Scott Eckstein - Investor Relations Monty Bennett - Chairman and Chief Executive Officer Douglas Kessler - President Deric Eubanks - Chief Financial Officer Jeremy Welter - Executive Vice President, Asset Management.

Ryan Meliker - MLV & Company Austin Wurschmidt - KeyBanc Thomas Allen - Morgan Stanley Andrew Didora - Bank of America/Merrill Lynch Chris Woronka - Deutsche Bank Nikhil Bhalla - FBR & Company.

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

Thank you, operator. Good day, everyone and welcome to today’s conference call to review results for both Ashford Hospitality Trust and Ashford Hospitality Prime for the third quarter of 2014 and to update you on recent developments.

On the call today will be Monty Bennett, Chairman and Chief Executive Officer; Douglas Kessler, President; Deric Eubanks, Chief Financial Officer and Jeremy Welter, Executive Vice President of Asset Management.

The results as well as a notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday afternoon in press releases that have been covered by the financial media.

At this time, let me remind you that certain statements and assumptions in this conference call contained are based upon forward-looking information and are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are subject to numerous assumptions, uncertainties and known or unknown risks which could cause actual results to differ materially from those anticipated. These risk factors are more fully discussed in both company’s filings with the Securities and Exchange Commission.

The forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them.

In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings releases and accompanying tables or schedules, which have been filed on Form 8-K with the SEC on October 30, 2014 and may also be accessed through both companies’ websites at www.ahtreit.com and www.ahpreit.com.

Each listener is encouraged to review those reconciliations provided in the earnings releases together with all of our information provided in the releases. I will now turn the call over to Monty Bennett. Please go ahead, sir..

Good morning and thank you for joining us. As our third quarter results demonstrates, both the Ashford Trust and Ashford Prime platforms had continued to benefit from the positive trends we are seeing in the lodging industry.

At the same time, Ashford Trust executed several value enhancing transactions, including strategic hotel investments and refinancings designed to lower its cost of debt, while increasing cash flow and strengthening its balance sheet for future investments.

In what we have come to call the Ashford group of companies both of our platforms exhibited exceptional RevPAR and EBITDA growth.

At the same time, our team is constantly searching for new strategies to unlock further value from our existing assets, while also seizing on current market conditions to seek out appealing investments in the lodging sector, the same philosophy led to our upcoming anticipated spin-off of Ashford Inc., which I will discuss in more detail later on.

In fact, this is value-add philosophy which has guided our team throughout our history as a public company and has served us well throughout the years in delivering substantial returns for our shareholders. I believe that we have the most highly aligned, stable and effective management team in the hotel industry.

That’s not a statement we make lightly, but I feel just by doing so that this management team has generated 213% total shareholder return since Ashford Trust’s IPO in 2003 compared with a 163% return from our peers in the same time period.

We have continued to outperform our peers in almost every yearly cumulative total shareholder return period since our IPO. While our Ashford Prime portfolio is still relatively young as a public company, we expect to continue this record of success with Ashford Prime as well.

As today’s results indicate, we are already well on our way towards that goal. Our team is dedicated creating maximum shareholder value, because we are significant shareholders in both of our platforms. Our insider ownership in Trust is 17% and 13% in Ashford Prime. The next closest hotel REIT peer has 4% insider ownership.

Over the years, collectively we have sold very little of our stock and have made material cash purchases of shares. Back in March of this year, I purchased $500,000 of Ashford Prime’s stock in the open market.

If you analyzed our individual holdings, you would see that the majority of our management team’s net worth is in Ashford Trust and Ashford Prime’s stock. It’s not surprising then, why shareholder value matters so much to us since our own capital is at risk with yours.

It’s one of the major factors that distinguishes us from others in the space and we see it as significant competitive advantage. Now, let’s review some of the third quarter highlights. The same positive lodging sector fundamentals we saw in the first half of 2014 continue to drive RevPAR and EBITDA growth in the third quarter. Demand for U.S.

lodging remains strong and we expect this will continue for the foreseeable future as projected levels of industry supply have remained at historical lows. Industry analysts concurred these fundamentals should remain consistent for some time. PKF is forecasting net supply growth of only 0.9% and 1.3% in 2014 and 2015 respectively.

Currently, PKF does not see the national annual supply growth exceeding the long run historical average until at least 2017. These limited supply trends are driving RevPAR forecast with PKF projecting that 2014 RevPAR will increase by 8.2% over 2013.

Further, PKF’s projected RevPAR growth forecast for 2015 is currently 6.7%, driven by combination of high occupancy and strong ADR growth. Presently, PKF is forecasting that the U.S. lodging industry will achieve 65% occupancy in 2015, the highest national occupancy rate since FTR began reporting data back in 1987.

Our financial results in both of our platforms reflect these positive trends. In the third quarter RevPAR for all Ashford Trust hotels increased 12.4%. This growth was driven largely by the new initiatives we implemented at Ashford and Remington, our affiliated property manager that are designed to improve RevPAR performance.

I discussed these initiatives in detail on previous calls, so I won’t rehash those now. What’s important is that as our third quarter RevPAR performance shows, we continue to see the benefits from these actions and expect to see further improvements over time.

On the investment front Ashford Trust acquired two hotels during the quarter including the $8 million acquisition of the 39 room Ashton Hotel in Downtown Fort Worth and a $50 million acquisition of the 357 room Fremont Marriott, Silicon Valley. EBITDA growth for these properties year-over-year for the third quarter has been 301% and 63% respectively.

We are excited about these additions to the Ashford Trust portfolio and Douglas will discuss these acquisitions in greater detail later on the call. As we have stated before Ashford Trust continues to look for more opportunistic lodging investment opportunities. And these recent acquisitions are excellent examples of this.

So having capital resources readily available is extremely important to us. During the quarter Ashford Trust continued to improve its capital structure.

In July we refinanced three mortgage loans that had a combined outstanding balance of $325 million with new loans totaling $469 million resulting in approximately $104 million in excess proceeds after closing costs and capital expenditure reserves. We were also able to unencumber two small hotels that we are now in the process of marketing for sale.

As previously announced, earlier this year Ashford Trust Board of Directors unanimously approved a plan to spinoff its asset management business into a separate publicly traded company in the form of a taxable distribution to Ashford Trust shareholders, to be comprised of common stock and Ashford Inc., a successor company of Ashford Trust’s existing advisor subsidiary, Ashford Hospitality Advisors LLC, which currently advises Ashford Prime.

In connection with this spinoff Ashford Inc. will advise Ashford Trust. It is anticipated that Ashford Inc. will enter into a 20 year advisory agreement to advise Ashford Trust. Ashford Inc. will continue to advise Ashford Prime as well. We have already filed an application for Ashford Inc. with the NYSE MKT exchange to list its shares under symbol AINC.

We expect this distribution to be declared sometime during November subject to certain conditions. For additional information, please refer to the registration statement on Form S-4 of Ashford Inc. as declared effective by the SEC on October 7, 2014 and the information statement included in the Form 10 filed with the SEC on October 30.

Earlier this week in response to recent shareholder feedback, we initiated over the past several weeks, just listened feedback from many of the same shareholders. We have made some enhancements to both Ashford Trust and Ashford Inc. corporate governance.

Specifically we amended Ashford Trust bylaws consistent with the proposal previously approved by shareholders at the company’s 2014 annual shareholder meeting providing for a majority voting standard and the election directors and uncontested elections subject to approval of similar amendments to the company’s charter at 2015 annual shareholder meeting.

In addition, we amended the bylaws to permit shareholders to amend these bylaws and to reduce the threshold to call the special meeting of shareholders from 50% to 35% of the outstanding common stock following the company’s 2015 annual shareholder meeting.

With the planned spin-off of Ashford Inc., we took into consideration the objective of protecting the company for growth while making changes in governance consistent with shareholder feedback. First, we amended the bylaws of Ashford Inc. to provide Ashford Inc. shareholders the right to call the special meeting.

Second, we adopted a plan to give Ashford Inc. shareholders the opportunity to vote to declassify the board of Ashford Inc.’s first annual meeting. Third, we provided a plan to permit Ashford Inc.’s directors up for annual election to be removed with or without cause if shareholders vote to declassify the board.

Lastly, a plan was put in place to provide Ashford and its shareholders the opportunity to provide an advisory non-binding vote on executive compensation every 3 years. We believe these enhancements to the governance of Ashford Trust and Ashford Inc.

demonstrate our commitment to policies and practices that best served the interest of the companies and shareholders. Turning to Ashford Prime, during the third quarter, RevPAR for all Ashford Prime hotels increased 11.7%. Much of this performance was driven by our West Coast assets, which continued to outperform.

This includes RevPAR growth of 16% for our Courtyard San Francisco Downtown, 19% for our Marriott Seattle Waterfront, and 20% for our Courtyard Seattle Downtown. Flow-through at the property level was strong again this quarter and the EBITDA flow-through was 45%.

We continue to be pleased with the performance of the Ashford Prime platform and Jeremy will offer some additional details into this portfolio a little later in today’s call. As previously announced, the Board of Directors of Ashford Trust declared a dividend of $0.12 per share for the third quarter of 2014.

The Board of Directors for Ashford Prime declared a third quarter 2014 quarterly cash dividend of $0.05 per share. On the top of Ashford Prime, it has now been about a year since we completed the spin-off of Ashford Prime from Ashford Trust.

The goal of the spin-off was to create a platform with a well-defined investment strategy to only invest in hotels with RevPAR of at least two times the national average and located in the major gateway and resort markets.

We also set up Ashford Prime to operate at a lower leverage level than Ashford Trust with a leverage target of 5.0 times, net debt to EBITDA ratio or lower.

Over this last year, we have executed on our strategy of growing the Ashford Prime portfolio and delivering solid RevPAR performance while slowly de-leveraging the platform toward its target leverage level. Despite executing on its investment strategy, Ashford Prime currently trades at a TTM NOI cap rate of about 7.3%.

This is below where assets similar to the high-quality assets in the Ashford Prime portfolio were trading in the private market. In fact, we haven’t seen much lower RevPAR portfolios trade at lower cap rates than where Prime is trading today.

Based on the deals we have seen trade in other market information from HVS etcetera, we believe the Ashford Prime assets were traded around 6% TTM NOI cap rate in the private market. If Prime were valued at that cap rate, it would equate to a significantly higher stock price. Our main goal has always been building shareholder value.

Currently, we just don’t believe it’s in our shareholders’ best interest to raise common equity to grow the portfolio. It certainly makes sense for Prime to increase its asset base thus increasing its earning stream diversification as well as liquidity of your stock. We can’t do that accretively by issuing shares at these levels.

Prime’s cost of equity capital was simply too high right now. So, earlier this week, we announced that the Ashford Prime board approved a $100 million share repurchase programs as well as the plan to sell the Courtyard Downtown Philadelphia to fund these share repurchases.

We prefer not to shrink the Ashford Prime portfolio, but an asset sale of a lower RevPAR asset is our cheapest source of equity and we see an attractive investment opportunity by investing the proceeds into Ashford Prime’s stock. It might also show the market, where private market values really are for these types of high-quality assets.

This is not unfamiliar territory for us having bought back almost 50% of Ashford Trust outstanding shares during the last downturn. Other steps we are taking to address the discount to private market value that we currently see in Ashford Prime’s stock include increasing our communication and interaction with investors.

We have been very proactive in engaging with investors about our platforms. Year-to-date, we have had over 250 investor meetings that will continue to get out on the road, attend conferences and tell our story. We are also working on improving Ashford Prime’s balance sheet by refinancing Hilton JV and Pier House loans.

On these loans, we believe we have the ability to push out the maturities while also lowering the cost of debt and increasing cash flow. We will continue to employ a certain leverage profile for the Ashford Prime platform and we will not be looking to increase debt proceeds through these refinancings.

And finally, we will continue to aggressively asset manage Ashford Prime’s high-quality assets to maximize RevPAR and EBITDA growth. As this past quarter shows, this portfolio is well-positioned to outperform and is in great shape from a CapEx standpoint.

We believe that if we continue to execute on these strategies to provide superior performance, the market will recognize the value of this portfolio. If it doesn’t, we remain open to exploring all options to maximize value.

In conclusion, we are very pleased with our operating performance this past quarter, with Ashford Trust and Ashford Prime demonstrating strong RevPAR growth and we are well-positioned for growth in the future. We are also very excited about the prospects for our planned spin-off of Ashford Inc., which we expect to occur shortly.

Once completed, the same management team responsible for Ashford Trust’s historical performance will now be the external advisor to Ashford Prime and Ashford Trust. This will offer our team greater flexibility to leverage the resources of both platforms putting us in a better competitive position when pursuing investment opportunities.

Our shareholders will also benefit as the Ashford family of companies is structured to ensure the alignment of management’s interest with shareholders. Also investors will have greater flexibility to pick the investment strategies that best fits their needs.

For example, since the advisor will be a publicly traded company, if investors want to synthetically internalize management, they can just buy share of Ashford Inc. stock. Most importantly through all of these platforms, we believe we are well-positioned to capitalize on improving hospitality sector fundamentals.

We thank you all for your continued support and look forward to updating you on our progress in future calls. With that, I will now turn the call over to Deric to review our financial performance for the quarter..

Thanks Monty. For the third quarter of 2014, Ashford Trust reported AFFO per diluted share of $0.25 compared with $0.25 a year ago. It’s important to note that the third quarter of 2013 included the operations of the Ashford Prime hotels. Ashford Prime reported AFFO per diluted share of $0.42 compared with $0.32 a year ago.

For the third quarter, we reported adjusted EBITDA of $82.4 million for Ashford Trust and $24.7 million for Ashford Prime. This adjusted EBITDA result for Ashford Prime reflected a 47% increase over the prior year. At quarter’s end, Ashford Trust had total assets of $3.9 billion including the Highland portfolio, which is not consolidated.

It had $2 billion of mortgage debt in continuing operations and $2.8 billion overall including Highland. The total combined debt for Ashford Trust currently has a blended average interest rate of 5.3% and it’s currently 47% fixed rate and 53% floating rate, all of which have interest rate caps in place.

Including the market value of Ashford Trust OP units of Ashford Prime and it’s pro rata share of the net working capital the Highland portfolio, Ashford Trust ended the quarter with net working capital of $547 million. Ashford Prime at quarter’s end had total assets of $1.3 billion.

It had $765 million of mortgage debt in continuing operations, which had a blended average interest rate of 5% and is currently 55% fixed rate and 45% floating rate, all of which have interest rate caps in place.

As of September 30, 2014 the Ashford Trust portfolio consisted of 116 hotels with 23,063 net rooms and the Ashford Prime portfolio consisted of 10 hotels with 3,472 net rooms. Ashford Trust share count currently stands at 110.9 million fully diluted shares outstanding which is comprised of 91.1 million common shares and 19.8 million OP units.

While Ashford Prime share count currently stands at 34.5 million fully diluted shares outstanding which is comprised of 25.4 million common shares and 9.1 million OP units. I would now like to turn it over to Jeremy to discuss our asset management accomplishments for the quarter..

Thank you, Deric. This was an exciting quarter for both Ashford Trust and Ashford Prime, with each producing double-digit RevPAR growth. I would like to start by discussing Ashford Prime, where our 10 assets increased RevPAR by 11.7% and total revenue by 11%. When compared to competitors, the portfolio gained 135 basis points of RevPAR market share.

The four West Coast assets continued to perform well with a combined RevPAR growth of 15.2%. We are also pleased with the strong quarter in Washington DC where the Capital Hilton grew RevPAR by 11.9%, driven primarily by strong group business.

The exceptional top line performance translated well to the bottom line with strong flow-throughs at the property level. Hotel EBITDA flow-through for all 10 Ashford Prime hotels was 45%, and hotel EBITDA margins increased by 116 basis points to 34.7%. Adjusting for property manager incentive fees EBITDA flow-throughs would have been 69%.

Our management team is very pleased with Ashford Prime’s strong performance in the quarter. Portfolio RevPAR was $191. Average rate was over $220, and the 10 properties operated at 87% occupancy. Four out of the 10 hotels maintained over 90% occupancy, while Pier House and Marriott Seattle average rate about $300 a night.

Group room revenues grew 21% versus last year dealing significant increases in ancillary revenues including high margin banquet and catering business. Overall, these results highlight the premium nature of the Ashford Prime assets all of which are located in high-quality markets and are among the finest properties in the respective areas.

I would like to move on to the Ashford Trust portfolio. With 116 assets grew RevPAR by 12.4% and 11.1% in total revenue. The Ashford Trust hotels increased the RevPAR market share by 226 basis points during the quarter. All five property managers grew RevPAR by double digits in the quarter.

54 assets grew RevPAR by more than 10%, 28 by more than 20% and 6 by more than 30%. Much of this growth came through a 14% increase in group room revenue. The Ashford Trust portfolio had hotel EBITDA flow-through of 48%.

Similar to Ashford Prime, strength in Washington DC was a significant driver of Q3 performance as Ashford Trust assets and the DC Metro area grew RevPAR by 18.9% year-over-year. During the third quarter, we acquired two new assets in the Ashford Trust portfolio.

The 39 room Ashton Hotel in Fort Worth and the 357 room Marriott Fremont in Silicon Valley. We are already seeing evidence of the operational improvements we expected from installing Remington as the property manager at these hotels. During the quarterly they together produced EBITDA flow-throughs of almost 100%.

Also during the quarter Ashford Trust completed a full renovation of the guestrooms at our Hilton property in Downtown Fort Worth. We are very excited to offer this new product, which features a streamlined modern design while blending in with the traditional atmosphere of the city.

The newly renovated rooms, suites and executive rooms are positioned among the finest in the city and will appeal to business travelers and leisure guests alike. Our asset management team continues to work alongside Remington to maximize the return to shareholders on capital expenditures.

In August of last year Ashford Trust announced a conversion of the Beverly Hills Crowne Plaza to a Marriott, to be completed in the first half of 2015. We had identified a gap in the supply of Marriott rooms in that market with no full service Marriott within 6.5 miles of this property.

At the end of the second quarter of this year we began a full renovation in preparation for the conversion. I would like share with you the completion of a stunning model room that truly embodies our concept for the new positioning. In the third quarter we began work on the remainder of the rooms most recently completed the new HVAC systems.

We are excited about the upcoming opening of the Marriott Beverly Hills, which is on schedule for the first half of 2015. This quarter’s robust gains in RevPAR market share coincide with the fourth full quarter since Ashford substantially increased its focus on market share and investment in revenue enhancement initiatives.

On the Ashford asset management team these efforts began in July of 2013 with the creation of a comprehensive revenue optimization initiative, which is installed – instilled an analytical data driven top line culture within our asset management team.

This revenue culture combines innovative new sources of revenue management data with rigorous and regular top line reviews with the brand management partners to enhance our hotel’s revenue optimization strategies. We have recently conducted comprehensive reviews of all of our properties negotiated corporate account for RFP.

These reviews were data intensive valuations of each hotel’s top negotiated accounts proposed pricing, taking into account a state patents, ancillary spend and displacement levels of high rated transient retail demand.

In addition, Remington also vastly expanded its own sales, revenue management and e-commerce resources and capabilities in the middle of 2013. The increased staffing included a 100% increase in e-commerce revenue management coverage.

In the past several quarters, I have highlighted these areas of increased revenue investments in greater detail and I believe this quarter’s RevPAR index growth demonstrates the success of our strategies and initiatives. Continuing to optimize top line growth will enable superior bottom line results for investors.

I will now hand the call over to Douglas..

Thanks Jeremy. Throughout the course of 2014 Ashford Trust has made good use of favorable capital market conditions to opportunistically address our debt maturities. At the same time we have generated excess cash to strengthen our balance sheet and we have raised equity for the two acquisitions that we completed during the third quarter.

We used the proceeds from that equity offering to acquire two hotels during the third quarter, the 39-room Ashton Hotel in downtown Fort Worth for $8 million and the 357-room Fremont Marriott Silicon Valley for $50 million.

We specifically look for transactions such as these, where we see high-quality assets with desirable locations and an opportunity to significantly improve the operating performance of the property by installing our affiliated property manager, Remington.

While the Ashton Hotel is a smaller deal size in what you would typically expect for Ashford Trust, we considered it an extremely attractive investment opportunity given it is the only luxury hotel in downtown Fort Worth.

We expect Remington will be able to realize considerable synergies since the Ashton is located two blocks from the Hilton Fort Worth, which is also owned by Ashford Trust and managed by Remington. Subsequent to closing, we financed this hotel with a $5.5 million non-recourse mortgage loan with a term of 5 years.

The Fremont Marriott Silicon Valley acquisition was a compelling opportunity for Ashford Trust. We acquired this hotel at a very attractive purchase price, representing an approximate 45% discount to estimated replacement cost.

On a forward 12-month basis, the purchase price represents an estimated cap rate of 8.1% on net operating income, which equates to an expected 10.0 times forward EBITDA multiple.

The hotel is in exceptional physical condition with minimal CapEx needs having recently undergone a significant renovation of approximately $8.1 million or $23,000 per key, which was completed in 2013. The Fremont Marriott is the only full service hotel in Fremont, which is itself a high barrier to entry, fast growing RevPAR market.

This gives a considerable leverage in drawing corporate demand from the large number of technology companies headquartered in the immediate area. The hotel offers market leading amenities and 15,000 square feet of meeting space.

Now, that we have installed Remington as the property manager, we have already seen markedly improved operating performance at this hotel. We financed the hotel with a $37.5 million non-recourse mortgage loan that bears interest at a floating rate of LIBOR plus 4.20%. And the loan has a 2-year term with three one-year extension options.

In terms of financing activity during the quarter in late July, Ashford Trust successfully refinanced three mortgage loans, with a combined outstanding balance of approximately $325 million for $469 million. For additional information including terms, I will refer you to the Ashford Trust press release dated July 28, 2014.

In summary, the refinancing resulted in excess net proceeds after closing cost and capital expenditure reserves of approximately $104 million and unencumbered two hotels, the Hampton Inn Terre Haute and the Homewood Suites Mobile, which we have listed for sale.

We continue to see favorable conditions in lending terms in the debt markets as spreads keep tightening, LTVs rise, and debt yields shrink. So, you can expect us to pursue similar financings in the future as we continue to proactively manage our debt maturity schedule.

Ashford Trust will likely continue to take a more opportunistic view on leverage and liquidity, while Ashford Prime will continue to be more conservative in its use and structure of leverage. The third quarter was relatively quiet for Ashford Prime.

We saw lot of activity earlier this year following the spin-off, including the January public offering of 9.2 million shares of common stock and the acquisitions of the 415-room Sofitel, Chicago Water Tower and the 142-room Pier House Resort, which demonstrate this platform as well-defined investment focus on high RevPAR hotels in gateway and resort locations.

We remain committed to growing this platform, but as we stated previously, we will only do so in a manner that is accretive to shareholders. Meanwhile, we see the stock buyback as a better alternative to hotel purchases currently. As Monty mentioned earlier, we remain open to exploring all avenues to maximize value for our shareholders.

Note, our other option property, the Marriott Gateway in Crystal City has a 12-month exercisable term that runs from May 2014 to May 2015.

Given Ashford Prime’s existing exposure in the DC market with the Capital Hilton and the current price of Ashford Prime stock, we do not expect Ashford Prime to exercise that option in the near-term unless these conditions change. Our deal pipeline remains strong as we continue to see the strategic benefits of having two investment platforms.

However, while Ashford Trust will continue to be more opportunistic, Ashford Prime has a well-defined strategy. So, while we continue to review many potential deals, the ones we will pursue for each platform will depend upon the marketed and off-market deal flow along with each company’s respective cost of capital.

We are seeing more portfolio opportunities coming to the market, which is typical at this point in the real estate cycle. Our two platforms in Prime and Trust offers an advantage as we can leverage both platforms to mix and match assets and capital to maintain a strong competitive bidding position against the private equity funds.

We are looking forward to the pending launch of Ashford Inc. Ashford seeks to increase its income stream through the growth of existing platforms if any and the potential launch of future businesses, including select service platform, a mortgage lending platform and a real estate-oriented hedge fund.

Other avenues of growth include starting or buying companies that offer services or goods to the various hotels that the Ashford platforms own. We released information recently that pointed to an annual EBITDA of approximately $3.4 million as estimated in our Form 8-K filed on October 10, 2014.

We are very excited about the long-term potential of this platform over time. In closing, we continue to seek out attractive investment opportunities as well as alternative ways to invest in accretive growth for both Trust and Prime. This includes proactively managing our capital structure.

Our focus for Ashford Trust remains opportunistic when deciding on refinancing and investment decisions. At Ashford Prime, our investment strategy is very focused on our target assets, remaining true to our objective of completing transactions that are accretive to shareholder value.

Remember, our interests are closely aligned with yours, because we are significant shareholders in both of these companies holding 17% of Ashford Trust and 13% of Ashford Prime. We invested right alongside all of you and as our track record clearly shows we are dedicated to delivering superior returns to our shareholders.

That concludes our prepared remarks and we will now open it up for your questions..

Thank you. (Operator Instructions) And we will take our first question from Ryan Meliker from MLV & Company. Caller, your line is open..

Hello, can you hear me? This is Ryan..

Yes..

Okay, great. Nice quarter guys. Thanks a lot. I just had a couple of quick questions.

With regards to AHT, I was wondering if you give us some color on what really drove Highland’s performance in the quarter, it was pretty stellar, were those properties coming off renovations more or is it just really seeing some things unfold? And then the second question I had with regards to Highland was, are you guys close to being in the market for refinancing? How are things unfolding? It looked like your debt yields on the strong flows of the property really ran up to over 12%.

If I call in the last call, you had mentioned that the debt yields for Highland could be refinanced in the 8% to 9% range potentially? It seems like there would be a pretty windfall of cash that could come when you refinance. How are you guys thinking about that now? Thanks..

Hey, Ryan, this is Jeremy. I will take the first question on Highland. Highland did have an incredible quarter. And if you look back at the history of the portfolio, when we took over the assets, there is lot of disruption in the sales force. A lot of those assets were capital-deprived.

There is lot of issues with just the mechanical, the envelope, the building just water penetration. And so when we acquired the assets, we initially just cut costs, I think it levels at the expense level and then put the right capital in the properties from a mechanical and systems perspective.

And then the renovation of the major renovation, the physicians have actually put in the capital that’s impactful to the guest experience, took some time as we planned it out. And so we are now getting the benefits of the renovation that we put in place.

I don’t think it’s mainly because of year-over-year renovation comparisons, I think it’s just the fact that it’s a return of some of the renovation capital we have invested as well as the sales and marketing revenue management strategies that we are putting in place at both the Remington and non-Remington hotels..

Great, thanks Jeremy..

Hey, Ryan, it’s Douglas. So, regarding the refinancing I would say we have adjusted our views internally, but not yet really made any decision.

We have moved this initiative forward from previous calls where this question has been asked and then clearly that the weighting has been the right thing to do as evidenced by the strong performance out of the portfolio.

We try to optimize the lining up of the operating performance with the hotels as well as what’s taking place in the debt capital markets. And over the period of time, this year, the debt capital markets have clearly tightened in the favor of borrowers and the performance of this portfolio has increased.

So, waiting clearly has been the right decision with respect to evaluating potential refinance of this portfolio. Obviously, this is the decision that we will make in conjunction with our partner Prudential, but we have started a process just to get a view of kind of indicative pricing on the portfolio.

And I think it is evident that there are excess proceeds available given the current financing terms in the market. As to the timing of when we do this, I think we first want to get a better understanding of where the financing terms will come out.

We also want to get better understanding of what our partner Prudential’s objectives are with respect to their investment in the portfolio, and to the extent there is any alignment of the refinancing with any strategic initiative with our partner.

That’s something for consideration or if we just go ahead and refinance it as a partnership as it stands right now, that’s also possible strategy. So we are engaged more in evaluating this opportunity. We clearly believe it’s an opportunity for our shareholders overall..

Ryan. This is Monty, Ryan. I think on that financing we hated to drive the stake in the ground say it for sure, but clearly nothing is going to happen between now and the end of the year because we just haven’t been in that process much. But we are starting the process. So that’s a change from the past.

So I would say there is a very real possibility that it could occur in the first quarter. But again, we are not saying that that’s anywhere close for sure because of all the items that Doug mentioned, but it’s certainly something we are looking at..

That’s helpful. Thanks Monty. And then I guess with regards to Prudential I think we have a pretty good understanding of your management team’s view of leverage and how you think about maximizing the value of your portfolio.

Would Prudential be on similar views where they might be open to maximizing leverage when this comes up for refinancing or do you think that they will take a little bit more of a conservative approach, and you guys are going to engage in that discussion going forward?.

We are obviously in discussions with Prudential on this. I think they also see the attractive aspects of the markets today and the performance of this portfolio. It’s an ongoing dialogue. Obviously, we would prefer to see us take advantage of the other markets today and we are going to continue to push that agenda..

That sounds good. It’s kind of exciting. It looks like with that 8%, you guys might be able to get $400 million incremental cash back to your balance sheet on a refinancing, so that would be exciting to see.

Second question I have…?.

Hey Ryan, it’s Deric, I just want to clarify something on the debt yields that you are looking at on our earnings schedules that’s an EBITDA debt yield. And the debt yields that we quote in terms of what is available in the market place today is an NOI debt yield. So I just wanted to make clear..

Got it. So there is a little bit of difference there, that’s helpful..

Also Ryan just to let you know is that three of those properties in the Highland portfolio would have a pretty healthy amount of (decisions) associated with them. And so those are less likely to be refinanced.

They are in a pool on their own, so we haven’t made that decision yet, but there is a very real chance that we will finance all of them except for those three or maybe those three as well..

Right, okay that makes sense. And then the second question I had was with regards to Ashford Prime, you guys announced the buyback on Monday and obviously the markets are certainly like that.

What we have seen this year, I think I will use Starwood and Marriott as prime examples, so I am curious, you're taking those how are you going to use the buyback. Marriott’s operated on a methodical approach where they have bought back stock at a similar pace throughout the course of the year.

Starwood had attempted to be a little bit more opportunistic with buybacks and got a lot of pushback from investors and eventually change their course. And you have seen a pretty big difference in value in stock performance over those two companies this year largely driven by buyback dynamics.

As you guys think about the buyback for Ashford Prime is this going to be something where you are going to be opportunistic or is this something where you are going to try to instill some type of methodical predetermined plan to show the market that you believe that this is a company where you can buyback stock because you have the cash and the stock is at a reasonable valuation?.

I think with our plans are internally is 2 days after our announcement to go ahead and to launch a programmatic program and then later in this year or the first of next year to sit down and to continue to reevaluate it, but we are just going to get into the market with a programmatic plan right out of the box..

Got it. I am sure the markets will like that. Alright, I will yield the floor to others. Thanks a lot and nice quarter guys..

Thank you..

Our next question comes from Jordan Sadler with KeyBanc..

Hi, guys. It’s Austin Wurschmidt here with Jordan.

I was just curious the operating strength this quarter was relatively broad-based and I was wondering if there were any of your top markets where you don’t expect the momentum to continue, you mentioned DC as being a top performer and just some color on the general outlook for that market would be helpful?.

Well, in DC, we had some great group dynamics here in the third quarter. And that really, really helped us. At the same time, we are seeing a return of government business. We do think that we have reached the bottom in that government business a quarter or two ago and it’s coming back, not in a wave necessarily, but it’s rebuilding.

As far as any markets that we see necessarily weakness going forward, Jeremy, you might want to comment on that?.

Yes, sure. Well, one of the markets is Philadelphia has got a weaker citywide convention calendar outlook. DC, it’s really kind of difficult to predict how it’s going to respond. For the quarter, the government business was up 15% in DC.

And so we are seeing some strength and of course in the fourth quarter you will not have the recurrence of a government shutdown that occurred in October of 2013. As far as other markets, national still looks to be strong in ‘15 and ‘16 that the convention calendar is still strong relative to the historical trends and…..

Really, really we don’t see much in any of the other markets to think that they would be materially off. I mean, again, a little bit here and there, but nothing, nothing newsworthy..

That’s helpful.

And then just in terms of the revenue management initiatives, you guys are starting to see some of the market share benefit of that, I am just curious when you look across the portfolio, how much additional market share upside do you think that you guys have left?.

That is hard to say. I mean, market share is a very difficult item, where we are pushing to get 100 or 200 basis points whether we get that increase at every quarter and how long we can get that, it’s hard to say.

Of course, you can’t get that forever, because then used to be climbing to the sky, but that is what we are internally trying to achieve, but there is quite a number of different techniques. We have developed our own revenue management system.

And one of the challenges we have is that the brands have their own revenue management systems or yield management systems and we are trying to interface, so we can put our information into the reservation systems, our rates and our inventory controls, but the brands just aren’t setup to allow us to interface. And so that’s frustrating for us.

We are trying to push them to allow these electronic interfaces to be in place and with very mixed results thus far. So, anyway we are continuing to push forward on it..

And then just one last one for me, I was just curious how should we be thinking about the ROFO properties as we head into 2015?.

I think that you think those ROFO properties, is being on the backburner. We are more focused on our stock price in Ashford Prime and you needed to get to a trading zone, where those purchases from Trust would be accretive for Prime, as well as of course attractive for Trust..

Great, thanks for the time today..

Our next question comes from Thomas Allen with Morgan Stanley..

Hi, guys. A recent theme has been around new soft brand launches by the bigger brands. Your Ashford Trust portfolio has relatively small mix of independent hotels, how are you thinking about that going forward as things change? Thank you..

We are always looking at branding options. Our property down in Key West is unbranded right now that the Pier House. And it just runs such high occupancies that it’s hard to see how a brand could add any occupancy to it now maybe through the additional pressure that could increase rate even more although we are gaining share continuing to do well.

So, it is hard to see how that could help us, maybe if it was a fairly inexpensive soft branding option, but so far while we review all of that constantly, we just don’t see any changes at this point in time?.

Okay, thank you. And then just on that Chicago, Sofitel, it seems like trends improved a bit in the third quarter, how is that performing versus your expectations? Thanks..

Well, at first, it performed better than our expectations. Right, when we bought it we had that tough Chicago winter and that was unexpected for us. We did know that the convention calendar for Chicago would be a little weak this year than normal.

And we have put that into our underwriting into our formulas, but it was the initial few months of performance, which has caught us a little bit by surprise, but since then it’s been right along what we have anticipated and we are happy with it. We have been able to achieve just some great EBITDA flows.

And this is despite the fact that the prior owner had some good people on it, but we have been able to improve it even more. So, so far so good, it’s beautiful assets sale..

Great, thank you..

Our next question is from Andrew Didora with Bank of America/Merrill Lynch..

Hey, good morning, everyone.

Just had a question on the buyback at Prime, I guess my question is how do you balance that buyback with wanting to de-lever Prime, I guess based on our calculations while potentially certainly accretive selling the Courtyard to buyback isn’t necessarily de-levering at this point in this cycle, are you willing to maybe keep a little bit higher leverage for kind of a longer time period than you originally thought or how do you think about that? Thanks..

Thank you. That’s a good question. We are still committed to our de-leveraging plan and we are committed to moving towards a net debt to EBITDA of about 5.0 times by the end of 2015. So, we want to keep on track with that. So, we will obviously balance any buyback in accordance with that goal. We do want to come off that goal..

I guess a follow-up to that kind of what are the steps that you guys are going to follow in order to try to get that leverage level down?.

We are going to let the EBITDA continue to grow and just at its growth levels we will be able to we believe achieve that target by the end of 2015..

Alright, that’s all I had, thanks..

Our next question comes from Chris Woronka with Deutsche Bank..

Hey, good morning guys. I want to ask you on the plan to sell the Philadelphia courtyard at Prime have you guys already kind of begun that process.

And without kind of getting into specifics on pricing maybe some directional guidance on where it might price relative to where your whole portfolio is trading?.

Well, we picked that asset because it's a one of our lower RevPAR assets. And we are trying to have Prime focused at the higher rents. And so that’s why we picked that one. We have just begun the process.

We received some brokers’ indications of value, but we haven’t started marketing at all, so it will be some time probably mid-spring, where you would trade. As far as what it would trade for at the moment, we are really at a stage where we can share much of that right now, because it’s just builds so early in the process..

The one thing I would add to that is obviously with the announcement it’s a very desirable asset, urban select service in a solid market.

And no surprise that we would get some inbound inquiries from as groups that this would fit their strategic purpose and would want to try to do a deal with us and kind of cut off a marketing process, but we are going to go through a marketed effort here.

And obviously there is a convergence taking place in the market today between select service cap rates and full service cap rates.

And we want to capitalize on that situation in the market and with the net impact of taking out one of our lower RevPAR assets, which should elevate the overall RevPAR of the remaining portfolio and be a benefit the way we think about our EBITDA multiple given that correlation. So it’s a right strategic move, it’s the right time to do it.

And we will look forward to getting this asset out in the market..

Okay, great.

And then when you launched the buyback earlier this week or when you announced it anyway, I think you mentioned that if possible you would sell other hotels in the future presumably for additional share repurchase, is that exclusively kind of the lowest maybe the lowest RevPAR assets or is it more of a market-based decision and I guess how do you think about potentially taking more liquidity out of the stock with incremental buybacks beyond this initial round?.

Taking liquidity out is very, very important issue to us. So we are going to look at that very, very carefully, that’s very important.

And to answer your questions, it’s just hard to say, that’s just out in the future and even if we were able to buy the amount that was authorized based upon our volumes and the limitations set out there it’s going to be over a year. So that’s just something quite some time out there.

So I think what we are trying to communicate is that we want this platform and this share price to perform well and it’s very, very important to us. And there may be some investors thinking that the key to our strategy – overall strategy is to grow this platform through issuing shares and that’s just not the case.

If that works for investors and it’s trading well then we will do it. If not, we are not going to – is focus on the share price because the successes of this platform stock price wise is very important to us, so that’s where we are focusing on now and we will take in future when it comes..

Okay, got it.

Just finally maybe a question for Jeremy, trying to understand directionally the seasonality of both Sofitel and Pier House but probably a little bit more on Sofitel, obviously the first quarter is always very slow, but I mean is there a big drop off from the third quarter or fourth quarter knowing that October is pretty strong?.

I don’t think the seasonality is necessarily going to change for either asset. But definitely the fourth quarter and the first quarter for Chicago is much weaker relative to the second, and third quarter. And for Pier House actually the season is much stronger at the first of the year.

Key West in January is in season, so they are almost counter seasonal to each of the respective assets..

Okay, great. Thanks guys..

We will take our next question from Robin Farley with UBS..

Hi. Thank you for taking the question. This is actually (Artina) for Robin. I actually had a two part question. Regarding group pace for 2015 as of now and what it was in Q2 as you look across your portfolio, if you could give some color there.

And then obviously you don’t give guidance for ’15, but as you look at group pace for ’15 and transient demand drivers today, do you expect acceleration in ’15, growth from 2014, not just year-over-year improvement?.

This is Monty. We try to avoid giving too much guidance on all of that for the reasons that we have talked about in the past because we find ourselves spending a lot of time on those forecasts and alike. But we see the economy to continue to grow and we see the desire for transient and group production to continue to be pretty strong.

So, it’s hard to say what that translates into RevPAR for the industry or for us. But we are still pretty optimistic about where we are at this point in the cycle for the industry and for ourselves..

Okay, great.

And then a follow-up, occupancies are obviously at peak and valuations are expected to obviously higher in ’15 at this point in the cycle, and you just commented that buying back stock for the Ashford Prime portfolio is perhaps a better alternative right now versus buying hotel, if you look ahead do you expect to be a net buyer or seller next year? Thank you..

I think that of course it all depends, but generally in Trust we see some opportunities to buy. But in Prime considering where the stock price is, I see that it is unlikely..

Alright. Thank you very much.

Our next question comes from Nikhil Bhalla with FBR & Company..

Hi, good morning Monty. The first question I have is on the margins for both the portfolios, Prime and Trust. I think they both had headwinds from higher incentive fees again in the third quarter very similar to what we saw in the second quarter.

Could you guys give us some sense on what that may look like in terms of trend going forward?.

Sure, I think that’s first as you compare our margins to some of the other platforms out there, we are running pretty high margins already especially compared to some of our peers.

And so while margin is importantly look like maybe even EBITDA year-over-year growth is maybe even better, but I think that your question affects both and Jeremy why don’t you comment a little bit on those incentive fees?.

Sure. If you look at the third quarter both Trust and Prime had incredible flow-throughs to the operating line, which we call gross operating profit. And there is no question that we were impacted by incentive fees. About 60% of both Trust and Prime properties are claiming for incentive fees for the third quarter.

And when you look at year-over-year basis, if you recall the Trust our revenues somewhat lagged the broader industry. So we didn’t have as many hotels last year that earned incentive fees with the performance we are having at Trust right now, a lot of properties are earning up into the incentive fee category.

The good news is that with the Remington properties they are capped at 1% of revenue. The non-Remington properties have kind of what a hurdle that they exceed and then they have participated in the operating cash flow above a certain hurdle.

As for Prime, we have a little bit of a year-over-year comparison where we had a property or two that ended up earning up in the incentive fee towards the end of the year. So it did not have it fully accrued in third quarter because it wasn’t determined whether or not it was actually going to earn incentive fees.

And so on a year-over-year comparison there is a little bit of an anomaly off of Prime..

Okay, so just going forward, I think what your comment is suggesting is that on the Prime side because fewer properties there are managed by Remington, we may still continue to see incentive fees ramp up over the next several quarters?.

They are definitely going to be there and but it’s not going to be – it should not be as significant just because we had that anomalies I mentioned on a year-over-year basis and we will anniversary out of that at the end of the year, but we will still be having incentive fees probably because the properties are performing so well.

The only way to lower those incentive fees is to owner fund CapEx and as we mentioned the properties are great from a capital standpoint or for a property performance to go down. .

Okay. Thank you. And then I have a follow up question for you again Monty. When you think about the Ashford portfolio and the termination fees associated with it if there is a change of control for the external advisor.

Yes, I know that there are some investors who have calculated that termination fee excessively high, somewhere in the $4 to $5 per share range, would you be able to kind of comment on that on how we should think about that if there is any way to book in the economics on the termination fee as the portfolio stands today and where the economics of the portfolio stand today?.

Sure. I just think that some folks are making amount (indiscernible) on all that. First of all, we think that those calculations are high.

And secondly is that that presumes that any portfolio of assets have got to be managed or overseen, right so I mean no matter who buys some assets or what they do, they have got to have some asset management overhead.

And we think that if these assets we are able to sold one of the buyers could potentially be someone that would avail themselves of Ashford Inc.’s management expertise and the overhead associated with that, in which case there will be no impact on price whatsoever.

So I think it’s just because and actually management structure is a little bit unusual in the equity side of REIT world of course they are everywhere in the mortgage REIT side that there is extra focus on it, where it doesn’t need to be because it’s just not significant..

Okay, so just based on where the portfolio stands today in terms of its trailing 12 month EBITDA and things like that and management fees that we can calculate out of that, is there a way to get a sense of what the termination fee could look like as a dollar per share value versus what people are thinking from maybe $4 or $5 per share number that I think some of us have heard?.

Yes. You can follow-up the docs and go to the calculations and rather than sit here and give specific numbers, I think it’s a calculation that people do for themselves, but it’s a pretty straightforward process that we can walk you through..

Okay. Alright, thank you very much..

Your last question comes from Ryan Meliker from MLV & Company..

Hey guys. Just one quick follow-up, we have seen this summer a flurry of select service portfolios trade hands usually going to private equity bidders or NorthStar, which is essentially a private equity buyer. You guys have talked about Ashford Trust being interested in acquiring a select service portfolio and Ashford Inc.

overseeing a select service REIT at some point if the stars align.

I am curious can you give us some color in terms of why you guys haven’t been the acquirer of any of these portfolios is because pricing has been too high, then because you had been too focused on getting the Ashford Inc.’s spin-off completed or something else that I am not even thinking of?.

I think the answer is that we have just had to get this Ashford Inc.’s spend to spun out. There has just been a lot of moving parts and trying to couple that with doing a large transaction would just add, not only add complexities, but also push the whole process back, because we have had to value what Ashford Inc.

would be worth and then with large portfolio the value would change, because the TEV of Ashford Trust would change and therefore the fees which it’s just too much, but we are almost done with that process. And so we will be out and about..

So, it sounds like after the spin-off is completed, you guys might be a little bit more aggressive if some more of these portfolios hit the market?.

I would expect so..

Great, that’s all for me. Thanks a lot..

That concludes today’s question-and-answer session. At this time, I would like to turn the conference back over to the management for any closing remarks..

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

This concludes today’s conference. Thank you for your participation..