3. Investment in Hotel Properties

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



	September 30,		December 31,
	2017		2016
	(unaudited)
Land	$	623,493	$	531,660
Buildings and improvements		3,195,726		3,135,806
Furniture, fixtures and equipment		502,775		512,372
Intangible assets		48,560		49,015
Franchise fees		980		1,021
Construction in process		39,481		65,449
Investment in hotel properties, gross		4,411,015		4,295,323
Accumulated depreciation and amortization		(1,175,962)		(1,137,104)
Investment in hotel properties, net	$	3,235,053	$	3,158,219

In July 2017, the Company purchased the newly-developed 175-room Oceans Edge Hotel & Marina in Key West, Florida for a net purchase price of $173.9 million, including prorations. The purchase of the hotel included a marina, wet and dry boat slips and other customary marina amenities. The Company recorded the acquisition at fair value using an independent third-party analysis, with the purchase price allocated to investment in hotel properties and hotel working capital assets. The Company recognized acquisition related costs of $0.4 million and $0.7 million for the three and nine months ended September 30, 2017, respectively, which are included in corporate overhead on the Company’s consolidated statements of operations and comprehensive income. The results of operations for the Oceans Edge Hotel & Marina have been included in the Company’s consolidated statements of operations and comprehensive income from the acquisition date of July 25, 2017 through the third quarter ended September 30, 2017.

The fair values of the assets acquired and liabilities assumed at the Oceans Edge Hotel & Marina’s acquisition date were allocated as follows (in thousands):


Assets:
Investment in hotel properties	$	174,971
Accounts receivable		15
Inventories		50
Prepaid expenses		41
Other assets		84
Total assets acquired		175,161

Liabilities:
Accounts payable and accrued expenses		210
Accrued payroll and employee benefits		256
Other current liabilities		752
Other liabilities		26
Total liabilities assumed		1,244

Total cash paid for acquisition	$	173,917

Investment in hotel properties was allocated to land ($92.5 million), buildings and improvements ($74.4 million), furniture, fixtures and equipment ($6.4 million), and intangibles ($1.7 million) related to air rights and in-place lease agreements. The air rights have a value of $1.6 million and an indefinite life. The in-place lease agreements, which are related to the wet and dry boat slips, have a value of $0.1 million and a weighted average life of nine months.

Acquired properties are included in the Company’s results of operations from the date of acquisition. The following unaudited pro forma results of operations reflect the Company’s results as if the acquisition of the Oceans Edge Hotel & Marina had occurred on January 1, 2017. The information is not necessarily indicative of the results that actually would have occurred, nor does it indicate future operating results. Since the newly-developed hotel opened mid-January 2017, the year-to-date results are slightly less than a full nine months, and there are no prior year results. In the Company’s opinion, all significant adjustments necessary to reflect the effects of the acquisition have been made (in thousands, except per share data):


	Three Months Ended		Nine Months Ended
	September 30, 2017		September 30, 2017
	(unaudited)		(unaudited)
Revenues	$	305,052	$	912,697
Income attributable to common stockholders	$	12,083	$	117,751
Income per diluted share attributable to common stockholders	$	0.02	$	0.50

For both the three and nine months ended September 30, 2017, the Company has included $1.8 million of revenue and a net loss of $1.2 million, which includes $0.7 million in hurricane-related restoration expenses, in its consolidated statements of operations and comprehensive income related to the Company’s acquisition of the Oceans Edge Hotel & Marina.

During the third quarter of 2017, four of the Company’s 27 hotels were impacted to varying degrees by Hurricanes Harvey and Irma: the Hilton North Houston; the Marriott Houston; the Oceans Edge Hotel & Marina; and the Renaissance Orlando at SeaWorld®. For more information regarding the impact of the hurricanes on the Company’s hotels, please see the Hurricanes Harvey and Irma discussion in Note 11.

In the aftermath of Hurricane Harvey, combined with continued operational declines due to weakness in the Houston market, and in accordance with the Property, Plant and Equipment Topic of the FASB ASC, the Company identified indicators of impairment and reviewed its Houston hotels for possible impairment. During the third quarter of 2017, the Company recorded a total impairment charge of $34.4 million, including $27.1 million for the Hilton North Houston and $7.3 million for the Marriott Houston, which is included in impairment loss on the Company’s consolidated statements of operations for both the three and nine months ended September 30, 2017 (see Note 5). No impairment was necessary for either the three or nine months ended September 30, 2016.