INVESTMENT IN HOTEL PROPERTIES, NET (Tables)

6 Months Ended

Jun. 30, 2018

Business Combinations [Abstract]

Schedule of investment in hotel properties, net

Investment in hotel properties, net at June 30, 2018 and December 31, 2017 is as follows (in thousands):

	June 30, 2018			December 31, 2017
Land	$	265,699		$	272,932
Hotel buildings and improvements	1,850,655			1,868,273
Intangible assets	22,764			22,764
Construction in progress	15,410			12,464
Furniture, fixtures and equipment	180,446			174,126
	2,334,974			2,350,559
Less - accumulated depreciation and amortization	(320,387		)	(291,067		)
	$	2,014,587		$	2,059,492

Schedule of intangible assets and intangible liabilities

Intangible assets included in Investment in hotel properties, net and intangible liabilities included in Accrued expenses and other in our Condensed Consolidated Balance Sheets include the following (in thousands):

	June 30, 2018			December 31, 2017
Intangible assets:
Air rights (1)	$	10,754		$	10,754
Favorable leases (2)	10,569			10,569
In-place lease agreements	1,361			1,361
Other	80			80
	22,764			22,764
Less accumulated amortization	(1,411		)	(1,001		)
Intangible assets, net	$	21,353		$	21,763
Intangible liabilities:
Unfavorable leases (2)	$	5,002		$	5,002
Less accumulated amortization	(333		)	(285		)
Intangible liabilities, net	$	4,669		$	4,717

(1) In conjunction with the acquisition of the Courtyard by Marriott - Charlotte, NC, the Company acquired certain air rights related to the hotel property.

(2) Intangible assets and liabilities are recorded on contracts assumed as part of the acquisition of certain hotels. Above-market and below-market contract values are based on the present value of the difference between contractual amounts to be paid pursuant to the contracts assumed and our estimate of the fair market contract rates for corresponding contracts measured over a period equal to the remaining non-cancelable term of the contracts assumed. Intangible assets and liabilities are amortized over the remaining non-cancelable term of the related contracts.

Schedule of sale of hotels

The agreements were modified on various occasions between 2015 and 2017 such that we sold 23 hotels containing 2,448 guestrooms to HIT in three tranches over that time period for a combined price of approximately $325.1 million (collectively, the “HIT Sale”) as follows (dollars in thousands):

Tranche	Closing Date	Hotels Sold	Sales Price
1	October 2015	10	$	150,000
2	February 2016	6	108,300
3	April 2017	7	66,800
		23	$	325,100

Assets Held for Sale at June 30, 2018 also include four hotels under contract for sale that are expected to close during the three months ended September 30, 2018 as follow:

Property	Guestrooms
Sale 1:
Hilton Garden Inn - Smyrna, TN	112
Hampton Inn & Suites - Smyrna, TN	83
Hyatt Place Phoenix North - Phoenix, AZ	127
	322
Sale 2:
Hyatt Place - Fort Myers, FL	148
	470

Schedule of hotel property acquisitions

A summary of the hotel properties acquired during the six months ended June 30, 2017 is as follows (in thousands):

Date Acquired	Franchise/Brand	Location	Purchase Price
March 1, 2017	Homewood Suites	Aliso Viejo (Laguna Beach), CA	$	38,000
March 30, 2017	Hyatt Place	Phoenix (Mesa), AZ	22,200
May 23, 2017	Courtyard by Marriott	Fort Lauderdale, FL	85,000
June 9, 2017	Courtyard by Marriott	Charlotte, NC	56,250
June 21, 2017	Courtyard by Marriott	Fort Worth, TX	40,000
June 21, 2017	Courtyard by Marriott	Kansas City, MO	24,500
June 21, 2017	Courtyard by Marriott	Pittsburgh, PA	42,000
June 21, 2017	Hampton Inn & Suites	Baltimore, MD	18,000
June 21, 2017	Residence Inn by Marriott	Baltimore, MD	38,500
			$	364,450	(1)

(1)    The net assets acquired totaled $367.4 million due to the purchase at settlement of $0.8 million of net working capital assets and capitalized transaction costs of $2.1 million

Schedule of allocation of the aggregate purchase prices to the fair value of assets acquired and liabilities assumed

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

	For the Six Months Ended June 30, 2017
Land	$	61,616
Hotel buildings and improvements	274,961
Intangible assets	15,710
Furniture, fixtures and equipment	14,314
Other assets	1,775
Total assets acquired	368,376
Less - other liabilities assumed	(990		)
Net assets acquired	$	367,386

Schedule of unaudited condensed pro forma financial information

The unaudited condensed pro forma financial information for the 80 hotel properties owned at June 30, 2018 for the three and six months ended June 30, 2018 and 2017 is as follows (in thousands, except per share):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2018		2017		2018		2017
Revenues	$	148,501	$	144,912	$	285,145	$	278,044
Income from hotel operations	$	56,877	$	56,769	$	106,148	$	106,232
Net income (1)	$	19,640	$	25,656	$	28,971	$	47,072
Net income attributable to common stockholders, net of amount allocated to participating securities (1) (2)	$	15,765	$	21,249	$	16,256	$	38,279
Basic and diluted net income per share attributable to common stockholders (1) (2)	$	0.15	$	0.22	$	0.16	$	0.40

(1) Pro forma amounts include depreciation expense, property tax expense, interest expense, income tax expense, and other corporate expenses totaling $49.0 million and $39.1 million for the three months ended June 30, 2018 and 2017, respectively, and $97.8 million and $76.0 million for the six months ended June 30, 2018 and 2017, respectively.

(2) Pro forma amounts for the three and six months ended June 30, 2018 include the effect of the premium on redemption of preferred stock of $3.3 million.

Disclosure of assets held for sale

Assets held for sale at June 30, 2018 and December 31, 2017 include the following (in thousands):

	June 30, 2018		December 31, 2017
Land	$	7,410	$	1,193
Hotel buildings and improvements	28,558		—
Furniture, fixtures and equipment	1,745		—
Construction in progress	15		—
Franchise fees and other	150		—
	$	37,878	$	1,193