INVESTMENT IN HOTEL PROPERTIES (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Schedule of investment in hotel properties, net

We generally depreciate our hotel properties and related assets using the straight-line method over their estimated useful lives as follows:

Classification	Estimated Useful Lives
Buildings and improvements	6 to 40 years
Furniture, fixtures and equipment	2 to 15 years

Investment in hotel properties, net at December 31, 2019 and 2018 include (in thousands):

	2019			2018
Land	$	319,603		$	288,833
Hotel buildings and improvements	2,049,384			1,916,194
Furniture, fixtures and equipment	173,128			165,026
Construction in progress	9,388			21,059
Intangible assets	11,231			22,064
Real estate development loan	5,485			—
	2,568,219			2,413,176
Less - accumulated depreciation	(383,987		)	(347,622		)
	$	2,184,232		$	2,065,554

Schedule of finite-lived intangible assets

Intangible assets included in Investment in hotel properties, net in our Consolidated Balance Sheets include the following (in thousands):

	Weighted Average Amortization Period (in Years)	2019			2018
Intangible assets:
Air rights (1)	n/a	$	10,754		$	10,754
Favorable leases (2)	n/a	—			10,550
In-place lease agreements	2.0	397			680
Other	n/a	80			80
		11,231			22,064
Less - accumulated amortization		(224		)	(1,108		)
Intangible assets, net		$	11,007		$	20,956

(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) In accordance with ASU No. 2016-02, Leases (Topic 842), we reclassified certain existing lease-related intangible assets to Right-of-use assets as of January 1, 2019 (See "Note 7 - Leases" for further information).

Schedule of indefinite-lived intangible assets

ntangible assets included in Investment in hotel properties, net in our Consolidated Balance Sheets include the following (in thousands):

	Weighted Average Amortization Period (in Years)	2019			2018
Intangible assets:
Air rights (1)	n/a	$	10,754		$	10,754
Favorable leases (2)	n/a	—			10,550
In-place lease agreements	2.0	397			680
Other	n/a	80			80
		11,231			22,064
Less - accumulated amortization		(224		)	(1,108		)
Intangible assets, net		$	11,007		$	20,956

(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) In accordance with ASU No. 2016-02, Leases (Topic 842), we reclassified certain existing lease-related intangible assets to Right-of-use assets as of January 1, 2019 (See "Note 7 - Leases" for further information).

Schedule of intangible liabilities future amortization expense

Future amortization expense is expected to be as follows (in thousands):

	Finite-Lived Intangible Assets
2020	$	87
2021	86
	$	173

Schedule of finite-lived intangible assets, future amortization expense

Future amortization expense is expected to be as follows (in thousands):

	Finite-Lived Intangible Assets
2020	$	87
2021	86
	$	173

Schedule of hotel property acquisitions

Hotel property acquisitions in 2019 and 2018 were as follows (in thousands):

Date Acquired	Franchise/Brand	Location	Guestrooms	Purchase  Price
Year Ended December 31, 2019
August 6, 2019	Hampton Inn & Suites	Silverthorne, CO	88	$	25,500
October 8, 2019	Portfolio Purchase - four properties(1)	various(1)	710	249,000
			798	$	274,500	(2)
Year Ended December 31, 2018
September 12, 2018	Residence Inn by Marriott	Boston (Watertown), MA	150	$	71,000
			150	$	71,000	(3)

(1)   On October 8, 2019, we acquired a portfolio of four hotels for an aggregate purchase price of $249.0 million. The hotels acquired included the Hilton Garden Inn - San Francisco, CA, the Hilton Garden Inn - San Jose (Milpitas), CA, the Residence Inn by Marriott - Portland (Downtown), OR, and the Residence Inn by Marriott - Portland (Hillsboro), OR.

(2)   The net assets acquired in 2019 were purchased for $274.5 million plus the purchase of adjacent land parcels totaling $2.4 million, $1.0 million of net working capital assets and capitalized transaction costs of $0.4 million. We own a 51% controlling interest in these hotel properties through a consolidated joint venture.

(3)   The net assets acquired in 2018 were purchased for $71.0 million plus the purchase at settlement of $0.1 million of net working capital liabilities and capitalized transaction costs of $0.1 million.

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

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):

	2019			2018
Land	$	44,868		$	25,083
Hotel buildings and improvements	219,410			42,676
Furniture, fixtures and equipment	12,995			3,300
Other assets	1,103			123
Total assets acquired	278,376			71,182
Less other liabilities	(79		)	(180		)
Net assets acquired (1) (2)	$	278,297		$	71,002

(1)   The net assets acquired in 2019 were purchased for $274.5 million plus the purchase of adjacent land parcels totaling $2.4 million, $1.0 million of net working capital assets and capitalized transaction costs of $0.4 million.

(2)  

The net assets acquired in 2018 were purchased for $71.0 million plus the purchase at settlement of $0.1 million of net working capital liabilities and capitalized transaction costs of $0.1 million.

Schedule of unaudited condensed pro forma financial information

The unaudited condensed pro forma financial information for the 72 hotel properties owned at December 31, 2019 for the twelve months ended December 31, 2019 and 2018 is as follows (in thousands, except per share):

	2019		2018
Revenues	$	572,262	$	562,097
Income from hotel operations	$	215,372	$	215,931
Net income (1)	$	57,909	$	71,478
Net income attributable to common stockholders, net of amount allocated to participating securities and non-controlling interests (1) (2)	$	33,671	$	38,803
Basic and diluted net income per share attributable to common stockholders (1) (2)	$	0.32	$	0.37

(1) Unaudited pro forma amounts include depreciation expense, property tax expense, interest expense, income tax expense, and corporate general and administrative expenses totaling $197.1 million and $181.9 million for the twelve months ended December 31, 2019 and 2018, respectively.

(2) Unaudited pro forma amounts for the twelve months ended December 31, 2018 include the effect of the premium on redemption of preferred stock of $3.3 million and higher preferred dividends of $1.8 million related to the redeemed preferred stock.

Schedule of sale of hotels

A summary of the dispositions in 2019 and 2018 follows (dollars in thousands):

Disposition Date	Franchise/Brand	Location	Guestrooms	Gross Sales Price		Aggregate Gain, net
Year Ended December 31, 2019
February 12, 2019	Portfolio Sale - two properties(1)	Charleston, WV (1)	130	$	11,600	$	4,163
April 17, 2019	Portfolio Sale - six properties (2)	various (2)	815	135,000		36,626
November 8, 2019	Portfolio Sale - two properties (3)	Birmingham, AL (3)	225	21,800		4,857
Total			1,170	$	168,400	$	45,646
Year Ended December 31, 2018
June 29, 2018	Portfolio Sale - two properties(4)	various (4)	175	$	18,950	$	13,133
June 29, 2018	Portfolio Sale - two properties (5)	Duluth, GA (5)	265	24,850		4,218
July 24, 2018	Portfolio Sale - three properties (6)	various (6)	322	46,500		22,964
September 28, 2018	Hyatt Place	Fort Myers, FL	148	16,500		2,195
November 7, 2018	Land parcel	Spokane, WA	n/a	450		139
Total			910	$	107,250	$	42,649

(1)   The portfolio included the Country Inn & Suites and the Holiday Inn Express in Charleston, WV.

(2)   The portfolio included the SpringHill Suites in Minneapolis (Bloomington), MN, the Hampton Inn & Suites in Minneapolis (Bloomington), MN, the Residence Inn in Salt Lake City, UT, the Hyatt Place in Dallas (Arlington), TX, the Hampton Inn in Santa Barbara (Goleta), CA, and the Hampton Inn in Boston (Norwood), MA. The sale resulted in a net gain of $36.6 million based on a gross aggregate sales price of $135.0 million, or a net aggregate sales price of $133.0 million after a buyer credit of $2.0 million.

(3) The portfolio included the Hilton Garden Inn in Birmingham (Lakeshore), AL and the Hilton Garden Inn in Birmingham (Liberty Park), AL.

(4)   The portfolio included the Hampton Inn in Provo, UT and the Holiday Inn Express & Suites in Sandy, UT.

(5)   The portfolio included the Holiday Inn in Duluth, GA and the Hilton Garden Inn in Duluth, GA. We provided seller financing of $3.6 million on the sale of these properties under two three-and-a-half-year second mortgage notes with a blended interest rate of 7.38%.

(6) The portfolio included the Hampton Inn & Suites in Smyrna, TN, the Hilton Garden Inn in Smyrna, TN and the Hyatt Place Phoenix North in Phoenix, AZ. The proceeds from these sales were used to complete a 1031 Exchange, which resulted in the deferral of taxable gains of $22.2 million.