COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2013

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 8 -      COMMITMENTS AND CONTINGENCIES

Pending Hotel Property Acquisitions

At September 30, 2013, we had entered into purchase agreements to acquire four hotel properties for a combined purchase price of $96.3 million, including the assumption of debt of $30.0 million. Two of these hotel properties with a combined purchase price of $30.9 million were acquired in October of 2013 and are discussed in Note 15 — Subsequent Events. The remaining two pending acquisitions are subject to customary closing conditions, including lender consent. Therefore, we cannot provide assurance that we will acquire these hotel properties.

We are also obligated to purchase a property under development in downtown Minneapolis, MN, subject to certain conditions including the successful conversion of the property, estimated to be completed in the fourth quarter of 2013. At September 30, 2013, we have funded a $20.3 million first mortgage loan on this hotel property. The loan represents a portion of the total acquisition and renovation costs expected to be incurred to convert the property to a Hyatt Place hotel. The purchase price is estimated to be $31.0 million, which will include forgiveness of the loan as partial purchase price consideration. We cannot provide assurance that we will acquire this hotel property.

Litigation

We are involved from time to time in litigation arising in the ordinary course of business; however, we are not currently aware of any actions against us that we believe would have a material impact on our financial condition or results of operations.