INVESTMENT IN HOTEL PROPERTIES, NET

3 Months Ended

Mar. 31, 2019

Investment in Hotel Properties, net

Investment in hotel properties, net at March 31, 2019 and December 31, 2018 is as follows (in thousands):



	March 31, 2019			December 31, 2018
Hotel buildings and improvements	$	1,814,628		$	1,916,194
Land	277,452			288,833
Furniture, fixtures and equipment	166,688			165,026
Construction in progress	22,442			21,059
Intangible assets	11,514			22,064
	2,292,724			2,413,176
Less - accumulated depreciation and amortization	(340,563		)	(347,622		)
	$	1,952,161		$	2,065,554

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which changed lessee accounting to reflect the financial liability and right-of-use assets that are inherent to leasing an asset on the balance sheet. In accordance with ASU No. 2016-02, we reclassified certain existing lease-related intangible assets to Right-of-use assets as of January 1, 2019 (See "Note 5 - Leases" for further information).

Asset Sales

On February 12, 2019, we completed the sale of two hotel properties, the Country Inn & Suites - Charleston, WV and the Holiday Inn Express - Charleston, WV, for an aggregate sales price of $11.6 million. The sale of these properties resulted in the realization of an aggregate gain of $4.2 million.

Hotel Property Acquisitions

We did not acquire any hotel properties during the three months ended March 31, 2019 and 2018.

On January 31, 2019, we exercised our option pursuant to a ground lease agreement to purchase the land under our Residence Inn by Marriott in Baltimore (Hunt Valley), MD for $4.2 million, which resulted in a termination of obligations under the ground lease. As a result, this hotel property is no longer subject to a ground lease.

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 pro forma information includes operating results for 75 hotels owned as of March 31, 2019 as if all such hotels had been owned by us since January 1, 2018. For hotels acquired by us after January 1, 2018 (the "Acquired Hotels"), we have included in the pro forma information the financial results of each of the Acquired Hotels for the period prior to acquisition by us (the "Preacquisition Period"). The financial results for the Pre-Acquisition Period were provided by the third-party owner of such Acquired Hotel prior to purchase by us and such information has not been audited or reviewed by our auditors or adjusted by us. For hotels sold by us between January 1, 2018 and March 31, 2019 (the "Disposed Hotels"), the unaudited pro forma information excludes the financial results, including gains on disposal of assets, of each of the Disposed Hotels for the period of ownership by us from January 1, 2018 through the date that the Disposed Hotels were sold by us. The unaudited pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and is not indicative of what actual results of operations would have been had the hotel acquisitions and dispositions taken place on or before January 1, 2018. The pro forma amounts exclude the gain or loss on the sale of hotel properties during the three months ended March 31, 2019 and 2018. 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 75 hotel properties owned at March 31, 2019 for the three months ended March 31, 2019 and 2018 is as follows (in thousands, except per share):



	For the Three Months Ended March 31,
	2019		2018
Revenues	$	138,682	$	132,580
Income from hotel operations	$	50,248	$	47,633
Net income ⁽¹⁾	$	8,887	$	8,344
Net income (loss) attributable to common stockholders, net of amount allocated to participating securities ^{(1) (2)}	$	5,098	$	(545	)
Basic and diluted net income (loss) per share attributable to common stockholders ^{(1) (2)}	$	0.05	$	(0.01	)


(1)	Pro forma amounts include depreciation expense, property tax expense, interest expense, income tax expense, and other corporate expenses totaling $51.2 million and $48.2 million for the three months ended March 31, 2019 and 2018, respectively.


(2)	Pro forma amounts for the three months ended March 31, 2018 include the effect of the premium on redemption of preferred stock of $3.3 million.

Assets Held for Sale

Assets held for sale at March 31, 2019 included a land parcel in Flagstaff, AZ and a portfolio of six properties that were sold on April 17, 2019. Assets held for sale at December 31, 2018 included a land parcel in Flagstaff, AZ and a portfolio of two properties that were sold on February 12, 2019. Assets held for sale were as follows (in thousands):



	March 31, 2019			December 31, 2018
Hotel buildings and improvements	$	103,891		$	7,929
Land	12,950			2,442
Furniture, fixtures and equipment	11,086			2,519
Franchise fees	573			131
Other	83			—
	128,583			13,021
Less - accumulated depreciation and amortization	(32,060		)	(5,388		)
	$	96,523		$	7,633