12.

Subsequent Events

Distribution Payment

On July 15, 2013, the total distribution for the three-month period ending June 30, 2013 of approximately $1.0 million was paid in full using a combination of cash and approximately 49,000 shares of the Company's common stock issued pursuant to the Company's DRIP, at a discounted price of $9.50 per share. The distribution was paid from cash flows provided from operations (approximately $0.5 million or 50%) and excess cash proceeds from the issuance of common stock through REIT II's DRIP (approximately $0.5 million or 50%).

Loan Agreement

On July 29, 2013, the Company, through certain subsidiaries, entered into a loan agreement (the "Loan Agreement") with Barclays Bank PLC ("Barclays") for approximately $24.4 million. The Loan Agreement has a term of five years with a maturity date of August 6, 2018, bears interest at 4.94%, and requires monthly principal and interest payments of approximately $142 through its stated maturity.

The Loan Agreement is cross-collateralized by four hotel properties consisting of the SpringHill Suites Hotel, the Town Place Suites TownePlace Suites Hotel and the Arkansas Portfolio.

Approximately $11.1 million of the financing proceeds were used to repay the outstanding balances on two mortgages secured by the TownePlace Suites Hotel located in Metairie and the SpringHill Suites Hotel located in Peabody and $4.0 million was used to repay the remaining outstanding balance of the Demand Note due to Lightstone REIT I. Additionally, approximately $1.0 million was held in escrow and is reserved for property improvements, repairs and real estate taxes and the Company paid approximately $400 in fees. The remaining financing proceeds of approximately $7.9 million may be used for acquisitions, capital expenditures, working capital and other general corporate funding purposes, including distributions.

Distribution Declaration

On August 12, 2013, the Board of Directors authorized and the Company declared a distribution for the three-month period ending September 30, 2013. The distribution will be calculated based on shareholders of record each day during this three-month period at a rate of $0.00178082191 per day, and will equal a daily amount that, if paid each day for a 365-day period, would equal a 6.5% annualized rate based on a share price of $10.00. The distribution will be paid in cash on October 15, 2013 to shareholders of record as of September 30, 2013. The shareholders have an option to elect the receipt of shares under our DRIP.