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Acquisition of Hotel Properties
 9 Months Ended
Sep. 30, 2013
Business Combinations [Abstract]  
ACQUISITION OF HOTEL PROPERTIES
Acquisition of Hotel Properties
On January 29, 2013, the Company acquired the 337-suite Embassy Suites San Diego Bay-Downtown located in San Diego, California for $112.5 million. The acquisition was funded with $45.8 million of available cash and the assumption of a $66.7 million first mortgage loan. The fixed rate mortgage loan that was assumed was determined to have an interest rate that was above the current market interest rate. The Company recorded a $4.8 million mortgage loan premium for the above market interest that is amortized as a reduction in interest expense through the maturity of the loan. The Company selected HEI Hotels and Resorts to manage the hotel.
On August 8, 2013, the Company acquired the 57-suite Redbury Hotel located in Hollywood, California for $34.0 million. The acquisition was funded with available cash and the property will continue to be managed by sbe Hotel Group.
On August 28, 2013, the Company acquired the 174-room Hotel Modera located in Portland, Oregon for $47.5 million. The acquisition was funded with $23.8 million of available cash and the assumption of a $23.7 million first mortgage loan. The fixed rate mortgage loan that was assumed was determined to have an interest rate that was above the current market interest rate. The Company recorded a $0.4 million mortgage loan premium for the above market interest that is amortized as a reduction in interest expense through the maturity of the loan. The Company selected OLS Hotels and Resorts to manage the hotel.
The allocation of fair value to the acquired assets and liabilities is as follows (in thousands). The allocation of fair value for the Hotel Modera is preliminary and is subject to change in the fourth quarter of 2013 upon management's final determination of fair values for the acquired assets and liabilities.
 
Embassy Suites San Diego Bay-Downtown
 
Redbury Hotel
 
Hotel Modera
 
Total
Land
$
20,103

 
$
8,057

 
$
7,490

 
$
35,650

Buildings and improvements
90,161

 
24,833

 
38,183

 
153,177

Furniture, fixtures and equipment
6,881

 
1,000

 
1,500

 
9,381

Above market rate contracts
(4,751
)
 
—

 
(395
)
 
(5,146
)
Mortgage debt
(66,732
)
 
—

 
(23,716
)
 
(90,448
)
In place lease assets and intangibles
66

 
—

 
355

 
421

Net working capital
(12
)
 
(165
)
 
416

 
239

Net assets acquired
$
45,716

 
$
33,725

 
$
23,833

 
$
103,274


The following unaudited pro forma financial information presents the results of operations of the Company for the three and nine months ended September 30, 2013 and 2012 as if the hotels acquired in 2013 and 2012 were acquired on January 1, 2012 and 2011, respectively. The following hotels' pro forma results are included in the pro forma table below: Hotel Zetta (formerly Hotel Milano), Hotel Vintage Park Seattle, Hotel Vintage Plaza Portland, W Los Angeles - Westwood, Hotel Palomar San Francisco, Embassy Suites San Diego Bay-Downtown, Redbury Hotel, and Hotel Modera. The pro forma results below excluded acquisition costs of $0.3 million and $0.5 million for the three months ended September 30, 2013 and 2012, respectively, and $1.4 million and $1.3 million for the nine months ended September 30, 2013 and 2012, respectively. The unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of either the results of operations that would have actually occurred had these transactions occurred on January 1, 2012 and 2011 or the future results of operations (in thousands, except per-share data).
 
 
For the three months ended September 30,
 
For the nine months ended September 30,
 
2013
 
2012
 
2013
 
2012
 
(Unaudited)
 
(Unaudited)
Total revenues
$
134,013

 
$
126,110

 
$
376,812

 
$
353,854

Operating income (loss)
22,916

 
20,951

 
49,347

 
42,430

Net income (loss) attributable to common shareholders
11,803

 
12,166

 
17,047

 
17,023

Net income (loss) per share available to common shareholders — basic
$
0.19

 
$
0.20

 
$
0.28

 
$
0.27

Net income (loss) per share available to common shareholders — diluted
$
0.19

 
$
0.20

 
$
0.27

 
$
0.27


For the three and nine months ended September 30, 2013, the Company's consolidated statements of operations included $9.4 million and $18.8 million of revenues, respectively and $5.1 million and $10.2 million of hotel operating expenses, respectively, related to the operations of the Embassy Suites San Diego Bay - Downtown, Redbury Hotel, and Hotel Modera acquired in 2013.