Hotel Dispositions

9 Months Ended

Sep. 30, 2014

Hotel Dispositions [Abstract]

Hotel Dispositions

NOTE 11 – HOTEL DISPOSITIONS

Effective January 1, 2014, we early adopted ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations.  This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.  As a result of the early adoption of ASU Update No. 2014-08, we anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.

For transactions that have been classified as held for sale or as discontinued operations for periods prior to our adoption of ASU Update No. 2014-08, we will continue to present the operating results as discontinued operations in the statements of operations for all applicable periods presented.

Disposed Assets

On April 30, 2014, the Company closed on the sale of Hotel 373, New York, NY to an unaffiliated buyer for a total sales price of $37,000 with a gain on sale of approximately $7,184 and reduction of the Company’s mortgage debt by $18,356.  This hotel was acquired by the Company in June 2007.  The operating results for this hotel are included in income from continuing operations as shown in the consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013 as disposition of this hotel does not represent a strategic shift in our business. The operations from this property included income of $17 and a loss of $133 for the three and nine months ended September 30, 2014, respectively, and income of $245 and $567 for the three and nine months ended September 30, 2013, respectively.

On September 20, 2013, the Company entered into a purchase and sale agreement to dispose of a portfolio of 16 non-core hotel properties, for an aggregate purchase price of approximately $217,000.  In September 2013, our Board of Trustees authorized management of the Company to sell this portfolio. The 16 non-core hotel properties in the portfolio were acquired by the Company between 1999 and 2010. On December 20, 2013, the Company closed on the sale of 12 of these non-core hotel properties and closed on the remaining four properties in February 2014. The operating results for the 16 assets were reclassified to discontinued operations in the statement of operations for three and nine months ended September 30, 2014 and 2013.  The 16 assets were sold for a total sales price of $217,000, reduced the Company’s consolidated mortgage debt by $78,754 and generated a gain on sale of approximately $31,697, including a loss of $45 recorded during the nine months ended September 30, 2014 from the closing of the remaining 4 properties.   We also recorded an impairment loss for this transaction of approximately $6,591 in 2013 and $1,800 in the first quarter of 2014, as the net proceeds did not exceed the carrying value for certain of these properties.

On September 17, 2013, the Company closed on the sale of the Holiday Inn Express Camp Springs, MD to an unaffiliated buyer for a total sale price of $8,500 with a gain on sale of approximately $120 recognized in 2013. This hotel was acquired by the Company in June 2008. The operating results for this hotel were reclassified to discontinued operations in the statements of operations for the three and nine months ended September 30, 2013. We previously recorded an impairment loss of approximately $3,723 during the second quarter of 2013 as the net proceeds were not expected to exceed the carrying value.

On June 12, 2013, the Company closed on the sale of the Comfort Inn Harrisburg, PA to an unaffiliated buyer for a total sale price of $3,700 with a gain on sale of approximately $912 recognized for the nine months ended September 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 nine months ended September 30, 2013.

NOTE 11  –HOTEL DISPOSITIONS (CONTINUED)

Assets held for sale or liabilities related to assets held for sale consisted of the following as of December 31, 2013:

	December 31, 2013
Land	$	9,517
Buildings and Improvements		58,129
Furniture, Fixtures and Equipment		9,198
		76,844
Less: Accumulated Depreciation & Amortization		(20,261)
Assets Held for Sale	$	56,583
Liabilities Related to Assets Held for Sale	$	45,835

The following table sets forth the components of discontinued operations for the three and nine months ended September 30, 2014 and 2013.  Discontinued operations include the results of operations for hotels sold in 2013 and the first quarter of 2014 (which were held for sale as of December 31, 2013).

	Three Months Ended September 30,				Nine Months Ended September 30,
		2014		2013		2014		2013
Revenue:
Hotel Operating Revenues	$	-	$	17,582	$	1,940	$	45,797
Total Revenues		-		17,582		1,940		45,797
Expenses:
Hotel Operating Expenses		-		10,122		1,148		27,754
Gain on Insurance Settlements		-		-		74		-
Real Estate and Personal Property Taxes and Property Insurance		-		865		91		2,592
General and Administrative		-		66		(15)		22
Depreciation and Amortization		-		2,238		-		7,037
Interest Expense		-		1,266		354		3,779
Other Expense		-		3		-		14
Income Tax Expense		-		(49)		-		167
Total Expenses		-		14,511		1,652		41,365
Income from Discontinued Operations	$	-	$	3,071	$	288	$	4,432

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.