INVESTMENTS IN LODGING PROPERTY, NET (Tables)

6 Months Ended

Jun. 30, 2023

Schedule of Investment in Lodging Properties, Net

Investments in lodging property, net is as follows (in thousands):


	June 30, 2023		December 31, 2022
Lodging buildings and improvements	$	2,872,197	$	2,815,993
Land	385,751		373,106
Furniture, fixtures and equipment	264,264		252,842
Construction in progress	63,950		64,159
Intangible assets	39,954		39,954
Real estate development loan, net	2,249		—
	3,628,365		3,546,054
Less accumulated depreciation and amortization	(772,359)		(704,198)
	$	2,856,006	$	2,841,856

Schedule of Lodging Property Acquisitions

A summary of the lodging properties acquired during the six months ended June 30, 2023 and 2022 is as follows (in thousands):


Date Acquired	Franchise/Brand	Location	Guestrooms	Purchase Price
2023 Acquisitions:
June 1, 2023	Residence Inn by Marriott	Scottsdale, AZ	120	$	29,000
June 23, 2023	Nordic Lodge	Steamboat Springs, CO	47	13,700
			167	$	42,700

2022 Acquisitions:
January 13, 2022	Portfolio of properties - twenty-six lodging properties and two parking garages (1)	Various	3,533	$	766,000
March 23, 2022	Canopy Hotel by Hilton (1)	New Orleans, LA	176	56,000
June 10, 2022	AC/Element Hotel (2)	Miami, FL	264	80,100
			3,973	$	902,100

(1) On January 13, 2022, we acquired a portfolio of twenty-six lodging properties and two parking garages for an aggregate purchase price of $766.0 million. The lodging properties acquired included 21 hotels and two parking garages in Texas, two hotels in Louisiana and three hotels in Oklahoma under the following brands: Marriott (13), Hilton (7), Hyatt (4), and IHG (2). On March 23, 2022, we acquired the Canopy Hotel by Hilton in New Orleans upon completion of its construction for a purchase price of $56.0 million.

(2) We acquired a 90% equity interest in the AC/Element Hotel for $80.1 million based on the exercise price of the Initial Purchase Option of $89.0 million. The transaction included the assumption of $47.0 million of debt resulting in a net consideration payment requirement of $42.0 million. We paid 90% of the required net consideration with the conversion of our $29.9 million mezzanine financing loan into equity and a cash payment of $7.9 million. The carrying amount of our Initial Purchase Option of $2.8 million is also included in the total amount allocated to the assets acquired. The Brickell Joint Venture partner’s non-controlling interest of $6.9 million represents 10% of the fair value of the net assets on the transaction date, determined by a third-party valuation expert based on discounted forecasted future cash flows of the net assets acquired. We also incurred $0.6 million of transaction costs. The result is a total amount allocated to the assets acquired of $95.1 million plus an intangible asset totaling $2.0 million related to the assumption of the franchises for the hotel properties and a related key money liability.

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,
	2023		2022
Land	$	12,257	$	67,175
Lodging buildings and improvements	29,225		751,720
Furniture, fixtures and equipment	1,331		82,353
Incentives and other intangibles	—		25,642
Other assets	—		5,318
Total assets acquired (1)	42,813		932,208
Less debt assumed	—		(382,205)
Less lease liabilities assumed	—		(5,441)
Less other liabilities	—		(5,892)
Net assets acquired	$	42,813	$	538,670

(1) Total assets acquired during the six months ended June 30, 2023 is based on an aggregate purchase price of $42.7 million plus transaction costs of $0.1 million.

Total assets acquired during the six months ended June 30, 2022 is based on an aggregate purchase price of $902.1 million adjusted for the following items:

•NCI Transaction: interest swap breakage fees and debt defeasance costs of $3.5 million, a reduction to the value of the Common Units issued on the closing date of $2.5 million, plus transaction costs of $3.0 million, and intangible assets totaling $9.1 million acquired outside of escrow, and

•Brickell Transaction: Brickell Joint Venture partner’s non-controlling interest of $6.9 million; Brickell Joint Venture partner’s non-controlling interest share of the debt assumed as part of the transaction of $4.7 million, the assumption of intangible assets totaling $2.0 million, the carrying amount of our Initial Purchase Option of $2.9 million, and transactions costs of $0.6 million.

On May 19, 2023, we completed the sale of four lodging properties (the "Sale Portfolio") for an aggregate gross selling price of $28.1 million as follows:

Franchise/Brand

Location

Guestrooms

Hilton Garden Inn

Minneapolis (Eden Prairie), MN

Holiday Inn Express & Suites

Minneapolis (Minnetonka), MN

Hyatt Place

Chicago (Hoffman Estates), IL

126

Hyatt Place

Chicago (Lombard/Oak Brook), IL

151

467

Schedule of Indefinite-Lived Intangible Assets

Intangible assets, net is as follows (in thousands):


	June 30, 2023		December 31, 2022
Indefinite-lived intangible assets:
Air rights	$	10,754	$	10,754
Other	80		80
	10,834		10,834
Finite-lived intangible assets:

Tax incentives	19,750		19,750
Key money	9,370		9,370


	29,120		29,120
Intangible assets	39,954		39,954
Less accumulated amortization	(7,188)		(5,110)
Intangible assets, net	$	32,766	$	34,844

Schedule of Finite-Lived Intangible Assets

Intangible assets, net is as follows (in thousands):


	June 30, 2023		December 31, 2022
Indefinite-lived intangible assets:
Air rights	$	10,754	$	10,754
Other	80		80
	10,834		10,834
Finite-lived intangible assets:

Tax incentives	19,750		19,750
Key money	9,370		9,370


	29,120		29,120
Intangible assets	39,954		39,954
Less accumulated amortization	(7,188)		(5,110)
Intangible assets, net	$	32,766	$	34,844

Schedule of Future Amortization Expenses

Future amortization expense related to intangible assets is as follows (in thousands):


For the Year Ending December 31,	Amount
2023	$	2,078
2024	4,157
2025	1,595
2026	1,595
2027	1,540
Thereafter	10,967
	$	21,932

Schedule of Asset Held for Sale

Assets Held for Sale was as follows at June 30, 2023 and December 31, 2022:


	Net Carrying Amount
	June 30, 2023		December 31, 2022
Under Contract for Sale:
Portfolio of four lodging properties	$	—	$	27,516

Parcel of undeveloped land - San Antonio, TX	1,225		1,225
Parcel of undeveloped land - Flagstaff, AZ	425		—
	1,650		28,741
Marketed for Sale:
Parcel of undeveloped land - Flagstaff, AZ	—		425
	$	1,650	$	29,166