Investment in Real Estate

6 Months Ended

Jun. 30, 2019

Real Estate [Abstract]

Real Estate Disclosure [Text Block]

2.  Investment in Real Estate

The Company’s investment in real estate consisted of the following (in thousands):

	June 30,			December 31,
	2019			2018
Land	$	730,614		$	737,822
Building and Improvements		4,469,348			4,503,728
Furniture, Fixtures and Equipment		471,324			471,399
Finance Ground Lease Assets		144,768			-
Franchise Fees		13,787			13,354
		5,829,841			5,726,303
Less Accumulated Depreciation and Amortization		(971,738	)		(909,893	)
Investment in Real Estate, net	$	4,858,103		$	4,816,410

Effective January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), as amended and, as a result, recorded finance ground lease assets for four of its ground leases, which are included in investment in real estate, net. See Note 9 for more information regarding the Company’s finance ground lease assets.

As of June 30, 2019, the Company owned 234 hotels with an aggregate of 30,046 rooms located in 34 states.

The Company leases all of its hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under master hotel lease agreements.

Hotel Acquisitions

The Company acquired two hotels during the six months ended June 30, 2019. The following table sets forth the location, brand, manager, date acquired, number of rooms and gross purchase price, excluding transaction costs, for each hotel. All dollar amounts are in thousands.

City	State	Brand	Manager	Date Acquired	Rooms		Gross Purchase Price
St. Paul	MN	Hampton	Vista Host	3/4/2019		160	$	31,680
Orlando	FL	Home2 Suites	LBA	3/19/2019		128		20,736
						288	$	52,416

During the year ended December 31, 2018, the Company acquired five hotels including four hotels in the first six months of 2018. The following table sets forth the location, brand, manager, date acquired, number of rooms and gross purchase price, excluding transaction costs, for each hotel. All dollar amounts are in thousands.

City	State	Brand	Manager	Date Acquired	Rooms		Gross Purchase Price
Atlanta/Downtown	GA	Hampton	McKibbon	2/5/2018		119	$	24,000
Memphis	TN	Hampton	Crestline	2/5/2018		144		39,000
Phoenix	AZ	Hampton	North Central	5/2/2018		210		44,300
Atlanta/Perimeter Dunwoody	GA	Hampton	LBA	6/28/2018		132		29,500
Jacksonville	FL	Hyatt Place	LBA	12/7/2018		127		15,400
						732	$	152,200

The Company used borrowings under its revolving credit facility to purchase each of these hotels.  The acquisitions of these hotel properties were accounted for as an acquisition of a group of assets, with costs incurred to effect the acquisition, which were not significant, capitalized as part of the cost of the assets acquired. For the two hotels acquired during the six months ended June 30, 2019, the amount of revenue and operating income included in the Company’s consolidated statement of operations from the date of acquisition through June 30, 2019 was approximately $3.4 million and $0.7 million, respectively. For the four hotels acquired during the six months ended June 30, 2018, the amount of revenue and operating income included in the Company’s consolidated statement of operations from the date of acquisition through June 30, 2018 was approximately $7.1 million and $2.1 million, respectively.

Hotel Purchase Contract Commitments

As of June 30, 2019, the Company had outstanding contracts for the potential purchase of five hotels for a total expected purchase price of approximately $159.2 million, which are under development and are planned to be completed and opened for business over the next 12 to 24 months from June 30, 2019, at which time closings on these hotels are expected to occur. Although the Company is working towards acquiring these hotels, there are many conditions to closing that have not yet been satisfied and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts. The following table summarizes the location, brand, date of purchase contract, expected number of rooms, refundable (if the seller does not meet its obligations under the contract) contract deposits paid, and gross purchase price for each of the contracts outstanding at June 30, 2019. All dollar amounts are in thousands.

Location (1)	Brands	Date of Purchase Contract	Rooms		Refundable Deposits		Gross Purchase Price
Cape Canaveral, FL (2)	Hampton and Home2 Suites	4/11/2018		224	$	3	$	46,704
Tempe, AZ (3)	Hyatt House and Hyatt Place	6/13/2018		254		720		63,341
Denver, CO	Courtyard	4/5/2019		182		586		49,140
				660	$	1,309	$	159,185

(1) These hotels are currently under development. The table shows the expected number of rooms upon hotel completion and the expected franchise brands. Assuming all conditions to closing are met, the purchases of these hotels are expected to occur over the next 12 to 24 months from June 30, 2019. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the contract. As the properties are under development, at this time, the seller has not met all of the conditions to closing.

(2) These hotels are part of an adjoining combined 224-room, dual-branded complex that will be located on the same site.

(3) These hotels are part of an adjoining combined 254-room, dual-branded complex that will be located on the same site.

The Company intends to use borrowings under its credit facilities available at closing to purchase the hotels under contract if a closing occurs.