NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of June 30, 2013 and December 31, 2012 our investment in unconsolidated joint ventures consisted of the following:


		Percent	Preferred		June 30,		December 31,
Joint Venture	Hotel Properties	Owned	Return		2013		2012

SB Partners, LLC	Holiday Inn Express, South Boston, MA	50.0%	N/A	$	1,294	$	1,292
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50.0%	N/A		4,914		4,964
Mystic Partners, LLC	Hilton and Marriott branded hotels in CT	8.8%-66.7%	8.5% non-cumulative		8,157		9,751
				$	14,365	$	16,007

On February 1, 2013, the Company closed on the sale of its interest in one of the unconsolidated joint venture properties owned in part by Mystic Partners, LLC to its joint venture partner. As our investment in this unconsolidated joint venture equated the net proceeds distributed to us, we did not record a gain or loss in connection with the sale of this hotel.

Income or loss from our unconsolidated joint ventures is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. Any difference between the carrying amount of these investments and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets.

Loss recognized during the three and six months ended June 30, 2013 and 2012, for our investments in unconsolidated joint ventures is as follows:


		Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
SB Partners, LLC	$	119	$	27	$	2	$	(95)
Hiren Boston, LLC		119		242		(50)		104
Mystic Partners, LLC		(90)		(98)		(200)		(211)
Metro 29th Street Associates, LLC		-		243		-		(114)
Income (loss) from Unconsolidated Joint Venture Investments		148		414		(248)		(316)
Loss from Remeasurement of Investment in Unconsolidated Joint Ventures		-		(224)		-		(224)
Income (loss) from Unconsolidated Joint Venture Investments	$	148	$	190	$	(248)	$	(540)

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following tables set forth the total assets, liabilities, equity and components of net income or loss, including the Company’s share, related to the unconsolidated joint ventures discussed above as of June 30, 2013 and December 31, 2012 and for the three and six months ended June 30, 2013 and 2012.


Balance Sheets
		June 30,		December 31,
		2013		2012
Assets
Investment in hotel properties, net	$	116,410	$	118,506
Other Assets		22,555		20,709
Assets Held For Sale		-		5,875
Total Assets	$	138,965	$	145,090

Liabilities and Equity
Mortgages and notes payable	$	118,413	$	119,236
Other liabilities		37,823		36,292
Liabilities Related to Assets Held For Sale		-		6,071
Equity:
Hersha Hospitality Trust		26,413		28,581
Joint Venture Partner(s)		(43,684)		(45,090)
Total Equity		(17,271)		(16,509)

Total Liabilities and Equity	$	138,965	$	145,090


Statements of Operations
		Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Room Revenue	$	15,502	$	20,108	$	27,840	$	35,512
Other Revenue		5,958		6,172		11,244		11,506
Operating Expenses		(14,070)		(16,375)		(27,093)		(31,241)
Interest Expense		(1,855)		(2,144)		(3,724)		(4,259)
Lease Expense		(247)		(1,517)		(495)		(3,216)
Property Taxes and Insurance		(777)		(1,073)		(1,520)		(2,170)
General and Administrative		(1,477)		(1,702)		(2,929)		(3,189)
Depreciation and Amortization		(1,623)		(1,799)		(3,232)		(3,583)
Loss Allocated to Noncontrolling Interests		(72)		(72)		(96)		(2,642)

Net Income (Loss)From Continuing Operations		1,339		1,598		(5)		(3,282)
Income (Loss) from Discontinued Operations		-		158		(55)		265
Gain on Disposition of Hotel Properties		-		9,600		1,162		25,131

Net Income	$	1,339	$	11,356	$	1,102	$	22,114

NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)

The following table is a reconciliation of the Company’s share in the unconsolidated joint ventures’ equity to the Company’s investment in the unconsolidated joint ventures as presented on the Company’s balance sheets as of June 30, 2013 and December 31, 2012.


		June 30,		December 31,
		2013		2012
Company's share of equity recorded on the joint ventures' financial statements	$	26,413	$	28,581
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures⁽¹⁾		(12,048)		(12,574)
Investment in Unconsolidated Joint Ventures	$	14,365	$	16,007

(1) Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:

– cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements,

– our basis in the investment in joint ventures not recorded on the joint ventures' financial statements, and

accumulated amortization of our equity in joint ventures that reflects our portion of the excess of the fair value of joint ventures' assets on the date of our investment over the carrying value of the assets recorded on the joint ventures financial statements. This excess investment is amortized over the life of the properties, and the amortization is included in Income (Loss) from Unconsolidated Joint Venture Investments on our consolidated statement of operations.