Investment in Joint Venture

On July 29, 2011, the Company acquired a 49% interest in a joint venture (the “Manhattan Collection joint venture”), which owned six properties in New York, New York. The transaction valued the six hotels at approximately $908.0 million (subject to working capital and similar adjustments). The Company accounted for this investment using the equity method.

In conjunction with the joint venture's refinancing in 2012, the Company provided the joint venture a $50.0 million unsecured special loan which matures at the earlier of July 4, 2018, the closing of any refinancing of the secured loan or the closing date of a portfolio sale (as defined in the loan agreement). The unsecured special loan bears interest at an annual fixed rate of 9.75% and requires interest-only payments through maturity. The unsecured special loan is pre-payable by the joint venture at any time. The unsecured special loan to the joint venture was included in the investment in joint venture on the consolidated balance sheets. Interest income is recorded on the accrual basis and the Company's 49% pro-rata portion of the special loan and related interest income was eliminated.

On July 29, 2016, the Company notified its joint venture partner of its intention to liquidate its interest in the joint venture, pursuant to the joint venture agreement. On September 19, 2016, the Company entered into an agreement with its joint venture partner to redeem the Company's entire 49% interest in the joint venture (the "redemption transaction"). As of September 30, 2016, the Company determined that its investment in the joint venture had experienced an other than temporary decline, due to the shortened hold period of this investment, and it recognized an impairment loss of $62.6 million, as a reduction of the carrying value of the investment. The impairment loss was determined using level 2 inputs (third-party offer prices) under authoritative guidance for fair value measurements.

The Company closed on the redemption transaction on October 19, 2016. Upon closing, the Company became the 100.0% owner of two hotels, the Manhattan NYC and Dumont NYC, which were previously owned by the joint venture. In addition, the Company assumed the $140.0 million mortgage loan secured by the Manhattan NYC ("Manhattan NYC loan") and the $50.0 million mortgage loan secured by the Dumont NYC. The Company immediately repaid the $50.0 million mortgage loan secured by the Dumont NYC. The Manhattan NYC loan had a maturity date of October 18, 2017 and bore interest at a floating rate of 1-month LIBOR plus 1.65% per annum. In addition, the Company was repaid the $50.0 million unsecured special loan it made to the joint venture in 2012. Upon closing of the redemption transaction, the Manhattan Collection joint venture ceased.

On December 20, 2016, the Company sold the Manhattan NYC for $217.5 million and repaid the $140.0 million mortgage loan secured by the hotel. The Company is currently marketing the Dumont NYC property for sale.

The summarized results of operations of the Company’s investment in the Manhattan Collection joint venture for the years ended December 31, 2016 (through October 18, 2016, the closing date of the redemption transaction), 2015 and 2014 are presented below (in thousands):



	For the year ended December 31,
	2016 ⁽¹⁾			2015		2014
Revenues	$	131,836		$	177,775	$	185,609
Total expenses	140,116			171,109		169,683
Net income (loss)	$	(8,280	)	$	6,666	$	15,926
Company’s 49% interest of net income (loss)	(4,057		)	3,266		7,804
Basis adjustment	44			558		(128		)
Special loan interest income elimination	1,793			2,389		2,389
Impairment loss	(62,622		)	—		—
Equity in earnings (loss) in joint venture	$	(64,842	)	$	6,213	$	10,065

⁽¹⁾The amounts in this column are for the period from January 1, 2016 to October 18, 2016, which was the closing date of the redemption transaction.

The Company classifies the distributions from the Manhattan Collection joint venture in the statements of cash flows based upon an evaluation of the specific facts and circumstances of each distribution. For example, distributions from cash generated by property operations are classified as cash flows from operating activities. However, distributions received as a result of property sales are classified as cash flows from investing activities.