NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of June 30, 2014 and December 31, 2013, our investment in unconsolidated joint ventures consisted of the following:



		Percent	Preferred		June 30,		December 31,
Joint Venture	Hotel Properties	Owned	Return		2014		2013

SB Partners, LLC	Holiday Inn Express, South Boston, MA	50.0%	N/A	$	941	$	1,057
Hiren Boston, LLC	Courtyard by Marriott, South Boston, MA	50.0%	N/A		4,676		4,777
Mystic Partners, LLC	Hilton and Marriott branded hotels in CT	8.8%-66.7%	8.5% non-cumulative		5,976		6,210
				$	11,593	$	12,044

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.

Income (loss) recognized during the three and six months ended June 30, 2014 and 2013, for our investments in unconsolidated joint ventures is as follows:




	Three Months Ended June 30,				Six Months Ended June 30,
		2014		2013		2014		2013
SB Partners, LLC	$	205	$	119	$	84	$	2
Hiren Boston, LLC		313		119		148		(50)
Mystic Partners, LLC		(99)		(90)		(233)		(200)
Income (Loss) from Unconsolidated Joint Venture Investments	$	419	$	148	$	(1)	$	(248)

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, 2014 and December 31, 2013 and for the three and six months ended June 30, 2014 and 2013.



Balance Sheets
		June 30,		December 31,
		2014		2013
Assets
Investment in Hotel Properties, Net	$	112,716	$	114,221
Other Assets		21,971		19,146
Total Assets	$	134,687	$	133,367

Liabilities and Equity
Mortgages and Notes Payable	$	124,930	$	112,654
Other Liabilities		32,090		37,464
Equity:
Hersha Hospitality Trust		26,064		26,230
Joint Venture Partner(s)		(48,397)		(42,981)
Total Equity		(22,333)		(16,751)

Total Liabilities and Equity	$	134,687	$	133,367



Statements of Operations

	Three Months Ended June 30,				Six Months Ended June 30,
		2014		2013		2014		2013
Room Revenue	$	16,048	$	15,502	$	28,537	$	27,840
Other Revenue		5,887		5,958		10,672		11,244
Operating Expenses		(14,213)		(14,070)		(27,168)		(27,093)
Interest Expense		(1,787)		(1,855)		(8,616)		(3,724)
Lease Expense		(274)		(247)		(524)		(495)
Property Taxes and Insurance		(751)		(777)		(1,498)		(1,520)
General and Administrative		(1,487)		(1,477)		(2,892)		(2,929)
Depreciation and Amortization		(1,578)		(1,623)		(3,194)		(3,232)
(Loss) Income Allocated to Noncontrolling Interests		(53)		(72)		176		(96)

Net Income (Loss) from Continuing Operations		1,792		1,339		(4,507)		(5)
Loss from Discontinued Operations		-		-		-		(55)
Gain on Disposition of Hotel Properties		-		-		-		1,162

Net Income (Loss)	$	1,792	$	1,339	$	(4,507)	$	1,102

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, 2014 and December 31, 2013.



		June 30,		December 31,
		2014		2013
Company's share of equity recorded on the joint ventures' financial statements	$	26,064	$	26,230
Adjustment to reconcile the Company's share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)		(14,471)		(14,186)
Investment in Unconsolidated Joint Ventures	$	11,593	$	12,044

(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 the Company’s investment in joint ventures not reflected on the joint ventures' financial statements;

the Company’s basis in the investment in joint ventures not recorded on the joint ventures' financial statements; and

accumulated amortization of the Company’s equity in joint ventures that reflects the Company’s 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 the Company’s consolidated statement of operations).