DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2011

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

NOTE 12 – DISCONTINUED OPERATIONS

The operating results of certain real estate assets which have been sold or otherwise qualify as held for sale are included in discontinued operations in the statements of operations for all periods presented.

Assets Held for Sale

On August 15, 2011, the Company entered into two purchase and sale agreements to dispose of a portfolio of 18 non-core hotel properties for an aggregate purchase price of approximately $155,000. Four of the properties included in the purchase and sale agreements are owned in part by the Company through an unconsolidated joint venture.  See “Note 3 – Investment in Unconsolidated Joint Ventures” for information on these four properties. On May 2011, our Board of Trustees authorized management of the Company to sell this portfolio.  The operating results for these consolidated hotels were reclassified to discontinued operations in the statements of operations for the years ended December 31, 2011, 2010 and 2009 and depreciation was ceased.    The 18 non-core hotel properties in the portfolio were acquired by the Company between 1998 and 2006.  As a result of entering into these purchase and sale agreements, we have recorded an impairment loss of approximately $30,248 for those consolidated assets for which the anticipated net proceeds do not exceed the carrying value.  These purchase and sale agreements provide that sales of the individual properties may close at different times, and ultimately not all properties may transfer.  

On February 23, 2012, the Company closed on the sale of 14 of the 18 non-core assets.  The Company expects to complete the sale of the remaining four assets by the end of the first quarter, pending completion of the loan assumption process.  The sale of the 14 assets generated net proceeds of $40,500 and reduced the Company's consolidated mortgage debt by $42,500.

Assets held for sale and liabilities related to assets held for sale consisted of the following as of December 31, 2011:

	December 31, 2011
Land	$	12,313
Buildings and Improvements		100,398
Furniture, Fixtures and Equipment		28,459
		141,170
Less Accumulated Depreciation & Amortization		(47,341	)
Assets Held for Sale	$	93,829
Liabilities Related to Assets Held for Sale	$	61,758

The following table sets forth the components of discontinued operations for the years ended December 31, 2011, 2010 and 2009:

	2011		2010			2009
Revenue:
Hotel Operating Revenues	$	43,373	$	41,354		$	42,784
Other Revenue		51		57			1,641
Total Revenues		43,424		41,411			44,425
Expenses:
Hotel Operating Expenses		28,263		28,474			29,325
Hotel Ground Rent		433		433			433
Real Estate and Personal Property Taxes and Property Insurance		2,110		2,216			2,418
General and Administrative		562		58			(515	)
Depreciation and Amortization		4,986		7,876			8,343
Interest Expense		4,562		5,150			5,863
Loss on Debt Extinguishment		22		54			-
Total Expenses		40,938		44,261			45,867
Income (Loss) from Discontinued Operations	$	2,486	$	(2,850	)	$	(1,442	)

The following real estate assets were sold between the period of January 1, 2009 to December 31, 2011.  Our Board of Trustees authorized management of the Company to sell each of these assets prior to the final disposition.  Based on their disposition date, the operating results for these hotels were reclassified to discontinued operations for the years ended December 31, 2011, 2010, and 2009:

Hotel	Acquisition  Date	Disposition  Date	Consideration		Gain on  Disposition
Comfort Inn, West Hanover, MD	May 1998	July 2011	$	5,250	$	949
Land Parcel,  Nevins Street, Brooklyn, NY	June 2007	December 2011		4,500		42
2011 Total					$	991
Holiday Inn Express, New Columbia, PA	December 1997	July 2010		3,000		347
2010 Total					$	347
MainStay Suites, Frederick, MD	January 2002	July 2009		5,125		748
Comfort Inn, Frederick, MD	May 2004	July 2009		5,125		748
Sheraton Four Points, Revere, MD	March 2004	July 2009		2,500		165
Hilton Garden Inn, Gettysburg, PA	July 2004	July 2009		7,750		208
2009 Total					$	1,869

* Interest in the joint venture was sold to our joint venture partner

Impairment of Assets Previously Held for Sale

We determined that the carrying value of the following properties exceeded fair value and as such we recorded an impairment charge as noted below during the years ended December 31, 2010 and 2009.  The fair value of these properties was determined using Level 3 inputs, which are typically unobservable and are based on our own assumptions, as there is little, if any, related market activity.  The land parcel located on Nevins Street, Brooklyn, NY, was sold in December 2011.

		For the Year Ended December 31,
		2010		2009
Asset	Asset Type	Impairment Charge
Comfort Inn, North Dartmouth, MA	Hotel Property	$	944	$	1,577
39th Street and 8th Avenue, New York, NY	Land Parcel		16		9,843
Nevins Street, Brooklyn, NY	Land Parcel		1,473		4,702

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.  We allocated $4,562, $5,150 and $5,863 of interest expense to discontinued operations for the years ended December 31, 2011, 2010, and 2009, respectively.