Equity Investments in Real Estate

At March 31, 2016, we owned equity interests in four Unconsolidated Hotels, three with unrelated third parties and one with CWI 2. We do not control the ventures that own these hotels, but we exercise significant influence over them. We account for these investments under the equity method of accounting (i.e., at cost, increased or decreased by our share of earnings or losses, less distributions, plus contributions and other adjustments required by equity method accounting, such as basis differences from acquisition costs paid to our Advisor that we incur and other-than-temporary impairment charges, if any).

Under the conventional approach of accounting for equity method investments, an investor applies its percentage ownership interest to the venture’s net income to determine the investor’s share of the earnings or losses of the venture. This approach is inappropriate if the venture’s capital structure gives different rights and priorities to its investors. We have priority returns on several of our equity method investments. Therefore, we follow the hypothetical liquidation at book value method in determining our share of these ventures’ earnings or losses for the reporting period as this method better reflects our claim on the ventures’ book value at the end of each reporting period. Earnings for our equity method investments are recognized in accordance with each respective investment agreement and, where applicable, based upon the allocation of the investment’s net assets at book value as if the investment were hypothetically liquidated at the end of each reporting period.

The following table sets forth our ownership interests in our equity investments in real estate and their respective carrying values. The carrying values of these ventures are affected by the timing and nature of distributions (dollars in thousands):



Hotels	State	Number of Rooms	% Owned	Our Initial Investment ^(a)		Acquisition Date	Hotel Type	Renovation Status at March 31, 2016	Carrying Value at
Hotels	State	Number of Rooms	% Owned	Our Initial Investment ^(a)		Acquisition Date	Hotel Type	Renovation Status at March 31, 2016	March 31, 2016		December 31, 2015
Unconsolidated Hotels
Hyatt French Quarter Venture ^(b)	LA	254	80%	$	13,000	9/6/2011	Full-service	Completed	$	721	$	1,752
Westin Atlanta Venture ^(c)	GA	372	57%	13,170		10/3/2012	Full-service	Completed	7,109		7,156
Marriott Sawgrass Golf Resort & Spa Venture ^(d)	FL	511	50%	33,758		10/3/2014	Resort	In progress	33,794		32,668
Ritz-Carlton Philadelphia Venture ^(e)	PA	299	60%	38,327		5/15/2015	Full-service	Planned Future	38,857		38,325
		1,436		$	98,255				$	80,481	$	79,901

___________


(a)	This amount represents purchase price plus capitalized costs, inclusive of fees paid to our Advisor, at the time of acquisition.


(b)	We received cash distributions of $1.2 million from this investment during the three months ended March 31, 2016.


(c)	We received cash distributions of $0.3 million from this investment during the three months ended March 31, 2016.


(d)	This investment is considered a VIE (Note 2).


(e)	We received cash distributions of $0.1 million from this investment during the three months ended March 31, 2016.

The following table sets forth our share of equity in earnings from our Unconsolidated Hotels, which are based on the hypothetical liquidation at book value model, as well as certain amortization adjustments related to basis differentials from acquisitions of investments (in thousands):



	Three Months Ended March 31,
Venture	2016		2015
Marriott Sawgrass Golf Resort & Spa Venture	$	1,126	$	—
Ritz-Carlton Philadelphia Venture	644		—
Westin Atlanta Venture	292		(175		)
Hyatt French Quarter Venture	240		835
Total equity in earnings of equity method investments in real estate	$	2,302	$	660

No other-than-temporary impairment charges related to our investments in these ventures were recognized during either the three months ended March 31, 2016 or 2015.

At both March 31, 2016 and December 31, 2015, the unamortized basis differences on our equity investments were $3.5 million. Net amortization of the basis differences reduced the carrying values of our equity investments by $0.1 million and less than $0.1 million for the three months ended March 31, 2016 and 2015, respectively.