HOTEL PROPERTY ACQUISITIONS

9 Months Ended

Sep. 30, 2015

HOTEL PROPERTY ACQUISITIONS

HOTEL PROPERTY ACQUISITIONS

NOTE 3 - HOTEL PROPERTY ACQUISITIONS

Hotel property acquisitions in the nine months ended September 30, 2015 and 2014 are as follows (in thousands):

Date Acquired	Franchise/Brand	Location	Purchase Price			Debt Assumed
First Nine Months 2015
April 13, 2015	Hampton Inn & Suites	Minneapolis, MN	$	38,951		$	—
June 18, 2015	Hampton Inn	Boston (Norwood), MA	24,000		(1)	—
June 30, 2015	Hotel Indigo	Asheville, NC	35,000		(1)	—
July 24, 2015	Residence Inn	Branchburg, NJ	25,700		(1)	—
July 24, 2015	Residence Inn	Hunt Valley, MD	31,100		(1)	—
Total Nine Months Ended September 30, 2015			$	154,751		$	—
First Nine Months 2014
January 9, 2014	Hilton Garden Inn	Houston (Galleria), TX	$	37,500		$	17,846
January 10, 2014	Hampton Inn	Santa Barbara (Goleta), CA	27,900		(2)	12,037
January 24, 2014	Four Points by Sheraton	San Francisco, CA	21,250			—
March 14, 2014	DoubleTree by Hilton	San Francisco, CA	39,060			13,289
August 15, 2014	Hilton Garden Inn	Houston (Energy Corridor), TX	36,000			—
September 9, 2014	Hampton Inn & Suites	Austin, TX	53,000			—
Total Nine Months Ended September 30, 2014			$	214,710		$	43,172

(1) These hotels (“Parked Assets”) were purchased as reverse 1031 Exchanges related to the anticipated sale of 26 properties to affiliates of American Realty Capital Hospitality Trust, Inc. (“ARCH”). See Note 2 — Basis of Presentation and Significant Accounting Policies – Variable Interest Entities; and Note 5 — Assets Held For Sale.  As such, the legal title to these Parked Assets are held by a qualified intermediary engaged to execute the 1031 Exchanges until the sale transaction with ARCH (the “ARCH Sale”) is consummated and the 1031 Exchanges are completed.  We retain essentially all of the legal and economic benefits and obligations related to the Parked Assets.  As such, the Parked Assets are included in our condensed consolidated statement of financial position at September 30, 2015 and condensed consolidated results of operations for the three and nine months then ended as VIE’s until legal title is transferred to us upon completion of the 1031 Exchanges. The 1031 Exchanges related to these properties were completed on October 15, 2015.

(2) The purchase price for this hotel included the issuance by the Operating Partnership of 412,174 Common Units in our Operating Partnership valued at the time of issuance at $3.7 million.

The allocation of the aggregate purchase prices to the fair value of assets acquired and liabilities assumed for the above acquisitions is as follows (in thousands):

	For the Nine Months Ended September 30,
	2015			2014
Land	$	9,975		$	11,400
Hotel buildings and improvements	134,109			199,573
Furniture, fixtures and equipment	13,690			5,489
Other assets (1)	700			11,625
Total assets acquired	158,474			228,087
Less debt assumed	—			(43,172		)
Less lease liability assumed	(3,250		)	(1,752		)
Less other liabilities (1)	(160		)	(2,671		)
Net assets acquired	$	155,064		$	180,492

(1) In addition to the total purchase price, the Company also paid additional consideration at closing during the nine months ended September 30, 2015 and 2014 of $0.3 million and $9.0 million, respectively, for net assets acquired at settlement, including restricted cash escrow balances and other working capital items.

Total revenues and net income for hotel properties acquired in the three and nine months ended September 30, 2015 and 2014, which are included in our condensed consolidated statements of operations, are as follows (in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015 Acquisitions		2014 Acquisitions				2015 Acquisitions		2014 Acquisitions
	2015		2015		2014		2015		2015		2014
Revenues	$	8,936	$	14,497	$	11,358	$	10,848	$	41,080	$	24,808
Net income	$	1,636	$	2,660	$	2,897	$	1,826	$	7,535	$	3,999

The results of operations of acquired hotel properties are included in the condensed consolidated statements of operations beginning on their respective acquisition dates. The following unaudited condensed pro forma financial information presents the results of operations as if all acquisitions in 2015 and 2014 had taken place on January 1, 2014. The unaudited condensed pro forma information excludes discontinued operations and disposed properties which were not classified as discontinued operations after the adoption of ASU 2014-08. The unaudited condensed pro forma financial information is for comparative purposes only and is not necessarily indicative of what actual results of operations would have been had the hotel acquisitions taken place on January 1, 2014. This information does not purport to be indicative of or represent results of operations for future periods.

The unaudited condensed pro forma financial information for the three and nine months ended September 30, 2015 and 2014 is as follows (in thousands, except per share):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
	(unaudited)				(unaudited)
Revenues	$	125,904	$	118,165	$	365,846	$	335,771
Net income	$	13,936	$	9,940	$	44,603	$	27,969
Net income attributable to common stockholders, net of amount allocated to participating securities	$	9,691	$	5,968	$	31,820	$	15,272
Basic and diluted net income per share attributable to common stockholders	$	0.11	$	0.07	$	0.37	$	0.18