Discontinued Operations - Hotel Properties Held For Sale and Sold

9 Months Ended

Sep. 30, 2014

Discontinued Operations - Hotel Properties Held for Sale And Sold [Abstract]

Discontinued Operations - Hotel Properties Held for Sale And Sold

Discontinued Operations - Hotel Properties Held for Sale and Sold

At December 31, 2013, the Company had 19 hotels identified that it intends to sell and that met the Company’s criteria to be classified as held for sale (the “Sale Hotels”). During the nine months ended September 30, 2014, tenof these hotels were sold. We recorded an approximate $2.7 million aggregate net gain on four of the hotels sold.The gain consisted of: $0.5 million from the sale of two hotels in the second quarter of 2014;  $1.2 million from the sale of a Super 8 in Moberly, Missouri; and $1.0 million from the sale of a Super 8 in Omaha, Nebraska (“M” Street), both in the third quarter of 2014. We recorded either impairment or impairment recovery on the other six hotels sold as described below in the note “Impairment Losses”.Due to changes in the market during the first quarter, one hotel was reclassified as held for sale, and an additional hotel was reclassified from held for sale to held for use. During the second quarter, three hotels were reclassified as held for sale due to changes in the market.Twelve hotels remain classified as held for sale as of September 30, 2014.

A REIT will incur a 100% tax on the net gain derived from any sale or other disposition of property that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We do not believe any of our hotels were held primarily for sale in the ordinary course of our trade or business. However, if the Internal Revenue Service would successfully assert that we held such hotels primarily for sale in the ordinary course of our business, the gain from such sales could be subject to a 100% prohibited transaction tax.

In accordance with FASB ASC 205-20 Presentation of Financial Statements – Discontinued Operations, gains, losses and impairment losses on hotel properties sold or classified as held for sale are presented in discontinued operations.The operating results of the hotels held for sale and sold are included in discontinued operations and are summarized below. The operating results for the three months ended September 30, 2014 include 12 hotels held for sale and four hotels that were sold in the third quarter of 2014.  The operating results for the three months ended September 30, 2013 include 12 hotels held for sale, ten hotels sold in 2014, and seven hotels sold in the third and fourth quarters of 2013.

The operating results for the nine months ended September 30, 2014 include 12 hotels held for sale and ten hotels sold in 2014. The operating results for the nine months ended September 30, 2013 include 12 hotels held for sale, 17 hotels sold in 2013, and ten hotels sold in 2014 (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Revenues	$	3,664	$	6,063	$	12,651	$	20,474
Hotel and property operations expenses		(2,841)		(4,736)		(9,944)		(16,856)
Interest expense		(259)		(508)		(1,059)		(2,285)
Loss on debt extinguishment		(120)		(123)		(120)		(687)
Depreciation expense		0		(195)		(112)		(875)
Net gain on disposition of assets		2,105		374		2,740		1,708
Impairment loss		(921)		(98)		(1,517)		(1,552)
	$	1,628	$	777	$	2,639	$	(73)