INVESTMENT IN HOTEL PROPERTIES UNDER DEVELOPMENT

12 Months Ended

Dec. 31, 2013

INVESTMENT IN HOTEL PROPERTIES UNDER DEVELOPMENT

INVESTMENT IN HOTEL PROPERTIES UNDER DEVELOPMENT

NOTE 5 - INVESTMENT IN HOTEL PROPERTIES UNDER DEVELOPMENT

In 2012, we entered into an agreement with an affiliate of Hyatt Hotels Corporation to fund $20.3 million in the form of a first mortgage loan on a hotel property in downtown Minneapolis, MN. The $20.3 million represented a portion of the total acquisition cost and renovation costs expected to be incurred to convert the property to a Hyatt Place hotel. In the fourth quarter of 2013, we purchased the hotel property for $32.6 million. Since we participated in the residual profits of the hotel property, we classified this loan as an investment in hotel properties under development. We capitalized interest expense on our investment of $0.4 million in 2013 and $0.1 million in 2012. The outstanding principal balance of the loan and accrued interest were credited to us as part of the purchase price consideration at acquisition, which was completed on December 31, 2013.