INVESTMENTS IN LODGING PROPERTY, NET

6 Months Ended

Jun. 30, 2024

Real Estate [Abstract]

INVESTMENTS IN LODGING PROPERTY, NET

INVESTMENTS IN LODGING PROPERTY, NET

Investments in Lodging Property, net

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

	June 30, 2024		December 31, 2023
Lodging buildings and improvements	$	2,806,950	$	2,786,223
Land	373,039		373,039
Furniture, fixtures and equipment	275,917		268,631
Construction in progress	58,965		41,324
Intangible assets	39,954		39,954
Real estate development loan, net	4,442		4,176
	3,559,267		3,513,347
Less accumulated depreciation and amortization	(857,229)		(784,298)
	$	2,702,038	$	2,729,049

Depreciation and amortization expense related to our lodging properties (excluding amortization of franchise fees) was $36.3 million and $37.4 million for the three months ended June 30, 2024 and 2023, respectively, and $72.9 million, and $74.1 million for the six months ended June 30, 2024 and 2023, respectively.

Lodging Property Acquisitions

We did not acquire any properties during the six months ended June 30, 2024. We acquired the following properties during the six months ended June 30, 2023 (in thousands):

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

All of the acquisitions completed during the six months ended June 30, 2023 were recorded as asset acquisitions. As such, we allocated the aggregate purchase price paid for each transaction to the net assets acquired based on their relative fair values. In determining relative fair values, we made significant estimates regarding replacement costs for the buildings and furniture, fixtures and equipment, and judgments related to certain market assumptions. Acquisition costs related to the transactions have been capitalized as part of the recorded amounts of the acquired net assets.

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):

	Six Months Ended June 30, 2023
Land	$	12,257
Lodging buildings and improvements	29,225
Furniture, fixtures and equipment	1,331
Net assets acquired (1)	$	42,813

(1) Net 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.

Lodging Property Sales

We sold the following properties during the six months ended June 30, 2024 and 2023:

Portfolio of Two Lodging Properties - New Orleans, LA

In April 2024, we completed the sale of the 202-guestroom Courtyard by Marriott and the 208-guestroom SpringHill Suites by Marriott, both located in New Orleans, LA, for an aggregate selling price of $73.0 million, which resulted in a gain of approximately $28.3 million that was recorded in the three months ended June 30, 2024.

Hilton Garden Inn - Bryan (College Station), TX

In April 2024, we completed the sale of the 119-guestroom Hilton Garden Inn - Bryan (College Station), TX for $11.0 million. The net selling price of the lodging property approximated its net book value on the closing date.

Hyatt Place - Dallas (Plano), TX

In February 2024, we completed the sale of the 127-guestroom Hyatt Place - Dallas (Plano), TX for $10.3 million. We recorded a nominal gain on the sale during the six months ended June 30, 2024 upon closing the transaction.

Sale of a Portfolio of Four Lodging Properties

In May 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
Hyatt Place	Chicago (Lombard/Oak Brook), IL	151
Hyatt Place	Chicago (Hoffman Estates), IL	126
Hilton Garden Inn	Minneapolis (Eden Prairie), MN	97
Holiday Inn Express & Suites	Minneapolis (Minnetonka), MN	93
		467

The net selling proceeds approximated the net carrying amount of the Sale Portfolio at closing.

Assets Held for Sale, net

Assets held for sale, net is as follows (in thousands):

	June 30, 2024		December 31, 2023
Under Contract for Sale:
Courtyard by Marriott and SpringHill Suites - New Orleans, LA	$	—	$	43,504
Hilton Garden Inn - Bryan (College Station), TX	—		10,642
Hyatt Place - Dallas (Plano), TX	—		9,940
Parcel of undeveloped land - San Antonio, TX	1,225		1,225
	1,225		65,311
Marketed for Sale:
One individual lodging property	8,065		8,004
Parcel of undeveloped land - Flagstaff, AZ	425		425
	$	9,715	$	73,740

The parcel of undeveloped land in San Antonio, TX is currently under contract to sell, and the sale is expected to close in the fourth quarter of 2024.

Intangible Assets

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

	June 30, 2024		December 31, 2023
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	(11,315)		(9,251)
Intangible assets, net	$	28,639	$	30,703

We recorded amortization expense related to intangible assets of approximately $1.0 million for each of the three months ended June 30, 2024 and 2023, respectively, and $2.1 million for each of the six months ended June 30, 2024 and 2023, respectively.

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

For the Year Ending December 31,	Amount
2024	$	2,454
2025	1,564
2026	1,564
2027	1,374
2028	1,016
Thereafter	9,833
	$	17,805