Hotel Capital MarketsHotel Capital Markets

Hodges Ward Elliott

Mark W. ElliottSenior Managing Director

Hodges Ward Elliott

Mark W. ElliottSenior Managing Director

Presented toHotel Asset Managers Association

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Current EBITDA Multiples

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Current Multiples of Public Lodging REITS

Source: Hodges Ward Elliott; Bloomberg

Company (as of 10/4/10) 2010E EBITDA X 2011E EBITDA X

Host Hotels & Resorts 18.3x 16.4x

Sunstone Hotel Investors 14.6x 13.5x

LaSalle Hotel Properties 17.0x 14.1x

Strategic Hotels & Resorts 20.5x 18.8x

DiamondRock Hospitality 15.8x 13.0x

Hersha Hospitality 14.2x 12.6x

FelCor Lodging Trust 12.0x 10.5x

Ashford Hospitality Trust 15.3x 12.8x

Lodging REITS 15.2x 13.4x

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Current Transactions

Current Transactions

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Asset Rooms Price Price Per Room

Westin Philadelphia 294 $145,000,000 $493,197

Royal Palm 409 $117,000,000 $286,063

Sir Francis Drake 416 $90,000,000 $216,346

Tampa Embassy Suites 360 $77,000,000 $213,889

Source: Hodges Ward Elliott

Cap Rates range from 1.88% to 6.48% and EBITDA Multiples range from 13.99 to 38.99 X.

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Rationale

Demand vs. GDP

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1988 – 2010E

Source: Bureau of Economic Analysis; Smith Travel Research; Hodges Ward Elliott; Bloomberg Contributor Composite

Demand vs. GDP

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October 2009 – July 2010

Source: Smith Travel Research; Bloomberg

US Market RevPAR

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RevPAR (1988 – 2010E)

Source: Smith Travel Research, Hodges Ward Elliott

US Market Supply

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Supply (1988 – 2010E)

Source: Smith Travel Research, Hodges Ward Elliott

23-Year Average, 1987-2009, 2.1%

Review of Past Cycles

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Trough-to-Peak RevPAR/NOI:

The sample below contains statistics for full-service hotels

from 2003 – 2007:Years CAGR in RevPAR CAGR in NOI

2003 – 2007 7.4% 17.9%

Source: Hodges Ward Elliott

Impact of EBITDA Growth

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Assumptions/Scenarios:

• 2010E EBITDA grows at 17.9% over the next 5 years.

• Corresponding EBITDA multiple if the growth rate is 17.9% and the stock price remains constant.

• Value of stock if balance sheet remains the same and company is valued at 10.7 X EBITDA.

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Impact of EBITDA Growth

Source: Hodges Ward Elliott; Bloomberg

Company

Stock Price – 10/4/1

0

2010E EBITDA

2010E EBITDA X

2015E EBITDA

(Growing at 17.9% annually)

EBITDA X with same stock price

(EV)

Stock price % change if

balance sheet remains the

same & company is

valued at 10.7 X EBITDA

Host Hotels & Resorts $14.64 $769 18.3 X $1,752 8.1 X 24.20%Sunstone Hotel

Investors $9.47 $153 14.6 X $348 6.4 X 107.69%

LaSalle Hotel Properties

$23.15 $156 17.0 X $355 7.5 X 71.37%

Strategic Hotels & Resorts

$4.25 $119 20.5 X $270 9.1 X 44.76%

DiamondRock Hospitality

$9.70 $133 15.8 X $302 6.9 X 52.99%

Hersha Hospitality $5.10 $112 14.2 X $256 6.3 X 159.31%FelCor Lodging Trust $4.55  185 12.0 X $421 5.3 X 385.82%

Ashford Hospitality Trust

$9.29 219 15.3 X $498 6.7 X 357.23%

Sources of Capital

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• Public Issuance

• Private Equity

• Debt Markets

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Lodging Stock Issuance1995 – Year-to-Date 2010

Source: Bloomberg

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Global CMBS Issuance for Hotels1995 – Year-to-Date 2010

Source: Bloomberg

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Identified Hotel Private Equity Availability

Source: Hodges Ward Elliott

Capital

EquityEquity

AllocationTotal Buying

Raised % Allocated for Hotels Power

Company (in Billions) to Hotels (in Billions) (in Billions)

RLJ Development $1.1 100% $1.10 $2.20

Rockpoint $2.3 35% $0.81 $1.61

Westbrook $2.2 35% $0.77 $1.54

Northwood $1.2 60% $0.72 $1.44

HEI $0.5 100% $0.50 $1.00

Lubert-Adler $1.3 35% $0.46 $0.91

Walton Street Capital $1.3 35% $0.46 $0.91

MSREF (US) $1.2 35% $0.42 $0.84

Paulson & Company $1.0 35% $0.35 $0.70

Rockwood $1.0 35% $0.35 $0.70

Starwood Capital $1.0 100% $1.00 $2.00

Cornerstone $0.5 100% $0.50 $1.00

Total $14.6 $7.4 $14.9

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Estimated Impaired Hotel Debt (Billions)

Source: MBA; Hodges Ward Elliott

Capital

CMBS Bank Life Co Other Total

2005 $17.9 $7.0 $4.6 $9.8 $39.3

2006 $22.4 $10.2 $5.8 $10.2 $48.7

2007 $30.0 $16.4 $7.9 $22.9 $77.1

2008 $0.2 $3.8 $1.7 $5.0 $10.8

Total

$70.5 $37.5 $20.0 $47.9 $175.9

Available Equity $14.9Potential Capital Gap Amount $160.8

Hodges Ward Elliott, IncMark W. Elliott

Senior Managing Directormelliott@hwehotels.com

Sovereign Building, 25th Floor3344 Peachtree Road NE

Atlanta GA 30326(404) 233-6000

www.hwehotels.com

Hodges Ward Elliott, IncMark W. Elliott

Senior Managing Directormelliott@hwehotels.com

Sovereign Building, 25th Floor3344 Peachtree Road NE

Atlanta GA 30326(404) 233-6000

www.hwehotels.com

Hotel Asset Managers AssociationHotel Asset Managers Association