Debt Financing

A summary of the Company’s long term debt as of September 30, 2015 is as follows (dollars in thousands):


			Interest
Fixed Rate Debt	Balance		Rate		Maturity

Lender
GE Capital Franchise Finance LLC	$	2,163	7.17	%	12/2015
Citigroup Global Markets Realty Corp		11,544	5.97	%	11/2015
GE Capital Franchise Finance LLC		3,913	4.75	%	2/2018
GE Capital Franchise Finance LLC		10,951	7.17	%	2/2017
Cantor		5,855	4.25	%	11/2017
Morgan Stanley		27,821	5.83	%	12/2017
Total fixed rate debt	$	62,247

Variable Rate Debt
Great Western Bank	$	2,892	4.25	%	6/2018
Total variable rate debt	$	2,892

Total Debt	$	65,139

Less: Debt related to hotel properties held for sale		10,339

Total long-term debt	$	54,800

On January 15, 2015, the Company sold a Super 8 in West Plains, Missouri (49 rooms) for gross sale proceeds of $1.5 million. Net proceeds were used to pay off the associated loan with Great Western Bank.

On January 29, 2015, the Company sold a Super 8 in Green Bay, Wisconsin (83 rooms) for gross sale proceeds of $2.2 million. Net proceeds were used to pay off the associated debt with GE.

On February 17, 2015, the maturity date of the Company’s $7.8 million GE loan was extended to December 15, 2015. A required principal payment of $0.3 million was paid on the loan in February 2015.

On March 16, 2015, the Company sold a Super 8 in Columbus, Georgia (74 rooms) for gross sale proceeds of $0.9 million. Net proceeds were used to pay off the associated loan with GE.

On March 19, 2015, the Company sold a Sleep Inn in Omaha, Nebraska (90 rooms) for gross sale proceeds of $2.9 million. Net proceeds were used to pay off the associated loan with Elkhorn Valley Bank.

On April 1, 2015, the Company sold a Savannah Suites in Chamblee, Georgia (120 rooms) for gross sale proceeds of $4.4 million, and a Savannah Suites in Augusta, Georgia (172 rooms) for gross sale proceeds of $3.4 million. Partial proceeds of $4.1 million were applied to the associated debt with GE.

On April 30, 2015, the Company sold a Super 8 in Batesville, Arkansas (49 rooms) for gross sale proceeds of $1.5 million. Partial proceeds of $1.3 million were applied to the revolving credit facility with Great Western Bank, reducing the outstanding revolver balance by $1.3 million, and the revolver limit from $12.5 million to $11.2 million.

On May 28, 2015, the $8.3 million mortgage loan previously held by Middle Patent Capital, LLC was, through the Company’s efforts, sold to Frontier Bank. The interest rate was reduced from 12.5 percent to 6.0 percent and the maturity date was extended from June 6, 2015 to May 1, 2016.

On June 5, 2015, the Company amended its revolving credit facility with Great Western Bank to, among other things, extend the maturity date to June 30, 2018, reduce the interest rate from 4.5 percent annually to the prime rate plus 1.0 percent annually (currently 4.25 percent annually) and remove the 2.0 percent prepayment penalty required with refinancing with another financial institution.

On July 1, 2015, the Company closed on the sale of a Days Inn in Ashland, Kentucky (63 rooms) for a gross sales price of $2.2 million. Partial proceeds of $1.3 million were applied to the associated debt with GE.

On July 13, 2015, the Company closed on the sale of two hotels in Alexandria, Virginia with a combined gross sales price of $19.0 million. Partial net proceeds of $8.3 million were applied to the associated debt with Frontier Bank.

On August 28, 2015, the Company sold a Super 8 in Manhattan, Kansas (85 rooms) for gross sale proceeds of $3.2 million. Partial proceeds of $2.4 million were applied to the revolving credit facility with Great Western Bank, reducing the outstanding revolver balance by $2.4 million and the revolver limit from $11.2 million to $8.8 million.

At September 30, 2015, the Company had long-term debt of $54.8 million associated with assets held for use, consisting of notes and mortgages payable, with a weighted average term to maturity of 1.6 years and a weighted average interest rate of 5.9%. The weighted average fixed rate was 6.0%. The weighted average variable rate was 4.25%. Debt is classified as held for use if the properties collateralizing it are not held for sale. Debt is classified as held for sale if the properties collateralizing it are held for sale. Debt associated with assets held for sale is classified in the table below as due within the next year irrespective of whether the notes and mortgages evidencing such debt mature within the next year. Aggregate annual principal payments on debt associated with assets held for use for the remainder of 2015 and thereafter, and debt associated with assets held for sale, are as follows (in thousands):



	Held for sale		Held for use		Total
Remainder of 2015	$	10,339	$	10,476	$	20,815
2016		0		1,824		1,824
2017		0		42,256		42,256
2018		0		244		244
2019		0		0		0
Thereafter		0		0		0
	$	10,339	$	54,800	$	65,139

At September 30, 2015, the Company had $20.8 million of principal due in 2015. Of this amount, $14.1 million of principal is due in 2015 pursuant to the notes and mortgages evidencing such debt. The remaining $6.7 million is associated with loans on assets held for sale and is not contractually due in 2015 unless the related assets are sold. The maturities comprising the $14.1 million consist of:

a $2.2 million balance on a mortgage loan with GE Capital Franchise Finance LLC (“GE”);

an $11.5 million balance on a mortgage loan with Citigroup Global Markets Realty Corp.; and

approximately $0.4 million of principal amortization on mortgage loans.

All of the GE loans are cross collateralized and the ten assets securing the loans outstanding at September 30, 2015 are treated as a pool. As of September 30, 2015, the Company had five GE hotel assets classified as held for sale. The required principal payment upon the sale of these five hotels is approximately $8.3 million. Upon sale the Company believes the net proceeds from the sale of these hotels will be sufficient to satisfy the debt with GE maturing in 2015. In October of 2015, after the close of the third quarter of 2015, the Company sold one of the GE encumbered assets that was held for sale and $1.1 million of the sales proceeds were applied to the balance of the $2.2 million loan, reducing the loan to $1.1 million. If the remaining hotels are not sold, the Company will attempt to refinance the debt with GE.

On October 26, 2015, the Company refinanced its mortgage loan with Citigroup Global Markets Realty Corp. with a new $10.0 million mortgage loan from The Huntington National Bank. The new loan has a five year term, a 25 year amortization schedule and an interest rate fixed at 4.13%. The new loan is non-recourse and secured by four hotels located in Indiana.

We are required to comply with certain financial covenants for some of our lenders. As of September 30, 2015, we were in compliance with our financial covenants. As a result, we are not in default of any of our loans.