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Investment In Unconsolidated Joint Ventures
 12 Months Ended
Dec. 31, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Investment In Unconsolidated Joint Ventures INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
As of December 31, 2019 and December 31, 2018 our investment in unconsolidated joint ventures consisted of the following:

 
 
 
Percent
 
 
 
 
Joint Venture
 
Hotel Properties
 
Owned
 
December 31, 2019
 
December 31, 2018

 
 
 
 
 
 
 
 
Cindat Hersha Owner JV, LLC
 
Hilton and IHG branded hotels in NYC
 
31.2
%
 
$
—

 
$
—

Hiren Boston, LLC
 
Courtyard by Marriott, South Boston, MA
 
50.0
%
 
1,434

 
1,879

SB Partners, LLC
 
Holiday Inn Express, South Boston, MA
 
50.0
%
 
—

 
1,125

SB Partners Three, LLC
 
Home2 Suites, South Boston, MA
 
50.0
%
 
7,012

 
1,000


 
 
 
 
 
$
8,446

 
$
4,004


On September 27, 2018, we entered into a joint venture agreement with JHM SB Three Member, LLC which will own a Home2 Suites located in South Boston, MA. Each partner will have a 50.0% interest of this asset, which is currently under development and is expected to open in 2020. At the onset of the agreement, each partner contributed $1,000 and any additional contributions will be made equally by each party.
On February 6, 2018, Cindat Hersha Owner JV, LLC repaid in full outstanding mortgage debt from an existing senior loan and mezzanine loan, and simultaneously entered into a new senior loan agreement with new lenders. A portion of the net cash proceeds from the refinance was used to distribute $47,738 to the Company to fully redeem our recorded preferred equity interest in the venture. While this transaction fully redeemed our preferred equity interest in the venture, the Company continues to hold a common equity investment in this joint venture which has a balance of $0 at December 31, 2019.
Effective January 1, 2018, the member allocations for distributions of net cash flow from operations, distributions from capital transactions and allocation of income and loss are based on these new common contributions and percentage interests. See the Income/Loss Allocation section below for a full explanation of how income and loss are allocated for Cindat Hersha Owner JV, LLC.
On January 3, 2017, we redeemed our joint venture interest in Mystic Partners, LLC by acquiring a 100% ownership interest in the Mystic Marriott Hotel & Spa and transferring our minority ownership interests in the Hartford Marriott and Hartford Hilton to our joint venture partner. We received $11,623 in cash and assumed a mortgage on the Mystic Marriott Hotel & Spa of $41,333 as consideration for this redemption and transfer of our minority interest. Subsequent to the assumption of the mortgage, the Company fully paid off the outstanding balance of the debt and added the property to the borrowing base of our Credit Facility. As a result of the remeasurement of the consideration received to fair value, the Company recognized a gain of $16,240 in conjunction with this transaction.

Income/Loss Allocation
The Cindat Hersha Owner JV, LLC cash available for distribution will be distributed to (1) Cindat until they receive a return on their contributed $142,000 senior common equity interest, currently at 9.0%, and (2) then to us until we receive an 8% return on our contributed $64,357 junior common equity interest.  Any cash available for distribution remaining will be split 31.2% to us and 68.8% to Cindat.  Cindat’s senior common equity return is reduced by 0.5% annually for 4 years following the closing until it is set at a rate of 8% for the remainder of the life of the joint venture.  As of December 31, 2019 and 2018, based on the income allocation methodology described above, the Company has absorbed cumulative losses equal to our accounting basis in the joint venture resulting in a $0 investment balance in the table above, however, we currently maintain a positive equity balance within the venture.  This difference is due to difference in our basis inside the venture versus our basis outside of the venture.
For SB Partners, LLC, Hiren Boston, LLC, and SB Partners Three, LLC, income or loss is allocated to us and our joint venture partners consistent with the allocation of cash distributions in accordance with the joint venture agreements. This results in an income allocation consistent with our percentage of ownership interests.
Any difference between the carrying amount of any of our investments noted above and the underlying equity in net assets is amortized over the expected useful lives of the properties and other intangible assets.
NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)
Income (loss) recognized during the years ended December 31, 2019, 2018 and 2017, for our investments in unconsolidated joint ventures is as follows:

Year Ended December 31,

2019
 
2018
 
2017
Cindat Hersha Owner JV, LLC
$
—

 
$
—

 
$
(3,717
)
Hiren Boston, LLC
155

 
866

 
750

SB Partners, LLC
626

 
218

 
494

SB Partners Three, LLC
(90
)
 
—

 
—

Income (Loss) from Unconsolidated Joint Venture Investments
$
691

 
$
1,084

 
$
(2,473
)

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 December 31, 2019 and December 31, 2018 and for the years ended December 31, 2019, 2018 and 2017. 
Balance Sheets
 
 
 

December 31, 2019
 
December 31, 2018
Assets
 
 
 
Investment in Hotel Properties, Net
$
579,287

 
$
569,609

Other Assets
33,891

 
30,088

Total Assets
$
613,178

 
$
599,697


 
 
 
Liabilities and Equity
 
 
 
Mortgages and Notes Payable
$
430,282

 
$
422,205

Other Liabilities
19,185

 
7,478

Equity:
 
 
 
Hersha Hospitality Trust
9,588

 
15,554

Joint Venture Partners
154,998

 
155,053

Accumulated Other Comprehensive Loss
(875
)
 
(593
)
Total Equity
163,711

 
170,014


 
 
 
Total Liabilities and Equity
$
613,178

 
$
599,697

Statements of Operations
 
 
 
 
 

Year Ended December 31,

2019
 
2018
 
2017
Room Revenue
$
94,384

 
$
98,123

 
$
93,254

Other Revenue
2,408

 
2,350

 
1,965

Operating Expenses
(46,175
)
 
(46,319
)
 
(43,245
)
Lease Expense
(693
)
 
(658
)
 
(691
)
Property Taxes and Insurance
(12,477
)
 
(11,882
)
 
(11,274
)
General and Administrative
(5,783
)
 
(5,489
)
 
(5,179
)
Depreciation and Amortization
(14,947
)
 
(13,403
)
 
(12,331
)
Interest Expense
(28,072
)
 
(26,289
)
 
(20,965
)
Loss on Debt Extinguishment
—

 
(7,270
)
 
—


 
 
 
 
 
Net (Loss) Income
$
(11,355
)
 
$
(10,837
)
 
$
1,534


NOTE 3 – INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (CONTINUED)
The following table is a reconciliation of our share in the unconsolidated joint ventures’ equity to our investment in the unconsolidated joint ventures as presented on our balance sheets as of December 31, 2019 and December 31, 2018.

December 31, 2019
 
December 31, 2018
Our share of equity recorded on the joint ventures' financial statements
$
9,588

 
$
15,554

Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)
(1,142
)
 
(11,550
)
Investment in Unconsolidated Joint Ventures
$
8,446

 
$
4,004

(1)
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures consists of the following:
•
the difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements;
•
accumulated amortization of our equity in joint ventures that reflects the difference in our portion of the fair value of joint ventures' assets on the date of our investment when compared to the carrying value of the assets recorded on the joint ventures’ financial statements (this excess or deficit 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); and
•
cumulative impairment of our investment in joint ventures not reflected on the joint ventures' financial statements, if any.
Subsequent Event
On January 3, 2020, we entered into an agreement for our joint venture partner to purchase our membership interests in Hiren Boston, LLC and SB Partners, LLC. Net proceeds from the sale of our interests are anticipated to be approximately $26,000 and this transaction is expected to close during the second quarter of 2020.