Investment in Hotel Properties (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of investment in hotel properties

Investment in hotel properties, net consisted of the following (in thousands):


	December 31,
	2015		2014
Land	$	542,660	$	570,011
Buildings and improvements		3,109,562		3,237,596
Furniture, fixtures and equipment		480,832		450,057
Intangibles		45,249		147,947
Franchise fees		1,082		1,167
Construction in process		97,974		68,275
Investment in hotel properties, gross		4,277,359		4,475,053
Accumulated depreciation and amortization		(1,048,349)		(936,924)
Investment in hotel properties, net	$	3,229,010	$	3,538,129

Effect of acquisitions on results of operations

In the Company’s opinion, all significant adjustments necessary to reflect the effects of the acquisitions have been made (in thousands, except per share data):


	2014		2013
Revenues	$	1,175,367	$	1,100,354

Income attributable to common stockholders from continuing operations	$	74,811	$	19,931

Income per diluted share attributable to common stockholders from continuing operations	$	0.39	$	0.12

Schedule Of Finite And Indefinite Lived Intangible Assets Included in Investment in Hotel Properties

As of December 31, 2015 and 2014, intangible assets included in the Company’s investment in hotel properties, net consisted of the following (in thousands):


	2015		2014
Advanced bookings (1)	$	10,621	$	10,621
Easement agreement (2)		9,727		9,727
Ground/air lease agreements (3)		21,480		121,850
In-place lease agreements (4)		2,264		6,795
Above/(below) market lease agreements, net (5)		(1,693)		(3,896)
Below market management agreement (6)		2,850		2,850
		45,249		147,947
Accumulated amortization		(9,653)		(22,453)
	$	35,596	$	125,494

Schedule of amortization expense on intangible assets included in investment in hotel properties

Amortization expense on these intangible assets for the years ended December 31, 2015, 2014 and 2013 consisted of the following (in thousands):


	2015		2014		2013
Advanced bookings (1)	$	2,340	$	1,769	$	4,560
Ground/air lease agreements (3)		3,791		4,113		4,113
In-place lease agreements (4)		1,455		830		454
Above/(below) market lease agreements, net (5)		(2,091)		(304)		(148)
Below market management agreement (6)		469		469		469
	$	5,964	$	6,877	$	9,448

(1)

Advanced bookings consist of advance deposits related to the purchases of the Boston Park Plaza, the Hyatt Regency San Francisco, and the Wailea Beach Marriott Resort & Spa. The contractual advanced hotel bookings were recorded at a discounted present value based on estimated collectability, and are amortized using the straightline method based over the periods the amounts are expected to be collected. The amortization expense for contractual advanced hotel bookings is included in depreciation and amortization expense in the Company’s consolidated statements of operations. The amounts will be fully amortized for the Boston Park Plaza, the Hyatt Regency San Francisco and the Wailea Beach Marriott Resort & Spa by June 2018, December 2017 and July 2018, respectively.

(2)

The Easement agreement at the Hilton Times Square was valued at fair value at the date of acquisition. The Hilton Times Square easement agreement has an indefinite useful life, and, therefore, is not amortized. This non-amortizable intangible asset is reviewed annually for impairment and more frequently if events or circumstances indicate that the asset may be impaired. If a non-amortizable intangible asset is subsequently determined to have a finite useful life, the intangible asset will be written down to the lower of its fair value or carrying amount and then amortized prospectively, based on the remaining useful life of the intangible asset.

(3)

Ground/air lease agreements at the Hilton Times Square and the JW Marriott New Orleans were valued at fair value at the dates of acquisition. The agreements are amortized using the straightline method over the remaining non-cancelable terms of the related agreements, which range from between approximately 65 and 75 years as of December 31, 2015. The amortization expense for the agreements is included in property tax, ground lease and insurance expense in the Company’s consolidated statements of operations. During 2015, the Company wrote off $81.5 million related to the air lease intangible asset net of accumulated amortization at the Doubletree Guest Suites Times Square due to the Company’s December 2015 sale of its interests in the hotel, which reduced the gain recognized on the sale.

(4)

In-place lease agreements at the Boston Park Plaza, the Hilton New Orleans St. Charles, the Hilton San Diego Bayfront, the Hyatt Regency San Francisco and the Wailea Beach Marriott Resort & Spa, were valued at fair value at the dates of acquisition. The agreements are amortized using the straightline method over the remaining non-cancelable terms of the related agreements, which range from between approximately 6 months and 7 years as of December 31, 2015. The amortization expense for the agreements is included in depreciation and amortization expense in the Company’s consolidated statements of operations. During 2015, the Company wrote off $2.4 million related to in-place lease intangible assets net of accumulated amortization at the Doubletree Guest Suites Times Square due to the Company’s December 2015 sale of its interests in the hotel, which reduced the gain recognized on the sale.

(5)

The above/(below) market lease agreements, net consist of unfavorable tenant lease liabilities at the Boston Park Plaza, the Hilton Garden Inn Chicago Downtown/Magnificent Mile, the Hyatt Regency San Francisco and the Wailea Beach Marriott Resort & Spa, and favorable tenant lease assets at the Hilton New Orleans St. Charles, the Hyatt Regency San Francisco and the Wailea Beach Marriott Resort & Spa. These agreements were valued at fair value at the dates of acquisition, and are amortized using the straightline method over the remaining non-cancelable terms of the related agreements, which range from between approximately 6 months and 16 years as of December 31, 2015. The amortization expense for the agreements is included in other operating revenue in the Company’s consolidated statements of operations.

(6)

The below market management agreement at the Hilton Garden Inn Chicago Downtown/Magnificent Mile was valued at fair value at the acquisition date. The agreement is comprised of two components, one for the management of the Hilton Garden Inn Chicago Downtown/Magnificent Mile, and the other for the potential management of a future hotel. The agreement is amortized using the straightline method over the remaining non-cancelable terms of the two components, approximately 2 and 7 years each as of December 31, 2015. The amortization expense for the agreement is included in property general and administrative expense in the Company’s consolidated statements of operations.

Schedule of amortization expense for next five years

For the next five years, amortization expense for the intangible assets noted above is expected to be as follows (in thousands):


2016	$	3,286
2017	$	3,084
2018	$	1,722
2019	$	391
2020	$	350