership of more than fifty percent (50%) of the profits or capital interest of the partnership; and

(d) in the case of a sole proprietorship, ownership of the sole proprietorship.

(B) (1) The term “brother-sister group under common control” means two (2) or more organizations conducting trades or businesses if the same five (5) or fewer persons own a controlling interest in each organization, and taking into account the ownership of each person only to the extent that person’s ownership is identical with respect to each organization, such persons are in effective control of each organization. The constructive ownership rules applied in section 52(a) shall apply for determining ownership, except that “stock” shall be replaced with “interest.”

(2) The term “controlling interest” for purposes of determining whether organizations are considered a brother-sister group under common control means:

(a) in the case of a corporation, ownership of stock possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote or at least eighty percent (80%) of the total value of the shares of all classes of stock of the corporation;

(b) in the case of a trust or estate, ownership of an actuarial interest of at least eighty percent (80%) of the estate or trust;

(c) in the case of a partnership, ownership of at least eighty percent (80%) of the profits or capital interest of the partnership; and

(d) in the case of a sole proprietorship, ownership of the sole proprietorship.

     (3) For purposes of this paragraph (B) (brother-sister group under common control), “effective control” means:

Exhibit B-5

(a) in the case of a corporation, ownership of stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock entitled to vote or more than fifty percent (50%) of the total value of the shares of all classes of stock of the corporation;

(b) in the case of a trust or estate, ownership of an actuarial interest of more than fifty percent (50%) of the estate or trust;

(c) in the case of a partnership, ownership of more than fifty percent (50%) of the profits or capital interest of the partnership; and

(d) in the case of a sole proprietorship, ownership of the sole proprietorship.

(C) The term “combined group under common control” means a group of three (3) or more organizations, in which

(a) each organization is a member of either a parent-subsidiary group under common control or brother-sister group under common control, and

(b) at least one organization is the common parent organization of a parent-subsidiary group under common control and also a member of a brother-sister group under common control.

“Excess Noncash Income” means

     (1) the excess (if any) of:

(A) the amount determined under paragraph (2) for the taxable year, over

(B) five percent (5%) of the real estate investment trust taxable income for the taxable year determined without regard to the deduction for dividends paid and by excluding any net capital gain.

(2) The amount determined under this paragraph for the taxable year is the sum of:

(A) the amount (if any) by which -

(i) the amounts includible in gross income under Code section 467 (relating to certain payments for the use of property or services), exceed

(ii) the amounts which would have been includible in gross income without regard to such section, and

(B) any income on the disposition of a Real Estate Asset if -

(i) there is a determination by a court or by agreement with the Internal Revenue Service that such income is not eligible for

Exhibit B-6

nonrecognition under the tax-free exchange rules of Code section 1031 (related to “like kind” exchanges), and

(ii) failure to meet the requirements of Code section 1031 was due to reasonable cause and not to willful neglect,

(C) the amount (if any) by which -

(i) the amounts includible in gross income with respect to instruments to which Code sections 860E(a) (dealing with REMIC residual interests) or 1272 (dealing with original issue discount obligations) applies, exceed

(ii) the amount of money and the fair market value of other property received during the taxable year under such instruments, and

(D) amounts includible in income by reason of cancellation of indebtedness.

     “Foreclosure Property” means any real property (including Interests in Real Property), and any personal property incident to such real property acquired by the Company or the Partnerships as a result of the Company or the Partnerships having bid in such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was default or default was imminent on a lease of such property or on an indebtedness which such property secured. Such term does not include property acquired by the Company or the Partnerships as a result of indebtedness arising from the sale or other disposition of property which is Section 1221(a)(l) Property which was not originally acquired as Foreclosure Property.

     “Independent Contractor” means any person:

(i) who does not own, directly or indirectly, more than thirty-five percent (35%) of the shares, or certificates of beneficial interest, in the Company; and

(ii) if such person is a corporation, not more than thirty-five percent (35%) of the total combined voting power of whose stock (or thirty-five percent (35%) of the total shares of all classes of whose stock), or, if such person is not a corporation, not more than thirty-five percent (35%) of the interest in whose assets or net profits is owned, directly or indirectly, by one or more persons owning thirty-five percent (35%) or more of the shares in the Company.

     Only persons who own, directly or indirectly, more than five percent (5%) of the stock of the Company are taken into account as owning any stock for purposes of applying the thirty-five percent (35%) limitation set forth in paragraph (ii) above (but all of the outstanding stock is considered outstanding in order to compute the denominator for purpose of determining the applicable percentage of ownership). The Section 318 Attribution Rules shall be applied to determine ownership.

     “Interests in Real Property” means fee ownership and co-ownership of land or improvements thereon, leaseholds of land or improvements thereon, options to acquire land or

Exhibit B-7

improvements thereon, and options to acquire leaseholds of land or improvements thereon, but does not include mineral, oil, or gas royalty interests.

     “Person” means an individual, private foundation, charitable trust, and employee pension, profit sharing, stock bonus and supplemental unemployment benefit trust.

     “Prohibited Transaction” means the sale or other disposition of Section 1221(a)(l) Property, other than Foreclosure Property unless (i) the property sold was a Real Estate Asset, (ii) the Company or the Partnerships held the Real Estate Asset for at least four (4) years; (iii) the aggregate expenditures made by the Company or the Partnerships during the four (4) year period preceding the date of the sale which are includible in the basis of the Real Estate Asset do not exceed thirty percent (30%) of the net selling price of such asset, (iv) (A) neither the Company nor the Partnerships made more than seven (7) sales of property during any taxable year (other than Foreclosure Property or sales to which Code section 1033 applies), or (B) the aggregate adjusted bases (as determined for purposes of computing earnings and profits) of Real Estate Assets (other than Foreclosure Property or sales to which Code section 1033 applies) sold during the taxable year does not exceed ten percent (10%) of the aggregate bases (as so determined) of all of the assets of the Company or the Partnerships as of the beginning of the taxable year, (v) in the case of property which consists of land or improvements not acquired through foreclosure (or deed in lieu of foreclosure), or lease termination, the Company or the Partnerships has held the property for not less than four (4) years for production of rental income, and (vi) if the requirement of paragraph (iv)(A) is not satisfied, substantially all of the marketing and development expenditures with respect to the property were made through an Independent Contractor from whom neither the Company or the Partnerships derives nor receives income.

     “Qualified Lodging Facility” means any hotel, motel or other establishment more than one-half of the dwelling units in which are used on a transient basis (including customary amenities and facilities operated as part of, or associated with, the lodging facility so long as such amenities and facilities are customary for other properties of a comparable size and class owned by other owners unrelated to the Company) unless wagering activities are conducted at or in connection with such facility by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or in connection with such facility.

     “Qualified REIT Subsidiary” means any corporation, other than a Taxable REIT Subsidiary, if one hundred percent (100%) of the stock of such corporation is held by the Company.

     “Qualified Temporary Investment Income” means any income which (i) is attributable to stock, or a bond, debenture, note, certificate or other evidence of indebtedness (excluding any annuity contract which depends, in whole or in substantial part, on the life expectancy of one or more individuals, or is issued by an insurance company in a transaction in which there is no consideration other than cash or another annuity contract meeting the requirements of this definition, pursuant to the exercise of an election under an insurance contract by a beneficiary thereof on the death of the insured party under such contract or in a transaction involving the qualified pension or employee benefit plan), (ii) is attributable to the temporary investment of

Exhibit B-8

new capital received by the Company, and (iii) is received or accrued during the one year period beginning on the date the Company receives such capital.

     “Real Estate Asset” means real property (including Interests in Real Property and interests in mortgages on real property) and shares (or transferable certificates of beneficial interest) in other REITs, and any property (not otherwise a Real Estate Asset) attributable to the temporary investment of new capital, but only if such property is stock or a debt instrument, and only for the one year period beginning on the date the Company receives such capital.

     “REIT” means a real estate investment trust which meets the requirements of sections 856 through 860 of the Code.

     “Revoked” means the Company filed an election with the Internal Revenue Service revoking its status as a REIT.

     “Safe Harbor Provisions” means the safe harbor under Revenue Procedure 2003-65 under which a loan from a REIT secured by an interest in a partnership or limited liability company will be treated as a Real Estate Asset and the interest on the loan will be treated as an interest on an obligation secured by a mortgage on real property or on an Interest in Real Property. To be within the safe harbor, a REIT must comply with the following requirements:

(i) The borrower is either a partner in a partnership or the sole member of an eligible entity that for federal tax purposes is disregarded as an entity separate from its owner (i.e., a limited liability company (“LLC”)).

(ii) The loan is nonrecourse, secured only by the partner’s interest in the partnership, or the member’s interest in the disregarded entity; thus, in the event of default, the sole recourse is against the pledged ownership interest.

(iii) The Company was granted a first priority security interest in the pledged ownership interest. This security interest will place the Company’s claim as lender ahead of the claims of other creditors of the partner or LLC member. The pledged ownership interest cannot be further encumbered unless the security interest created is subordinate to the Company’s security interest.

(iv) Upon default and foreclosure on the secured loan, the Company will replace the borrower as a partner in the partnership or as the sole member of the disregarded entity. In the case of a loan secured by a partnership interest, the other partners in the partnership must have agreed that upon default and foreclosure they will not unreasonably oppose the admission of the Company as a partner.

(v) On the date the commitment by the Company to make the loan became binding on the Company, the partnership or disregarded entity held Real Estate Assets. If all or part of this real property is subsequently sold or otherwise transferred, the loan will become due and payable upon the sale or transfer of the Real Estate Assets.

(vi) On each testing date, the value of the Real Estate Assets held by the partnership or disregarded entity was at least eighty-five percent (85%) of the value of all of the assets

Exhibit B-9

of the partnership or disregarded entity. For this purpose a testing date means the close of the first quarter of the Company’s taxable year following the date on which the commitment by the Company to make the loan becomes binding on the Company, and the close of each subsequent quarter in which the partnership or disregarded entity acquires any assets other than Real Estate Assets, cash and cash items (including receivables), or government securities, or reasonable quantities of equipment and materials customarily used for the maintenance and repair of real property. For this purpose, asset acquisitions by a partnership or disregarded entity include additional partnership or member contributions.

(vii) The loan value of the Real Estate Assets owned by the partnership or disregarded entity equals or exceeds the amount of the loan as determined under Treasury Regulation section 1.856-5(c)(2) (which defines loan value to mean the fair market value of the Real Estate Assets as of the date the commitment to make or purchase the loan becomes binding on the Company). For this purpose, the loan value is reduced by any liens encumbering the Real Estate Assets, as well as by any other liabilities of the partnership or disregarded entity on the date the commitment by the Company to make the loan becomes binding on the Company. If the Real Estate Asset is owned by a partnership, only the proportionate share of the loan value (based upon the proportionate amount of capital allocable to the Company) attributable to the interest that secures the Company’s loan is taken into account.

(viii) Interest on the loan includes only an amount that constitutes compensation for the use or forbearance of money, and, subject to the exception contained in Treasury Regulation section 1.856-5(d) (which treats a proportionate amount of contingent interest as non-qualified income where the REIT’s loan provides for permissible contingent interest based on the borrower’s gross receipts but the borrower’s gross receipts depend, in part, on the profits of another person), the determination of the amount does not depend in whole or in part on the income or profits of any person.

     “Section 318 Attribution Rules” means that:

(1) Members of family

(A) An individual shall be considered as owning the stock owned, directly or indirectly, by or for:

(i) his spouse (other than a spouse who is legally separated from the individual), and

(ii) his children (including adopted children), grandchildren, and parents.

(2) Attribution from partnerships, estates, trusts and corporations

(A) From partnerships and estates — Stock owned, directly or indirectly, by or for a partnership or estate shall be considered as owned proportionately by its partners or beneficiaries.

Exhibit B-10

(B) From trusts –

     (i) Stock owned, directly or indirectly, by or for a trust (other than an employees’ trust described in section 401(a) which is exempt from tax under section 501(a)) shall be considered as owned by its beneficiaries in proportion to the actuarial interest of such beneficiaries in such trust.

     (ii) Stock owned, directly or indirectly, by or for any portion of a trust of which a person is considered the owner under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by such person.

(C) From corporations – If ten percent (10%) or more in value of the stock in a corporation is owned, directly or indirectly, by or for any person, such person shall be considered as owning the stock owned, directly or indirectly, by or for such corporation, in that proportion which the value of the stock which such person so owns bears to the value of all the stock in such corporation.

(3) Attribution to partnerships, estates, trusts and corporations

(A) To partnerships and estates –

(i)	If the partner owns, directly or indirectly, twenty-five percent (25%) or more of the capital or profits interest in the partnership, stock owned, directly or indirectly, by or for a partner shall be considered as owned by the partnership.
(ii)	Stock owned, directly or indirectly, by or for a beneficiary of an estate shall be considered as owned by the estate.

(B) To trusts -

     (i) Stock owned, directly or indirectly, by or for a beneficiary of a trust (other than an employees’ trust described in section 401(a) which is exempt from tax under section 501(a)) shall be considered as owned by the trust, unless such beneficiary’s interest in the trust is a remote contingent interest. For purposes of this clause, a contingent interest of a beneficiary in a trust shall be considered remote if, under the maximum exercise of discretion by the trustee in favor of such beneficiary, the value of such interest, computed actuarially, is five percent (5%) or less of the value of the trust property.

     (ii) Stock owned, directly or indirectly, by or for a person who is considered the owner of any portion of a trust under subpart E of part I of subchapter J (relating to grantors and others treated as substantial owners) shall be considered as owned by the trust.

Exhibit B-11

(C) If ten percent (10%) or more in value of the stock in a corporation is owned, directly or indirectly, by or for any person, such corporation shall be considered as owning the stock owned, directly or indirectly, by or for such person.

(4) If any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock.

(5) Operating rules

(A) Except as provided in subparagraphs (B) and (C) below, stock constructively owned by a person by reason of the application of paragraphs (1), (2), (3), or (4) shall, for purposes of applying paragraphs (1), (2), (3), and (4) be considered as actually owned by such person.

(B) Stock constructively owned by an individual by reason of the application of paragraph (1) shall not be considered as owned by him for purposes of again applying paragraph (1) in order to make another the constructive owner of such stock.

(C) Stock constructively owned by a partnership, estate, trust or corporation by reason of the application of paragraph (3) shall not be considered as owned by it for purposes of applying paragraph (2) in order to make another the constructive owner of such stock.

(D) For purposes of this paragraph, if stock may be considered as owned by an individual under paragraphs (1) or (4), it shall be considered as owned by him under paragraph (4).

(E) For purposes of these rules, an S corporation shall be treated as a partnership and any shareholder of the S corporation shall be treated as a partner of such partnership. The preceding sentence shall not apply for purposes of determining whether stock in the S corporation is constructively owned by any person.

     “Section 1221(a)(l) Property” means stock in trade of the taxpayer or other property of a kind which would properly be included in the inventory of the taxpayer if on hand at the close of the taxable year, or property held by the taxpayer primarily for sale to customers in the ordinary course of its trade or business.

     “Taxable REIT Subsidiary” means a corporation in which the Company directly or indirectly owns stock (other than another REIT, a corporation which directly or indirectly operates or manages a lodging facility or health care facility and, with certain exceptions, a corporation which directly or indirectly provides to any other person (under a franchise, license, or otherwise) rights to any brand name under which any lodging facility or health care facility is operated) with respect to which the Company and such corporation file a joint election with the Internal Revenue Service for such corporation to be treated as a Taxable REIT Subsidiary of the Company. Taxable REIT Subsidiary includes any corporation (other than a REIT) with respect to which a Taxable REIT Subsidiary owns, directly or indirectly, securities possessing more than thirty-five percent (35%), by vote or by value, of the total outstanding securities of such corporation.

Exhibit B-12

EXHIBIT “C”

Treasury Regulation Section 1.857-8

§ 1.857-8 Records to be kept by a real estate investment trust.

(a) In general. Under section 857(a)(2) a real estate investment trust is required to keep such records as will disclose the actual ownership of its outstanding stock. Thus, every real estate investment trust shall maintain in the internal revenue district in which it is required to file its income tax return permanent records showing the information relative to the actual owners of its stock contained in the written statements required by this section to be demanded from its shareholders. Such records shall be kept at all times available for inspection by any internal revenue officer or employee, and shall be retained so long as the contents thereof may become material in the administration of any internal revenue law.

(b) Actual owner of stock. The actual owner of stock of a real estate investment trust is the person who is required to include in gross income in his return the dividends received on the stock. Generally, such person is the shareholder of record of the real estate investment trust. However, where the shareholder of record is not the actual owner of the stock, the stockholding record of the real estate investment trust may not disclose the actual ownership of such stock. Accordingly, the real estate investment trust shall demand written statements from shareholders of record disclosing the actual owners of stock as required in paragraph (d) of this section.

(c) Stock ownership for personal holding company determination. For the purpose of determining under section 856(a)(6) whether a trust, claiming to be a real estate investment trust, is a personal holding company, the permanent records of the trust shall show the maximum number of shares of the trust (including the number and face value of securities convertible into stock of the trust) to be considered as actually or constructively owned by each of the actual owners of any of its stock at any time during the last half of the trust’s taxable year, as provided in section 544.

(d) Statements to be demanded from shareholders. The information required by paragraphs (b) and (c) of this section shall be set forth in written statements which shall be demanded from shareholders of record as follows:

(1) In the case of a trust having 2,000 or more shareholders of record of its stock on any dividend record date, from each record holder of 5 percent or more of its stock; or

(2) In the case of a trust having less than 2,000 and more than 200 shareholders of record of its stock on any dividend record date, from each record holder of 1 percent or more of its stock; or

(3) In the case of a trust having 200 or less shareholders of record of its stock on any dividend record date, from each record holder of one-half of 1 percent or more of its stock.

Exhibit C-1

(e) Demands for statements. The written statements from shareholders of record shall be demanded by the real estate investment trust in accordance with paragraph (d) of this section within 30 days after the close of the real estate investment trust’s taxable year (or before June 1, 1962, whichever is later). When making demand for such written statements, the trust shall inform each such shareholder of his duty to submit at the time he files his income tax return (or before July 1, 1962, whichever is later) the statements which are required by § 1.857-9 if he fails or refuses to comply with such demand. A list of the persons failing or refusing to comply in whole or in part with the trust’s demand for statements under this section shall be maintained as a part of the trust’s records required by this section. A trust which fails to keep such records to show, to the extent required by this section, the actual ownership of its outstanding stock shall be taxable as an ordinary corporation and not as a real estate investment trust.

Exhibit C-2

EXHIBIT “D”

Form of Lease

(Begins on next page)

Exhibit D-1

EXHIBIT “E”

Hedges

(1) the Swap Transaction with SMBC Derivative Products Limited dated September 2, 2004;

(2) four Swap Transactions with CALYON New York Branch dated September 2, 2004; and

(3) the Early Rate Lock Agreement by and between Ashford Hospitality Limited Partnership and Merrill Lynch Mortgage Lending, Inc. dated April 26, 2005.

Exhibit E-1

EXHIBIT “F”

Leases

(Begins on next page)

Exhibit F-1

Leases during Relevant Period

		Date	Date of
Property	Parties	Acquired	Disposition
Radisson — Holtsville, NY	Ashford Holtsville LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Dulles, VA	Ashford Dulles LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Las Vegas, NV	Ashford Las Vegas LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Radisson — Covington, KY	Ashford Covington LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Dallas, TX	Ashford Dallas LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Austin, TX	Ashford Austin LP – Lessor	08/29/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Syracuse, NY	Ashford Syracuse LP – Lessor	10/08/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Phoenix, AZ	Ashford Phoenix LP – Lessor	10/08/03	N/A
	Ashford TRS Corporation – Lessee
Embassy Suites — Flagstaff, AZ	Ashford Flagstaff LP – Lessor	10/08/03	N/A
	Ashford TRS Corporation – Lessee
Doubletree Guest Suites – Dayton,	Ashford Dayton LP – Lessor	10/08/03	N/A
OH	Ashford TRS Corporation – Lessee
Doubletree Guest Suites –	Ashford Columbus LP – Lessor	10/08/03	N/A
Columbus, OH	Ashford TRS Corporation – Lessee
Homewood Suites — Mobile, AL	Ashford Mobile LP – Lessor	11/24/03	N/A
	Ashford TRS Corporation – Lessee
Hilton Garden Inn – Jacksonville,	Ashford Jacksonville I LP – Lessor	11/24/03	N/A
FL	Ashford TRS I, LLC – Lessee
SpringHill Suites – Jacksonville, FL	Ashford Jacksonville II LP – Lessor	11/24/03	N/A
	Ashford TRS Corporation – Lessee

Exhibit F-2

		Date	Date of
Property	Parties	Acquired	Disposition
Hampton Inn — Lawrenceville, GA	Ashford Lawrenceville LP – Lessor	11/24/03	N/A
	Ashford TRS Corporation – Lessee
Residence Inn – Lake Buena Vista,	Ashford Buena Vista LP – Lessor	03/24/04	N/A
FL	Ashford TRS Corporation – Lessee
Sea Turtle Inn — Atlantic Beach, FL	Ashford Atlantic Beach LP – Lessor	04/01/04	N/A
	Ashford TRS II, LLC – Lessee
SpringHill Suites – BWI Airport,	Ashford BWI Airport LP – Lessor	05/17/04	N/A
MD	Ashford TRS Corporation – Lessee
Sheraton — Bucks County, PA	Ashford Bucks County LLC – Lessor	07/07/04	N/A
	Ashford TRS Corporation – Lessee
Fairfield Inn — Kennesaw, GA	Ashford Kennesaw I LP – Lessor	07/23/04	N/A
	Ashford TRS Corporation – Lessee
SpringHill Suites — Kennesaw, GA	Ashford Kennesaw II LP – Lessor	07/23/04	N/A
	Ashford TRS Corporation – Lessee
SpringHill Suites — Buford, GA	Ashford Buford II LP – Lessor	07/23/04	N/A
	Ashford TRS Corporation – Lessee
Hampton Inn — Buford, GA	Ashford Buford I LP – Lessor	07/23/04	N/A
	Ashford TRS Corporation – Lessee
Hampton Inn — Horse Cave, KY	Ashford Horse Cave LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee
Courtyard by Marriott – Louisville,	Ashford Louisville LP – Lessor	09/02/04	N/A
KY	Ashford TRS Lessee, LLC – Lessee
Courtyard by Marriott –	Ashford Bloomington LP – Lessor	09/02/04	N/A
Bloomington, IN	Ashford TRS Lessee, LLC – Lessee
Courtyard by Marriott – Columbus,	Ashford Tipton Lakes LP – Lessor	09/02/04	N/A
IN	Ashford TRS Lessee, LLC – Lessee
Fairfield Inn — Evansville, IN	Ashford Evansville II LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee
Residence Inn — Evansville, IN	Ashford Evansville III LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee

Exhibit F-3

		Date	Date of
Property	Parties	Acquired	Disposition
Fairfield Inn — Princeton, IN	Ashford Princeton LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee
Hampton Inn — Terre Haute, IN	Ashford Terre Haute LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee
Hampton Inn — Evansville, IN	Ashford Evansville I LP – Lessor	09/02/04	N/A
	Ashford TRS Lessee, LLC – Lessee
Hyatt Regency — Anaheim, CA	Ashford Anaheim LP – Lessor
	Ashford TRS Corporation – Lessee	10/01/04	N/A
Hilton — Nassau Bay, TX	New Clear Lake Hotel LP – Lessor	3/16/05	N/A
	Ashford TRS IV LLC – Lessee
Radisson — Indianapolis Airport, IN	Ashford Indy Airport LP – Lessor	3/16/05	N/A
	Ashford TRS IV LLC – Lessee
Hilton — St. Petersburg, FL	St. Petersburg Florida Hotel LP-Lessor	3/16/05	N/A
	Ashford TRS V LLC – Lessee
Radisson — Milford, MA	Ashford Milford LP – Lessor	3/16/05	N/A
	Ashford TRS IV LLC – Lessee
Holiday Inn — Coral Gables, FL	Coral Gables Florida Hotel LP-Lessor	3/16/05	6/15/05
	Ashford TRS Corporation-Lessee
Howard Johnson — Commack, NY	Commack New York Hotel LP-Lessor	3/16/05	N/A
	Ashford TRS V LLC – Lessee
Crowne Plaza — Beverly Hills, CA	New Beverly Hills Hotel LP-Lessor	3/16/05	N/A
	Ashford TRS IV LLC-Lessee
Ramada — Hyannis, MA	Hyannis Massachusetts Hotel LP-Lessor	3/16/05	4/19/05
	Ashford TRS Corporation-Lessee
Howard Johnson — Westbury, NY	Westbury New York Hotel LP-Lessor	3/16/05	N/A
	Ashford TRS V LLC – Lessee
Radisson — Ft. Worth, TX	New Fort Tower I Hotel LP – Lessor	3/16/05	N/A
	New Fort Tower II Hotel LP – Lessor
	Ashford TRS IV LLC – Lessee

Exhibit F-4

		Date	Date of
Property	Parties	Acquired	Disposition
Inn on the Square — Falmouth, MA	Falmouth Square Inn LP – Lessor	3/16/15	6/14/05
	Ashford TRS Corporation – Lessee
Sheraton — Minnetonka, MN	Minnetonka Minnesota Hotel LP –Lessor	3/16/05	N/A
	Ashford TRS III LLC – Lessee
Radisson — Rockland, MA	Rockland Massachusetts Hotel LP-Lessor	3/16/05	N/A
	Ashford TRS III LLC – Lessee
Crowne Plaza — Key West, FL	Key West Florida Hotel LP – Lessor	3/16/05	N/A
	Ashford TRS III LLC – Lessee
Embassy Suites — Houston, TX	New Houston Hotel LP – Lessor	3/16/05	N/A
	Ashford TRS IV LLC – Lessee
Embassy Suites — West Palm	Palm Beach Florida Hotel and Office	3/16/05	N/A
Beach Gardens, FL	Building LP – Lessor
	Ashford TRS V LLC – Lessee
Historic Inns — Annapolis, MD	Annapolis Maryland Hotel LP – Lessor	3/16/05	N/A
	Ashford TRS III LLC – Lessee
Radisson — Indianapolis Downtown,	New Indianapolis Downtown Hotel	3/16/05	N/A
IN	LP – Lessor
	Ashford TRS IV LLC – Lessee
Gull Wing Suites — Yarmouth, MA	South Yarmouth Massachusetts Hotel	3/16/05	6/7/05
	LP – Lessor
	Ashford TRS Corporation – Lessee
Best Western – Dallas, TX	Acquired by Ashford TRS Corporation	3/16/05	4/1/05
Ramada – Warner Robbins, GA	Acquired by Ashford TRS Corporation	3/16/05	4/22/05
Hilton — Santa Fe, NM	Ashford Santa Fe LP – Lessor	3/22/05	N/A
	Ashford TRS Corporation – Lessee
Residence Inn – Orlando	Ashford Orlando Sea World LP – Lessor	6/17/05	N/A
Sea World, FL	Ashford TRS Lessee I LLC – Lessee
Residence Inn — Cottonwood, UT	Ashford Salt Lake LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee I LLC – Lessee
Courtyard — Palm Desert, CA	Ashford Ruby Palm Desert I LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee I LLC – Lessee

Exhibit F-5

		Date	Date of
Property	Parties	Acquired	Disposition
Residence Inn — Palm Desert, CA	Ashford Ruby Palm Desert I LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee I LLC – Lessee
SpringHill Suites – University	Ashford Charlotte LP – Lessor	6/17/05	N/A
Research Park, NC	Ashford TRS Lessee I LLC – Lessee
Residence Inn — Fairfax, VA	Ashford Falls Church LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee II LLC – Lessee
SpringHill Suites – Gaithersburg,	Ashford Gaithersburg LP – Lessor	6/17/05	N/A
MD	Ashford TRS Lessee II LLC – Lessee
Residence Inn – Sorrento Mesa, CA	Ashford Mira Mesa San Diego LP-Lessor	6/17/05	N/A
	Ashford TRS Lessee II LLC – Lessee
Courtyard — Irvine Spectrum, CA	Ashford Irvine Spectrum Foothill	6/17/05	N/A
	Ranch LP – Lessor
	Ashford TRS Lessee II LLC – Lessee
SpringHill Suites–Durham Airport,	Ashford Raleigh LP – Lessor	6/17/05	N/A
NC	Ashford TRS Lessee II LLC – Lessee
SpringHill Suites — Centreville, VA	Ashford Centreville LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee III LLC – Lessee
Courtyard — Reagan Airport, VA	Ashford Crystal City LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee III LLC – Lessee
Courtyard — Overland Park, KS	Ashford Overland Park LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee III LLC – Lessee
Courtyard – Alpharetta, GA	Ashford Alpharetta LP – Lessor	6/17/05	N/A
	Ashford TRS Lessee III LLC – Lessee
Courtyard — Ft. Lauderdale, FL	Ashford Ft. Lauderdale Weston I LLC –	6/17/05	N/A
	Lessor
	Ashford Ft. Lauderdale Weston II LLC -
	Lessor
	Ashford Ft. Lauderdale Weston III LLC -
	Lessor
	Ashford TRS Lessee III LLC – Lessee
Residence Inn – Fishkill, NY	Acquired by Ashford TRS VI Corporation	6/17/05	N/A

Exhibit F-6

		Date	Date of
Property	Parties	Acquired	Disposition
Residence Inn – Orlando, FL	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Ft. Worth, TX	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Tyler, TX	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Sacramento, CA	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Wilmington, DE	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Providence, RI	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
Residence Inn – Ann Arbor, MI	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Miami
Airport, FL	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Miami
Lakes, FL	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Mt. Laurel,
NJ	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Ft. Worth, TX	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Silicon
Valley, CA	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Portland, ME	Acquired by Ashford TRS VI Corporation	6/17/05	N/A
TownePlace Suites – Boston, MA	Acquired by Ashford TRS VI Corporation	6/17/05	N/A

Exhibit F-7

EXHIBIT “G”

Loans (Assets)

Loans (Assets) during Relevant Period

	Original
	Amount	Date	Date of
Property	of Loan	Acquired	Disposition
Hilton Times Square	$10 million	11/26/03	N/A
Adam’s Mark – Denver, CO	$15 million	01/23/04	N/A
17 Wyndham-owned hotels	$25 million	03/04/04	N/A
Embassy Suites – Boston Logan Airport	$15 million	03/19/04	N/A
Northland Inn & Conference Center	$6.6 million	03/24/04	N/A
Westin – Westminster, CO	$11 million	09/10/04	N/A
Hotel Teatro	$5 million	09/20/04	N/A
Viceroy Hotel	$8 million	02/08/05	N/A
Penn’s Landing	$8 million	04/13/05	N/A
Garden Grove	$8.5 million	05/31/05	N/A
Marriott Cool Springs	$4 million	06/20/05	N/A
Sheraton Gunter	$5.6 million	07/13/05	N/A

Exhibit G-1

EX-23.3

Exhibit 23.3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the reference to our firm under the caption “Experts” in the Registration Statement (Form S-3) and related Prospectus for the registration of 333,333 shares of common stock to be filed with the Securities and Exchange Commission of Ashford Hospitality Trust, Inc. and to the incorporation by reference therein of our reports dated March 15, 2005, with respect to the consolidated and combined financial statements and schedule of Ashford Hospitality Trust, Inc. and the Predecessor, Ashford Hospitality Trust, Inc. management’s assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Ashford Hospitality Trust, Inc. included in its Annual Report (Form 10-K) for the year ended December 31, 2004, filed with the Securities and Exchange Commission.

We also consent to the incorporation by reference therein of our reports on the Residence, Sea Turtle, Sheraton Philadelphia, and SpringHill properties dated March 24, 2004, April 2, 2004, March 29, 2004, and March 24, 2004, respectively, with respect to the historical summaries of revenue and direct operating expenses of these properties for the year ended December 31, 2003 included in Form 8-K/A filed on April 12, 2004.

We also consent to the incorporation by reference therein of our report dated August 12, 2005 , with respect to the balance sheets of RST4 Tenant, LLC as of August 6, 2004, January 2, 2004 and January 3, 2003, and the related statements of operations, cash flows and member’s capital for the period January 3, 2004 through August 6, 2004 and the fiscal years ended January 2, 2004 and January 3, 2003 included in Form 8-K/A filed on August 30, 2005.

/s/ Ernst & Young LLP

Dallas, Texas

August 31, 2005

EX-23.4

Exhibit 23.4

CONSENT OF INDEPENDENT AUDITORS

     We consent to the incorporation by reference in the Registration Statement on Form S-3 (filed on or around September 1, 2005) of Ashford Hospitality Trust, Inc. of our reports on the Day Properties, dated August 2, 2004, the Dunn Properties, dated October 1, 2004, and Hyatt Regency Orange County, dated November 12, 2004, with respect to the combined historical summaries of revenue and direct operating expenses of these properties included in current reports on Form 8-K/A filed with the Securities and Exchange Commission on August 19, 2004, October 14, 2004, and December 8, 2004, respectively.

/s/ Holland Shipes Vann, P.C.

Atlanta, Georgia
September 1, 2005

EX-23.5

Exhibit 23.5

CONSENT OF INDEPENDENT AUDITORS

     We consent to the incorporation by reference in the Registration Statement on Form S-3 (filed on or around September 1, 2005) of Ashford Hospitality Trust, Inc. of our reports on the FGSB Hotel Portfolio, dated December 27, 2004, with respect to the combined historical summaries of revenue and direct operating expenses of these properties included in current reports on Form 8-K/A filed with the Securities and Exchange Commission on December 29, 2004.

/s/ Berdon LLP

New York, New York
September 1, 2005

EX-23.6

Exhibit 23.6

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

     We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our reports dated August 22, 2005 relating to the financial statements of Crystal City Courtyard by Marriott, RFS Hotels and CNL Hotels, which appear in the Current Report on Form 8-K/A of Ashford Hospitality Trust, Inc. dated August 30, 2005. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Orlando, Florida
September 1, 2005