Hotel Dispositions

3 Months Ended

Mar. 31, 2015

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

Discontinued Operations - Hotel Properties Held for Sale And Sold

Hotel Dispositions

Effective October 1, 2014, the Company adopted ASU Update No. 2014-08 concerning the classification and reporting of discontinued operations. This amendment defines discontinued operations as a component of an entity that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. As a result of the adoption of ASU Update No. 2014-08, we anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this description.

For transactions that have been classified as held for sale or as discontinued operations for periods prior to adoption of ASU 2014-08, the Company will continue to present the operating results as discontinued operations in the statements of operations for all applicable periods presented.

Sold Hotels - Continuing Operations

On March 19, 2015 the Company closed on the sale of a Sleep Inn in Omaha, Nebraska, to an unaffiliated buyer for a gross sales price of $2.9 million, with no gain on the sale and reduction of the Company’s mortgage debt of $2.5 million. The operating results of this hotel are included in earnings from continuing operations.

Sold Hotels - Discontinued Operations

The operating results of the three hotels below which were sold are included in gain/loss from discontinued operations, net of tax as shown in the condensed consolidated statement of operations for the three months ended March 31, 2015 and 2014.

On January 15, 2015 the Company closed on the sale of a Super 8 in West Plains, Missouri to an unaffiliated buyer for a gross sales price of $1.5 million, with a gain on sale of $0.9 million and reduction of the Company’s mortgage debt of $1.4 million.

On January 29, 2015 the Company closed on the sale of a Super 8 in Green Bay, Wisconsin, to an unaffiliated buyer for a gross sales price of $2.2 million, with no gain on the sale and reduction of the Company’s mortgage debt of $1.5 million.

On March 16, 2015 the Company closed on the sale of a Super 8 in Columbus, Georgia, to an unaffiliated buyer for a gross sales price of $0.9 million, with no gain on the sale and reduction of the Company’s mortgage debt of $0.9 million.

Hotels Held For Sale

The two hotels classified as held for sale in the first quarter of 2015 are the Comfort Inn and the Days Inn in Alexandria, Virginia. The operating results of the Comfort Inn and Days Inn hotels are $(120,348) and$(980,494) for March 31, 2015 and $(220,178) and $(123,042) for March 31, 2014.  The Days Inn operating results for March 31, 2015 include an impairment expense of $0.9 million,  which was recognized as of March 31, 2015upon the hotel’s classification as held for sale. Earnings attributable to noncontrolling interest from the two hotels for the three months ended March 31, 2015 and 2014 is approximately $(121,000) and $0, respectively.

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.

Assets held for sale consisted of the following as of March 31, 2015 and December 31, 2014:

	2015			2014
	Continuing Operations (4)	Discontinued Operations (6)	Total Held For Sale	Continuing Operations (4)	Discontinued Operations (10)	Total Held For Sale
Land	5,523	3,240	8,763	5,785	4,103	9,888
Acquired below market lease intangibles	0	883	883	0	883	883
Buildings, improvements, vehicles	20,588	12,358	32,946	21,031	18,086	39,117
Furniture and Equipment	3,566	2,336	5,902	3,462	3,860	7,322
Construction-in-progress	44	(2)	42	202	(2)	200
Assets Held For Sale	29,721	18,815	48,536	30,480	26,930	57,410
Accumulated depreciation	(7,171)	(3,485)	(10,656)	(7,077)	(5,515)	(12,592)
Investment in hotel properties, net	22,550	15,330	37,880	23,403	21,415	44,818

The following table sets forth the components of discontinued operations for the three months ended March 31, 2015 and 2014. Discontinued operations include the results of operations for hotels sold in 2014 and the first quarter of 2015 (which were held for sale at December 31, 2014).

	Three Months Ended
	March 31,
	2015		2014
Revenues	$	1,752	$	4,248
Hotel and property operations expenses		(1,252)		(3,619)
Interest expense		(145)		(451)
Depreciation expense		0		(73)
Net gain on disposition of assets		937		168
Impairment loss		45		(91)
Gain from discontinued operations, net of tax	$	1,337	$	182
Loss attributable to noncontrolling interest		(147)		0
Net earnings attributable to controlling interests	$	1,190	$	182
Capital Expenditures	$	27	$	93