Investment in Hotel Properties

3 Months Ended

Mar. 31, 2015

Investment in hotel properties as of March 31, 2015 and December 31, 2014 consists of the following:



	March 31, 2015			December 31, 2014
Land	$	730,735		$	601,962
Buildings and improvements	3,595,465			3,295,233
Furniture, fixtures and equipment	659,946			596,879
Investment in hotel properties, gross	4,986,146			4,494,074
Accumulated depreciation	(1,108,270		)	(1,065,518		)
Investment in hotel properties, net	$	3,877,876		$	3,428,556

As of March 31, 2015 and December 31, 2014, buildings and improvements included capital lease assets of $186,711 and accumulated depreciation included amounts related to capital lease assets of $16,866 and $15,513, respectively. Depreciation of the capital lease assets is included in depreciation and amortization expense in the accompanying consolidated statements of operations and comprehensive loss for all periods presented.

Depreciation expense was $42,752 and $37,658 for the three months ended March 31, 2015 and 2014, respectively.

Acquisitions

In connection with the acquisition of Hotel Vitale on April 2, 2014, the Company incurred acquisition transaction costs of $107 that were expensed as incurred during the three months ended March 31, 2014, which expenses are included in the accompanying consolidated statements of operations and comprehensive loss.

During the first quarter of 2015, the Company acquired 100% interests in two full-service hotels, each of which is leased to LHL. The Company recorded the acquisitions at fair value using model-derived valuations, with the estimated fair value recorded to investment in hotel properties and hotel working capital assets and liabilities. In connection with the acquisitions, the Company incurred acquisition transaction costs that were expensed as incurred. The following is a summary of the acquisitions:



							Acquisition Transaction Costs
Hotel Name	Acquisition Date	Number of Rooms	Location	Purchase Price		Manager	For the three months ended March 31, 2015
Park Central San Francisco	January 23, 2015	681	San Francisco, CA	$	350,000	Highgate Hotels	$	230
The Marker Waterfront Resort	March 16, 2015	96	Key West, FL	96,250		Highgate Hotels	217
Total				$	446,250		$	447

The sources of the funding for the January 23, 2015 acquisition were cash on hand and borrowings under the Company’s senior unsecured credit facility. The source of funding for the March 16, 2015 acquisition was borrowings under the Company’s senior unsecured credit facility. The Company has not yet finalized its determination of fair value of the 2015 acquisitions. A final determination of required fair value adjustments will be made during 2015. Total revenues and net income from the hotels acquired during 2015 of $14,466 and $786, respectively, are included in the accompanying consolidated statements of operations and comprehensive loss for the three months ended March 31, 2015.

- Definition

The entire disclosure for equity method investments and joint ventures. Equity method investments are investments that give the investor the ability to exercise significant influence over the operating and financial policies of an investee. Joint ventures are entities owned and operated by a small group of businesses as a separate and specific business or project for the mutual benefit of the members of the group.

+ References+ Details