Discontinued Operations

6 Months Ended

Jun. 30, 2013

Discontinued Operations [Abstract]

Discontinued Operations

NOTE 12 – DISCONTINUED OPERATIONS

The operating results of certain real estate assets which have been sold or otherwise qualify as held for sale are included in discontinued operations in the statements of operations for all periods presented.

Disposed Assets

On June 12, 2013, the Company closed on the sale of Comfort Inn Harrisburg, PA to an unaffiliated buyer for a total sale price of $3,700 with a gain on sale of approximately $1,043 as of June 30, 2013.  This hotel was acquired by the Company in September 1999. The operating results for this hotel were reclassified to discontinued operations in the statements of operations for the three and six months ended June 30, 2013 and 2012.

On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties, four of which are owned in part by the Company through an unconsolidated joint venture, for an aggregate purchase price of approximately $155,000.  In May 2011, our Board of Trustees authorized management of the Company to sell this portfolio.   The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006.On February 23, 2012, the Company closed on the sale of 14 of these non-core hotel properties, including three hotel properties owned in part by the Company through an unconsolidated joint venture, and closed on the remaining 4 properties on May 8, 2012, including one hotel property owned in part by the Company through an unconsolidated joint venture.  The operating results for the consolidated assets were reclassified to discontinued operations in the statement of operations for the three and six months ended June 30, 2012.  The 18 assets were sold for a total sales price of $155,000, reduced the Company’s consolidated mortgage debt by $61,298 and recorded a gain on sale of approximately $5,066 as of June 30, 2012.

On March 30, 2012, we transferred the title to the Comfort Inn, located in North Dartmouth, to the lender.  Previously, we had ceased operations at this property on March 31, 2011.  The operating results were reclassified to discontinued operations in the statements of operations for the three and six months ended June 30, 2012.  The transfer of the title resulted in a gain of approximately $1,216 as of June 30, 2012, since the outstanding mortgage loan payable exceeded the net book value of the property.

On April 30, 2012, we closed on the sale of the land parcel and improvements located at 585 Eighth Avenue, New York, NY, to an unaffiliated buyer for a total sale price of $19,250 with a gain on sale of approximately $5,170. This land parcel was acquired by the Company in June 2006. The operating results were reclassified to discontinued operations in the statement of operations for the three and six months ended June 30, 2012.

Assets Held for Sale

On May 22, 2013, the Company entered into a purchase and sale agreement to dispose of Holiday Inn Express Camp Springs, MD for an aggregate purchase price of approximately $8,500. The hotel was acquired by the Company in June 2008. The operating results for the consolidated asset were reclassified to discontinued operations in the statement of operations for the three and six months ended June 30, 2013 and 2012. The Company expects to complete the sale of the asset by August 2013. We recorded an impairment loss of approximately $3,723for the asset as the anticipated net proceeds do not exceed the carrying value.

NOTE 12 – DISCONTINUED OPERATIONS (CONTINUED)

Assets held for sale or liabilities related to assets held for sale consisted of the following as of June 30, 2013:

	June 30, 2013
Land	$	1,192
Buildings and Improvements		8,557
Furniture, Fixtures and Equipment		1,181
		10,930
Less Accumulated Depreciation & Amortization		(2,737)
Assets Held for Sale	$	8,193

The following table sets forth the components of discontinued operations for the three and six months ended June 30, 2013 and 2012:

	Three Months Ended June 30,				Six Months Ended June 30,
		2013		2012		2013		2012
Revenue:
Hotel Operating Revenues	$	1,101	$	2,338	$	1,888	$	8,599
Other Revenue		-		-		-		11
Total Revenues		1,101		2,338		1,888		8,610
Expenses:
Hotel Operating Expenses		755		1,489		1,443		6,409
Hotel Ground Rent		-		-		-		72
Real Estate and Personal Property Taxes and Property Insurance		59		133		127		608
General and Administrative		(17)		1		(49)		10
Depreciation and Amortization		204		187		426		456
Interest Expense		-		188		-		1,200
Other Expense		2		-		3		2
Loss on Debt Extinguishment		-		-		-		33
Total Expenses		1,003		1,998		1,950		8,790
Income (Loss) from Discontinued Operations	$	98	$	340	$	(62)	$	(180)

We allocate to income or loss from discontinued operations interest expense related to debt that is to be assumed or that is required to be repaid as a result of the disposal transaction.

Out of Period Adjustment

In the second quarter of 2012, we recorded an adjustment impacting gain on disposition of hotel properties that increased net income by $1,950.  This adjustment was made after completing an analysis that determined a liability for deferred land rent payable was not properly written off when a hotel property was sold during the first quarter of 2012.  After evaluating the quantitative and qualitative effects of this adjustment, we have concluded that the impact on the Company’s consolidated financial statements for the periods ended March 31, 2012 and June 30, 2012 was not material.