DISCONTINUED OPERATIONS

On February 28, 2017, we sold the Sedona Hotels in a combined cash transaction to DiamondRock Hospitality Company (“DiamondRock”) for $97.0 million resulting in a gain on sale of $6.8 million (net of selling costs). The Company was not actively seeking to dispose of these assets and this sale resulted from an unsolicited offer we received from DiamondRock. In considering the offer, the Company determined that the price point was favorable to the Company based on review of available market data and elected to proceed with the transaction. In accordance with ASC 205-20, Presentation of Financial Statements-Discontinued Operations, a component of an entity is reported in discontinued operations after meeting the criteria for held for sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. While the Company has remained active in the hospitality industry through the active pursuit of hospitality acquisition and management opportunities, the Company determined that the disposal of the Sedona hotels is required to be treated as discontinued operations accounting presentation under GAAP.

As such, the historical financial results of the Sedona Hotels and the related income tax effects have been presented as discontinued operations for all periods presented of the disposal group and is reported in the balance sheet as assets of discontinued operations, liabilities of discontinued operations and net income (loss) of discontinued operations in the consolidated statements of operations through the date of sale (February 28, 2017).

Results of Operations

The following table summarizes the results of operations classified as discontinued operations, net of tax, for the year ended December 31, 2017 for Sedona assets operations from January 1, 2017 through February 28, 2017.



Revenue:	$	3,425

Expenses:
Operating Property Direct Expenses (exclusive of Interest and Depreciation)	4,034
Interest Expense	1,075
Depreciation and Amortization Expense	278
Settlement and Related Costs	(159		)
Total Operating Expenses	5,228

Gain on Disposal of Assets	(6,837		)
Provision for Income Taxes	1,963
Income (Loss) from discontinued operations, net of tax	$	3,071

Interest expense

The Company allocated interest expense, including amortization of deferred financing fees, to discontinued operations based on the senior mortgage debt that was paid with the proceeds from the sale of the Sedona hotels. The total allocated interest expense for the year ended December 31, 2017 is as follows:



Interest expense	$	628
Amortization of deferred financing fees	447
Total	$	1,075

Cash Flow Information

The following table presents the total operating and investing cash flows and depreciation, amortization, capital expenditures, and significant operating and investing non-cash items of the discontinued operations for the year ended December 31, 2017:



Cash flows from discontinued operating activities:	$	278
Depreciation expense	274
Amortization expense	4

Cash flows from discontinued investing activities:	$	649
Investment in real estate owned	649