Disposition Of Hotel Properties And Discontinued Operations

9 Months Ended

Sep. 30, 2016

Disposition Of Hotel Properties And Discontinued Operations [Abstract]

Disposition Of Hotel Properties And Discontinued Operations

NOTE 4: DISPOSITIONS OF HOTEL PROPERTIES AND DISCONTINUED OPERATIONS

As of September 30, 2016, the Company had 11 hotels classified as held for sale. At June 30, 2016, the Company had 17 hotels held for sale and during the three months ended September 30, 2016 sold four properties, classified two additional hotels as held for sale, and reclassified four properties into held for use. At December 31, 2015, the Company had 16 hotels held for sale and during the nine months ended September 30, 2016 sold 15 properties, classified 12 additional hotels as held for sale, and reclassified two properties into held for use.  The properties that were reclassified into held for use during the periods presented were done so due to changes in market conditions as well as ongoing consideration given to the operating results of the held for sale properties versus their expected selling prices.

None of the hotels reclassified as held for sale since the Company’s adoption of ASU 2014-08 on October 1, 2014 represent a strategic shift that has (or will have) a major effect on the entity’s operations and financial results.  As a result, only hotels classified as held for sale prior to October 1, 2014 (excluding those subsequently reclassified as held for use),  none of which remain unsold at September 30, 2016, are included in discontinued operations with all other hotels, including those subsequently sold or classified as held for sale, reported in continuing operations. For the three months ended September 30, 2016 and 2015, the results of 31 and 47 hotels, respectively, were included in continuing operations and the results of no hotels and two hotels, respectively, were included in discontinued operations.  For the nine months ended September 30, 2016 and 2015, the results of 41 and 47 hotels, respectively, were included in continuing operations and the results of one hotel and nine hotels, respectively, were included in discontinued operations.

In the three months ended September 30, 2016 and 2015, the Company sold fourhotels in each period, resulting in total gains of $3,632 and $2,966,respectively, all of which were included in continuing operations.  In the nine months ended September 30, 2016 and 2015, the Company sold 15 and 11 hotels, respectively, resulting in total gains of $16,577 and $4,633, respectively, of which $15,896 and $2,966, respectively, was included in continuing operations.

Two hotels in Alexandria, Virginia, which, based on their size, represent a significant disposition for which results are included in continuing operations, were sold on July 13, 2015.  For the three and nine months ended September 30, 2015, the Alexandria Comfort Inn and Days Inn hotels had a combined net earnings (loss) of $198 and ($821), respectively, and earnings (loss) attributable to noncontrolling interest of $14 and ($846), respectively. These amounts include impairment expense (recovery) of ($289) and $1,020 that was recognized in the three and nine months ended September 30, 2015, respectively, following the hotels’ classification as held for sale in the first quarter of 2015.

The Company allocates interest expense to discontinued operations for debt that is to be assumed or that is required to be repaid as a result of disposal transactions. The following table sets forth the components of discontinued operations for the three and nine months ended September 30, 2016 and 2015:

	Three months ended September 30,				Nine months ended September 30,
	2016		2015		2016		2015
Revenue	$	-	$	526	$	6	$	2,526
Hotel and property operations expense		-		(341)		(4)		(1,679)
Net gain (loss) on disposition of assets		-		(1)		681		1,665
Interest expense		-		(32)		(5)		(192)
Impairment recovery		-		-		-		120
Gain from discontinued operations, net of tax	$	-	$	152	$	678	$	2,440
Capital expenditures	$	-	$	-	$	-	$	58