Investments In Real Estate

3 Months Ended

Mar. 31, 2020

Real Estate Investments, Net [Abstract]

Investments In Real Estate

Investments in Real Estate

During the three months ended March 31, 2020, 23 hotels were sold for gross proceeds of $100 million resulting in a gain on sale of $23 million. 

For the three months ended March 31, 2020 we recorded an impairment loss of $2 million, related to final disposal costs related to a previously impaired hotel property. In connection with our impairment analysis as of March 31, 2020, we considered the financial effects related to the COVID-19 pandemic as a change in circumstances requiring an impairment review. We performed the impairment analysis consistent with GAAP which incorporated the real estate carrying value adjustments resulting from the impairment losses in 2019 and 2018 of $141 million and $154 million, respectively. We also considered the market information related to the hotels we sold in 2019 and those sold in the three months ended March 31, 2020 which resulted in gain on sales of $32

million and $23 million, respectively, as well as hotels under sales contracts as of March 31, 2020, each in relation to the underlying real estate carrying amounts. After also considering other factors related to recoverability of our real estate assets, we have concluded there were no additional impairment losses for the three months ended March 31, 2020. We will continue to monitor events and changes in circumstances related to our real estate assets, including updated COVID-19 data and analysis related to our operations, fair value and cash flow assumptions, that may indicate that the carrying amounts of our real estate assets may not be recoverable. Those changes in circumstances and analysis may result in impairment losses in future periods. We had no impairment loss for the three months ended March 31, 2019.

We have experienced hurricane and fire related damages to certain of our hotels. We carry comprehensive property, casualty, flood and business interruption insurance that we anticipate will cover our losses at these hotels, subject to deductibles. For the three months ended March 31, 2020 we had no involuntary conversion write-off of net book value of damaged assets. Certain of our hotels had closures and disruptions to business primarily due to hurricanes and fires. For the three months ended March 31, 2020 and 2019, we recorded business interruption insurance proceeds of $2 million, and $1 million, respectively, which are included in “other income, net” on our condensed consolidated statements of operations. As of March 31, 2020, we have not recognized any potential claims related to the COVID-19 pandemic losses. Given the contractual uncertainty of those claims, we cannot provide any assessment of whether such claims are realizable.

Construction in progress primarily includes capitalized costs for ongoing projects that have not yet been put into service. We have pledged substantially all of our investments in real estate as collateral for our CMBS Facility (as defined below).