Discontinued Operations

9 Months Ended

Sep. 30, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

In November 2011, the Company elected to cease the subsidization of debt service on the mortgage loan secured by the SpringHill Suites Southfield, Michigan. In January 2012, the Company received notice of an event of default for failure to

make the required monthly payments. Under the terms of the mortgage loan, the lender received the monthly net cash from operations from the hotel. In December 2012, the Company entered into a deed in lieu of foreclosure agreement with the lender, providing for a consensual transfer of the property to the lender or its designee.  On May 30, 2013, the Company transferred title to the hotel to the lenders pursuant to the deed in lieu of foreclosure arrangement.  The Company removed the hotel’s net assets and liabilities in its combined consolidated balance sheet in May 2013 and recorded a gain on extinguishment of indebtedness of approximately $2.4 million to discontinued operations at that time.

In November 2011, the Company elected to cease the subsidization of debt service on the mortgage loan secured by the Courtyard Goshen, Indiana.  In December 2011, the Company received notice of an event of default for failure to make the required monthly payments. In May 2012, a receiver took control of the property for the benefit of the lender of the mortgage loan. On August 28, 2013, the property was sold at a foreclosure auction and was purchased by an affiliate of the lender. The Company removed the hotel’s net assets and liabilities in its combined consolidated balance sheet in August 2013 and recorded a gain on extinguishment of indebtedness of approximately $3.3 million to discontinued operations at that time.

In February 2013, the Goshen lender filed suit against the Company claiming amounts due from the Company in its capacity as a guarantor of certain borrower obligations and has continued to pursue this claim following the sale of the property.  The Company disputes that any amounts are owed to the lender under the guaranty and is defending itself against this claim.

Operating results of discontinued operations were as follows (in thousands):

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
Operating revenue	$	398		$	967		$	1,978		$	2,537
Operating expense	(442		)	(797		)	(1,882		)	(2,399		)
Operating (loss) income	(44		)	170			96			138
Interest expense	(31		)	(897		)	(372		)	(1,146		)
Loss from discontinued operations before gain on sale	(75		)	(727		)	(276		)	(1,008		)
Gain on extinguishment of indebtedness	3,277			—			5,702			—
Net income (loss) from discontinued operations	$	3,202		$	(727	)	$	5,426		$	(1,008	)