NOTE 2 – INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties consists of the following at March 31, 2016 and December 31, 2015:



		March 31, 2016		December 31, 2015

Land	$	465,102	$	480,874
Buildings and Improvements		1,371,230		1,518,565
Furniture, Fixtures and Equipment		214,744		227,527
		2,051,076		2,226,966

Less Accumulated Depreciation		(348,185)		(395,847)

Total Investment in Hotel Properties	$	1,702,891	$	1,831,119

Acquisitions

We have acquired the following properties during the three months ended March 31, 2016:



Hotel	Acquisition Date		Land		Buildings and Improvements		Furniture Fixtures and Equipment		Other Intangibles			Loan Costs		Total Purchase Price		Assumption of Debt
Sanctuary Beach Resort, Marina, CA	1/28/2016	$	20,014	$	17,093	$	2,369	$	-		$	198	$	39,674	$	14,750	*
Hilton Garden Inn M Street, Washington, DC	3/9/2016		30,131		65,971		9,621		874	**		-		106,597		-
TOTAL		$	50,145	$	83,064	$	11,990	$	874		$	198	$	146,271	$	14,750

*Assumption of debt includes a $50 premium resulting from the determination that the stated rate of interest is above market rates on the date of acquisition

**Includes an intangible asset for a lease-in-place of $648, advance bookings of $76 and franchise fees of $150.

Acquisition-related costs, such as due diligence, legal and accounting fees, are not capitalized or applied in determining the fair value of the above acquired assets. During the three months ended March 31, 2016, we paid $1,410 in acquisition costs related to the above acquired assets.

Included in the consolidated statement of operations for the three months ended March 31, 2016 are total revenues of $2,132, and total net income of $754 for the hotels we acquired during the three months ended March 31, 2016 and consolidated since the date of acquisition of the hotels.



	Three Months Ended March 31,
	2016
Hotel		Revenue		Net Income
Sanctuary Beach Resort, Marina, CA	$	902	$	263
Hilton Garden Inn M Street, Washington, DC		1,230		491
Total	$	2,132	$	754

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

Purchase and Sale Agreement

On February 4, 2016, we announced the signing of asset purchase and contribution agreements (the “Contribution Agreements”) with Cindat Manhattan Hotel Portfolio (US) LLC (“Cindat”) to form a joint venture that initially invests in seven of our limited service hotels in Manhattan (The “JV Properties”) totaling 1,087 rooms. The joint venture’s purchase price for the JV Properties is $543,500, or $500 per key. This transaction closed on April 29, 2016. The proposed joint venture is structured with Cindat as a senior common equity member holding a 70.0% ownership interest, while we retain a 30% common equity interest. Under the terms of the Contribution Agreements, we contributed the JV Properties and Cindat will contribute cash equal to 70% of the remaining purchase price. In addition, we had a $37,000 preferred equity interest in the joint ventures that provides for a 9% non-cumulative return. Upon closing, we received a distribution from the joint venture in the amount of Cindat’s contributed cash and our 30% interest in the net proceeds from joint venture borrowings. We have classified the assets and mortgage indebtedness related to these seven hotels as held for sale as of March 31, 2016.



	March 31, 2016

Land	$	65,916
Buildings and Improvements		236,830
Furniture, Fixtures and Equipment		29,596
		332,342

Less: Accumulated Depreciation & Amortization		(67,558)

Assets Held for Sale	$	264,784

Liabilities Related to Assets Held for Sale	$	55,203

We did not have any assets or liabilities related to assets held for sale as of December 31, 2015

NOTE 2 – INVESTMENT IN HOTEL PROPERTIES (CONTINUED)

Pro Forma Results (Unaudited)

The following condensed pro forma financial data for the three months ended March 31, 2016 and 2015 are presented as if the hotels acquired by the Company in 2016 and 2015 had been acquired as of January 1, 2015 and 2014, respectively. The condensed pro forma financial data are not necessarily indicative of what actual results of operations of the Company would have been for the periods presented assuming the acquisitions had been consummated on January 1, 2015 and 2014, nor do they purport to represent the results of operations for future periods.



		Three Months Ended March 31,
	2016		2015
Pro Forma Total Revenues	$	110,325	$	100,833

Pro Forma Net Loss		(6,192)		(3,948)
Loss Allocated to Noncontrolling Interest		588		427
Preferred Distributions		(3,589)		(3,589)
Pro Forma Loss Applicable to Common Shareholders	$	(9,193)	$	(7,110)

Pro Forma Loss Applicable to Common Shareholders per Common Share
Basic	$	(0.21)	$	(0.14)
Diluted	$	(0.21)	$	(0.14)

Weighted Average Common Shares Outstanding
Basic		44,379,327		49,582,790
Diluted		44,379,327		49,582,790