INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

INVESTMENT IN UNCONSOLIDATED JOINT VENTURES

As of June 30, 2023 and December 31, 2022, our investment in unconsolidated joint ventures consisted of the following:

Joint Venture	Hotel Properties	Percent Owned		June 30, 2023		December 31, 2022
SB Partners, LLC	Holiday Inn Express, South Boston, MA	50	%	$	—	$	—
SB Partners Three, LLC	Home2 Suites, South Boston, MA	50	%	4,562		4,989
				$	4,562	$	4,989

Income/Loss Allocation

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. When we absorb cumulative losses equal to our accounting basis in the joint venture, our investment balance is $0 as presented in the table above.

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. 

Income (Loss) recognized during the three and six months ended June 30, 2023 and 2022 for our investments in unconsolidated joint ventures is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Hiren Boston, LLC*	$	—	$	301	$	—	$	42
SB Partners, LLC	—		—		—		(310)
SB Partners Three, LLC	(74)		56		(426)		(311)
(Loss) Income from Unconsolidated Joint Venture Investments	$	(74)	$	357	$	(426)	$	(579)

*On November 30, 2022, we sold our 50% membership interest in Hiren Boston, LLC.

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, 2023 and December 31, 2022 and for the three and six months ended June 30, 2023 and 2022.

Balance Sheets

	June 30, 2023		December 31, 2022
Assets
Investment in Hotel Properties, Net	$	45,241	$	47,356
Other Assets	12,238		11,803
Total Assets	$	57,479	$	59,159
Liabilities and Equity
Mortgages	$	49,727	$	50,236
Other Liabilities	10,294		10,012
Equity:
Hersha Hospitality Trust	1,903		2,630
Joint Venture Partner(s)	(4,445)		(3,719)
Total Equity	(2,542)		(1,089)
Total Liabilities and Equity	$	57,479	$	59,159

Statements of Operations

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Room Revenue	$	5,037	$	6,848	$	7,335	$	9,495
Other Revenue	196		318		323		504
Operating Expenses	(2,693)		(3,630)		(4,328)		(6,083)
Lease Expense	(184)		(257)		(319)		(514)
Property Taxes and Insurance	(379)		(572)		(753)		(1,144)
General and Administrative	82		(15)		72		(35)
Depreciation and Amortization	(1,072)		(1,248)		(2,144)		(2,502)
Interest Expense	(836)		(773)		(1,639)		(1,442)
Income Tax (Expense) Benefit	(98)		(74)		—		51
Net Income (Loss)	$	53	$	597	$	(1,453)	$	(1,670)

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 June 30, 2023 and December 31, 2022.

	June 30, 2023		December 31, 2022
Our share of equity recorded on the joint ventures' financial statements	$	1,903	$	2,630
Adjustment to reconcile our share of equity recorded on the joint ventures' financial statements to our investment in unconsolidated joint ventures(1)	2,659		2,359
Investment in Unconsolidated Joint Ventures	$	4,562	$	4,989

(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 difference between our basis in the investment in joint ventures and the equity recorded on the joint ventures' financial statements.