10-K

enXt

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-K

	(Mark one)
☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2016
or
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______________ to _________________

Commission file number: 001-34087

Condor Hospitality Trust, Inc.

(Exact name of registrant as specified in its charter)

Maryland	52-1889548
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
4800 Montgomery Lane Ste. 220, Bethesda, MD	20814
(Address of principal executive offices)	(Zip Code)

(301)  861-3305

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $.01 par value per share	The NASDAQ Stock Market, LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [  ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes [  ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 or the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer   [  ]  (Do not check if a smaller reporting company)	Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

As of June 30, 2016 the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $7.2 million based on the price at which the common stock was last sold on that date as reported on the Nasdaq Global Market. At February 28, 2017, there were 43,993,705 shares of the registrant’s common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive Proxy Statement for the Registrant’s 2017 Annual Meeting of Stockholders to be filed within 120 days of the fiscal year ended December 31, 2016, are incorporated into Part III.

TABLE OF CONTENTS

		Form 10-K
		Report
Item No.		Page
	PART I
1	Business	2
1A.	Risk Factors	2
1B.	Unresolved Staff Comments	25
2	Properties	26
3	Legal Proceedings	26
4	Mine Safety Disclosures	26
	PART II
5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	27
6	Selected Financial Data	29
7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
7A.	Quantitative and Qualitative Disclosures about Market Risk	49
8	Financial Statements and Supplementary Data	51
9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	95
9A.	Controls and Procedures	95
9B.	Other Information	95
	PART III
10	Directors, Executive Officers and Corporate Governance	96
11	Executive Compensation	96
12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	96
13	Certain Relationships and Related Transactions, and Director Independence	96
14	Principal Accountant Fees and Services	97
	PART IV
15	Exhibits and Financial Statement Schedules	97

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FORWARD-LOOKING STATEMENTS

Certain information both included and incorporated by reference in this Form 10-K may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as such may involve known and unknown risks, uncertainties, and other factors which may cause our actual results, performance, or achievements to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements. These forward-looking statements are based on assumptions that management has made in light of experience in the business in which we operate, as well as management’s perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. These statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond our control), and assumptions. Management believes that these forward-looking statements are based on reasonable assumptions.

Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies, and expectations are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative thereof or other variations thereon or comparable terminology. Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in economic conditions generally and the real estate market specifically, legislative/regulatory changes (including changes to laws governing the taxation of real estate investment trusts), availability of capital, risks associated with debt financing, interest rates, competition, supply and demand for hotel rooms in our current and proposed market areas, policies and guidelines applicable to real estate investment trusts, and other risks and uncertainties described herein, and in our filings with the Securities and Exchange Commission (“SEC”) from time to time.  These risks and uncertainties should be considered in evaluating any forward-looking statements contained or incorporated by reference herein.  We caution readers not to place undue reliance on any forward-looking statements included in this report which speak only as of the date of this report.

PART I

ITEM 1. BUSINESS

References to “we,” “our,” “us,” and the “Company” refer to Condor Hospitality Trust, Inc., including, as the context requires, its direct and indirect subsidiaries.

Overview

Condor Hospitality Trust, Inc. (“CDOR,” “Condor,” or the “Company”), which until July 15, 2015 was formerly named Supertel Hospitality, Inc., was incorporated in Virginia on August 23, 1994 and was reincorporated in Maryland on November 19, 2014. Our common stock began to trade on the Nasdaq Stock Market on October 30, 1996 and today trades under the symbol “CDOR”.

CDOR is a self-administered real estate investment trust (“REIT”) for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  As of December 31, 2016, the Company owned 19 hotels, representing 2,047 rooms, in 12 states, including one hotel owned through an 80% interest in an unconsolidated joint venture (the “Atlanta JV”).

Our significant events for 2016 include:

· On various dates throughout the year, the Company sold 25 hotels for total gross proceeds of $61.4 million and primarily used the net proceeds, after repayment of the underlying loans, to fund acquisitions, to build cash reserves for future hotel acquisitions, and for general corporate purposes.

· On March 16, 2016, the Company raised $30.0 million in a private placement transaction with an affiliate of the StepStone Group. The investment, structured as a new Series D Preferred Stock, includes a 6.25% annual dividend, payable quarterly, and may be converted by the holders into shares of the Company’s common stock at a conversion price of $1.60 per share.  Simultaneously with StepStone’s Series D Preferred Stock investment, the Company’s outstanding 6.25% Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”), all of which was held by Real Estate Strategies L.P. (“RES”), was also 2  

exchanged for the newly created Series D Preferred Stock.  The Company used approximately $20.2 million of the proceeds from the $30.0 million raise to redeem all outstanding 8% Series A Cumulative Preferred Stock (“Series A Preferred Stock”) and 10% Series B Cumulative Preferred Stock (“Series B Preferred Stock”), including all unpaid accrued dividends, on April 15, 2016, resulting in one class of preferred stock for which the Company can require conversion entirely into common stock upon the occurrence of defined capital events.  Excess proceeds were utilized by the Company to accelerate the strategic repositioning of its portfolio through the completion of acquisitions. 

· On May 26, 2016, the Company announced that it had moved its corporate headquarters to Bethesda, Maryland.  The new corporate headquarters are located at 4800 Montgomery Lane, Suite 220, Bethesda, Maryland 20814.  The Company continues to maintain leased office space in both Omaha and Norfolk, Nebraska.

· On July 11, 2016, the Company reinstated common dividends for the first time since 2009.  The Company declared a common stock dividend of $0.01 per share for the second quarter of 2016.

· On August 22, 2016, the Company closed on the joint venture acquisition of the 254-room Aloft Atlanta located in downtown Atlanta at 300 Spring Street NW, Atlanta, GA. Condor entered into the Atlanta JV with Three Wall Capital (“TWC”), of which Condor owns 80% and TWC owns 20%, to acquire the hotel. The purchase price for the hotel was $43.6 million.  The hotel is managed by Boast Hotel Management Company, LLC, an affiliate of TWC.

· On September 16, 2016, the Company announced that it increased its common stock dividend to an annualized $0.12 per share for the third quarter of 2016.

· On December 8, 2016, the Company declared its fourth quarter dividend of $0.03 per share. 

· On December 14, 2016, the Company closed on the acquisition of the 156-room Aloft Leawood / Overland Park (Kansas City) located within Park Place Village at 11620 Ash Street, Leawood, KS.  The purchase price for the hotel was $22.5 million.  The hotel is managed by Presidian Hotel and Resorts.

Subsequent to the close of 2016, the Company announced the following significant events.  These events are further discussed in the Subsequent Events footnote to the consolidated financial statements.

· On January 23, 2017 the Company executed an agreement to purchase a portfolio of four Home2 Suites hotels for $73.8 million.  The portfolio includes the Home2 Suites Memphis / Southaven, the Home2 Suites Austin / Round Rock, the Home 2 Suites Lexington University / Medical Center (Kentucky), and the Home2 Suites Tallahassee State Capitol.  The closing of these acquisitions is anticipated to occur in the first quarter of 2017, but is subject to customary closing conditions including accuracy of representations and warrants and compliance with covenants and obligations. 

· On February 8, 2017, the Company announced that it had received commitment letters from two banks, KeyBank and The Huntington National Bank, for a $90.0 million secured credit facility.  This credit facility subsequently closed on March 1, 2017.The new credit facility significantly reduced the Company’s weighted average cost of debt and enabled the refinancing of all 2017 and 2018 maturities.

· On February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted their shares into 39,032,225 shares of common stock at $1.60 per share pursuant to the terms of the preferred stock.  The terms of the Series D Preferred Stock provided for automatic conversion following certain future common stock offerings, and also provided for potential additional payments to the holders depending on the sales price of common stock in the offerings. As a result of the voluntary conversion, the holders are no longer entitled to the potential payments. To induce the holders of the Series D Preferred Stock to voluntarily convert their shares, the Company issued the holders a $9.3 million of a new series of preferred stock, the Series E Preferred Stock.

We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotel properties are owned by our operating partnership, Condor Hospitality Limited Partnership and its subsidiaries (“CHLP”), for which we serve as general partner. As of December 31, 2016, we owned an approximate 97.8% ownership interest in CHLP.  In the future, CHLP may issue limited partnership interests to third parties from time to time in connection with our acquisition of hotel properties or the raising of capital.  The Company’s 100% owned E&P Financing Limited Partnership no longer owns any assets or conducts any operations following the sale of its last remaining property in January 2016.

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In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required by the Internal Revenue Service (“IRS”) for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels.  Therefore, CHLP and its subsidiaries lease our hotel properties to the Company’s wholly owned taxable REIT subsidiary, TRS Leasing, Inc., and its wholly owned subsidiaries (“the TRS”). The TRS in turn engages third-party eligible independent contractors to manage the hotels.  CHLP, the TRS, and their respective subsidiaries are consolidated into the Company’s financial statements. 

We are engaged primarily in the business of owning equity interests in hotel properties and therefore our business is disclosed as one reportable segment.  See the consolidated financial statements and notes thereto included in Item 8 of this Annual Report on Form 10-K for certain financial information required in this Item 1.

Mission Statement

Our mission is to provide to our shareholders attractive total returns for the lodging sector through (1) disciplined investment in high-quality select-service, limited-service, extended stay, and compact full service hotels, and (2) intensive asset management to achieve enhanced results.

We achieve this mission through the disciplined and efficient execution of the following Core Strategies:

· Acquisition Strategy

· Disposition Strategy

· Asset Management Strategy

· Financing Strategy

We understand that we cannot achieve our mission alone and therefore work with the following independent businesses, who we refer to as Business Partners, in the execution of our mission:

· Franchise Partners

· Hotel Management Company Partners

Core Strategies

Acquisition Strategy

The objective of our acquisition strategy is to enable us to acquire assets that meet our target property characteristics and investment criteria at attractive valuations. We believe that our existing relationships with owners, operators, and developers of select-service hotels will provide us with access to certain off-market acquisition opportunities ahead of other real estate investors.  Typically, off-market transactions lead to more attractive valuation outcomes.  Our organizational documents do not limit the types of investments we can make; however, our intent is to execute the acquisition strategy as detailed herein.

We believe our target property characteristics and investment criteria, coupled with our ability to source off-market transactions, differentiates us from our peers and will enable us to achieve our mission to obtain attractive returns to our shareholders.

Target Property Characteristics

Our target properties are high-quality select-service, limited-service, extended stay, and compact full-service hotels located primarily in the top 100 Metropolitan Statistical Areas (“MSAs”), with a focus on the top 21 – 60 MSAs.  From time to time, we may acquire assets outside these target MSAs if we are able to acquire the asset at an attractive valuation and have confidence in the value proposition of the property.  If within a top 25 MSA, the asset will typically be located within an attractive sub- market of the larger MSA.  The hotels we will look to acquire will be franchised under premium flags by brands such as Hilton, Marriott/Starwood, IHG, and Hyatt and operated by third-party management companies.

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In 2016, we acquired two assets that meet our investment criteria: Aloft Atlanta Downtown and the Aloft Leawood.  Subsequent to the close of 2016, we announced our intent to acquire four Home2 Suites hotels in the following markets: Austin-Round Rock (TX), Lexington (KY), Tallahassee (FL), and Memphis-Southaven (MS).  We expect to close on the acquisition of these four assets in the first quarter of 2017, subject to customary closing conditions and diligence.

Investment Criteria

We perform thorough due diligence and utilize extensive research to evaluate any target market or property.  This due diligence and research may include, but is not limited to, analyzing the long-term economic outlook of an MSA, reviewing trends in local lodging demand and supply, assessing property condition and required capital investment, and understanding historical property financial performance.  Specific investment criteria for hotels we are looking to acquire may include but are not limited to:

· hotels that operate under leading premium franchise brands and possess key attributes such as building design and décor that is consistent with current generation brand standards;

· hotels that are located within the top 100 MSAs, in close proximity to multiple demand drivers, including large corporations, regional hospitals, regional business hubs, recreational travel destinations, significant retail centers, and military installations, among others;

· hotels that are located within markets that have favorable economic, job growth, and demographic factors;

· hotels that have illustrated an ability to generate stabilized and dependable revenue and net operating income;

· hotels that were constructed less than ten years prior to our acquisition or have been recently significantly renovated  to current brand standards, and have significant time (generally ten or more years) remaining on the existing franchise license;

· hotels that have some value-added growth potential through operating efficiencies, institutional asset management, repositioning, renovations, or rebranding;

· hotels that can be acquired at a discount to replacement cost; and/or

· hotels that can be acquired in off-market transactions.

Disposition Strategy

We have been engaged in a process of transitioning our portfolio from economy hotels to high-quality select-service, limited-service, extended stay, and compact full service hotels.  In order to achieve this objective, we have focused on disposing of legacy assets that do not meet the property characteristics and investment criteria discussed above.  Since January 1, 2015, we have sold 42 hotels.  The value unlocked from asset sales has been and will continue to be redeployed into newer, higher-quality assets meeting the acquisition strategy discussed above.  Just as we carefully evaluate the hotels we plan to acquire, our asset management team has evaluated the timing and composition of the legacy hotels to be disposed of in a manner we believe will maximize returns for our shareholders.  We are committed to a disciplined but timely monetization of the legacy assets in order to achieve the strategic repositioning of the portfolio.  In 2017, we will continue to dispose of assets that do not fit the new strategic vision of our portfolio and have announced plans to sell seven additional legacy hotels in the first half of 2017.

Additionally, from time to time, we may undertake the sale of one or more hotels that meet the property characteristics and investment criteria discussed above.  These disposition decisions are the result of a thorough analysis and typically in response to changes in market conditions, our current or projected return on our investment in the hotel, or other factors which we deem relevant to the disposition decision.

Asset Management Strategy

Through collaboration with our third-party operators, we seek to maximize value to our shareholders through improvements to our existing hotels’ operating results.  We work toward this goal by constantly monitoring the performance of each individual hotel and identifying opportunities for value-enhancement through intensive asset management strategies.  We will make recommendations to our third-party operators in all aspects of our hotels operations, including revenue management, physical design, guest experience, market positioning, and overall

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property strategy.  Fundamentally, all strategies are focused on growing the revenue of a hotel, controlling expenses, and/or maximizing the guest experience to drive returns.

We work with our third-party operators to develop short- and long-term capital investment plans that are focused on generating positive returns for our shareholders.  The capital improvements may involve investments in expansions, additions, renovations, technology upgrades, and/or energy efficiency improvements.

Additionally, from time to time, we may come to the conclusion that a particular asset may provide greater returns to our shareholders after an extensive repositioning of the asset in the market.  In these instances, capital investment in a greater amount than typical for an asset may be required to achieve the desired repositioning.  These decisions will be made after a thorough analysis of the property, market conditions, and the potential for a positive return on investment that exceeds our investment hurdle rates.

Financing Strategy

Our financing strategy is to seek to minimize the cost of our capital in order to maximize the returns generated for our shareholders.  We intend to finance our long-term growth with equity capital raises and debt financings that have staggered maturities.  From time to time, when purchasing hotel properties, we may issue limited partnership interests in CHLP to third parties as full or partial consideration to sellers.  Currently, our debt includes a recourse line of credit secured by certain hotels and mortgages secured by our hotel properties.  In the future we plan on using a revolving credit facility, term loans, equity issuances, and mortgage debt financings to fund future acquisitions as well as for property redevelopments, return on investment initiatives, and working capital requirements.

Business Partners

Franchise Partners

We believe that in order to achieve our mission we must partner with the right franchisors of quality brands in our target segments.  To this end, we have built strong relationships with many of who we believe are the leading franchisors of the strongest brands in the segments we target, including Hilton, Marriott/Starwood, IHG, and Hyatt.  The franchisors provide a variety of benefits and value which include national advertising, marketing programs to increase brand awareness, personnel training, and centralized reservation systems.  We are constantly monitoring and evaluating the performance of these franchisors and their respective brands so that, when necessary, we can adapt our franchise partner strategy to maximize returns to our shareholders.

Under our franchise agreements, we are required to pay franchise fees generally between 3.3% and 5.5% of room revenue, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and 6.0% of room revenue.  The franchise agreements typically have 10 to 25 year terms although certain agreements may be terminated by either party on certain anniversary dates specified in the agreements.  Further, each agreement provides for early termination fees in the event the agreement is terminated before the stated term.

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Our 19 hotels owned at December 31, 2016 operate under the following national and independent brands.  Pursuant to our previously discussed strategy, we envision the composition of this brand portfolio to change dramatically as we continue to transition the portfolio.

Franchise Brand	Number of Hotels	Number of Rooms
Acquired In or Since 2012:
Aloft (1)	2	410
Courtyard by Marriott (1)	1	120
Hilton Garden Inn (2)	1	100
Hotel Indigo (3)	1	142
SpringHill Suites (1)	1	116
Legacy Properties Owned Prior to 2012:
Super 8 (4)	2	227
Comfort Inn/Comfort Suites (5)	6	535
Quality Inn (5)	2	140
Days Inn (4)	1	176
Key West Inn (6)	1	40
Supertel Inn (7)*	1	41
Total	19	2,047

(1) Courtyard by Marriott ®, Aloft ®, and SpringHill Suites ® are a registered trademarks of Marriott International

(2) Hilton Garden Inn® is a registered trademark of Hilton Hotels Corporation

(3) Hotel Indigo® is a registered trademark of InterContinental Hotels Group (IHG)

(4) Super 8® and Days Inn ® are registered trademarks of Wyndham Worldwide

(5) Comfort Inn ®, Comfort Suites ®, and Quality Inn® are registered trademarks of Choice Hotels International, Inc.

(6) Key West Inn ® is a registered trademark of Key West Inns

(7) Supertel Inn® is a registered trademark of Condor Hospitality Trust, Inc.

* Independent hotel brand unassociated with a national franchise brand

Hotel Management Company Partners

As a REIT, we are not permitted to directly operate any of our hotels.  We partner closely with some of who we believe are the leading hotel management companies in order to operate our hotels with the ultimate objective of improving same-store hotel performance throughout our portfolio.  Each management agreement provides for a set term and is subject to early termination upon the occurrence of defaults and certain other events.  As required under the REIT qualification rules, each manager must qualify as an “eligible independent contractor” during the term of the management agreement.

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Our 19 hotels owned at December 31, 2016 are operated by the following third-party management companies:

Management Company	Number of Hotels	Number of Rooms
Hospitality Management Advisors, Inc.	7	672
Peachtree Hospitality Management, LLC	3	378
Kinseth Hotel Corporation	3	268
K Partners Hotel Management	2	160
Boast Hotel Management Company	1	254
Presidian Hotels	1	156
Cherry Cove Hospitality Management, LLC	2	159
Total	19	2,047

Seasonality of Hotel Business

Historically, as a result of the geographic areas in which we operate, the operations of our hotels have been seasonal in nature.  Generally, occupancy rates, revenue, and operating income have been greater in the second and third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotels located in Florida, which experience peak demand in the first and fourth quarters of the year.  The results of the recently acquired premium-branded select-service hotels, because of their locations and chain scale, are expected to be less seasonal in nature than our legacy portfolio of assets.

Competition

The hotel industry is highly competitive.  Each of our hotels is located in a developed area that includes other hotel properties.  The number of competitive hotel properties in a particular area could have a material adverse effect on revenue, occupancy, and the average daily room rate of our hotels or of hotel properties acquired in the future, and thus our financial results.

We may compete for investment opportunities with entities that have substantially greater financial resources than us.  These entities generally may be able to accept more risk than we can prudently manage. Competition in general may reduce the number of suitable investment opportunities for us and increase the bargaining power of property owners seeking to sell. 

Tax Status

The Company qualifies and intends to continue to qualify as a REIT under the applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will be unable to re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT, unless we satisfy certain relief provisions.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.  Taxable income from non-REIT activities managed through the TRS, which is taxed as a C-Corporation, is subject to federal, state, and local income taxes. 

Employees

At December 31, 2016, Condor had 14 employees.  The staff at our hotels are employed by our third-party hotel managers.

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Available Information

Our executive offices are located at 4800 Montgomery Lane, Suite 220, Bethesda, Maryland 20814, our telephone number is (301) 861-3305, and we maintain an Internet website located at www.condorhospitality.com.  Our annual reports on Form 10-K and quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports are available free of charge on our website as soon as reasonably practicable after they are filed with the SEC.  We also make available the charters of our board committees and our Code of Business Conduct and Ethics on our website.  Copies of these documents are available in print to any shareholder who requests them.  Requests should be sent to Condor Hospitality Trust, Inc., 4800 Montgomery Lane, Suite 220, Bethesda, MD 20814, Attn: Corporate Secretary.

Item 1A. Risk Factors

The following discussion concerns the risks associated with our business that should be reviewed and considered carefully. Our business faces many risks and the risks described below may not be the only risks we face. Other risks and uncertainties not presently known to us may also materially and adversely affect our business, the value of our shares, and our ability to pay dividends to our shareholders. Additionally, the risks detailed below are interrelated and should be considered as a whole. In connection with the forward-looking statements that appear in this Annual Report on Form 10-K, you should carefully review the section entitled “Forward-Looking Statements.”

For presentation purposes only, we categorize the risk factors into four broad categories:

· Risk Related to Our Business & Operations

· Risks Related to the Hotel Industry

· Risks Related to the Real Estate Industry

· Risks Related to Our Structure & Organization

Risks Related to Our Business & Operations

Failure of the economy to improve or remain stable may adversely affect our ability to execute our business strategies, which in turn would adversely affect our ability to make distributions to our stockholders.

Our ability to execute our business strategy is affected by economic conditions, and we cannot assure you that economic fundamentals will improve or remain stable. The housing market collapse and world events outside our control, such as terrorism, have adversely affected the economy in the recent past andcontributed to our net losses of $16.3 million, $1.4 million, $10.2 million, and $17.5 million for our 2014, 2013, 2012, and 2011 fiscal years, respectively.  If events like these reoccur, they may adversely affect the economy in the future.  An economic recession could have a dramatic impact on our financial results. In the event conditions in the economy do not improve or remain stable, our ability to execute our business strategies will be adversely effected, which in turn would adversely affect our ability to make distributions to our stockholders.

The departure of any of our key personnel who have significant experience and relationships in the lodging industry, particularly our Chief Executive Officer, J. William Blackham, could materially and adversely affect us.

We depend on the experience and relationships of our executive officers, especially J. William Blackham, our Chief Executive Officer and a member of our board of directors, to manage our day-to-day operations and strategic business direction. Mr. Blackham has extensive experience in the lodging industry, during which time he has established an extensive network of lodging industry contacts and relationships, including relationships with national hotel brands, hotel owners, financiers, operators, commercial real estate brokers, developers and management companies. We can provide no assurances that Mr. Blackham, or any of our key personnel, will continue their employment with us. The loss of the services of any of the members of our management team, or any difficulty attracting and retaining other talented and experienced personnel, could adversely affect our ability to source potential investment opportunities, our relationship with national hotel brands and other industry participants and the execution of our business strategy. Our ability to replace key individuals may be difficult because of the

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limited number of individuals with the breadth of skills and experience needed to excel in the hotel industry and there can be no assurance that we would be able to hire, train, retain, or motivate such individuals. Further, such a loss could be negatively perceived by investors, which could reduce the market value of our common shares.

If we are unable to successfully manage our growth, our operating results and financial condition could be adversely affected.

Our ability to implement our new business strategy and grow our business depends upon our senior executive officers’ business contacts and their ability to successfully hire, train, supervise and manage additional personnel.

We may not be able to hire and train sufficient personnel or develop management, information and operating systems suitable for our expected growth. If we are unable to manage any future growth effectively, our operating results and financial condition could be adversely affected.

Our future growth is dependent on obtaining new financing and if we cannot secure financing in the future,our growth will be limited.

The success of our growth strategy will depend on access to capital through use of excess cash flow,borrowings or subsequent issuances of common shares or other securities. Acquisitions of new hotel propertieswill require significant additional capital and existing hotels will require periodic capital improvement initiativesto remain competitive. We may not be able to fund acquisitions or capital improvements solely from cashprovided from our operating activities because we must distribute at least 90% of our taxable income (determinedbefore the deduction for dividends paid and excluding any net capital gains) each year to satisfy the requirementsfor qualification as a REIT for federal income tax purposes. As a result, our ability to fund capital expendituresfor acquisitions through retained earnings is very limited. Our ability to grow through acquisitions of hotels willbe limited if we cannot obtain satisfactory debt or equity financing, which will depend on capital marketsconditions.

Our lack of industry, brand, and/or geographic diversification could have an adverse effect on results.

Historically, we  have exclusively bought ownership interest in hotels in the United States.  As a result, we are subject to the risks inherent in investing in a single industry.  A downturn in the U.S. hotel industry may have a pronounced effect on the amount of funds available to us for distribution or on the value of Company’s assets.  Our business is subject to the risks that are common to the hotel industry and that are out of our control.  Additionally, we may face risks associated with any geographic concentration or franchisor concentration. 

Our returns depend on management of our hotels by third parties.

In order to qualify as a REIT, we cannot operate any hotel or participate in the decisions effecting the daily operations of any hotel. Under the REIT Modernization Act of 1999, REITs are permitted to lease their hotels to TRSs. However, a TRS, such as our TRS, may not operate or manage the leased hotels and, therefore, must enter into management agreements with third-party eligible independent contractors to manage the hotels. Thus, an independent operator under a management agreement with our TRS controls the daily operations of each of our hotels.

Under the terms of our management agreements, our ability to participate in operating decisions regarding the hotels is limited. We depend on our management companies to adequately operate our hotels as provided in the management agreements. We do not have the authority to require any hotel to be operated in a particular manner or to govern any particular aspect of the daily operations of any hotel (for instance, setting room rates). Thus, even if we believe our hotels are being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, revenue per available room, and average daily rates, we may not be able to force our management companies to change their methods of operation of our hotels. We can only seek redress if a management company violates the terms of the management agreement with our TRS, and then only to the extent of the remedies provided for under the terms of the applicable management agreement. If any of the foregoing occurs at franchised hotels, our relationship with the franchisors may be damaged, and we may be in breach of one or more of our franchise agreements. Additionally, in the event that we need to replace a management company due to the termination of an

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existing management agreement, we may experience decreased occupancy and other significant disruptions at our hotels and in our operations generally.

We face competition for the acquisition of hotels and we may not be successful in identifying or completing hotel acquisitions that meet our criteria, which may impede our growth.  

One component of our business strategy is expansion through acquisitions, and we may not be successful in identifying or completing acquisitions that are consistent with our strategy. We compete with institutional pension funds, private equity investors, other REITs, hotel companies, and others who are engaged in the acquisition of hotels, most of whom have greater financial resources than we do. This competition for hotel investments may increase the price we pay for hotels and these competitors may succeed in acquiring the hotels we seek to acquire. Furthermore, our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater marketing and financial resources, may be willing to pay more, or may have a more compatible operating philosophy. In addition, the number of entities competing for suitable hotels may increase in the future, which would increase demand for these hotels and the prices we must pay to acquire them. If we pay higher prices for hotels, our returns on investment and profitability may be reduced.  Future acquisitions may not yield the returns we expect and may result in stockholder dilution.

Future acquisitions may not yield the returns expected, may result in disruptions to our business, may strain management resources, may not be efficiently integrated into operations, and may result in stockholder dilution.

Our business strategy may not ultimately be successful and may not provide positive returns on our investments. Acquisitions may cause disruptions in our operations and divert management’s attention away from day-to-day operations.  If the integration of our acquisitions into our management companies’ operations is not accomplished as efficiently as planned, we will not achieve the expected operating results from the acquisitions.  The issuance of equity securities in connection with any acquisition could be substantially dilutive to our stockholders.

We may not be able to sell hotels on favorable terms.

Our business strategy may include the disposition of assets.  We may not be able to sell such hotels on favorable terms, and such hotels may be sold at a loss. As with acquisitions, we face competition for buyers of our hotel properties. Other sellers of hotels may have the financial resources to dispose of their hotels on unfavorable terms that we would be unable to accept. If we cannot find buyers for any properties that are designated for sale, we will not be able to implement our disposition strategy. In the event that we cannot fully execute our disposition strategy or realize the benefits therefrom, we may not be able to fully execute our growth strategy.

We may record additional impairment charges on our properties which will negatively impact our results of operations.

We analyze our assets for impairment when events or circumstances occur that indicate an asset’s carrying value may not be recoverable.  For impaired assets, we record an impairment charge equal to the excess of the property’s carrying value over its fair value.  Our operating results for 2016, 2015, and 2014 include $1.5 million, $3.7 million, and $2.9 million, respectively, of total impairment charges related to our hotels.  Factors, many of which are outside our control, such as increased local competition, age and condition of hotels, and national and local declines in the economy, may result in additional impairment charges, which will negatively affect our results of operations. We can provide no assurance that any impairment loss recognized would not be material to our results of operations.

We will likely seek to sell equity and/or debt securities to meet our need for additional cash, and we cannot assure you that such financing will be available and further, in connection with such sales our current shareholders could experience a material amount of dilution.

We may require additional cash resources based on business conditions and any acquisitions we may decide to pursue.  We will likely seek to sell additional equity and/or debt securities.  We cannot assure you that the sale of such securities will be available in amounts or on terms acceptable to us, if at all. If our board determines to sell

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additional shares of common stock or other debt or equity securities, a material amount of dilution may cause the market price of the common stock to decline.

We face risks associated with the use of debt, including the ability to obtain debt financing and refinancing risk.

We may not be able to successfully obtain debt financing or we may not be able to extend, refinance, or repay our existing debt due to a number of factors, including decreased property valuations, limited availability of credit, tightened lending standards, or deteriorating economic conditions. If we are unable to refinance our debt on acceptable terms, we may be forced to dispose of hotel properties on disadvantageous terms, potentially resulting in losses. We have placed mortgages on certain of our hotel properties, have assumed mortgages on other hotels we acquired and may place additional mortgages on certain of our hotels to secure other debt. To the extent we cannot meet any future debt service obligations, we will risk losing some or all of our hotel properties that are pledged to secure our obligations to foreclosure.  If we lack the ability to raise debt or refinance existing debt, our ability to execute our business strategy will be significantly hampered and our financial results may be significantly affected.

Our debt service obligations could adversely affect our operating results, may require us to liquidate our properties, and could limit our ability to make distributions to our stockholders.

We seek to maintain a total stabilized debt level of no more than 70% of our aggregate property investment at cost. We, however, may change or eliminate this target at any time without the approval of our stockholders. In the future, we and our subsidiaries may incur substantial additional debt, including secured debt. Incurring such debt could subject us to many risks, including the risks that:

· our cash flow from operations will be insufficient to make required payment of principal and interest;

· we may be more vulnerable to adverse economic and industry conditions;

· we may be more vulnerable to adverse economic and industry conditions;

· we may be required to dedicate a substantial portion of our cash flow from operations to the repayment of our debt, thereby reducing the cash available for distribution to our stockholders, funds available for operations and capital expenditures, future investment opportunities, or other purposes;

· the terms of any refinancing may not be as favorable as the terms of the debt being refinanced; and

· the use of leverage could adversely affect our stock price and our ability to make distributions to our stockholders

Our results may be negatively affected by interest rate fluctuations and our attempts to hedge this risk may not be effective.

Higher interest rates could increase our debt service requirements and could reduce the amounts available for distribution to our stockholders, as well as reduce funds available for our operations, future investment opportunities, or other purposes. We may obtain in the future one or more forms of interest rate protection—in the form of swap agreements, interest rate cap contracts, or similar agreements—to “hedge” against the possible negative effects of interest rate fluctuations. However, we cannot assure you that any hedging will adequately mitigate the adverse effects of interest rate increases or that counterparties under these agreements will honor their obligations. In addition, we may be subject to risks of default by hedging counterparties. Adverse economic conditions could also cause the terms on which we borrow to be unfavorable.

Operating our hotels under franchise agreements could adversely affect distributions to our shareholders.

At December 31, 2016, 18 of our hotels operate under third party franchise agreements and we are subject to the risks of concentrating our hotel investments in several franchise brands. These risks include reductions in business following negative publicity related to any one of our particular brands. Risks associated with our brands could adversely affect our lease revenues and the amounts available for distribution to our shareholders.

The maintenance of the franchise licenses for our hotels is subject to our franchisors’ operating standards and other terms and conditions. Our franchisors periodically inspect our hotels to ensure that we and the TRS follow their standards. Failure to maintain these standards or other terms and conditions could result in a franchise license being

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canceled. As a condition of our continued holding of a franchise license, a franchisor could possibly require us to make capital expenditures, even if we do not believe the capital improvements are necessary or desirable or will result in an acceptable return on our investment. Nonetheless, we may risk losing a franchise license if we do not make franchisor-required capital expenditures.

If a franchisor terminates the franchise license, we may try either to obtain a suitable replacement franchise or to operate the hotel without a franchise license. The loss of a franchise license could materially and adversely affect the operations or the underlying value of the hotel because of the loss of associated name recognition, marketing support, and centralized reservation systems provided by the franchisor. Loss of a franchise license for several of our hotels could materially and adversely affect our revenue. This loss of revenue could, therefore, also adversely affect our cash available for distribution to shareholders.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, our reliance on a co-venturer’s financial condition and disputes between us and our co-venturers.

We may co-invest in the future with third parties through partnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility for managing the affairs of a property, partnership, joint venture or other entity. In such event, we would not be in a position to exercise sole decision-making authority regarding the property, partnership, joint venture or other entity. Investments in partnerships, joint ventures, or other entities may, under certain circumstances, involve risks not present were a third party not involved, including the possibility that partners or co-venturers might become bankrupt or fail to fund their share of required capital contributions. Investments in joint ventures may require that we provide the joint venture entity with the right of first offer or right of first refusal to acquire any new property we consider acquiring directly. Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such investments may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the partner or co-venturer would have full control over the partnership or joint venture. Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our business. Consequently, actions by, or disputes with, partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk. We may also, in certain circumstances, be liable for the actions of our third-party partners or co-venturers. For example, we may be required to guarantee indebtedness incurred by a partnership, joint venture or other entity for the purchase or renovation of a hotel property. Such a guarantee may be on a joint and several basis with our partner or co-venturer in which case we may be liable in the event such party defaults on its guaranty obligation.

Unanticipated expenses and insufficient demand for hotels we acquire in new geographic markets could adversely affect our profitability and our ability to make distributions to our stockholders.

We may develop or acquire hotels in geographic areas in which our management may have little or no operating experience and in which potential customers may not be familiar with our franchise brands. As a result, we may have to incur costs relating to the opening, operation and promotion of those new hotel properties that are substantially greater than those incurred in other areas. These hotels may attract fewer customers than our existing hotels, while at the same time, we may incur substantial additional costs with these new hotel properties. Unanticipated expenses and insufficient demand at a new hotel property, therefore, could adversely affect our profitability and our ability to make distributions to our stockholders.

The growth of Internet travel intermediaries could adversely affect the Company’s business and profitability.

Although a majority of rooms sold via the Internet are sold through hotel franchisor websites, some of the Company’s hotel rooms are booked through Internet travel intermediaries.  These Internet travel intermediaries purchase rooms at a negotiated, net of fees, discount from participating hotels, which typically results in lower room rates than the Company’s franchisor or manager otherwise could have obtained.  Although the Company’s managers and franchisors may have established agreements with many of these intermediaries that limit transaction fees for hotels, there be no assurance that the Company’s managers and franchisors will be able to renegotiate such agreements upon their expirations with terms as favorable as the provisions that exist today.  An increase in the

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growth of Internet travel intermediaries may negatively affect our hotel revenues.

We and our hotel managers rely on information technology in our operations, and any material failure, inadequacy, interruption or security failure of that technology could harm our business.

We and our hotel managers rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data. We purchase some of our information technology from vendors, on whom our systems depend. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as individually identifiable information, including information relating to financial accounts. Although we have taken steps to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. Any failure to maintain proper function, security and availability of our information systems could interrupt our operations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations and our ability to make distributions to our shareholders.

Uninsured and underinsured losses and our ability to satisfy our obligations could adversely affect our operating results and our ability to make distributions to our stockholders.

We intend to maintain comprehensive insurance on each of our hotel properties, including liability, fire, and extended coverage, of the type and amount we believe are customarily obtained for or by hotel owners. There are no assurances that current coverage will continue to be available at reasonable rates. Various types of catastrophic losses, like earthquakes and floods, or losses from foreign or domestic terrorist activities, may not be insurable or may not be economically insurable. Initially, we do not expect to obtain terrorism insurance on our hotel properties because it is costly. Lenders may require such insurance and our failure to obtain such insurance could constitute a default under loan agreements. Depending on our access to capital, liquidity and the value of the properties securing the effected loan in relation to the balance of the loan, a default could reduce our net income and limit our ability to obtain future financing.

In the event of a substantial loss, our insurance coverage may not be sufficient to cover the full current market value or replacement cost of our lost investment or the cash flows lost due to the interruption in operations. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we have invested in a hotel, as well as the anticipated future revenue from the hotel. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed property.

Risks Related to the Hotel Industry

A recession could have a material adverse effect on the hotel industry and our results of operations.

The performance of the hotel industry usually follows the general economy.  During the recession of 2008 and 2009, overall travel was reduced, which had a significant effect on our results of operations.  Uncertainty in the strength and direction of the recovery have slowed the pace of the overall economic recovery.  A stall in the economic recovery or a resurgent recession could have a material adverse effect on the hotel industry and, thus, on our results of operations.

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Our ability to make distributions to our shareholders may be affected by factors in the hotel industry that are beyond our control.

Our hotels are subject to various operating risks found throughout the hotel industry. Many of these risks are beyond our control. These include, among other things, the following:

· competitors with substantially greater marketing and financial resources than us;

· over-building in our markets, which adversely effects occupancy and revenues at our hotels;

· dependence on business and commercial travelers and tourism;

· terrorist incidents which may deter travel;

· increases in hotel operating costs, energy costs, airline fares and other expenses, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; and

· adverse effects of general, regional and local economic conditions.

These factors could adversely affect the amount of rent we receive from leasing our hotels and reduce the net operating profits of the TRS, which in turn could adversely affect our ability to make distributions to our shareholders. Decreases in room revenues of our hotels will result in reduced operating profits for the TRS and decreased lease revenues to our company under our current percentage leases with the TRS.

The hotel industry is seasonal in nature and may affect our cash flow.

Demand for our hotels is seasonal. We generally expect that we will have lower revenue, operating income, and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters. These general trends are, however, influenced by overall economic cycles and the geographic locations of our hotels. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, we expect to utilize cash on hand or borrowings under our credit facility to pay expenses, debt service or to make distributions to our equity holders.

The cyclical nature of the lodging industry may cause fluctuations in our operating performance, which couldhave a material adverse effect on us.

The hotel industry is highly cyclical in nature. Fluctuations in lodging demand and, therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affects levels of business and leisure travel. In addition to general economic conditions, hotel room supply growth is an important factor that can affect the lodging industry's performance.  Overbuilding has in the past and will continue to have the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus Revenue per Available Room (“RevPAR”), tend to increase when demand growth exceeds supply growth. We can provide no assurancesregarding whether, or the extent to which, lodging demand will rebound or whether any such rebound will besustained. An adverse change in lodging fundamentals in our markets could result in returns that are substantiallybelow our expectations or result in losses, which could have a material adverse effect on us.

Competition from other hotels in the markets in which we operate could have a material adverse effect on ourresults of operations.

The lodging industry is highly competitive. Our hotels compete with other hotels for guests in each market inwhich our hotels operate based on a number of factors, including location, convenience, brand affiliation, guestroom rates, range of services and guest amenities or accommodations offered and quality of customerservice. Competition is often specific to the individual markets in which our hotels are located and includescompetition from existing and new hotels. Our competitors may have an operating model that enables them tooffer guestrooms at lower rates than we can, which could result in our competitors increasing their occupancy atour expense. Competition could adversely affect our occupancy, Average Daily Rate (“ADR”) and RevPAR, and may require us toprovide additional amenities or make capital improvements that we otherwise would not have to make, whichcould reduce our profitability and could materially and adversely affect our results of operations.

The need for business-related travel and, thus, demand for rooms in our hotels may be materially andadversely

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affected by the increased use of business-related technology.

The increased use of teleconference and video-conference technology by businesses could result indecreased business travel as companies increase the use of technologies that allow multiple parties from differentlocations to participate at meetings without traveling to a centralized meeting location, such as our hotels. To theextent that such technologies play an increased role in day-to-day business and the necessity for business-relatedtravel decreases, demand for our hotel rooms may decrease and we could be materially and adversely affected.

The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.

Our hotel guestrooms are likely to be booked through Internet travel intermediaries, including, but notlimited to Travelocity.com, Expedia.com and Priceline.com. As these Internet bookings increase, theseintermediaries may be able to obtain higher commissions, reduced guestroom rates or other significant contractconcessions from our management companies. Moreover, some of these Internet travel intermediaries areattempting to offer hotel guestrooms as a commodity, by increasing the importance of price and generalindicators of quality (such as “three-star downtown hotel”) at the expense of brand identification. These agencieshope that consumers will eventually develop brand loyalties to their reservations system rather than to the brandsunder which our hotels are franchised. If the amount of sales made through Internet intermediaries increasessignificantly, guestroom revenue may flatten or decrease and our profitability may be adversely affected.

In the past, economic trends, terrorist acts, and military action have adversely affected the hotel industry generally, and similar future events could adversely affect the industry in the future.

Terrorist attacks and the after-effects (including the prospects for more terror attacks in the United States and abroad) have, in the past, substantially reduced business and leisure travel and lodging industry RevPAR generally. We cannot predict the extent to which these factors will directly or indirectly impact your investment in our securities, the lodging industry or our operating results in the future.

Declining RevPAR at our hotels would reduce our net income and restrict our ability to fund capital improvements at our hotels and our ability to make distributions to stockholders necessary to maintain our status as a REIT. Additional terrorist attacks, acts of war or similar events could have further material adverse effects on the markets on which shares of our stock will trade, as well as on the lodging industry in general and our operations in particular.

The hotel business is capital intensive.

Our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. The franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses. The costs of all of these capital improvements could adversely affect our financial condition and reduce the amounts available for distribution to our shareholders. These renovations may give rise to the following risks:

· possible environmental problems;

· construction cost overruns and delays;

· a possible shortage of available cash to fund renovations and the related possibility that financing for these renovations may not be available to us on affordable terms; and

· uncertainties as to market demand or a loss of market demand after renovations have begun

The lenders under some of the mortgage debt that we will assume will require us to set aside varying amounts each year for capital improvements at our hotels. We may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities and, thus, may need to raise capital in order to finance any required capital expenditures.

Noncompliance with governmental regulations could adversely affect our operating results.

Environmental Matters

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Our hotel properties are subject to various federal, state, and local environmental laws. Under these laws, courts and government agencies have the authority to require the owner of a contaminated property to clean up the property, even if the owner did not know of or was not responsible for the contamination. These laws also apply to persons who owned a property at the time it became contaminated. In addition to the costs of cleanup, contamination can affect the value of a property and, therefore, an owner’s ability to borrow funds using the property as collateral.

Under these environmental laws, courts and government agencies also have the authority to require that a person who sent waste to a waste disposal facility, like a landfill or an incinerator, pay for the clean-up of that facility if it becomes contaminated and threatens human health or the environment. Furthermore, court decisions have established that third parties may recover damages for injury caused by property contamination. For instance, a person exposed to asbestos while staying in a hotel may seek to recover damages if he suffers injury from the asbestos. Lastly, some of these environmental laws restrict the use of a property or place conditions on various activities at a property. One example is laws that require a business using chemicals to manage them carefully and to notify local officials that the chemicals are being used.

Our Company could be responsible for the costs discussed above if it found itself in one or more of these situations. The costs to clean up a contaminated property, to defend against a claim, or to comply with environmental laws could be material and could affect the funds available for distribution to our shareholders. To determine whether any costs of this nature might be required, we commission Phase I environmental site assessments, or “ESAs”, before we acquire our hotels, and at certain times have commissioned new ESAs for certain of our hotels in conjunction with a refinancing of the debt obligations of those hotels. These studies typically included a review of historical information and a site visit, but not soil or groundwater testing. We obtain the ESAs to help us identify whether we might be responsible for cleanup costs or other costs in connection with our hotels. The ESAs on our hotels did not reveal any environmental conditions that are likely to have a material adverse effect on our business, assets, results of operations, or liquidity. However, ESAs do not always identify all potential problems or environmental liabilities. Consequently, we may have material environmental liabilities of which we are unaware.

Americans with Disabilities Act and Other Changes in Governmental Rules and Regulations

Under the Americans with Disabilities Act of 1990, or ADA, all public accommodations must meet various federal requirements related to access and use by disabled persons. Compliance with the ADA’s requirements could require removal of access barriers and non-compliance could result in the U.S. government imposing fines or in private litigants obtaining damages. If we were required to make substantial modifications to our hotels, whether to comply with the ADA or other changes in governmental rules and regulations, our ability to make distributions to our shareholders and meet our other obligations could be adversely affected.

Risks Related to the Real Estate Industry

Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our properties and harm our financial condition.

Because real estate investments are relatively illiquid, our ability to promptly sell one or more hotel properties or investments in our portfolio in response to changing economic, financial and investment conditions may be limited.  The real estate market is affected by many factors that are beyond our control, including:

· adverse changes in international, national, regional and local economic and market conditions;

· changes in interest rates and in the availability, cost and terms of debt financing;

· changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances;

· the ongoing need for capital improvements, particularly in older structures;

· changes in operating expenses; and

· civil unrest, acts of God, including earthquakes, floods and other natural disasters and acts of war or terrorism, including the consequences of terrorist acts such as those that occurred on September 11, 2001, which may result in uninsured losses.

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We cannot predict whether we will be able to sell any hotel property or investment for the price or on the terms setby us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We also cannot predict the length of time needed to find a willing purchaser and to close the sale of a hotel property or loan.

We may be required to expend funds to correct defects or to make improvements before a hotel property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In acquiring a hotel property, we may agree to lock-out provisions that materially restrict us from selling that hotel property for a period of time or impose other restrictions, such as limitation on the amount of debt that can be placed or repaid on that hotel property. These facts and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to stockholders.

Increases in property taxes would adversely affect our ability to make distributions to our shareholders.

Hotel properties are subject to real and personal property taxes. These taxes may increase as tax rates change and as the properties are assessed or reassessed by taxing authorities. In particular, our property taxes could increase following our hotel purchases as the acquired hotels are reassessed. If property taxes increase, our financial condition, results of operations, and our ability to make distributions to our shareholders could be materially and adversely affected.

Our hotels may contain or develop harmful environmental challenges which could lead to liability for adverse health effects and costs of remediating the problem.

Bed bug infestation can cause adverse health effects, including skin rashes, psychological effects andallergic symptoms. When excessive moisture accumulates in buildings or on building materials, mold growthmay occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants. Concern about indoor exposure to mold has beenincreasing, as exposure to mold may cause a variety of adverse health effects and symptoms, including allergic orother reactions. As a result, the presence of significant mold or bed bugs at any of our properties could require usto undertake a costly remediation program to contain or remove the mold or remove the bed bugs from theeffected property, the cost of which would reduce our cash available for distribution. In addition, the presence ofsignificant mold or bed bugs could expose us to liability from our guests, employees or our managementcompanies and others if property damage or health concerns arise.

Risks Related to our Organization and Structure

We cannot assure you that we will qualify, or remain qualified, as a REIT.

We currently are taxed as a REIT, and we expect to qualify as a REIT for future taxable years, but wecannot assure you that we will remain qualified as a REIT. If we fail to remain qualified as a REIT, all of ourearnings will be subject to federal income taxation, which will reduce the amount of cash available fordistribution to our stockholders, and we will not be required to distribute our income to our stockholders.

Our TRS lessee structure subjects us to the risk of increased operating expenses.

Operating Risks

Our hotels are subject to various operating risks found throughout the hotel industry. Many of these risks arebeyond our control. These include, among other things, the following:

· competitors with substantially greater marketing and financial resources than us;

· dependence on business and commercial travelers and tourism;

· over-building of hotels in our markets, which could adversely affect occupancy and revenue at thehotels we acquire;

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· increases in energy costs and other expenses affecting travel, which may affect travel patterns andreduce the number of business and commercial travelers and tourists;

· increases in operating costs, including increased real estate and personal property taxes, due to inflationand other factors that may not be offset by increased guestroom rates;

· potential increases in labor costs at our hotels, including as a result of unionization of the labor forceand increasing health care insurance expense;

· adverse effects of international, national, regional and local economic and market conditions;

· changes in governmental laws and regulations, fiscal policies and zoning ordinances and the relatedcosts of compliance with laws and regulations, fiscal policies and ordinances; and

· events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel related health concerns including pandemics and epidemics such as H1N1 influenza (swine flu), Zika virus, avian bird flu, Ebola and SARS, travel-related environmental concernsincluding water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents andunusual weather patterns, including natural disasters such as hurricanes.

These factors could adversely affect the amount of rent we receive from leasing our hotels and reduce thenet operating profits of the TRS, which in turn could adversely affect our ability to make distributions to ourstockholders. Decreases in room revenues of our hotels will result in reduced operating profits for the TRS anddecreased lease revenues to our company under our current percentage leases with the TRS.

Competition and Financing for Acquisitions

We compete for investment opportunities with entities that have substantially greater financial resourcesthan we do. These entities generally may be able to accept more risk than we can manage wisely. Thiscompetition may generally limit the number of suitable investment opportunities offered to us. This competitionmay also increase the bargaining power of property owners seeking to sell to us, making it more difficult for usto acquire new properties on attractive terms. Additionally, current economic conditions present difficultchallenges to obtaining financing for acquisitions.

Seasonality of Hotel Business

Historically, as a result of the geographic areas in which we operate, the operations of our hotels have beenseasonal in nature. Generally, occupancy rates, revenue, and operating income have been greater in the secondand third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotelslocated in Florida, which experience peak demand in the first and fourth quarters of the year.

Investment Concentration in Particular Segments of Single Industry

Our entire business is hotel-related. Although we intend to invest in premium-branded upper-midscale andupscale select-service properties in the future, our current hotel portfolio is concentrated in midscale andeconomy hotel properties. Therefore, a downturn in the hotel industry in general and our segments in particularwill have a material adverse effect on our revenues and amounts available for distribution to our stockholders.

Capital Expenditures

Our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. The franchisors of our hotels also require periodic capitalimprovements as a condition of keeping the franchise licenses. The costs of all of these capital improvements could adversely affect our financial condition and reduce the amounts available for distribution to ourstockholders. These renovations may give rise to the following risks:

· possible environmental problems;

· construction cost overruns and delays;

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· a possible shortage of available cash to fund renovations and the related possibility that financing forthese renovations may not be available to us on affordable terms; and

· uncertainties as to market demand or a loss of market demand after renovations have begun.

Our ability to make distributions on our common and preferred stock is subject to fluctuations in our financial performance, operating results, and capital improvement requirements.

As a REIT, we generally are required to distribute annually at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction, to our stockholders. Downturns in our operating results and financial performance or unanticipated capital improvements to our hotel properties may affect our ability to declare or pay distributions to our stockholders.  Further, we may not generate sufficient cash in order to fund distributions to our stockholders, which may require us to sell assets or borrow money to satisfy the REIT distribution requirements.

Among the factors which could adversely affect our results of operations and our distributions to stockholders are reduced net operating profits or operating losses, increased debt service requirements, and capital expenditures at our hotel properties. Among the factors which could reduce our net operating profits are decreases in hotel property revenue and increases in hotel property operating expenses. Hotel property revenue can decrease for a number of reasons, including increased competition from a new supply of rooms and decreased demand for rooms. These factors can reduce both occupancy and room rates at our hotel properties.

The timing and amount of distributions are at the sole discretion of our Board of Directors, which will consider, among other factors, our actual results of operations, debt service requirements, capital expenditure requirements for our properties, and our operating expenses.  We cannot guarantee future distributions.

We have restrictive debt covenants that could adversely affect our ability to run our business.

We are required to meet or maintain quarterly loan covenants with certain of our lenders. Weakness in theeconomy and the lodging industry at large may result in non-compliance with our loan covenants. Such noncompliance with our loan covenants may result in our lenders restricting the use of our operating funds for capital improvements to our existing hotels, including improvements required by our franchise agreements, or causing the debt maturity to accelerate. We cannot assure you that we can maintain compliance with our loan covenants and maintain our business strategy.

Our restrictive debt covenants may jeopardize our tax status as a REIT.

To maintain our REIT status, we generally must distribute at least 90% of our REIT taxable income to ourstockholders annually. In addition, we are subject to a 4% non-deductible excise tax if the actual amountdistributed to stockholders in a calendar year is less than a minimum amount specified under federal income taxlaws. In the event we do not comply with our debt service obligations, our lenders may limit our ability to makedistributions to our stockholders, which could adversely affect our REIT status.

Joint venture investments could be adversely affected by our lack of sole decision-making authority, ourreliance on a co-venturer’s financial condition and disputes between us and our co-venturers.

On August 22, 2016, we entered into a joint venture which acquired the 254-room Aloft hotel in downtownAtlanta, Georgia. Our joint venture partner has joint approval rights with us with respect to most major decisionsregarding the hotel or the joint venture. In addition, we may co-invest in the future with third parties throughpartnerships, joint ventures or other entities, acquiring non-controlling interests in or sharing responsibility formanaging the affairs of a property, partnership, joint venture or other entity. In such event, we may not be in aposition to exercise sole decision-making authority regarding the property, partnership, joint venture or otherentity. Investments in partnerships, joint ventures, or other entities may, under certain circumstances, involverisks not present were a third party not involved, including the possibility that partners or co-venturers mightbecome bankrupt or fail to fund their share of required capital contributions. Investments in joint ventures mayrequire that we provide the joint venture entity with the right of first offer or right of first refusal to acquire anynew property we consider acquiring directly. Partners or co-venturers may have economic or other businessinterests or goals which are inconsistent with our

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business interests or goals, and may be in a position to takeactions contrary to our policies or objectives. Such investments may also have the potential risk of impasses ondecisions, such as a sale, because neither we nor the partner or co-venturer would have full control over thepartnership or joint venture.

Disputes between us and partners or co-venturers may result in litigation or arbitration that would increaseour expenses and prevent our officers and directors from focusing their time and effort on our business. Consequently, actions by, or disputes with, partners or co-venturers might result in subjecting properties ownedby the partnership or joint venture to additional risk. We may also, in certain circumstances, be liable for theactions of our third-party partners or co-venturers. If a joint venture partner becomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we and any other remaining joint venture partnerswould generally remain liable for the joint venture liabilities. For example, we may be required to guaranteeindebtedness incurred by a partnership, joint venture or other entity for the purchase or renovation of a hotelproperty. Such a guarantee may be on a joint and several basis with our partner or co-venturer in which case wemay be liable in the event such party defaults on its guaranty obligation. Furthermore, if a joint venture partnerbecomes bankrupt or otherwise defaults on its obligations under a joint venture agreement, we may be unable tocontinue the joint venture other than by purchasing such joint venture partner’s interests or the underlying assetsat a premium to the market price. If any of the above risks are realized, it could materially adversely affect ourbusiness, financial condition and results of operations and our ability to make distributions to our stockholders.

Our two largest shareholders hold significant voting power and have the right to designate seven of our nine directors, which provides these shareholders with significant power to influence our business and affairs.

RES and its affiliates hold 49% and SREP III Flight-Investco, L.P. (“SREP”) and its affiliates hold 42.6% of the combined voting power of all Condor voting stock.  RES and SREP each have a contractual preemptive right, but not the obligation, to purchase up to their pro rata share (based on their ownership on a fully diluted basis) of any equity securities we offer in future offerings on the same terms as other investors.  RES has the right to appoint four directors to our board of directors and SREP has the right to appoint three directors to our board of directors. 

As discussed further in the Subsequent Events footnote to the consolidated financial statements, on February 28, 2017, RES and SREP, the holders of the Series D Preferred Stock, voluntarily converted their shares into 39,032,225 shares of common stock at $1.60 per share pursuant to the terms of the preferred stock.  The terms of the Series D Preferred Stock provided for automatic conversion following certain future common stock offerings, and also provided for potential additional payments to the holders depending on the sales price of common stock in the offerings. As a result of the voluntary conversion, the holders are no longer entitled to the potential payments. To induce the holders of the Series D Preferred Stock to voluntarily convert their shares, the Company issued the holders a $9.25 million in face amount of a new series of preferred stock, the Series E Preferred Stock. The Series D Preferred Stock, while it was outstanding, had the right to vote separately as a class to approve certain significant corporate events.  Similarly, the Series E Preferred Stock votes as a class on matters generally affecting the Series E Preferred Stock, and as long as 434,750 shares of Series E Preferred Stock (47% of the originally issued shares of Series E Preferred Stock) remain outstanding, then 75% approval of the Series E Preferred Stock will be required to approve merger, consolidation, liquidation or winding up of Condor, related party transactions exceeding $120,000, payment of dividends on common stock except from funds from operations or to maintain REIT status, the grant of exemptions from Condor’s charter limitation on ownership of 9.9% of any class or series of its securities (exclusive of persons currently holding exemptions), issuance of preferred stock, or commitment or agreement to do any of the foregoing. 

By virtue of their voting power and board designation rights, preemptive right to purchase additional equity securities in future stock offerings and approval rights, RES and SREP, collectively and separately, have the power to significantly influence our business and affairs and the outcome of matters required to be submitted to shareholders for approval, including the election of our directors, amendments to our charter, mergers, or sales of assets. Their influence over our business and affairs may not be consistent with the interests of some or all of our shareholders and might negatively affect the market price of our common stock.

The holders of the Series E Preferred Stock have rights senior to holders of common stock.

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RES and SREP, our two largest shareholders, own all of the issued and outstanding shares our Series E Preferred Stock.  The Series E Preferred Stock ranks senior to our common stock and any other preferred stock issuances and receives preferential cumulative cash dividends at a rate of 6.25% annually per annum of the $10.00 face value per share. If we fail to pay a dividend, then during the period that dividends are not paid, the dividend rate increases to 12.5%, if specific equity offering or offerings have not occurred, and increases 9.25% per annum if such equity or equity offerings have occurred.  Dividends on the Series E Preferred Stock accrue whether or not we have earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement.

Our failure to qualify as a REIT under the federal tax laws would result in adverse tax consequences.

The federal income tax laws governing REITs are complex and subject to revision.

We currently operate as a REIT under the federal income tax laws. The REIT qualification requirements are extremely complex and interpretations of the federal income tax laws governing qualification as a REIT are limited. Accordingly, we cannot be certain that we would be successful in operating so that we can qualify as a REIT. At any time, new laws, interpretations, or court decisions may change the federal tax laws or the federal income tax consequences of our qualification as a REIT. We have not applied for or obtained rulings from the IRS that we will qualify as a REIT.

Failure to qualify as a REIT would subject us to federal income tax.

If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income. We might need to borrow money or sell assets in order to pay any such tax. If we cease to be a REIT, we no longer would be required to distribute most of our taxable income to our stockholders. Unless we were entitled to relief under certain federal income tax laws, we could not re-elect REIT status during the four calendar years after the year in which we failed to qualify as a REIT.

Failure to make required distributions would subject us to tax.

In order to qualify as a REIT, we generally are required to distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction, each year to our stockholders. To the extent that we satisfy this distribution requirement, but distribute less than 100% of our taxable income, we will be subject to federal income tax on our undistributed taxable income. In addition, we will be subject to a 4% non-deductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under federal tax laws. As a result, for example, of differences between cash flow and the accrual of income and expenses for tax purposes, or of nondeductible expenditures, our REIT taxable income in any given year could exceed our cash available for distribution. In addition, to the extent we may retain earnings of the TRS in those subsidiaries, such amount of cash would not be available for distribution to our stockholders to satisfy the 90% distribution requirement. Accordingly, we may be required to borrow money or sell assets to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the distribution requirement and to avoid federal corporate income tax and the 4% non-deductible excise tax in a particular year.

The formation of the TRS increases our overall tax liability.

The TRS is subject to federal and state income tax on its taxable income, which in the case of the TRS currently consists and generally will continue to consist of revenues from the hotel properties leased by the TRS, net of the operating expenses for such properties and rent payments to us. Accordingly, although our ownership of the allows us to participate in the operating income from our hotel properties in addition to receiving rent, that operating income is fully subject to income tax. Such taxes could be substantial. The after-tax net income of the TRS is available for distribution to us.

We incur a 100% excise tax on transactions with the TRS that are not conducted on an arm’s-length basis. For example, to the extent that the rent paid by the TRS exceeds an arm’s-length rental amount, such amount potentially

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is subject to the excise tax. We intend that all transactions between us and the TRS will continue to be conducted on an arm’s-length basis and, therefore, that the rent paid by the TRS to us will not be subject to the excise tax.

We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the market price of our shares.

At any time, the federal income tax laws governing REITs or the administrative and judicial interpretations of those laws may be amended or changed. We cannot predict when or if any new federal income tax law, regulation or administrative and judicial interpretation, or any amendment to any existing federal income tax law, regulation or administrative or judicial interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively.  We and our shareholders could be adversely affected by any such change in, or any new, federal income tax law, regulation or administrative and judicial interpretation.

If our hotel managers do not qualify as "eligible independent contractors” the Company would likely fail to qualify as a REIT.

Rent paid by a lessee that is a "related party tenant" of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. We lease substantially all of our hotels to our TRS. The TRS will not be treated as a "related party tenant," and will not be treated as directly operating a lodging facility to the extent the TRS leases properties from us that are managed by an "eligible independent contractor." In addition, our TRS holding companies will fail to qualify as “taxable REIT subsidiaries” if they lease or own a lodging facility that is not managed by an “eligible independent contractor.”

If our hotel managers do not qualify as "eligible independent contractors," we would fail to qualify as a REIT. Each of the hotel management companies that enters into a management contract with our TRS must qualify as an "eligible independent contractor" under the REIT rules in order for the rent paid to us by our TRS to be qualifying income for our REIT income test requirements and for our TRS holding companies to qualify as “taxable REIT subsidiaries”. Among other requirements, in order to qualify as an eligible independent contractor a manager must not own more than 35% of our outstanding shares (by value) and no person or group of persons can own more than 35% of our outstanding shares and the ownership interests of the manager, taking into account only owners of more than 5% of our shares and, with respect to ownership interests in such managers that are publicly traded, only holders of more than 5% of such ownership interests. Complex ownership attribution rules apply for purposes of these 35% thresholds. Although we intend to monitor ownership of our shares by our property managers and their owners, there can be no assurance that these ownership levels will not be exceeded.

If our leases with our TRS are not respected as true leases for federal income tax purposes, we would fail to qualify as a REIT.

To qualify as a REIT, we are required to satisfy two gross income tests, pursuant to which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to the hotel leases with our TRS, which should constitute substantially all of our gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and must not be treated as service contracts, joint ventures or some other type of arrangement. We have structured our leases, and intend to structure any future leases, so that the leases will be respected as true leases for federal income tax purposes, but there can be no assurance that the IRS will agree with this characterization, not challenge this treatment or that a court would not sustain such a challenge. If the leases were not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs and likely would fail to qualify for REIT status.

We may be subject to the 100% prohibited transaction tax on the gain recognized on the hotels we sold. 

A REIT will incur a 100% tax on the net income 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 undertook specific disposition programs beginning in 2001 (that included the sale of 23 hotels through December 31, 2004) and 2008 (that included the sale of 112 hotels through December 31, 2016). We held the disposed hotels for an average period

23

of 14.0 years and did not acquire the hotels for purposes of resale. We believe that such sales are not prohibited transactions. However, if the IRS 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.

Complying with REIT requirements may cause us to forego attractive opportunities that could otherwise generate strong risk-adjusted returns and instead pursue less attractive opportunities, or none at all.  

To continue to qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our stock. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of generating strong risk-adjusted returns on invested capital for our stockholders.

Complying with REIT requirements may force us to liquidate otherwise attractive investments, which could result in an overall loss on our investments.

To continue to qualify as a REIT, we must also ensure that at the end of each calendar quarter at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investment in securities (other than government securities and qualified real estate assets) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our assets (other than government securities and qualified real estate assets) can consist of the securities of any one issuer, and no more than 25% of the value of our total securities can be represented by securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences. If we fail to comply with these requirements at the end of any calendar quarter, we may be able to preserve our REIT status by benefiting from certain statutory relief provisions. Except with respect to a de minimis failure of the 5% asset test or the 10% vote or value test, we can maintain our REIT status only if the failure was due to reasonable cause and not to willful neglect. In that case, we will be required to dispose of the assets causing the failure within six months after the last day of the quarter in which we identified the failure, and we will be required to pay an additional tax of the greater of $50,000 or the product of the highest applicable tax rate (currently 35%) multiplied by the net income generated on those assets. As a result, we may be required to liquidate otherwise attractive investments.

Taxation of dividend income could make our common stock less attractive to investors and reduce the market price of our common stock.

At any time, the federal income tax laws governing REITs or the administrative interpretations of those laws may be amended or changed. Any of those new laws or interpretations may take effect retroactively and could adversely affect us or you as a stockholder. Since 2013, the maximum tax rate on dividend income for certain taxpayers has been at 20% for qualified dividends and 39.6% on non-qualified dividends (plus a 3.8% net investment income tax). Generally, dividends from REITs do not qualify for reduced dividend tax rates because, as a result of the dividends paid deduction to which REITs are entitled, REITs generally do not pay corporate level tax on income that they distribute to stockholders. As a result of that legislation, individual, trust, and estate investors could view stocks of non-REIT corporations as more attractive relative to shares of REITs than was the case previously because the dividends paid by non-REIT corporations are subject to lower tax rates for such investors.

Provisions of our charter and substantial voting power held by two shareholders may limit the ability of a third party to acquire control of our company.

In order to maintain our REIT qualification, no more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the federal income tax laws to include various kinds of entities) during the last half of any taxable year. Our articles of incorporation contain the ownership limitation, which prohibits both direct and indirect ownership of more than 9.9% of the outstanding shares of our common stock or 9.9% of any series of our preferred stock by any person, subject to several exceptions. Generally,

24

any shares of our capital stock owned by affiliated owners will be added together for purposes of the ownership limitation.

Our articles of incorporation permit our board, in its sole discretion, to exempt a person from the 9.9% ownership limitation if the person provides representations and undertakings that enable our board to determine that granting the exemption would not result in the loss of our REIT qualification. Under the IRS rules, REIT shares owned by certain entities are considered owned proportionately by owners of the entities for REIT qualification purposes. RES and SREP each provided a letter at the time of the issuance of the Series D Preferred Stock that permitted our board to grant such an exemption. The stock ownership by RES and SREP, which was permitted with our board’s approval, represents such substantial voting power that it may limit the ability of a third party to acquire control of our company.

These ownership limitations may prevent an acquisition of control of our company by a third party without our board of directors’ approval, even if our stockholders believe the change of control is in their best interests. Our charter authorizes our board of directors to issue shares of common stock and shares of preferred stock, and to set the preferences, rights and other terms of the preferred stock. Furthermore, our board of directors may, without any action by the stockholders, amend our charter from time to time to increase or decrease the aggregate number of shares of stock of any class or series of preferred stock that we have authority to issue. Issuances of additional shares of stock may have the effect of delaying, deferring or preventing a transaction or a change in control of our company that might involve a premium to the market price of our common stock or otherwise be in our stockholders’ best interests.

Our ownership limitation may prevent a shareholder from engaging in certain transfers of our capital stock.

If anyone transfers shares in a way that would violate the ownership limitation described above or prevent us from continuing to qualify as a REIT under the federal income tax laws, we will consider the transfer to be null and void from the outset, and the intended transferee of those shares will be deemed never to have owned the shares. Those shares instead will be transferred to a trust for the benefit of a charitable beneficiary and will be either redeemed by our company or sold to a person whose ownership of the shares will not violate the ownership limitation. Anyone who acquires shares in violation of the ownership limitation or the other restrictions on transfer in our articles of incorporation bears the risk that he will suffer a financial loss when the shares are redeemed or sold if the market price of our stock falls between the date of purchase and the date of redemption or sale.

The ability of our board of directors to change our major corporate policies may not be in your interest.

Our board of directors determines our major corporate policies, including our acquisition, financing, growth, operations and distribution policies. Our board may amend or revise these and other policies from time to time without the vote or consent of our stockholders.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

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ITEM 2. PROPERTIES

Our Company headquarters is located in Bethesda,  Maryland, with additional office space in Omaha, Nebraska and Norfolk, Nebraska. The following table sets forth certain information with respect to the hotels owned by us as of December 31, 2016:

Brand	City	State	Rooms
Upscale/Upper Midscale Select Service Hotels
Hilton Garden Inn	Dowell	Maryland	100
Hotel Indigo	Atlanta (Airport) (2)	Georgia	142
SpringHill Suites	San Antonio (Downtown) (2)	Texas	116
Courtyard by Marriott	Jacksonville (2)	Florida	120
Aloft	Leawood-Overland Park (2)	Kansas	156
Aloft	Atlanta (Downtown) (3)	Georgia	254
			888
Legacy Hotels Held for Use
Comfort Suites	South Bend	Indiana	135
Comfort Suites	Fort Wayne	Indiana	127
Comfort Inn & Suites	Warsaw	Indiana	71
Quality Inn	Solomons	Maryland	59
Super 8	Creston	Iowa	121
Supertel Inn	Creston	Iowa	41
			554
Legacy Hotels Held for Sale
Comfort Suites	Lafayette	Indiana	62
Comfort Inn	New Castle	Pennsylvania	79
Comfort Inn	Harlan (1)	Kentucky	61
Quality Inn	Morgantown	West Virginia	81
Days Inn	Bossier City	Louisiana	176
Super 8	Billings	Montana	106
Key West Inn	Key Largo	Florida	40
			605
		Total Rooms	2,047

(1) This property is subject to a long-term ground lease

(2) Wholly owned property acquired in 2015 or 2016

(3) Joint venture property acquired in 2016

All of our properties are encumbered by either our revolving credit agreement orby mortgage debt at December 31, 2016.  Additional property information is found in Item 8 Schedule III of this Annual Report on Form 10-K.

ITEM 3.  LEGAL PROCEEDINGS

Various claims and legal proceedings arise in the ordinary course of business and may be pending against the Company and its properties. We are not currently involved in any material litigation, nor, to our knowledge, is any material litigation threatened against us.  The Company has insurance to cover potential material losses and we believe it is not reasonably possible that such matters will have a material impact on our financial condition or results of operations.

ITEM 4.  MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY / RELATED STOCKHOLDERMATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock trades on the Nasdaq Global Market under the symbol “CDOR”.The closing sales price for the common stock on February 28, 2017was $2.13 per share.  The table below sets forth the high and low sales prices per share reported on the Nasdaq Global Market for the periods indicated:

	Condor Hospitality Trust, Inc.
	Common Stock
	High		Low
2015
First quarter	$	2.27	$	1.42
Second quarter	$	3.70	$	1.61
Third quarter	$	2.74	$	0.80
Fourth quarter	$	1.59	$	1.00
2016
First quarter	$	2.24	$	.70
Second quarter	$	2.60	$	1.51
Third quarter	$	3.14	$	1.70
Fourth quarter	$	2.19	$	1.53

Shareholder Information

As of February 28, 2017, the approximate number of holders of record of our common stock was 51.  However, because the vast majority of our common shares are held by brokers and other institutions on behalf of shareholders, we believe that there are considerably more beneficial holders of our common shares than record holders.

Distribution Information

Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary income.  Distributions in excess of current and accumulated earnings and profits generally will be treated as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable capital gain.  Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares.

The actual amount of future dividends will be determined by the Board of Directors based on the actual results of operations, economic conditions, capital expenditure requirements, the annual distribution requirements under the REIT provisions of the Code, and other factors that the Board of Directors deems relevant.

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For income tax purposes, distributions paid per share in 2016 were characterized as follows:

	For the year ended December 31, 2016
	Amount		%
Common Shares:
Ordinary income	$	0.070000	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.070000	100%
Series C Preferred Stock:
Ordinary income	$	1.649124	100%
Capital gain		-	-
Return of capital		-	-
Total	$	1.649124	100%
Series D Preferred Stock:
Ordinary income	$	0.494792	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.494792	100%

The common and preferred share distributions declared on December 6, 2016 and paid on January 5, 2017 and January 3, 2017, respectively, were treated as 2016 dividend distributions for federal income tax purposes. 

A portion of the redemption price of the Series A and B Preferred Stock that was redeemed for cash on April 15, 2016 included amounts equal to the accrued and unpaid dividends on such stock.  However, the entire redemption price, inclusive of amounts equal to accrued and unpaid dividends, was treated as payment in exchange for the redeemed stock and none of the redemption price is treated as a distribution of dividends under the Code for federal income tax purposes.

No dividends on common stock or preferred stock were paid in or declared related to 2015 or 2014.

Shares Authorized for Issuance Under Equity Compensation Plans

See Part III, Item 12 for a description of securities authorized for issuance under our 2016 Stock Plan.

Share Performance

The following graph compares the yearly percentage change in the cumulative total shareholder return on our common stock for the period December 31, 2011 through December 31, 2016, with the cumulative total return on the SNL Securities Hotel REIT Index (“Hotel REITs Index”) and the Nasdaq Composite (“Nasdaq—Total US Index”) for the same period.  The Hotel REIT Index is comprised of publicly traded REITs that focus on investments in hotel properties.  The Nasdaq Composite is comprised of all United States common shares traded on the Nasdaq Stock Market.  The comparison assumes a starting investment of $100 on December 31, 2011 in our common stock and in each of the indices shown and assumes that all dividends are reinvested.  The performance graph is not necessarily indicative of future investment performance.

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ITEM 6.  SELECTED FINANCIAL DATA

The following sets forth selected financial and operating data on a historical consolidated basis.  The following information should be read in conjunction with “Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes thereto, appearing elsewhere in this document.

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			As of and for the years ended December 31,
In thousands, except share and per share data
	2016		2015		2014		2013		2012
Revenue
Room rentals and other hotel services	$	50,647	$	58,714	$	58,799	$	55,027	$	56,990
Operating expense
Hotel and property operations		37,092		43,367		44,391		43,033		42,056
Depreciation and amortization		5,190		5,400		6,437		6,300		6,393
General and administrative		5,792		5,493		4,192		3,923		3,908
Acquisitions and terminated transactions		550		684		-		713		240
Terminated equity transactions		-		246		76		1,050		-
Total operating expenses		48,624		55,190		55,096		55,019		52,597
Operating income		2,023		3,524		3,703		8		4,393
Net gain (loss) on disposition of assets		23,132		4,798		(1)		(47)		(9)
Equity in loss of joint venture		(244)		-		-		-		-
Unrealized derivative gain (loss)		6,377		11,578		(14,430)		10,028		(247)
Other income		55		114		116		34		103
Interest expense		(4,710)		(5,522)		(7,116)		(5,620)		(5,283)
Loss on debt extinguishment		(2,187)		(213)		(158)		(458)		(138)
Impairment loss		(1,477)		(3,829)		(1,269)		(2,438)		(97)
Earnings (loss) from continuing operations before income taxes		22,969		10,450		(19,155)		1,507		(1,278)
Income tax (expense) benefit		(125)		-		-		-		6,588
Earnings (loss) from continuing operations		22,844		10,450		(19,155)		1,507		(7,866)
Gain (loss) from discontinued operations, net of tax		678		3,872		2,896		(2,860)		(2,354)
Net earnings (loss)		23,522		14,322		(16,259)		(1,353)		(10,220)
(Earnings) loss attributable to noncontrolling interest		(727)		(1,197)		23		2		10
Net earnings (loss) attributable to controlling interests		22,795		13,125		(16,236)		(1,351)		(10,210)
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(20,748)		(3,632)		(3,452)		(3,349)		(3,169)
Net earnings (loss) attributable to common shareholders	$	2,047	$	9,493	$	(19,688)	$	(4,700)	$	(13,379)
Weighted average number of common shares - basic		4,947		4,886		3,897		2,890		2,885
Weighted average number of common shares - diluted		35,981		23,241		3,897		2,890		2,885
Basic
Basic EPS from continuing operations	$	0.28	$	1.24	$	(5.79)	$	(0.64)	$	(3.82)
Basic EPS from discontinued operations		0.13		0.70		0.74		(0.99)		(0.81)
Total EPS Basic	$	0.41	$	1.94	$	(5.05)	$	(1.63)	$	(4.63)
Diluted
Diluted EPS from continuing operations	$	0.12	$	(0.15)	$	(5.79)	$	(0.64)	$	(3.82)
Diluted EPS from discontinued operations		0.02		0.15		0.74		(0.99)		(0.81)
Total EPS Diluted	$	0.14	$	-	$	(5.05)	$	(1.63)	$	(4.63)
Balance sheet data
Total investment in hotel properties, net	$	114,871	$	130,699	$	139,182	$	164,356	$	191,091
Cash and cash equivalents	$	8,326	$	4,870	$	173	$	45	$	891
Total assets	$	140,665	$	142,346	$	144,820	$	169,500	$	199,223
Total debt, net of deferred financing costs, including convertible debt at fair value	$	64,035	$	86,011	$	91,063	$	115,460	$	130,197
Total equity	$	70,799	$	34,495	$	19,092	$	32,726	$	36,651

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ITEM 7.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Condor Hospitality Trust, Inc. is a self-administered REIT for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  Substantially all of our operations are conducted through CHLP, our operating partnership, of which the Company is the sole general partner.  As of December 31, 2016, the Company owned 19 hotels, representing 2,047 rooms, in 12 states, including one hotel owned through an 80% interest in an unconsolidated joint venture.

Condor experienced another year of positive transition in 2016 with significant enhancements to its portfolio composition, equity structure, debt profile, and brand.  The Company’s new strategy enabled the Company to announce its first common dividend since 2009.  The Company declared and paid three consecutive quarterly dividends commencing in the second quarter of 2016. Significant accomplishments for 2016 are summarized as follows:

Portfolio Composition:  In 2016, the Company sold 25 legacy hotels generating $61.4 million of gross proceeds.  These legacy asset sales were completed in individual transactions at valuations management believes were attractive. The net proceeds were recycled into two acquisitions. In August 2016, the Company closed on a joint venture to acquire the Aloft Atlanta Downtown for $43.6 million.  In December 2016, the Company acquired the Aloft Leawood for $22.5 million.  Both of these assets are representative of the Company’s new investment strategy to acquire high-quality, premium-branded, select-service assets.   Subsequent to the close of the year, on January 23, 2017, the Company announced that it had executed an agreement to purchase a portfolio of four Home2 Suites hotels for $73.8 million.  The transaction is expected to close in the first quarter of 2017, subject to customary closing conditions.

Equity Structure:  On March 16, 2016, the Company closed on a $30.0 million private placement, enabling the full redemption, including accrued dividends, of the Series A and Series B Preferred Stock.  Simultaneously with the sale and issuance of Condor’s Series D Preferred Stock in the $30.0 million private placement, the Company exchanged all of its outstanding Series C Preferred Stock for new Series D Preferred Stock.  Subsequent to the close of 2016, on February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted to common stock.  At the time of conversion, the Series D holders were granted $9.3 million of newly created Series E Preferred Stock. 

Debt Profile: Subsequent to the close of the year, on March 1, 2017, the Company closed a new $90.0 million secured credit facility.   KeyBank and The Huntington National Bank served as the joint lead arrangers for the revolving credit facility.  The new credit facility significantly reduced the Company’s weighted average cost of debt and enabled the refinancing of all 2017 and 2018 maturities.  The credit facility also enables the Company to accelerate the closing of acquisitions.  Management believes the new facility is a strong indicator of Condor’s credit-worthiness and the confidence of the debt community in the Company’s new strategic direction.

Rebranding: The Company completed a comprehensive rebranding in 2016.  The Company launched a new website in March 2016 and revised all reporting materials to reflect the new strategic direction of the Company.

With the aforementioned successes serving as a foundation for future growth, Condor’s management is excited about 2017 and is confident in its ability to achieve the mission of providing attractive total returns in the lodging sector to Condor’s shareholders.

Condor remains cautiously optimistic on the outlook of the hospitality sector in 2017.  The hospitality sector experienced its seventh straight year of positive RevPARgrowth in 2016.  The expected decline in the pace of RevPAR growth materialized in 2016 and is expected to continue into 2017.  Most industry forecasts estimate that U.S. RevPAR will grow at a slower pace in 2017, generally between 2.0% - 3.0%.  The slower pace of RevPAR growth we believe is primarily driven by concerns on new supply and concerns on slowing economic growth.  Condor management believes the sectors and segments it targets will see growth in excess of these estimates.  While many primary markets have a large influx of new supply, the markets Condor targets are experiencing less

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aggressive supply growth.  Additionally, the markets Condor targets are less affected, we believe, by alternative lodging platforms like Airbnb. These supply factors, combined with the possibility of continued positive economic growth, we believe should enable our hotels to experience growth in RevPAR in 2017.

We believe that the performance of the hotel industry is strongly correlated with the performance of the macro-economy. The equity markets have so far reacted favorably following the U.S. Presidential election. However, it is unknown if the new administration’s policies will have a position or negative impact on the economy.  Additionally, the continued threat of terrorism and economic and geopolitical turbulence abroad could derail the macro-economy.  Barring any major disruption to the U.S. economy, we expect a continued improvement in lodging fundamentals, with a more tepid improvement in lodging fundamentals in 2017 than in 2016.  The manner in which the economy continues to grow, if at all, is not predictable and outside of our control.  As a result, there can be no assurances that we will be able to grow our hotel revenue, ADR, occupancy, or RevPAR.  Factors that might contribute to less than anticipated performance are detailed in “Item 1A. Risk Factors.”  Condor’s management continually monitors the economic environment and works to adjust its strategy to seek to maximize value and returns to shareholders.

Hotel Property Portfolio Activity

Acquisitions

On August 1, 2016, the Company entered into a joint venture with TWC to acquire a 254-room Aloft hotel in downtown Atlanta, Georgia.  The Company accounts for the Atlanta JV under the equity method.  Condor owns 80% of the Atlanta JV with TWC owning the remaining 20%.  The Atlanta JV is comprised of two companies: Spring Street Hotel Property II LLC, of which CHLP indirectly owns an 80% equity interest, and Spring Street Hotel OpCo II LLC, of which our TRS indirectly owns an 80% equity interest.  TWC owns the remaining 20% equity interest in these two companies.

On August 22, 2016, the Atlanta JV closed on the acquisition of the Atlanta Aloft hotel for a purchase price of $43.6 million, subject to working capital and similar adjustments.  A summary of this acquisition and its funding as completed by the Atlanta JV is as follows (in thousands):

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Land option (1)		Total purchase price		Debt originated at acquisition		Net cash
Aloft	$	13,025	$	34,048	$	2,667	$	(6,190)	$	43,550	$	33,750	$	9,800
Atlanta, GA

(1) The purchase agreement includes a provision which permits the seller to purchase the surface parking lot north of the hotel exercisable for ten years at less than market rates

The purchase price for the Atlanta Aloft was paid by the Atlanta JV with $9.8 million in cash, of which $7.8 million was contributed by Condor and $2.0 million was contributed by TWC, and $33.8 million of proceeds from a term loan secured by the property.  Condor additionally contributed $1.4 million and TWC additionally contributed $0.4 million to the Atlanta JV to cover acquisition costs and to provide working capital to the entity. 

On December 14, 2016, we also acquired one wholly-owned hotel, the 156-room Aloft Leawood / Overland Park (Kansas City) through a single-purpose bankruptcy remove entity 100% owned by CHLP.  A summary of this acquisition and its funding is as follows (in thousands):

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Total purchase price		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Aloft	$	3,339	$	18,046	$	1,115	$	22,500	$	15,925	$	50	$	6,525
Leawood, KS

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The $22.5 million purchase price was funded with the proceeds of two mortgage loans provided by Great Western Bank totaling $15.9 million, approximately $6.5 million in cash, and the issuance of 213,904 operating units in CHLP with a value of $50,000.

During 2015, we acquired three wholly-owned premium select-service hotel properties through three single-purpose bankruptcy remote entities 100% owned by CHLP from affiliates of Peachtree Hotel Group II, LLC.  A summary of these acquisitions and their funding is as follows (in thousands):

Hotel	Acquisition date	Land		Building, improvements, and vehicles		Furniture and equipment		Total purchase price		Assumption of debt		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Hotel Indigo	10/2/2015	$	800	$	8,700	$	1,500	$	11,000	$	-	$	5,000	$	150	$	5,850
Atlanta, GA
Marriott Courtyard	10/2/2015		2,100		11,050		850		14,000		-		10,100		150		3,750
Jacksonville, FL
SpringHill Suites	10/1/2015		1,597		14,353		1,550		17,500		11,220		-		150		6,130
San Antonio, TX
Total		$	4,497	$	34,103	$	3,900	$	42,500	$	11,220	$	15,100	$	450	$	15,730

The $42.5 million purchase price was funded with the assumption of one loan with an aggregate outstanding principal balance of $11.2 million and two newly originated GE Capital loans (sold to Western Alliance Bank (“WAB”) in April 2016) totaling $15.1 million. The remaining $16.2 million was funded with $14.9 million in cash, approximately $0.8 million of borrowings from the Company’s existing credit facility with Great Western Bank, and the issuance of operating units from CHLP representing limited partnership interest in that entity. A total of 2,298,879 operating units in CHLP were issued with a value of $450,000.

There were no hotel acquisitions in 2014.

Additionally, as discussed further in the Subsequent Events footnote to the consolidated financial statements, on January 23, 2017 the Company executed an agreement to purchase a portfolio of four Home2 Suites hotels for $73.8 million.  The portfolio includes the Home2 Suites Memphis / Southaven, the Home2 Suites Austin / Round Rock, the Home2 Suites Lexington University / Medical Center (Kentucky), and the Home2 Suites Tallahassee State Capitol.  The closing of these acquisitions is anticipated to occur in the first quarter of 2017, but is subject to customary closing conditions including accuracy of representations and warrants and compliance with covenants and obligations.

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Dispositions

Pursuant to our disposition strategy, the following hotel sales were executed in 2016:

				Number of	Gross proceeds
Date of sale	Location	Brand	Condor lender	rooms	(in thousands)
01/04/16	Kirksville, MO	Super 8	Great Western	61	$	1,525
01/07/16	Lincoln, NE	Super 8	Great Western	133		2,800
01/08/16	Greenville, SC	Savannah Suites	Western Alliance Bank	170		2,700
03/30/16	Portage, WI	Super 8	Morgan Stanley	61		2,375
04/25/16	O'Neill, NE	Super 8	Morgan Stanley	72		1,725
05/10/16	Culpeper, VA	Quality Inn	Morgan Stanley	49		2,200
05/19/16	Storm Lake, IA	Super 8	Morgan Stanley	59		2,800
05/24/16	Cleveland, TN	Clarion	Morgan Stanley	59		2,231
05/26/16	Coralville, IA	Super 8	Morgan Stanley	84		3,375
05/27/16	Keokuk, IA	Super 8	Morgan Stanley	61		2,153
06/06/16	Chambersburg, PA	Comfort Inn	Morgan Stanley	63		2,150
08/08/16	Pittsburg, KS	Super 8	Morgan Stanley	64		1,620
09/09/16	Mt. Pleasant, IA	Super 8	Morgan Stanley	54		1,850
09/19/16	Danville, KY	Quality Inn	Morgan Stanley	63		2,288
09/26/16	Menomonie, WI	Super 8	Morgan Stanley	81		3,000
10/14/16	Glasgow, KY	Comfort Inn	Western Alliance Bank	60		2,400
11/04/16	Sioux Falls, SD	Days Inn	Western Alliance Bank	86		2,095
11/07/16	Shelby, NC	Comfort Inn	Morgan Stanley	76		4,090
11/17/16	Rocky Mount, VA	Comfort Inn	Morgan Stanley	61		2,160
11/17/16	Farmville, VA	Days Inn	Morgan Stanley	59		2,390
11/18/16	Marion, IN	Comfort Suites	Huntington	62		2,992
11/30/16	Farmville, VA	Comfort Inn	Morgan Stanley	50		2,573
12/05/16	Princeton, WV	Quality Inn	Morgan Stanley	50		2,150
12/21/16	Burlington, IA	Super 8	Morgan Stanley	62		2,860
12/22/16	Atlanta, GA	Savannah Suites	Western Alliance Bank	164		2,925
			Total	1,864	$	61,427

Net proceeds, after expenses and debt repayment, totaled $19.2 million in 2016. In 2015, 17 hotels with 1,673 rooms were sold for gross proceeds of $54.7 million, and net proceeds, after expenses and debt repayment, of $25.3 million.  In 2014, 13 hotels with 1,265 rooms were sold for gross proceeds of $22.3 million, and net proceeds, after expenses and debt repayment, of $2.6 million.

Based on the criteria discussed in the footnotes to the consolidated financial statements, as of December 31, 2016, the Company had seven hotels classified as held for sale. At the beginning of 2016, the Company had 16 hotels held for sale and during the year classified an additional 16 hotels as held for sale. Twenty-five of these hotels were sold during 2016.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold in any period presented, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented.

As discussed in the footnotes to the consolidated financial statements, as of October 1, 2014 we adopted ASU 2014-08 which changes the criteria for reporting a discontinued operation such that only disposals representing a strategic shift in operations should be presented as discontinued operations subsequent to adoption.  As a result of this adoption, only the operations of hotels meeting the criteria to be considered held for sale prior to October 1, 2014 (excluding those subsequently reclassified as held for use), none of which remain unsold at December 31, 2016, are included in discontinued operations for all periods presented as no individual hotel disposition represents a strategic shift that has (or will have) a major effect on our operations or financial results.

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Operating Performance Metrics

The following table presents our RevPAR, ADR, and occupancy for our same store operations.  The comparisons for same store operations include all of our hotels owned as of December 31, 2016 with the exception of the three hotels we acquired in October 2015, the hotel acquired through our Atlanta JV in August 2016, and the hotel acquired in December 2016 (14 hotels included in same store results, seven of which are considered held for use (“HFU”) and seven of which are considered held for sale (“HFS”)).  All hotels included in same store operations were owned throughout each of the periods presented.  The performance metrics for the hotels acquired in 2015 and 2016 represent post-acquisition operations only and are separately presented.  Performance metrics presented for the hotel owned through our Atlanta JV reflect 100% of the operating results of the property including our interest and the interest of our joint venture partner.

	Year ended December 31,
	2016					2015					2014
	Occupancy	ADR		RevPAR		Occupancy	ADR		RevPAR		Occupancy	ADR		RevPAR
Same store HFU	65.52%	$	83.96	$	55.00	67.71%	$	82.33	$	55.75	67.83.%	$	76.15	$	51.65
Same store HFS	56.93%		70.43		40.10	60.45%		67.84		41.01	68.84%		63.12		43.45
Total same store	61.41%	$	77.96	$	47.87	64.22%	$	75.79	$	48.67	68.31%	$	69.85	$	47.72
October 2015 Acquisitions	72.92%	$	113.39	$	82.68	65.22%	$	116.48	$	75.97	-	$	-	$	-
Aloft Atlanta JV	69.87%	$	136.97	$	95.70	-	$	-	$	-	-	$	-	$	-
Aloft Leawood	68.20%	$	102.76	$	70.08	-	$	-	$	-	-	$	-	$	-

In the same store HFU portfolio of hotels, 2016 RevPAR decreased 1.3%, driven by a decrease of 3.2% in occupancy partially offset by an increase of 2.0% in ADR. This decrease in occupancy was driven by market challenges facing these hotels as a result of declines in the oil and gas, rail, and fracking industries as well as renovation interruption at three of these hotels during the 2016.  Despite the decrease in occupancy, the Company was able to increase ADR due to continued improvement in the economy and, to a lesser extent, decreases in inventory as a result of the ongoing renovations at certain hotels.

In the same store HFU portfolio of hotels, 2015 RevPAR increased 7.9% from 2014, driven by an increase in ADR of 8.1%.  In 2015, the Company focused on increasing ADR in light of an improving economy and increasing leisure and transient travel.

Results of Operations

Comparison of the year ended December 31, 2016 to the year ended December 31, 2015 (in thousands, except per share amounts)

	Year ended December 31,
	2016						2015
	Continuing operations		Discontinued operations		Total		Continuing operations		Discontinued operations		Total		Continuing operations variance
Revenue	$	50,647	$	6	$	50,653	$	58,714		2,923	$	61,637	$	(8,067)
Hotel and property operations expense		(37,092)		(4)		(37,096)		(43,367)		(1,946)		(45,313)		6,275
Depreciation and amortization expense		(5,190)		-		(5,190)		(5,400)		-		(5,400)		210
General and administrative expense		(5,792)		-		(5,792)		(5,493)		-		(5,493)		(299)
Acquisition and terminated transactions expense		(550)		-		(550)		(684)		-		(684)		134
Terminated equity transactions		-		-		-		(246)		-		(246)		246
Net gain (loss) on disposition of assets		23,132		681		23,813		4,798		2,997		7,795		18,334
Equity in loss of joint venture		(244)		-		(244)		-		-		-		(244)
Net gain on derivatives and convertible debt		6,377		-		6,377		11,578		-		11,578		(5,201)
Other income (expense)		55		-		55		114		-		114		(59)
Interest expense		(4,710)		(5)		(4,715)		(5,522)		(223)		(5,745)		812
Loss on extinguishment of debt		(2,187)		-		(2,187)		(213)		-		(213)		(1,974)
Impairment (loss) recovery		(1,477)		-		(1,477)		(3,829)		121		(3,708)		2,352
Income tax expense		(125)		-		(125)		-		-		-		(125)
Net earnings	$	22,844	$	678	$	23,522	$	10,450	$	3,872	$	14,322	$	12,394

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Revenue

During 2016, revenue from continuing operations decreased by $8,067 between the periods.  Revenue from properties acquired in and subsequent to the fourth quarter of 2015 increased $10,175 and revenue from our other held for use assets remained consistent, decreasing by $129.  Revenue from held for sale and sold properties decreased by $18,113 driven by property sales during the periods presented.

Expenses

Hotel and property operations expense from continuing operations decreased by $6,275, driven by declines resulting from sold hotels partially offset by increases related to newly acquired properties.  In totality, hotel and operations expenses from continuing operations decreased as a percentage of revenue by 0.6% because of increases in ADR and because the legacy hotels that remain in our portfolio and our recent acquisitions have higher operating margins than the hotels that were sold during the period.

Interest expense and depreciation expense from continuing operations decreased by $812 and $210, respectively, between the periods as a result of a net decrease in the size of the Company’s hotel portfolio and thus its debt levels.  Additionally, interest expense was favorably impacted by a decrease in the weighted average interest rate on total debt outstanding between the periods, from 5.31% at December 31, 2015 to 4.86% at December 31, 2016, as a result of debt repaid upon the sale of properties and the lower than average interest rate obtained on the Great Western Bank debt obtained as part of the Leawood Aloft acquisition in December 2016.

The $299 increase in general and administrative expense was driven by increased compensation expense resulting from compensation arrangements put into place with the new management team in 2015 as well as increased professional fees associated with increased business activity in 2016.  These increases were partially offset by decreased directors’ and officers’ insurance premiums and decreased employee recruiting costs following significant executive recruiting in 2015.

Acquisition and terminated transaction costs will fluctuate period to period based on our acquisition activities.  Acquisition costs typically consist of transfer taxes, legal fees, and other costs associated with acquiring a hotel property as well as transactions that were terminated during the year. 

The $246 of terminated equity transactions expense in 2015 consists of charges incurred in the preparation of an exchange offer commenced on August 6, 2015.  This offer was withdrawn on September 17, 2015.

Impairment Losses

In 2016, we incurred $1,477 of impairment losses, all of which was included in continuing operations.  In 2015, we incurred $3,708 of impairment losses, all of which was included in continuing operations with the exception of net recovery of $121 included in discontinued operations. All impairments recognized in both years related either to hotels held for sale at some point or sold during the year.

Dispositions

In 2016, twenty-four hotels were sold with gains totaling $24,256 and one hotel was sold with no gain as it had been previously impaired.  In 2015, eight hotels were sold with gains totaling $7,759 and nine hotels were sold with no gain as they had been previously impaired.

Net Gain on Derivatives and Convertible Debt

The change in net gain on derivatives and convertible debt was driven by the change in fair value of the derivative liabilities for the current year compared to the year ended December 31, 2015. The fair value of the derivative liabilities decreased by an aggregate of $6,680 during 2016 and $11,578 during 2015. The decreases in fair value in both periods was primarily a result of a decrease in the Company’s stock price during the periods, which in turn

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decreases the value assigned to the conversion feature of the Series C Preferred Stock and the outstanding common stock warrants throughout 2015 and while being marked to market in the first quarter of 2016.

Income Tax Expense

As of both December 31, 2016 and 2015, a full valuation allowance continued to be recorded against the net deferred tax asset due to the uncertainty of realization because of historical operating losses. As such, no income tax expense or benefit was recorded during either year with the exception of amounts totaling $125 for alternative minimum tax recorded in 2016 related to the use of net operating losses during the period. Management believes the combined federal and state income tax rate for the TRS will be approximately 38% and income tax benefit or expense will vary based on the taxable earnings or loss of the TRS.

Comparison of the year ended December 31, 2015 to the year ended December 31, 2014 (in thousands, except per share amounts)

	Year ended December 31,
	2015						2014
	Continuing operations		Discontinued operations		Total		Continuing operations		Discontinued operations		Total		Continuing operations variance
Revenue	$	58,714	$	2,923	$	61,637	$	58,799	$	13,579	$	72,378	$	(85)
Hotel and property operations expense		(43,367)		(1,946)		(45,313)		(44,391)		(10,410)		(54,801)		1,024
Depreciation and amortization expense		(5,400)		-		(5,400)		(6,437)		(112)		(6,549)		1,037
General and administrative expense		(5,493)		-		(5,493)		(4,192)		-		(4,192)		(1,301)
Acquisition and terminated transactions expense		(684)		-		(684)		-		-		-		(684)
Terminated equity transactions		(246)		-		(246)		(76)		-		(76)		(170)
Net gain on disposition of assets		4,798		2,997		7,795		(1)		2,751		2,750		4,799
Equity in loss of joint venture		-		-		-		-		-		-		-
Net gain on derivatives and convertible debt		11,578		-		11,578		(14,430)		-		(14,430)		26,008
Other income		114		-		114		116		-		116		(2)
Interest expense		(5,522)		(223)		(5,745)		(7,116)		(1,140)		(8,256)		1,594
Loss on extinguishment of debt		(213)		-		(213)		(158)		(120)		(278)		(55)
Impairment (loss) recovery		(3,829)		121		(3,708)		(1,269)		(1,652)		(2,921)		(2,560)
Income tax expense		-		-		-				-		-		-
Net earnings	$	10,450	$	3,872	$	14,322	$	(19,155)	$	2,896	$	(16,259)	$	29,605

Revenue

During 2015, revenue from continuing operations remained stable, decreasing by $85 between the periods.  Revenue from properties acquired in the fourth quarter of 2015 totaled $2,611 and revenue from our other held for use assets increased $1,117, largely driven by an improving economy and a mild winter in early 2015 which increased construction and special projects business at our properties.  Revenue from held for sale and sold properties included in continuing operations decreased by $3,813 driven by property sales during the periods presented.

Expenses

Hotel and property operations expense from continuing operations decreased by $1,024, driven by declines resulting from sold hotels.  The decrease in these expenses outpaced the decrease in revenue because of increases in ADR as discussed above and because the legacy hotels that remained in our portfolio  in 2015 and our 2015 acquisitions have higher operating margins than the hotels that were sold during the period.

Interest expense from continuing operations and depreciation expense from continuing operations decreased by $1,594 and $1,037, respectively, between the periods as a result of a net decrease in the size of the Company’s hotel portfolio and thus its debt levels.  Additionally, interest expense was favorably impacted by a decrease in the weighted average interest rate on total debt outstanding between the periods, from 6.48% at December 31, 2014 to 5.31% at December 31, 2015, as a result of debt repaid upon the sale of properties and debt refinancings during 2015.

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The $1,301 increase in general and administrative expense was driven by increased compensation expense resulting from compensation arrangements put into place with the new management team in 2015 and severance accrued for management who left the Company during the year, as well as recruiting expenses incurred in relation to those transitions.  Increased director and officer insurance premiums, increased travel, legal, and professional fees expense resulting from our name change, increased transactional activity during the year, and increased directors’ fees resulting from the increased size of our Board of Directors also contributed to this change.

Acquisition and terminated transaction costs will fluctuate period to period based on our acquisition activities.  Acquisition costs typically consist of transfer taxes, legal fees, and other costs associated with acquiring a hotel property as well as expenses incurred related to transactions that were terminated during the year.  The increase in these expenses in 2015 was a result of the three acquisitions consummated during the year as well as increased activity by management to review potential future transactions.

The $246 of terminated equity transactions expense in 2015 consists of charges incurred in the preparation of an exchange offer commenced on August 6, 2015.  This offer was withdrawn on September 17, 2015.

Impairment (Loss) Recovery

In 2015, we incurred $3,708 of impairment losses, all of which were included in continuing operations with the exception of net recovery of $121 included in discontinued operations. In 2014, we incurred impairment losses totaling $2,921, of which $1,269 was in continuing operations and $1,652 was in discontinued operations.  All impairments recognized in both years related either to hotels held for sale at some pointor sold during the year.

Dispositions

In 2015, eight hotels were sold with gains totaling $7,759 and nine hotels were sold that had been previously impaired and as such had no gains. In 2014, five hotels were sold with gains totaling $2,749 and eight hotels were sold that had been previously impaired and as such had no gains.

Net Gain (Loss) on Derivatives and Convertible Debt

The change in net gain (loss) on derivatives and convertible debt was driven by the relative changes in derivative value between the years ended December 31, 2015 and 2014. The fair value of the derivative liabilities decreased by an aggregate of $11,578 during 2015 and increased by $14,430 during 2014. The decrease in fair value in 2015 was primarily a result of a decrease in the Company’s stock price in 2015, which in turn decreases the value assigned to the conversion feature of the Series C Preferred Stock and the outstanding common stock warrants.The increase in fair value in 2014 was primarily due to the change in exercise price of the related warrants adjusted downward from $9.60 to $1.92, and to a change in the conversion price of the Series C Preferred Stock from $8.00 to $1.60, the public offering price of the common stock in the Company’s subscription rights offering concluded on June 6, 2014.

Income Tax Expense

As of December 31, 2015 and 2014, a full valuation allowance continued to be recorded against the net deferred tax asset due to the uncertainty of realization because of historical operating losses. As such, no income tax expense or benefit was recorded for the years ended December 31, 2015 or 2014.  Management believes the combined federal and state income tax rate for the TRS will be approximately 38% and income tax benefit or expense will vary based on the taxable earnings or loss of the TRS.

Non-GAAP Financial Measures

Non-GAAP financial measures are measures of our historical financial performance that are different from measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  We report Funds from Operations (“FFO”), Adjusted FFO (“AFFO”), Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, and Hotel EBITDA as non-GAAP measures that we believe are useful to investors as key measures of our operating results and which management

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uses to facilitate a periodic evaluation of our operating results relative to those of our peers.  Our non-GAAP measures should not be considered as an alternative to U.S. GAAP net earnings as an indication of financial performance or to U.S. GAAP cash flows from operating activities as a measure of liquidity.  Additionally, these measures are not indicative of funds available to fund cash needs or our ability to make cash distributions as they have not been adjusted to consider cash requirements for capital expenditures, property acquisitions, debt service obligations, or other commitments.

Funds from Operations (“FFO”) & Adjusted FFO (“AFFO”)

We calculate FFO in accordance with the standards established by the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net earnings computed in accordance with GAAP, excluding gains or losses from sales of real estate assets, impairment, and the depreciation and amortization of real estate assets.  FFO is calculated both for the Company in total and as FFO attributable to common shares and partnership units, which is FFO excluding preferred stock dividends.  AFFO is FFO attributable to common shares and partnership units adjusted to exclude items we do not believe are representative of the results from our core operations, such as non-cash gains or losses on derivative liabilities and convertible debt and cash charges for acquisition or equity raising costs. All REITs do not calculate FFO and AFFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO and AFFO for similar REITs.

We consider FFO and AFFO to be useful additional measures of performance for an equity REIT because they facilitate an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time.  Since real estate values have historically risen or fallen with market conditions, we believe that FFO and AFFO provide a meaningful indication of our performance.

The following table reconciles net earnings (loss) to FFO and AFFO for the years ended December 31 (in thousands). All amounts presented include both continuing and discontinued operations as well as our portion of the results of our unconsolidated Atlanta JV.

	Year ended December 31,
Reconciliation of Net earnings (loss) to FFO and AFFO	2016		2015		2014
Net earnings (loss)	$	23,522	$	14,322	$	(16,259)
Depreciation and amortization expense		5,190		5,400		6,549
Depreciation and amortization expense from JV		377		-		-
Net gain on disposition of assets		(23,813)		(7,795)		(2,750)
Net loss on disposition of assets from JV		2		-		-
Impairment loss		1,477		3,708		2,921
FFO		6,755		15,635		(9,539)
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(20,748)		(3,632)		(3,452)
FFO attributable to common shares and partnership units		(13,993)		12,003		(12,991)
Net (gain) loss on derivatives and convertible debt		(6,377)		(11,578)		14,430
Net loss on derivatives from JV		5		-		-
Acquisitions and terminated transactions expense		550		684		-
Acquisition expense from JV		239		-		-
Gain on debt conversion		-		-		(88)
Terminated equity transactions expense		-		246		76
AFFO attributable to common shares and partnership units	$	(19,576)	$	1,355	$	1,427

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Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), Adjusted EBITDA, and Hotel EBITDA

We calculate EBITDA and Adjusted EBITDA by adding back to net earnings certain non-operating expenses and certain non-cash charges which are based on historical cost accounting that we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods. In calculating EBITDA, we add back to net earnings interest expense, loss on debt extinguishment, income tax expense, and depreciation and amortization expense. In calculating Adjusted EBITDA, we adjust EBITDA to add back net gain/loss on disposition of assets, acquisition and terminated transactions expense, and terminated equity transactions expense, which are cash charges. We also add back impairment and gain or loss on derivatives and convertible debt, which are non-cash charges.  EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

We believe EBITDA and Adjusted EBITDA to be useful additional measures of our operating performance, excluding the impact of our capital structure (primarily interest expense), our asset base (primarily depreciation and amortization expense), and other items we do not believe are representative of the results from our core operations.

The Company further excludes general and administrative expenses, other non-operating income or expense, and certain hotel and property operations expenses that are not allocated to individual properties in assessing hotel performance (primarily certain general liability and other insurance costs, land lease costs, and office and banking fees) from Adjusted EBITDA to calculate Hotel EBITDA.  Hotel EBITDA is similar to the non-GAAP measure of Property Operating Income (“POI”) presented in filings prior to the September 30, 2016 Form 10-Q except that Hotel EBITDA also excludes the unallocated hotel and property operations expenses previously included in POI.  Hotel EBITDA, as presented, may not be comparable to similarly titled measures of other companies. 

Hotel EBITDA is intended to isolate property level operational performance over which the Company’s hotel operators have direct control.  We believe Hotel EBITDA is helpful to investors as it better communicates the comparability of our hotels’ operating results for all of the Company’s hotel properties and is used by management to measure the performance of the Company’s hotels and the effectiveness of the operators of the hotels.

The following table reconciles net earnings (loss) to EBITDA, Adjusted EBITDA, and Hotel EBITDA for the years ended December 31 (in thousands). All amounts presented include both continuing and discontinued operations as well as our portion of the results of our unconsolidated Atlanta JV.

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	Year ended December 31,
Reconciliation of Net earnings (loss) to EBITDA, Adjusted EBITDA, and Hotel EBITDA	2016		2015		2014
Net earnings (loss)	$	23,522	$	14,322	$	(16,259)
Interest expense		4,715		5,745		8,256
Interest expense from JV		618		-		-
Loss on debt extinguishment		2,187		213		278
Income tax expense		125		-		-
Depreciation and amortization expense		5,190		5,400		6,549
Depreciation and amortization expense from JV		377		-		-
EBITDA		36,734		25,680		(1,176)
Net gain on disposition of assets		(23,813)		(7,795)		(2,750)
Net loss on disposition of assets from JV		2		-		-
Impairment loss		1,477		3,708		2,921
Net (gain) loss on derivatives and convertible debt		(6,377)		(11,578)		14,430
Net loss on derivatives from JV		5		-		-
Acquisitions and terminated transactions expense		550		684		-
Acquisition expense from JV		239		-		-
Gain on debt conversion		-		-		(88)
Terminated equity transactions expense		-		246		76
Adjusted EBITDA		8,817		10,945		13,413
General and administrative expense		5,792		5,493		4,192
Other income		(55)		(114)		(28)
Unallocated hotel and property operations expense		467		495		319
Hotel EBITDA	$	15,021	$	16,819	$	17,896
Revenue	$	50,653	$	61,637	$	72,378
JV revenue		2,962		-		-
Condor and JV revenue	$	53,615	$	61,637	$	72,378
Hotel EBITDA as a percentage of revenue		28%		27%		25%

Liquidity and Capital Resources

Liquidity Requirements

We expect to meet our short-term liquidity requirements through net cash provided by operations, existing cash balances and working capital, short-term borrowings under our revolving credit agreement with Great Western Bank, and the release of restricted cash upon the satisfaction of usage requirements.  At December 31, 2016, the Company had $8.3 million of cash and cash equivalents on hand and $1.2 million of unused availability under its revolving credit agreement.  Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, recurring maintenance and capital expenditures necessary to maintain our hotels in accordance with brand standards, interest expense and scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, and the payment of dividends in accordance with the REIT requirements of the Internal Revenue Code and as required in connection with our Series D Preferred Stock(which, as previously discussed, was converted to common stock with $9.3 million of a new class of preferred shares, Series E Preferred Stock, issued on February 28, 2017). We presently expect to invest approximately $4.0 million to $5.0 million in capital expenditures related to hotel properties we currently own through March 31, 2018.

To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually.  In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws.  We have a general dividend

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policy of paying out approximately 100% of annual REIT taxable income.  The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.

Our longer-term liquidity requirements consist primarily of the cost of acquiring additional hotel properties, renovations and other one-time capital expenditures that periodically are made related to our hotel properties, and scheduled debt payments, including maturing loans.  Possible sources of liquidity to fund debt maturities and acquisitions and to meet other obligations include additional secured or unsecured debt financings and proceeds from public or private issuances of debt or equity securities. 

Prior to the consideration of any asset sales or our ability to refinance debt subsequent to December 31, 2016, contractual principal payments on our debt outstanding, including normal amortization, total $15.8 million through March 31, 2018, including the February 1, 2017 maturity of one of our WAB loans with a balance at December 31, 2016 of $4.8 million, the November 6, 2017 maturity of our Cantor loan with a balance at December 31, 2016 of $5.7 million, the December 1, 2017 maturity of our Morgan Stanley loan with a balance at December 31, 2016 of $0.9 million, and the February 1, 2018 maturity of one of our WAB loans with a balance at December 31, 2016 of $2.8million.  As discussed further in the Subsequent Events footnote of the consolidated financial statements, on January 27, 2017, the WAB loan due February 1, 2017 was extended to February 1, 2018.  Subsequently, on March 1, 2017, each of these pieces of debt was refinanced with a $90.0 million secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual principal payments on our debt outstanding at December 31, 2016 through March 31, 2018 totaled $1.1 million.

Sources and Uses of Cash

Cash provided by Operating Activities.  Our cash provided by operations was $2.7 million, $5.0 million, and $5.5 million for the years ended December 31, 2016, 2015, and 2014, respectively.  These changes in operating cash flows were driven by changes in net income, after adjusting for non-cash items, which decreased by $2.0 million in 2016 from 2015 and decreased by $0.9 million in 2015 from 2014.  Other changes in operating cash flows between the periods were due to miscellaneous changes in property tax and insurance escrow balances and accounts receivable.

Cash provided by Investing Activities.  Our cash provided by investing activities was $21.9 million, $5.4 million, and $17.9 million for the years ended December 31, 2016, 2015, and 2014, respectively.  The lower cash flows in 2015 from the other periods presented was primarily a result of differences in the net cash spent on acquisitions and investment in joint venture less cash received from asset sales which, net, totaled $26.9 million in 2016, $10.7 million in 2015, and $21.3 million in 2014.

Cash used in Financing Activities.  Our cash used by financing activities was $21.2 million, $5.7 million, and $23.3 million for the years ended December 31, 2016, 2015, and 2014, respectively.  This increase in cash flows in 2016 was primarily related to cash received in the first quarter of 2016 related to the Series D Preferred Stock issuance less cash used to redeem the Series A and B Preferred Stock and cash dividends paid on the Series C and Series D Preferred Stock, which together had a net impact to financing cash flows of $5.1 million, as well as decreased net principal payments on long-term and revolving debt of $19.0 million as a result of decreased net revolver activity as well as decreased debt repayments required upon the sale of hotel properties.  These increases were partially offset with prepayment penalties of $1.8 million paid in 2016 upon the sale of properties encumbered by certain of the Company’s debt.  From 2014 to 2015, debt repayments increased due to increased property sales.  However, this increase in debt repayments was offset by increased cash inflows for new debt obtained, including the debt obtained in connection with the 2015 acquisitions which totaled $15.1 million excluding debt assumed.

Outstanding Indebtedness

At December 31, 2016, we had long-term debt of $57.4 million associated with assets held for use with a weighted average term to maturity of 2.9 years and a weighted average interest rate of 4.89%.  Of this total, at December 31, 2016, $26.1 million is fixed rate debt with a weighted average term to maturity of 2.8 years and a weighted average interest rate of 4.78% and $31.3 million is variable rate debt with a weighted average term to maturity of 2.9 years

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and a weighted average interest rate of 4.98%.  At December 31, 2015, we had long-term debt of $45.5 million associated with assets held for use with a weighted average term to maturity of 3.3 years and a weighted average interest rate of 4.98%.Of this total, at December 31, 2015, $12.5 million is fixed rate debt with a weighted average term to maturity of 1.6 years and a weighted average interest rate of 5.63% and $33.0 million is variable rate debt with a weighted average term to maturity of 3.9 years and a weighted average interest rate of 4.74%. 

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 based on its contractual maturity although the balances are expected to be repaid within one year upon the sale of the related hotel properties.  Aggregate annual principal payments on debt for the next five years and thereafter are as follows (in thousands):

	Held for sale		Held for use		Total
2017	$	1,574	$	11,333	$	12,907
2018		2,603		12,065		14,668
2019		52		1,120		1,172
2020		1,771		19,199		20,970
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

Financial Covenants

The Company’s debt agreements contain requirements as to the maintenance of minimum levels of debt service and fixed charge coverage and required loan-to-value and leverage ratios, and place certain restrictions on dividends.  As of December 31, 2016, we were in compliance with our financial covenants.

If we fail to pay our indebtedness when due, fail to comply with covenants or otherwise default on our loans, unless waived, we could incur higher interest rates during the period of such loan defaults, be required to immediately pay our indebtedness, and ultimately lose our hotels through lender foreclosure if we are unable to obtain alternative sources of financing with acceptable terms. Our Great Western Bank and certain of our WAB facilities contain cross-default provisions which would allow Great Western Bank and WAB to declare a default and accelerate our indebtedness to them if we default on our other loans and such default would permit that lender to accelerate our indebtedness under any such loan. As of December 31, 2016, we are not in default of any of our loans.

Significant Debt Transactions

During 2016, the Company sold 25 hotel properties for combined gross sales proceeds of $61.4 million.  Net proceeds were used to pay off the associated loans totaling $37.6 million, to fund acquisitions, to reduce the balance of the revolving credit facility with Great Western Bank, and for general corporate purposes.These dispositions, as well as adjustments required to remain in compliance with the required debt service ratio, decreased the total availability under the Great Western Bank revolver from $5.7 million at December 31, 2015 to $1.2 million at December 31, 2016.

On December 14, 2016, the purchase of the Aloft Leawood / Overland Park was financed, in part, with the proceeds of mortgage loans provided by Great Western Bank in an aggregate principal amount of $15.9 million.  The loans require monthly principal and interest payments based on a 25-year amortization (in the case of the $14.3 million loan) and 7-year amortization (in the case of the $1.6 million loan), with the principal balances due and payable on December 1, 2021.  The term of the loans may be extended for an additional two years subject to interest rate adjustments.  The loans bear interest at a fixed rate of 4.33% per annum and are non-recourse, as long as a certain pre-dividend debt service coverage ratio is met and with the exception of losses resulting from fraud, theft, and involuntary bankruptcy.

Additionally, as discussed further in the Subsequent Events footnote to the consolidated financial statements, two significant debt events occurred in early 2017.

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On January 27, 2017, the WAB loan with a balance of $4.8 million at December 31, 2016 due February 1, 2017 was extended to February 1, 2018.

On March 1, 2017, a significant portion of the Company’s debt (including all debt outstanding at December 31, 2016 with the exception of the two variable rate WAB loans and the two fixed rate Great Western Bank loans) was refinanced with a $90.0 million secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual debt maturities related to the debt outstanding at December 31, 2016 were as follows:

	Held for sale		Held for use		Total
2017	$	-	$	916	$	916
2018		-		930		930
2019		6,000		27,691		33,691
2020		-		14,180		14,180
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

The credit agreement provides for a $90.0 million senior secured credit facility and includes an accordion feature that would allow the facility to be increased to $400.0 million with additional lender commitments.  Availability under the facility is based on a borrowing base formula for the pool of hotel properties securing the facility.  As of the closing date, the collateral pool consisted of 14 hotel properties.  As of the closing date, four hotels were excluded from the borrowing base until certain conditions are satisfied and the availability under the facility was $34.3 million.  The four hotels are expected to be added to the borrowing base within days after the closing and the availability under the facility is expected to increase to $41.0 million.  The facility is guaranteed by the Company and its material subsidiaries that do not have stand-alone financing.  Prior to the occurrence of specific capital achievements, borrowings under the facility accrue interest, at the Company’s option, at either LIBOR plus 3.95% or a base rate plus 2.95%.  Thereafter, borrowings bear interest based on a leverage-based pricing grid, at the Company’s option, at either LIBOR plus a spread ranging from 2.25% to 3.00% (depending on leverage) or a base rate plus a spread ranging from 1.25% to 2.00% (depending on leverage).  The facility matures in two years and has an automatic one-year extension upon the completion of specific capital achievements.  The facility has two additional one-year extension options following additional capital achievements.  The facility contains customary representations and warranties, covenants and events of default. 

On March 1, 2017, the Company borrowed $34.3 million under the facility to repay existing indebtedness and pay reserves costs related to the closing of the facility.  The Company anticipates using borrowings under the facility to acquire three out of the four Home2 Suites hotels currently under contract to be acquired, which will be added to the collateral pool for the facility.  Borrowings under the facility can also be used for future acquisitions and general corporate purposes.

Significant Equity Transactions

On March 16, 2016, the Company entered into a series of agreements providing for:

· the issuance and sale of Condor’s Series D Preferred Stock under a private transaction to SREP, an affiliate of StepStone Group LP;

· the exchange of all of Condor’s outstanding Series C Preferred Stock for Series D Preferred Stock; and

· the cash redemption of all of Condor’s outstanding Series A Preferred Stock and Series B Preferred Stock.

In connection with these transactions, the Company and SREP entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) dated March 16, 2016 pursuant to which Condor issued and sold 3,000,000 shares of Series D Preferred Stock to SREP on March 16, 2016 for an aggregate purchase price of $30.0 million. The Stock Purchase Agreement required that $20.2 million of the purchase price be deposited into an escrow account for the purpose of effecting the redemption of the Series A and Series B Preferred Stock and that the remaining amount of the purchase price be delivered to Condor. 

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Simultaneously, the Company entered into an agreement (the “Exchange Agreement”) with RES pursuant to which all 3,000,000 outstanding shares of Series C Preferred Stock were exchanged for 3,000,000 shares of Series D Preferred Stock. Under the Exchange Agreement, in lieu of payment of accrued and unpaid dividends in the amount of $4.9 million on the Series C Preferred Stock, Condor (a) paid to RES an amount of cash equal to $1.5 million, (b) issued to RES 245,156 shares of Series D Preferred Stock (such that RES, IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”), and their affiliates do not beneficially own in excess of 49% of the voting stock of Condor) and (c) issued to RES a convertible promissory note, bearing interest at 6.25% per annum, in the principal amount of $1.0 million.

Pursuant to the Stock Purchase Agreement, on April 15, 2016, Condor redeemed all of the outstanding Series A and Series B Preferred Stock, in accordance with redemption notices issued on March 16, 2016, as follows:

· all 803,270 outstanding shares of the Series A Preferred Stock at the redemption price of $10.00 per share plus $2.084940 per share in accrued and unpaid dividends (plus compounded interest) through the redemption date for a total redemption price of $9.7 million; and

· all 332,500 outstanding shares of the Series B Preferred Stock at the redemption price of $25.00 per share plus $6.354167 per share in accrued and unpaid dividends through the redemption date for a total redemption price of $10.5 million.

The terms of the convertible promissory note and the Series D Preferred Stock are discussed in Note 7, Convertible Debt at Fair Value, and Note 10, Preferred Stock, to our consolidated financial statements.

Additionally, on January 24, 2017, the Company exchanged 150,540 new warrants (the “New Warrants”) to purchase common stock of the Company for 3,750,000 warrants (the “Old Warrants”, see further discussion in Note 10, Preferred Stock, to our consolidated financial statements) held by RES.The number of New Warrants issued in exchange for the Old Warrants equals the number of shares of common stock issuable upon exercise of the Old Warrants pursuant to a cashless exercise provisions of the Old Warrants. The New Warrants are exercisable for 150,540 shares of common stock, have an exercise price of $.001 for each common share and expire on January 24, 2019.

As discussed further in the Subsequent Events footnote of the consolidated financial statements, on February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted their shares into 39,032,225 shares of common stock at $1.60 per share pursuant to the terms of the preferred stock.  The terms of the Series D Preferred Stock provided for automatic conversion following certain future common stock offerings, and also provided for potential additional payments to the holders depending on the sales price of common stock in the offerings. As a result of the voluntary conversion, the holders are no longer entitled to the potential payments. To induce the holders of the Series D Preferred Stock to voluntarily convert their shares, the Company issued the holders $9.3 million of a new series of preferred stock, the Series E Preferred Stock.

The Series E Preferred Stock ranks senior to the Company’s common stock and any other preferred stock issuances and receives preferential cumulative cash dividends at a rate of 6.25% per annum, payable quarterly of the $10.00 face value per share.  If the Company fails to pay a dividend then during the period that dividends are not paid, the dividend rate increases to 12.5%, if specific equity offering or offerings have not occurred, and increases 9.50% per annum if such equity or equity offerings have occurred. Dividends on the Series E Preferred Stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement.  Subject to certain shareholder approvals, required under Nasdaq Marketplace Rules, which Condor will seek and expects to obtain at the next annual shareholders meeting, each share of Series E Preferred Stock is convertible, at the option of the holder, at any time on or after February 28, 2019, into a number of shares of common stock determined by dividing the conversion price of $2.13 into an amount equal to the $10.00 face value per share plus accrued and unpaid dividends, if any. Upon liquidation, each share of Series E Preferred Stock is entitled to $10.00 per share, accrued and unpaid dividends, and an additional amount based on liquidation preference that the holders may have foregone by converting their Series D Preferred Stock into common stock, as adjusted for stock appreciation and dividends paid on the common stock.  The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends. Following a specific equity offering or offerings, from time to time a number of shares of Series E Preferred Stock automatically converts into common stock if the common stock trades

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at 120% of the conversion price for 60 trading days, and the number of shares converted will be determined by certain trading volumes measures. The Company has rights, following a specific equity offering or offerings, to redeem up to 490,250 shares of the Series E Preferred Stock at prices from 110% to 130% of its liquidation value, and the holders have put rights commencing March 16, 2021 to put the Series E Preferred Stock to the Company at 130% of its liquidation preference, which the Company can satisfy with cash or common stock.  The Series E Preferred Stock votes as a class on matters generally affecting the Series E Preferred Stock, and as long as 434,750 shares of Series E Preferred Stock (47% of the originally issued shares of Series E Preferred Stock) remain outstanding, then 75% approval of the Series E Preferred Stock will be required to approve merger, consolidation, liquidation or winding up of Condor, related party transactions exceeding $120,000, payment of dividends on common stock except from funds from operations or to maintain REIT status, the grant of exemptions from Condor’s charter limitation on ownership of 9.9% of any class or series of its securities (exclusive of persons currently holding exemptions), issuance of preferred stock, or commitment or agreement to do any of the foregoing.

To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually.  In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws.  We have a general dividend policy of paying out approximately 100% of annual REIT taxable income.  The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.

Contractual Obligations

Below is a summary of certain obligations that will require capital as of December 31, 2016 (in thousands):

			Payments due by period
Contractual obligations	Total		2017		2018-2019		2020-2021		After 2021
Long-term debt including interest (1)	$	64,905	$	13,788	$	16,378	$	34,739	$	-
Corporate office leases		561		156		297		108		-
Total contractual obligations	$	65,466	$	13,944	$	16,675	$	34,847	$	-

(1) Interest rate payments on our variable rate debt have been estimated using interest rates in effect at December 31, 2016  

Long-term debt and land lease payments above include only amounts related to properties classified as held for use.  Future debt payments, including interest, related to the seven held for sale properties that are expected to be sold within the next 12 months totaling $6.4 million and future obligations on the one land lease related to a held for sale property totaling $1.8 million are not included in the table above.

We have various standing or renewable contracts with vendors. These contracts are all cancelable with immaterial or no cancellation penalties. Contract terms are generally one year or less.  We also have management agreements in place for the management and operation of our hotel properties.

Inflation

We rely on the performance of our hotels to increase revenues to keep pace with inflation.  Generally, our hotel operators possess the ability to adjust room rates daily to reflect the effects of inflation.  However, competitive pressures may limit the ability of our management companies to raise room rates.

Off Balance Sheet Financing Transactions

We have not entered into any off balance sheet financing transactions.

Critical Accounting Policies

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Our consolidated financial statements have been prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that effect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that are believed to be reasonable under the circumstances.

Critical accounting policies are those that are both important to the presentation of our financial condition and results of operations and require management’s most difficult, complex, or subjective judgments.  We have identified the following principal accounting policies that have a material effect on our consolidated financial statements.

Investment in Hotel Properties

At the time of acquisition, the Company allocates the purchase price of assets to asset classes based on the fair value of the acquired real estate, furniture, fixtures and equipment, and intangible assets, if any, and the fair value of liabilities assumed, including debt. Acquisition date fair values are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers including discounted cash flows and capitalization rates.  Acquisition costs are expensed as incurred.

The Company’s investments in hotel properties are recorded at cost and are depreciated using the straight-line method over an estimated useful life of 15 to 40 years for buildings and improvements and 3 to 12 years for furniture, fixtures, and equipment.

Development and construction costs of properties in development are capitalized including, where applicable, direct and indirect costs, including real estate taxes and interest costs.  Development and construction costs and costs of significant improvements, replacements, or renovations are capitalized while costs of maintenance and repairs are expensed as incurred.

On a quarterly basis, the Company reviews the carrying value of each held for use hotel to determine if certain circumstances, known as triggering events, exist indicating impairment to the carrying value of the hotel or that depreciation periods should be modified.  These triggering events include a significant change in the cash flows of or a significant adverse change in the business climate for a hotel.  If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on these undiscounted future cash flows. If the investment is not recoverable based on this analysis, an impairment charge will be taken, if necessary, to reduce the carrying value of the hotel to the hotel’s fair value.

Investment in Joint Venture

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a variable interest entity (“VIE”) or through our voting interest in a voting interest entity (“VOE”) and we have the ability to provide significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of our investment in, advances to, and commitments to the investee. Pursuant to our Atlanta JV agreement, allocations of profits and losses of our Atlanta JV may be allocated disproportionately to nominal ownership percentages due to specified preferred return rate thresholds.

On an annual basis or at interim periods if events and circumstances indicate that the investment may be impaired, the Company reviews the carrying value of its investment in unconsolidated joint venture to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. The investment is considered impaired if its estimated fair value is less than the carrying amount of the investment and that impairment is other than temporary.

47

Assets Held for Sale and Discontinued Operations

A hotel is considered held for sale (a) when a contract for sale is entered into, a substantial, nonrefundable deposit has been committed by the purchaser, and sale is expected to occur within one year, or (b) if management has committed to and is actively engaged in a plan sell the property, the property is available for sale in its current condition, and it is probable the sale will be completed within one year.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold in any period presented, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented.

Depreciation of ourhotels is discontinued at the time they are considered held for sale.  If the fair value of the held for sale property less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss.  Impairment losses on held for sale properties may be subsequently recovered up to the amount of the cumulative impairment losses taken while the property is held for sale should future revisions to fair value estimates be required.  If active marketing ceases or the property no longer meets the criteria to be classified as held for sale, the property is reclassified to held for use and measured at the lower of its (a) carrying amount before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for use, or (b) its fair value at the date of the subsequent decision not to sell.

Historically, we have presented the results of operations of hotel properties that have been sold or considered held for sale as discontinued operations.  In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in ASU 2014-08 change the criteria for reporting a discontinued operation and require new disclosures of both discontinued operations and certain other significant disposals that do not meet the definition of a discontinued operation. Only disposals representing a strategic shift in operations that have a major effect on an entity’s operations and financial results should be presented as discontinued operations subsequent to adoption. The Company adopted the pronouncement on October 1, 2014.  As a result of this early adoption, only the operations of hotels meeting the criteria to be considered held for sale prior to October 1, 2014 are included in discontinued operations for all periods presented as no individual hotel disposition represents a strategic shift in operations or has a major effect on our operations or financial results.

Gains on the sale of real estate are recognized when a property is sold, provided that the profit is determinable, meaning that collectability of the sales price is reasonably assured or can be estimated, and that the earnings process is complete, meaning that the seller is not obligated to perform significant activities after the sale in order to earn the profit.If these criteria are not met, the timing of the sale is determined based on various criteria related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the property. If the sales criteria are not met, the gain is deferred and the finance, installment, or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent we sell a property and retain a partial ownership interest in the property, we generally recognize a  gain to the extent of the third party ownership interest.

Income Taxes

The Company qualifies and intends to continue to qualify as a REIT under applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  If we fail to quality as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will be unable to re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT, unless we satisfy certain relief provisions.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.  Except with respect to the TRS, the Company does not believe that it will be liable for significant federal or state income taxes in future years.

48

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 IRS 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.

Taxable income from non-REIT activities managed through the TRS, which is taxed as a C-Corporation, is subject to federal, state, and local income taxes.  We account for the federal income taxes of our TRS using the asset and liability method.  Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled.  However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible.  In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on its technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statement of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement to the uncertain tax position by the applicable taxing authority or by expiration of the applicable statute of limitations.

New Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  The original updated accounting guidance was effective for annual and interim reporting periods in fiscal years beginning after December 15, 2016, however, in July 2015, the FASB approved a one year delay of the effective date to fiscal years beginning after December 15, 2017.  As such, the standard will be effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has begun to evaluate each of its revenue streams under the new model.  Based on preliminary assessments, the Company does not expect the adoption of this guidance to materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales.  Furthermore, for real estate sales to third parties, primarily a result of disposition of real estate in exchange for cash with few contingencies, we do not expect the standard to significantly impact the recognition of or accounting for these sales.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes most existing lease guidance in U.S. GAAP when it becomes effective. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability and additional qualitative and quantitative disclosures. ASU 2016-02 is effective for the Company for annual periods in fiscal years beginning after December 15, 2019, permits early adoption, and mandates a modified retrospective transition method. The Company is required to adopt ASU 2016-02 on January 1, 2020. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accountedfor as acquisitions of assets or business combinations. This standard will be effective for annual periods

49

beginning after December15, 2017, although early adoption is permitted. We are evaluating the effect of ASU 2017-01 on our consolidated financialstatements and related disclosures.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices, and other market changes that effect market-sensitive instruments.  At December 31, 2016, our market risk arises primarily from interest rate risk relating to variable rate borrowings and the market risk related to our convertible debt that fair value will fluctuate following changes in the Company’s common stock price or changes in interest rates.

Interest Rate Sensitivity

We seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs by closely monitoring our variable rate debt and converting such debt to fixed rates when we deem such conversion advantageous.  From time to time, we may enter into interest rate swap agreements or other interest rate hedging agreements.  At December 31, 2016, we have an interest rate swap in place which effectively locks the variable interest rate on our Huntington Bank debt (balance of $7.4 million) at 4.13% and an interest rate cap in place which caps the 30-day LIBOR interest rate on our Latitude debt (December 31, 2016 balance of $11.1 million) at 1.0%. We do not intend to enter into derivative or interest rate transactions for speculative purposes.

The table below provides information about financial instruments that are sensitive to changes in interest rates.  The table presents scheduled maturities, including the amortization of principal and related weighted-average interest rates for the debt maturing in each specified period, excluding $6.0 million of debt related to hotel properties held for sale (dollars in thousands):

	2017			2018			2019			2020			2021			Total
Fixed rate debt	$	10,700		$	545		$	569		$	593		$	13,672		$	26,079
Average fixed interest rate		5.44	%		4.33	%		4.33	%		4.33	%		4.33	%		4.78	%
Variable rate debt	$	633		$	11,520		$	551		$	18,606		$	-		$	31,310
Average variable interest rate		4.53	%		6.86	%		3.87	%		3.87	%		-	%		4.98	%
Total debt	$	11,333		$	12,065		$	1,120		$	19,199		$	13,672		$	57,389
Total average interest rate		5.39	%		6.74	%		4.10	%		3.88	%		4.33	%		4.89	%

At December 31, 2016, approximately 54.9% of our outstanding debt, excluding debt related to hotel properties held for sale, is subject to fixed interest rates or effectively locked with an interest rate swap, while 45.1% of our debt is subject to floating rates.  Assuming no increase in the level of our variable debt outstanding at December 31, 2016 and after giving effect to our interest rate swap, if interest rates increased by 1.0% our cash flow related to hotel properties held for use would decrease by approximately $0.3 million per year.

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Condor Hospitality Trust, Inc. and Subsidiaries

Index to Consolidated Financial Statements and Schedule III

	Page
Report of Independent Registered Public Accounting Firm	52
Consolidated Balance Sheets as of December 31, 2016 and 2015	53
Consolidated Statements of Operations for years ended December 31, 2016,  2015, and 2014	54
Consolidated Statements of Equity for the years ended December 31, 2016,  2015, and 2014	55
Consolidated Statements of Cash Flows for the years ended December 31, 2016,  2015, and 2014	56
Notes to Consolidated Financial Statements	57
Schedule III – Real Estate and Accumulated Depreciation	92
Notes to Schedule III – Real Estate and Accumulated Depreciation	94

51

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

Condor Hospitality Trust, Inc.:

We have audited the accompanying consolidated balance sheets of Condor Hospitality Trust, Inc. and subsidiaries (the Company) as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2016.  In connection with our audits of the consolidated financial statements, we have also audited the related financial statement schedule, Schedule III- Real Estate and Accumulated Depreciation These consolidated financial statements and the financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Condor Hospitality Trust, Inc. and subsidiaries as of December 31, 2016 and 2015, and the results of their operations and their cash flows for each of the years in the three‑year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for discontinued operations as of October 1, 2014 on a prospective basis due to the adoption of Accounting Standards Update 2014-08.

(signed) KPMG LLP

McLean, Virginia
March 1, 2017

52

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Balance Sheet

(In thousands, except share and per share data)

		As of December 31,
	2016		2015
Assets
Investment in hotel properties, net	$	96,158	$	75,899
Investment in unconsolidated joint venture		9,036		-
Cash and cash equivalents		8,326		4,870
Restricted cash, property escrows		5,350		3,776
Accounts receivable, net of allowance for doubtful accounts of $21 and $10		1,416		1,169
Prepaid expenses and other assets		1,666		1,832
Investment in hotel properties held for sale, net		18,713		54,800
Total Assets	$	140,665	$	142,346
Liabilities and Equity
Liabilities
Accounts payable, accrued expenses, and other liabilities	$	5,823	$	5,419
Derivative liabilities, at fair value		8		8,759
Convertible debt, at fair value		1,315		-
Long-term debt, net of deferred financing costs		56,775		44,667
Long-term debt related to hotel properties held for sale, net of deferred financing costs		5,945		41,344
Total Liabilities		69,866		100,189
Redeemable preferred stock:
10% Series B, 800,000 shares authorized; $.01 par value, 332,500 shares outstanding, liquidation preference of $10,182 at December 31, 2015		-		7,662
Equity
Shareholders' Equity
Preferred stock, 40,000,000 shares authorized:
8% Series A, 2,500,000 shares authorized, $.01 par value, 803,270 shares outstanding, liquidation preference of $9,485 at December 31, 2015		-		8
6.25% Series C, 3,000,000 shares authorized, $.01 par value, 3,000,000 shares outstanding, liquidation preference of $34,492 at December 31, 2015		-		30
6.25% Series D, 6,700,000 shares authorized, $.01 par value, 6,245,156 shares outstanding, liquidation preference of $63,427 at December 31, 2016		61,333		-
Common stock, $.01 par value, 200,000,000 shares authorized; 4,956,835 and 4,941,878 shares outstanding		50		49
Additional paid-in capital		118,613		138,387
Accumulated deficit		(112,024)		(105,858)
Total Shareholders' Equity		67,972		32,616
Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $2,008 and $1,197		2,827		1,879
Total Equity		70,799		34,495
Total Liabilities and Equity	$	140,665	$	142,346

See accompanying notes to consolidated financial statements.

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Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statement of Operations

(In thousands, except per share data)

asd

	Year ended December 31,
	2016		2015		2014
Revenue
Room rentals and other hotel services	$	50,647	$	58,714	$	58,799
Operating expenses
Hotel and property operations		37,092		43,367		44,391
Depreciation and amortization		5,190		5,400		6,437
General and administrative		5,792		5,493		4,192
Acquisition and terminated transactions		550		684		-
Terminated equity transactions		-		246		76
Total operating expenses		48,624		55,190		55,096
Operating income		2,023		3,524		3,703
Net gain (loss) on disposition of assets		23,132		4,798		(1)
Equity in loss of joint venture		(244)		-		-
Net gain (loss) on derivatives and convertible debt		6,377		11,578		(14,430)
Other income		55		114		116
Interest expense		(4,710)		(5,522)		(7,116)
Loss on debt extinguishment		(2,187)		(213)		(158)
Impairment loss		(1,477)		(3,829)		(1,269)
Earnings (loss) from continuing operations before income taxes		22,969		10,450		(19,155)
Income tax expense		(125)		-		-
Earnings (loss) from continuing operations		22,844		10,450		(19,155)
Gain from discontinued operations, net of tax		678		3,872		2,896
Net earnings (loss)		23,522		14,322		(16,259)
(Earnings) loss attributable to noncontrolling interest		(727)		(1,197)		23
Net earnings (loss) attributable to controlling interests		22,795		13,125		(16,236)
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(20,748)		(3,632)		(3,452)
Net earnings (loss) attributable to common shareholders	$	2,047	$	9,493	$	(19,688)
Earnings per Share
Continuing operations - Basic	$	0.28	$	1.24	$	(5.79)
Discontinued operations - Basic		0.13		0.70		0.74
Total - Basic Earnings per Share	$	0.41	$	1.94	$	(5.05)
Continuing operations - Diluted	$	0.12	$	(0.15)	$	(5.79)
Discontinued operations - Diluted		0.02		0.15		0.74
Total - Diluted Earnings per Share	$	0.14	$	-	$	(5.05)

See accompanying notes to consolidated financial statements.

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Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statement of Equity

(In thousands)

	Years ended December 31, 2016, 2015, and 2014
	Shares of preferred stock		Preferred  stock		Shares of common Stock		Common stock		Additional paid-in capital		Accumulated Deficit		Total shareholders' equity		Noncontrolling interest		Total equity
Balance at December 31, 2013		3,803	$	38		2,898	$	29	$	135,293	$	(102,747)	$	32,613	$	113	$	32,726
Stock-based compensation		-		-		8		-		34		-		34		-		34
Rights offering		-		-		1,787		18		2,573		-		2,591		-		2,591
Net loss		-		-		-		-		-		(16,236)		(16,236)		(23)		(16,259)
Balance at December 31, 2014		3,803	$	38		4,693	$	47	$	137,900	$	(118,983)	$	19,002	$	90	$	19,092
Stock-based compensation		-		-		21		-		143		-		143		-		143
Long-term incentive plan		-		-		-		-		-		-		-		142		142
Issuance of common stock		-		-		228		2		344		-		346		-		346
Issuance of common units		-		-		-		-		-		-		-		450		450
Net income		-		-		-		-		-		13,125		13,125		1,197		14,322
Balance at December 31, 2015		3,803	$	38		4,942	$	49	$	138,387	$	(105,858)	$	32,616	$	1,879	$	34,495
Stock-based compensation		-		-		15		1		133		-		134		-		134
Long-term incentive plan		-		-		-		-		-		-		-		171		171
Issuance of common units		-		-		-		-		-		-		-		50		50
Common dividends declared ($0.07 per share)		-		-		-		-		-		(347)		(347)		-		(347)
Series D Preferred Stock dividends declared		-		-		-		-		-		(3,090)		(3,090)		-		(3,090)
Redemption of Series A and B Preferred Stock		(803)		(8)		-		-		(7,390)		(5,107)		(12,505)		-		(12,505)
Exchange of Series C and issuance of Series D Preferred Stock		3,245		61,303		-		-		(12,517)		(20,417)		28,369		-		28,369
Net income		-		-		-		-		-		22,795		22,795		727		23,522
Balance at December 31, 2016		6,245	$	61,333		4,957	$	50	$	118,613	$	(112,024)	$	67,972	$	2,827	$	70,799

See accompanying notes to consolidated financial statements.

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Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

	Year ended December 31,
	2016		2015		2014
Cash flows from operating activities:
Net earnings (loss)	$	23,522	$	14,322	$	(16,259)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization expense		5,190		5,400		6,549
Net gain on disposition of assets		(23,813)		(7,794)		(2,750)
Net (gain) loss on derivatives and convertible debt		(6,377)		(11,578)		14,430
Equity in loss of joint venture		244		-		-
Amortization of deferred financing costs		597		714		1,292
Amortization of debt discount		-		-		38
Loss on extinguishment of debt		2,187		213		278
Gain on debt conversion		-		-		(88)
Impairment loss		1,477		3,708		2,921
Stock-based compensation and long term incentive plan expense		305		285		34
Amortization of warrant issuance cost		12		58		58
Changes in operating assets and liabilities:
(Increase) decrease in assets		(244)		442		(63)
Decrease in liabilities		(432)		(800)		(933)
Net cash provided by operating activities		2,668		4,970		5,507
Cash flows from investing activities:
Additions to hotel properties		(3,446)		(3,853)		(3,034)
Investment in joint venture		(9,280)		-		-
Acquisitions of hotel properties		(22,450)		(42,592)		-
Proceeds from sale of hotel assets		58,593		53,306		21,316
Net changes in capital expenditure escrows		(1,475)		(1,463)		(340)
Net cash provided by investing activities		21,942		5,398		17,942
Cash flows from financing activities:
Deferred financing costs		(136)		(865)		(485)
Principal payments on long-term debt		(39,965)		(51,868)		(22,207)
Proceeds from long-term debt		15,925		44,620		-
Payments on revolving debt		(10,305)		(39,056)		(30,843)
Proceeds from revolving debt		10,198		41,152		29,692
Debt early extinguishment penalties		(1,752)		-		(120)
Series D Preferred Stock issuance		28,881		-		-
Series A and B Preferred Stock redemption, including accumulated dividends		(20,167)		-		-
Cash dividends paid to common shareholders		(198)		-		-
Cash dividends paid to Series C and D Preferred shareholders		(3,598)		-		-
Proceeds from common stock issued in rights offering		-		346		860
Rights offering issuance costs		-		-		(218)
Other items		(37)		-		-
Net cash used in financing activities		(21,154)		(5,671)		(23,321)
Increase in cash and cash equivalents		3,456		4,697		128
Cash and cash equivalents, beginning of year		4,870		173		45
Cash and cash equivalents, end of year	$	8,326	$	4,870	$	173
Supplemental cash flow information
Interest paid, net of amounts capitalized	$	4,229	$	5,085	$	7,119
Income taxes paid	$	37	$	-	$	-
Schedule of noncash investing and financing activities:
Unamortized debt discount	$	-		-	$	113
Convertible loan embedded derivative	$	-	$	-	$	(151)
Debt converted to common stock	$	-	$	-	$	(2,000)
Common stock issued on conversion of debt	$	-	$	-	$	1,950
Debt assumed in acquisitions	$		$	11,220	$	-
Fair Value of CHLP operating units issued in acquisitions	$	50	$	450	$	-
In kind dividends deemed on preferred stock	$	20,218	$	-	$	-

See accompanying notes to consolidated financial statements.

56

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

NOTE 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Condor Hospitality Trust, Inc. (“CDOR,” “Condor,” or the “Company”), which until July 15, 2015 was formerly named Supertel Hospitality, Inc.,was incorporated in Virginia on August 23, 1994 and was reincorporated in Maryland on November 19, 2014. CDOR is a self-administered real estate investment trust (“REIT”) for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  As of December 31, 2016, the Company owned 19 hotels in 12 states, including one hotel owned through an 80% interest in an unconsolidated joint venture (the “Atlanta JV”).

CDOR, through its wholly owned subsidiary, Condor Hospitality REIT Trust (formerly Supertel Hospitality REIT Trust), ownsa  controlling interests in Condor Hospitality Limited Partnership (“CHLP”) (formerly Supertel Limited Partnership), for which we serve as general partner.  CHLP, including its various subsidiary partnerships, holds substantially all of the Company’s assets (with the exception of the furniture and equipment of 14 properties held by TRS Leasing, Inc.) and conducts all of its operations.  At December 31, 2016, the Company owned 97.8% of the common operating units (“common units”) of CHLP with the remaining common units owned by other limited partners and long-term incentive plan unit holders (see Note 12).  The Company’s 100% owned E&P Financing Limited Partnership no longer owns any assets or conducts any operations following the sale of its last remaining property in January 2016.

In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required by the Internal Revenue Service (“IRS”) for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels.  Therefore, CHLP and its subsidiaries lease our hotel properties to the Company’s wholly owned taxable REIT subsidiary, TRS Leasing, Inc., and its wholly owned subsidiaries (the “TRS”).The TRS in turn engages third-party eligible independent contractors to manage the hotels. CHLP, the TRS, and their respective subsidiaries are consolidated into the Company’s financial statements. 

References to “we,” “our,” and “us” herein refer to Condor Hospitality Trust, Inc., including as the context requires, its direct and indirect subsidiaries.

Historically, as a result of the geographic areas in which we operate, the operations of our hotels have been seasonal in nature.  Generally, occupancy rates, revenue, and operating income have been greater in the second and third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotels located in Florida, which experience peak demand in the first and fourth quarters of the year.  The results of the hotels acquired in 2015 and 2016 (see Note 3), because of their locations and chain scale, are expected to be less seasonal in nature than our legacy portfolio of assets.

Basis of Presentation

The consolidated financial statements have been prepared in accordance with U.S. general accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company, as well as the accounts of CHLP and its subsidiaries and our wholly owned TRS and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Estimates, Risks, and Uncertainties

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as revenue and expenses recognized during the reporting period.  Actual results could differ from those estimates.  Because the state of the

57

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

economy and of the real estate market can significantly impact hotel operational performance and the estimated fair value of our assets, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change.

Investment in Hotel Properties

At the time of acquisition, the Company allocates the purchase price of assets to asset classes based on the fair value of the acquired real estate, furniture, fixtures, and equipment, and intangible assets, if any, and the fair value of liabilities assumed, including debt. Acquisition date fair values are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers including discounted cash flows and capitalization rates.  Acquisition costs are expensed as incurred.

The Company’s investments in hotel properties are recorded at cost and are depreciated using the straight-line method over an estimated useful life of 15 to 40 years for buildings and improvements and 3 to 12 years for furniture and equipment.

Renovations and/or replacements that improve or extend the life of the hotel properties are capitalized and depreciated over their useful lives. Repairs and maintenance are expensed as incurred.

On a quarterly basis, the Company reviews the carrying value of each held for use hotel to determine if certain circumstances, known as triggering events, exist indicating impairment to the carrying value of the hotel or that depreciation periods should be modified.  These triggering events include a significant change in the cash flows of or a significant adverse change in the business climate for a hotel.  If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on these undiscounted future cash flows. If the investment is not recoverable based on this analysis, an impairment charge will be taken, if necessary, to reduce the carrying value of the hotel to the hotel’s fair value.

Investment in Joint Venture

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a variable interest entity (“VIE”) or through our voting interest in a voting interest entity (“VOE”) and we have the ability to provide significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of our investment in, advances to, and commitments to the investee. Pursuant to our Atlanta JV agreement, allocations of the profits and losses of our Atlanta JV may be allocated disproportionately to nominal ownership percentages due to specified preferred return rate thresholds.

Distributions received from a joint venture are classified in the statement of cash flows using the cumulative distributions approach.  Distributions are classified as cash inflows from operating activities unless cumulative distributions, including those from prior periods not designated as a return of investment, exceed cumulative recognized equity in earnings of the joint venture.  Excess distributions are classified as cash inflows from investing activities as a return of investment.

On an annual basis or at interim periods if events and circumstances indicate that the investment may be impaired, the Company reviews the carrying value of its investment in unconsolidated joint venture to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. The investment is considered impaired if its estimated fair value is less than the carrying amount of the investment and that impairment is other than temporary.

58

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Assets Held for Sale and Discontinued Operations

A hotel is considered held for sale (a) when a contract for sale is entered into, a substantial, nonrefundable deposit has been committed by the purchaser, and sale is expected to occur within one year, or (b) if management has committed to and is actively engaged in a plan sell the property, the property is available for sale in its current condition, and it is probable the sale will be completed within one year.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold in any period presented, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented.

Depreciation of our hotels is discontinued at the time they are considered held for sale.  If the fair value of the held for sale property less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss.  Impairment losses on held for sale properties may be subsequently recovered up to the amount of the cumulative impairment losses taken while the property is held for sale should future revisions to fair value estimates be required.  If active marketing ceases or the property no longer meets the criteria to be classified as held for sale, the property is reclassified to held for use and measured at the lower of its (a) carrying amount before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for use, or (b) its fair value at the date of the subsequent decision not to sell.

Historically, we have presented the results of operations of hotel properties that have been sold or considered held for sale as discontinued operations.  In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in ASU 2014-08 change the criteria for reporting a discontinued operation and require new disclosures of both discontinued operations and certain other significant disposals that do not meet the definition of a discontinued operation. Only disposals representing a strategic shift in operations that have a major effect on an entity’s operations and financial results should be presented as discontinued operations subsequent to adoption. The Company adopted the pronouncement on October 1, 2014.  As a result of this adoption, only the operations of hotels meeting the criteria to be considered held for sale prior to October 1, 2014 are included in discontinued operations for all periods presented as no individual hotel disposition represents a strategic shift in operations or has a major effect on our operations or financial results.

Gains on the sale of real estate are recognized when a property is sold, provided that the profit is determinable, meaning that collectability of the sales price is reasonably assured or can be estimated, and that the earnings process is complete, meaning that the seller is not obligated to perform significant activities after the sale in order to earn the profit.If these criteria are not met, the timing of the sale is determined based on various criteria related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the property. If the sales criteria are not met, the gain is deferred and the finance, installment, or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent we sell a property and retain a partial ownership interest in the property, we generally recognize a gain to the extent of the third party ownership interest.

Cash and Cash Equivalents

Cash and cash equivalents includes cash and highly liquid investments with original maturities of three months or less when acquired, and are carried at cost which approximates fair value. The Company maintained a major portion of its deposits with Great Western Bank, a Nebraska Corporation, at December 31, 2016 and with US Bank at December 31, 2015.  The balances on deposit at Great Western Bank and US Bank may at times exceed the federal deposit insurance limit, however, management believes that no significant credit risk exists with respect to the uninsured portion of these cash balances.

59

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Restricted Cash

Restricted cash consists of cash held in escrow for the replacement of furniture and fixtures or for real estate taxes and property insurance as required under certain loan agreements.  For purposes of the statement of cash flows, changes in restricted cash caused by changes in required reserves for real estate taxes or property insurance are shown as operating activities. Changes in restricted cash caused by changes in required reserves for the replacement of furniture and fixtures are shown as investing activities.

Deferred Financing Cost

Direct costs incurred in financing transactions are capitalized as deferred financing costs and amortized to interest expense over the term of the related loan using the effective interest method.  Deferred financing costs are presented on the balance sheet as a direct deduction from the associated debt liability.

Derivative Liabilities

In the normal course of business, the Company is exposed to the effects of interest rate changes, and the Company may enter into derivative instruments including interest rate swaps, caps, and collars to manage or economically hedge interest rate risk.  Additionally, prior to the first quarter of 2016, the Company was required to include on the balance sheet certain bifurcated embedded derivative instruments such as conversion features in convertible instruments and certain common stock warrants.

All derivatives recognized by the Company are reported as derivative liabilities on the balance sheet and are adjusted to their fair value at each reporting date.  Realized and unrealized gains and losses on derivative instruments are included in net gain (loss) on derivatives and convertible debt with the exception of realized gains and losses related to interest rate instruments which are included in interest expense on the statement of operations.

Noncontrolling Interest

Noncontrolling interest in CHLP represents the limited partners’ proportionate share of the equity in the operating partnership and long-term incentive plan (“LTIP”) units (see Note 12).  Earnings and loss are allocated to noncontrolling interest in accordance with the weighted average percentage ownership of CHLP during the period. 

Revenue Recognition

Revenue consists of amounts derived from hotel operations, including the sale of rooms, food and beverage, and other ancillary amenities.  Revenue from the operation of the hotel properties is recognized when rooms are occupied and services have been rendered.  Sales, use, occupancy, and similar taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the statement of operations.

Income Taxes

The Company qualifies and intends to continue to qualify as a REIT under applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will be unable to re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT, unless we satisfy certain relief provisions.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.  Except with

60

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

respect to the TRS, the Company does not believe that it will be liable for significant federal or state income taxes in future years.

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 IRS 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.

Taxable income from non-REIT activities managed through the TRS, which is taxed as a C-Corporation, is subject to federal, state, and local income taxes.  We account for the federal income taxes of our TRS using the asset and liability method.  Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled.  However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible.  In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not (defined as a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on its technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statement of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement to the uncertain tax position by the applicable taxing authority or by expiration of the applicable statute of limitations. For the years ended December 31, 2016, 2015, and 2014, the Company did not record any uncertain tax positions.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are utilized to determine the value of certain liabilities, to perform impairment assessments, to account for hotel acquisitions, and for disclosure purposes. Fair value measurements are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable inputs other than quoted prices included in Level 1. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.

Level 3: Unobservable inputs for which there is little or no market data, which require a reporting entity to develop its own assumptions.

Our estimates of fair value were determined using available market information and appropriate valuation methods.  Considerable judgment is necessary to interpret market data and develop estimated fair value.  The use of different market assumptions or valuation techniques may have a material effect on estimated fair value measurements.  We

61

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

With the exception of fixed rate debt (see Note 8) and other financial instruments carried at fair value, the carrying amounts of the Company’s financial instruments approximates their fair values due to their short-term nature or variable market-based interest rates.

Fair Value Option

Under U.S. GAAP, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in net earnings.  This option was elected for the treatment of the Company’s convertible debt entered into on March 16, 2016 (see Note 7).

Stock-Based Compensation

Stock-based compensation for awards with a service condition only is measured based on the fair value of the award on the date of grant and recognized as compensation expense on a straight line basis over the service period.  The compensation cost related to awards for which vesting is contingent upon achieving a market based criteria is measured at the fair value of the award on the date of grant, including consideration of the market criteria, and amortized on a straight line basis over the performance period.  The fair value of the award at grant is measured using either the closing stock price on the date of grant (for vested and unvested share awards), the Black-Scholes model (for options and warrants), or a Monte Carlo simulation (for LTIP awards), as appropriate.  Compensation cost is recognized as additional paid-in capital for awards of the Company’s common stock and as noncontrolling interest for LTIP awards of CHLP common units.

Recently Adopted Accounting Standards

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity, which clarifies certain of the criteria for determining whether derivative features in a hybrid financial instrument should be separately recognized.  ASU 2014-16 is effective for fiscal years beginning after December 15, 2015 and permits either a retrospective or cumulative effect transition method.  ASU 2014-16 was adopted by the Company on January 1, 2016 and was utilized in determining the accounting for the 6.25% Series D Cumulative Convertible Preferred Stock (“Series D Preferred Stock”) issued in March 2016 (see Note 10).

In February 2015, the FASB issued ASU No. 2015-02, Consolidation - Amendments to the Consolidation Analysis, which amends the current consolidation guidance effecting both the VIE and VOE consolidation models. The standard does not add or remove any of the characteristics in determining if an entity is a VIE or VOE, but rather enhances the way the Company assesses some of these characteristics. The Company adopted this standard on January 1, 2016 and concluded that CHLP now meets the criteria to be considered a VIE of which the Company is the primary beneficiary and, accordingly, the Company continues to consolidate CHLP. The Company’s sole significant asset is its investment in CHLP, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of CHLP. All of the Company’s debt is an obligation of CHLP.  This ASU was also used in the determination of the accounting for the Atlanta JV entered into in August 2016 (see Note 5).

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability.  The Company adopted this standard on January 1, 2016 and presents all debt issuance costs, other than issuance costs related to its revolving credit facility, as a direct deduction from the carrying value of the debt liability. Adoption of this standard was applied retrospectively for all periods presented, effecting only the presentation of the balance

62

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

sheet. The adoption of this standard did not have a material impact on the Company's financial position and had no impact on the results of operations or cash flows.  For the amounts of the reclassification, see Note 6.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  The original updated accounting guidance was effective for annual and interim reporting periods in fiscal years beginning after December 15, 2016, however, in July 2015, the FASB approved a one year delay of the effective date to fiscal years beginning after December 15, 2017.  As such, the standard will be effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has begun to evaluate each of its revenue streams under the new model.  Based on preliminary assessments, the Company does not expect the adoption of this guidance to materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales.  Furthermore, for real estate sales to third parties, primarily a result of disposition of real estate in exchange for cash with few contingencies, we do not expect the standard to significantly impact the recognition of or accounting for these sales.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes most existing lease guidance in U.S. GAAP when it becomes effective. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability and additional qualitative and quantitative disclosures. ASU 2016-02 is effective for the Company for annual periods in fiscal years beginning after December 15, 2019, permits early adoption, and mandates a modified retrospective transition method. The Company is required to adopt ASU 2016-02 on January 1, 2020. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accountedfor as acquisitions of assets or business combinations. This standard will be effective for annual periods beginning after December15, 2017, although early adoption is permitted. The Company is evaluating the effect that ASU 2017-01 will have on its consolidated financial statements and related disclosures.

Reclassifications

Certain amounts in prior year financial statements have been reclassified to conform to current year presentation.

Beginning in the first quarter of 2016, we have revised the classification of cash payments for debt prepayment or extinguishment penalties in our statements of cash flows from where they were previously presented as operating cash flows to financing cash flows.  We have concluded that this classification is preferable as these payments are closely related to other financing cash flows, such as the repayment of debt, and reflect the impact of financing decisions made by management.  This revised policy is also consistent with the ASU 2016-15, Statement of Cash Flows, which was issued in August 2016 and becomes effective for the Company on January 1, 2018.  This revision in classification had the effect of increasing operatingcashflows and decreasing financing cash flows by $1,752,  $0, and $120 during the years ended December 31, 2016, 2015, and 2014, respectively.

Liquidity

The following disclosure and analysis is pursuant to ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 requires the Company to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a

63

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

going concern within one year after the date the financial statements are issued.  To satisfy the requirements of this standard, the Company’s evaluation considered a 15 month period beginning January 1, 2017.

We expect to meet our short-term liquidity requirements through net cash provided by operations, existing cash balances and working capital, short-term borrowings under our revolving credit agreement with Great Western Bank, and the release of restricted cash upon the satisfaction of usage requirements.  At December 31, 2016, the Company had $8,326 million of cash and cash equivalents on hand and $1,234 of unused availability under its revolving credit agreement.  Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, recurring maintenance and capital expenditures necessary to maintain our hotels in accordance with brand standards, interest expense and scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, and the payment of dividends in accordance with the REIT requirements of the Internal Revenue Code and as required in connection with our Series D Preferred Stock (which, as discussed as a subsequent event (see Note 17), was converted to common stock with $9,250 of a new class of stock, Series E Preferred Stock, issued on February 28, 2017). We presently expect to invest approximately $4,000 to $5,000 in capital expenditures related to hotel properties we currently own through March 31, 2018.

To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually.  In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws.  We have a general dividend policy of paying out approximately 100% of annual REIT taxable income.  The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.

Our longer-term liquidity requirements consist primarily of the cost of acquiring additional hotel properties, renovations and other one-time capital expenditures that periodically are made related to our hotel properties, and scheduled debt payments, including maturing loans.  Possible sources of liquidity to fund debt maturities and acquisitions and to meet other obligations include additional secured or unsecured debt financings and proceeds from public or private issuances of debt or equity securities. 

Prior to the consideration of any asset sales or our ability to refinance debt subsequent to December 31, 2016, contractual principal payments on our debt outstanding, including normal amortization, total $15,788 through March 31, 2018, including the February 1, 2017 maturity of one of our Western Alliance Bank (“WAB”) loans with a balance at December 31, 2016 of $4,806, the November 6, 2017 maturity of our Cantor loan with a balance at December 31, 2016 of $5,713, the December 1, 2017 maturity of our Morgan Stanley loan with a balance at December 31, 2016 of $912, and the February 1, 2018 maturity of one of our WAB loans with a balance at December 31, 2016 of $2,803.  On January 27, 2017, the WAB loan due February 1, 2017 was extended to February 1, 2018.  Subsequently, on March 1, 2017, each of these pieces of debt was refinanced with a $90,000 secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual principal payments on our debt outstanding at December 31, 2016 through March 31, 2018 totaled approximately $1,100.

NOTE 2.  INVESTMENT IN HOTEL PROPERTIES

Investments in hotel properties consisted of the following at December 31:

	As of December 31,
	2016						2015
	Held for sale		Held for use		Total		Held for sale		Held for use		Total
Land	$	2,392	$	14,020	$	16,412	$	8,184	$	10,683	$	18,867
Acquired below market lease intangibles		-		-		-		883		-		883
Buildings, improvements, vehicles		23,118		85,565		108,683		70,932		67,174		138,106
Furniture and equipment		5,427		12,776		18,203		19,170		11,418		30,588
Construction-in-progress		23		63		86		322		133		455
Investment in hotel properties		30,960		112,424		143,384		99,491		89,408		188,899
Less accumulated depreciation		(12,247)		(16,266)		(28,513)		(44,691)		(13,509)		(58,200)

64

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Investment in hotel properties, net $ 18,713  $ 96,158  $ 114,871  $ 54,800  $ 75,899  $ 130,699 

NOTE 3.  ACQUISITION OF HOTEL PROPERTIES

On December 14, 2016, the Company acquired one wholly-owned hotel, the Aloft Leawood / Overland Park (Kansas City).  The allocation of the purchase price based on fair value, which was determined using Level 3 fair value inputs, was as follows:

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Total purchase price		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Aloft	$	3,339	$	18,046	$	1,115	$	22,500	$	15,925	$	50	$	6,525
Leawood, KS

The $22,500 purchase price was funded with the proceeds of two mortgage loans provided by Great Western Bank totaling $15,925, approximately $6,525 in cash, and the issuance of 213,904 common units from CHLP with a value of $50.

During 2015, the Company acquired three wholly-owned hotel properties.  The allocation of the purchase price based on fair value, which was determined using Level 3 fair value inputs, was as follows:

Hotel	Acquisition date	Land		Building, improvements, and vehicles		Furniture and equipment		Total purchase price		Assumption of debt		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Hotel Indigo	10/2/2015	$	800	$	8,700	$	1,500	$	11,000	$	-	$	5,000	$	150	$	5,850
Atlanta, GA
Marriott Courtyard	10/2/2015		2,100		11,050		850		14,000		-		10,100		150		3,750
Jacksonville, FL
SpringHill Suites	10/1/2015		1,597		14,353		1,550		17,500		11,220		-		150		6,130
San Antonio, TX
Total		$	4,497	$	34,103	$	3,900	$	42,500	$	11,220	$	15,100	$	450	$	15,730

The $42,500 purchase price was funded with the assumption of one loan with an aggregate outstanding principal balance of $11,220 and two newly originated GE Capital loans totaling $15,100 (sold to WAB in April 2016). The remaining $16,180 was funded with approximately $14,900 in cash, approximately $830 of borrowings from the Company’s existing credit facility with Great Western Bank, and the issuance of common units from CHLP. A total of 2,298,879 common units were issued with a value of $450.

There were no hotel acquisitions in 2014.

Included in the statement of operations for the year ended December 31, 2016 and 2015 is total revenue of $12,786 and $2,611 and total operating income of $2,279 and $356, respectively, which represent the results of operations for these four hotels since the date of acquisition.

Pro Forma Results (Unaudited)

The following condensed pro forma financial data is presented as if all acquisitions completed during the years ended December 31, 2016 and 2015 (including the Atlanta JV acquisition subsequently discussed (see Note 5)) had been completed on January 1, 2015 and 2014, respectively.  The pro forma results below exclude acquisition costs of $550 and $684 incurred during the years ended December 31, 2016 and 2015, respectively.  The condensed pro forma financial data is not necessarily indicative of what actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2015 and 2014, nor do they purport to represent the results of operations for future periods.

65

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

	Years ended December 31,
	2016		2015
Total revenue	$	56,741	$	73,281
Operating income	$	3,970	$	6,774
Net Income attributable to common shareholders	$	3,755	$	10,816
Net Income per share available to common shareholders-basic	$	0.76	$	2.21
Net Income per share available to common shareholders-diluted	$	0.19	$	0.05

NOTE 4: DISPOSITION OF HOTEL PROPERTIES AND DISCONTINUED OPERATIONS

As of December 31, 2016, the Company had seven hotels classified as held for sale. At the beginning of 2016, the Company had 16 hotels held for sale and during the year classified an additional 16 hotels as held for sale. Twenty-five of these hotels were sold during 2016. 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 subsequent reclassified as held for use),  none of which remain unsold at December 31, 2016, are included in discontinued operations with all other hotels, including those subsequently sold or classified as held for sale, reported in continuing operations.

In 2016,  2015, and 2014, the Company sold 25 hotels, 17 hotels, and 13 hotels, respectively, resulting in total gains of $24,256,  $7,759, and $2,749, respectively, of which $23,575,  $4,996, and $0, respectively, was included in continuing operations.

Included in these 2015 sales were two hotels in Alexandria, Virginia that were sold on July 13, 2015 for a combined gross sales price of $19,000.  These hotels represent a significant disposition,and as such, their operating results are disclosed.  The Alexandria Comfort Inn and Days Inn hotels had combined net earnings (loss) of ($665) and $761for the years ended December 31, 2015 and 2014, respectively. Net earnings for the year ended December 31, 2015 includes impairment expense of $1,020 which was recognized following the hotels classification as held for sale. Earnings attributable to noncontrolling interest related to these properties for the years ended December 31, 2015 and 2014 were $3 and$1, respectively.

66

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

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 the disposal transaction. The following table sets forth the components of discontinued operations for the years ended December 31, 2016, 2015 and 2014:

	Year ended December 31,
		2016		2015		2014
Revenue		$	6	$	2,923	$	13,579
Hotel and property operations expense			(4)		(1,946)		(10,410)
Depreciation and amortization expense			-		-		(112)
General and administrative expense			-		-		-
Net gain on dispositions of assets			681		2,997		2,751
Interest expense			(5)		(223)		(1,140)
Loss on extinguishment of debt			-		-		(120)
Impairment recovery (loss)			-		121		(1,652)
		$	678	$	3,872	$	2,896
Capital expenditures		$	-	$	90	$	338

NOTE 5.  INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

On August 1, 2016, the Company entered into a joint venture with Three Wall Capital LLC and certain of its affiliates (“TWC”) to acquire a 254-room Aloft hotel in downtown Atlanta, Georgia.  The Company accounts for the Atlanta JV under the equity method.  Condor owns 80% of the Atlanta JV with TWC owning the remaining 20%.  The Atlanta JV is comprised of two companies: Spring Street Hotel Property II LLC, of which CHLP indirectly owns an 80% equity interest, and Spring Street Hotel OpCo II LLC, of which our TRS indirectly owns an 80% equity interest.  TWC owns the remaining 20% equity interest in these two companies.

On August 22, 2016, the Atlanta JV closed on the acquisition of the Atlanta Aloft for a purchase price of $43,550, subject to working capital and similar adjustments.  The purchase price was allocated by the Atlanta JV based on fair value, which was determined using Level 3 fair value inputs, as documented in the table below:

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Land option (1)		Total purchase price		Debt originated at acquisition		Net cash
Aloft	$	13,025	$	34,048	$	2,667	$	(6,190)	$	43,550	$	33,750	$	9,800
Atlanta, GA

(1) The purchase agreement includes a provision which permits the seller to purchase the surface parking lot north of the hotel exercisable for ten years at less than market rates

The purchase price for the Atlanta Aloft was paid with $9,800 in cash, of which $7,840 was contributed by Condor and $1,960 was contributed by TWC, and $33,750 of proceeds from a term loan secured by the property.  Condor additionally contributed $1,440 and TWC additionally contributed $360 to the Atlanta JV to cover acquisition costs and to provide working capital to the entity.  The term loan, obtained from LoanCore Capital Credit REIT LLC, has an initial term of 24 months with three12-month extension periods which may be exercised at the Atlanta JV’s option subject to certain conditions and fees.  The interest rate is a floating rate calculated on the one-month LIBOR plus 5.0%, and as a condition to closing, the Atlanta JV purchased a LIBOR cap of 3.0%.  The current interest rate on the loan is 5.75%.  The loan is non-recourse to the Atlanta JV, subject to specified exceptions.  The loan is also non-recourse to Condor, except for certain customary carve-outs which are guaranteed by the Company.

67

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Under the Atlanta JV agreement, the Atlanta JV is managed by TWC in accordance with business plans and budgets approved by both partners.  Major decisions as detailed in the agreement also require joint approval.  Condor may remove TWC as manager of the Atlanta JV and appoint a new manager only upon the occurrence of certain events.  The Atlanta Aloft hotel is managed by Boast Hotel Management Company LLC (“Boast”), an affiliate of TWC.  The Atlanta JV paid to Boast total management fees of $110 during the year ended December 31, 2016.

Net cash flow and profits from the Atlanta JV will be distributed each fiscal year first with a 10% preferred return on capital contributions to Condor, second with a 10% preferred return on capital contributions to TWC, and third with any remainder distributed to the partners based on their pro-rata equity ownership. Losses are allocated based on pro-rata equity ownership. The Atlanta JV agreement also includes buy-sell rights for both members (generally after three years of hotel ownership for Condor and after five years for TWC) and Condor has a purchase option for TWC’s Atlanta JV ownership interest exercisable between the third and fifth anniversary of the hotel closing.

The following tables represent the total assets, liabilities, equity, and components of net income (loss), including the Company’s share, of the Atlanta JV as of and for the year ended December 31, 2016:

68

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

	As of
	December 31, 2016
Investment in hotel properties, net	$	49,305
Cash and cash equivalents		1,184
Restricted cash, property escrows		464
Accounts receivable, prepaid expenses, and other assets		320
Total Assets	$	51,273
Accounts payable, accrued expenses, and other liabilities	$	633
Land option liability		6,190
Long-term debt, net of deferred financing costs		33,155
Total Liabilities		39,978
Condor equity		9,036
TWC equity		2,259
Total Equity		11,295
Total Liabilities and Equity	$	51,273

	Year ended December 31, 2016
Revenue
Room rentals and other hotel services	$	3,703
Operating Expenses
Hotel and property operations		2,457
Depreciation and amortization		471
Acquisition		299
Total operating expenses		3,227
Operating income		476
Net loss on disposition of assets		(2)
Net loss on derivative		(6)
Interest expense		(773)
Net loss	$	(305)
Condor allocated loss	$	(244)
TWC allocated loss		(61)
Net loss	$	(305)

69

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

NOTE 6.  LONG-TERM DEBT

Long-term debt, including debt related to hotel properties held for sale, consisted of the following loans payable at December 31:

Lender		Balance at December 31, 2016	Interest rate at December 31, 2016	Maturity	Amortization provision	Properties encumbered at December 31, 2016		Balance at December 31, 2015
Fixed rate debt
Western Alliance Bank	$	4,806	7.17%	02/2017	15 years	2	$	10,819
Western Alliance Bank		2,803	4.75%	02/2018	15 years	2		3,864
Cantor Commercial Real Estate Lending		5,713	4.25%	11/2017	30 years	1		5,826
Morgan Stanley Mortgage Capital Holdings, LLC		912	5.83%	12/2017	25 years	4		27,542
Great Western Bank (7)		14,326	4.33%	12/2021	25 years	1		-
Great Western Bank (7)		1,599	4.33%	12/2021	7 years	-		-
Total fixed rate debt		30,159						48,051
Variable rate debt
Great Western Bank (6)		-	4.75% (1)	06/2018	Interest only	2		3,215
Western Alliance Bank		4,882	4.18% (2)	11/2020	25 years	1		4,990
Western Alliance Bank		9,863	4.18% (2)	11/2020	25 years	1		10,079
The Huntington National Bank		7,361	2.87% (3)	11/2020	25 years	3		9,981
LMREC 2015 - CREI, Inc. (Latitude)		11,124	7.00% (4)	05/2018	$12 monthly (5)	1		11,220
Total variable rate debt		33,230				18		39,485
Total long-term debt	$	63,389					$	87,536
Less: Deferred financing costs		(669)						(1,525)
Total long-term debt, net of deferred financing costs		62,720						86,011
Less: Long-term debt related to hotel properties held for sale, net of deferred financing costs of $55 and $736		(5,945)						(41,344)
Long-term debt related to hotel properties held for use, net of deferred financing costs of $614 and $789	$	56,775					$	44,667

(1) Prime rate plus 1%; was fixed rate debt at 4.5% prior to amendment on June 5, 2015

(2) 90-day LIBORplus3.25%

(3) 30-day LIBOR plus 2.25%, fixed at 4.13% after giving effect to interest rate swap

(4) 30-day LIBORplus 6.25%30-day LIBOR capped at 1.0% after giving effect to market rate cap (see Note 8)

(5) $12 monthly payment began May 2016

(6) Total availability under this revolving credit facility was $1,234 at December 31, 2015; commitment fee on unused facility is 0.25%

(7) Both loans are collateralized by Aloft Leawood

At December 31, 2016, we had long-term debt of $57,389 associated with assets held for use with a weighted average term to maturity of 2.9 years and a weighted average interest rate of4.89%.  Of this total, at December 31, 2016,  $26,079 is fixed rate debt with a weighted average term to maturity of 2.8 years and a weighted average interest rate of 4.78% and $31,310 is variable rate debt with a weighted average term to maturity of 2.9 years and a weighted average interest rate of 4.98%.  At December 31, 2015, we had long-term debt of $45,455 associated with assets held for use with a weighted average term to maturity of 3.3 years and a weighted average interest rate of4.98%.  Of this total, at December 31, 2015,  $12,439 is fixed rate debt with a weighted average term to maturity of 1.6 years and a weighted average interest rate of5.63% and $33,016 is variable rate debt with a weighted average term to maturity of 3.9 years and a weighted average interest rate of 4.74%. 

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 based on its contractual maturity although the balances are expected to be

70

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

repaid within one year upon the sale of the related hotel properties.  Aggregate annual principal payments on debt for the next five years and thereafter are as follows:

	Held for sale		Held for use		Total
2017	$	1,574	$	11,333	$	12,907
2018		2,603		12,065		14,668
2019		52		1,120		1,172
2020		1,771		19,199		20,970
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

As discussed further in the Subsequent Events footnote (see Note 17), on January 27, 2017, the WAB loan with a balance of $4,806 at December 31, 2016 due February 1, 2017 was extended to February 1, 2018.  On March 1, 2017 a significant portion of the Company’s debt (including all debt outstanding at December 31, 2016 with the exception of the two variable rate WAB loans and the two fixed rate Great Western Bank loans) was refinanced with a $90,000 secured credit facility that matures on March 1, 2019. 

Financial Covenants

The Company’s debt agreements contain requirements as to the maintenance of minimum levels of debt service and fixed charge coverage and required loan-to-value and leverage ratios, and place certain restrictions on dividends.  As of December 31, 2016, we were in compliance with our financial covenants.

If we fail to pay our indebtedness when due, fail to comply with covenants or otherwise default on our loans, unless waived, we could incur higher interest rates during the period of such loan defaults, be required to immediately pay our indebtedness, and ultimately lose our hotels through lender foreclosure if we are unable to obtain alternative sources of financing with acceptable terms. Our Great Western Bank and certain of our WAB facilities contain cross-default provisions which would allow Great Western Bank and WAB to declare a default and accelerate our indebtedness to them if we default on our other loans and such default would permit that lender to accelerate our indebtedness under any such loan. As of December 31, 2016, we are not in default of any of our loans.

2014 Convertible Loan

On January 9, 2014, we entered into an unsecured convertible loan agreement with Real Estate Strategies, L.P. (“RES”), for a revolving line of credit of up to $2,000 with an annual interest rate equal to LIBOR plus 7%. During the first quarter of 2014, the Company borrowed the full amount of $2,000available under the loan agreement. 

Upon issuance, it was determined that the conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative liability as there was no explicit limit to the number of shares to be delivered upon settlement of the conversion option.  The initial fair value of the conversion feature was determined to be $151 and was recorded as a derivative liability with the offset recorded as a debt discount against the convertible loan.

RES applied the amount owed to it under the loan to purchase 1,250,000 shares of newly issued common stock. On June 11, 2014, the effective purchase date, $1,950, the fair value of the shares issued, was recorded in equity, and a gain of $88 was recorded in other income to reflect the change in fair value from March 31, 2014 to the date of conversion of the convertible loan, amortized debt discount, and the separately accounted for embedded derivative.

NOTE 7: CONVERTIBLE DEBT AT FAIR VALUE

As part of an agreement entered into on March 16, 2016 (the “Exchange Agreement”) with RES (see Note 10), the Company issued to RES a Convertible Promissory Note (the “Note”), bearing interest at 6.25% per annum, in the

71

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

principal amount of $1,012.  If the Series D Preferred Stock is outstanding, RES at its option may at any time elect to convert the Note, in whole or part, by notice delivered to the Company, into a number of shares of Series D Preferred Stock determined by dividing the principal amount of the Note to be converted by $10.00.  Any time the Series D Preferred Stock is required by its terms to be converted into common stock of the Company (see Note 10), the Note will be automatically converted into the number of shares of common stock that RES would have received had RES converted this Note into Series D Preferred Stock immediately prior to the conversion of the Series D Preferred Stock.  Any such conversion shall be reduced such that RES, together with its affiliates, does not beneficially own more than 49% of the voting stock of the Company and shall reduce the principal amount of the Note proportionally.  

The Company has made an irrevocable election to record this Note in its entirety at fair value utilizing the fair value option available under U.S. GAAP in order to more accurately reflect the economic value of this Note. As such, gains and losses on the Note are included in net gain (loss) on derivatives and convertible debt within net earnings each reporting period. Losses related to this Note were recognized totaling $303 during the year ended December 31, 2016.  The fair value of the Note is determined using a Monte Carlo simulation model.  The Monte Carlo simulation method is a generally accepted statistical method used to generate a defined number of stock price paths in order to develop a reasonable estimate of the range of future expected stock prices of the Company and its peer group and minimize standard error. The fair value of the Note on the date of issuance was determined to be equal to its principal amount. Interest expense related to this Note is recorded separately from other changes in its fair value within interest expense each period.

The following table represents the difference between the fair value and the unpaid principal balance of the Note as of December 31, 2016:

	Fair value as of December 31, 2016		Unpaid principal balance as of December 31, 2016		Fair value carrying amount over/(under) unpaid principal
6.25% Convertible Debt	$	1,315	$	1,012	$	303

NOTE 8: FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

Our determination of fair value measurements is based on the assumptions that market participants would use in pricing the asset or liability. At December 31, 2016, the Company’s convertible debt (see Note 7) and certain derivative instruments were the only financial instruments measured in the financial statements at fair value on a recurring basis.  Nonrecurring fair value measurements were utilized in the determination of the fair value of acquired hotel properties and related assumed debt in 2016 and 2015 (see Note 3), the acquisition accounting performed by the Atlanta JV in 2016 (see Note 5), the accounting for the equity transactions that occurred in March 2016 (see Note 10), and in the valuation of impaired hotels during the years ended December 31, 2016, 2015, and 2014.

Derivative Instruments

Currently, the Company uses derivatives, such as interest rate swaps and caps, to manage its interest rate risk.  The fair value of interest rate positions is determined using the standard market methodology of netting the discounted expected future cash receipts and payments. Variable interest rates used in the calculation of projected receipts and payments on the positions are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.  Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the agreements.  The Company believes it minimizes this credit risk by transacting with major creditworthy financial institutions.  These interest rate positions at December 31, 2016 and 2015 are as follows:

72

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Associated debt	Type	Terms	Effective Date	Maturity Date	Notional amount at December  31, 2016		Notional amount at December  31, 2015
Huntington	Swap	Swaps 30-day LIBOR + 2.25% for fixed rate of	11/2015	11/2020	$	7,361 (1)	$	9,981 (1)
		4.13 %; cancellable at Company's option anytime
		after 11/01/2018 without penalty
Latitude	Cap	Caps 30-day LIBOR at 1.0%	03/2016	06/2017	$	11,124 (1)	$	-
Latitude	Cap	Caps 30-day LIBOR at 2.5%	10/2015	05/2016	$	-	$	11,220 (1)

(1) Notional amounts amortize consistently with the principal amortization of the associated loans

Additionally, prior to the execution of the Exchange Agreement (see Note 10) on March 16, 2016 which extinguished the instrument, the Company was required to bifurcate and include on the balance sheet at fair value the embedded conversion option in the 6.25% Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) due to the presence of an antidilution provision that required an adjustment in the common stock conversion ratio should subsequent issuances of the Company’s common stock be issued below the instrument’s original conversion price of $8.00 per share.As a result of a subscription rights offering by the Company which concluded on June 6, 2014 (see Note 9), the conversion price of the Series C Preferred Stock, pursuant to its terms, was adjusted to $1.60, the exercise price of the subscription rights for a share of common stock, where the conversion price remained until the instrument’s extinguishment.

Similarly, prior to the execution of the Exchange Agreement, the terms of the common stock warrants issued to the holders of the Series C Preferred Stock (see Note 10) also included an antidilution provision that required a reduction in the warrant’s exercise price of $9.60 should the conversion ratio of the Series C Preferred Stock be adjusted due to antidilution provisions. Accordingly, the warrants did not qualify for equity classification, and, as a result, the fair value of the derivative was shown as a derivative liability on the balance sheet. As a result of a subscription rights offering by the Company which concluded on June 6, 2014 (see Note 9), the exercise price of the warrants for a share of common stock was adjusted to $1.92, equal to 120% of the adjusted conversion price of the Series C Preferred Stock. With the execution of the Exchange Agreement, this provision of these warrants was effectively eliminated and the conversion price was locked permanently at $1.92.  Following this modification of terms, the warrants qualify for equity classification and were reclassified to additional paid-in capital at their fair value of $611 on the date of the modification.

The fair value of the derivative liabilities recognized in connection with the Series C Preferred Stock was determined using the Monte Carlo simulation method.

All derivatives recognized by the Company are reported as derivative liabilities on the balance sheet and are adjusted to their fair value at each reporting date.  All gains and losses on derivative instruments are included in net gain (loss) on derivatives and convertible debt and with the exception of realized gains and losses related to the interest rate instruments, which are included in interest expense on the statements of operations. Net gains (losses) of $6,680,  $11,578, and ($14,430) were recognized related to derivative instruments for the years ended December, 2016, 2015, and 2014, respectively.

73

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Recurring Fair Value Measurements

The following tables provide the fair value of the Company’s financial liabilities carried at fair value and measured on a recurring basis:

There were no transfers between levels during the years ended December 31, 2016, 2015, or 2014.

	Fair value at
	December 31, 2016		Level 1		Level 2		Level 3
Interest rate derivative	$	8	$	-	$	8	$	-
Convertible debt		1,315		-		-		1,315
	$	1,323	$	-	$	8	$	1,315

	Fair value at
	December 31, 2015		Level 1		Level 2		Level 3
Series C preferred embedded derivative	$	6,271	$	-	$	-	$	6,271
Warrant derivative		2,411		-		-		2,411
Interest rate derivatives		77		-		77		-
	$	8,759	$	-	$	77	$	8,682

The following table presents a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that use significant unobservable inputs (Level 3) and the related gains and losses recorded in the statement of operations during the periods:

	Year ended December 31,
		2016							2015
	Series C Preferred embedded derivative		RES warrant derivative		Convertible debt		Total		Series C Preferred embedded derivative		RES warrant derivative		Total
Fair value, beginning of period	$	6,271	$	2,411	$	-	$	8,682	$	13,804	$	6,533	$	20,337
Net (gains) losses recognized in earnings		(4,848)		(1,800)		303		(6,345)		(7,533)		(4,122)		(11,655)
Purchase and issuances		-		-		1,012		1,012		-		-		-
Sales and settlements		(1,423)		-		-		(1,423)		-		-		-
Gross transfers into Level 3		-		-		-		-		-		-		-
Gross transfers out of Level 3 (1)		-		(611)		-		(611)		-		-		-
Fair value, end of period	$	-	$	-	$	1,315	$	1,315	$	6,271	$	2,411	$	8,682
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period	$	-	$	-	$	303	$	303	$	(7,533)	$	(4,122)	$	(11,655)

(1) RES warrants were permanently reclassified to additional paid-in capital as discussed above

Fair Value of Debt

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of debt obligations with similar credit policies. Credit spreads take into consideration general market conditions and maturity. The inputs utilized in estimating the fair value of debt are classified in Level 2 of the fair value hierarchy. The carrying value, net of deferred financing costs, and estimated fair value of the Company’s debt, excluding convertible debt, which is presented in the balance sheet at fair value, is presented in the table below:

74

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

	Carrying value at December 31,				Estimated fair value at December 31,
	2016		2015		2016		2015
Held for use	$	56,775	$	44,667	$	57,456	$	45,771
Held for sale		5,945		41,344		6,433		43,508
Total	$	62,720	$	86,011	$	63,889	$	89,279

Impaired Hotel Properties

In the performance of impairment analysis for both held for sale and held for use properties, fair value is determined with the assistance of independent real estate brokers and through the use of revenue multiples based on the Company’s experience with hotel sales as well as available industry information.  For held for sale properties, estimated selling costs are based on our experience with similar asset sales.  These are considered Level 3 inputs.  All impairment in the table below related to held for use properties relates to impairments taken when those properties were previously held for sale or upon their reclassification to held for use. The amount of impairment and recovery of previously recorded impairment recognized in the years ended December 31, 2016, 2015, and 2014 is shown in the table below:

	Year ended December 31,
	2016			2015			2014
	Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery
Continuing Operations:
Held for sale hotels:
Impairment loss	4	$	(1,273)	-	$	-	-	$	-
Sold hotels:
Impairment loss	1		(204)	6		(3,914)	2		(1,388)
Recovery of impairment	-		-	1		85	1		119
Net impairment loss reported in continuing operations	5	$	(1,477)	7	$	(3,829)	3	$	(1,269)
Discontinued Operations:
Sold hotels:
Impairment loss	-	$	-	1	$	(117)	8	$	(2,450)
Recovery of impairment	-		-	3		238	5		798
Net impairment loss reported in discontinued operations	-	$	-	4	$	121	13	$	(1,652)
Total net impairment:	5	$	(1,477)	11	$	(3,708)	16	$	(2,921)

75

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

NOTE 9.  COMMON STOCK

The Company’s common stock is duly authorized, full paid, and non-assessable.

On March 11, 2015, an executive officer exercised a warrant to purchase 227,894 shares at the price of $1.52 per share (see Note 12).

The Company concluded a subscription rights offering on June 6, 2014.  Each subscription right entitled its holder to purchase one share of common stock of the Company for $1.60 per share. Subscription rights to purchase 1,787,204 shares of common stock were exercised for $2,860, of which $2,000 was paid by the conversion of a loan owed by the Company to RES (see Note 6).  The Company incurred issuance costs of $218.

NOTE 10.  PREFERRED STOCK

On March 16, 2016, the Company entered into a series of agreements providing for:

· the issuance and sale of Condor’s Series D Preferred Stock under a private transaction to SREP III Flight-Investco, L.P. (“SREP”), an affiliate of StepStone Group LP;

· the exchange of all of Condor’s outstanding Series C Preferred Stock for Series D Preferred Stock; and

· the cash redemption of all of Condor’s outstanding 8% Series A Cumulative Preferred Stock (“Series A Preferred Stock”) and 10% Series B Cumulative Preferred Stock (“Series B Preferred Stock”).

In connection with these transactions, the Company and SREP entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) dated March 16, 2016 pursuant to which Condor issued and sold 3,000,000 shares of Series D Preferred Stock to SREP on the March 16, 2016 for an aggregate purchase price of $30,000. The Stock Purchase Agreement required that $20,147 of the purchase price be deposited into an escrow account for the purpose of effecting the redemption of the Series A and Series B Preferred Stock and that the remaining amount of the purchase price be delivered to Condor. 

Simultaneously, the Company entered into the Exchange Agreement with RES pursuant to which all 3,000,000 outstanding shares of Series C Preferred Stock were exchanged for 3,000,000 shares of Series D Preferred Stock. Under the Exchange Agreement, in lieu of payment of accrued and unpaid dividends in the amount of $4,947 on the Series C Preferred Stock, Condor (a) paid to RES an amount of cash equal to $1,484, (b) issued to RES 245,156 shares of Series D Preferred Stock (such that RES,IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”), and their affiliates do not beneficially own in excess of 49% of the voting stock of Condor) and (c) issued to RES a convertible promissory note, bearing interest at 6.25% per annum, in the principal amount of $1,012 (see Note 7).

Pursuant to the Stock Purchase Agreement, on April 15, 2016, Condor redeemed all of the outstanding Series A and Series B Preferred Stock, in accordance with redemption notices issued on March 16, 2016, as follows:

· all 803,270 outstanding shares of the Series A Preferred Stock at the redemption price of $10.00 per share plus $2.084940 per share in accrued and unpaid dividends (plus compounded interest) through the redemption date for a total redemption price of $9,707; and

· all 332,500 outstanding shares of the Series B Preferred Stock at the redemption price of $25.00 per share plus $6.354167 per share in accrued and unpaid dividends through the redemption date for a total redemption price of $10,425.

The effect of these transactions on the Company’s preferred stock and the key terms of the remaining series of the Company’s preferred stock are discussed individually below.

76

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Series A Preferred Stock

On December 30, 2005, the Company offered and sold 1,521,258 shares of Series A Preferred Stock.  At December 31, 2015, 803,270 shares of Series A Preferred Stock remained outstanding until the completion of the redemption on April 15, 2016.

Dividends on the Series A Preferred Stock were cumulative and payable monthly in arrears on the last day of each month, at the annual rate of 8% of the $10.00 liquidation preference per share, equivalent to a fixed annual amount of $.80 per share. The Company was able to redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time for cash at a redemption price of $10.00 per share, plus all accrued and unpaid dividends. Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series A Preferred Stock to preserve capital and improve liquidity. Unpaid dividends accumulated and bore additional dividends at 8%, compounded monthly. Accumulated but unpaid dividends were$1,452, or $1.807 per share, as of December 31, 2015. These dividends were not reflected as an obligation on the balance sheet.

Holders of the Series A Preferred Stock generally had no voting rights. However, if dividends on the Series A Preferred Stock were in arrears for six consecutive months or nine months (whether or not consecutive) in any twelve-month period, holders of the Series A Preferred Stock, voting together as a single class with all series of preferred stock for which like voting rights are exercisable, were entitled to elect two directors. At the Company’s annual meeting on June 10, 2015, holders of the Series A Preferred Stock and Series B Preferred Stock, voting as one class, elected two directors.  With the issuance of the redemption notices on March 16, 2016 and the redemption funds deposited in escrow, all rights of the holders of the Series A Preferred Stock were terminated with the exception of the right to receive the redemption price, including the right to board representation.

The difference between the recorded value of the Series A Preferred Stock prior to the issuance of the redemption notice and the redemption value of the Series A Preferred Stock plus related expenses, a total of $2,326, was recorded as a reduction of accumulated deficit during the year ended December 31, 2016 as the amount is considered a deemed dividend on the Series A Preferred Stock. Of this amount, $874 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividends that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series B Preferred Stock

At December 31, 2015, there were 332,500 shares of Series B Preferred Stock outstanding, originally sold on June 3, 2008, which remained outstanding until the completion of the redemption on April 15, 2016.

Dividends on the Series B Preferred Stock were cumulative and are payable quarterly in arrears on each  March 31, June 30, September 30, and December 31, or, if not a business day, the next succeeding business day, at the annual rate of 10.0% of the $25.00 liquidation preference per share, equivalent to a fixed annual amount of $2.50 per share.  The Company was able to redeem the Series B Preferred Stock, in whole or in part, at any time or from time to time for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends. Also, upon a change of control, each outstanding share of the Company’s Series B Preferred Stock would be redeemed for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends.Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series B Preferred Stock to preserve capital and improve liquidity. Unpaid dividends on the Series B Preferred Stock did not bear interest. Unpaid dividends were$1,870 or $5.625 per share, as of December 31, 2015. These dividends were not reflected as an obligation on the balance sheet.

Holders of the Series B Preferred stock generally had no voting rights. However, if the dividends on the Series B Preferred Stock were in arrears for six or more quarterly periods (whether or not consecutive), holders of the Series B Preferred Stock, voting together as a single class with all series of preferred stock for which like voting rights are exercisable, would be entitled to elect two directors. At the Company’s annual meeting on June 10, 2015, holders of

77

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Series A Preferred Stock and Series B Preferred Stock, voting as one class, elected two directors.With the issuance of the redemption notices on March 16, 2016 and the redemption funds deposited in escrow, all rights of the holders of the Series B Preferred Stock were terminated with the exception of the right to receive the redemption price, including the right to board representation.

The difference between the recorded value of the Series B Preferred Stock prior to the issuance of the redemption notice and the redemption value of the Series B Preferred Stock, a total $2,781, was recorded as a reduction of accumulated deficit during the year ended December 31, 2016 as the amount is considered a deemed dividend on the Series B Preferred Stock.  Of this amount, $911 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividend that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series C Preferred Stock and RES Warrants

The Company entered into a Purchase Agreement dated November 16, 2011 for the issuance and sale of Series C Preferred Stock and warrants under a private transaction with RES. In two closings on February 1, 2012 and February 15, 2012, the Company completed the sale to RES of 3,000,000shares of Series C Preferred Stock and 3,750,000warrants to purchase shares of common stock.All of the Series C Preferred Stock remained outstanding prior to the execution of the Exchange Agreement on March 16, 2016.  The 3,750,000 warrants remained outstanding at December 31, 2016 with a current exercise price of $1.92 per share (see Note 8) and an expiration date of January 31, 2017.  As discussed further in Subsequent Events (see Note 17), these warrants were exchanged for newly issued warrants in January 2017.

Each of the 3,000,000 shares of Series C Preferred Stock was convertible, in whole or in part, at RES’s option, at any time, but subject to RES’s beneficial ownership limitation, into the number of shares of common stock equal to the $10.00 per share liquidation preference, divided by the conversion price then in effect,  which is equal to the rate of 6.25 shares of common stock for each share of Series C Preferred Stock.  As a result of the subscription rights offering concluded on June 6, 2014 (see Note 9), the conversion price was adjusted downward from $8.00 to $1.60, equal to the public offering price of our common stock in the subscription rights offering, where the conversion price remained until the instrument’s extinguishment.  A holder of Series C Preferred Stock would not have conversion rights to the extent the conversion would cause the holder and its affiliates to beneficially own more than 34% of voting stock (the “Beneficial Ownership Limitation”). “Voting stock” means capital stock having the power to vote generally for the election of directors of the Company.  A holder of warrants would similarly not have exercise rights to the extent the exercise of a warrant would cause the holder and its affiliates to own capital stock in an amount exceeding the Beneficial Ownership Limitation.

Each share of Series C Preferred Stock was entitled to a dividend of $0.625 per year payable in equal quarterly dividends. Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series C Preferred Stock to preserve capital and improve liquidity. Unpaid dividends accumulated and bore additional dividends at 6.25%, compounded quarterly. Accumulated but unpaid dividends were$4,492, or $1.497 per share, as of December 31, 2015. These dividends are not reflected as an obligation on the balance sheet.

The Series C Preferred Stock voted with the common stock as one class, subject to certain voting limitations. For any vote, the voting power of the Series C Preferred Stock was equal to the lesser of: (a) 0.78625 vote per share or (b) an amount of votes per share such that the vote of all shares of Series C Preferred Stock in the aggregate equal 34% of the combined voting power of all the Company voting stock, minus an amount equal to the number of votes represented by the other shares of voting stock beneficially owned by RES and its affiliates. 

On March 16, 2016, the Series C Preferred Stock was extinguished under the Exchange Agreement discussed above.  Upon this extinguishment, the difference between the recorded value of the Series C Preferred Stock prior to the exchange and the fair value of the consideration received in the exchange, a total of $20,366, was recorded as a reduction of accumulated deficit as the amount is considered a deemed dividend on the Series C Preferred Stock.  Of

78

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

this amount, $15,874 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividend that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series D Preferred Stock

Following the execution of the Stock Purchase Agreement and Exchange Agreement on March 16, 2016, there were 6,245,156 shares of Series D Preferred Stock outstanding. 

The Series D Preferred stockholders rank senior to the Company’s common stock and any other preferred stock issuances and receive preferential cumulative cash dividends at a rate of 6.25% per annum, payable quarterly in arrears on each March 31, June 30, September 30, and December 31, or, if not a business day, the next succeeding business day, of the $10.00 face value per share.  Dividends on the Series D Preferred Stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement. Whenever the dividends on the Series D Preferred Stock are in arrears for four consecutive quarters, then upon notice by holders of in the aggregate not less than 40% of the outstanding Series D Preferred Stock, the Company will (a) take all appropriate action reasonably within its means to maximize the assets legally available for paying such dividends and to monetize such assets (for example, but without limiting the generality of the foregoing, by selling or liquidating all of some of the Company’s assets or by selling the Company as a going concern), (b) pay out of all such assets legally available (including any proceeds from any sale or liquidation of such assets) the maximum possible amount of such unpaid dividends, and (c) thereafter, at any time and from time to time when additional assets of the Company (including any proceeds from any sale or liquidation of such assets) become legally available to pay such unpaid dividends, pay such remaining unpaid dividends until all dividends accumulated on the Series D Preferred Stock have been fully paid.  Dividends on the Series D Preferred Stock were paid on June 30, 2016, September 30, 2016, and January 3, 2017 which included all amounts due through those dates.

Each share of Series D Preferred Stock is convertible, at the option of the holder, at any time into a number of shares of common stock determined by dividing the conversion price of $1.60 into an amount equal to the $10.00 face value per share plus accrued and unpaid dividends, if any. The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends.  Each outstanding share of Series D Preferred Stock will be converted into a number of shares of common stock determined by dividing the conversion price of $1.60 into the $10.00 face value per share, which is equal to a rate of 6.25 shares of common stock for each share of Series D Preferred Stock, automatically upon closing of a Qualified Offering (defined as a single offering of common stock of at least $50,000 or up to three offerings in the aggregate of at least $75,000, all with certain minimum prices per share and a potential make whole payment required in certain scenarios) without any further action by the holders of such shares or the Company.

The Series D Preferred Stock is redeemable by the Company at any time subject to certain restrictions, in whole or in a partial redemption of up to $30,000, at $12.00 per share on or before March 16, 2019, $13.00 per share from March 16, 2019 to March 16, 2020, and $14.00 per share on or after March 16, 2020, plus all accrued and unpaid dividends.  If a Qualified Offering has not occurred on or before September 30, 2021, holders that hold in the aggregate not less than 40% of the outstanding shares of the Series D Preferred Stock have the right to elect to have the Company fully liquidate in a commercially reasonable manner as determined by the Board of Directors of the Company to provide for liquidation distributions to the holders of the Series D Preferred Stock in an amount per share equal to $14.00 in cash plus accrued and unpaid dividends.  Once this right has been exercised and the Company has been notified, the dividend rate on the Series D Preferred Stock after September 30, 2021 will increase from 6.25% per annum to 12.5% per annum. The holders of Series D Preferred Stock vote their Series D Preferred Stock as a single class with the holders of the common stock on all matters submitted to such holders for vote or consent. For each such vote or consent, each share of Series D Preferred Stock entitles the holder to cast one vote for each whole vote (rounded to the nearest whole number) that such holder would be entitled to cast had such holder

79

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

converted its Series D Preferred Stock into shares of common stock as of the date immediately prior to the record date for determining the shareholders of the Company eligible to vote on any such matter.

The fair value of the Series D Preferred Stock was determined to be equal to its face value on the date of issuance.

As discussed further as a subsequent event (see Note 17), on February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted to common stock.  At the time of conversion, the Series D holders were granted $9,250 of newly created Series E Preferred Stock.

Impact of Preferred Stock on Net Earnings (Loss) Attributable to Common Shareholders

The components of dividends declared and undeclared and in kind dividends deemed on preferred stock are as follows:

	Year ended December 31,
	2016		2015		2014
Preferred A dividends accrued at stated rate	$	222	$	727	$	671
Preferred A additional deemed dividends upon redemption		652		-		-
Preferred B dividends accrued at stated rate		243		831		831
Preferred B additional deemed dividends upon redemption		668		-		-
Preferred C dividends accrued at stated rate		455		2,074		1,950
Preferred C additional deemed dividends at exchange		15,418		-		-
Preferred D dividends accrued at stated rate		3,090		-		-
Dividends declared and undeclared and in kind dividends deemed on preferred stock	$	20,748	$	3,632	$	3,452

NOTE 11.  NONCONTROLLING INTEREST OF COMMON UNITS IN CHLP

At December 31, 2016 and 2015,  7,872,943 and 7,659,039 of CHLP’s common units were outstanding, respectively. These amounts include 2,609,791 and 2,395,887 common units held by limited partners at December 31, 2016 and 2015, respectively, and 5,263,152 LTIP units outstanding at December 31, 2016 and 2015 which were not yet earned at those dates (see Note 12).The combined redemption value for the common units and LTIP units was $2,008 and $1,197at December 31, 2016 and 2015, respectively.

Our ownership interest in CHLP as of December 31, 2016, 2015, and 2014 was 97.8%,  90.1%, and 99.9%, respectively, which includes consideration of the common units of the limited partners as well as the LTIP units.The Company’s increased ownership interest in CHLP during 2016 was primarily the result of the contribution to CHLP of the proceeds from the Series D Preferred Stock issuance during the first quarter of 2016 which was partially offset by the proceeds used to redeem the Series A and B Preferred Stock, which were withdrawn from CHLP, in the second quarter of 2016 (see Note 10).  The Company’s decreased ownership in CHLP during 2015 was a result of two events.  On March 2, 2015, the Company granted an equity award of 5,263,152 LTIP units to an executive officer representing profit interests in the Company’s operating partnership (see Note 12).  On October 1 and 2, 2015, as partial consideration for the purchase of hotels (see Note 3), 2,298,879 common units in CHLP were issued.

Each limited partner of CHLP may, subject to certain limitations, require that CHLP redeem all or a portion of his or her common units at any time after a specified period following the date the units were acquired, by delivering a redemption notice to CHLP. When a limited partner tenders common units for redemption, the Company can, at its sole discretion, choose to purchase the units for either (1) a number of shares of Company common stock at a rate of one share of common stock for each eight common units redeemed or (2) cash in an amount equal to the market

80

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

value of the number of shares of Company common stock the limited partner would have received if the Company chose to purchase the units for common stock. No common units were redeemed in 2016, 2015, or 2014.

NOTE 12.  STOCK-BASED COMPENSATION

The Company previously had a 2006 Stock Plan which had been approved by the Company’s shareholders. The 2006 Stock Plan authorized the grant of stock options, stock appreciation rights, restricted stock, and stock bonuses for up to 62,500 shares of common stock. The 2006 Stock Plan expired onDecember 31, 2015.

As a replacement for the 2006 Stock Plan, the Board of Directors adopted the Condor 2016 Stock Plan, which was approved by the Company’s shareholders at the annual shareholders meeting on June 15, 2016.  The 2016 Stock Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, deferred stock units, and other forms of stock-based compensation.  The maximum number of shares of the Company’s common stock that may be issued under the 2016 Stock Plan is 3,000,000, provided, however, that awards under this plan may not exceed 250,000 shares of common stock prior to the conversion into common stock of all shares of Series D Preferred Stock (see Note 10). 

Options and Unvested Share Awards

At December 31, 2016, the Company had a total of 5,625 vested stock options outstanding with a weighted average exercise price of $7.53 per share and no unvested stock options or unvested share awardsoutstanding.  

Warrants

On March 2, 2015, the Company granted a warrant to an executive officer of the Company outside of the 2006 Stock Plan as an inducement material to the executive’s acceptance of employment. The warrant entitles the executive to purchase a total of 657,894 authorized but previously unissued shares of the Company’s common stock with a grant date price at (i) $1.52 per share (the adjusted closing bid price of the common stock on Nasdaq on March 2, 2015) if at least one-third but not more than one-half of the shares were purchased on or prior to March 17, 2015, and (ii) $1.92 per share for shares purchased after. The warrant has a three-year term. The executive officer exercised the warrant in part to purchase 227,894 shares on March 11, 2015 at the price of $1.52 per share. The warrant remains exercisable for 430,000 shares at an exercise price of $1.92 per share. As of December 31, 2016, the total unrecognized compensation cost related to the warrants was approximately $115, which is expected to be recognized over the next 14months. 

The Company records compensation expense for warrants based on the estimated fair value of the warrants on the date of grant determined using the Black-Scholes option-pricing model.  The Company uses historical data among other factors to estimate expected price volatility, expected warrant life, dividend rate, and expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield in effect at the time of grant for the estimated life of thewarrants.  The following table summarizes the estimates used in the Black-Scholes option-pricing model related to the warrants granted in 2015:

	$1.52 Grant		$1.92 Grant
	March 2, 2015		March 2, 2015
Volatility	53.10	%	78.60	%
Expected forfeitures	0.00	%	0.00	%
Expected term	15	days	3.00	years
Risk free interest rate	0.02	%	1.06	%

LTIP Awards

81

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

On March 2, 2015, the Company granted an equity award of 5,263,152 LTIP units, representing profit interests in CHLP, to an executive officer of the company. The LTIP units are earned in one-third increments upon the Company’s common stock achieving price per share milestones of $3.50,  $4.50, and $5.50 respectively.  Earned LTIP units vest in March 2018, or earlier upon a change in control of the Company, and can be redeemed at the rate of one share of common stock for each eight earned LTIP units for up to 657,894 common shares. As of December 31, 2016, the total unrecognized compensation cost related to the LTIP units was $199, which is expected to be recognized over the next 14months. 

The Company records compensation expense for the LTIP units based on the estimated fair value of the units on the date of grant determined using the Monte Carlo simulation model.  The Company uses historical data among other factors to estimate expected price volatility, expected LTIP life, volume weighted average price, and expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield in effect at the time of grant for the estimated life of the LTIP.  The following table summarizes the estimates used in the Monte Carlo option-pricing model related to the LTIP grant in 2015:

	Grant Date March 2, 2015
Volatility		75.5	%
Expected forfeitures		0.00	%
Weighted average price	$	1.53
Expected term		3.00	years
Risk free interest rate		1.06	%

Investment Committee Share Compensation

Independent directors serving as members of the Investment Committee of the Board of Directors receive their monthly Investment Committee fees in the form of shares of the Company’s common stock issued under the available stock plan, priced as the average of the closing price of the stock for the first 20 trading days of the calendar year. The shares issued to the independent directors of the Investment Committee for the year ended December 31, 2016 under the 2016 Stock Plan totaled 15,349.  The shares issued for the years ended December 31, 2015 and 2014 under the 2006 Stock Plan totaled 21,422 and9,711, respectively.

Stock-Based Compensation Expense

The expense recognized in the financial statements for stock-based compensation, including the LTIP, related to employees and directors for the years ended December 31, 2016, 2015, and 2014 was $305,  $285, and $34, respectively, all of which is included in general and administrative expense. 

NOTE 13.  INCOME TAXES

The Company has recognized no current or deferred income tax expense or benefit from continuing operations or related to discontinued operations for the years ended December 31, 2016, 2015, and 2014 with the exception of Alternative Minimum Tax (“AMT”) recognized at both the REIT and the TRS during the year ended December 31, 2016.  Income tax expense related to AMT totaled $35 for the REIT and $90 for the TRS and was the result of the application of limits on the use of net operating loss carryovers to offset AMT income.

82

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Actual income tax expense of the TRS for the years ended December 31, 2016, 2015, and 2014 differs from the “expected” income tax expense (benefit) (computed by applying the appropriate U.S. federal income tax rate of 34% to earnings before income taxes) as a result of the following:

	Year ended December 31,
	2016		2015		2014
Computed "expected" income tax (benefit) expense	$	993	$	684	$	(118)
State income taxes, net of federal income tax (benefit) expense		139		82		(14)
(Decrease) increase in valuation allowance		(1,082)		(722)		132
Other		(50)		(44)		-
Alternative minimum tax		90		-		-
Total income tax expense	$	90	$	-	$	-

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are as follows:

	As of December 31,
	2016		2015
Deferred Tax Assets
Expenses accrued for consolidated financial statement purposes, nondeductible for tax return purposes	$	99	$	113
Net operating losses carried forward for federal income tax purposes		1,477		6,902
Book depreciation in excess of tax depreciation		38		-
Subtotal deferred tax assets		1,614		7,015
Valuation allowance		(1,551)		(6,923)
Total deferred tax assets		63		92
Deferred Liabilities
Tax depreciation in excess of book depreciation		-		92
JV basis difference		63		-
Total deferred tax liabilities		63		92
Net deferred tax assets	$	-	$	-

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers projected reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Management uses historical experience and short and long-range business forecasts to develop such estimates. Further, we employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. A cumulative loss in recent years is a significant piece of evidence with respect to realizability that outweighs the other evidence, and the TRS incurred net losses in 2014 and had taxable income in 2016 and 2015 primarily due to taxable income generated from property sales during the year.  As a result of this analysis, the Company believes that a full valuation allowance against the net deferred tax asset position is necessary at December 31, 2016 and 2015. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and future profitability. Our accounting for deferred taxes represents our best estimate of those future events. Changes in our current estimates, due to unanticipated events or otherwise, could have a material impact on our financial condition and results of operations. 

After consideration of limitations related to a change in control as defined under Internal Revenue Code Section 382 following the Company’s 2012 transactions with RES (see Note 10),  the TRS’s net operating loss carryforward at

83

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

December 31, 2016 as determined for federal income tax purposes was $3,810.  The availability of the loss carryforwards will expire in 2022 through 2035.

As of December 31, 2016, the tax years that remain subject to examination by major tax jurisdictions generally include 2013 through 2016.

Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary income.  Distributions in excess of current and accumulated earnings and profits generally will be treated as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable capital gain.  Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares.

For income tax purposes, distributions paid per share in 2016 were characterized as follows:

	For the year ended December 31, 2016
	Amount		%
Common Shares:
Ordinary income	$	0.070000	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.070000	100%
Series C Preferred Stock:
Ordinary income	$	1.649124	100%
Capital gain		-	-
Return of capital		-	-
Total	$	1.649124	100%
Series D Preferred Stock:
Ordinary income	$	0.494792	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.494792	100%

The common and preferred share distributions declared on December 6, 2016 and paid on January 5, 2017 and January 3, 2017, respectively, were treated as 2016 distributions for tax purposes. 

A portion of the redemption price of the Series A and B Preferred Stock that was redeemed for cash on April 15, 2016 included amounts equal to the accrued and unpaid dividends on such stock.  However, the entire redemption price, inclusive of amounts equal to accrued and unpaid dividends, was treated as payment in exchange for the redeemed stock and none of the redemption price is treated as a distribution of dividends under the Code for federal income tax purposes.

No dividends on common stock or preferred stock were paid in or declared related to 2015 or 2014.

NOTE 14. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding.  Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of any dilutive potential common shares

84

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

outstanding during the period. These effects include adjustments to the numerator for any change in fair value included in net earnings (loss) attributed to the certain derivative liabilities (related to the Series C Preferred Stock and warrants) during the period the convertible securities are dilutive. The computation of basic and diluted EPS is presented below:

	Year ended December 31,
	2016		2015		2014
Numerator: Basic (1)
Net earnings (loss) attributable to common shareholders
Continuing operations - Basic	$	1,390	$	6,055	$	(22,581)
Discontinued operations - Basic		657		3,438		2,893
Total Basic	$	2,047	$	9,493	$	(19,688)
Numerator: Diluted (1)
Net earnings (loss) attributable to common shareholders from continuing operations	$	1,390	$	6,055	$	(22,581)
Dividends on Series C Preferred Stock		-		2,074		-
Dividends on Series D Preferred Stock		3,090		-		-
Unrealized gain on warrant derivative		-		(4,122)		-
Unrealized gain on Series C Preferred Embedded Derivative		-		(7,533)		-
Continuing operations - Diluted		4,480		(3,526)		(22,581)
Discontinued operations - Diluted		657		3,438		2,893
Total Diluted	$	5,137	$	(88)	$	(19,688)
Denominator
Weighted average number of common shares - Basic		4,947,234		4,885,625		3,897,092
Unvested stock		-		4,025		-
Series C Preferred Stock		-		18,750,000		-
Series D Preferred Stock		31,033,818		-		-
Warrants - Employees		-		691		-
Warrants - RES		-		(399,778)		-
Weighted average number of common shares - Diluted		35,981,052		23,240,563		3,897,092
Earnings Per Share
Continuing operations - Basic	$	0.28	$	1.24	$	(5.79)
Discontinued operations - Basic		0.13		0.70		0.74
Total - Basic Earnings Per Share	$	0.41	$	1.94	$	(5.05)
Continuing operations - Diluted	$	0.12	$	(0.15)	$	(5.79)
Discontinued operations - Diluted		0.02		0.15		0.74
Total - Diluted Earnings Per Share	$	0.14	$	-	$	(5.05)

(1) The loss (earnings) attributable to noncontrolling interest is allocated between continuing and discontinued operations for the purpose of the EPS calculation

85

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Potentially dilutive common shares, if any, have been excluded from the denominator if they are antidilutive to net earnings (loss) attributable to common shareholders.  The following table summarizes the weighted average number of potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted EPS:

	Year ended December 31,
	2016	2015	2014
Outstanding stock options	5,625	5,625	8,750
Unvested stock awards outstanding	-	-	1,541
Warrants - RES	3,750,000	-	3,750,000
Warrants - Employees	430,000	359,121	-
Series C preferred Stock	3,893,443	-	18,750,000
LTIP common units (1)	657,894	549,747	-
Convertible debt	502,690	-	551,370
CHLP common units (1)	300,728	84,556	12,126
Total potentially dilutive securities excluded from the denominator	9,540,380	999,049	23,073,787

(1) LTIP and common units of CHLP have been omitted from the denominator for the purpose of computing diluted EPS since the effect of including these amounts in the numerator and denominator would have no impact on calculated EPS

NOTE 15.  COMMITMENTS AND CONTINGENCIES

Management Agreements

Our TRS engages eligible independent contractors as property managers for each of our hotels in accordance with the requirements for qualification as a REIT.  The hotel management agreements provide that the management companies have control of all operational aspects of the hotels, including employee-related matters. The management companies must generally maintain each hotel under their management in good repair and condition and perform routine maintenance, repairs, and minor alterations. Additionally, the management companies must operate the hotels in accordance with the national franchise agreements that cover the hotels, which includes, as applicable, using franchisor sales and reservation systems and abiding by franchisors’ marketing standards.  The management agreements generally require the TRS to fund debt service, working capital needs, and capital expenditures and to fund the management companies’ third-party operating expenses, except those expenses not related to the operation of hotels.  The TRS also is responsible for obtaining and maintaining certain insurance policies with respect to the hotels.

Each of the management companies employed by the TRS at December 31, 2016 receive a base monthly management fee of 3.0% to 3.5% of gross hotel revenue, with incentives for performance which increase such fee to a maximum of 5.0%.  For the years ended December 31, 2016, 2015, and 2014, base management fees incurred totaled $1,619,  $2,466, and $3,101, respectively, of which $1,619,  $2,348, and $2,521, respectively, was included in continuing operations as hotel and property operations expense.  For the years ended December 31, 2016 and 2015, incentive management fees, included in continuing operations in their entirety, totaled $190 and $158, respectively.

The management agreements generally have initial terms of one to three years and renew for additional terms of one year unless either party to the agreement gives the other party written notice of termination at least 90 days before the end of a term.  The Company may terminate a management agreement, subject to cure rights, if certain performance metrics tied to both individual hotel and total managed portfolio performance are not met. The Company may also terminate a management agreement with respect to a hotel at any time without reason upon payment of a termination fee.The management agreements terminate with respect to a hotel upon sale of the hotel, subject to certain notice requirements.

86

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Franchise Agreements

As of December 31, 2016,  17 of our18 wholly owned properties operate under franchise licenses from national hotel companies.  Under our franchise agreements, we are required to pay franchise fees generally between  3.3% and 5.5% of room revenue, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and  6.0% of room revenue.  The franchise agreements typically have 10 to 25 year termsalthough certain agreements may be terminated by either party on certain anniversary dates specified in the agreements.  Further, each agreement provides for early termination fees in the event the agreement is terminated before the stated term.  Franchise fee expense totaled $3,123,  $3,883, and $4,691, for the years ended December 31, 2016, 2015, and 2014, respectively, of which $3,123,  $3,853, and $4,051, respectively, was included in continuing operations as hotel and property operations expense. The initial fees incurred to enter into the franchise agreements are capitalized and amortized over the life of the franchise agreements.

Leases

The Company assumed a land lease agreementat the time of purchaserelated to one hotel owned at December 31, 2016.  The lease requires monthly payments of the greater of $2 or 5% of room revenue and is associated with a property held for sale at December 31, 2016.   Land lease expense totaled $105,  $105, and $102 for the years ended December 31, 2016, 2015, and 2014, respectively, all of which is included in continuing operationsas hotel and property operations expense.

The Company entered intothree new office lease agreements in 2016, replacing all existing office lease agreements which expired in 2016.  These leases expire in 2019 through 2021 and have combined rent expense of approximately $132 annually.  Office lease expense totaled $199,  $163, and $162 in the years ended December 31, 2016, 2015, and 2014, respectively, and is included in general and administrative expense.

As of December 31, 2016, the future minimum lease payments applicable to non-cancellable operating leases, excluding leases associated with properties held for sale at December 31, 2016, are as follows:

		Lease rents
2017	$	156
2018		159
2019		138
2020		61
2021		47
	$	561

As of December 31, 2016, the Company had agreements with two restaurants and a cell tower operator for leased space at our hotel locations. Lease income totaled $86,  $198, and $309 for the years ended December 31, 2016, 2015, and 2014, respectively, of which $86,  $177, and $292, respectively, was included in continuing operations in room rentals and other hotel services revenue.

Obligation to RES

The Company had an obligation to RES to use $25,000 of the proceeds from its capital infusion in 2012 to pursue hotel acquisitions (see Note 10). There were no contractual restrictions or penalties related to the use of these funds for purposes other than acquisitions, but the Company was obligated to replace these funds promptly as it had the ability to do so.Following the completion of the hotel acquisitions in 2015 and 2016 (see Note 3) and the acquisition made through the Atlanta JV in August 2016 (see Note 5), the Company has satisfied this obligation.

87

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Benefit Plans

The Company has a qualified contributory retirement plan under Section 401(k) of the Code (the “401(k) Plan”) which covers all employees who meet certain eligibility requirements.  Voluntary contributions may be made to the 401(k) Plan by employees.  The 401(k) Plan is a Safe Harbor Plan and requires a mandatory employer contribution.  The employer contribution expense for the years ended December 31, 2016, 2015, and 2014 was $73,  $66, and $59, respectively, and is included in general and administrative expenses.

Litigation

Various claims and legal proceedings arise in the ordinary course of business and may be pending against the Company and its properties.  We are not currently involved in any material litigation, nor, to our knowledge, is any material litigation threatened against us.  The Company has insurance to cover potential material losses and we believe it is not reasonably possible that such matters will have a material impact on our financial condition or results of operations.

88

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

NOTE 16. QUARTERLY OPERATING RESULTS (UNAUDITED)

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2016		2016		2016		2016		2016
Revenue	$	12,503	$	14,155	$	13,519	$	10,470	$	50,647
Operating expenses		12,662		12,508		12,445		11,009		48,624
Operating income (loss)		(159)		1,647		1,074		(539)		2,023
Net gain on dispositions of assets		3,367		8,856		3,591		7,318		23,132
Equity in loss of joint venture		-		-		(54)		(190)		(244)
Net gain on derivatives and convertible debt		6,117		162		26		72		6,377
Other income (expense)		(21)		23		85		(32)		55
Interest expense		(1,329)		(1,248)		(1,127)		(1,006)		(4,710)
Loss on debt extinguishment		(173)		(976)		(399)		(639)		(2,187)
Impairment loss		(793)		(121)		(343)		(220)		(1,477)
Earnings from continuing operations before income tax expense		7,009		8,343		2,853		4,764		22,969
Income tax expense		-		-		-		(125)		(125)
Earnings (loss) from continuing operations		7,009		8,343		2,853		4,639		22,844
Gain from discontinued operations, net of tax		678		-		-		-		678
Net earnings		7,687		8,343		2,853		4,639		23,522
Earnings attributable to noncontrolling interest		(389)		(178)		(61)		(99)		(727)
Earnings attributable to controlling interests		7,298		8,165		2,792		4,540		22,795
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(17,740)		(1,057)		(976)		(975)		(20,748)
Net earnings (loss) attributable to common shareholders	$	(10,442)	$	7,108	$	1,816	$	3,565	$	2,047
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	(2.25)	$	1.44	$	0.37	$	0.72	$	0.28
Basic EPS from discontinued operations		0.14		-		-		-		0.13
Total EPS Basic	$	(2.11)	$	1.44	$	0.37	$	0.72	$	0.41
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(2.25)	$	0.18	$	0.06	$	0.10	$	0.12
Diluted EPS from discontinued operations		0.14		-		-		-		0.02
Total EPS Diluted	$	(2.11)	$	0.18	$	0.06	$	0.10	$	0.14

(1) Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

89

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2015		2015		2015		2015		2015
Revenue	$	12,692	$	16,733	$	15,895	$	13,394	$	58,714
Operating expenses		13,134		14,247		13,983		13,826		55,190
Operating income (loss)		(442)		2,486		1,912		(432)		3,524
Net gain (loss) on dispositions of assets		11		(137)		2,927		1,997		4,798
Net gain (loss) on derivatives and convertible debt		4,823		(4,710)		7,895		3,570		11,578
Other income (expense)		95		31		(4)		(8)		114
Interest expense		(1,547)		(1,510)		(1,137)		(1,328)		(5,522)
Loss on debt extinguishment		(7)		-		(104)		(102)		(213)
Impairment recovery (loss)		(777)		(3,053)		313		(312)		(3,829)
Earnings (loss) from continuing operations before income tax expense		2,156		(6,893)		11,802		3,385		10,450
Income tax expense		-		-		-		-		-
Earnings (loss) from continuing operations		2,156		(6,893)		11,802		3385		10,450
Gain from discontinued operations, net of tax		1,294		994		152		1,432		3,872
Net earnings (loss)		3,450		(5,899)		11,954		4,817		14,322
(Earnings) loss attributable to noncontrolling interest		(281)		284		(724)		(476)		(1,197)
Earnings (loss) attributable to controlling interests		3,169		(5,615)		11,230		4,341		13,125
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(891)		(902)		(914)		(925)		(3,632)
Net earnings (loss) attributable to common shareholders	$	2,278	$	(6,517)	$	10,316	$	3,416	$	9,493
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	0.24	$	(1.52)	$	2.06	$	0.44	$	1.24
Basic EPS from discontinued operations		0.24		0.20		0.03		0.25		0.70
Total EPS Basic	$	0.48	$	(1.32)	$	2.09	$	0.69	$	1.94
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(0.14)	$	(1.52)	$	0.12	$	(0.04)	$	(0.15)
Diluted EPS from discontinued operations		0.05		0.20		0.01		0.05		0.15
Total EPS Diluted	$	(0.09)	$	(1.32)	$	0.13	$	0.01	$	-

(1)  Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

90

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

NOTE 17.  SUBSEQUENT EVENTS

Subsequent Property Activity

On January 23, 2017 the Company executed an agreement to purchase a portfolio of four Home2 Suites hotels for $73,750.  The portfolio includes the Home2 Suites Memphis / Southaven, the Home2 Suites Austin / Round Rock, the Home2 Suites Lexington University / Medical Center (Kentucky), and the Home2 Suites Tallahassee State Capitol.  The closing of these acquisitions is anticipated to occur in the first quarter of 2017, but is subject to customary closing conditions including accuracy of representations and warrants and compliance with covenants and obligations.

Subsequent Debt Transactions

On January 27, 2017, the Company extended the maturity date on the WAB loan with a principal balance of $4,806 on December 31, 2016 from February 1, 2017 to February 1, 2018.  This loan was subsequently repaid in full with the refinancing discussed below.

On March 1, 2017, a significant portion of the Company’s debt (including all debt outstanding at December 31, 2016 with the exception of the two variable rate WAB loans and the two fixed rate Great Western Bank loans) was refinanced with a secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual debt maturities on debt outstanding at December 31, 2016 were as follows:

	Held for sale		Held for use		Total
2017	$	-	$	916	$	916
2018		-		930		930
2019		6,000		27,691		33,691
2020		-		14,180		14,180
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

The credit agreement provides for a $90,000 senior secured credit facility and includes an accordion feature that would allow the facility to be increased to $400,000 with additional lender commitments.  Availability under the facility is based on a borrowing base formula for the pool of hotel properties securing the facility.  As of the closing date, the collateral pool consisted of 14 hotel properties.  As of the closing date, four hotels were excluded from the borrowing base until certain conditions are satisfied and the availability under the facility was $34,250.  Those four hotels are expected to be added to the borrowing base within days after the closing and the availability under the facility is expected to increase to $41,050.  The facility is guaranteed by the Company and its material subsidiaries that do not have stand-alone financing.  Prior to the occurrence of specific capital achievements, borrowings under the facility accrue interest, at the Company’s option, at either LIBOR plus 3.95% or a base rate plus 2.95%.  Thereafter, borrowings bear interest based on a leverage-based pricing grid, at the Company’s option, at either LIBOR plus a spread ranging from 2.25% to 3.00%(depending on leverage) or a base rate plus a spread ranging from 1.25%to 2.00% (depending on leverage).  The facility matures in two years and has an automatic one-year extension upon the completion of specific capital achievements.  The facility has two additional one-year extension options following additional capital achievements.  The facility contains customary representations and warranties, covenants and events of default.

On March 1, 2017, the Company borrowed $34,250 under the facility to repay existing indebtedness and pay reserves costs related to closing of the facility.  The Company anticipates using borrowings under the facility to acquire three out of the four Home2 Suites hotels currently under contract to be acquired, which will be added to the collateral pool for the facility.  Borrowings under the facility can also be used for future acquisitions and general corporate purposes.

91

Condor Hospitality Trust, Inc. and Subsidiaries

Notes To Consolidated Financial Statements

(In thousands, except share and per share data)

Subsequent Equity Transactions

On January 24, 2017, the Company exchanged 150,540 new warrants (the “New Warrants”) to purchase common stock of the Company for 3,750,000 warrants (the “Old Warrants”, see Note 10) held by RES.The number of New Warrants issued in exchange for the Old Warrants equals the number of shares of common stock issuable upon exercise of the Old Warrants pursuant to a cashless exercise provisions of the Old Warrants. The New Warrants are exercisable for 150,540 shares of common stock, have an exercise price of $.001 for each common share and expire on January 24, 2019.  

On February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted their shares into 39,032,225 shares of common stock at $1.60 per share pursuant to the terms of the preferred stock.  The terms of the Series D Preferred Stock provided for automatic conversion following certain future common stock offerings, and also provided for potential additional payments to the holders depending on the sales price of common stock in the offerings. As a result of the voluntary conversion, the holders are no longer entitled to the potential payments. To induce the holders of the Series D Preferred Stock to voluntarily convert their shares, the Company issued the holders $9,250 of a new series of preferred stock, the Series E Preferred Stock.

The Series E Preferred Stock ranks senior to the Company’s common stock and any other preferred stock issuances and receives preferential cumulative cash dividends at a rate of 6.25% per annum, payable quarterly of the $10.00 face value per share.  If the Company fails to pay a dividend then during the period that dividends are not paid, the dividend rate increases to 12.5%, if specific equity offering or offerings have not occurred, and increases 9.50% per annum if such equity or equity offerings have occurred. Dividends on the Series E Preferred Stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement.  Subject to certain shareholder approvals, required under Nasdaq Marketplace Rules, which Condor will seek and expects to obtain at the next annual shareholders meeting, each share of Series E Preferred Stock is convertible, at the option of the holder, at any time on or after February 28, 2019, into a number of shares of common stock determined by dividing the conversion price of $2.13 into an amount equal to the $10.00 face value per share plus accrued and unpaid dividends, if any. Upon liquidation, each share of Series E Preferred Stock is entitled to $10.00 per share, accrued and unpaid dividends, and an additional amount based on liquidation preference that the holders may have foregone by converting their Series D Preferred Stock into common stock, as adjusted for stock appreciation and dividends paid on the common stock.  The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends. Following a specific equity offering or offerings, from time to time a number of shares of Series E Preferred Stock automatically converts into common stock if the common stock trades at 120% of the conversion price for 60 trading days, and the number of shares converted will be determined by certain trading volumes measures. The Company has rights, following a specific equity offering or offerings, to redeem up to 490,250 shares of the Series E Preferred Stock at prices from 110% to 130% of its liquidation value, and the holders have put rights commencing March 16, 2021 to put the Series E Preferred Stock to the Company at 130% of its liquidation preference, which the Company can satisfy with cash or common stock.The Series E Preferred Stock votes as a class on matters generally affecting the Series E Preferred Stock, and as long as 434,750 shares of Series E Preferred Stock (47% of the originally issued shares of Series E Preferred Stock) remain outstanding, then 75% approval of the Series E Preferred Stock will be required to approve merger, consolidation, liquidation or winding up of Condor, related party transactions exceeding $120, payment of dividends on common stock except from funds from operations or to maintain REIT status, the grant of exemptions from Condor’s charter limitation on ownership of 9.9% of any class or series of its securities (exclusive of persons currently holding exemptions), issuance of preferred stock or commitment or agreement to do any of the foregoing.

92

Condor Hospitality Trust, Inc. and Subsidiaries

Schedule III Real Estate and Accumulated Depreciation

As of December 31, 2016

(In thousands)

										Additions, (dispositions),
										(impairments)
				Initial cost						Subsequent to acquisition							Gross amount at December 31, 2016
Brand	Location	Acquisition date	Encumbrance	Land		Buildings & improvements		Furniture & equipment		Land		Buildings & improvements			Furniture & equipment		Land		Buildings & improvements		Furniture & equipment		Accumulated depreciation		Net book value
Super 8	Creston, Iowa	09/19/1978	GWBR	$	56	$	765	$	76	$	90	$	1,574		$	892	$	146	$	2,339	$	968	$	(2,213)	$	1,240
Quality Inn	Solomons, Maryland	06/01/1986	WAB		2,304		2,719		269		-		1,514			436		2,304		4,233		705		(3,220)		4,022
Comfort Inn	New Castle, Pennsylvania	07/01/1987	MS		57		3,732		369		(1)		344			426		56		4,076		795		(2,550)		2,377
Key West Inn	Key Largo, Florida	08/01/1987	MS		339		2,947		292		-		1,186			342		339		4,133		634		(2,553)		2,553
Comfort Inn	Harlan, Kentucky	07/01/1993	WAB		-		2,684		265		-		(1,265)			512		-		1,419		777		(532)		1,664
Quality Inn	Morgantown, West Virginia	10/01/1996	MS		398		3,749		347		-		633			704		398		4,382		1,051		(2,732)		3,099
Comfort Suites	Ft. Wayne, Indiana	11/07/2005	HUNT		1,200		3,964		840		-		1,037			591		1,200		5,001		1,431		(2,555)		5,077
Comfort Suites	Lafayette, Indiana	11/07/2005	HUNT		850		3,054		420		-		375			301		850		3,429		721		(1,561)		3,439
Comfort Inn & Suites	Warsaw, Indiana	11/07/2005	HUNT		650		2,121		380		-		380			438		650		2,501		818		(1,330)		2,639
Comfort Suites	South Bend, Indiana	11/30/2005	WAB		500		10,602		910		(250)		(4,264)			1,392		250		6,338		2,302		(1,691)		7,199
Supertel Inn	Creston, Iowa	06/30/2006	MS		235		2,364		344		-		(16)			65		235		2,348		409		(1,012)		1,980
Super 8	Billings, Montana	01/05/2007	WAB		518		4,648		159		(27)		(12)			259		491		4,636		418		(1,507)		4,038
Days Inn	Bossier City, Louisiana	04/04/2007	GWBR		1,025		5,031		87		(768)		(3,792)			750		257		1,239		837		(813)		1,520
Hilton Garden Inn	Dowell, Maryland	05/25/2012	CANTOR		1,400		9,492		323		-		621			348		1,400		10,113		671		(1,644)		10,540
SpringHill Suites	San Antonio, Texas	10/01/2015	LAT		1,597		14,353		1,550		-		114			20		1,597		14,467		1,570		(786)		16,848
Courtyard by Marriott	Jacksonville, Florida	10/02/2015	WABJ		2,100		11,050		850		-		152			3		2,100		11,202		853		(710)		13,445
Hotel Indigo	Atlanta, Georgia	10/02/2015	WABA		800		8,700		1,500		-		86			141		800		8,786		1,641		(729)		10,498
Aloft	Leawood, Kansas	12/14/2016	GWB		3,339		18,046		1,115		-		(5)			-		3,339		18,041		1,115		(57)		22,438
Subtotal Hotel Properties					17,368		110,021		10,096		(956)		(1,338)	-		7,620		16,412		108,683		17,716		(28,195)		114,616
Construction in progress					-		-				-		82			4		-		82		4		-		86
Office building					69		1,517		-		(69)		(1,517)			487		-		-		487		(318)		169
Total				$	17,437	$	111,538	$	10,096	$	(1,025)	$	(2,773)		$	8,111	$	16,412	$	108,765	$	18,207	$	(28,513)	$	114,871

93

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Schedule III Real Estate and Accumulated Depreciation

As of December 31, 2016

(In thousands)

Encumbrance codes refer to the following lenders:

MS	Morgan Stanley	WAB	Western Alliance Bank Fixed Rate Debt
GWBR	Great Western Bank Revolving Credit Facility	HUNT	Huntington
LAT	Latitude	CANTOR	Cantor
WABA	Western Alliance Bank Variable Rate Debt - $4.9m	WABJ	Western Alliance Bank Variable Rate Debt - $9.9m
GWB	Great Western Bank Fixed Rate Debt

See Accompanying Report of Independent Registered Public Accounting Firm

94

	ASSET BASIS	Total
(a)	Balance at January 1, 2014	$	248,468
	Additions		3,058
	Disposals		(32,646)
	Impairment loss		(4,295)
	Balance at December 31, 2014		214,585
	Additions		46,489
	Disposals		(65,802)
	Impairment loss		(6,373)
	Balance at December 31, 2015		188,899
	Additions		25,618
	Disposals		(68,256)
	Impairment loss		(2,877)
	Balance at December 31, 2016	$	143,384
	ACCUMULATED DEPRECIATION	Total
(b)	Balance at January 1, 2014	$	84,112
	Depreciation for the period ended December 31, 2014		6,549
	Depreciation on assets sold or disposed		(13,884)
	Impairment loss		(1,374)
	Balance at December 31, 2014		75,403
	Depreciation for the period ended December 31, 2015		5,400
	Depreciation on assets sold or disposed		(19,938)
	Impairment loss		(2,665)
	Balance at December 31, 2015		58,200
	Depreciation for the period ended December 31, 2016		5,190
	Depreciation on assets sold or disposed		(33,477)
	Impairment loss		(1,400)
	Balance at December 31, 2016	$	28,513

(c) The aggregate cost of land, buildings, furniture and equipment for Federal income tax purposes is approximately $148.4 million (unaudited).

(d) Depreciation is computed based upon the following useful lives:

Buildings and improvements     15 - 40 years

Furniture and equipment             3 - 12 years

(e) The Company has mortgages payable on the properties as noted.  Additional mortgage information can be found in Note 6 to the consolidated financial statements.

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ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was performed under the supervision of management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rule 13a-15 of the rules promulgated under the Securities and Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934 was (a) accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (b) recorded, processed, summarized,  and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Other than as discussed below, no changes in the Company’s internal controls over financial reporting occurred during the last fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Management’s Annual Report On Internal Control Over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Securities Exchange Act Rule 13a-15(f). The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2016. The Company’s management used the framework in Internal Control—Integrated Framework (2013)  issued by the Committee of Sponsoring Organizations (COSO) to perform this evaluation. Based on that evaluation, the Company’s management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2016.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Internal control over financial reporting was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.  OTHER INFORMATION

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None.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders.

ITEM 11.  EXECUTIVE COMPENSATION

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

RELATED STOCKHOLDER MATTERS

Certain of the information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders.

Equity Compensation Plan Information

The following table provides information about the Company’s common stock that may be issued upon exercise of options, warrants, and rights under existing equity compensation plans as of December 31, 2016:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants, and rights (a)		Weighted average exercise price of outstanding options, warrants, and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (including securities plans reflected in column(a)) (c)
Equity compensation plans approved by security holders		2,500	$	7.84		2,984,651 (1)
Equity compensation plans not approved by security holders		433,125		1.96		-
Total		435,625	$	2.00		-

(1) Represents shares issuable under the Company’s 2016 Stock Plan. The maximum number of shares of the Company’s common stock that may be issued under the 2016 Stock Plan is 3,000,000, provided, however, that awards under this plan may not exceed 250,000 shares of common stock prior to the conversion into common stock of all shares of Series D Preferred Stock.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

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The information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for the 2017 Annual Meeting of Stockholders.

PART IV

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Financial Statements and Financial Statement Schedules

The following financial statements and financial statement schedule are included in this report on the pages listed below:

	Page
Report of Independent Registered Public Accounting Firm	52
Consolidated Balance Sheets as of December 31, 2016 and 2015	53
Consolidated Statements of Operations for the Years Ended December 31, 2016,  2015, and 2014	54
Consolidated Statements of Equity for the Years Ended December 31, 2016,  2015, and 2014	55
Consolidated Statements of Cash Flows for the Years Ended December 31, 2016,  2015, and 2014	56
Notes to Consolidated Financial Statements	57
Schedule III – Real Estate and Accumulated Depreciation	92
Notes to Schedule III – Real Estate and Accumulated Depreciation	94

All other schedules for which provision is made in Regulation S-X are either not required to be included herein pursuant to the related instructions are inapplicable, or the related information is included in the footnotes to the applicable financial statement, and, therefore, have been omitted from this Item 15.

Exhibits

3.1*Amended and Restated Articles of Incorporation of the Company, as amended.

3.2 Bylaws of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated November 19, 2014).

10.1 Third Amended and Restated Agreement of Limited Partnership of Condor Hospitality Limited Partnership, as amended (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2016).

10.2 Amended and Restated Limited Liability Company Agreement of Spring Street Hotel Property II LLC dated as of August 22, 2016 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 22, 2016).

10.3Limited Liability Company Agreement of Spring Street Hotel OpCo II LLC dated as of August 22, 2016 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 22, 2016).

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10.4 Hotel Management Agreement dated June 29, 2016 by and between TRS Leasing, Inc., TRS Subsidiary, LLC and Kinseth Hotel Corporation (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 29, 2016).

10.5 Hotel Management Agreement dated June 29, 2016 by and between TRS Leasing, Inc., TRS Subsidiary, LLC and Strand Development Company, LLC (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 29, 2016).

10.6 Hotel Management Agreement dated June 29, 2016 by and between TRS Leasing, Inc., TRS Subsidiary, LLC, SPPR TRS Subsidiary, LLC, BMI Alexandria TRS Subsidiary, LLC and Hospitality Management Advisors, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 29, 2016).

10.7   Hotel Management Agreement dated June 29, 2016 by and between SPPR-Dowell TRS Subsidiary, LLC and Cherry Cove Hospitality Management, LLC (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 29, 2016).

10.8   Hotel Management Agreement dated October 1, 2015 between TRS San Spring, LLC and Peachtree Hospitality Management, LLC (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated October 1, 2015).

10.9   Hotel Management Agreement dated October 1, 2015 between TRS Atl Indy, LLC and Peachtree Hospitality Management, LLC (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated October 1, 2015).

10.10   Hotel Management Agreement dated October 1, 2015 between TRS Jax Court, LLC and Peachtree Hospitality Management, LLC (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated October 1, 2015).

10.11Hotel Management Agreement, dated June 29, 2016, by and between TRS Leasing, Inc., TRS Subsidiary, LLC and K Partners Hospitality Group LP (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 29, 2016).

10.12Agreement between Spring Street Hotel OpCo LLC and Boast Hotel Management Company LLC dated effective August 19, 2016 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 22, 2016).

10.13Hotel Management Agreement dated as of December 14, 2016 between TRS KCI Loft, LLC and Presidian Destinations, Ltd. (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 14, 2016).

10.14 Amended and Restated Loan Agreement dated December 3, 2008 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.9 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2013).

10.15  First Amendment to Amended and Restated Loan Agreement dated February 4, 2009 between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2009).

10.16  Second Amendment to Amended and Restated Loan Agreement dated March 29, 2010 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s

99

Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2010).

10.17  Third Amendment to Amended and Restated Loan Agreement dated March 15, 2011 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2011).

10.18 Fourth Amendment to Amended and Restated Loan Agreement dated December 9, 2011 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 9, 2011).

10.19Fifth Amendment to Amended and Restated Loan Agreement dated February 21, 2012 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated February 21, 2012).

10.20 Sixth Amendment to Amended and Restated Loan Agreement dated effective as of December 31, 2012 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated January 17, 2013).

10.21Seventh Amendment to Amended and Restated Loan Agreement dated March 26, 2013 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 26, 2013).

10.22 Eighth Amendment to Amended and Restated Loan Agreement dated July 31, 2013 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2013).

10.23 Ninth Amendment to Amended and Restated Loan Agreement dated June 30, 2014 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 30, 2014).

10.24 Tenth Amendment and Written Consent to Amended and Restated Loan Agreement dated August 1, 2014 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 1, 2014).

10.25 Eleventh Amendment to Amended and Restated Loan Agreement dated August 1, 2014 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 1, 2014).

10.26 Twelfth Amendment to Amended and Restated Loan Agreement dated November 20, 2014 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated November 20, 2014).

10.27   Thirteenth Amendment to Amended and Restated Loan Agreement dated June 5, 2015 by and between the Company and Great Western Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 5, 2015).

10.28 Promissory Note, Loan Agreement and form of Mortgage, Assignment of Rents and Leases, Security Agreement and Fixture Filing dated January 5, 2007 by Condor Hospitality Limited Partnership to and for the benefit of Western Alliance Bank (incorporated herein by reference to Exhibit 10.19 to the Company’s

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Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2012).

10.29 Amendment No. 1 to the Promissory Note dated January 5, 2007 by Condor Hospitality Limited Partnership to and for the benefit of Western Alliance Bank (incorporated herein by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2013).

10.30 Global Amendment and Consent dated March 16, 2009 between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC and Western Alliance Bank (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2009).

10.31 Unconditional Guaranties of Payment and Performance dated March 16, 2009, by the Company and Condor Hospitality REIT Trust to and for the benefit of Western Alliance Bank (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2009).

10.32  Loan Modification Agreements dated as of September 30, 2009 by and between Western Alliance Bank, the Company, Condor Hospitality Limited Partnership, Condor Hospitality REIT Trust and SPPR-South Bend, LLC, (incorporated herein by reference to Exhibits 10.1 and 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2009).

10.33  Covenant Waiver dated as of November 9, 2009 by Western Alliance Bank to the Company, Condor Hospitality Limited Partnership, Condor Hospitality REIT Trust and SPPR-South Bend, LLC, (incorporated herein by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2009).

10.34 Loan Modification Agreement dated as of March 25, 2010 by and between Western Alliance Bank, Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, Condor Hospitality REIT Trust and the Company (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2010).

10.35 Loan Modification Agreement dated as of March 29, 2012 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 29, 2012).

10.36 Loan Waiver and Collateral Agreement dated as of November 14, 2012 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2012).

10.37 Loan Modification Agreement dated as of August 13, 2013 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended June 30, 2013).

10.38 Loan Modification Agreement dated as of November 13, 2013 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2013).

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10.39 Loan Modification Agreement dated as of March 14, 2014 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended June 30, 2014).

10.40 Loan Modification Agreement dated as of October  13, 2014 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2014).

10.41 Loan Modification Agreement dated as of December 30, 2014 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 23, 2014).

10.42 Loan Modification Agreement dated as of February 17, 2015 by and between Condor Hospitality Limited Partnership, SPPR-South Bend, LLC, the Company and Condor Hospitality REIT Trust and Western Alliance Bank (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated February 17, 2015).

10.43 Loan Agreement, dated as of November 2, 2012, between Solomons Beacon Inn Limited Partnership, TRS Subsidiary, LLC and Morgan Stanley Mortgage Capital Holdings LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated November 2, 2012).

10.44  First Amendment to Loan Agreement, dated as of January 3, 2013, between Solomons Beacon Inn Limited Partnership, TRS Subsidiary, LLC and Morgan Stanley Mortgage Capital Holdings LLC (incorporated herein by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2012).

10.45Second Amendment to Loan Agreement, dated as of April 15, 2016, between Solomons Beacon Inn Limited Partnership, TRS Subsidiary, LLC and U.S. Bank National Association, as Trustee for Morgan Stanley Bank of America Merrill Lynch Trust 2013-C7, Commercial Mortgage Pass-Through Certificates, Series 2013-C7 (incorporated herein by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended June 30, 2016).

10.46 Guaranty of Recourse Obligations of Borrower, dated as of November 2, 2012, by the Company in favor of Morgan Stanley Mortgage Capital Holdings LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated November 2, 2012).

10.47 Cash Management Agreement, dated as of November 2, 2012, among Morgan Stanley Mortgage Capital Holdings LLC, Solomons Beacon Inn Limited Partnership, TRS Subsidiary, LLC, Hospitality Management Advisors, Inc., Kinseth Hotel Corporation and Strandco, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated November 2, 2012).

10.48 First Amendment to Cash Management Agreement, dated as of November 5, 2012, among Morgan Stanley Mortgage Capital Holdings LLC, Solomons Beacon Inn Limited Partnership, TRS Subsidiary, LLC, Hospitality Management Advisors, Inc., Kinseth Hotel Corporation and Strandco, Inc. (incorporated herein by reference to Exhibit 10.35 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2012).

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10.49   Loan Agreement dated October 2, 2015 between Western Alliance Bank and CDOR Atl Indy, LLC and TRS Atl Indy, LLC (incorporated herein by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.50   Loan Agreement dated October 2, 2015 between Western Alliance Bank and CDOR Jax Court, LLC and TRS Jax Court, LLC (incorporated herein by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.51   Term Loan Note dated October 2, 2015 by CDOR Atl Indy, LLC and TRS Atl Indy, LLC to the order of Western Alliance Bank (incorporated herein by reference to Exhibit 10.11 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.52   Term Loan Note dated October 2, 2015 by CDOR Jax Court, LLC and TRS Jax Court, LLC to the order of Western Alliance Bank (incorporated herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.53   Guaranty dated October 2, 2015 by the Company for the benefit of Western Alliance Bank (incorporated herein by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.54   Guaranty dated October 2, 2015 by the Company for the benefit of Western Alliance Bank (incorporated herein by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.55   Assignment and Assumption of Deed of Trust and Other Loan Documents and Modification Agreement dated October 1, 2015 by and among PHG San Antonio, LLC, Jatin Desai, Mitul Patel, and Gregory M. Friedman, CDOR San Spring, LLC, TRS San Spring, LLC and the Company, and LMREC 2015-CRE1, Inc. (incorporated herein by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.56   Promissory Note (SpringHill Suites) dated April 21, 2014 by PHG San Antonio, LLC to the order of LMREC III Holdings III, Inc. (incorporated herein by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.57   Deed of Trust, Security Agreement and Financing Statement by PHG San Antonio, LLC to Cyrus N. Ansari, Esq. for the benefit of LMREC III Holdings III, Inc. (incorporated herein by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.58   Indemnity and Guarantee Agreement (SpringHill Suites) dated October 1, 2015 by the Company in favor of LMREC 2015-CRE 1, Inc. (incorporated herein by reference to Exhibit 10.18 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.59   Lockbox and Security Agreement (SpringHill Suites) dated October 1, 2015 by CDOR San Spring, LLC and TRS San Spring, LLC in favor of LMREC 2015-CRE 1, Inc. (incorporated herein by reference to Exhibit 10.19 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended September 30, 2015).

10.60Loan Agreement dated as of August 22 2016 between Spring Street Hotel Property LLC, Spring Street Hotel Opco LLC and LoanCore Capital Credit REIT LLC (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 22, 2016).

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10.61Guaranty of Recourse Obligations by the Company and Alan Kanders and Raviraj Kiran Dave dated August 22, 2016 in favor of LoanCore Capital Credit REIT LLC (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 22, 2016).

10.62Loan Agreement dated as of December 14, 2016 among CDOR KCI Loft, LLC, TRS KCI Loft, LLC and Great Western Bank (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 14, 2016).

10.63Springing Unconditional Guaranty of Payment and Performance dated as of December 14, 2016 by the Company in favor of Great Western Bank (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 14, 2016).

10.64Limited Guaranty of Payment and Performance dated as of December 14, 2016 by the Company in favor of Great Western Bank (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated December 14, 2016).

10.65 Purchase Agreement, dated November 16, 2011, by and among the Company, Condor Hospitality Limited Partnership and Real Estate Strategies L.P. (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A (Commission file number 001-34087) dated November 16, 2011).

10.66 Warrants issued to Real Estate Strategies L.P. dated February 1, 2012 and February 15, 2012 (incorporated herein by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2011).

10.67 Investor Rights and Conversion Agreement, dated February 1, 2012, by and among the Company, Real Estate Strategies L.P. and IRSA Inversiones y Representaciones Sociedad Anónima (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated January 30, 2012).

10.68 Registration Rights Agreement, dated February 1, 2012, by and among the Company, Real Estate Strategies L.P. and IRSA Inversiones y Representaciones Sociedad Anónima (incorporated herein by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated January 30, 2012).

10.69 Directors Designation Agreement, dated February 1, 2012, by and among the Company, Real Estate Strategies L.P. and IRSA Inversiones y Representaciones Sociedad Anónima (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated January 30, 2012).

10.70 Agreement, dated August 9, 2013, by and among the Company, Real Estate Strategies L.P. and IRSA Inversiones y Representaciones Sociedad Anonima (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated August 9, 2013)

10.71   Agreement, dated July 23, 2015, between Real Estate Strategies L.P., IRSA Inversiones y Representaciones Sociedad Anonima and the Company (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 23, 2015).

10.72Stock Purchase Agreement, dated as of March 16, 2016, between SREP III Flight-Investco, L.P. and the Company (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 16, 2016).

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10.73Investor Rights Agreement, dated as of March 16, 2016, by and among SREP III Flight-Investco, L.P., StepStone Group Real Estate LP and the Company (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 16, 2016).

10.74Agreement, dated as of March 16, 2016, by and among Real Estate Strategies L.P., IRSA Inversiones y Representaciones Sociedad Anónima and the Company (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 16, 2016).

10.75 The Company’s 2006 Stock Plan (incorporated herein by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2011).

10.76 Amendment to the Company’s 2006 Stock Plan dated May 28, 2009 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated May 28, 2009).

10.77 Amendment to the Company’s 2006 Stock Plan dated May 22, 2012 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated May 22, 2012).

10.78 Form of Stock Option Agreement (incorporated herein by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2011).

10.79The Company’s 2016 Stock Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated June 15, 2016).

10.80 Jeffrey W. Dougan Employment Agreement dated July 15, 2013 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 9, 2013).

10.81 Jeffrey W. Dougan Restricted Stock Agreement dated July 15, 2013 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 9, 2013).

10.82 Jeffrey W. Dougan Stock Option Agreement dated July 15, 2013 (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 9, 2013).

10.83 Kelly Walters Letter Agreement dated January 29, 2015 (incorporated herein by reference to Exhibit 10.69 to the Company’s Annual Report on Form 10-K (Commission file number 001-34087) for the year ended December 31, 2014).

10.84   Amended and Restated Employment Agreement dated March 2, 2015 by and between the Company and J. William Blackham, as amended and restated on September 16, 2016 (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated September 16, 2016).

10.85   Common Stock Purchase Warrant dated March 2, 2015 between the Company and J. William Blackham (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 2, 2015).

105

10.86   Letter dated March 25, 2015 with Corrine L. Scarpello (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated March 25, 2015).

10.87   Letter dated July 9, 2015 with Corrine L. Scarpello (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 9, 2015).

10.88Form of Executive Officer and Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (Commission file number 001-34087) for the quarter ended March 31, 2016).

10.89 Director and Named Executive Officers Compensation is incorporated herein by reference to the sections entitled “Compensation Discussion and Analysis”, “Compensation Committee Report”, “Summary Compensation Table”, “Grants of Plan-Based Awards for Fiscal Year 2016”, “Outstanding Equity Awards at Fiscal Year-End”, and “Director Compensation” in the Company’s Proxy Statement for the Annual Meeting of Stockholders for 2017.

10.90   Purchase and Sale Agreement dated July 14, 2015 between Condor Hospitality Limited Partnership and PHG College Park, LLC (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 14, 2015).

10.91   Purchase and Sale Agreement dated July 14, 2015 between Condor Hospitality Limited Partnership and PHG Jax Flagler, LLC (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 14, 2015).

10.92   Purchase and Sale Agreement dated July 14, 2015 between Condor Hospitality Limited Partnership and PHG San Antonio, LLC (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (Commission file number 001-34087) dated July 14, 2015).

10.93Agreement of Purchase and Sale dated as of August 29, 2016 between Leawood ADP, Ltd. and Condor Hospitality Limited Partnership (incorporated by reference to Exhibit 10.1 filed with the Company’s Form 8-K dated August 29, 2016 (001-34087)).

21.0* Subsidiaries.

23.1* Consent of KPMG LLP.

31.1* Section 302 Certification of Chief Executive Officer.

31.2* Section 302 Certification of Chief Financial Officer.

32.1* Section 906 Certifications.

101.1* The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Equity, (iv) the Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.

Pursuant to Item 601 (b)(4) of Regulation S-K, certain instruments with respect to the Company’s long-term debt are not filed with this Form 10-K. The Company will furnish a copy of any such long-term debt agreement to the Securities and Exchange Commission upon request.

Management contracts and compensatory plans are set forth as Exhibits 10.75 through 10.89.

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* Filed herewith.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto dually authorized
	March 1, 2017	/s/J. William Blackham
		J. William Blackham
		Chief Executive Officer
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature		Title	Date
/s/J. William Blackham		Chief Executive Officer	March 1, 2017
J. William Blackham		(Principal Executive Officer)
/s/Jonathan J. Gantt		Chief Financial Officer	March 1, 2017
Jonathan J. Gantt		(Principal Financial Officer)
/s/Arinn A. Cavey		Chief Accounting Officer	March 1, 2017
Arinn A. Cavey		(Principal Accounting Officer)
/s/James H. Friend		Chairmen of the Board	March 1, 2017
James H. Friend
/s/Daphne J. Dufresne		Board Member	March 1, 2017
Daphne J. Dufresne
/s/Daniel R. Elsztain		Board Member	March 1, 2017
Daniel R. Elsztain
/s/Jeff Giller		Board Member	March 1, 2017
Jeff Giller
/s/Donald J. Landry		Board Member	March 1, 2017
Donald J. Landry
/s/Mark Linehan		Board Member	March 1, 2017
Mark Linehan
/s/Brendan MacDonald		Board Member	March 1, 2017
Brendan MacDonald
/s/John M. Sabin		Board Member	March 1, 2017
John M. Sabin

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EX-3.1

Exhibit 3.1

ARTICLES OF AMENDMENT
TO THE
AMENDED AND
RESTATED ARTICLES OF INCORPORATION
OF
SUPERTEL HOSPITALITY, INC.

Supertel Hospitality, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:

FIRST: The Corporation desires to amend its Amended and Restated Articles of Incorporation as currently in effect (the “Articles”).

SECOND: Article I of the Articles is hereby amended in its entirety as follows:

“I.

NAME

The name of the corporation (which is hereinafter called the “Corporation”) is Condor Hospitality Trust, Inc.”

THIRD: This amendment to the Articles as hereinabove set forth has been duly advised and approved by a majority of the entire board of directors and that the amendment is limited to a change expressly authorized by Section 2-605 of the Maryland General Corporation Law to be made without action by the stockholders.

FOURTH: The undersigned Chief Executive Officer acknowledges these Articles of Amendment to be the act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned Chief Executive Officer acknowledges that to the best of his knowledge, information, and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

FIFTH: These Articles of Amendment shall become effective as of the later of (i) the time the State Department of Assessments and Taxation of Maryland accepts these Articles of Amendment for record, or (ii) 12:01 a.m. (Eastern Time) on July 15, 2015.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name and on its behalf by its Chief Executive Officer and attested to it by its Treasurer on this 14th day of July, 2015.

SUPERTEL HOSPITALITY, INC.

By:  /s/ J. William Blackham

Name: J. William Blackham

Title:   Chief Executive Officer

ATTEST

By:  /s/ Patrick E. Beans

Name: Patrick E. Beans

Title:   Treasurer

2

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

SUPERTEL HOSPITALITY, INC.

I.

NAME

The name of the corporation (which is hereinafter called the “Corporation”) is Supertel Hospitality, Inc.

II.

PURPOSE

The purpose for which this Corporation is formed is to transact any and all lawful business, not required to be specifically stated in these Articles, for which corporations may be incorporated under the Maryland General Corporation Law, as amended from time to time.

III.

STOCK

The total number of shares of stock that the Corporation has authority to issue is 200,000,000 shares of Common Stock, $.01 par value per share, and 40,000,000 shares of Preferred Stock, $.01 par value per share. The Board of Directors, with the approval of a majority of the entire Board of Directors, and without any action by the shareholders of the Corporation, may amend the Articles of Incorporation from time to time to increase or decrease the aggregate number of shares of stock of the Corporation or the number of shares of stock of any class or series that the Corporation has authority to issue.

No holder of shares of capital stock of the Corporation shall have any preemptive or preferential right to subscribe to or purchase (i) any shares of any class of the Corporation, whether now or hereafter authorized; (ii) any warrants, rights, or options to purchase any such shares; or (iii) any securities or obligations convertible into any such shares or into warrants, rights, or options to purchase any such shares.

The Preferred Stock may be issued from time to time by the Board of Directors of the Corporation, in such series and with such preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or other provisions as may be fixed by the Board of Directors.

IV.

PRINCIPAL OFFICE AND RESIDENT AGENT

The name and address of the resident agent for service of process of the Corporation in the State of Maryland is CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, MD 21202. The address of the Corporation’s principal office in the State of Maryland is c/o CSC-Lawyers Incorporating Service Company, 7 St. Paul Street, Suite 1660, Baltimore, MD 21202. The Corporation may have such other offices and places of business within or outside the State of Maryland as the board of directors may from time to time determine.

V.

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BOARD OF DIRECTORS

A. The Corporation shall have a Board of Directors consisting of not less than three (3) nor more than eleven (11) members. A director need not be a shareholder. At the annual meeting of shareholders, the shareholders shall elect directors to serve a one-year term and until their successors are duly elected and qualified.

B. Notwithstanding anything herein to the contrary, at all times (except during a period not to exceed sixty (60) days following the death, resignation, incapacity or removal from office of a director prior to expiration of the director’s term of office), a majority of the Board of Directors shall be comprised of persons who are “Independent Directors.” Independent Directors are persons who are not officers or employees of the Corporation or “Affiliates” of (i) any advisor to the Corporation under an advisory agreement, (ii) any lessee of any property of the Corporation, (iii) any subsidiary of the Corporation or (iv) any partnership which is an Affiliate of the Corporation.

C. For purposes of the foregoing subsection, “Affiliate” of a person shall mean (i) any person that, directly or indirectly, controls or is controlled by or is under common control with such person, (ii) any other person that owns, beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock, shares or equity interests of such person, or (iii) any officer, director, employee, partner or trustee of such person or any person controlling, controlled by or under common control with such person (excluding directors and persons serving in similar capacities who are not otherwise an Affiliate of such person). The term “person” means and includes individuals, corporations, general and limited partnerships, stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts, or other entities and governments and agencies and political subdivisions thereof. For the purposes of this definition, “control” (including the correlative meanings of the terms “controlled by” and “under common control with”), as used with respect to any person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such person, through the ownership of voting securities, partnership interests or other equity interests.

D. Notwithstanding any other provisions of these Articles of Incorporation or the bylaws of the Corporation (and notwithstanding that some lesser percentage may be specified by law, these Articles of Incorporation or the bylaws of the Corporation), the provisions of this Article V shall not be amended, altered, changed or repealed without the approval of a majority of the members of the Board of Directors or the affirmative vote of the holders of not less than a majority of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting separately as a class.

VI.

AMENDMENTS

Except as expressly otherwise required by these Articles of Incorporation, (i) an amendment to or restatement of these Articles of Incorporation for which the Maryland General Corporation Law requires shareholder approval, (ii) the approval of a plan of merger or share exchange for which the Maryland General Corporation Law requires shareholder approval, (iii) the approval of a sale of all, or substantially all of the Corporation’s property, other than in the usual and regular course of business or (iv) the approval of the dissolution of the Corporation shall be approved by a majority of the votes entitled to be cast by each voting group that is entitled to vote on the matter,

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unless in submitting any such matter to the shareholders the Board of Directors shall require a greater vote.

VII.

LIMITATION OF LIABILITY AND INDEMNIFICATION

A. To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers of a corporation, no present or former director or officer of the Corporation or its predecessor shall be liable to the Corporation or its shareholders for money damages. To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation or its predecessor and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director or officer of the Corporation or its predecessor and at the request of the Corporation or its predecessor, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity. The rights to indemnification and advance of expenses provided by the Articles of Incorporation and bylaws shall vest immediately upon election of a director or officer. The Corporation may indemnify any other persons permitted but not required to be indemnified by Maryland law, as applicable from time to time, if and to the extent indemnification is authorized and determined to be appropriate, in each case in accordance with applicable law, by the Board of Directors. The indemnification and payment or reimbursement of expenses provided in these Articles of Incorporation shall not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any bylaw, resolution, insurance, agreement or otherwise.

B. No amendment of the Articles of Incorporation or repeal of any of its provisions shall limit or eliminate any of the benefits provided to directors and officers under this Article VII in respect of any act or omission that occurred prior to such amendment or repeal.

VIII.

REIT STATUS

The Corporation shall seek to elect and maintain status as a REIT under the Code. It shall be the duty of the Board of Directors to ensure that the Corporation satisfies the requirements for qualification as a REIT under the Code, including, but not limited to, the ownership of its outstanding stock, the nature of its assets, the sources of its income, and the amount and timing of its distributions to its shareholders. The Board of Directors shall take no action to disqualify the Corporation as a REIT or to otherwise revoke the Corporation’s election to be taxed as a REIT without the affirmative vote of two-thirds (2/3) of the number of shares of Common Stock entitled to vote on such matter at a special meeting of the shareholders.

IX.

OWNERSHIP LIMITATIONS

A.Restrictions on Transfer.

5

1.Definitions. The following terms shall have the following meanings:

“Beneficial Ownership” shall mean ownership of shares of Equity Stock by a Person who would be treated as an owner of such shares of Equity Stock either directly or indirectly through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial Owner,” “Beneficially Owns,” and “Beneficially Owned” shall have correlative meanings.

“Beneficiary” shall mean, with respect to any Trust, one or more organizations described in each of Section 170(b)(1)(A) (other than clauses (vii) or (viii) thereof) and Section 170(c)(2) of the Code that are named by the Corporation as the beneficiary or beneficiaries of such Trust, in accordance with the provisions of Section (B)(1) of Article IX hereof.

“Board of Directors” shall mean the Board of Directors of the Corporation.

“Constructive Ownership” shall mean ownership of shares of Equity Stock by a Person who would be treated as an owner of such shares of Equity Stock either directly or indirectly through the application of Section 318 of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns,” and “Constructively Owned” shall have correlative meanings.

“Equity Stock” shall mean Preferred Stock and Common Stock of the Corporation. The term “Equity Stock” shall include all shares of Preferred Stock and Common Stock of the Corporation that are held as Shares-in-Trust in accordance with the provisions of Section (B) of Article IX hereof.

“Market Price” on any date shall mean the average of the Closing Price for the five consecutive Trading Days ending on such date. The “Closing Price” on any date shall mean the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on the New York Stock Exchange or the Nasdaq Stock Market or, if the shares of Equity Stock are not listed or admitted to trading on the New York Stock Exchange or the Nasdaq Stock Market, as reported in the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which the shares of Equity Stock are listed or admitted to trading or, if the shares of Equity Stock are not listed or admitted to trading on any national securities exchange, the last quoted price, or if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotations system that may then be in use or, if the shares of Equity Stock are not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in the shares of Equity Stock selected by the Board of Directors.

“Non-Transfer Event” shall mean an event other than a purported Transfer that would cause any Person to Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit, including, but not limited to, the granting of any option or entering into any agreement for the sale, transfer or other disposition of shares of Equity Stock or the sale, transfer, assignment or other disposition of any securities or rights convertible into or exchangeable for shares of Equity Stock.

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“Ownership Limit” shall mean, with respect to the Common Stock, 9.9% of the number of outstanding shares of Common Stock and, with respect to any class or series of Preferred Stock, 9.9% of the number of outstanding shares of such class or series of Preferred Stock.

“Permitted Transferee” shall mean any Person designated as a Permitted Transferee in accordance with the provisions of Section (B)(5) of Article IX hereof.

“Person” shall mean an individual, corporation, partnership, estate, trust, a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a “group” as that term is used for purposes of Section 12(d)(3) of the Securities Exchange Act of 1934, as amended.

“Prohibited Owner” shall mean, with respect to any purported Transfer or Non-Transfer Event, any Person who, but for the provisions of Section (A)(3) of Article IX hereof, would own record title to shares of Equity Stock.

“Redemption Rights” shall mean the rights granted under the Supertel Limited Partnership Agreement to the limited partners to redeem, under certain circumstances, their limited partnership interests for shares of Common Stock (or cash at the option of the Corporation).

“Restriction Termination Date” shall mean the first day after which (i) the Board of Directors determines that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT and (ii) there is an affirmative vote of two-thirds of the number of shares of Common Stock entitled to vote on such matter at a special meeting of the shareholders of the Corporation.

“Shares-in-Trust” shall mean any shares of Equity Stock designated Shares-in-Trust pursuant to Section (A)(3) of Article IX hereof.

“Supertel Limited Partnership Agreement” shall mean the agreement of limited partnership establishing Supertel Limited Partnership, a Virginia limited partnership, as amended and restated from time to time.

“Trading Day” shall mean a day on which the principal national securities exchange on which the shares of Equity Stock are listed or admitted to trading is open for the transaction of business or, if the shares of Equity Stock are not listed or admitted to trading on any national securities exchange, shall mean any day other than a Saturday, a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close.

“Transfer” (as a noun) shall mean any sale, transfer, gift, assignment, devise or other disposition of shares of Equity Stock, whether voluntary or involuntary, whether of record, constructively or beneficially and whether by operation of law or otherwise. “Transfer” (as a verb) shall not have the correlative meaning.

“Trust” shall mean any separate trust created pursuant to Section (A)(3) of Article IX hereof and administered in accordance with the terms of Section (B) of Article IX hereof, for the exclusive benefit of any Beneficiary.

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“Trustee” shall mean any Person or entity unaffiliated with both the Corporation and any Prohibited Owner, such Trustee to be designated by the Corporation to act as trustee of any Trust, or any successor trustee thereof.

2.Restriction on Transfers.

(a)Except as provided in Section (A)(7) of Article IX hereof, prior to the Restriction Termination Date, (i) no Person shall Beneficially Own or Constructively Own outstanding shares of Equity Stock in excess of the Ownership Limit and (ii) any Transfer that, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Equity Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would be otherwise Beneficially Owned or Constructively Owned by such Person in excess of the Ownership Limit, and the intended transferee shall acquire no rights in such excess shares of Equity Stock.

(b) Except as provided in Section (A)(7) of Article IX hereof, prior to the Restriction Termination Date, any Transfer that, if effective, would result in shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution) shall be void ab initio as to the Transfer of that number of shares which would be otherwise beneficially owned (determined without reference to any rules of attribution) by the transferee, and the intended transferee shall acquire no rights in such shares of Equity Stock.

(c) Prior to the Restriction Termination Date, any Transfer of shares of Equity Stock that, if effective, would result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would cause the Corporation to be “closely held” within the meaning of Section 856(h) of the Code, and the intended transferee shall acquire no rights in such shares of Equity Stock.

(d)Prior to the Restriction Termination Date, any Transfer of shares of Equity Stock that, if effective, would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s real property, within the meaning of Section 856(d)(2)(B) of the Code, shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s real property, within the meaning of Section 856(d)(2)(B) of the Code, and the intended transferee shall acquire no rights in such excess shares of Equity Stock.

3. Transfer to Trust.

(a)If, notwithstanding the other provisions contained in this Section (A) of Article IX, at any time prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event such that any Person would either Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit, then, (i) except as otherwise provided in Section (A)(7) of Article IX hereof, the purported transferee shall acquire no right or interest (or, in the case of a Non-Transfer Event, the Person holding record title to the shares of Equity Stock Beneficially Owned or Constructively Owned by such Beneficial Owner or Constructive Owner, shall cease to own any right or interest) in such number of shares of Equity Stock which would cause such Beneficial Owner or Constructive Owner to Beneficially Own or Constructively Own shares of Equity Stock in excess of the Ownership Limit, (ii) such number of shares of Equity Stock in excess of the Ownership

8

Limit (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of Section (B) of Article IX hereof, transferred automatically and by operation of law to the Trust to be held in accordance with that Section (B) of Article IX, and (iii) the Prohibited Owner shall submit such number of shares of Equity Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be.

(b)If, notwithstanding the other provisions contained in this Section (A) of Article IX, at any time prior to the Restriction Termination Date, there is a purported Transfer or Non-Transfer Event that, if effective, would (i) result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (ii) result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or (iii) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s real property, within the meaning of Section 856(d)(2)(B) of the Code, then (x) the purported transferee shall not acquire any right or interest (or, in the case of a Non-Transfer Event, the Person holding record title of the shares of Equity Stock with respect to which such Non-Transfer Event occurred, shall cease to own any right or interest) in such number of shares of Equity Stock, the ownership of which by such purported transferee or record holder would (A) result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (B) result in the Corporation being “closely held” within the meaning of Section 856(h) of the Code, or (C) cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s real property, within the meaning of Section 856(d)(2)(B) of the Code, (y) such number of shares of Equity Stock (rounded up to the nearest whole share) shall be designated Shares-in-Trust and, in accordance with the provisions of Section (B) of Article IX hereof, transferred automatically and by operation of law to the Trust to be held in accordance with that Section (B) of Article IX, and (z) the Prohibited Owner shall submit such number of shares of Equity Stock to the Corporation for registration in the name of the Trustee. Such transfer to a Trust and the designation of shares as Shares-in-Trust shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event, as the case may be.

4.Remedies For Breach. If the Corporation, or its designees, shall at any time determine in good faith that a Transfer has taken place in violation of Section (A)(2) of Article IX hereof or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Equity Stock in violation of Section (A)(2) of Article IX hereof, the Corporation shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or acquisition, including, but not limited to, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or acquisition.

5. Notice of Restricted Transfer. Any Person who acquires or attempts to acquire shares of Equity Stock in violation of Section (A)(2) of Article IX hereof, or any Person who owned shares of Equity Stock that were transferred to the Trust pursuant to the provisions of Section (A)(3) of Article IX hereof, shall immediately give written notice to the Corporation of such event and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer or Non-Transfer Event, as the case may be, on the Corporation’s status as a REIT.

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6. Owners Required To Provide Information. Prior to the Restriction Termination Date:

(a)Every Beneficial Owner or Constructive Owner of more than 5%, or such lower percentages as required pursuant to regulations under the Code, of the outstanding shares of all classes of capital stock of the Corporation shall, within 30 days after January 1 of each year, provide to the Corporation a written statement or affidavit stating the name and address of such Beneficial Owner or Constructive Owner, the number of shares of Equity Stock Beneficially Owned or Constructively Owned, and a description of how such shares are held. Each such Beneficial Owner or Constructive Owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Beneficial Ownership or Constructive Ownership on the Corporation’s status as a REIT and to ensure compliance with the Ownership Limit.

(b)Each Person who is a Beneficial Owner or Constructive Owner of shares of Equity Stock and each Person (including the stockholder of record) who is holding shares of Equity Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation a written statement or affidavit stating such information as the Corporation may request in order to determine the Corporation’s status as a REIT and to ensure compliance with the Ownership Limit.

7. Exception. The Ownership Limit shall not apply to the acquisition of shares of Equity Stock by an underwriter that participates in a public offering of such shares for a period of 90 days following the purchase by such underwriter of such shares provided that the restrictions contained in Section (A)(2) of Article IX hereof will not be violated following the distribution by such underwriter of such shares. In addition, the Board of Directors, upon receipt of a ruling from the Internal Revenue Service or an opinion of counsel in each case to the effect that the restrictions contained in Section (A)(2)(b), Section (A)(2)(c), and/or Section (A)(2)(d) of Article IX hereof will not be violated, may exempt a Person from the Ownership Limit provided that (i) the Board of Directors obtains such representations and undertakings from such Person as are reasonably necessary to ascertain that no individual’s Beneficial Ownership or Constructive Ownership of shares of Equity Stock will violate the Ownership Limit and (ii) such Person agrees in writing that any violation or attempted violation will result in such transfer to the Trust of shares of Equity Stock pursuant to Section (A)(3) of Article IX hereof (except the foregoing Section (A)(7)(i) and Section (A)(7)(ii) shall not be required from a Person with respect to Series D Cumulative Convertible Preferred Stock so long as the Board of Directors is able to obtain the opinion of counsel specified in this Section (A)(7) of Article IX).

B. Shares-in-Trust.

1. Trust. Any shares of Equity Stock transferred to a Trust and designated Shares-in-Trust pursuant to Section (A)(3) of Article IX hereof shall be held for the exclusive benefit of the Beneficiary. The Corporation shall name a Beneficiary for each Trust within five days after discovery of the existence thereof. Any transfer to a Trust, and subsequent designation of shares of Equity Stock as Shares-in-Trust, pursuant to Section (A)(3) of Article IX hereof shall be effective as of the close of business on the business day prior to the date of the Transfer or Non-Transfer Event that results in the transfer to the Trust. Shares-in-Trust shall remain issued and outstanding shares of Equity Stock of the Corporation and shall be entitled to the same rights and privileges on identical terms and conditions as are all other issued and outstanding shares of Equity Stock of the same class and series. When

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transferred to a Permitted Transferee in accordance with the provisions of Section (B)(5) of Article IX hereof, such Shares-in-Trust shall cease to be designated as Shares-in-Trust.

2. Dividend Rights. The Trust, as record holder of Shares-in-Trust, shall be entitled to receive all dividends and distributions as may be declared by the Board of Directors on such shares of Equity Stock and shall hold such dividends or distributions in trust for the benefit of the Beneficiary. The Prohibited Owner with respect to Shares-in-Trust shall repay to the Trust the amount of any dividends or distributions received by it that (i) are attributable to any shares of Equity Stock designated Shares-in-Trust and (ii) the record date of which was on or after the date that such shares became Shares-in-Trust. The Corporation shall take all measures that it determines reasonably necessary to recover the amount of any such dividend or distribution paid to a Prohibited Owner, including, if necessary, withholding any portion of future dividends or distributions payable on shares of Equity Stock Beneficially Owned or Constructively Owned by the Person who, but for the provisions of Section (A)(3) of Article IX hereof, would Constructively Own or Beneficially Own the Shares-in-Trust; and, as soon as reasonably practicable following the Corporation’s receipt or withholding thereof, shall pay over to the Trust for the benefit of the Beneficiary the dividends so received or withheld, as the case may be.

3. Rights Upon Liquidation. In the event of any voluntary or involuntary liquidation, dissolution or winding up of, or any distribution of the assets of, the Corporation, each holder of Shares-in-Trust shall be entitled to receive, ratably with each other holder of shares of Equity Stock of the same class or series, that portion of the assets of the Corporation which is available for distribution to the holders of such class and series of shares of Equity Stock. The Trust shall distribute to the Prohibited Owner the amounts received upon such liquidation, dissolution, or winding up, or distribution; provided, however, that the Prohibited Owner shall not be entitled to receive amounts pursuant to this Section (B)(3) of Article IX in excess of, in the case of a purported Transfer in which the Prohibited Owner gave value for shares of Equity Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the shares of Equity Stock and, in the case of a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer. Any remaining amount in such Trust shall be distributed to the Beneficiary.

4. Voting Rights. The Trustee shall be entitled to vote all Shares-in-Trust. Any vote by a Prohibited Owner as a holder of shares of Equity Stock prior to the discovery by the Corporation that the shares of Equity Stock are Shares-in-Trust shall, subject to applicable law, be rescinded and shall be void ab initio with respect to such Shares-in-Trust and the Prohibited Owner shall be deemed to have given, as of the close of business on the business day prior to the date of the purported Transfer or Non-Transfer Event that results in the transfer to the Trust of shares of Equity Stock under Section (A)(3) of Article IX hereof, an irrevocable proxy to the Trustee to vote the Shares-in-Trust in the manner in which the Trustee, in its sole and absolute discretion, desires.

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5. Designation of Permitted Transferee. The Trustee shall have the exclusive and absolute right to designate a Permitted Transferee of any and all Shares-in-Trust. In an orderly fashion so as not to materially adversely affect the Market Price of the Shares-in-Trust, the Trustee shall designate any Person as Permitted Transferee, provided, however, that (i) the Permitted Transferee so designated purchases for valuable consideration (whether in a public or private sale) the Shares-in-Trust and (ii) the Permitted Transferee so designated may acquire such Shares-in-Trust without such acquisition resulting in a transfer to a Trust and the redesignation of such shares of Equity Stock so acquired as Shares-in-Trust under Section (A)(3) of Article IX hereof. Upon the designation by the Trustee of a Permitted Transferee in accordance with the provisions of this Section (B)(5) of Article IX, the Trustee shall (i) cause to be transferred to the Permitted Transferee that number of Shares-in-Trust acquired by the Permitted Transferee, (ii) cause to be recorded on the books of the Corporation that the Permitted Transferee is the holder of record of such number of shares of Equity Stock, (iii) cause the Shares-in-Trust to be canceled, and (iv) distribute to the Beneficiary any and all amounts held with respect to the Shares-in-Trust after making that payment to the Prohibited Owner pursuant to Section (B)(6) of Article IX hereof.

6. Compensation to Record Holder of Shares of Equity Stock that Become Shares-in-Trust. Any Prohibited Owner shall be entitled (following discovery of the Shares-in-Trust and subsequent designation of the Permitted Transferee in accordance with Section (B)(5) of Article IX hereof or following the acceptance of the offer to purchase such shares in accordance with Section (B)(7) of Article IX hereof) to receive from the Trustee following the sale or other disposition of such Shares-in-Trust the lesser of (i) in the case of (a) a purported Transfer in which the Prohibited Owner gave value for shares of Equity Stock and which Transfer resulted in the transfer of the shares to the Trust, the price per share, if any, such Prohibited Owner paid for the shares of Equity Stock, or (b) a Non-Transfer Event or Transfer in which the Prohibited Owner did not give value for such shares (e.g., if the shares were received through a gift or devise) and which Non-Transfer Event or Transfer, as the case may be, resulted in the transfer of shares to the Trust, the price per share equal to the Market Price on the date of such Non-Transfer Event or Transfer, and (ii) the price per share received by the Trustee from the sale or other disposition of such Shares-in-Trust in accordance with Section (B)(5) of Article IX hereof. Any amounts received by the Trustee in respect of such Shares-in-Trust and in excess of such amounts to be paid the Prohibited Owner pursuant to this Section (B)(6) shall be distributed to the Beneficiary in accordance with the provisions of Section (B)(5) of Article IX hereof. Each Beneficiary and Prohibited Owner waive any and all claims that they may have against the Trustee and the Trust arising out of the disposition of Shares-in-Trust, except for claims arising out of the gross negligence or willful misconduct of, or any failure to make payments in accordance with this Section (B), by such Trustee or the Corporation.

7. Purchase Right in Shares-in-Trust. Shares-in-Trust shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that created such Shares-in-Trust (or, in the case of devise, gift or Non-Transfer Event, the Market Price at the time of such devise, gift or Non-Transfer Event) and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer for a period of ninety days after the later of (i) the date of the Non-Transfer Event or purported Transfer which resulted in such Shares-in-

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Trust and (ii) the date the Corporation determines in good faith that a Transfer or Non-Transfer Event resulting in Shares-in-Trust has occurred, if the Corporation does not receive a notice of such Transfer or Non-Transfer Event pursuant to Section (A)(5) of Article IX hereof.

C. Remedies Not Limited. Nothing contained in this Article IX shall limit the authority of the Corporation to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its shareholders by preservation of the Corporation’s status as a REIT and to ensure compliance with the Ownership Limit.

D. Ambiguity. In the case of an ambiguity in the application of any of the provisions of this Article IX, including any definition contained in Section (A)(1) of Article IX hereof, the Board of Directors shall have the power to determine the application of the provisions of this Article IX with respect to any situation based on the facts known to it.

E. Legend. Each certificate for shares of Equity Stock shall bear the following legend:

“The shares of [Common or Preferred] Stock represented by this certificate are subject to restrictions on transfer for the purpose of the Corporation’s maintenance of its status as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”). No Person may (i) Beneficially Own or Constructively Own shares of Common Stock in excess of 9.9% of the number of outstanding shares of Common Stock, (ii) Beneficially Own or Constructively Own shares of any class or series of Preferred Stock in excess of 9.9% of the number of outstanding shares of such class or series of Preferred Stock, (iii) beneficially own shares of Equity Stock that would result in the shares of Equity Stock being beneficially owned by fewer than 100 Persons (determined without reference to any rules of attribution), (iv) Beneficially Own shares of Equity Stock that would result in the Corporation being “closely held” under Section 856(h) of the Code, or (v) Constructively Own shares of Equity Stock that would cause the Corporation to Constructively Own 10% or more of the ownership interests in a tenant of the Corporation’s real property, within the meaning of Section 856(d)(2)(B) of the Code. Any Person who attempts to Beneficially Own or Constructively Own shares of Equity Stock in excess of the above limitations must immediately notify the Corporation in writing. If the restrictions above are violated, the shares of Equity Stock represented hereby will be transferred automatically and by operation of law to a Trust and shall be designated Shares-in-Trust. All capitalized terms in this legend have the meanings defined in the Corporation’s Amended and Restated Articles of Incorporation, as the same may be further amended from time to time, a copy of which, including the restrictions on transfer, will be sent without charge to each shareholder who so requests.”

F. Severability. If any provision of this Article IX or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court.

X.

ESTABLISHMENT OF SERIES A CUMULATIVE PREFERRED STOCK

Pursuant to Article III hereof, the Board of Directors has established the following Series of Preferred Stock.

A. Terms of the Series A Cumulative Preferred Stock.

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1. Designation and Number. A series of Preferred Stock, designated the “Series A Cumulative Preferred Stock”, is hereby established. The number of authorized shares of Series A Cumulative Preferred Stock shall be 2,500,000.

2. Maturity. The Series A Cumulative Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption.

3. Rank. The Series A Cumulative Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation, rank (a) prior or senior to the Common Stock issued by the Corporation; (b) prior or senior to all classes or series of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank junior to the Series A Cumulative Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation, (c) on a parity with all classes or series of shares of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank on a parity with the Series A Cumulative Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation (the “Parity Shares”) and (d) junior to all existing and future indebtedness of the Corporation.

4. Dividends.

(a)Holders of Series A Cumulative Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors of the Corporation, or a duly authorized committee thereof, and declared by the Corporation out of funds of the Corporation legally available for payment, preferential cumulative cash dividends at the rate of 8% per annum of the Liquidation Preference (as defined below) per share (equivalent to a fixed annual amount of $.80 per share). Such dividends shall be cumulative from the date of original issue and shall be payable in arrears on the last day of each month (or, if not a Business Day (as defined below), the next succeeding Business Day, each a “Dividend Payment Date”) for the period ending on such Dividend Payment Date, commencing on the date of issue. “Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close. The first dividend will be paid on January 31, 2006 with respect to the period beginning on the date of issue and ending on January 31, 2006. Each Share of Series A Convertible Preferred Stock, $0.01 par value per share of the Corporation’s predecessor, Supertel Hospitality, Inc., a Virginia corporation, was converted into one share of Series A Cumulative Preferred Stock of the Corporation. For the avoidance of doubt, dividends previously paid by the Corporation’s predecessor, and dividends accrued but unpaid until time of such conversion, with respect to such predecessor’s Series A Convertible Preferred Stock, $0.01 par value per share, are, respectively, payments of dividends and accrued but unpaid dividends in the amounts and for the same periods provided for herein with respect to the Series A Cumulative Preferred Stock of the Corporation. Any dividend payable on the Series A Cumulative Preferred Stock for any partial dividend period will be computed on the basis of twelve 30-day months and a 360-day year. Dividends will be payable in arrears to holders of record as they appear on the share records of the Corporation at the close of business on the applicable record date, which shall be the first day of the calendar month in which the Dividend Payment Date occurs or such other date designated by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

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(b)No dividends on Series A Cumulative Preferred Stock shall be authorized by the Board of Directors of the Corporation or declared or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)Notwithstanding the foregoing, dividends on the Series A Cumulative Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement. Accrued but unpaid dividends on the Series A Cumulative Preferred Stock will accumulate and earn additional dividends at 8%, compounded monthly. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any other class or series of Preferred Stock ranking, as to dividends, on a parity with or junior to the Series A Cumulative Preferred Stock (other than a dividend payable in capital stock of the Corporation ranking junior to the Series A Cumulative Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series A Cumulative Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series A Cumulative Preferred Stock and the shares of any other class or series of Preferred Stock ranking on a parity as to dividends with the Series A Cumulative Preferred Stock, all dividends declared upon the Series A Cumulative Preferred Stock and any other class or series of Preferred Stock ranking on a parity as to dividends with the Series A Cumulative Preferred Stock shall be declared pro rata so that the amount of dividends declared per share of Series A Cumulative Preferred Stock and such other class or series of Preferred Stock, shall in all cases bear to each other the same ratio that accrued dividends per share on the Series A Cumulative Preferred Stock and such other class or series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other.

(d)Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series A Cumulative Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than a dividend payable in capital stock of the Corporation ranking junior to the Series A Cumulative Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series A Cumulative Preferred Stock as to dividends or upon liquidation, nor shall the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series A Cumulative Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for any other class or series of capital stock of the Corporation ranking junior to the Series A Cumulative Preferred Stock as to dividends and upon liquidation or redemption for the purpose of preserving the Corporation’s qualification as a real estate investment trust under the Internal Revenue Code of 1986, as amended

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(the “Code”)). Holders of Series A Cumulative Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series A Cumulative Preferred Stock as provided above. Any dividend payment made on the Series A Cumulative Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.

(e)If, for any taxable year, the Corporation elects to designate as “capital gain dividends” (as defined in Section 857 of the Code) any portion (the “Capital Gains Amount”) of the dividends (as determined for federal income tax purposes) paid or made available for the year to holders of all classes of shares (the “Total Dividends”), then the portion of the Capital Gains Amount that shall be allocable to the holders of Series A Cumulative Preferred Stock shall be the amount that the total dividends (as determined for federal income tax purposes) paid or made available to the holders of the Series A Cumulative Preferred Stock for the year bears to the Total Dividends. The Corporation may elect to retain and pay income tax on its net long-term capital gains. In such a case, the holders of Series A Cumulative Preferred Stock would include in income their appropriate share of the Corporation’s undistributed long-term capital gains, as designated by the Corporation.

5. Liquidation Preference.

(a)Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of the Series A Cumulative Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $10.00 per share (the “Liquidation Preference”) in cash or property at its fair market value as determined by the Board of Directors of the Corporation, plus an amount equal to any accrued and unpaid dividends to the date of payment, but without interest, before any distribution of assets is made to holders of the Corporation’s Common Stock or any other class or series of capital stock of the Corporation that ranks junior to the Series A Cumulative Preferred Stock as to liquidation rights. The Corporation will promptly provide to the holders of the Series A Cumulative Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. After payment of the full amount of the Liquidation  Preference, plus any accrued and unpaid dividends to which they are entitled, the holders of the Series A Cumulative Preferred Stock will have no right or claim to any of the remaining assets of the Corporation. The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation, trust or entity with or into the Corporation, the sale, lease or conveyance of all or substantially all of the property or business of the Corporation or a statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation, unless a liquidation, dissolution or winding up of the Corporation is effected in connection with, or as a step in a series of transactions by which, a consolidation or merger of the Corporation is effected.

In determining whether a distribution (other than upon voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of capital stock of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon distribution of holders of shares of capital stock of the Corporation whose preferential rights upon distribution are superior to those receiving the distribution.

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(b)If upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of Series A Cumulative Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series A Cumulative Preferred Stock and any such other Parity Shares ratably in the same proportion as the respective amounts that would be payable on such Series A Cumulative Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full.

(c)Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Series A Cumulative Preferred Stock and any Parity Shares, the holders of Common Stock shall be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Cumulative Preferred Stock and any Parity Shares shall not be entitled to share therein.

6. Redemption.

(a)The Corporation may, at its option, upon not less than 30 nor more than 60 days’ written notice, redeem the Series A Cumulative Preferred Stock, in whole or in part, at any time or from time to time, for cash at a redemption price equal to the Liquidation Preference per share, plus all accrued and unpaid dividends thereon to the date fixed for redemption (the “Redemption Date”), without interest. No Series A Cumulative Preferred Stock may be redeemed except with assets legally available for the payment of the redemption price.

Holders of Series A Cumulative Preferred Stock to be redeemed shall surrender such Series A Cumulative Preferred Stock at the place designated in such notice and shall be entitled to the redemption price and any accrued and unpaid dividends payable upon such redemption following such surrender. If notice of redemption of any of the Series A Cumulative Preferred Stock has been given and if the funds necessary for such redemption have been set aside, separate and apart from other funds, by the Corporation in trust for the pro rata benefit of the holders of any Series A Cumulative Preferred Stock so called for redemption, then from and after the Redemption Date dividends will cease to accrue on such Series A Cumulative Preferred Stock, such Series A Cumulative Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series A Cumulative Preferred Stock is to be redeemed, the Series A Cumulative Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.

(b)Unless full cumulative dividends on all Series A Cumulative Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no Series A Cumulative Preferred Stock shall be redeemed unless all outstanding Series A Cumulative Preferred Stock is simultaneously redeemed and the Corporation shall not purchase or otherwise acquire, directly or indirectly, any Series A Cumulative Preferred Stock (except by exchange for any other class or series of capital stock of the Corporation ranking junior to the Series A Cumulative Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Corporation of any Series A Cumulative

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Preferred Stock in accordance with Article IX hereof, or the purchase or acquisition of Series A Cumulative Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series A Cumulative Preferred Stock. So long as no dividends are in arrears, the Corporation shall be entitled at any time and from time to time to repurchase any Series A Cumulative Preferred Stock in open-market transactions duly authorized by the Board of Directors of the Corporation and effected in compliance with applicable laws.

(c)Notice of redemption of the Series A Cumulative Preferred Stock shall be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the Redemption Date. A similar notice shall be mailed by the Corporation by first class mail, postage prepaid, not less than 30 nor more than 60 days prior to the Redemption Date, addressed to each holder of record of the Series A Cumulative Preferred Stock to be redeemed at such holder’s address as the same appears on the share records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series A Cumulative Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the Redemption Date; (ii) the redemption price; (iii) the number of shares of Series A Cumulative Preferred Stock to be redeemed; and (iv) the place or places where the Series A Cumulative Preferred Stock is to be surrendered for payment of the redemption price.

(d)Immediately prior to any redemption of Series A Cumulative Preferred Stock, the Corporation shall pay, in cash, any accumulated and unpaid dividends through the Redemption Date, unless a Redemption Date falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series A Cumulative Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)The Series A Cumulative Preferred Stock has no stated maturity and will not be subject to any sinking fund or mandatory redemption provisions, except as provided under Article IX hereof.

(f)Subject to applicable law and the limitation on purchases when dividends on the Series A Cumulative Preferred Stock are in arrears, the Corporation may, at any time and from time to time, purchase any Series A Cumulative Preferred Stock in the open market, by tender or by private agreement.

(g)All Series A Cumulative Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and reclassified as authorized but unissued Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock in accordance with the applicable provisions of these Articles of Incorporation.

7. Voting Rights.

(a)Holders of the Series A Cumulative Preferred Stock will not have any voting rights, except as set forth below.

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(b)Whenever dividends on any Series A Cumulative Preferred Stock shall be in arrears for six consecutive months or nine months, whether or not consecutive, in any twelve month period (a “Preferred Dividend Default”), the number of directors then constituting the Board of Directors of the Corporation shall increase by two (if not already increased by reason of a similar arrearage with respect to any Parity Preferred (as hereinafter defined)). The holders of such Series A Cumulative Preferred Stock (voting separately as a class with all other classes or series of Preferred Stock ranking on a parity with the Series A Cumulative Preferred Stock as to dividends or upon liquidation and upon which like voting rights have been conferred and are exercisable (“Parity Preferred”)) will be entitled to vote separately as a class, in order to fill the vacancies thereby created, for the election of a total of two additional directors of the Corporation (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series A Cumulative Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting at which a Preferred Stock Director is to be elected until up to twelve months after all dividends accumulated on such Series A Cumulative Preferred Stock and Parity Preferred for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In the event the directors of the Corporation are divided into classes, each such vacancy shall be apportioned among the classes of directors to prevent stacking in any one class and to ensure that the number of directors in each of the classes of directors are as equal as possible. Within twelve months after all accumulated dividends and the dividend for the then current dividend period on the Series A Cumulative Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or set aside for payment in full on the Series A Cumulative Preferred Stock and all series of Parity Preferred upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate within twelve months thereafter and the number of directors then constituting the Board of Directors of the Corporation shall decrease accordingly. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding Series A Cumulative Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series A Cumulative Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter.

(c)So long as any shares of Series A Cumulative Preferred Stock remain outstanding, the Corporation will not, without the affirmative vote or consent of the holders of Series A Cumulative Preferred Stock entitled to cast a majority of the votes entitled to be cast by the holders of the Series A Cumulative Preferred Stock, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

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(i)amend, alter or repeal the provisions of these Articles of Incorporation, whether by merger, consolidation or otherwise (an “Event”), so as to materially and adversely affect any right, preference, privilege or voting power of the Series A Cumulative Preferred Stock or the holders thereof; or

(ii)authorize, create or issue, or increase the authorized or issued amount of, any class or series of capital stock or rights to subscribe to or acquire any class or series of capital stock or any class or series of capital stock convertible into any class or series of capital stock, in each case ranking senior to the Series A Cumulative Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, or reclassify any shares of capital stock into any such shares;

provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series A Cumulative Preferred Stock (or any equivalent class or series of stock or shares issued by the surviving corporation, trust or other entity in any merger or consolidation to which the Corporation became a party) remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series A Cumulative Preferred Stock; and provided, further, that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other class or series of Preferred Stock, (ii) any increase in the amount of the authorized shares of such series, in each case ranking on a parity with or junior to the Series A Cumulative Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or (iii) any merger or consolidation in which the Corporation is not the surviving entity if, as a result of the merger or consolidation, the holders of Series A Cumulative Preferred Stock receive cash in the amount of the Liquidation Preference in exchange for each of their shares of Series A Cumulative Preferred Stock, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d)With respect to the exercise of the above described voting rights, each share of Series A Cumulative Preferred Stock shall have one vote per share, except that when any other class or series of capital stock shall have the right to vote with the Series A Cumulative Preferred Stock as a single class, then the Series A Cumulative Preferred Stock and such other class or series of capital stock shall each have one vote per $10.00 of liquidation preference.

(e)The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series A Cumulative Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

(f)Except as expressly stated in this Article X, the Series A Cumulative Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers, and the consent of the holders thereof shall not be required for the taking of any corporate action, including but not limited to, any merger or consolidation involving the Corporation or a sale of all or substantially all of the assets of the Corporation, irrespective of the effect that such merger, consolidation or sale may have upon the rights, preferences or voting power of the holders of the Series A Cumulative Preferred Stock.

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8. Articles of Incorporation and Bylaws. The rights of all holders of the Series A Cumulative Preferred Stock and the terms of the Series A Cumulative Preferred Stock are subject to the provisions of these Articles of Incorporation and the Bylaws of the Corporation, including, without limitation, the restrictions on transfer and ownership contained in Article IX of these Articles of Incorporation.

B. Exclusion of Other Rights.

Except as may otherwise be required by law, the Series A Cumulative Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, other than those specifically set forth in Article X of these Articles of Incorporation (as such article may be amended from time to time) and in the other articles of these Articles of Incorporation. The Series A Cumulative Preferred Stock shall have no preemptive or subscription rights.

C. Headings of Subdivisions.

The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

D. Severability of Provisions.

If any voting powers, preferences or relative, participating, optional and other special rights of the Series A Cumulative Preferred Stock or qualifications, limitations or restrictions thereof set forth in Article X of these Articles of Incorporation (as such article may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series A Cumulative Preferred Stock and qualifications, limitations and restrictions thereof set forth in Article X of these Articles of Incorporation (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences or relative, participating, optional or other special rights of Series A Cumulative Preferred Stock or qualifications, limitations and restrictions thereof shall be given such effect. None of the voting powers, preferences or relative participating, optional or other special rights of the Series A Cumulative Preferred Stock or qualifications, limitations or restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special right of Series A Cumulative Preferred Stock or qualifications, limitations or restrictions thereof unless so expressed herein.

XI.

ESTABLISHMENT OF SERIES B CUMULATIVE PREFERRED STOCK

Pursuant to Article III hereof, the Board of Directors has established the following Series of Preferred Stock.

A. Terms of the Series B Cumulative Preferred Stock.

1. Designation and Number. A series of Preferred Stock, designated the “Series B Cumulative Preferred Stock”, is hereby established. The number of authorized shares of Series B Cumulative Preferred Stock shall be 800,000.

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2. Maturity. The Series B Cumulative Preferred Stock has no stated maturity and will not be subject to any sinking fund or, except in the event of a Change of Control (as defined below), mandatory redemption.

3. Rank. The Series B Cumulative Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation, rank (a) prior or senior to the Common Stock issued by the Corporation; (b) prior or senior to all classes or series of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank junior to the Series B Cumulative Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation, (c) on a parity with the Series A Cumulative Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation and with all classes or series of shares of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank on a parity with the Series B Cumulative Preferred Stock (the “Parity Shares”) and (d) junior to all existing and future indebtedness of the Corporation.

4. Dividends.

(a)Holders of Series B Cumulative Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors of the Corporation, or a duly authorized committee thereof, and declared by the Corporation out of funds of the Corporation legally available for payment, preferential cumulative cash dividends at the rate of 10.0% per annum of the Liquidation Preference (as defined below) per share (equivalent to a fixed annual amount of $25.00 per share). Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 (or, if not a Business Day (as defined below), the next succeeding Business Day, each a “Dividend Payment Date”) for the period ending on such Dividend Payment Date, commencing on the date of issue.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close. The first dividend on Series B Cumulative Preferred Stock will be paid on June 30, 2008 with respect to the period beginning on the date of issue and ending on June 30, 2008 and will be less than a full quarter payment. Each share of Series B Cumulative Preferred Stock, $0.01 par value per share of the Corporation’s predecessor, Supertel Hospitality, Inc., a Virginia corporation, was converted into one share of Series B Cumulative Preferred Stock of the Corporation. For the avoidance of doubt, dividends previously paid by the Corporation’s predecessor, and dividends accrued but unpaid until time of such conversion, with respect to such predecessor’s Series B Cumulative Preferred Stock, $0.01 par value per share, are, respectively, payments of dividends and accrued but unpaid dividends in the amounts and for the same periods provided for herein with respect to the Series B Cumulative Preferred Stock of the Corporation. Any dividend payable on the Series B Cumulative Preferred Stock for any partial dividend period will be computed on the basis of twelve 30-day months and a 360-day year. Dividends will be payable in arrears to holders of record as they appear on the share records of the Corporation at the close of business on the applicable record date, which shall be the fifteenth day of March, June, September or December, as the case may be, immediately preceding the applicable Dividend Payment Date or such other date designated by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

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(b)No dividends on Series B Cumulative Preferred Stock shall be authorized by the Board of Directors of the Corporation or declared or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation, including any agreement relating to its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)Notwithstanding the foregoing, dividends on the Series B Cumulative Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement. Accrued but unpaid dividends on the Series B Cumulative Preferred Stock will accumulate but will not bear interest. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any other class or series of Preferred Stock ranking, as to dividends, on a parity with or junior to the Series B Cumulative Preferred Stock (other than a dividend payable in capital stock of the Corporation ranking junior to the Series B Cumulative Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series B Cumulative Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series B Cumulative Preferred Stock and the shares of any other class or series of Preferred Stock ranking on a parity as to dividends with the Series B Cumulative Preferred Stock, all dividends declared upon the Series B Cumulative Preferred Stock and any other class or series of Preferred Stock ranking on a parity as to dividends with the Series B Cumulative Preferred Stock shall be declared pro rata so that the amount of dividends declared per share of Series B Cumulative Preferred Stock and such other class or series of Preferred Stock, shall in all cases bear to each other the same ratio that accrued dividends per share on the Series B Cumulative Preferred Stock and such other class or series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other.

(d)Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series B Cumulative Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than a dividend payable in capital stock of the Corporation ranking junior to the Series B Cumulative Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series B Cumulative Preferred Stock as to dividends or upon liquidation, nor shall the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series B Cumulative Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for any other class or series of capital stock of the Corporation ranking junior to the Series B Cumulative Preferred Stock as to dividends and upon liquidation or redemption for the purpose of preserving the Corporation’s qualification as a real estate investment trust under the Internal Revenue Code of 1986, as amended

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(the “Code”) or complying with the provisions of Article VIII hereof). Holders of Series B Cumulative Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series B Cumulative Preferred Stock as provided above. Any dividend payment made on the Series B Cumulative Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. Accrued but unpaid dividends on the Series B Cumulative Preferred Stock will not bear interest.

5. Liquidation Preference.

(a)Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of the Series B Cumulative Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $25.00 per share (the “Liquidation Preference”) in cash, plus an amount equal to any accrued and unpaid dividends to the date of payment, but without interest, before any distribution of assets is made to holders of the Corporation’s Common Stock or any other class or series of capital stock of the Corporation that ranks junior to the Series B Cumulative Preferred Stock as to liquidation rights. The Corporation will promptly provide to the holders of the Series B Cumulative Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation, trust or entity with or into the Corporation, the sale, lease or conveyance of all or substantially all of the property or business of the Corporation or a statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

In determining whether a distribution (other than upon voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of capital stock of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon distribution of holders of shares of capital stock of the Corporation whose preferential rights upon distribution are superior to those receiving the distribution.

(b)If upon any liquidation, dissolution or winding up of the Corporation, the available assets of the Corporation, or proceeds thereof, distributable among the holders of Series B Cumulative Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series B Cumulative Preferred Stock and any such other Parity Shares ratably in the same proportion as the respective amounts that would be payable on such Series B Cumulative Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full.

(c)Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Series B Cumulative Preferred Stock and any Parity Shares, the holders of the Series B Cumulative Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

6. Redemption.

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(a)The Series B Cumulative Preferred Stock is not redeemable at the Corporation’s option prior to June 3, 2013 except upon a Change of Control or pursuant to the provisions of Article IX hereof. The Corporation, upon not less than 30 nor more than 60 days’ written notice, may at its option on or after June 3, 2013 redeem the Series B Cumulative Preferred Stock, in whole or in part, at any time or from time to time, and shall upon a Change of Control redeem each outstanding share of Series B Cumulative Preferred Stock, in all cases for cash at a redemption price equal to the Liquidation Preference per share, plus all accrued and unpaid dividends thereon to the date of redemption, without interest.

If notice of redemption of any of the Series B Cumulative Preferred Stock has been given and if the funds necessary for such redemption have been set aside, separate and apart from other funds, by the Corporation in trust for the pro rata benefit of the holders of any Series B Cumulative Preferred Stock so called for redemption, then from and after the date of redemption dividends will cease to accrue on such Series B Cumulative Preferred Stock, such Series B Cumulative Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series B Cumulative Preferred Stock is to be redeemed, the Series B Cumulative Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method determined by the Corporation.

(b)Unless full cumulative dividends on all Series B Cumulative Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no Series B Cumulative Preferred Stock shall be redeemed unless all outstanding Series B Cumulative Preferred Stock is simultaneously redeemed and the Corporation shall not purchase or otherwise acquire, directly or indirectly, any Series B Cumulative Preferred Stock (except by exchange for any other class or series of capital stock of the Corporation ranking junior to the Series B Cumulative Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Corporation of any Series B Cumulative Preferred Stock in accordance with Article IX hereof, or the purchase or acquisition of Series B Cumulative Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series B Cumulative Preferred Stock. Subject to applicable law and the limitation on purchases when dividends on the Series B Cumulative Preferred Stock are in arrears, the Corporation shall be entitled at any time and from time to time to repurchase any Series B Cumulative Preferred Stock by tender, by private agreement and in open-market transactions duly authorized by the Board of Directors of the Corporation.

(c)Notice of redemption of the Series B Cumulative Preferred Stock shall be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the date of redemption. A similar notice shall be mailed by the Corporation by first class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date of redemption, addressed to each holder of record of the Series B Cumulative Preferred Stock to be redeemed at such holder’s address as the same appears on the share records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series B Cumulative Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the date of redemption; (ii) the

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redemption price; (iii) the number of shares of Series B Cumulative Preferred Stock to be redeemed; (iv) the place or places where the Series B Cumulative Preferred Stock is to be surrendered for payment of the redemption price; and (v) dividends will cease to accrue on the redemption date.

(d)Immediately prior to any redemption of Series B Cumulative Preferred Stock, the Corporation shall pay, in cash, any accumulated and unpaid dividends through the date of redemption, unless a date of redemption falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series B Cumulative Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)All Series B Cumulative Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and reclassified as authorized but unissued Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock in accordance with the applicable provisions of these Articles of Incorporation.

(f)A “Change of Control” shall be deemed to have occurred at such time as (i) a “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes the ultimate “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have beneficial ownership of all shares of Voting Stock that such person or group has the right to acquire regardless of when such right is first exercisable), directly or indirectly, of Voting Stock representing more than 35% of the total voting power of the total Voting Stock of the Corporation on a fully diluted basis; (ii) the date the Corporation sells, transfers or otherwise disposes of all or substantially all of the assets of the Corporation; and (iii) the date of the consummation of a merger or share exchange of the Corporation with another corporation where the shareholders of the Corporation immediately prior to the merger or share exchange would not beneficially own immediately after the merger or share exchange, shares entitling such shareholders to 50% or more of all votes (without consideration of the rights of any class of stock to elect directors by a separate group vote) to which all shareholders of the corporation issuing cash or securities in the merger or share exchange would be entitled in the election of directors, or where members of the Board of Directors of the Corporation immediately prior to the merger or share exchange would not immediately after the merger or share exchange constitute a majority of the board of directors of the corporation issuing cash or securities in the merger or share exchange. “Voting Stock” shall mean capital stock of any class or kind having the power to vote generally for the election of directors of the Corporation.

7. Voting Rights.

(a)Holders of the Series B Cumulative Preferred Stock will not have any voting rights, except as set forth below.

(b)Whenever dividends on any Series B Cumulative Preferred Stock shall be in arrears for six or more quarterly periods, whether or not consecutive (a “Preferred Dividend Default”), the number of directors then constituting the Board of Directors of the Corporation shall increase by two (if not already increased by reason of a similar arrearage

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with respect to any Parity Preferred (as hereinafter defined)). The holders of such Series B Cumulative Preferred Stock (voting separately as a class with all other classes or series of Preferred Stock ranking on a parity with the Series B Cumulative Preferred Stock as to dividends or upon liquidation and upon which like voting rights have been conferred and are exercisable (“Parity Preferred”)) will be entitled to vote separately as a class, in order to fill the vacancies thereby created, for the election of a total of two additional directors of the Corporation (the “Preferred Stock Directors”) at a special meeting called by the holders of record of at least 20% of the Series B Cumulative Preferred Stock or the holders of record of at least 20% of any series of Parity Preferred so in arrears (unless such request is received less than 90 days before the date fixed for the next annual or special meeting of the shareholders) or at the next annual meeting of shareholders, and at each subsequent annual meeting at which a Preferred Stock Director is to be elected until up to twelve months after all dividends accumulated on such Series B Cumulative Preferred Stock and Parity Preferred for the past dividend periods and the dividend for the then current dividend period shall have been fully paid or declared and a sum sufficient for the payment thereof set aside for payment. In the event the directors of the Corporation are divided into classes, each such vacancy shall be apportioned among the classes of directors to prevent stacking in any one class and to ensure that the number of directors in each of the classes of directors are as equal as possible. Within twelve months after all accumulated dividends and the dividend for the then current dividend period on the Series B Cumulative Preferred Stock shall have been paid in full or declared and set aside for payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to revesting in the event of each and every Preferred Dividend Default) and, if all accumulated dividends and the dividend for the then current dividend period have been paid in full or set aside for payment in full on the Series B Cumulative Preferred Stock and all series of Parity Preferred upon which like voting rights have been conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall terminate (within twelve months thereafter) and the number of directors then constituting the Board of Directors of the Corporation shall decrease accordingly. Any Preferred Stock Director may be removed at any time with or without cause by, and shall not be removed otherwise than by the vote of, the holders of record of a majority of the outstanding Series B Cumulative Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a Preferred Stock Director may be filled by written consent of the Preferred Stock Director remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the outstanding shares of Series B Cumulative Preferred Stock when they have the voting rights described above (voting separately as a class with all series of Parity Preferred upon which like voting rights have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one vote per director on any matter.

(c)So long as any shares of Series B Cumulative Preferred Stock remain outstanding, the Corporation will not, without the affirmative vote or consent of the holders of Series B Cumulative Preferred Stock entitled to cast at least two-thirds of the votes entitled to be cast by the holders of the Series B Cumulative Preferred Stock, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

(i)amend, alter, repeal or make other changes to the provisions of these Articles of Incorporation setting forth the terms of the Series B Cumulative Preferred Stock, whether by merger, consolidation or otherwise (an “Event”), so as

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to materially and adversely affect any right, preference, privilege or voting power of the Series B Cumulative Preferred Stock or the holders thereof; or

(ii)authorize, create or issue, or increase the authorized or issued amount of, any class or series of capital stock or rights to subscribe to or acquire any class or series of capital stock or any class or series of capital stock convertible into any class or series of capital stock, in each case ranking senior to the Series B Cumulative Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or otherwise, or reclassify any shares of capital stock into any such shares;

provided, however, that with respect to the occurrence of any Event set forth above, so long as the Series B Cumulative Preferred Stock (or any equivalent class or series of stock or shares issued by the surviving corporation, trust or other entity in any merger or consolidation to which the Corporation became a party) remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting power of holders of the Series B Cumulative Preferred Stock; and provided, further, that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other class or series of Preferred Stock, (ii) any increase in the amount of the authorized shares of such series, in each case ranking on a parity with or junior to the Series B Cumulative Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or (iii) any merger or consolidation in which the Corporation is not the surviving entity if, as a result of the merger or consolidation, the holders of Series B Cumulative Preferred Stock receive cash in the amount of the Liquidation Preference in exchange for each of their shares of Series B Cumulative Preferred Stock, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

(d)With respect to the exercise of the above described voting rights, each share of Series B Cumulative Preferred Stock shall have one vote per share, except that when any other class or series of capital stock shall have the right to vote with the Series B Cumulative Preferred Stock as a single class, then the Series B Cumulative Preferred Stock and such other class or series of capital stock shall each have one vote per $10.00 of liquidation preference.

(e)The foregoing voting provisions will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series B Cumulative Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

8. Articles of Incorporation and Bylaws.

The rights of all holders of the Series B Cumulative Preferred Stock and the terms of the Series B Cumulative Preferred Stock are subject to the provisions of these Articles of Incorporation and the Bylaws of the Corporation, including, without limitation, the restrictions on transfer and ownership contained in Article IX of these Articles of Incorporation.

B. Exclusion of Other Rights.

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Except as may otherwise be required by applicable law, the Series B Cumulative Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, other than those specifically set forth in Article XI of these Articles of Incorporation (as such article may be amended from time to time) and in the other articles of these Articles of Incorporation. The Series B Cumulative Preferred Stock shall have no preemptive or subscription rights.

C. Headings of Subdivisions.

The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

D. Severability of Provisions.

If any voting powers, preferences or relative, participating, optional and other special rights of the Series B Cumulative Preferred Stock or qualifications, limitations or restrictions thereof set forth in Article XI of these Articles of Incorporation (as such article may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series B Cumulative Preferred Stock and qualifications, limitations and restrictions thereof set forth in Article XI of these Articles of Incorporation (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences or relative, participating, optional or other special rights of Series B Cumulative Preferred Stock or qualifications, limitations and restrictions thereof shall be given such effect. None of the voting powers, preferences or relative participating, optional or other special rights of the Series B Cumulative Preferred Stock or qualifications, limitations or restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special right of Series B Cumulative Preferred Stock or qualifications, limitations or restrictions thereof unless so expressed herein.

XII.

ESTABLISHMENT OF SERIES C CUMULATIVE CONVERTIBLE PREFERRED STOCK

Pursuant to Article III hereof, the Board of Directors has established the following Series of Preferred Stock.

A. Terms of the series c cumulative convertible preferred stock.

1. Designation and Number. A series of Preferred Stock, designated the “Series C Cumulative Convertible Preferred Stock”, is hereby established (and are herein referred to as the “Series C Preferred Stock”). The number of authorized shares of Series C Preferred Stock shall be 3,000,000 (the “Preferred Shares”).

2. Maturity. The Series C Preferred Stock has no stated maturity and will not be subject to any sinking fund, mandatory redemption, except as described below, forced conversion.

3. Rank. The Series C Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of Supertel Hospitality, Inc. (the “Corporation”), rank (a) prior or senior to the Common Stock issued by the Corporation; (b) prior or senior to all classes or series of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank junior

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to the Series C Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation, (c) on a parity with the Series A Cumulative Preferred Stock and Series B Cumulative Preferred Stock with respect to dividend rights or rights upon liquidation, dissolution or winding up of the Corporation and with all classes or series of shares of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank on a parity with the Series C Preferred Stock (the “Parity Shares”) and (d) junior to all existing and future indebtedness of the Corporation.

4. Dividends.

(a)Holders of Series C Preferred Stock shall be entitled to receive, when and as authorized by the Board of Directors of the Corporation, or a duly authorized committee thereof, and declared by the Corporation out of funds of the Corporation legally available for payment, preferential cumulative cash dividends at the rate of 6.25% per annum of the face value per share (equivalent to a fixed annual amount of $0.625 per share). Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 (or, if not a Business Day (as defined below), the next succeeding Business Day, each a “Dividend Payment Date”) for the period ending on such Dividend Payment Date, commencing on the date of issue. “Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close. The first dividend on Series C Preferred Stock will be paid on March 31, 2012 with respect to the period beginning on the date of issue and ending on March 31, 2012 and will be less than a full quarter payment. Each share of Series C Cumulative Convertible Preferred Stock, $0.01 par value per share of the Corporation’s predecessor, Supertel Hospitality, Inc., a Virginia corporation, was converted into one share of Series C Preferred Stock of the Corporation. For the avoidance of doubt, dividends previously paid by the Corporation’s predecessor, and dividends accrued but unpaid until time of such conversion, with respect to such predecessor’s Series C Cumulative Convertible Preferred Stock, $0.01 par value per share, are, respectively, payments of dividends and accrued but unpaid dividends in the amounts and for the same periods provided for herein with respect to the Series C Preferred Stock of the Corporation. Any dividend payable on the Series C Preferred Stock for any partial dividend period will be computed on the basis of twelve 30-day months and a 360-day year. Dividends will be payable in arrears to holders of record as they appear on the share records of the Corporation at the close of business on the applicable record date, which shall be the fifteenth day of March, June, September or December, as the case may be, immediately preceding the applicable Dividend Payment Date or such other date designated by the Board of Directors of the Corporation for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)No dividends on Series C Preferred Stock shall be authorized by the Board of Directors of the Corporation or declared or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation relating to the Corporation’s indebtedness prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)Notwithstanding the foregoing, dividends on the Series C Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds

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legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement. Accrued but unpaid dividends on the Series C Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly. Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any other class or series of Preferred Stock ranking, as to dividends, on a parity with or junior to the Series C Preferred Stock (other than a dividend payable in capital stock of the Corporation ranking junior to the Series C Preferred Stock as to dividends and upon liquidation) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series C Preferred Stock for all past dividend periods and the then current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series C Preferred Stock and the shares of any other class or series of Preferred Stock ranking on a parity as to dividends with the Series C Preferred Stock, all dividends declared upon the Series C Preferred Stock and any other class or series of Preferred Stock ranking on a parity as to dividends with the Series C Preferred Stock shall be declared pro rata so that the amount of dividends declared per share of Series C Preferred Stock and such other class or series of Preferred Stock, shall in all cases bear to each other the same ratio that accrued dividends per share on the Series C Preferred Stock and such other class or series of Preferred Stock (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other.

Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series C Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then current dividend period, no dividends (other than a dividend payable in capital stock of the Corporation ranking junior to the Series C Preferred Stock as to dividends and upon liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series C Preferred Stock as to dividends or upon liquidation, nor shall the Common Stock, or any other class or series of capital stock of the Corporation ranking junior to or on a parity with the Series C Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for any other class or series of capital stock of the Corporation ranking junior to the Series C Preferred Stock as to dividends and upon liquidation or redemption for the purpose of preserving the Corporation’s qualification as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”) or complying with the provisions of Article VIII hereof). Holders of Series C Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series C Preferred Stock as provided above. Any dividend payment made on the Series C Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. As provided herein, accrued but unpaid dividends on the Series C Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly.

5. Liquidation Preference.

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(a)Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of the Series C Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders a liquidation preference of $10.00 per share (the “Liquidation Preference”) in cash, plus an amount equal to any accrued and unpaid dividends to the date of payment, before any distribution of assets is made to holders of the Corporation’s Common Stock or any other class or series of capital stock of the Corporation that ranks junior to the Series C Preferred Stock as to liquidation rights. As provided herein, accrued but unpaid dividends on the Series C Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly. The Corporation will promptly provide to the holders of the Series C Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation, trust or entity with or into the Corporation, the sale, lease or conveyance of all or substantially all of the property or business of the Corporation or a statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

In determining whether a distribution (other than upon voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of capital stock of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon distribution of holders of shares of capital stock of the Corporation whose preferential rights upon distribution are superior to those receiving the distribution.

(b)If upon any liquidation, dissolution or winding up of the Corporation, the available assets of the Corporation, or proceeds thereof, distributable among the holders of Series C Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series C Preferred Stock and any such other Parity Shares ratably in the same proportion as the respective amounts that would be payable on such Series C Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full.

(c)Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Series C Preferred Stock and any Parity Shares, the holders of the Series C Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

6. Redemption.

(a)The Series C Preferred Stock is not redeemable at the Corporation’s option prior to January 31, 2017. After January 31, 2017, the Series C Preferred Stock is redeemable at the Corporation’s option if the VWAP (as defined below) of the Common Stock of the Corporation is less than the Conversion Price for any 30 Day Period (as defined below) after January 31, 2017 (a “Redemption Event”). The Corporation, upon not less than 30 nor more than 60 days’ written notice, may at its option at any time after a Redemption Event redeem the Series C Preferred Stock, in whole or in part, at any time or from time to time, redeem each outstanding share of Series C Preferred Stock, in all cases for cash at a redemption price equal to the Liquidation Preference per share, plus all accrued and unpaid dividends thereon to the date of redemption. As provided herein,

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accrued but unpaid dividends on the Series C Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly.

If notice of redemption of any of the Series C Preferred Stock has been given and if the funds necessary for such redemption have been set aside, separate and apart from other funds, by the Corporation in trust for the pro rata benefit of the holders of any Series C Preferred Stock so called for redemption, then from and after the date of redemption dividends will cease to accrue on such Series C Preferred Stock, such Series C Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price. If less than all of the outstanding Series C Preferred Stock is to be redeemed, the Series C Preferred Stock to be redeemed shall be selected pro rata (as nearly as may be practicable without creating fractional shares) or by any other equitable method reasonably determined by the Corporation.

(b)Unless full cumulative dividends on all Series C Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then current dividend period, no Series C Preferred Stock shall be redeemed unless all outstanding Series C Preferred Stock is simultaneously redeemed and the Corporation shall not purchase or otherwise acquire, directly or indirectly, any Series C Preferred Stock (except by exchange for any other class or series of capital stock of the Corporation ranking junior to the Series C Preferred Stock as to dividends and upon liquidation); provided, however, that the foregoing shall not prevent the purchase by the Corporation of any Series C Preferred Stock in accordance with Article IX hereof, or the purchase or acquisition of Series C Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series C Preferred Stock. Subject to applicable law and the limitation on purchases when dividends on the Series C Preferred Stock are in arrears, the Corporation shall be entitled at any time and from time to time to repurchase any Series C Preferred Stock by tender, by private agreement and in open-market transactions duly authorized by the Board of Directors of the Corporation.

(c)Notice of redemption by the Corporation of the Series C Preferred Stock shall be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the date of redemption. A similar notice shall be mailed by the Corporation by first class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date of redemption, addressed to each holder of record of the Series C Preferred Stock to be redeemed at such holder’s address as the same appears on the share records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series C Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the date of redemption; (ii) the redemption price; (iii) the number of shares of Series C Preferred Stock to be redeemed; (iv) the place or places where the Series C Preferred Stock is to be surrendered for payment of the redemption price; and (v) dividends will cease to accrue on the redemption date.

(d)Immediately prior to any redemption of Series C Preferred Stock, the Corporation shall pay, in cash, any accumulated and unpaid dividends through the date of redemption, unless a date of redemption falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series C Preferred Stock at the close of business on such Dividend Record Date shall be entitled

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to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)All Series C Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and reclassified as authorized but unissued Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock in accordance with the applicable provisions of these Articles of Incorporation.

(f)“30 Day Period” shall mean any 30 consecutive calendar days. “VWAP” means, for any 30 Day Period (i) the volume weighted average price of the Common Stock for such period on the Nasdaq Stock Market LLC, or if such securities are not listed or admitted for trading on the Nasdaq Stock Market LLC, on the principal national securities exchange on which such securities are listed or admitted as reported by Bloomberg L.P. (based on a trading Day from 9:30 a.m. (New York City time) to 4:00 p.m. (New York City time)), (ii) if not listed or admitted for trading on any national securities exchange, the volume weighted average price of the Common Stock for such period in the applicable securities market in which the securities are traded, or (iii) if the Common Stock is not then listed or quoted for trading on any securities market the average fair market value of a share of Common Stock for such period as determined by an independent appraiser selected in good faith by the Company, the fees and expenses of which shall be paid by the Company and which determination shall be final, conclusive and binding.

7. Voting Rights.

(a)Except as otherwise provided herein, the Holders of Series C Preferred Stock shall not have any voting rights. The Holders of Series C Preferred Stock shall be entitled to vote their Series C Preferred Stock as a single class with the holders of the Common Stock on all matters submitted to such holders for vote or consent. For each such vote or consent, the voting power of the Series C Preferred Stock shall be equal to the lesser of (i) .78625 vote per share of Series C Preferred Stock or (ii) an amount of votes per share of Series C Preferred Stock such that the vote of all shares of Series C Preferred Stock in the aggregate equal 34% of the combined voting power all of the Voting Stock entitled to vote or consent, minus an amount equal to the number of votes represented by the other shares of Voting Stock Beneficially Owned by Real Estate Strategies L.P., a Bermuda Limited Partnership (“RES” or the “Purchaser”) and its Affiliates and Subsidiaries, as such terms are defined under certain Purchase Agreement dated as of November 16, 2011 by and among the Purchaser and the predecessor of the Corporation. The foregoing voting rights decline in proportion to the amount of Series C Preferred Stock converted to common shares. “Voting Stock” shall mean capital stock of any class or kind having the power to vote generally for the election of directors of the Corporation.

(b)So long as any shares of Series C Preferred Stock remain outstanding, the Corporation will not, without the affirmative vote or consent of the holders of Series C Preferred Stock be entitled to cast at least a majority of the votes entitled to be cast by the holders of the Series C Preferred Stock, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

(i)amend, alter, repeal or make other changes to the provisions of these Articles of Incorporation setting forth the terms of the Series C Preferred Stock, whether by merger, consolidation or otherwise (an “Event”), so as to

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adversely affect any right, preference, privilege or voting power of the Series C Preferred Stock or the holders thereof; or

(ii)authorize, create or issue, or increase the authorized or issued amount of, any class or series of capital stock or rights to subscribe to or acquire any class or series of capital stock or any class or series of capital stock convertible into any class or series of capital stock, in each case ranking senior or pari passu to the Series C Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or otherwise, or reclassify any shares of capital stock into any such shares;

provided, however, that with respect to the occurrence of any Event, so long as the Series C Preferred Stock (or any equivalent class or series of stock or shares issued by the surviving corporation, trust or other entity in any merger or consolidation to which the Corporation became a party) remains outstanding with the terms thereof materially unchanged, the occurrence of any such Event shall not be deemed to adversely affect such rights, preferences, privileges or voting power of holders of the Series C Preferred Stock; and provided, further, that (i) any increase in the amount of the authorized Preferred Stock or the creation or issuance of any other class or series of Preferred Stock, (ii) any increase in the amount of the authorized shares of such series, in each case ranking on a parity with or junior to the Series C Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up or (iii) any merger or consolidation in which the Corporation is not the surviving entity

if, as a result of the merger or consolidation, the holders of Series C Preferred Stock receive cash in the amount of the Liquidation Preference plus accrued and unpaid dividends in exchange for each of their shares of Series C Preferred Stock, shall not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.

With respect solely to the exercise of the above described voting rights in this Section 7(b), each share of Series C Preferred Stock shall have one vote per share, except that when any other class or series of capital stock shall have the right to vote with the Series C Preferred Stock as a single class, then the Series C Preferred Stock and such other class or series of capital stock shall each have one vote per $10.00 of liquidation preference.

The foregoing voting provisions in this Section 7(b) will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series C Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

(c)So long as the Purchaser and/or its Affiliates has the right to designate two or more directors to the Board of Directors of the Corporation pursuant to the Directors Designation Agreement dated January 31, 2012, by and among the predecessor of the Corporation, the Purchaser and IRSA Inversiones y Representaciones Sociedad Anónima, an Argentine sociedad anónima (“IRSA”), the following matters shall require the approval of the Purchaser and/or IRSA:

(i)the merger, consolidation, liquidation or sale of substantially all of the assets of the Corporation;

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(ii)the sale, issuance or potential issuance in an offering by the Corporation of Common Stock (or securities convertible into or exercisable Common Stock) equal to 20% or more of the Common Stock or 20% or more of the Voting Stock outstanding before the issuance; or

(iii)any transaction in which the Corporation is to be a participant and the amount involved exceeds $120,000 other than employment compensation and in which any of the Corporation’s directors or executive officers or any member of their immediate family will have a material interest, exclusive of interests arising solely from the ownership of a class of equity securities of the Corporation and all holders of that class of equity securities receive the same benefit on a pro rata basis.

8. Conversion.

(a)Subject to the Beneficial Ownership Limitation (as set forth below) each share of Series C Preferred Stock shall be convertible, at any time and from time to time from and after the Date of Issuance at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Liquidation Preference of such share of Series C Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with a conversion notice (a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Series C Preferred Stock to be converted, the number of shares of Series C Preferred Stock owned prior to the conversion at issue, the number of shares of Series C Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. To effect conversions of shares of Series C Preferred Stock, a Holder shall surrender the certificate(s) representing the shares of Series C Preferred Stock to be converted to the Corporation together with the delivery of the Notice of Conversion, unless such shares are held in uncertificated form. Shares of Series C Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled.

(b)The conversion price for the Series C Preferred Stock shall equal $1.60, subject to adjustment herein (the “Conversion Price”).

(c)Promptly after each Conversion Date, the Corporation shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of the Series C Preferred Stock.

(d)No fractional Common Stock shall be issued upon conversion of Series C Preferred Stock. All Common Stock (including fractions thereof) issuable upon conversion of Series C Preferred Stock shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the exercise would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional shares, pay cash equal to the product of such fraction multiplied by the fair market value per share of Common Stock on the Conversion Date (as reported by the NASDAQ or any other national securities exchange on which the Common Stock are then listed for trading, or if none, the most recently

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reported “over the counter” trade price or if none, as determined in good faith by the Board of Directors of the Company).

(e)The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series C Preferred, free from all liens and preemptive rights. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the Common Stock required to be delivered upon conversion of the Series C Preferred Stock, prior to such delivery, upon any national securities exchange upon which the Common Stock is listed at the time of such delivery.

(f)The issuance of certificates for shares of the Common Stock on conversion of the Series C Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

(g)The Corporation shall not effect any conversion of the Series C Preferred Stock, and a Holder shall not have the right to convert any portion of the Series C Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own Voting Stock in excess of the Beneficial Ownership Limitation. For purposes of this Section 8(g), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder (except that a person or group shall be deemed to have beneficial ownership of shares of Voting Stock that such person or group has the right to acquire regardless of when such right is first exercisable), it being acknowledged by such Holder that the Holder does not have the right to acquire Common Stock in excess of the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph. For purposes of this Section 8(g), a Holder may rely on the number of outstanding shares of Voting Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Voting Stock outstanding. Upon the written or oral request of a Holder, the Corporation shall promptly confirm orally and in writing to such Holder the number of votes represented by the Voting Stock then outstanding. In any case, the voting power of outstanding shares of Voting Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Voting Stock was reported. The “Beneficial Ownership Limitation” shall be 34.0% of the total number of votes represented by the Voting Stock outstanding immediately after giving effect to the issuance of shares of Common Stock otherwise

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issuable upon conversion of Preferred Stock pursuant to the applicable Notice of Conversion. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 8(g) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to any successor holder of Series C Preferred Stock.

9. Certain Adjustments.

(a)If the Corporation, at any time while this Series C Preferred Stock is outstanding: (i) pays a stock dividend or makes a distribution to holders of any class or series of capital stock of the Corporation in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series C Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a greater number of shares, (iii) combines its outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock by reclassification of the Common Stock, or (v) undertakes any transaction similar to or having the effect of the foregoing transactions, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 9(a) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(b)If the Corporation sells or issues any Common Stock or grants any option or right to purchase Common Stock at an effective price per share that is lower than $1.60 per share (the “Base Conversion Price”), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock, option or right are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 9(b) in respect of an Exempt Issuance. “Exempt Issuance” means the issuance of (a) shares of Common Stock to employees, officers, directors or consultants of the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities issued and outstanding on the date of the establishment of the Series C Preferred Stock, (c) securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock, (d) securities issued pursuant to acquisitions approved by a number of the members of the Board of Directors equal to one more than a majority of the members of the Board of Directors and (e) securities issued upon the exercise of warrants to purchase Common Stock which were issued concurrently with the issuance of the Series C Preferred Stock to the original Holder or Holders.

(c)If at any time the Corporation issues any rights, options or warrants pro rata to all holders of Common Stock to purchase Common Stock (or securities convertible into or exchangeable for Common Stock) (the “Purchase Rights”), then each Holder shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the

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number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the issuance of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the issuance of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent and such Purchase Right to such extent shall be held in abeyance, for a period not to exceed 71 days, for the Holder until such time during such 71 day period, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

(d)If the Corporation, at any time while this Series C Preferred Stock is outstanding, distributes to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security (other than the Common Stock, which shall be subject to Section 9(c)), then in each such case the Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of the Common Stock as determined by the Board of Directors of the Corporation in good faith. In either case the adjustments shall be described in a statement delivered to the Holders describing the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

(e)Whenever the Conversion Price is adjusted pursuant to any provision of this Section 9, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(f)Minimum Adjustment. Notwithstanding anything herein to the contrary, no adjustment of the Conversion Price shall be made pursuant to this Section 9 in an amount less than $.01 per share, and any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per share or more.

(g)If the Conversion Price is adjusted pursuant to Section 9(a), then the vote per share of the Series C Preferred Stock shall be further adjusted, to a vote per share determined by multiplying the vote per share of the Series C Preferred Stock then in effect for Section 7(a)(i), by a fraction of which the denominator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event causing adjustment of the Conversion Price pursuant to Section 9(a), and of which the numerator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 9(g) shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective

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immediately after the effective date in the case of a subdivision, combination or reclassification.

10. Articles of Incorporation and Bylaws.

The rights of all holders of the Series C Preferred Stock and the terms of the Series C Preferred Stock are subject to the provisions of these Articles of Incorporation and the Bylaws of the Corporation, including, without limitation, the restrictions on transfer and ownership contained in Article IX of these Articles of Incorporation.

B. Exclusion of other rights.

Except as may otherwise be required by applicable law, the Series C Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, other than those specifically set forth in Article XII of these Articles of Incorporation (as such article may be amended from time to time) and in the other articles of these Articles of Incorporation. The Series C Preferred Stock shall have no preemptive or subscription rights.

C. Headings of subdivisions.

The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

D. Severability of provisions.

If any voting powers, preferences or relative, participating, optional and other special rights of the Series C Preferred Stock or qualifications, limitations or restrictions thereof set forth in Article XII of these Articles of Incorporation (as such article may be amended from time to time) is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series C Preferred Stock and qualifications, limitations and restrictions thereof set forth in Article XII of these Articles of Incorporation (as so amended) which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences or relative, participating, optional or other special rights of Series C Preferred Stock or qualifications, limitations and restrictions thereof shall be given such effect. None of the voting powers, preferences or relative participating, optional or other special rights of the Series C Preferred Stock or qualifications, limitations or restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special right of Series C Preferred Stock or qualifications, limitations or restrictions thereof unless so expressed herein.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused these Articles of Incorporation to be signed in its name and on its behalf by its President and Chief Executive Officer and attested to by its Senior Vice President and Chief Financial Officer on this 17th day of November, 2014.

ATTEST:	SUPERTEL HOSPITALITY, INC.
By  /s/ Corrine L. Scarpello	By  /s/  Kelly A. Walters
Name:  Corrine L. Scarpello	Name:  Kelly A. Walters
Title:  Senior Vice President and Chief Financial Officer	Title:  President and Chief Executive Officer

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ARTICLES SUPPLEMENTARY
OF
CONDOR HOSPITALITY TRUST, INC.

Condor Hospitality Trust, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:

FIRST: Under a power contained in Article III of the Amended and Restated Articles of Incorporation, as amended, of the Corporation (the “Articles”) and pursuant to Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation (the “Board”), by duly adopted resolutions, classified and established 6,700,000 shares of authorized but unissued Preferred Stock, $.01 par value per share, of the Corporation as shares of Series D Cumulative Convertible Preferred Stock, with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption (which, upon any restatement of the Articles, may be made a part of the Articles, with any necessary or appropriate changes to the numeration or lettering of the sections or subsections hereof). Capitalized terms used but not defined herein shall have the meanings given to them in the Articles.

A. Terms of the Series D Cumulative Convertible Preferred Stock.

1.Designation and Number. A series of Preferred Stock, designated the “Series D Cumulative Convertible Preferred Stock”, is hereby established (and is herein referred to as the “Series D Preferred Stock”). The number of authorized shares of Series D Preferred Stock shall be 6,700,000.

2.Maturity. The Series D Preferred Stock has no stated maturity and will not be subject to any sinking fund, mandatory redemption or, except as described in Section 9(d) below, forced conversion.

3.Rank. The Series D Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation, rank (a) prior or senior to the Common Stock issued by the Corporation; (b) prior or senior to all classes or series of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank junior to the Series D Preferred Stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation (together with the Common Stock, collectively, “Junior Shares”), (c) on a parity with the Series A Cumulative Preferred Stock, the Series B Cumulative Preferred Stock and the Series C Cumulative Convertible Preferred Stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation and with all classes or series of shares of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank on a parity with the Series D Preferred Stock (collectively, “Parity Shares”) and (d) junior to all existing and future indebtedness of the Corporation.

4.Dividends.

(a)Holders of Series D Preferred Stock shall be entitled to receive, when and as authorized by the Board, or a duly authorized committee thereof, and declared by the Corporation out of funds of the Corporation legally available for payment, preferential cumulative cash dividends at the rate of 6.25% per annum of the face value per share (equivalent to a fixed annual amount of $0.625 per share), subject to increase as provided in Section 6 below. Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 (or, if not a Business Day (as

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defined below), the next succeeding Business Day, each a “Dividend Payment Date”) for the period ending on such Dividend Payment Date, commencing on the date of issue. “Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close. The first dividend on the Series D Preferred Stock will be paid on June 30, 2016 with respect to the period beginning on the date of issue and ending on June 30, 2016 and will be greater than a full quarter payment. Any dividend payable on the Series D Preferred Stock for any partial dividend period will be computed on the basis of twelve 30-day months and a 360-day year. Dividends will be payable in arrears to holders of record as they appear on the share records of the Corporation at the close of business on the applicable record date, which shall be the 15th day of March, June, September or December, as the case may be, immediately preceding the applicable Dividend Payment Date or such other date designated by the Board for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(b)No dividends on the Series D Preferred Stock shall be authorized by the Board or declared or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation relating to the Corporation’s indebtedness prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(c)Notwithstanding the foregoing, dividends on the Series D Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement. Accrued but unpaid dividends on the Series D Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly (subject to increase as provided in Section 6 below). Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any Parity Shares or Junior Shares (other than a dividend payable in Junior Shares) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series D Preferred Stock for all past dividend periods and the then-current dividend period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series D Preferred Stock and any Parity Shares, all dividends declared upon the Series D Preferred Stock and such Parity Shares shall be declared pro rata so that the amount of dividends declared per share of Series D Preferred Stock and per Parity Share shall in all cases bear to each other the same ratio that accrued dividends per share on the Series D Preferred Stock and such Parity Shares (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other.

Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series D Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then-current dividend period, no dividends (other than a dividend payable in Junior Shares) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any Parity Shares or Junior Shares, nor shall the Common Stock, any other Junior Shares or any Parity Shares be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for any other class or series of capital stock of the Corporation constituting Junior Shares and upon liquidation or redemption for the purpose of preserving the Corporation’s qualification as a real estate investment trust under the Internal Revenue Code of

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1986, as amended (the “Code”), or complying with the provisions of Article VIII of the Articles). Holders of Series D Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series D Preferred Stock as provided above. Any dividend payment made on the Series D Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable. As provided herein, accrued but unpaid dividends on the Series D Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly (subject to increase as provided in Section 6 below).

(d)Whenever the dividends on any Series D Preferred Stock share shall be in arrears for four consecutive quarters, then upon written notice delivered by one or more holders that hold in the aggregate not less than 40% of the outstanding Series D Preferred Stock, the Corporation shall (i) take all appropriate action reasonably within its means to maximize the assets legally available for paying such dividends and to monetize such assets (for example, but without limiting the generality of the foregoing, by selling or liquidating all of some of the Corporation’s assets or by selling the Corporation as a going concern), (ii) pay out of all such assets legally available (including any proceeds from any sale or liquidation of such assets) the maximum possible amount of such unpaid dividends, and (iii) thereafter, at any time and from time to time when additional assets of the Corporation (including any proceeds from any sale or liquidation of such assets) become legally available to pay such unpaid dividends, pay such remaining unpaid dividends until all dividends accumulated on the Series D Preferred Stock have been fully paid.

5.Liquidation Preference.

(a)Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of the Series D Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders, before any distribution of assets is made to holders of the Corporation’s Common Stock or any other Junior Shares, a liquidation preference of $10.00 per share in cash (the “Liquidation Preference”), except as otherwise provided in Section 6 below, plus the sum of (i) an amount equal to any accrued and unpaid dividends to the date of payment and (ii) (A) $2.00 per share in cash, if the liquidation, dissolution or winding up occurs on or before March 16, 2019, (B) $3.00 per share in cash, if the liquidation, dissolution or winding up occurs from March 16, 2019 and on or before March 16, 2020, or (C) $4.00 per share in cash, if the liquidation, dissolution or winding up occurs after March 16, 2020. As provided herein, accrued but unpaid dividends on the Series D Preferred Stock will accumulate and will earn additional dividends at 6.25%, compounding quarterly (subject to increase as provided in Section 6 below). The Corporation will promptly provide to the holders of the Series D Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference. The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation, trust or entity with or into the Corporation, the sale, lease or conveyance of all or substantially all of the property or business of the Corporation or a statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

In determining whether a distribution (other than upon voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of capital stock of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon distribution of holders of shares of capital stock of the Corporation whose preferential rights upon distribution are superior to those receiving the distribution.

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(b)If upon any liquidation, dissolution or winding up of the Corporation, the available assets of the Corporation, or proceeds thereof, distributable among the holders of Series D Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series D Preferred Stock and any such other Parity Shares ratably in the same proportion as the respective amounts that would be payable on such Series D Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full.

(c)Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Series D Preferred Stock and any Parity Shares, the holders of the Series D Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

6. Liquidation Special Distribution.

(a)Should a Qualified Offering set forth in Section 9 below not occur on or before the end of the 60th month following the issuance of the Series D Preferred Stock, one or more holders that hold in the aggregate not less than 40% of the outstanding shares of the Series D Preferred Stock shall have the right, by delivering a written notice to the Corporation (a “Special Liquidation Event Notice”), to elect to have the Corporation fully liquidate in a commercially reasonable manner as determined by the Board to provide for liquidation distributions to the holders of the Series D Preferred Stock in an amount per share of Series D Preferred Stock equal to $14.00 in cash (the “Liquidation Special Distribution”), plus accrued and unpaid dividends (whether or not declared) on the Series D Preferred Stock through the date on which such liquidation distributions are made to the holders of the Series D Preferred Stock. If a Special Event Liquidation Notice has been delivered to the Corporation, then the dividend rate on the Series D Preferred Stock after the 60th month following the issuance of the Series D Preferred Stock shall increase from 6.25% per annum to 12.5% per annum.

(b)The Corporation shall pay the Liquidation Special Distribution with respect to each outstanding share of Series D Preferred Stock on a date designated by the Board (“Special Liquidation Distribution Payment Date”), which Special Liquidation Distribution Payment Date shall not be more than 6 months following receipt by the Corporation of the Special Liquidation Event Notice. The Corporation will use its best efforts to sell all assets and settle all liabilities such that the remaining cash from the net proceeds will be paid out to all shareholders of the Corporation in accordance with the preference order set out in Section 5 above, which includes the holders of the Series D Preferred Stock and any Parity Shares with first priority, followed by holders of Common Stock and any other Junior Shares. Not less than 35 days prior to the Special Liquidation Distribution Payment Date, the Corporation shall deliver to each of the holders of the Series D Preferred Stock a written notice stating (i) the amount per share of Series D Preferred Stock that will be distributed on the Special Liquidation Distribution Payment Date and (ii) the amount per share of Common Stock the holders of Common Stock would receive assuming that all shares of the Series D Preferred Stock were converted to Common Stock on the date immediately prior to the Special Liquidation Distribution Payment Date.

(c)Notwithstanding anything to the contrary herein, a holder of Series D Preferred Stock may exercise the conversion rights set forth in Section 9 below and as determined with the Liquidation Preference (and not the amount of the Liquidation Special Distribution) after a Special Liquidation Event Notice has been delivered provided that the conversion date occurs no later than one Business Day prior to the Special Liquidation Distribution Payment Date.

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7.Redemption.

(a)The Corporation, upon not less than 30 nor more than 60 days’ prior written notice, may at its option at any time or from time to time subject to the requirements for the share price of the Common Stock and approval set forth below, redeem each outstanding share of Series D Preferred Stock, in all cases for cash at a redemption price equal to the Redemption Amount per share, plus all accrued and unpaid dividends thereon to the date of redemption (i) in whole, or (ii) in part, provided that (x) any partial redemptions are made pro rata (as nearly as practicable without creating factional shares) to all holders of Series D Preferred Stock, (y) any partial redemptions do not in the aggregate exceed $30,000,000 in Liquidation Preference, and (z) the Corporation shall not borrow funds, or delay making any capital expenditures or paying any operating expenses, for the purpose of making any such partial redemptions.

The “Redemption Amount” with respect to a share of Series D Preferred stock shall mean:

(i)120% of the Liquidation Preference for redemption on or before March 16, 2019;

(ii) 130% of the Liquidation Preference for redemption from March 16, 2019 and prior to March 16, 2020; and

(iii) 140% of the Liquidation Preference for redemption on or after March 16, 2020.

Prior to receiving a Special Event Liquidation Notice, the Corporation may not call shares of Series D Preferred Stock for redemption pursuant to this Section 7 unless the closing sales price of the Common Stock equals or exceeds $1.60 per share on the trading day immediately preceding the date the notice of redemption is given. The closing sales price of the Common Stock shall be as reported by the Nasdaq Stock Market or any other national securities exchange on which the shares of Common Stock are then listed for trading, or if none, the most recently reported “over the counter” trade price or if none, as determined in good faith by the Board and set forth in a resolution adopted by no less than seven of the nine members of the Board. Further, a call for redemption pursuant to this Section 7 may only be made with the approval of no less than seven of the nine members of the Board if the closing sale price of the Common Stock is between and including $1.60 and $1.99 per share, and with the approval of no less than a majority of the members of the Board if the closing sale price of the Common Stock is $2.00 or higher per share. A call for redemption pursuant to this Section 7 made after the Corporation has received a Special Event Liquidation Notice shall require the approval of no less than a majority of the members of the Board. The foregoing prices per share of Common Stock shall be adjusted if the Conversion Price is adjusted pursuant to Section 10(a) below, in the same manner.

If notice of redemption of any of the Series D Preferred Stock has been given by the Corporation pursuant to this Section 7(a) and if the funds necessary for such redemption have been set aside, separate and apart from other funds, by the Corporation in trust for the pro rata benefit of the holders of any Series D Preferred Stock so called for redemption, then from and after the date of redemption dividends will cease to accrue on such Series D Preferred Stock, such Series D Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price and except that conversion rights will continue up to the date the redemption price is paid. A holder of Series D Preferred Stock shall continue to have all preferences, conversion and other rights, and voting powers set forth herein with respect to all shares of Series D Preferred Stock subject to a notice

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of redemption under this Section 7(a) until such time as the holder receives the redemption price for such shares, for the avoidance of doubt, a holder may exercise conversion rights with respect to any shares of the holder’s Series D Preferred Stock so called for redemption up to the date of the payment of the redemption price of such shares.

(b)Unless full cumulative dividends on all Series D Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then-current dividend period, no Series D Preferred Stock shall be redeemed unless all outstanding Series D Preferred Stock is simultaneously redeemed and the Corporation shall not purchase or otherwise acquire, directly or indirectly, any Series D Preferred Stock (except by exchange for any Junior Shares); provided,  however, that the foregoing shall not prevent the purchase by the Corporation of any Series D Preferred Stock in accordance with Article IX of the Articles, or the purchase or acquisition of Series D Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series D Preferred Stock. Subject to applicable law and the limitation on purchases when dividends on the Series D Preferred Stock are in arrears, the Corporation shall be entitled at any time and from time to time to repurchase any Series D Preferred Stock pro rata from the holders of the Series D Preferred Stock by tender or by private agreement transactions duly authorized by the Board.

(c)Notice of redemption by the Corporation of the Series D Preferred Stock shall be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 days prior to the date of redemption. A similar notice shall be mailed by the Corporation by first class mail, postage prepaid, not less than 30 nor more than 60 days prior to the date of redemption, addressed to each holder of record of the Series D Preferred Stock to be redeemed at such holder’s address as the same appears on the share records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series D Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the date of redemption; (ii) the redemption price; (iii) the number of shares of Series D Preferred Stock to be redeemed; (iv) the place or places where the Series D Preferred Stock is to be surrendered for payment of the redemption price; and (v) dividends will cease to accrue on the redemption date.

(d)Immediately prior to any redemption of Series D Preferred Stock, the Corporation shall pay, in cash, any accumulated and unpaid dividends through the date of redemption, unless a date of redemption falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series D Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e)All Series D Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and reclassified as authorized but unissued Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock in accordance with the applicable provisions hereof and elsewhere in the Articles.

8.Voting Rights.

(a)Except as otherwise provided herein, the Holders of Series D Preferred Stock shall not have any voting rights. The Holders of Series D Preferred Stock shall be entitled

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to vote their Series D Preferred Stock as a single class with the holders of the Common Stock on all matters submitted to such holders for vote or consent. For each such vote or consent, each share of Series D Preferred Stock shall entitle the holder thereof to cast one vote for each whole vote (rounded to the nearest whole number) that such holder would be entitled to cast had such holder converted its Series D Preferred Stock into shares of Common Stock as of the date immediately prior to the record date for determining the shareholders of the Corporation eligible to vote on any such matter.

(b)So long as any shares of Series D Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of not less than 75% of the Series D Preferred Stock, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

(i)amend, alter, repeal or make other changes to any provision hereof of any provision elsewhere in the Articles so as to adversely affect any right, preference, privilege or voting power of the Series D Preferred Stock or the holders thereof, including without limitation any amendment, alteration, repeal or other change effected in connection with a merger, consolidation or similar transaction (any such transaction, which for the avoidance of doubt does not include any liquidation, dissolution or winding up of the Corporation, an “Event”);

(ii)authorize, create or issue, or increase the authorized or issued amount of, any class or series of capital stock or rights to subscribe to or acquire any class or series of capital stock or any class or series of capital stock convertible into any class or series of capital stock, in each case ranking on a parity with, or senior to, the Series D Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation or otherwise, or reclassify any shares of capital stock into any such shares;

(iii)except for dividends or distributions of cash from the Corporation’s funds from operations and except as required to preserve the Corporation’s qualification as a real estate investment trust under the Code, declare or pay any dividends or other distributions on shares of Common Stock or any other Junior Shares;

(iv)except as required by Section 4(d) or 6 above, (A) merge, consolidate, liquidate, dissolve or wind up the Corporation or (B) sell, lease or convey all or substantially all of the assets of the Corporation;

(v)except for a Qualified Offering, sell, issue or potentially issue in an offering by the Corporation of Common Stock (or securities convertible into or exercisable Common Stock) equal to 20% or more of the Common Stock or 20% or more of the Voting Stock outstanding before the issuance;

(vi)engage in any transaction in which the Corporation is to be a participant and the amount involved exceeds $120,000, other than employment compensation, and in which any of the Corporation’s directors or executive officers or any member of their immediate families will have a material interest, exclusive of interests arising solely from the ownership of a class of equity securities of the Corporation provided that all holders of such class of equity securities receive the same benefit on a pro rata basis;

(vii)redeem, or otherwise buy back (including in the open market, but excluding shares exchanged or withheld for the exercise price and/or taxes with respect to

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employee awards) any shares of common stock until all the shares of the Series D Preferred Stock converted, exchanged or redeemed; or

(viii) agree or commit to do any of the foregoing.

provided,  however, that any Event in which the Series D Preferred Stock (or any equivalent class or series of stock or shares issued by the surviving corporation, trust or other entity in connection with such Event) remains outstanding after such Event with the same ranking, preferences, rights, voting powers and other terms as provided herein unchanged shall not be deemed to adversely affect the rights, preferences, privileges or voting power of holders of the Series D Preferred Stock for purposes of Section 8(b)(i) above and also will not be subject to Section 8(b)(iv) above; and provided, further, that any Event and any liquidation, dissolution or winding up of the Corporation in which the holders of Series D Preferred Stock receive cash in the amount of the Redemption Amount plus accrued and unpaid dividends in exchange for each of their shares of Series D Preferred Stock will not be subject to Section 8(b)(i) or 8(b)(iv) above.

With respect solely to the exercise of the above described voting rights in this Section 8(b), each share of Series D Preferred Stock shall have one vote per share.

The foregoing voting provisions in this Section 8(b) will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series D Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

9.Conversion.

(a)Each share of Series D Preferred Stock shall be convertible in accordance with the terms of this Section 9, at any time and from time to time from and after the date of issuance at the option of the holder thereof, into that number of shares of Common Stock determined by dividing the Liquidation Preference of such share of Series D Preferred Stock, plus the aggregate accrued or accumulated and unpaid dividends thereon through the Conversion Date (as defined below), by the Conversion Price in effect on the Conversion Date. A holder of the Series D Preferred Stock shall effect any such conversion by providing the Corporation with a written conversion notice (each, a “Notice of Conversion”). Each Notice of Conversion shall specify the number of shares of Series D Preferred Stock to be converted, the number of shares of Series D Preferred Stock owned prior to the conversion at issue, the number of shares of Series D Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effective (such effective date, the “Conversion Date”); provided, however, that the Conversion Date may not be less than 30 days after the date on which the Notice of Conversion is delivered to the Corporation. If a Conversion Date is not specified, or is less than 30 days after delivery of the Notice of Conversion, the Notice of Conversion shall be effective on the 30th day (or if such day is not a Business Day, the next Business Day) following delivery of the Notice of Conversion.

(b)Upon receipt of a Notice of Conversion, the Corporation shall promptly notify all other holders of Series D Preferred Stock, if any (each, a “Non-converting Holder”), that a Notice of Conversion has been delivered and provide each Non-converting Holder with a copy of such Notice of Conversion. The Board shall deliver a waiver of the Ownership Limit to a Non-converting Holder pursuant to Article IX(A)(7) of the Articles prior to the Conversion Date if (i) such Non-converting Holder provides the Board the representations and undertakings specified in Article IX(A)(7) of the Articles prior to the Conversion Date and (ii) the Board has received the

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opinion of counsel specified in Article IX(A)(7) of the Articles prior to the Conversion Date (which the Corporation shall use commercially reasonable efforts to obtain, at the Corporation’s expense). In the event a Non-converting Holder fails to provide such representations and undertakings, or the Corporation is unable to obtain such opinion of counsel notwithstanding commercially reasonable efforts to do so, the minimum number of shares of Series D Preferred Stock held by such Non-converting Holder shall automatically without any further action by such Non-converting Holder or the Corporation convert (along with the aggregate accrued or accumulated and unpaid dividends thereon) into an aggregate number of shares of Common Stock (including any fraction of a share) determined in accordance with this Section 9 on the Conversion Date, concurrently with the conversion of the shares specified in the Notice of Conversion.

(c)At the first annual meeting of shareholders following the issuance of the Series D Preferred Stock, the Corporation shall seek (and use commercially reasonable efforts to obtain) shareholder approval of an amendment to the Articles that, in connection with any conversion of the Series D Preferred Stock, eliminates the requirement that the Board obtain such representations and undertakings from a Person as are reasonably necessary to ascertain that no individual’s Beneficial Ownership or Constructive Ownership of shares of the Series D Preferred Stock will violate the Ownership Limit, so long as the Board is able to obtain the opinion of counsel specified in Article IX(A)(7) of the Articles. In the event such amendment is approved by the shareholders of the Corporation, the second and third sentences of Section 9(b) above shall deemed to be amended to eliminate the requirement for a Non-Converting Holder to deliver the representations and undertakings specified in Article IX(A)(7) of the Articles.

(d)Upon the closing of a Qualified Offering by the Corporation, all of the outstanding shares of Series D Preferred Stock (including any fraction of a share) shall automatically convert into an aggregate number of shares of Common Stock (including any fraction of a share) as is determined by (i) multiplying the outstanding number of shares (including any fraction of a share) of Series D Preferred Stock by the Liquidation Preference thereof, and then (ii) dividing the result by the Conversion Price then in effect. The date of the closing of a Qualified Offering shall be deemed a Conversion Date and such automatic conversion of all of the outstanding shares of Series D Preferred Stock shall be deemed to have been converted into shares of Common Stock in accordance with the terms hereof as of immediately prior to such closing.

All outstanding shares of Series D Preferred Stock shall be converted into the number of shares of Common Stock as provided in this Section 9(d) automatically upon closing of a Qualified Offering without any further action by the holders of such shares or the Corporation. As promptly as practicable following such Qualified Offering, the Corporation shall send each holder of shares of Series D Preferred Stock written notice of such event, along with the payment of any accrued and unpaid dividends with respect to such shares of Series D Preferred Stock through the Conversion Date. Upon receipt of such notice and any such payment, each holder shall surrender to the Corporation the certificate or certificates representing all shares of Series D Preferred Stock being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), unless such shares are held in uncertificated form, and upon receipt thereof by the Corporation such holder shall be issued a certificate or certificates representing the shares of Common Stock into which such shares of Series D Preferred Stock were converted.

“Qualified Offering” means (i) the sale of Common Stock in a single offering of at least $50,000,000 or (ii) the sale of Common Stock in up to three separate offerings totaling at

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least $75,000,000 in the aggregate, in each case at an offering price per share of Common Stock equal to at least the lesser of:

(i)$2.00 per share (appropriately adjusted in the same manner as the Conversion Price pursuant to Section 10 below) if the closing of the applicable Qualified Offering occurs on or before September 16, 2017;

(ii)the greater of (x) $2.00 per share (appropriately adjusted in the same manner as the Conversion Price pursuant to Section 10 below) or (y) 90% of “NAV” per share of Common Stock if the closing of the applicable Qualified Offering occurs after September 16, 2017; or

(iii)$1.60 (appropriately adjusted in the same manner as the Conversion Price pursuant to Section 10 below) or more upon any closing of any Qualified Offering, provided the Corporation immediately following the receipt of the net proceeds from the closing of such Qualified Offering makes a cash “Make Whole Payment” to each of the holders of Series D Preferred Stock, providedthat, the Make Whole Payment shall not exceed the Issuance Market Value Difference.

“Issuance Market Value Difference” means an amount equal to (i) the Conversion Price, minus (ii) the closing consolidated bid price on March 15, 2016 as reported by Nasdaq, adjusted if the Conversion Price is adjusted pursuant to Section 10(a) below, in the same manner.

“NAV” means the net asset value of the Corporation per share of Common Stock, as net asset value is commonly determined by exchange listed funds and research analysts, immediately prior to the closing of the applicable Qualified Offering.

Upon notice that the Corporation intends to conduct a Qualified Offering, the holders of at least 75% of the shares of Series D Preferred Stock shall within 10 days thereafter, select an investment banking firm of national recognition, subject to the reasonable approval of the members of Board who were not designated for nomination to the Board by right of holders of Series D Preferred Stock. If the holders of at least 75% of the shares of the Series D Preferred Stock fail to select an investment banking firm of national recognition within such 10 days that is reasonably acceptable to the Board, then the Board shall select an investment banking firm of national recognition to calculate the NAV. The Corporation shall bear the fees and expenses of the investment banking firm. If required by the investment banking firm, the Corporation shall execute a retainer and engagement letter containing reasonable terms and conditions, including, without limitation, customary provisions concerning the rights of indemnification and contribution by the Corporation in favor of such investment banking firm and its officers, directors, partners, employees, agents and affiliates.

“Make Whole Payment” means, with respect to each share of Common Stock into which an outstanding share of Series D Preferred Stock is converted as a result of a Qualified Offering, an amount per share of such Common Stock determined by the following formula:

1.3*(A - B) = Make Whole Payment

where

A = $2.00, if 90%NAV - $2.00 is a negative number

A = 90%NAV, if 90%NAV- $2.00 is a positive number

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B = Adjusted NAV

If A-B is a negative number then the Make Whole Payment is $0.

“Adjusted NAV” means NAV adjusted for the effects of the applicable Qualified Offering, determined by the following formula: the quotient of (i) the sum of (A) NAV, multiplied by the number of shares of outstanding Common Stock assuming full conversion of Series D Preferred Stock, plus (B) the net offering proceeds from the Qualified Offering, divided by (ii) the number of shares of Common Stock outstanding after the Qualified Offering.

(e)To effect conversions of shares of Series D Preferred Stock, a Holder shall surrender the certificate(s) representing the shares of Series D Preferred Stock to be converted to the Corporation together with the delivery of the Notice of Conversion, if applicable, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers) unless such shares are held in uncertificated form. Shares of Series D Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled.

(f)The conversion price for each share of the Series D Preferred Stock shall equal $1.60, subject to adjustment as set forth in Section 10 below (the “Conversion Price”).

(g)Promptly after each Conversion Date, the Corporation shall deliver, or cause to be delivered, to the converting Holder a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of the Series D Preferred Stock.

(h)No fractional Common Stock shall be issued upon conversion of Series D Preferred Stock. All Common Stock (including fractions thereof) issuable upon conversion of Series D Preferred Stock shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the exercise would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional shares, pay cash equal to the product of such fraction multiplied by the fair market value per share of Common Stock on the Conversion Date (as reported by the Nasdaq Stock Market or any other national securities exchange on which the Common Stock are then listed for trading, or if none, the most recently reported “over the counter” trade price or if none, as determined in good faith by the Board).

(i)The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series D Preferred Stock, free from all liens and preemptive rights, a sufficient number of shares of Common Stock to effect the conversion of all then-outstanding shares of Series D Preferred Stock in accordance with the terms hereof. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the Common Stock required to be delivered upon conversion of the Series D Preferred Stock, prior to such delivery, upon any national securities exchange upon which the Common Stock is listed at the time of such delivery.

(j)The issuance of certificates for shares of the Common Stock on conversion of the Series D Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a

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name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

10.Certain Adjustments and Rights.

(a)If the Corporation, at any time while this Series D Preferred Stock is outstanding: (i) pays a stock dividend or makes a distribution to holders of any class or series of capital stock of the Corporation in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series D Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a greater number of shares, (iii) combines its outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock by reclassification of the Common Stock, or (v) undertakes any transaction similar to or having the effect of the foregoing transactions, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 10(a) (shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(b)The Corporation shall not sell or issue any Common Stock or grant any option or right to purchase Common Stock at an effective price per share that is lower than the Conversion Price. Notwithstanding the foregoing, this Section 10(b) shall not apply to an Exempt Issuance. “Exempt Issuance” means the issuance of (i) shares of Common Stock to employees, officers, directors or consultants of the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board or a majority of the members of a committee of non-employee directors established for such purpose, (ii) securities upon the exercise or exchange of or conversion of any securities issued and outstanding on the date of the establishment of the Series D Preferred Stock, (iii) securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock, and (iv) securities issued pursuant to acquisitions approved by a number of the members of the Board equal to one more than a majority of the members of the Board.

(c)If at any time the Corporation issues any rights, options or warrants pro rata to all holders of Common Stock to purchase Common Stock (or securities convertible into or exchangeable for Common Stock) (the “Purchase Rights”), then each holder of Series D Preferred Stock shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder would have acquired if such holder had held the number of shares of Common Stock acquirable upon complete conversion of such holder’s Series D Preferred Stock immediately before the date on which a record is taken for the issuance of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the issuance of such Purchase Rights.

(d)Whenever the Conversion Price is adjusted pursuant to any provision of this Section 10, the Corporation shall promptly deliver to each holder of Series D Preferred Stock a written notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

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(e)Notwithstanding anything herein to the contrary, no adjustment of the Conversion Price shall be made pursuant to this Section 10 in an amount less than $.01 per share, and any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per share or more.

11. Articles of Incorporation and Bylaws.

The rights of all holders of the Series D Preferred Stock and the terms of the Series D Preferred Stock are subject to the provisions of the Articles and the Bylaws of the Corporation, including, without limitation, the restrictions on transfer and ownership contained in Article IX of the Articles.

B. Exclusion of Other Rights.

Except as may otherwise be required by applicable law, the Series D Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, other than those specifically set forth herein or elsewhere in the Articles. The Series D Preferred Stock shall have no preemptive or subscription rights.

C. Headings of Subdivisions.

The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

D. Severability of Provisions.

If any voting power, preference or relative, participating, optional and other special right of the Series D Preferred Stock is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series D Preferred Stock and qualifications, limitations and restrictions thereof set forth herein which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences or relative, participating, optional or other special rights of Series D Preferred Stock or qualifications, limitations and restrictions thereof shall be given such effect. None of the voting powers, preferences or relative participating, optional or other special rights of the Series D Preferred Stock or qualifications, limitations or restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special right of Series D Preferred Stock or qualifications, limitations or restrictions thereof unless so expressed herein.

SECOND: The shares of Series D Cumulative Convertible Preferred Stock have been classified and established by the Board under the authority contained in the Articles.

THIRD: These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

FOURTH: The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

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[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Executive Officer and attested to it by its Treasurer on this 16th day of March, 2016.

CONDOR HOSPITALITY TRUST, INC.

By:  /s/ J. William Blackham

Name: J. William Blackham

Title:  Chief Executive Officer

ATTEST:

By:  /s/ Patricia M. Morland

Name: Patricia M. Morland

Title:   Treasurer

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articles supplementary

OF
condor hospitality trust, inc.

Condor Hospitality Trust, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland as follows:

FIRST:  Under a power contained in Article III of the Amended and Restated Articles of Incorporation, as amended, of the Corporation (the “Articles”) and pursuant to Section 2-208 of the Maryland General Corporation Law, the Board of Directors of the Corporation (the “Board”), by duly adopted resolutions, classified and established 925,000 shares of authorized but unissued Preferred Stock, $.01 par value per share, of the Corporation as shares of Series E Cumulative Convertible Preferred Stock, with the following preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, and terms and conditions of redemption (which, upon any restatement of the Articles, may be made a part of the Articles, with any necessary or appropriate changes to the numeration or lettering of the sections or subsections hereof).  Capitalized terms used but not defined herein shall have the meanings given to them in the Articles.

A. Terms of the Series E Cumulative Convertible Preferred Stock.  

1. Designation and Number. A series of Preferred Stock, designated the “Series E Cumulative Convertible Preferred Stock”, is hereby established (and is herein referred to as the “Series E Preferred Stock”).  The number of authorized shares of Series E Preferred Stock shall be 925,000.

1. Maturity.  The Series E Preferred Stock has no stated maturity and will not be subject to any sinking fund or, except as described in Section 7 and Section 8 below, mandatory redemption or forced conversion.

2. Rank.  The Series E Preferred Stock will, with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation, rank (a) prior or senior to the Common Stock issued by the Corporation; (b) prior or senior to all classes or series of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank junior to the Series E Preferred Stock with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation (together with the Common Stock, collectively, “Junior Shares”), (c) on a parity with respect to dividend rights and rights upon liquidation, dissolution or winding up of the Corporation with all classes or series of shares of Preferred Stock issued by the Corporation, the terms of which specifically provide that such shares rank on a parity with the Series E Preferred Stock (collectively, “Parity Shares”) and (d) junior to all existing and future indebtedness of the Corporation.

3. Dividends.  

(a) Holders of Series E Preferred Stock shall be entitled to receive, when and as authorized by the Board, or a duly authorized committee thereof, and declared by the Corporation out of funds of the Corporation legally available for payment, preferential cumulative cash dividends at the rate of 6.25% per annum of the face value per share (equivalent to a fixed annual amount of $0.625 per share), subject to increase as provided in Section 4(c) below. Such dividends shall be cumulative from the date of original issue and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 (or, if not a Business Day (as defined below), the next succeeding Business Day, each a “Dividend Payment Date”) for the period ending on such Dividend Payment Date, commencing on the date of issue. “Business

Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required to close. The first dividend on the Series E Preferred Stock will be paid on March 31, 2017 with respect to the period beginning on the date of issue and ending on March 31, 2017 and will be less than a full quarter payment.  Any dividend payable on the Series E Preferred Stock for any partial dividend period will be computed on the basis of twelve 30-day months and a 360-day year. Dividends will be payable in arrears to holders of record as they appear on the share records of the Corporation at the close of business on the applicable record date, which shall be the 15th day of March, June, September or December, as the case may be, immediately preceding the applicable Dividend Payment Date or such other date designated by the Board for the payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).

(a) No dividends on the Series E Preferred Stock shall be authorized by the Board or declared or paid or set apart for payment by the Corporation at such time as the terms and provisions of any agreement of the Corporation relating to the Corporation’s indebtedness prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted or prohibited by law.

(b) Notwithstanding the foregoing, dividends on the Series E Preferred Stock will accrue whether or not the Corporation has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared and whether or not such dividends are prohibited by agreement.  Accrued but unpaid dividends on the Series E Preferred Stock will accumulate and will earn additional dividends at 9.5%, or 12.5% if a Qualified Offering (as defined below) has not occurred, compounding quarterly.  Except as set forth in the next sentence, no dividends will be declared or paid or set apart for payment on any Parity Shares or Junior Shares (other than a dividend payable in Junior Shares) for any period unless full cumulative dividends have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for such payment on the Series E Preferred Stock for all past dividend periods and the then-current dividend period.  When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) upon the Series E Preferred Stock and any Parity Shares, all dividends declared upon the Series E Preferred Stock and such Parity Shares shall be declared pro rata so that the amount of dividends declared per share of Series E Preferred Stock and per Parity Share shall in all cases bear to each other the same ratio that accrued dividends per share on the Series E Preferred Stock and such Parity Shares (which shall not include any accrual in respect of unpaid dividends for prior dividend periods if such Preferred Stock does not have a cumulative dividend) bear to each other. 

Except as provided in the immediately preceding paragraph, unless full cumulative dividends on the Series E Preferred Stock have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof is set apart for payment for all past dividend periods and the then-current dividend period, no dividends (other than a dividend payable in Junior Shares) shall be declared or paid or set aside for payment nor shall any other distribution be declared or made upon the Common Stock, or any Parity Shares or Junior Shares, nor shall the Common Stock, any other Junior Shares or any Parity Shares be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such shares) by the Corporation (except by conversion into or exchange for any other class or series of capital stock of the Corporation constituting Junior Shares and upon liquidation or redemption for the purpose of preserving the Corporation’s qualification as a real estate investment trust under the Internal Revenue Code of 1986, as amended (the “Code”), or complying with the provisions of Article

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VIII of the Articles).  Holders of Series E Preferred Stock shall not be entitled to any dividend, whether payable in cash, property or stock, in excess of full cumulative dividends on the Series E Preferred Stock as provided above.  Any dividend payment made on the Series E Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to such shares which remains payable.  As provided herein, accrued but unpaid dividends on the Series E Preferred Stock will accumulate and will earn additional dividends at 9.5%, or 12.5% if a Qualified Offering has not occurred, compounding quarterly.

4. Liquidation Preference.  

(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the holders of the Series E Preferred Stock are entitled to be paid out of the assets of the Corporation legally available for distribution to its shareholders, before any distribution of assets is made to holders of the Corporation’s Common Stock or any other Junior Shares, a liquidation preference of $10.00 per share in cash (the “Liquidation Preference”) and (i) an amount equal to any accrued and unpaid dividends to the date of payment and (ii), in the case of a liquidation, dissolution or winding up that occurs on or after March 16, 2021, and in the event a Qualified Offering has not occurred prior to the time of such liquidation, dissolution or winding up, the additional sum of the Net Series E Per Share Additional Liquidation Preference (as defined below)

(b) As provided herein, accrued but unpaid dividends on the Series E Preferred Stock will accumulate and will earn additional dividends at 9.5%, or 12.5% if a Qualified Offering has not occurred, compounding quarterly.  The Corporation will promptly provide to the holders of the Series E Preferred Stock written notice of any event triggering the right to receive such Liquidation Preference.  The consolidation or merger of the Corporation with or into any other corporation, trust or entity or of any other corporation, trust or entity with or into the Corporation, the sale, lease or conveyance of all or substantially all of the property or business of the Corporation or a statutory share exchange, shall not be deemed to constitute a liquidation, dissolution or winding up of the Corporation.

(c) In determining whether a distribution (other than upon voluntary or involuntary liquidation) by dividend, redemption or other acquisition of shares of capital stock of the Corporation or otherwise is permitted under Maryland law, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon distribution of holders of shares of capital stock of the Corporation whose preferential rights upon distribution are superior to those receiving the distribution.

(d) “Qualified Offering” means (i) the sale of Common Stock in a single offering of at least $50,000,000 or (ii) the sale of Common Stock in up to three separate offerings totaling at least $75,000,000 in the aggregate, in each case at an offering price of $1.60 per share (appropriately adjusted in the same manner as the Conversion Price pursuant to Section 8 below) or more.

“Net Series E Per Share Additional Liquidation Preference” shall mean an amount equal to [A - B +/- C]/925,000, where:

A = $16,135,263

B = the (i) amount to the extent by which the per share weighted market sale price average of the Common Stock, as reported by the Nasdaq Stock Market or any other national securities exchange on which the Common Stock are then listed for trading, or if none, the most recently reported “over the counter” trade price, for the 30 trading days (or such longer trading period as

3

required to have at least 5 trading days on which trades occurred) preceding the public disclosure of the liquidation, dissolution or winding up exceeds $1.60 per share, multiplied by (ii) 39,644,474.

C =

(i) subtract the amount, if any positive amount, prorated for any partial year, by which the (A) aggregate cash dividends paid on 39,644,474 shares of Common Stock during the Dividend Benefit Measuring Period (as defined below) exceeds (B) an amount equal to the equivalent of a 6.25% annual dividend on securities with a face value of $63,463,159 as if paid during the Dividend Measuring Period (and if there are accumulated but unpaid dividends on the Series E Preferred Stock, 9.5% or 12.5% on equivalent dividends as if accumulated and unpaid for the same periods in the same manner as provided in Section 5(b)); or

(ii) add the amount, if any positive amount, prorated for any partial year, by which (A) an amount equal to the equivalent of a 6.25% annual dividend on securities with a face value of $63,463,159 as if paid during the Dividend Measuring Period (and if there are accumulated but unpaid dividends on the Series E Preferred Stock, 9.5% or 12.5% on equivalent dividends as if accumulated and unpaid for the same periods in the same manner as provided in Section 5(b)) is greater than (B) the aggregate cash dividends paid on 39,644,474 shares of Common Stock during the Dividend Benefit Measuring Period.

“Dividend Measurement Period” shall mean the period commencing on the date of issuance of the Series E Preferred Stock and ending on the date immediately preceding the public disclosure of the liquidation, dissolution or winding up of the Corporation.

(e) If upon any liquidation, dissolution or winding up of the Corporation, the available assets of the Corporation, or proceeds thereof, distributable among the holders of Series E Preferred Stock shall be insufficient to pay in full the above described preferential amount and liquidating payments on any other class or series of Parity Shares, then such assets, or the proceeds thereof, shall be distributed among the holders of Series E Preferred Stock and any such other Parity Shares ratably in the same proportion as the respective amounts that would be payable on such Series E Preferred Stock and any such other Parity Shares if all amounts payable thereon were paid in full.

(f) Upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of Series E Preferred Stock and any Parity Shares, the holders of the Series E Preferred Stock shall have no right or claim to any of the remaining assets of the Corporation.

5. Voting Rights.  

(a) Except as otherwise provided herein, the holders of Series E Preferred Stock shall not have any voting rights.

(b) So long as any shares of Series E Preferred Stock remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of not less than 75% of the Series E Preferred Stock, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

(i) amend, alter, repeal or make other changes to any provision hereof of any provision elsewhere in the Articles so as to adversely affect any right, preference, privilege or

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voting power of the Series E Preferred Stock or the holders thereof, including without limitation any amendment, alteration, repeal or other change effected in connection with a merger, consolidation or similar transaction (any such transaction, which for the avoidance of doubt does not include any liquidation, dissolution or winding up of the Corporation, an “Event”);

(i) authorize, create or issue, or increase the authorized or issued amount of, any class or series of capital stock or rights to subscribe to or acquire any class or series of capital stock or any class or series of capital stock convertible into any class or series of capital stock, in each case ranking on a parity with or senior to, the Series E Preferred Stock with respect to payment of dividends or the distribution of assets upon liquidation, dissolution or winding up of the Corporation or otherwise, or reclassify any shares of capital stock into any such shares; or

(ii) agree or commit to do any of the foregoing.

provided,  however, that any Event in which the Series E Preferred Stock (or any equivalent class or series of stock or shares issued by the surviving corporation, trust or other entity in connection with such Event) remains outstanding after such Event with the same ranking, preferences, rights, voting powers and other terms as provided herein unchanged shall not be deemed to adversely affect the rights, preferences, privileges or voting power of holders of the Series E Preferred Stock for purposes of Section 6(b)(i) above; and provided,  further, that any Event and any liquidation, dissolution or winding up of the Corporation in which the holders of Series E Preferred Stock receive cash in the amount of the Liquidation Preference plus accrued and unpaid dividends in exchange for each of their shares of Series E Preferred Stock will not be subject to Section 6(b)(i) above. 

(c)So long as 434,750 shares of Series E Preferred Stock (47% of the originally issued shares of Series E Preferred Stock) remain outstanding, the Corporation shall not, without the affirmative vote or consent of the holders of not less than 75% of the Series E Preferred Stock then outstanding, given in person or by proxy, either in writing or at a meeting (voting separately as a class):

(i) merge, consolidate, liquidate, dissolve or wind up the Corporation or sell, lease or convey all or substantially all of the assets of the Corporation;

(ii)engage in any transaction in which the Corporation is to be a participant and the amount involved exceeds $120,000, other than employment compensation, and in which any of the Corporation’s directors or executive officers or any member of their immediate families will have a material interest, exclusive of interests arising solely from the ownership of a class of equity securities of the Corporation provided that all holders of such class of equity securities receive the same benefit on a pro rata basis;

(iii)except for dividends or distributions of cash from the Corporation’s funds from operations and except as required to preserve the Corporation’s qualification as a real estate investment trust under the Code, declare or pay any dividends or other distributions on shares of Common Stock or any other Junior Shares;

(iv)grant an exemption from the Ownership Limit set forth in the Articles of Incorporation pursuant to Section (A)(7) of the Articles of Incorporation, or otherwise, provided that the Board of Directors may by affirmative majority vote of Directors present at a meeting at which a quorum is present, may grant additional exemptions pursuant to Section (A)(7) of the Articles of Incorporation to prior recipients  of such exemptions, and their affiliates, if such recipients were shareholders as of February 28, 2017;

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(v)issue any preferred stock of the Corporation; or

(vi)agree or commit to do any of the foregoing.

(d)With respect solely to the exercise of the above described voting rights in this Section 6, each share of Series E Preferred Stock shall have one vote per shareexcept that when any other class or series of preferred stock shall have the right to vote with the Series E Preferred Stock as a single class, then the Series E Preferred Stock and such other class or series shall have one vote per each $10.00 of stated liquidation preference.

The foregoing voting provisions in this Section 6(b) will not apply if, at or prior to the time when the act with respect to which such vote would otherwise be required shall be effected, all outstanding Series E Preferred Stock shall have been redeemed or called for redemption upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.

6. Redemption.  

(a) The Corporation, upon not less than 30 nor more than 60 calendar days’ prior written notice, may at its option at any time after a Qualified Offering or from time to time thereafter, select a redemption date or dates to redeem up to a total of 490,250 shares of Series E Preferred Stock, in all cases for cash at a redemption price equal to the Redemption Amount per share, plus all accrued and unpaid dividends thereon to the date of redemption provided that (x) redemptions are made pro rata (as nearly as practicable without creating factional shares) to all holders of Series E Preferred Stock, and (y) the Corporation shall not borrow funds, or delay making any capital expenditures or paying any operating expenses, for the purpose of making any such partial redemptions.

The “Redemption Amount” with respect to a share of Series E Preferred stock shall mean:

(i)110% of the Liquidation Preference for redemption on or before March 16, 2019 ;

(ii)120% of the Liquidation Preference for redemption from March 16, 2019 and prior to March 16, 2020; and

(iii)130% of the Liquidation Preference for redemption on or after March 16, 2020.

If notice of redemption of any of the Series E Preferred Stock has been given by the Corporation pursuant to this Section 7(a) and if the funds necessary for such redemption have been set aside, separate and apart from other funds, by the Corporation in trust for the pro rata benefit of the holders of any Series E Preferred Stock so called for redemption, then from and after the date of redemption dividends will cease to accrue on such Series E Preferred Stock, such Series E Preferred Stock shall no longer be deemed outstanding and all rights of the holders of such shares will terminate, except the right to receive the redemption price and except that conversion rights will continue up to the date the redemption price is paid.  A holder of Series E Preferred Stock shall continue to have all preferences, conversion and other rights, and voting powers set forth herein with respect to all shares of Series E Preferred Stock subject to a notice of redemption under this Section 7(a) until such time as the holder receives the redemption price for such shares, for the avoidance of doubt, a holder may exercise conversion rights with respect to any shares of the holder’s Series E Preferred Stock so called for redemption up to the date of the payment of the redemption price of such shares to such holder.

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(b) Unless full cumulative dividends on all Series E Preferred Stock shall have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for payment for all past dividend periods and the then-current dividend period, no Series E Preferred Stock shall be redeemed unless all outstanding Series E Preferred Stock is simultaneously redeemed and the Corporation shall not purchase or otherwise acquire, directly or indirectly, any Series E Preferred Stock (except by exchange for any Junior Shares); provided,  however, that the foregoing shall not prevent the purchase by the Corporation of any Series E Preferred Stock in accordance with Article IX of the Articles, or the purchase or acquisition of Series E Preferred Stock pursuant to a purchase or exchange offer made on the same terms to holders of all outstanding Series E Preferred Stock. Subject to applicable law and the limitation on purchases when dividends on the Series E Preferred Stock are in arrears, the Corporation shall be entitled at any time and from time to time to repurchase any Series E Preferred Stock pro rata from the holders of the Series E Preferred Stock by tender or by private agreement transactions duly authorized by the Board.

(c) Notice of redemption by the Corporation of the Series E Preferred Stock shall be given by publication in a newspaper of general circulation in the City of New York, such publication to be made once a week for two successive weeks commencing not less than 30 nor more than 60 calendar days prior to the date of redemption. A similar notice shall be mailed by the Corporation by first class mail, postage prepaid, not less than 30 nor more than 60 calendar days prior to the date of redemption, addressed to each holder of record of the Series E Preferred Stock to be redeemed at such holder’s address as the same appears on the share records of the Corporation. No failure to give such notice or any defect therein or in the mailing thereof shall affect the validity of the proceedings for the redemption of any Series E Preferred Stock except as to the holder to whom notice was defective or not given. Each notice shall state: (i) the date of redemption; (ii) the redemption price; (iii) the number of shares of Series E Preferred Stock to be redeemed; (iv) the place or places where the Series E Preferred Stock is to be surrendered for payment of the redemption price; and (v) dividends will cease to accrue on the redemption date.

(d) Immediately prior to any redemption of Series E Preferred Stock, the Corporation shall pay, in cash, any accumulated and unpaid dividends through the date of redemption, unless a date of redemption falls after a Dividend Record Date and prior to the corresponding Dividend Payment Date, in which case each holder of Series E Preferred Stock at the close of business on such Dividend Record Date shall be entitled to the dividend payable on such shares on the corresponding Dividend Payment Date notwithstanding the redemption of such shares before such Dividend Payment Date.

(e) All Series E Preferred Stock redeemed, purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and reclassified as authorized but unissued Preferred Stock, without designation as to class or series, and may thereafter be reissued as any class or series of Preferred Stock in accordance with the applicable provisions hereof and elsewhere in the Articles.

7. Conversion.  

(a) The conversion price for each share of the Series E Preferred Stock shall equal $2.13 and shall be subject to adjustment as set forth in Section 8 below (the “Conversion Price”).  Subject to obtaining shareholder approval pursuant to Nasdaq Marketplace Rules as described below, each share of Series E Preferred Stock shall be convertible in accordance with the terms of this Section 8, at any time and from time to time from and after February 28, 2019 at the option of the holder thereof, into that number of shares of Common Stock determined by dividing the Liquidation Preference of such share of Series E Preferred Stock, plus the aggregate accrued or accumulated and unpaid dividends thereon through the Conversion Date

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(as defined below), by the Conversion Price in effect on the Conversion Date.  A holder of the Series E Preferred Stock shall effect any such conversion by providing the Corporation with a written conversion notice (each, a “Notice of Conversion”).  Each Notice of Conversion shall specify the number of shares of Series E Preferred Stock to be converted, the number of shares of Series E Preferred Stock owned prior to the conversion at issue, the number of shares of Series E Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effective (such effective date, the “Conversion Date”); provided,  however, that the Conversion Date may not be less than 30 days after the date on which the Notice of Conversion is delivered to the Corporation.  If a Conversion Date is not specified, or is less than 30 calendar days after delivery of the Notice of Conversion, the Notice of Conversion shall be effective on the 30th day (or if such day is not a Business Day, the next Business Day) following delivery of the Notice of Conversion. 

(b) Upon receipt of a Notice of Conversion, the Corporation shall promptly notify all other holders of Series E Preferred Stock, if any (each, a “Non-converting Holder”), that a Notice of Conversion has been delivered and provide each Non-converting Holder with a copy of such Notice of Conversion.  The Board shall deliver a waiver of the Ownership Limit to a Non-converting Holder pursuant to Article IX(A)(7) of the Articles prior to the Conversion Date if (i) such Non-converting Holder provides the Board the representations and undertakings specified in Article IX(A)(7) of the Articles prior to the Conversion Date and (ii) the Board has received the opinion of counsel specified in Article IX(A)(7) of the Articles prior to the Conversion Date (which the Corporation shall use commercially reasonable efforts to obtain, at the Corporation’s expense).  In the event a Non-converting Holder fails to provide such representations and undertakings, or the Corporation is unable to obtain such opinion of counsel notwithstanding commercially reasonable efforts to do so, the minimum number of shares of Series E Preferred Stock held by such Non-converting Holder necessary to cause such Non-converting Holder to satisfy the Ownership Limit shall automatically without any further action by such Non-converting Holder or the Corporation convert (along with the aggregate accrued or accumulated and unpaid dividends thereon) into an aggregate number of shares of Common Stock (including any fraction of a share) determined in accordance with this Section 8 on the Conversion Date, concurrently with the conversion of the shares specified in the Notice of Conversion.

(c) At the first annual meeting of shareholders following the issuance of the Series E Preferred Stock, the Corporation shall seek (and use commercially reasonable efforts to obtain) shareholder approval of an amendment to the Articles that, in connection with any conversion of the Series E Preferred Stock, eliminates the requirement that the Board obtain such representations and undertakings from a Person as are reasonably necessary to ascertain that no individual’s Beneficial Ownership or Constructive Ownership of shares of the Series E Preferred Stock will violate the Ownership Limit, so long as the Board is able to obtain the opinion of counsel specified in Article IX(A)(7) of the Articles.  In the event such amendment is approved by the shareholders of the Corporation, the second and third sentences of Section 9(b) above shall deemed to be amended to eliminate the requirement for a Non-Converting Holder to deliver the representations and undertakings specified in Article IX(A)(7) of the Articles.    

(d) "Qualified Pricing Event" means the Common Stock trades for 60 consecutive trading days (or such longer trading period to have at least 5 trading days on which trades occurred) at a weighted market sales price average equal to or greater than 120% of the Conversion Price as reported by the Nasdaq Stock Market or any other national securities exchange on which the Common Stock are then listed for trading, or if none, the as reported “over the counter” trade price for such time period (a “Qualified Pricing Event Period”).  In the event of a Qualified Pricing Event, an aggregate number of shares of Series E Preferred    

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Stock (including any fraction of a share) as is determined by (i) multiplying the daily weighted market sales price average by the daily average volume of the Common Stock during the Qualified Pricing Event Period, and then (ii) multiplying the result by 15, and then (iii) dividing that result by the Liquidation Preference (the “Qualified Number of Shares”) shall automatically convert into an aggregate number of shares of Common Stock (including any fraction of a share) as is determined by (x) multiplying the Qualified Number of Shares (including any fraction of a share) by the Liquidation Preference thereof, and then (y) dividing the result by the Conversion Price then in effect. The 60th trading date (or last day of such longer trading period needed to have at least 5 trading days on which trades occurred at the required weighted market sales price average) of a Qualified Pricing Event shall be deemed a Conversion Date and such automatic conversion of the Qualified Number of Shares into shares of Common Stock shall be deemed to have occurred in accordance with the terms hereof at 5:00 p.m. New York City time on such date. No automatic conversion of Series E Preferred Stock shall occur pursuant to this Section 8(d) during a period of 90 calendar days following an automatic conversion of Series E Preferred Stock (an “Automatic Conversion Limitation Period”)  but may occur on the 91st day and any day thereafter, unless prohibited by another Automatic Conversion Limitation Period.

The shares of Series E Preferred Stock that are converted into the number of shares of Common Stock as provided in this Section 8(d) (i) shall be automatically converted upon the occurrence of a Qualified Pricing Event without any further action by the holders of such shares or the Corporation, and (ii) shall be made pro rata (as nearly as practicable without creating factional shares) to all holders of Series E Preferred Stock.  As promptly as practicable following such Qualified Pricing Event, the Corporation shall send each holder of shares of Series E Preferred Stock written notice of such event and the number of such holder’s shares of Series E Preferred Stock that were automatically converted, along with the payment of any accrued and unpaid dividends with respect to such shares of Series E Preferred Stock through the Conversion Date.  Upon receipt of such notice and any such payment, each holder shall surrender to the Corporation the certificate or certificates representing all shares of Series E Preferred Stock being converted, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers relating thereto), unless such shares are held in uncertificated form, and upon receipt thereof by the Corporation such holder shall be issued a certificate or certificates representing the shares of Common Stock into which such shares of Series E Preferred Stock were converted.

(e) To receive shares of Common Stock upon conversion of shares of Series E Preferred Stock, a holder shall surrender the certificate(s) representing the shares of Series E Preferred Stock to be converted to the Corporation together with the delivery of the Notice of Conversion, if applicable, duly assigned or endorsed for transfer to the Corporation (or accompanied by duly executed stock powers) unless such shares are held in uncertificated form.  Shares of Series E Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled.

(f) Promptly after each Conversion Date, the Corporation shall deliver, or cause to be delivered, to the converting holder a certificate or certificates representing the number of shares of Common Stock being acquired upon the conversion of the Series E Preferred Stock.

(g) No fractional Common Stock shall be issued upon conversion of Series E Preferred Stock.  All Common Stock (including fractions thereof) issuable upon conversion of Series E Preferred Stock shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share.  If, after the aforementioned aggregation, the exercise would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional shares, pay cash equal to the product of such fraction

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multiplied by the fair market value per share of Common Stock on the Conversion Date (as reported by the Nasdaq Stock Market or any other national securities exchange on which the Common Stock is then listed for trading, or if none, the most recently reported “over the counter” trade price or if none, as determined in good faith by the Board).

(h) The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Series E Preferred Stock, free from all liens and preemptive rights, a sufficient number of shares of Common Stock to effect the conversion of all then-outstanding shares of Series E Preferred Stock in accordance with the terms hereof.  The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable. The Corporation shall use its best efforts to list the Common Stock required to be delivered upon conversion of the Series E Preferred Stock, prior to such delivery, upon any national securities exchange upon which the Common Stock is listed at the time of such delivery.

(i) The issuance of certificates for shares of the Common Stock on conversion of the Series E Preferred Stock shall be made without charge to any holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

(j) At the first annual meeting of shareholders following the issuance of the Series E Preferred Stock, the Corporation shall seek (and use best efforts to obtain) shareholder approval pursuant to applicable Nasdaq Marketplace Rules of the Conversion Price to be used to determine the number of shares of Common Stock issued upon conversion of the Series E Preferred Stock.  In the event shareholder fail to so approve the Corporation, the Corporation will successively seek similar approval at the next annual meetings of shareholders until February 28, 2022.  If shareholder approval is not obtained, the Series E Preferred Stock shall not be convertible.

8. Certain Adjustments and Rights.

(a) If the Corporation, at any time while this Series E Preferred Stock is outstanding: (i) pays a stock dividend or makes a distribution to holders of any class or series of capital stock of the Corporation in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of this Series E Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a greater number of shares, (iii) combines its outstanding shares of Common Stock into a smaller number of shares, or (iv) issues any shares of its capital stock by reclassification of the Common Stock, or (v) undertakes any transaction similar to or having the effect of the foregoing transactions, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  As an example of an adjustment, an 8 for 1 reverse stock split would cause a $2.00 conversion price to be a $16.00 converion price. Any adjustment made pursuant to this Section 9(a) (shall become effective immediately after the record date for the determination of shareholders entitled to receive such

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dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.

(b) If at any time after the issuance of the Series E Preferred Stock, the Corporation issues any rights, options or warrants pro rata to all holders of Common Stock to purchase Common Stock (or securities convertible into or exchangeable for Common Stock) (the “Purchase Rights”), then each holder of Series E Preferred Stock shall be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder would have acquired if such holder had held the number of shares of Common Stock acquirable upon complete conversion of such holder’s Series E Preferred Stock immediately before the date on which a record is taken for the issuance of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the issuance of such Purchase Rights.

(c) Whenever the Conversion Price is adjusted pursuant to any provision of this Section 9, the Corporation shall promptly deliver to each holder of Series E Preferred Stock a written notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(d) Notwithstanding anything herein to the contrary, no adjustment of the Conversion Price shall be made in an amount less than $.01 per share, and any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per share or more.

9. Put Right. 

(a) Subject to obtaining shareholder approval pursuant to Nasdaq Marketplace Rules as described below,each holder of Series E Preferred Stock will have the right (a “Put Right”), exercised by notice delivered by such holder to the Corporation on or after March 16, 2021 (a “Put Right Notice”), to require the Corporation to redeem  all, but not less than all, of such holder’s then outstanding Series E Preferred Stock at a value per share of at 130% of the Liquidation Preference plus accrued and unpaid dividends on a date specified in the Put Right Notice (a “Put Right Exercise Date”); provided, however, that a Put Right Exercise Date may not be less than 30 calendar days after the date on which a Put Right Notice is delivered to the Corporation.  If a Put Right Exercise Date is not specified, or is less than 30 calendar days after the delivery of the Put Right Notice, the Put Right Notice shall be effective on the 30th calendar day (or if such day is not a Business Day, the next Business Day) following the delivery of the Put Right Notice.   Any redemption pursuant to a Put Right shall be in cash or Common Stock at the election of the Corporation.  If in connection with the exercise of a Put Right the Corporation elects to redeem the Series E Preferred Stock with Common Stock, then the number of shares of Common Stock issued shall be determined by dividing (i) the sum of (a) 130% of the aggregate Liquidation Preference of the shares of Series E Preferred Stock to be redeemed and (b) any accrued and unpaid dividends with respect to such shares of Series E Preferred Stock through the redemption by (ii) the market value of the Common Stock.  The market value per share of the Common Stock payment (the “Put Right Common Stock Market Value”) shall be the greater of (a) the weighted market sale price average of the Common Stock for the 30 trading days (or such longer trading period as required to have at least 5 trading days on which trades occurred) preceding the Put Right Notice,  and (b) if the shareholder described in Section 10(b) is obtained, $0.75 (appropriately adjusted in the same manner as the Conversion Price pursuant to Section 9).

(b) Upon receipt of a Put Right Notice, the Corporation shall promptly notify all other holders of Series E Preferred Stock, if any (each, a “Non-exercising Holder”), that a Put

11

Right Notice has been delivered and provide each Non-exercising Holder with a copy of such Put Right Notice.  The Board shall deliver a waiver of the Ownership Limit to a Non-exercising Holder pursuant to Article IX(A)(7) of the Articles prior to the Put Right Exercise Date if (i) such Non-exercising Holder provides the Board the representations and undertakings specified in Article IX(A)(7) of the Articles prior to the Put Right Exercise Date and (ii) the Board has received the opinion of counsel specified in Article IX(A)(7) of the Articles prior to the Put Right Exercise Date (which the Corporation shall use commercially reasonable efforts to obtain, at the Corporation’s expense).  In the event a Non-exercising Holder fails to satisfy the conditions of any existing waiver previously granted to it, and fails to provide such representations and undertakings, or the Corporation is unable to obtain such opinion of counsel notwithstanding commercially reasonable efforts to do so, the minimum number of shares of Series E Preferred Stock held by such Non-exercising Holder necessary to cause such Non-exercising Holder to satisfy the Ownership Limit shall without any further action by such Non- exercising Holder or the Corporation automatically be converted (along with the aggregate accrued or accumulated and unpaid dividends thereon) into an aggregate number of shares of Common Stock (including any fraction of a share) determined in accordance with this Section 10 on the Put Right Exercise Date, concurrently with the conversion of the shares specified in the Put Right Conversion; provided,  however, that the Non-exercising Holder shall, if necessary, be permitted, in connection with the exercise by another Holder of its Put Right, to put such portion of its shares above as may be required to enable the Corporation to obtain the opinion of counsel contemplated above or to satisfy the conditions of any existing waiver previously granted to it (the “Secondary Put Right”). The consideration delivered by the Corporation in connection with the exercise of a Secondary Put Right shall be calculated in accordance with the pricing mechanism specified in paragraph (a) and shall be paid with the same type and proportion of consideration elected by the Corporation with respect to the Put Right.

(c) At the first annual meeting of shareholders following the issuance of the Series E Preferred Stock, the Corporation shall seek (and use best efforts to obtain) shareholder approval pursuant to applicable Nasdaq Marketplace Rules of the Put Right Common Stock Market Value to be used to determine the number of shares of Common Stock issued upon exercise of a Put Right.  In the event shareholder fail to so approve the Put Right Common Stock Market Value, the Corporation will successively seek similar approval at the next annual meetings of shareholders until February 28, 2022.  If shareholder approval is not obtained, the Put Right shall not be exercisable.

10. Articles of Incorporation and Bylaws.  

The rights of all holders of the Series E Preferred Stock and the terms of the Series E Preferred Stock are subject to the provisions of the Articles and the Bylaws of the Corporation, including, without limitation, the restrictions on transfer and ownership contained in Article IX of the Articles.

A. Exclusion of Other Rights.  

Except as may otherwise be required by applicable law, the Series E Preferred Stock shall not have any voting powers, preferences or relative, participating, optional or other special rights, other than those specifically set forth herein or elsewhere in the Articles.  The Series E Preferred Stock shall have no preemptive or subscription rights.

B. Headings of Subdivisions.  

The headings of the various subdivisions hereof are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.

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C. Severability of Provisions.  

If any voting power, preference or relative, participating, optional and other special right of the Series E Preferred Stock is invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, all other voting powers, preferences and relative, participating, optional and other special rights of Series E Preferred Stock and qualifications, limitations and restrictions thereof set forth herein which can be given effect without the invalid, unlawful or unenforceable voting powers, preferences or relative, participating, optional or other special rights of Series E Preferred Stock or qualifications, limitations and restrictions thereof shall be given such effect.  None of the voting powers, preferences or relative participating, optional or other special rights of the Series E Preferred Stock or qualifications, limitations or restrictions thereof herein set forth shall be deemed dependent upon any other such voting powers, preferences or relative, participating, optional or other special right of Series E Preferred Stock or qualifications, limitations or restrictions thereof unless so expressed herein.

SECOND:The shares of Series E Cumulative Convertible Preferred Stock have been classified and established by the Board under the authority contained in the Articles.

THIRD:These Articles Supplementary have been approved by the Board in the manner and by the vote required by law.

FOURTH:The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Executive Officer and attested to it by its Treasurer on this 28th day of February, 2017.

CONDOR hospitality TRUST, inc.

By:  /s/ J. William Blackham

Name:  J. William Blackham

Title:     Chief Executive Officer

ATTEST:

By:  /s/ Patricia M. Morland

Name:  Patricia M. Morland

Title:     Treasurer

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EX-21.0

EXHIBIT 21.0

LIST OF SUBSIDIARIES

Condor Hospitality Trust, Inc. owns, directly or indirectly, 100% of the voting securities, partnership interests or limited liability company interests of the entities listed below (unless otherwise indicated).

Subsidiary	Jurisdiction of Incorporation
Condor Hospitality REIT Trust	Maryland
E&P REIT Trust	Maryland
TRS Leasing, Inc. (TRS)	Virginia
Supertel Hospitality Management, Inc.	Maryland
Condor Hospitality Limited Partnership (CHLP) (97.8%)	Virginia
E&P Financing Limited Partnership	Maryland
Solomons GP, LLC (SGLLC)	Delaware
Solomons Beacon Inn Limited Partnership (1%; 99% owned by SGLLC)	Maryland
TRS Subsidiary, LLC	Delaware
SPPR Holdings, Inc.	Delaware
SPPR – Hotels, LLC (1%; 99% owned by CHLP)	Delaware
SPPR – South Bend, LLC	Delaware
SPPR TRS Subsidiary, LLC	Delaware
SPPR-Dowell Holdings, Inc.	Delaware
SPPR-Dowell, LLC (1%; 99% owned by CHLP)	Delaware
SPPR-Dowell TRS Subsidiary, LLC	Delaware
CDOR SAN SPRING, LLC	Delaware
TRS SAN SPRING, LLC	Delaware
CDOR JAX COURT, LLC	Delaware
TRS JAX COURT, LLC	Delaware
CDOR ATL INDY, LLC	Delaware
TRS ATL, INDY LLC	Delaware
Spring Streel Hotel Property II LLC (80% owned by CHLP)	Delaware
Spring Street Hotel Opco II LLC (80% owned by TRS Leasing)	Delaware
CDOR KCI LOFT, LLC	Delaware
TRS KCI LOFT, LLC	Delaware

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Condor Hospitality Trust, Inc.:

We consent to the incorporation by reference in the registration statements (Nos. 333-180479, 333-138304, and 333-170756) on Form S-3 and (Nos. 333-212264, 333-134822 and 333-181680) on Form S-8 of Condor Hospitality Trust, Inc. (the Company) of our report dated March 1, 2016, with respect to the consolidated balance sheets of Condor Hospitality Trust, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2016, and the related financial statement schedule, Schedule III – Real Estate and Accumulated Depreciation, which appears in the December 31, 2016 annual report on Form 10-K of Condor Hospitality Trust, Inc.  Our report refers to a change in the method of accounting for discontinued operations. 

(signed) KPMG LLP

McLean, Virginia
March 1, 2017

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, J. William Blackham, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2016 of Condor Hospitality Trust, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 1, 2017	/s/ J. William Blackham
	J. William Blackham
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Jonathan J. Gantt, certify that:

1.	I have reviewed this annual report on Form 10-K for the year ended December 31, 2016 of Condor Hospitality Trust, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 1, 2017	/s/ Jonathan J. Gantt
	Jonathan J. Gantt
	Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Condor Hospitality Trust, Inc., on Form 10-K for the year ending December 31, 2016 as filed with the Securities and Exchange Commission (the “Report”), I, J. William Blackham, Chief Executive Officer of Condor Hospitality Trust, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Condor Hospitality Trust, Inc. at the dates and for the periods indicated.
March 1, 2017			/s/ J. William Blackham
			J. William Blackham
			Chief Executive Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-K or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1is expressly and specifically incorporated by reference in any such filing.

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

Certification Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to

Section 906 of The Sarbanes-Oxley Act of 2002

In connection with the Annual Report of Condor Hospitality Trust, Inc., on Form 10-K for the year ending December 31, 2016 as filed with the Securities and Exchange Commission (the “Report”), I, Jonathan J. Gantt, Chief Financial Officer of Condor Hospitality Trust, Inc., certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

	(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
	(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Condor Hospitality Trust, Inc. at the dates and for the periods indicated.
March1, 2017			/s/ Jonathan J. Gantt
			Jonathan J. Gantt
			Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-K or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32.1is expressly and specifically incorporated by reference in any such filing.

A signed original of this written statement required by Section 906 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

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Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Feb. 28, 2017	Jun. 30, 2016
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Fiscal Period Focus	FY
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Entity Registrant Name	CONDOR HOSPITALITY TRUST, INC.
Entity Central Index Key	0000929545
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Common Stock, Shares Outstanding		43,993,705
Entity Public Float			$ 7.2

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Consolidated Balance Sheet - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets
Investment in hotel properties, net	$ 96,158	$ 75,899
Investment in unconsolidated joint venture	9,036
Cash and cash equivalents	8,326	4,870
Restricted cash, property escrows	5,350	3,776
Accounts receivable, net of allowance for doubtful accounts of $21 and $10	1,416	1,169
Prepaid expenses and other assets	1,666	1,832
Investment in hotel properties held for sale, net	18,713	54,800
Total Assets	140,665	142,346
Liabilities
Accounts payable, accrued expenses, and other liabilities	5,823	5,419
Derivative liabilities, at fair value	8	8,759
Convertible debt, at fair value	1,315
Long-term debt, net of deferred financing costs	56,775	44,667
Long-term debt related to hotel properties held for sale, net of deferred financing costs	5,945	41,344
Total Liabilities	69,866	100,189
Shareholders' Equity
Common stock, $.01 par value, 200,000,000 shares authorized; 4,956,835 and 4,941,878 shares outstanding	50	49
Additional paid-in capital	118,613	138,387
Accumulated deficit	(112,024)	(105,858)
Total Shareholders' Equity	67,972	32,616
Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $2,008 and $1,197	2,827	1,879
Total Equity	70,799	34,495
Total Liabilities and Equity	140,665	142,346
Series B Preferred Stock [Member]
Liabilities
Redeemable preferred stock: 10% Series B, 800,000 shares authorized; $.01 par value, 332,500 shares outstanding, liquidation preference of $10,182 at December 31, 2015		7,662
Series A Preferred Stock [Member]
Shareholders' Equity
Preferred stock value		8
Series C Preferred Stock [Member]
Shareholders' Equity
Preferred stock value		$ 30
Series D Preferred Stock [Member]
Shareholders' Equity
Preferred stock value	$ 61,333

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Consolidated Balance Sheet (Parenthetical) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Accounts receivable, allowance for doubtful accounts	$ 21,000	$ 10,000
Preferred stock, shares authorized	40,000,000	40,000,000
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares outstanding	4,956,835	4,941,878
Noncontrolling interest in consolidated partnership, redemption value	$ 2,008,000	$ 1,197,000
Series B Preferred Stock [Member]
Preferred stock, annual dividend rate	10.00%	10.00%
Redeemable preferred stock, shares authorized		800,000
Preferred stock, par value		$ 0.01
Preferred stock, shares outstanding		332,500
Preferred stock, liquidation preference		$ 10,182
Series A Preferred Stock [Member]
Preferred stock, annual dividend rate	8.00%	8.00%
Preferred stock, shares authorized		2,500,000
Preferred stock, par value		$ 0.01
Preferred stock, shares outstanding		803,270
Preferred stock, liquidation preference		$ 9,485
Series C Preferred Stock [Member]
Preferred stock, annual dividend rate	6.25%	6.25%
Preferred stock, shares authorized		3,000,000
Preferred stock, par value		$ 0.01
Preferred stock, shares outstanding		3,000,000
Preferred stock, liquidation preference		$ 34,492
Series D Preferred Stock [Member]
Preferred stock, annual dividend rate	6.25%
Preferred stock, shares authorized	6,700,000
Preferred stock, par value	$ 0.01
Preferred stock, shares outstanding	6,245,156
Preferred stock, liquidation preference	$ 63,427

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Consolidated Statement Of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Revenue
Room rentals and other hotel services	$ 50,647	$ 58,714	$ 58,799
Operating expenses
Hotel and property operations	37,092	43,367	44,391
Depreciation and amortization	5,190	5,400	6,437
General and administrative	5,792	5,493	4,192
Acquisition and terminated transactions	550	684
Terminated equity transactions		246	76
Total operating expenses	48,624	55,190	55,096
Operating income	2,023	3,524	3,703
Net gain (loss) on disposition of assets	23,132	4,798	(1)
Equity in loss of joint venture	(244)
Net gain (loss) on derivatives and convertible debt	6,377	11,578	(14,430)
Other income	55	114	116
Interest expense	(4,710)	(5,522)	(7,116)
Loss on debt extinguishment	(2,187)	(213)	(158)
Impairment loss	(1,477)	(3,829)	(1,269)
Earnings (loss) from continuing operations before income taxes	22,969	10,450	(19,155)
Income tax expense	(125)
Earnings (loss) from continuing operations	22,844	10,450	(19,155)
Gain from discontinued operations, net of tax	678	3,872	2,896
Net earnings (loss)	23,522	14,322	(16,259)
(Earnings) loss attributable to noncontrolling interest	(727)	(1,197)	23
Net earnings (loss) attributable to controlling interests	22,795	13,125	(16,236)
Dividends declared and undeclared and in kind dividends deemed on preferred stock	(20,748)	(3,632)	(3,452)
Net earnings (loss) attributable to common shareholders	$ 2,047	$ 9,493	$ (19,688)
Earnings per Share
Continuing operations - Basic	$ 0.28	$ 1.24	$ (5.79)
Discontinued operations - Basic	0.13	0.70	0.74
Total - Basic Earnings per Share	0.41	1.94	(5.05)
Continuing operations - Diluted	0.12	(0.15)	(5.79)
Discontinued operations - Diluted	0.02	$ 0.15	0.74
Total - Diluted Earnings per Share	$ 0.14		$ (5.05)

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Consolidated Statement Of Equity - USD ($) shares in Thousands, $ in Thousands	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total Shareholders' Equity [Member]	Noncontrolling Interest [Member]	Total
Balance at Dec. 31, 2013	$ 38	$ 29	$ 135,293	$ (102,747)	$ 32,613	$ 113	$ 32,726
Balance, shares at Dec. 31, 2013	3,803	2,898
Stock-based compensation			34		34		34
Stock-based compensation, shares		8
Issuance of common stock		$ 18	2,573		2,591		2,591
Issuance of common stock, shares		1,787
Net earnings (loss)				(16,236)	(16,236)	(23)	(16,259)
Balance at Dec. 31, 2014	$ 38	$ 47	137,900	(118,983)	19,002	90	19,092
Balance, shares at Dec. 31, 2014	3,803	4,693
Stock-based compensation			143		143		143
Stock-based compensation, shares		21
Long-term incentive plan						142	142
Issuance of common stock		$ 2	344		346		346
Issuance of common stock, shares		228
Issuance of common units						450	450
Net earnings (loss)				13,125	13,125	1,197	14,322
Balance at Dec. 31, 2015	$ 38	$ 49	138,387	(105,858)	32,616	1,879	34,495
Balance, shares at Dec. 31, 2015	3,803	4,942
Stock-based compensation		$ 1	133		134		134
Stock-based compensation, shares		15
Long-term incentive plan						171	171
Issuance of common units						50	50
Common dividends declared ($0.07 per share)				(347)	(347)		(347)
Series D Preferred Stock dividends declared				(3,090)	(3,090)		(3,090)
Redemption of Series A and B Preferred Stock	$ (8)		(7,390)	(5,107)	(12,505)		(12,505)
Redemption of Series A and Series B Preferred Stock, shares	(803)
Exchange of Series C Preferred and issuance of Series D Preferred Stock	$ 61,303		(12,517)	(20,417)	28,369		28,369
Exchange of Series C Preferred and issuance of Series D Preferred Stock, shares	3,245
Net earnings (loss)				22,795	22,795	727	23,522
Balance at Dec. 31, 2016	$ 61,333	$ 50	$ 118,613	$ (112,024)	$ 67,972	$ 2,827	$ 70,799
Balance, shares at Dec. 31, 2016	6,245	4,957

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Consolidated Statement Of Equity (Parenthetical)	12 Months Ended
	Dec. 31, 2016 $ / shares
Consolidated Statement Of Equity [Abstract]
Common stock dividends declared	$ 0.07

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Consolidated Statement Of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Cash flows from operating activities:
Net earnings (loss)	$ 23,522	$ 14,322	$ (16,259)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization expense	5,190	5,400	6,549
Net gain on disposition of assets	(23,813)	(7,794)	(2,750)
Net (gain) loss on derivatives and convertible debt	(6,377)	(11,578)	14,430
Equity in loss of joint venture	244
Amortization of deferred financing costs	597	714	1,292
Amortizaton of debt discount			38
Loss on extinguishment of debt	2,187	213	278
Gain on debt conversion			(88)
Impairment loss	1,477	3,708	2,921
Stock-based compensation and long term incentive plan expense	305	285	34
Amortization of warrant issuance cost	12	58	58
Changes in operating assets and liabilities:
(Increase) decrease in assets	(244)	442	(63)
Decrease in liabilities	(432)	(800)	(933)
Net cash provided by operating activities	2,668	4,970	5,507
Cash flows from investing activities:
Additions to hotel properties	(3,446)	(3,853)	(3,034)
Investment in joint venture	(9,280)
Acquisitions of hotel properties	(22,450)	(42,592)
Proceeds from sale of hotel assets	58,593	53,306	21,316
Net changes in capital expenditure escrows	(1,475)	(1,463)	(340)
Net cash provided by investing activities	21,942	5,398	17,942
Cash flows from financing activities:
Deferred financing costs	(136)	(865)	(485)
Principal payments on long-term debt	(39,965)	(51,868)	(22,207)
Proceeds from long-term debt	15,925	44,620
Payments on revolving debt	(10,305)	(39,056)	(30,843)
Proceeds from revolving debt	10,198	41,152	29,692
Debt early extinguishment penalties	(1,752)		(120)
Series D Preferred Stock issuance	28,881
Series A and B Preferred Stock redemption, including accumulated dividends	(20,167)
Cash dividends paid to common shareholders	(198)
Cash dividends paid to Series C and D Preferred Shareholders	(3,598)
Proceeds from common stock issued in rights offering		346	860
Rights offering issuance costs			(218)
Other items	(37)
Net cash used in financing activities	(21,154)	(5,671)	(23,321)
Increase in cash and cash equivalents	3,456	4,697	128
Cash and cash equivalents, beginning of year	4,870	173	45
Cash and cash equivalents, end of year	8,326	4,870	173
Supplemental cash flow information:
Interest paid, net of amounts capitalized	4,229	5,085	7,119
Income taxes paid	37
Schedule of noncash investing and financing activities:
Unamortized debt discount			113
Convertible loan embedded derivative			(151)
Debt converted to common stock			(2,000)
Common stock issued on conversion of debt			$ 1,950
Debt assumed in acquisitions		11,220
Fair Value of CHLP operating units issued in acquisitions	50	$ 450
In kind dividends deemed on preferred stock	$ 20,218

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Organization And Summary Of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Organization And Summary Of Significant Accounting Policies [Abstract]

Organization And Summary Of Significant Accounting Policies

NOTE 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Condor Hospitality Trust, Inc. (“CDOR,” “Condor,” or the “Company”), which until July 15, 2015 was formerly named Supertel Hospitality, Inc.,was incorporated in Virginia on August 23, 1994 and was reincorporated in Maryland on November 19, 2014. CDOR is a self-administered real estate investment trust (“REIT”) for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  As of December 31, 2016, the Company owned 19 hotels in 12 states, including one hotel owned through an 80% interest in an unconsolidated joint venture (the “Atlanta JV”).

CDOR, through its wholly owned subsidiary, Condor Hospitality REIT Trust (formerly Supertel Hospitality REIT Trust), ownsa  controlling interests in Condor Hospitality Limited Partnership (“CHLP”) (formerly Supertel Limited Partnership), for which we serve as general partner.  CHLP, including its various subsidiary partnerships, holds substantially all of the Company’s assets (with the exception of the furniture and equipment of 14 properties held by TRS Leasing, Inc.) and conducts all of its operations.  At December 31, 2016, the Company owned 97.8% of the common operating units (“common units”) of CHLP with the remaining common units owned by other limited partners and long-term incentive plan unit holders (see Note 12).  The Company’s 100% owned E&P Financing Limited Partnership no longer owns any assets or conducts any operations following the sale of its last remaining property in January 2016.

In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required by the Internal Revenue Service (“IRS”) for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels.  Therefore, CHLP and its subsidiaries lease our hotel properties to the Company’s wholly owned taxable REIT subsidiary, TRS Leasing, Inc., and its wholly owned subsidiaries (the “TRS”).The TRS in turn engages third-party eligible independent contractors to manage the hotels. CHLP, the TRS, and their respective subsidiaries are consolidated into the Company’s financial statements. 

References to “we,” “our,” and “us” herein refer to Condor Hospitality Trust, Inc., including as the context requires, its direct and indirect subsidiaries.

Historically, as a result of the geographic areas in which we operate, the operations of our hotels have been seasonal in nature.  Generally, occupancy rates, revenue, and operating income have been greater in the second and third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotels located in Florida, which experience peak demand in the first and fourth quarters of the year.  The results of the hotels acquired in 2015 and 2016 (see Note 3), because of their locations and chain scale, are expected to be less seasonal in nature than our legacy portfolio of assets.

Basis of Presentation

The consolidated financial statements have been prepared in accordance with U.S. general accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company, as well as the accounts of CHLP and its subsidiaries and our wholly owned TRS and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Estimates, Risks, and Uncertainties

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as revenue and expenses recognized during the reporting period.  Actual results could differ from those estimates.  Because the state of the economy and of the real estate market can significantly impact hotel operational performance and the estimated fair value of our assets, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change.

Investment in Hotel Properties

At the time of acquisition, the Company allocates the purchase price of assets to asset classes based on the fair value of the acquired real estate, furniture, fixtures, and equipment, and intangible assets, if any, and the fair value of liabilities assumed, including debt. Acquisition date fair values are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers including discounted cash flows and capitalization rates.  Acquisition costs are expensed as incurred.

The Company’s investments in hotel properties are recorded at cost and are depreciated using the straight-line method over an estimated useful life of 15 to 40 years for buildings and improvements and 3 to 12 years for furniture and equipment.

Renovations and/or replacements that improve or extend the life of the hotel properties are capitalized and depreciated over their useful lives. Repairs and maintenance are expensed as incurred.

On a quarterly basis, the Company reviews the carrying value of each held for use hotel to determine if certain circumstances, known as triggering events, exist indicating impairment to the carrying value of the hotel or that depreciation periods should be modified.  These triggering events include a significant change in the cash flows of or a significant adverse change in the business climate for a hotel.  If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on these undiscounted future cash flows. If the investment is not recoverable based on this analysis, an impairment charge will be taken, if necessary, to reduce the carrying value of the hotel to the hotel’s fair value.

Investment in Joint Venture

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a variable interest entity (“VIE”) or through our voting interest in a voting interest entity (“VOE”) and we have the ability to provide significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of our investment in, advances to, and commitments to the investee. Pursuant to our Atlanta JV agreement, allocations of the profits and losses of our Atlanta JV may be allocated disproportionately to nominal ownership percentages due to specified preferred return rate thresholds.

Distributions received from a joint venture are classified in the statement of cash flows using the cumulative distributions approach.  Distributions are classified as cash inflows from operating activities unless cumulative distributions, including those from prior periods not designated as a return of investment, exceed cumulative recognized equity in earnings of the joint venture.  Excess distributions are classified as cash inflows from investing activities as a return of investment.

On an annual basis or at interim periods if events and circumstances indicate that the investment may be impaired, the Company reviews the carrying value of its investment in unconsolidated joint venture to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. The investment is considered impaired if its estimated fair value is less than the carrying amount of the investment and that impairment is other than temporary.

Assets Held for Sale and Discontinued Operations

A hotel is considered held for sale (a) when a contract for sale is entered into, a substantial, nonrefundable deposit has been committed by the purchaser, and sale is expected to occur within one year, or (b) if management has committed to and is actively engaged in a plan sell the property, the property is available for sale in its current condition, and it is probable the sale will be completed within one year.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold in any period presented, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented.

Depreciation of our hotels is discontinued at the time they are considered held for sale.  If the fair value of the held for sale property less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss.  Impairment losses on held for sale properties may be subsequently recovered up to the amount of the cumulative impairment losses taken while the property is held for sale should future revisions to fair value estimates be required.  If active marketing ceases or the property no longer meets the criteria to be classified as held for sale, the property is reclassified to held for use and measured at the lower of its (a) carrying amount before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for use, or (b) its fair value at the date of the subsequent decision not to sell.

Historically, we have presented the results of operations of hotel properties that have been sold or considered held for sale as discontinued operations.  In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in ASU 2014-08 change the criteria for reporting a discontinued operation and require new disclosures of both discontinued operations and certain other significant disposals that do not meet the definition of a discontinued operation. Only disposals representing a strategic shift in operations that have a major effect on an entity’s operations and financial results should be presented as discontinued operations subsequent to adoption. The Company adopted the pronouncement on October 1, 2014.  As a result of this adoption, only the operations of hotels meeting the criteria to be considered held for sale prior to October 1, 2014 are included in discontinued operations for all periods presented as no individual hotel disposition represents a strategic shift in operations or has a major effect on our operations or financial results.

Gains on the sale of real estate are recognized when a property is sold, provided that the profit is determinable, meaning that collectability of the sales price is reasonably assured or can be estimated, and that the earnings process is complete, meaning that the seller is not obligated to perform significant activities after the sale in order to earn the profit.If these criteria are not met, the timing of the sale is determined based on various criteria related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the property. If the sales criteria are not met, the gain is deferred and the finance, installment, or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent we sell a property and retain a partial ownership interest in the property, we generally recognize a gain to the extent of the third party ownership interest.

Cash and Cash Equivalents

Cash and cash equivalents includes cash and highly liquid investments with original maturities of three months or less when acquired, and are carried at cost which approximates fair value. The Company maintained a major portion of its deposits with Great Western Bank, a Nebraska Corporation, at December 31, 2016 and with US Bank at December 31, 2015.  The balances on deposit at Great Western Bank and US Bank may at times exceed the federal deposit insurance limit, however, management believes that no significant credit risk exists with respect to the uninsured portion of these cash balances.

Restricted Cash

Restricted cash consists of cash held in escrow for the replacement of furniture and fixtures or for real estate taxes and property insurance as required under certain loan agreements.  For purposes of the statement of cash flows, changes in restricted cash caused by changes in required reserves for real estate taxes or property insurance are shown as operating activities. Changes in restricted cash caused by changes in required reserves for the replacement of furniture and fixtures are shown as investing activities.

Deferred Financing Cost

Direct costs incurred in financing transactions are capitalized as deferred financing costs and amortized to interest expense over the term of the related loan using the effective interest method.  Deferred financing costs are presented on the balance sheet as a direct deduction from the associated debt liability.

Derivative Liabilities

In the normal course of business, the Company is exposed to the effects of interest rate changes, and the Company may enter into derivative instruments including interest rate swaps, caps, and collars to manage or economically hedge interest rate risk.  Additionally, prior to the first quarter of 2016, the Company was required to include on the balance sheet certain bifurcated embedded derivative instruments such as conversion features in convertible instruments and certain common stock warrants.

All derivatives recognized by the Company are reported as derivative liabilities on the balance sheet and are adjusted to their fair value at each reporting date.  Realized and unrealized gains and losses on derivative instruments are included in net gain (loss) on derivatives and convertible debt with the exception of realized gains and losses related to interest rate instruments which are included in interest expense on the statement of operations.

Noncontrolling Interest

Noncontrolling interest in CHLP represents the limited partners’ proportionate share of the equity in the operating partnership and long-term incentive plan (“LTIP”) units (see Note 12).  Earnings and loss are allocated to noncontrolling interest in accordance with the weighted average percentage ownership of CHLP during the period. 

Revenue Recognition

Revenue consists of amounts derived from hotel operations, including the sale of rooms, food and beverage, and other ancillary amenities.  Revenue from the operation of the hotel properties is recognized when rooms are occupied and services have been rendered.  Sales, use, occupancy, and similar taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the statement of operations.

Income Taxes

The Company qualifies and intends to continue to qualify as a REIT under applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will be unable to re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT, unless we satisfy certain relief provisions.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.  Except with respect to the TRS, the Company does not believe that it will be liable for significant federal or state income taxes in future years.

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 IRS 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.

Taxable income from non-REIT activities managed through the TRS, which is taxed as a C-Corporation, is subject to federal, state, and local income taxes.  We account for the federal income taxes of our TRS using the asset and liability method.  Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled.  However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible.  In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not (defined as a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on its technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statement of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement to the uncertain tax position by the applicable taxing authority or by expiration of the applicable statute of limitations. For the years ended December 31, 2016, 2015, and 2014, the Company did not record any uncertain tax positions.

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are utilized to determine the value of certain liabilities, to perform impairment assessments, to account for hotel acquisitions, and for disclosure purposes. Fair value measurements are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable inputs other than quoted prices included in Level 1. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.

Level 3: Unobservable inputs for which there is little or no market data, which require a reporting entity to develop its own assumptions.

Our estimates of fair value were determined using available market information and appropriate valuation methods.  Considerable judgment is necessary to interpret market data and develop estimated fair value.  The use of different market assumptions or valuation techniques may have a material effect on estimated fair value measurements.  We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

With the exception of fixed rate debt (see Note 8) and other financial instruments carried at fair value, the carrying amounts of the Company’s financial instruments approximates their fair values due to their short-term nature or variable market-based interest rates.

Fair Value Option

Under U.S. GAAP, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in net earnings.  This option was elected for the treatment of the Company’s convertible debt entered into on March 16, 2016 (see Note 7).

Stock-Based Compensation

Stock-based compensation for awards with a service condition only is measured based on the fair value of the award on the date of grant and recognized as compensation expense on a straight line basis over the service period.  The compensation cost related to awards for which vesting is contingent upon achieving a market based criteria is measured at the fair value of the award on the date of grant, including consideration of the market criteria, and amortized on a straight line basis over the performance period.  The fair value of the award at grant is measured using either the closing stock price on the date of grant (for vested and unvested share awards), the Black-Scholes model (for options and warrants), or a Monte Carlo simulation (for LTIP awards), as appropriate.  Compensation cost is recognized as additional paid-in capital for awards of the Company’s common stock and as noncontrolling interest for LTIP awards of CHLP common units.

Recently Adopted Accounting Standards

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity, which clarifies certain of the criteria for determining whether derivative features in a hybrid financial instrument should be separately recognized.  ASU 2014-16 is effective for fiscal years beginning after December 15, 2015 and permits either a retrospective or cumulative effect transition method.  ASU 2014-16 was adopted by the Company on January 1, 2016 and was utilized in determining the accounting for the 6.25% Series D Cumulative Convertible Preferred Stock (“Series D Preferred Stock”) issued in March 2016 (see Note 10).

In February 2015, the FASB issued ASU No. 2015-02, Consolidation - Amendments to the Consolidation Analysis, which amends the current consolidation guidance effecting both the VIE and VOE consolidation models. The standard does not add or remove any of the characteristics in determining if an entity is a VIE or VOE, but rather enhances the way the Company assesses some of these characteristics. The Company adopted this standard on January 1, 2016 and concluded that CHLP now meets the criteria to be considered a VIE of which the Company is the primary beneficiary and, accordingly, the Company continues to consolidate CHLP. The Company’s sole significant asset is its investment in CHLP, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of CHLP. All of the Company’s debt is an obligation of CHLP.  This ASU was also used in the determination of the accounting for the Atlanta JV entered into in August 2016 (see Note 5).

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability.  The Company adopted this standard on January 1, 2016 and presents all debt issuance costs, other than issuance costs related to its revolving credit facility, as a direct deduction from the carrying value of the debt liability. Adoption of this standard was applied retrospectively for all periods presented, effecting only the presentation of the balance sheet. The adoption of this standard did not have a material impact on the Company's financial position and had no impact on the results of operations or cash flows.  For the amounts of the reclassification, see Note 6.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  The original updated accounting guidance was effective for annual and interim reporting periods in fiscal years beginning after December 15, 2016, however, in July 2015, the FASB approved a one year delay of the effective date to fiscal years beginning after December 15, 2017.  As such, the standard will be effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has begun to evaluate each of its revenue streams under the new model.  Based on preliminary assessments, the Company does not expect the adoption of this guidance to materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales.  Furthermore, for real estate sales to third parties, primarily a result of disposition of real estate in exchange for cash with few contingencies, we do not expect the standard to significantly impact the recognition of or accounting for these sales.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes most existing lease guidance in U.S. GAAP when it becomes effective. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability and additional qualitative and quantitative disclosures. ASU 2016-02 is effective for the Company for annual periods in fiscal years beginning after December 15, 2019, permits early adoption, and mandates a modified retrospective transition method. The Company is required to adopt ASU 2016-02 on January 1, 2020. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accountedfor as acquisitions of assets or business combinations. This standard will be effective for annual periods beginning after December15, 2017, although early adoption is permitted. The Company is evaluating the effect that ASU 2017-01 will have on its consolidated financial statements and related disclosures.

Reclassifications

Certain amounts in prior year financial statements have been reclassified to conform to current year presentation.

Beginning in the first quarter of 2016, we have revised the classification of cash payments for debt prepayment or extinguishment penalties in our statements of cash flows from where they were previously presented as operating cash flows to financing cash flows.  We have concluded that this classification is preferable as these payments are closely related to other financing cash flows, such as the repayment of debt, and reflect the impact of financing decisions made by management.  This revised policy is also consistent with the ASU 2016-15, Statement of Cash Flows, which was issued in August 2016 and becomes effective for the Company on January 1, 2018.  This revision in classification had the effect of increasing operatingcashflows and decreasing financing cash flows by $1,752,  $0, and $120 during the years ended December 31, 2016, 2015, and 2014, respectively.

Liquidity

The following disclosure and analysis is pursuant to ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 requires the Company to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued.  To satisfy the requirements of this standard, the Company’s evaluation considered a 15 month period beginning January 1, 2017.

We expect to meet our short-term liquidity requirements through net cash provided by operations, existing cash balances and working capital, short-term borrowings under our revolving credit agreement with Great Western Bank, and the release of restricted cash upon the satisfaction of usage requirements.  At December 31, 2016, the Company had $8,326 million of cash and cash equivalents on hand and $1,234 of unused availability under its revolving credit agreement.  Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, recurring maintenance and capital expenditures necessary to maintain our hotels in accordance with brand standards, interest expense and scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, and the payment of dividends in accordance with the REIT requirements of the Internal Revenue Code and as required in connection with our Series D Preferred Stock (which, as discussed as a subsequent event (see Note 17), was converted to common stock with $9,250 of a new class of stock, Series E Preferred Stock, issued on February 28, 2017). We presently expect to invest approximately $4,000 to $5,000 in capital expenditures related to hotel properties we currently own through March 31, 2018.

To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually.  In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws.  We have a general dividend policy of paying out approximately 100% of annual REIT taxable income.  The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.

Our longer-term liquidity requirements consist primarily of the cost of acquiring additional hotel properties, renovations and other one-time capital expenditures that periodically are made related to our hotel properties, and scheduled debt payments, including maturing loans.  Possible sources of liquidity to fund debt maturities and acquisitions and to meet other obligations include additional secured or unsecured debt financings and proceeds from public or private issuances of debt or equity securities. 

Prior to the consideration of any asset sales or our ability to refinance debt subsequent to December 31, 2016, contractual principal payments on our debt outstanding, including normal amortization, total $15,788 through March 31, 2018, including the February 1, 2017 maturity of one of our Western Alliance Bank (“WAB”) loans with a balance at December 31, 2016 of $4,806, the November 6, 2017 maturity of our Cantor loan with a balance at December 31, 2016 of $5,713, the December 1, 2017 maturity of our Morgan Stanley loan with a balance at December 31, 2016 of $912, and the February 1, 2018 maturity of one of our WAB loans with a balance at December 31, 2016 of $2,803.  On January 27, 2017, the WAB loan due February 1, 2017 was extended to February 1, 2018.  Subsequently, on March 1, 2017, each of these pieces of debt was refinanced with a $90,000 secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual principal payments on our debt outstanding at December 31, 2016 through March 31, 2018 totaled approximately $1,100.

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Investment In Hotel Properties

12 Months Ended

Dec. 31, 2016

Investment In Hotel Properties [Abstract]

Investment In Hotel Properties

NOTE 2.  INVESTMENT IN HOTEL PROPERTIES

Investments in hotel properties consisted of the following at December 31:

	As of December 31,
	2016						2015
	Held for sale		Held for use		Total		Held for sale		Held for use		Total
Land	$	2,392	$	14,020	$	16,412	$	8,184	$	10,683	$	18,867
Acquired below market lease intangibles		-		-		-		883		-		883
Buildings, improvements, vehicles		23,118		85,565		108,683		70,932		67,174		138,106
Furniture and equipment		5,427		12,776		18,203		19,170		11,418		30,588
Construction-in-progress		23		63		86		322		133		455
Investment in hotel properties		30,960		112,424		143,384		99,491		89,408		188,899
Less accumulated depreciation		(12,247)		(16,266)		(28,513)		(44,691)		(13,509)		(58,200)
Investment in hotel properties, net	$	18,713	$	96,158	$	114,871	$	54,800	$	75,899	$	130,699

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Acquisition Of Hotel Properties

12 Months Ended

Dec. 31, 2016

Acquisition Of Hotel Properties [Abstract]

Acquisition Of Hotel Properties

NOTE 3.  ACQUISITION OF HOTEL PROPERTIES

On December 14, 2016, the Company acquired one wholly-owned hotel, the Aloft Leawood / Overland Park (Kansas City).  The allocation of the purchase price based on fair value, which was determined using Level 3 fair value inputs, was as follows:

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Total purchase price		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Aloft	$	3,339	$	18,046	$	1,115	$	22,500	$	15,925	$	50	$	6,525
Leawood, KS

The $22,500 purchase price was funded with the proceeds of two mortgage loans provided by Great Western Bank totaling $15,925, approximately $6,525 in cash, and the issuance of 213,904 common units from CHLP with a value of $50.

During 2015, the Company acquired three wholly-owned hotel properties.  The allocation of the purchase price based on fair value, which was determined using Level 3 fair value inputs, was as follows:

Hotel	Acquisition date	Land		Building, improvements, and vehicles		Furniture and equipment		Total purchase price		Assumption of debt		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Hotel Indigo	10/2/2015	$	800	$	8,700	$	1,500	$	11,000	$	-	$	5,000	$	150	$	5,850
Atlanta, GA
Marriott Courtyard	10/2/2015		2,100		11,050		850		14,000		-		10,100		150		3,750
Jacksonville, FL
SpringHill Suites	10/1/2015		1,597		14,353		1,550		17,500		11,220		-		150		6,130
San Antonio, TX
Total		$	4,497	$	34,103	$	3,900	$	42,500	$	11,220	$	15,100	$	450	$	15,730

The $42,500 purchase price was funded with the assumption of one loan with an aggregate outstanding principal balance of $11,220 and two newly originated GE Capital loans totaling $15,100 (sold to WAB in April 2016). The remaining $16,180 was funded with approximately $14,900 in cash, approximately $830 of borrowings from the Company’s existing credit facility with Great Western Bank, and the issuance of common units from CHLP. A total of 2,298,879 common units were issued with a value of $450.

There were no hotel acquisitions in 2014.

Included in the statement of operations for the year ended December 31, 2016 and 2015 is total revenue of $12,786 and $2,611 and total operating income of $2,279 and $356, respectively, which represent the results of operations for these four hotels since the date of acquisition.

Pro Forma Results (Unaudited)

The following condensed pro forma financial data is presented as if all acquisitions completed during the years ended December 31, 2016 and 2015 (including the Atlanta JV acquisition subsequently discussed (see Note 5)) had been completed on January 1, 2015 and 2014, respectively.  The pro forma results below exclude acquisition costs of $550 and $684 incurred during the years ended December 31, 2016 and 2015, respectively.  The condensed pro forma financial data is not necessarily indicative of what actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2015 and 2014, nor do they purport to represent the results of operations for future periods.

	Years ended December 31,
	2016		2015
Total revenue	$	56,741	$	73,281
Operating income	$	3,970	$	6,774
Net Income attributable to common shareholders	$	3,755	$	10,816
Net Income per share available to common shareholders-basic	$	0.76	$	2.21
Net Income per share available to common shareholders-diluted	$	0.19	$	0.05

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Disposition Of Hotel Properties And Discontinued Operations

12 Months Ended

Dec. 31, 2016

Disposition Of Hotel Properties And Discontinued Operations [Abstract]

Disposition Of Hotel Properties And Discontinued Operations

NOTE 4: DISPOSITION OF HOTEL PROPERTIES AND DISCONTINUED OPERATIONS

As of December 31, 2016, the Company had seven hotels classified as held for sale. At the beginning of 2016, the Company had 16 hotels held for sale and during the year classified an additional 16 hotels as held for sale. Twenty-five of these hotels were sold during 2016. 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 subsequent reclassified as held for use),  none of which remain unsold at December 31, 2016, are included in discontinued operations with all other hotels, including those subsequently sold or classified as held for sale, reported in continuing operations.

In 2016,  2015, and 2014, the Company sold 25 hotels, 17 hotels, and 13 hotels, respectively, resulting in total gains of $24,256,  $7,759, and $2,749, respectively, of which $23,575,  $4,996, and $0, respectively, was included in continuing operations.

Included in these 2015 sales were two hotels in Alexandria, Virginia that were sold on July 13, 2015 for a combined gross sales price of $19,000.  These hotels represent a significant disposition,and as such, their operating results are disclosed.  The Alexandria Comfort Inn and Days Inn hotels had combined net earnings (loss) of ($665) and $761for the years ended December 31, 2015 and 2014, respectively. Net earnings for the year ended December 31, 2015 includes impairment expense of $1,020 which was recognized following the hotels classification as held for sale. Earnings attributable to noncontrolling interest related to these properties for the years ended December 31, 2015 and 2014 were $3 and$1, respectively.

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 the disposal transaction. The following table sets forth the components of discontinued operations for the years ended December 31, 2016, 2015 and 2014:

	Year ended December 31,
		2016		2015		2014
Revenue		$	6	$	2,923	$	13,579
Hotel and property operations expense			(4)		(1,946)		(10,410)
Depreciation and amortization expense			-		-		(112)
General and administrative expense			-		-		-
Net gain on dispositions of assets			681		2,997		2,751
Interest expense			(5)		(223)		(1,140)
Loss on extinguishment of debt			-		-		(120)
Impairment recovery (loss)			-		121		(1,652)
		$	678	$	3,872	$	2,896
Capital expenditures		$	-	$	90	$	338

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Investment In Unconsolidated Joint Venture

12 Months Ended

Dec. 31, 2016

Investment In Unconsolidated Joint Venture [Abstract]

Investment In Unconsolidated Joint Venture

NOTE 5.  INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

On August 1, 2016, the Company entered into a joint venture with Three Wall Capital LLC and certain of its affiliates (“TWC”) to acquire a 254-room Aloft hotel in downtown Atlanta, Georgia.  The Company accounts for the Atlanta JV under the equity method.  Condor owns 80% of the Atlanta JV with TWC owning the remaining 20%.  The Atlanta JV is comprised of two companies: Spring Street Hotel Property II LLC, of which CHLP indirectly owns an 80% equity interest, and Spring Street Hotel OpCo II LLC, of which our TRS indirectly owns an 80% equity interest.  TWC owns the remaining 20% equity interest in these two companies.

On August 22, 2016, the Atlanta JV closed on the acquisition of the Atlanta Aloft for a purchase price of $43,550, subject to working capital and similar adjustments.  The purchase price was allocated by the Atlanta JV based on fair value, which was determined using Level 3 fair value inputs, as documented in the table below:

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Land option (1)		Total purchase price		Debt originated at acquisition		Net cash
Aloft	$	13,025	$	34,048	$	2,667	$	(6,190)	$	43,550	$	33,750	$	9,800
Atlanta, GA

(1) The purchase agreement includes a provision which permits the seller to purchase the surface parking lot north of the hotel exercisable for ten years at less than market rates

The purchase price for the Atlanta Aloft was paid with $9,800 in cash, of which $7,840 was contributed by Condor and $1,960 was contributed by TWC, and $33,750 of proceeds from a term loan secured by the property.  Condor additionally contributed $1,440 and TWC additionally contributed $360 to the Atlanta JV to cover acquisition costs and to provide working capital to the entity.  The term loan, obtained from LoanCore Capital Credit REIT LLC, has an initial term of 24 months with three12-month extension periods which may be exercised at the Atlanta JV’s option subject to certain conditions and fees.  The interest rate is a floating rate calculated on the one-month LIBOR plus 5.0%, and as a condition to closing, the Atlanta JV purchased a LIBOR cap of 3.0%.  The current interest rate on the loan is 5.75%.  The loan is non-recourse to the Atlanta JV, subject to specified exceptions.  The loan is also non-recourse to Condor, except for certain customary carve-outs which are guaranteed by the Company.

Under the Atlanta JV agreement, the Atlanta JV is managed by TWC in accordance with business plans and budgets approved by both partners.  Major decisions as detailed in the agreement also require joint approval.  Condor may remove TWC as manager of the Atlanta JV and appoint a new manager only upon the occurrence of certain events.  The Atlanta Aloft hotel is managed by Boast Hotel Management Company LLC (“Boast”), an affiliate of TWC.  The Atlanta JV paid to Boast total management fees of $110 during the year ended December 31, 2016.

Net cash flow and profits from the Atlanta JV will be distributed each fiscal year first with a 10% preferred return on capital contributions to Condor, second with a 10% preferred return on capital contributions to TWC, and third with any remainder distributed to the partners based on their pro-rata equity ownership. Losses are allocated based on pro-rata equity ownership. The Atlanta JV agreement also includes buy-sell rights for both members (generally after three years of hotel ownership for Condor and after five years for TWC) and Condor has a purchase option for TWC’s Atlanta JV ownership interest exercisable between the third and fifth anniversary of the hotel closing.

The following tables represent the total assets, liabilities, equity, and components of net income (loss), including the Company’s share, of the Atlanta JV as of and for the year ended December 31, 2016:

	As of
	December 31, 2016
Investment in hotel properties, net	$	49,305
Cash and cash equivalents		1,184
Restricted cash, property escrows		464
Accounts receivable, prepaid expenses, and other assets		320
Total Assets	$	51,273
Accounts payable, accrued expenses, and other liabilities	$	633
Land option liability		6,190
Long-term debt, net of deferred financing costs		33,155
Total Liabilities		39,978
Condor equity		9,036
TWC equity		2,259
Total Equity		11,295
Total Liabilities and Equity	$	51,273

	Year ended December 31, 2016
Revenue
Room rentals and other hotel services	$	3,703
Operating Expenses
Hotel and property operations		2,457
Depreciation and amortization		471
Acquisition		299
Total operating expenses		3,227
Operating income		476
Net loss on disposition of assets		(2)
Net loss on derivative		(6)
Interest expense		(773)
Net loss	$	(305)
Condor allocated loss	$	(244)
TWC allocated loss		(61)
Net loss	$	(305)

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Long-Term Debt

12 Months Ended

Dec. 31, 2016

Long-Term Debt [Abstract]

Long-Term Debt

NOTE 6.  LONG-TERM DEBT

Long-term debt, including debt related to hotel properties held for sale, consisted of the following loans payable at December 31:

Lender		Balance at December 31, 2016	Interest rate at December 31, 2016	Maturity	Amortization provision	Properties encumbered at December 31, 2016		Balance at December 31, 2015
Fixed rate debt
Western Alliance Bank	$	4,806	7.17%	02/2017	15 years	2	$	10,819
Western Alliance Bank		2,803	4.75%	02/2018	15 years	2		3,864
Cantor Commercial Real Estate Lending		5,713	4.25%	11/2017	30 years	1		5,826
Morgan Stanley Mortgage Capital Holdings, LLC		912	5.83%	12/2017	25 years	4		27,542
Great Western Bank (7)		14,326	4.33%	12/2021	25 years	1		-
Great Western Bank (7)		1,599	4.33%	12/2021	7 years	-		-
Total fixed rate debt		30,159						48,051
Variable rate debt
Great Western Bank (6)		-	4.75% (1)	06/2018	Interest only	2		3,215
Western Alliance Bank		4,882	4.18% (2)	11/2020	25 years	1		4,990
Western Alliance Bank		9,863	4.18% (2)	11/2020	25 years	1		10,079
The Huntington National Bank		7,361	2.87% (3)	11/2020	25 years	3		9,981
LMREC 2015 - CREI, Inc. (Latitude)		11,124	7.00% (4)	05/2018	$12 monthly (5)	1		11,220
Total variable rate debt		33,230				18		39,485
Total long-term debt	$	63,389					$	87,536
Less: Deferred financing costs		(669)						(1,525)
Total long-term debt, net of deferred financing costs		62,720						86,011
Less: Long-term debt related to hotel properties held for sale, net of deferred financing costs of $55 and $736		(5,945)						(41,344)
Long-term debt related to hotel properties held for use, net of deferred financing costs of $614 and $789	$	56,775					$	44,667

(1) Prime rate plus 1%; was fixed rate debt at 4.5% prior to amendment on June 5, 2015

(2) 90-day LIBORplus3.25%

(3) 30-day LIBOR plus 2.25%, fixed at 4.13% after giving effect to interest rate swap

(4) 30-day LIBORplus 6.25%30-day LIBOR capped at 1.0% after giving effect to market rate cap (see Note 8)

(5) $12 monthly payment began May 2016

(6) Total availability under this revolving credit facility was $1,234 at December 31, 2015; commitment fee on unused facility is 0.25%

(7) Both loans are collateralized by Aloft Leawood

At December 31, 2016, we had long-term debt of $57,389 associated with assets held for use with a weighted average term to maturity of 2.9 years and a weighted average interest rate of4.89%.  Of this total, at December 31, 2016,  $26,079 is fixed rate debt with a weighted average term to maturity of 2.8 years and a weighted average interest rate of 4.78% and $31,310 is variable rate debt with a weighted average term to maturity of 2.9 years and a weighted average interest rate of 4.98%.  At December 31, 2015, we had long-term debt of $45,455 associated with assets held for use with a weighted average term to maturity of 3.3 years and a weighted average interest rate of4.98%.  Of this total, at December 31, 2015,  $12,439 is fixed rate debt with a weighted average term to maturity of 1.6 years and a weighted average interest rate of5.63% and $33,016 is variable rate debt with a weighted average term to maturity of 3.9 years and a weighted average interest rate of 4.74%. 

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 based on its contractual maturity although the balances are expected to be repaid within one year upon the sale of the related hotel properties.  Aggregate annual principal payments on debt for the next five years and thereafter are as follows:

	Held for sale		Held for use		Total
2017	$	1,574	$	11,333	$	12,907
2018		2,603		12,065		14,668
2019		52		1,120		1,172
2020		1,771		19,199		20,970
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

As discussed further in the Subsequent Events footnote (see Note 17), on January 27, 2017, the WAB loan with a balance of $4,806 at December 31, 2016 due February 1, 2017 was extended to February 1, 2018.  On March 1, 2017 a significant portion of the Company’s debt (including all debt outstanding at December 31, 2016 with the exception of the two variable rate WAB loans and the two fixed rate Great Western Bank loans) was refinanced with a $90,000 secured credit facility that matures on March 1, 2019. 

Financial Covenants

The Company’s debt agreements contain requirements as to the maintenance of minimum levels of debt service and fixed charge coverage and required loan-to-value and leverage ratios, and place certain restrictions on dividends.  As of December 31, 2016, we were in compliance with our financial covenants.

If we fail to pay our indebtedness when due, fail to comply with covenants or otherwise default on our loans, unless waived, we could incur higher interest rates during the period of such loan defaults, be required to immediately pay our indebtedness, and ultimately lose our hotels through lender foreclosure if we are unable to obtain alternative sources of financing with acceptable terms. Our Great Western Bank and certain of our WAB facilities contain cross-default provisions which would allow Great Western Bank and WAB to declare a default and accelerate our indebtedness to them if we default on our other loans and such default would permit that lender to accelerate our indebtedness under any such loan. As of December 31, 2016, we are not in default of any of our loans.

2014 Convertible Loan

On January 9, 2014, we entered into an unsecured convertible loan agreement with Real Estate Strategies, L.P. (“RES”), for a revolving line of credit of up to $2,000 with an annual interest rate equal to LIBOR plus 7%. During the first quarter of 2014, the Company borrowed the full amount of $2,000available under the loan agreement. 

Upon issuance, it was determined that the conversion feature should be bifurcated from its host instrument and accounted for as a freestanding derivative liability as there was no explicit limit to the number of shares to be delivered upon settlement of the conversion option.  The initial fair value of the conversion feature was determined to be $151 and was recorded as a derivative liability with the offset recorded as a debt discount against the convertible loan.

RES applied the amount owed to it under the loan to purchase 1,250,000 shares of newly issued common stock. On June 11, 2014, the effective purchase date, $1,950, the fair value of the shares issued, was recorded in equity, and a gain of $88 was recorded in other income to reflect the change in fair value from March 31, 2014 to the date of conversion of the convertible loan, amortized debt discount, and the separately accounted for embedded derivative.

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Convertible Debt At Fair Value

12 Months Ended

Dec. 31, 2016

Convertible Debt At Fair Value [Abstract]

Convertible Debt At Fair Value

NOTE 7: CONVERTIBLE DEBT AT FAIR VALUE

As part of an agreement entered into on March 16, 2016 (the “Exchange Agreement”) with RES (see Note 10), the Company issued to RES a Convertible Promissory Note (the “Note”), bearing interest at 6.25% per annum, in the principal amount of $1,012.  If the Series D Preferred Stock is outstanding, RES at its option may at any time elect to convert the Note, in whole or part, by notice delivered to the Company, into a number of shares of Series D Preferred Stock determined by dividing the principal amount of the Note to be converted by $10.00.  Any time the Series D Preferred Stock is required by its terms to be converted into common stock of the Company (see Note 10), the Note will be automatically converted into the number of shares of common stock that RES would have received had RES converted this Note into Series D Preferred Stock immediately prior to the conversion of the Series D Preferred Stock.  Any such conversion shall be reduced such that RES, together with its affiliates, does not beneficially own more than 49% of the voting stock of the Company and shall reduce the principal amount of the Note proportionally.  

The Company has made an irrevocable election to record this Note in its entirety at fair value utilizing the fair value option available under U.S. GAAP in order to more accurately reflect the economic value of this Note. As such, gains and losses on the Note are included in net gain (loss) on derivatives and convertible debt within net earnings each reporting period. Losses related to this Note were recognized totaling $303 during the year ended December 31, 2016.  The fair value of the Note is determined using a Monte Carlo simulation model.  The Monte Carlo simulation method is a generally accepted statistical method used to generate a defined number of stock price paths in order to develop a reasonable estimate of the range of future expected stock prices of the Company and its peer group and minimize standard error. The fair value of the Note on the date of issuance was determined to be equal to its principal amount. Interest expense related to this Note is recorded separately from other changes in its fair value within interest expense each period.

The following table represents the difference between the fair value and the unpaid principal balance of the Note as of December 31, 2016:

	Fair value as of December 31, 2016		Unpaid principal balance as of December 31, 2016		Fair value carrying amount over/(under) unpaid principal
6.25% Convertible Debt	$	1,315	$	1,012	$	303

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Fair Value Measurements And Derivative Instruments

12 Months Ended

Dec. 31, 2016

Fair Value Measurements And Derivative Instruments [Abstract]

Fair Value Measurements And Derivative Instruments

NOTE 8: FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS

Our determination of fair value measurements is based on the assumptions that market participants would use in pricing the asset or liability. At December 31, 2016, the Company’s convertible debt (see Note 7) and certain derivative instruments were the only financial instruments measured in the financial statements at fair value on a recurring basis.  Nonrecurring fair value measurements were utilized in the determination of the fair value of acquired hotel properties and related assumed debt in 2016 and 2015 (see Note 3), the acquisition accounting performed by the Atlanta JV in 2016 (see Note 5), the accounting for the equity transactions that occurred in March 2016 (see Note 10), and in the valuation of impaired hotels during the years ended December 31, 2016, 2015, and 2014.

Derivative Instruments

Currently, the Company uses derivatives, such as interest rate swaps and caps, to manage its interest rate risk.  The fair value of interest rate positions is determined using the standard market methodology of netting the discounted expected future cash receipts and payments. Variable interest rates used in the calculation of projected receipts and payments on the positions are based on an expectation of future interest rates derived from observable market interest rate curves and volatilities.  Derivatives expose the Company to credit risk in the event of non-performance by the counterparties under the terms of the agreements.  The Company believes it minimizes this credit risk by transacting with major creditworthy financial institutions.  These interest rate positions at December 31, 2016 and 2015 are as follows:

Associated debt	Type	Terms	Effective Date	Maturity Date	Notional amount at December  31, 2016		Notional amount at December  31, 2015
Huntington	Swap	Swaps 30-day LIBOR+  2.25% for fixed rate of	11/2015	11/2020	$	7,361 (1)	$	9,981 (1)
		4.13 %; cancellable at Company's option anytime
		after 11/01/2018 without penalty
Latitude	Cap	Caps 30-day LIBOR at 1.0%	03/2016	06/2017	$	11,124 (1)	$	-
Latitude	Cap	Caps 30-day LIBOR at 2.5%	10/2015	05/2016	$	-	$	11,220 (1)

(1) Notional amounts amortize consistently with the principal amortization of the associated loans

Additionally, prior to the execution of the Exchange Agreement (see Note 10) on March 16, 2016 which extinguished the instrument, the Company was required to bifurcate and include on the balance sheet at fair value the embedded conversion option in the 6.25% Series C Cumulative Convertible Preferred Stock (“Series C Preferred Stock”) due to the presence of an antidilution provision that required an adjustment in the common stock conversion ratio should subsequent issuances of the Company’s common stock be issued below the instrument’s original conversion price of $8.00 per share.As a result of a subscription rights offering by the Company which concluded on June 6, 2014 (see Note 9), the conversion price of the Series C Preferred Stock, pursuant to its terms, was adjusted to $1.60, the exercise price of the subscription rights for a share of common stock, where the conversion price remained until the instrument’s extinguishment.

Similarly, prior to the execution of the Exchange Agreement, the terms of the common stock warrants issued to the holders of the Series C Preferred Stock (see Note 10) also included an antidilution provision that required a reduction in the warrant’s exercise price of $9.60 should the conversion ratio of the Series C Preferred Stock be adjusted due to antidilution provisions. Accordingly, the warrants did not qualify for equity classification, and, as a result, the fair value of the derivative was shown as a derivative liability on the balance sheet. As a result of a subscription rights offering by the Company which concluded on June 6, 2014 (see Note 9), the exercise price of the warrants for a share of common stock was adjusted to $1.92, equal to 120% of the adjusted conversion price of the Series C Preferred Stock. With the execution of the Exchange Agreement, this provision of these warrants was effectively eliminated and the conversion price was locked permanently at $1.92.  Following this modification of terms, the warrants qualify for equity classification and were reclassified to additional paid-in capital at their fair value of $611 on the date of the modification.

The fair value of the derivative liabilities recognized in connection with the Series C Preferred Stock was determined using the Monte Carlo simulation method.

All derivatives recognized by the Company are reported as derivative liabilities on the balance sheet and are adjusted to their fair value at each reporting date.  All gains and losses on derivative instruments are included in net gain (loss) on derivatives and convertible debt and with the exception of realized gains and losses related to the interest rate instruments, which are included in interest expense on the statements of operations. Net gains (losses) of $6,680,  $11,578, and ($14,430) were recognized related to derivative instruments for the years ended December, 2016, 2015, and 2014, respectively.

Recurring Fair Value Measurements

The following tables provide the fair value of the Company’s financial liabilities carried at fair value and measured on a recurring basis:

There were no transfers between levels during the years ended December 31, 2016, 2015, or 2014.

	Fair value at
	December 31, 2016		Level 1		Level 2		Level 3
Interest rate derivative	$	8	$	-	$	8	$	-
Convertible debt		1,315		-		-		1,315
	$	1,323	$	-	$	8	$	1,315

	Fair value at
	December 31, 2015		Level 1		Level 2		Level 3
Series C preferred embedded derivative	$	6,271	$	-	$	-	$	6,271
Warrant derivative		2,411		-		-		2,411
Interest rate derivatives		77		-		77		-
	$	8,759	$	-	$	77	$	8,682

The following table presents a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that use significant unobservable inputs (Level 3) and the related gains and losses recorded in the statement of operations during the periods:

	Year ended December 31,
		2016							2015
	Series C Preferred embedded derivative		RES warrant derivative		Convertible debt		Total		Series C Preferred embedded derivative		RES warrant derivative		Total
Fair value, beginning of period	$	6,271	$	2,411	$	-	$	8,682	$	13,804	$	6,533	$	20,337
Net (gains) losses recognized in earnings		(4,848)		(1,800)		303		(6,345)		(7,533)		(4,122)		(11,655)
Purchase and issuances		-		-		1,012		1,012		-		-		-
Sales and settlements		(1,423)		-		-		(1,423)		-		-		-
Gross transfers into Level 3		-		-		-		-		-		-		-
Gross transfers out of Level 3 (1)		-		(611)		-		(611)		-		-		-
Fair value, end of period	$	-	$	-	$	1,315	$	1,315	$	6,271	$	2,411	$	8,682
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period	$	-	$	-	$	303	$	303	$	(7,533)	$	(4,122)	$	(11,655)

(1) RES warrants were permanently reclassified to additional paid-in capital as discussed above

Fair Value of Debt

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates or credit spreads consistent with the maturity of debt obligations with similar credit policies. Credit spreads take into consideration general market conditions and maturity. The inputs utilized in estimating the fair value of debt are classified in Level 2 of the fair value hierarchy. The carrying value, net of deferred financing costs, and estimated fair value of the Company’s debt, excluding convertible debt, which is presented in the balance sheet at fair value, is presented in the table below:

	Carrying value at December 31,				Estimated fair value at December 31,
	2016		2015		2016		2015
Held for use	$	56,775	$	44,667	$	57,456	$	45,771
Held for sale		5,945		41,344		6,433		43,508
Total	$	62,720	$	86,011	$	63,889	$	89,279

Impaired Hotel Properties

In the performance of impairment analysis for both held for sale and held for use properties, fair value is determined with the assistance of independent real estate brokers and through the use of revenue multiples based on the Company’s experience with hotel sales as well as available industry information.  For held for sale properties, estimated selling costs are based on our experience with similar asset sales.  These are considered Level 3 inputs.  All impairment in the table below related to held for use properties relates to impairments taken when those properties were previously held for sale or upon their reclassification to held for use. The amount of impairment and recovery of previously recorded impairment recognized in the years ended December 31, 2016, 2015, and 2014 is shown in the table below:

	Year ended December 31,
	2016			2015			2014
	Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery
Continuing Operations:
Held for sale hotels:
Impairment loss	4	$	(1,273)	-	$	-	-	$	-
Sold hotels:
Impairment loss	1		(204)	6		(3,914)	2		(1,388)
Recovery of impairment	-		-	1		85	1		119
Net impairment loss reported in continuing operations	5	$	(1,477)	7	$	(3,829)	3	$	(1,269)
Discontinued Operations:
Sold hotels:
Impairment loss	-	$	-	1	$	(117)	8	$	(2,450)
Recovery of impairment	-		-	3		238	5		798
Net impairment loss reported in discontinued operations	-	$	-	4	$	121	13	$	(1,652)
Total net impairment:	5	$	(1,477)	11	$	(3,708)	16	$	(2,921)

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Common Stock

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Common Stock

NOTE 9.  COMMON STOCK

The Company’s common stock is duly authorized, full paid, and non-assessable.

On March 11, 2015, an executive officer exercised a warrant to purchase 227,894 shares at the price of $1.52 per share (see Note 12).

The Company concluded a subscription rights offering on June 6, 2014.  Each subscription right entitled its holder to purchase one share of common stock of the Company for $1.60 per share. Subscription rights to purchase 1,787,204 shares of common stock were exercised for $2,860, of which $2,000 was paid by the conversion of a loan owed by the Company to RES (see Note 6).  The Company incurred issuance costs of $218.

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Preferred Stock

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Preferred Stock

NOTE 10.  PREFERRED STOCK

On March 16, 2016, the Company entered into a series of agreements providing for:

· the issuance and sale of Condor’s Series D Preferred Stock under a private transaction to SREP III Flight-Investco, L.P. (“SREP”), an affiliate of StepStone Group LP;

· the exchange of all of Condor’s outstanding Series C Preferred Stock for Series D Preferred Stock; and

· the cash redemption of all of Condor’s outstanding 8% Series A Cumulative Preferred Stock (“Series A Preferred Stock”) and 10% Series B Cumulative Preferred Stock (“Series B Preferred Stock”).

In connection with these transactions, the Company and SREP entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) dated March 16, 2016 pursuant to which Condor issued and sold 3,000,000 shares of Series D Preferred Stock to SREP on the March 16, 2016 for an aggregate purchase price of $30,000. The Stock Purchase Agreement required that $20,147 of the purchase price be deposited into an escrow account for the purpose of effecting the redemption of the Series A and Series B Preferred Stock and that the remaining amount of the purchase price be delivered to Condor. 

Simultaneously, the Company entered into the Exchange Agreement with RES pursuant to which all 3,000,000 outstanding shares of Series C Preferred Stock were exchanged for 3,000,000 shares of Series D Preferred Stock. Under the Exchange Agreement, in lieu of payment of accrued and unpaid dividends in the amount of $4,947 on the Series C Preferred Stock, Condor (a) paid to RES an amount of cash equal to $1,484, (b) issued to RES 245,156 shares of Series D Preferred Stock (such that RES,IRSA Inversiones y Representaciones Sociedad Anónima (“IRSA”), and their affiliates do not beneficially own in excess of 49% of the voting stock of Condor) and (c) issued to RES a convertible promissory note, bearing interest at 6.25% per annum, in the principal amount of $1,012 (see Note 7).

Pursuant to the Stock Purchase Agreement, on April 15, 2016, Condor redeemed all of the outstanding Series A and Series B Preferred Stock, in accordance with redemption notices issued on March 16, 2016, as follows:

· all 803,270 outstanding shares of the Series A Preferred Stock at the redemption price of $10.00 per share plus $2.084940 per share in accrued and unpaid dividends (plus compounded interest) through the redemption date for a total redemption price of $9,707; and

· all 332,500 outstanding shares of the Series B Preferred Stock at the redemption price of $25.00 per share plus $6.354167 per share in accrued and unpaid dividends through the redemption date for a total redemption price of $10,425.

The effect of these transactions on the Company’s preferred stock and the key terms of the remaining series of the Company’s preferred stock are discussed individually below.

Series A Preferred Stock

On December 30, 2005, the Company offered and sold 1,521,258 shares of Series A Preferred Stock.  At December 31, 2015, 803,270 shares of Series A Preferred Stock remained outstanding until the completion of the redemption on April 15, 2016.

Dividends on the Series A Preferred Stock were cumulative and payable monthly in arrears on the last day of each month, at the annual rate of 8% of the $10.00 liquidation preference per share, equivalent to a fixed annual amount of $.80 per share. The Company was able to redeem the Series A Preferred Stock, in whole or in part, at any time or from time to time for cash at a redemption price of $10.00 per share, plus all accrued and unpaid dividends. Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series A Preferred Stock to preserve capital and improve liquidity. Unpaid dividends accumulated and bore additional dividends at 8%, compounded monthly. Accumulated but unpaid dividends were$1,452, or $1.807 per share, as of December 31, 2015. These dividends were not reflected as an obligation on the balance sheet.

Holders of the Series A Preferred Stock generally had no voting rights. However, if dividends on the Series A Preferred Stock were in arrears for six consecutive months or nine months (whether or not consecutive) in any twelve-month period, holders of the Series A Preferred Stock, voting together as a single class with all series of preferred stock for which like voting rights are exercisable, were entitled to elect two directors. At the Company’s annual meeting on June 10, 2015, holders of the Series A Preferred Stock and Series B Preferred Stock, voting as one class, elected two directors.  With the issuance of the redemption notices on March 16, 2016 and the redemption funds deposited in escrow, all rights of the holders of the Series A Preferred Stock were terminated with the exception of the right to receive the redemption price, including the right to board representation.

The difference between the recorded value of the Series A Preferred Stock prior to the issuance of the redemption notice and the redemption value of the Series A Preferred Stock plus related expenses, a total of $2,326, was recorded as a reduction of accumulated deficit during the year ended December 31, 2016 as the amount is considered a deemed dividend on the Series A Preferred Stock. Of this amount, $874 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividends that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series B Preferred Stock

At December 31, 2015, there were 332,500 shares of Series B Preferred Stock outstanding, originally sold on June 3, 2008, which remained outstanding until the completion of the redemption on April 15, 2016.

Dividends on the Series B Preferred Stock were cumulative and are payable quarterly in arrears on each  March 31, June 30, September 30, and December 31, or, if not a business day, the next succeeding business day, at the annual rate of 10.0% of the $25.00 liquidation preference per share, equivalent to a fixed annual amount of $2.50 per share.  The Company was able to redeem the Series B Preferred Stock, in whole or in part, at any time or from time to time for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends. Also, upon a change of control, each outstanding share of the Company’s Series B Preferred Stock would be redeemed for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends.Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series B Preferred Stock to preserve capital and improve liquidity. Unpaid dividends on the Series B Preferred Stock did not bear interest. Unpaid dividends were$1,870 or $5.625 per share, as of December 31, 2015. These dividends were not reflected as an obligation on the balance sheet.

Holders of the Series B Preferred stock generally had no voting rights. However, if the dividends on the Series B Preferred Stock were in arrears for six or more quarterly periods (whether or not consecutive), holders of the Series B Preferred Stock, voting together as a single class with all series of preferred stock for which like voting rights are exercisable, would be entitled to elect two directors. At the Company’s annual meeting on June 10, 2015, holders of Series A Preferred Stock and Series B Preferred Stock, voting as one class, elected two directors.With the issuance of the redemption notices on March 16, 2016 and the redemption funds deposited in escrow, all rights of the holders of the Series B Preferred Stock were terminated with the exception of the right to receive the redemption price, including the right to board representation.

The difference between the recorded value of the Series B Preferred Stock prior to the issuance of the redemption notice and the redemption value of the Series B Preferred Stock, a total $2,781, was recorded as a reduction of accumulated deficit during the year ended December 31, 2016 as the amount is considered a deemed dividend on the Series B Preferred Stock.  Of this amount, $911 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividend that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series C Preferred Stock and RES Warrants

The Company entered into a Purchase Agreement dated November 16, 2011 for the issuance and sale of Series C Preferred Stock and warrants under a private transaction with RES. In two closings on February 1, 2012 and February 15, 2012, the Company completed the sale to RES of 3,000,000shares of Series C Preferred Stock and 3,750,000warrants to purchase shares of common stock.All of the Series C Preferred Stock remained outstanding prior to the execution of the Exchange Agreement on March 16, 2016.  The 3,750,000 warrants remained outstanding at December 31, 2016 with a current exercise price of $1.92 per share (see Note 8) and an expiration date of January 31, 2017.  As discussed further in Subsequent Events (see Note 17), these warrants were exchanged for newly issued warrants in January 2017.

Each of the 3,000,000 shares of Series C Preferred Stock was convertible, in whole or in part, at RES’s option, at any time, but subject to RES’s beneficial ownership limitation, into the number of shares of common stock equal to the $10.00 per share liquidation preference, divided by the conversion price then in effect,  which is equal to the rate of 6.25 shares of common stock for each share of Series C Preferred Stock.  As a result of the subscription rights offering concluded on June 6, 2014 (see Note 9), the conversion price was adjusted downward from $8.00 to $1.60, equal to the public offering price of our common stock in the subscription rights offering, where the conversion price remained until the instrument’s extinguishment.  A holder of Series C Preferred Stock would not have conversion rights to the extent the conversion would cause the holder and its affiliates to beneficially own more than 34% of voting stock (the “Beneficial Ownership Limitation”). “Voting stock” means capital stock having the power to vote generally for the election of directors of the Company.  A holder of warrants would similarly not have exercise rights to the extent the exercise of a warrant would cause the holder and its affiliates to own capital stock in an amount exceeding the Beneficial Ownership Limitation.

Each share of Series C Preferred Stock was entitled to a dividend of $0.625 per year payable in equal quarterly dividends. Commencing with dividends due on December 31, 2013, the Company suspended payment of dividends on its Series C Preferred Stock to preserve capital and improve liquidity. Unpaid dividends accumulated and bore additional dividends at 6.25%, compounded quarterly. Accumulated but unpaid dividends were$4,492, or $1.497 per share, as of December 31, 2015. These dividends are not reflected as an obligation on the balance sheet.

The Series C Preferred Stock voted with the common stock as one class, subject to certain voting limitations. For any vote, the voting power of the Series C Preferred Stock was equal to the lesser of: (a) 0.78625 vote per share or (b) an amount of votes per share such that the vote of all shares of Series C Preferred Stock in the aggregate equal 34% of the combined voting power of all the Company voting stock, minus an amount equal to the number of votes represented by the other shares of voting stock beneficially owned by RES and its affiliates. 

On March 16, 2016, the Series C Preferred Stock was extinguished under the Exchange Agreement discussed above.  Upon this extinguishment, the difference between the recorded value of the Series C Preferred Stock prior to the exchange and the fair value of the consideration received in the exchange, a total of $20,366, was recorded as a reduction of accumulated deficit as the amount is considered a deemed dividend on the Series C Preferred Stock.  Of this amount, $15,874 was recorded as a reduction of net earnings attributable to common shareholders as the portion of this deemed dividend that was in excess of preferred dividends deducted to arrive at net earnings attributable to common shareholders in previous periods.

Series D Preferred Stock

Following the execution of the Stock Purchase Agreement and Exchange Agreement on March 16, 2016, there were 6,245,156 shares of Series D Preferred Stock outstanding. 

The Series D Preferred stockholders rank senior to the Company’s common stock and any other preferred stock issuances and receive preferential cumulative cash dividends at a rate of 6.25% per annum, payable quarterly in arrears on each March 31, June 30, September 30, and December 31, or, if not a business day, the next succeeding business day, of the $10.00 face value per share.  Dividends on the Series D Preferred Stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement. Whenever the dividends on the Series D Preferred Stock are in arrears for four consecutive quarters, then upon notice by holders of in the aggregate not less than 40% of the outstanding Series D Preferred Stock, the Company will (a) take all appropriate action reasonably within its means to maximize the assets legally available for paying such dividends and to monetize such assets (for example, but without limiting the generality of the foregoing, by selling or liquidating all of some of the Company’s assets or by selling the Company as a going concern), (b) pay out of all such assets legally available (including any proceeds from any sale or liquidation of such assets) the maximum possible amount of such unpaid dividends, and (c) thereafter, at any time and from time to time when additional assets of the Company (including any proceeds from any sale or liquidation of such assets) become legally available to pay such unpaid dividends, pay such remaining unpaid dividends until all dividends accumulated on the Series D Preferred Stock have been fully paid.  Dividends on the Series D Preferred Stock were paid on June 30, 2016, September 30, 2016, and January 3, 2017 which included all amounts due through those dates.

Each share of Series D Preferred Stock is convertible, at the option of the holder, at any time into a number of shares of common stock determined by dividing the conversion price of $1.60 into an amount equal to the $10.00 face value per share plus accrued and unpaid dividends, if any. The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends.  Each outstanding share of Series D Preferred Stock will be converted into a number of shares of common stock determined by dividing the conversion price of $1.60 into the $10.00 face value per share, which is equal to a rate of 6.25 shares of common stock for each share of Series D Preferred Stock, automatically upon closing of a Qualified Offering (defined as a single offering of common stock of at least $50,000 or up to three offerings in the aggregate of at least $75,000, all with certain minimum prices per share and a potential make whole payment required in certain scenarios) without any further action by the holders of such shares or the Company.

The Series D Preferred Stock is redeemable by the Company at any time subject to certain restrictions, in whole or in a partial redemption of up to $30,000, at $12.00 per share on or before March 16, 2019, $13.00 per share from March 16, 2019 to March 16, 2020, and $14.00 per share on or after March 16, 2020, plus all accrued and unpaid dividends.  If a Qualified Offering has not occurred on or before September 30, 2021, holders that hold in the aggregate not less than 40% of the outstanding shares of the Series D Preferred Stock have the right to elect to have the Company fully liquidate in a commercially reasonable manner as determined by the Board of Directors of the Company to provide for liquidation distributions to the holders of the Series D Preferred Stock in an amount per share equal to $14.00 in cash plus accrued and unpaid dividends.  Once this right has been exercised and the Company has been notified, the dividend rate on the Series D Preferred Stock after September 30, 2021 will increase from 6.25% per annum to 12.5% per annum. The holders of Series D Preferred Stock vote their Series D Preferred Stock as a single class with the holders of the common stock on all matters submitted to such holders for vote or consent. For each such vote or consent, each share of Series D Preferred Stock entitles the holder to cast one vote for each whole vote (rounded to the nearest whole number) that such holder would be entitled to cast had such holder converted its Series D Preferred Stock into shares of common stock as of the date immediately prior to the record date for determining the shareholders of the Company eligible to vote on any such matter.

The fair value of the Series D Preferred Stock was determined to be equal to its face value on the date of issuance.

As discussed further as a subsequent event (see Note 17), on February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted to common stock.  At the time of conversion, the Series D holders were granted $9,250 of newly created Series E Preferred Stock.

Impact of Preferred Stock on Net Earnings (Loss) Attributable to Common Shareholders

The components of dividends declared and undeclared and in kind dividends deemed on preferred stock are as follows:

	Year ended December 31,
	2016		2015		2014
Preferred A dividends accrued at stated rate	$	222	$	727	$	671
Preferred A additional deemed dividends upon redemption		652		-		-
Preferred B dividends accrued at stated rate		243		831		831
Preferred B additional deemed dividends upon redemption		668		-		-
Preferred C dividends accrued at stated rate		455		2,074		1,950
Preferred C additional deemed dividends at exchange		15,418		-		-
Preferred D dividends accrued at stated rate		3,090		-		-
Dividends declared and undeclared and in kind dividends deemed on preferred stock	$	20,748	$	3,632	$	3,452

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Noncontrolling Interest Of Common Units In CHLP

12 Months Ended

Dec. 31, 2016

Noncontrolling Interest Of Common Units CHLP [Abstract]

Noncontrolling Interest Of Common Units In CHLP

NOTE 11.  NONCONTROLLING INTEREST OF COMMON UNITS IN CHLP

At December 31, 2016 and 2015,  7,872,943and 7,659,039of CHLP’s common units were outstanding, respectively. These amounts include 2,609,791and 2,395,887 common units held by limited partners at December 31, 2016 and 2015, respectively, and 5,263,152 LTIP units outstanding at December 31, 2016 and 2015 which were not yet earned at those dates (see Note 12).The combined redemption value for the common units and LTIP units was $2,008 and $1,197at December 31, 2016 and 2015, respectively.

Our ownership interest in CHLP as of December 31, 2016, 2015, and 2014 was 97.8%,  90.1%, and 99.9%, respectively, which includes consideration of the common units of the limited partners as well as the LTIP units.The Company’s increased ownership interest in CHLP during 2016 was primarily the result of the contribution to CHLP of the proceeds from the Series D Preferred Stock issuance during the first quarter of 2016 which was partially offset by the proceeds used to redeem the Series A and B Preferred Stock, which were withdrawn from CHLP, in the second quarter of 2016 (see Note 10).  The Company’s decreased ownership in CHLP during 2015 was a result of two events.  On March 2, 2015, the Company granted an equity award of 5,263,152 LTIP units to an executive officer representing profit interests in the Company’s operating partnership (see Note 12).  On October 1 and 2, 2015, as partial consideration for the purchase of hotels (see Note 3), 2,298,879 common units in CHLP were issued.

Each limited partner of CHLP may, subject to certain limitations, require that CHLP redeem all or a portion of his or her common units at any time after a specified period following the date the units were acquired, by delivering a redemption notice to CHLP. When a limited partner tenders common units for redemption, the Company can, at its sole discretion, choose to purchase the units for either (1) a number of shares of Company common stock at a rate of one share of common stock for each eight common units redeemed or (2) cash in an amount equal to the market value of the number of shares of Company common stock the limited partner would have received if the Company chose to purchase the units for common stock. No common units were redeemed in 2016, 2015, or 2014.

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Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Stock-Based Compensation [Abstract]

Stock-Based Compensation

NOTE 12.  STOCK-BASED COMPENSATION

The Company previously had a 2006 Stock Plan which had been approved by the Company’s shareholders. The 2006 Stock Plan authorized the grant of stock options, stock appreciation rights, restricted stock, and stock bonuses for up to 62,500 shares of common stock. The 2006 Stock Plan expired onDecember 31, 2015.

As a replacement for the 2006 Stock Plan, the Board of Directors adopted the Condor 2016 Stock Plan, which was approved by the Company’s shareholders at the annual shareholders meeting on June 15, 2016.  The 2016 Stock Plan authorizes the issuance of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, deferred stock units, and other forms of stock-based compensation.  The maximum number of shares of the Company’s common stock that may be issued under the 2016 Stock Plan is 3,000,000, provided, however, that awards under this plan may not exceed 250,000 shares of common stock prior to the conversion into common stock of all shares of Series D Preferred Stock (see Note 10). 

Options and Unvested Share Awards

At December 31, 2016, the Company had a total of 5,625 vested stock options outstanding with a weighted average exercise price of $7.53 per share and no unvested stock options or unvested share awardsoutstanding.  

Warrants

On March 2, 2015, the Company granted a warrant to an executive officer of the Company outside of the 2006 Stock Plan as an inducement material to the executive’s acceptance of employment. The warrant entitles the executive to purchase a total of 657,894 authorized but previously unissued shares of the Company’s common stock with a grant date price at (i) $1.52 per share (the adjusted closing bid price of the common stock on Nasdaq on March 2, 2015) if at least one-third but not more than one-half of the shares were purchased on or prior to March 17, 2015, and (ii) $1.92 per share for shares purchased after. The warrant has a three-year term. The executive officer exercised the warrant in part to purchase 227,894 shares on March 11, 2015 at the price of $1.52 per share. The warrant remains exercisable for 430,000 shares at an exercise price of $1.92 per share. As of December 31, 2016, the total unrecognized compensation cost related to the warrants was approximately $115, which is expected to be recognized over the next 14months. 

The Company records compensation expense for warrants based on the estimated fair value of the warrants on the date of grant determined using the Black-Scholes option-pricing model.  The Company uses historical data among other factors to estimate expected price volatility, expected warrant life, dividend rate, and expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield in effect at the time of grant for the estimated life of thewarrants.  The following table summarizes the estimates used in the Black-Scholes option-pricing model related to the warrants granted in 2015:

	$1.52 Grant		$1.92 Grant
	March 2, 2015		March 2, 2015
Volatility	53.10	%	78.60	%
Expected forfeitures	0.00	%	0.00	%
Expected term	15	days	3.00	years
Risk free interest rate	0.02	%	1.06	%

LTIP Awards

On March 2, 2015, the Company granted an equity award of 5,263,152 LTIP units, representing profit interests in CHLP, to an executive officer of the company. The LTIP units are earned in one-third increments upon the Company’s common stock achieving price per share milestones of $3.50,  $4.50, and $5.50 respectively.  Earned LTIP units vest in March 2018, or earlier upon a change in control of the Company, and can be redeemed at the rate of one share of common stock for each eight earned LTIP units for up to 657,894 common shares. As of December 31, 2016, the total unrecognized compensation cost related to the LTIP units was $199, which is expected to be recognized over the next 14months. 

The Company records compensation expense for the LTIP units based on the estimated fair value of the units on the date of grant determined using the Monte Carlo simulation model.  The Company uses historical data among other factors to estimate expected price volatility, expected LTIP life, volume weighted average price, and expected forfeiture rate. The risk-free rate is based on the U.S. Treasury yield in effect at the time of grant for the estimated life of the LTIP.  The following table summarizes the estimates used in the Monte Carlo option-pricing model related to the LTIP grant in 2015:

	Grant Date March 2, 2015
Volatility		75.5	%
Expected forfeitures		0.00	%
Weighted average price	$	1.53
Expected term		3.00	years
Risk free interest rate		1.06	%

Investment Committee Share Compensation

Independent directors serving as members of the Investment Committee of the Board of Directors receive their monthly Investment Committee fees in the form of shares of the Company’s common stock issued under the available stock plan, priced as the average of the closing price of the stock for the first 20 trading days of the calendar year. The shares issued to the independent directors of the Investment Committee for the year ended December 31, 2016 under the 2016 Stock Plan totaled 15,349.  The shares issued for the years ended December 31, 2015 and 2014 under the 2006 Stock Plan totaled 21,422 and9,711, respectively.

Stock-Based Compensation Expense

The expense recognized in the financial statements for stock-based compensation, including the LTIP, related to employees and directors for the years ended December 31, 2016, 2015, and 2014 was $305,  $285, and $34, respectively, all of which is included in general and administrative expense. 

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Income Taxes

NOTE 13.  INCOME TAXES

The Company has recognized no current or deferred income tax expense or benefit from continuing operations or related to discontinued operations for the years ended December 31, 2016, 2015, and 2014 with the exception of Alternative Minimum Tax (“AMT”) recognized at both the REIT and the TRS during the year ended December 31, 2016.  Income tax expense related to AMT totaled $35 for the REIT and $90 for the TRS and was the result of the application of limits on the use of net operating loss carryovers to offset AMT income.

Actual income tax expense of the TRS for the years ended December 31, 2016, 2015, and 2014 differs from the “expected” income tax expense (benefit) (computed by applying the appropriate U.S. federal income tax rate of 34% to earnings before income taxes) as a result of the following:

	Year ended December 31,
	2016		2015		2014
Computed "expected" income tax (benefit) expense	$	993	$	684	$	(118)
State income taxes, net of federal income tax (benefit) expense		139		82		(14)
(Decrease) increase in valuation allowance		(1,082)		(722)		132
Other		(50)		(44)		-
Alternative minimum tax		90		-		-
Total income tax expense	$	90	$	-	$	-

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities at December 31, 2016 and 2015 are as follows:

	As of December 31,
	2016		2015
Deferred Tax Assets
Expenses accrued for consolidated financial statement purposes, nondeductible for tax return purposes	$	99	$	113
Net operating losses carried forward for federal income tax purposes		1,477		6,902
Book depreciation in excess of tax depreciation		38		-
Subtotal deferred tax assets		1,614		7,015
Valuation allowance		(1,551)		(6,923)
Total deferred tax assets		63		92
Deferred Liabilities
Tax depreciation in excess of book depreciation		-		92
JV basis difference		63		-
Total deferred tax liabilities		63		92
Net deferred tax assets	$	-	$	-

In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers projected reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Management uses historical experience and short and long-range business forecasts to develop such estimates. Further, we employ various prudent and feasible tax planning strategies to facilitate the recoverability of future deductions. A cumulative loss in recent years is a significant piece of evidence with respect to realizability that outweighs the other evidence, and the TRS incurred net losses in 2014 and had taxable income in 2016 and 2015 primarily due to taxable income generated from property sales during the year.  As a result of this analysis, the Company believes that a full valuation allowance against the net deferred tax asset position is necessary at December 31, 2016 and 2015. The valuation of deferred tax assets requires judgment in assessing the likely future tax consequences of events that have been recognized in our financial statements or tax returns and future profitability. Our accounting for deferred taxes represents our best estimate of those future events. Changes in our current estimates, due to unanticipated events or otherwise, could have a material impact on our financial condition and results of operations. 

After consideration of limitations related to a change in control as defined under Internal Revenue Code Section 382 following the Company’s 2012 transactions with RES (see Note 10),  the TRS’s net operating loss carryforward at December 31, 2016 as determined for federal income tax purposes was $3,810.  The availability of the loss carryforwards will expire in 2022 through 2035.

As of December 31, 2016, the tax years that remain subject to examination by major tax jurisdictions generally include 2013 through 2016.

Distributions to the extent of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to a shareholder as ordinary income.  Distributions in excess of current and accumulated earnings and profits generally will be treated as a nontaxable reduction of the shareholder’s basis in such shareholder’s shares, to the extent thereof, and thereafter as taxable capital gain.  Distributions that are treated as a reduction of the shareholder’s basis in its shares will have the effect of increasing the amount of gain, or reducing the amount of loss, recognized upon the sale of the shareholder’s shares.

For income tax purposes, distributions paid per share in 2016 were characterized as follows:

	For the year ended December 31, 2016
	Amount		%
Common Shares:
Ordinary income	$	0.070000	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.070000	100%
Series C Preferred Stock:
Ordinary income	$	1.649124	100%
Capital gain		-	-
Return of capital		-	-
Total	$	1.649124	100%
Series D Preferred Stock:
Ordinary income	$	0.494792	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.494792	100%

The common and preferred share distributions declared on December 6, 2016 and paid on January 5, 2017 and January 3, 2017, respectively, were treated as 2016 distributions for tax purposes. 

A portion of the redemption price of the Series A and B Preferred Stock that was redeemed for cash on April 15, 2016 included amounts equal to the accrued and unpaid dividends on such stock.  However, the entire redemption price, inclusive of amounts equal to accrued and unpaid dividends, was treated as payment in exchange for the redeemed stock and none of the redemption price is treated as a distribution of dividends under the Code for federal income tax purposes.

No dividends on common stock or preferred stock were paid in or declared related to 2015 or 2014.

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Earnings Per Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 14. EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed by dividing net earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding.  Diluted EPS is computed after adjusting the numerator and denominator of the basic EPS computation for the effects of any dilutive potential common shares outstanding during the period. These effects include adjustments to the numerator for any change in fair value included in net earnings (loss) attributed to the certain derivative liabilities (related to the Series C Preferred Stock and warrants) during the period the convertible securities are dilutive. The computation of basic and diluted EPS is presented below:

	Year ended December 31,
	2016		2015		2014
Numerator: Basic (1)
Net earnings (loss) attributable to common shareholders
Continuing operations - Basic	$	1,390	$	6,055	$	(22,581)
Discontinued operations - Basic		657		3,438		2,893
Total Basic	$	2,047	$	9,493	$	(19,688)
Numerator: Diluted (1)
Net earnings (loss) attributable to common shareholders from continuing operations	$	1,390	$	6,055	$	(22,581)
Dividends on Series C Preferred Stock		-		2,074		-
Dividends on Series D Preferred Stock		3,090		-		-
Unrealized gain on warrant derivative		-		(4,122)		-
Unrealized gain on Series C Preferred Embedded Derivative		-		(7,533)		-
Continuing operations - Diluted		4,480		(3,526)		(22,581)
Discontinued operations - Diluted		657		3,438		2,893
Total Diluted	$	5,137	$	(88)	$	(19,688)
Denominator
Weighted average number of common shares - Basic		4,947,234		4,885,625		3,897,092
Unvested stock		-		4,025		-
Series C Preferred Stock		-		18,750,000		-
Series D Preferred Stock		31,033,818		-		-
Warrants - Employees		-		691		-
Warrants - RES		-		(399,778)		-
Weighted average number of common shares - Diluted		35,981,052		23,240,563		3,897,092
Earnings Per Share
Continuing operations - Basic	$	0.28	$	1.24	$	(5.79)
Discontinued operations - Basic		0.13		0.70		0.74
Total - Basic Earnings Per Share	$	0.41	$	1.94	$	(5.05)
Continuing operations - Diluted	$	0.12	$	(0.15)	$	(5.79)
Discontinued operations - Diluted		0.02		0.15		0.74
Total - Diluted Earnings Per Share	$	0.14	$	-	$	(5.05)

(1) The loss (earnings) attributable to noncontrolling interest is allocated between continuing and discontinued operations for the purpose of the EPS calculation

Potentially dilutive common shares, if any, have been excluded from the denominator if they are antidilutive to net earnings (loss) attributable to common shareholders.  The following table summarizes the weighted average number of potentially dilutive securities that have been excluded from the denominator for the purpose of computing diluted EPS:

	Year ended December 31,
	2016	2015	2014
Outstanding stock options	5,625	5,625	8,750
Unvested stock awards outstanding	-	-	1,541
Warrants - RES	3,750,000	-	3,750,000
Warrants - Employees	430,000	359,121	-
Series C preferred Stock	3,893,443	-	18,750,000
LTIP common units (1)	657,894	549,747	-
Convertible debt	502,690	-	551,370
CHLP common units (1)	300,728	84,556	12,126
Total potentially dilutive securities excluded from the denominator	9,540,380	999,049	23,073,787

(1) LTIP and common units of CHLP have been omitted from the denominator for the purpose of computing diluted EPS since the effect of including these amounts in the numerator and denominator would have no impact on calculated EPS

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Commitments And Contingencies

12 Months Ended

Dec. 31, 2016

Commitments And Contingencies [Abstract]

Commitments And Contingencies

NOTE 15.  COMMITMENTS AND CONTINGENCIES

Management Agreements

Our TRS engages eligible independent contractors as property managers for each of our hotels in accordance with the requirements for qualification as a REIT.  The hotel management agreements provide that the management companies have control of all operational aspects of the hotels, including employee-related matters. The management companies must generally maintain each hotel under their management in good repair and condition and perform routine maintenance, repairs, and minor alterations. Additionally, the management companies must operate the hotels in accordance with the national franchise agreements that cover the hotels, which includes, as applicable, using franchisor sales and reservation systems and abiding by franchisors’ marketing standards.  The management agreements generally require the TRS to fund debt service, working capital needs, and capital expenditures and to fund the management companies’ third-party operating expenses, except those expenses not related to the operation of hotels.  The TRS also is responsible for obtaining and maintaining certain insurance policies with respect to the hotels.

Each of the management companies employed by the TRS at December 31, 2016 receive a base monthly management fee of 3.0% to 3.5% of gross hotel revenue, with incentives for performance which increase such fee to a maximum of 5.0%.  For the years ended December 31, 2016, 2015, and 2014, base management fees incurred totaled $1,619,  $2,466, and $3,101, respectively, of which $1,619,  $2,348, and $2,521, respectively, was included in continuing operations as hotel and property operations expense.  For the years ended December 31, 2016 and 2015, incentive management fees, included in continuing operations in their entirety, totaled $190 and $158, respectively.

The management agreements generally have initial terms of one to three years and renew for additional terms of one year unless either party to the agreement gives the other party written notice of termination at least 90 days before the end of a term.  The Company may terminate a management agreement, subject to cure rights, if certain performance metrics tied to both individual hotel and total managed portfolio performance are not met. The Company may also terminate a management agreement with respect to a hotel at any time without reason upon payment of a termination fee.The management agreements terminate with respect to a hotel upon sale of the hotel, subject to certain notice requirements.

Franchise Agreements

As of December 31, 2016,  17 of our18 wholly owned properties operate under franchise licenses from national hotel companies.  Under our franchise agreements, we are required to pay franchise fees generally between  3.3% and 5.5% of room revenue, plus additional fees for marketing, central reservation systems, and other franchisor programs and services that amount to between 2.5% and  6.0% of room revenue.  The franchise agreements typically have 10 to 25 year termsalthough certain agreements may be terminated by either party on certain anniversary dates specified in the agreements.  Further, each agreement provides for early termination fees in the event the agreement is terminated before the stated term.  Franchise fee expense totaled $3,123,  $3,883, and $4,691, for the years ended December 31, 2016, 2015, and 2014, respectively, of which $3,123,  $3,853, and $4,051, respectively, was included in continuing operations as hotel and property operations expense. The initial fees incurred to enter into the franchise agreements are capitalized and amortized over the life of the franchise agreements.

Leases

The Company assumed a land lease agreementat the time of purchaserelated to one hotel owned at December 31, 2016.  The lease requires monthly payments of the greater of $2 or 5% of room revenue and is associated with a property held for sale at December 31, 2016.   Land lease expense totaled $105,  $105, and $102 for the years ended December 31, 2016, 2015, and 2014, respectively, all of which is included in continuing operationsas hotel and property operations expense.

The Company entered intothree new office lease agreements in 2016, replacing all existing office lease agreements which expired in 2016.  These leases expire in 2019 through 2021 and have combined rent expense of approximately $132 annually.  Office lease expense totaled $199,  $163, and $162 in the years ended December 31, 2016, 2015, and 2014, respectively, and is included in general and administrative expense.

As of December 31, 2016, the future minimum lease payments applicable to non-cancellable operating leases, excluding leases associated with properties held for sale at December 31, 2016, are as follows:

		Lease rents
2017	$	156
2018		159
2019		138
2020		61
2021		47
	$	561

As of December 31, 2016, the Company had agreements with two restaurants and a cell tower operator for leased space at our hotel locations. Lease income totaled $86,  $198, and $309 for the years ended December 31, 2016, 2015, and 2014, respectively, of which $86,  $177, and $292, respectively, was included in continuing operations in room rentals and other hotel services revenue.

Obligation to RES

The Company had an obligation to RES to use $25,000 of the proceeds from its capital infusion in 2012 to pursue hotel acquisitions (see Note 10). There were no contractual restrictions or penalties related to the use of these funds for purposes other than acquisitions, but the Company was obligated to replace these funds promptly as it had the ability to do so.Following the completion of the hotel acquisitions in 2015 and 2016 (see Note 3) and the acquisition made through the Atlanta JV in August 2016 (see Note 5), the Company has satisfied this obligation.

Benefit Plans

The Company has a qualified contributory retirement plan under Section 401(k) of the Code (the “401(k) Plan”) which covers all employees who meet certain eligibility requirements.  Voluntary contributions may be made to the 401(k) Plan by employees.  The 401(k) Plan is a Safe Harbor Plan and requires a mandatory employer contribution.  The employer contribution expense for the years ended December 31, 2016, 2015, and 2014 was $73,  $66, and $59, respectively, and is included in general and administrative expenses.

Litigation

Various claims and legal proceedings arise in the ordinary course of business and may be pending against the Company and its properties.  We are not currently involved in any material litigation, nor, to our knowledge, is any material litigation threatened against us.  The Company has insurance to cover potential material losses and we believe it is not reasonably possible that such matters will have a material impact on our financial condition or results of operations.

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Quarterly Operating Results

12 Months Ended

Dec. 31, 2016

Quarterly Operating Results [Abstract]

Quarterly Operating Results

NOTE 16. QUARTERLY OPERATING RESULTS (UNAUDITED)

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2016		2016		2016		2016		2016
Revenue	$	12,503	$	14,155	$	13,519	$	10,470	$	50,647
Operating expenses		12,662		12,508		12,445		11,009		48,624
Operating income (loss)		(159)		1,647		1,074		(539)		2,023
Net gain on dispositions of assets		3,367		8,856		3,591		7,318		23,132
Equity in loss of joint venture		-		-		(54)		(190)		(244)
Net gain on derivatives and convertible debt		6,117		162		26		72		6,377
Other income (expense)		(21)		23		85		(32)		55
Interest expense		(1,329)		(1,248)		(1,127)		(1,006)		(4,710)
Loss on debt extinguishment		(173)		(976)		(399)		(639)		(2,187)
Impairment loss		(793)		(121)		(343)		(220)		(1,477)
Earnings from continuing operations before income tax expense		7,009		8,343		2,853		4,764		22,969
Income tax expense		-		-		-		(125)		(125)
Earnings (loss) from continuing operations		7,009		8,343		2,853		4,639		22,844
Gain from discontinued operations, net of tax		678		-		-		-		678
Net earnings		7,687		8,343		2,853		4,639		23,522
Earnings attributable to noncontrolling interest		(389)		(178)		(61)		(99)		(727)
Earnings attributable to controlling interests		7,298		8,165		2,792		4,540		22,795
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(17,740)		(1,057)		(976)		(975)		(20,748)
Net earnings (loss) attributable to common shareholders	$	(10,442)	$	7,108	$	1,816	$	3,565	$	2,047
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	(2.25)	$	1.44	$	0.37	$	0.72	$	0.28
Basic EPS from discontinued operations		0.14		-		-		-		0.13
Total EPS Basic	$	(2.11)	$	1.44	$	0.37	$	0.72	$	0.41
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(2.25)	$	0.18	$	0.06	$	0.10	$	0.12
Diluted EPS from discontinued operations		0.14		-		-		-		0.02
Total EPS Diluted	$	(2.11)	$	0.18	$	0.06	$	0.10	$	0.14

(1) Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2015		2015		2015		2015		2015
Revenue	$	12,692	$	16,733	$	15,895	$	13,394	$	58,714
Operating expenses		13,134		14,247		13,983		13,826		55,190
Operating income (loss)		(442)		2,486		1,912		(432)		3,524
Net gain (loss) on dispositions of assets		11		(137)		2,927		1,997		4,798
Net gain (loss) on derivatives and convertible debt		4,823		(4,710)		7,895		3,570		11,578
Other income (expense)		95		31		(4)		(8)		114
Interest expense		(1,547)		(1,510)		(1,137)		(1,328)		(5,522)
Loss on debt extinguishment		(7)		-		(104)		(102)		(213)
Impairment recovery (loss)		(777)		(3,053)		313		(312)		(3,829)
Earnings (loss) from continuing operations before income tax expense		2,156		(6,893)		11,802		3,385		10,450
Income tax expense		-		-		-		-		-
Earnings (loss) from continuing operations		2,156		(6,893)		11,802		3385		10,450
Gain from discontinued operations, net of tax		1,294		994		152		1,432		3,872
Net earnings (loss)		3,450		(5,899)		11,954		4,817		14,322
(Earnings) loss attributable to noncontrolling interest		(281)		284		(724)		(476)		(1,197)
Earnings (loss) attributable to controlling interests		3,169		(5,615)		11,230		4,341		13,125
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(891)		(902)		(914)		(925)		(3,632)
Net earnings (loss) attributable to common shareholders	$	2,278	$	(6,517)	$	10,316	$	3,416	$	9,493
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	0.24	$	(1.52)	$	2.06	$	0.44	$	1.24
Basic EPS from discontinued operations		0.24		0.20		0.03		0.25		0.70
Total EPS Basic	$	0.48	$	(1.32)	$	2.09	$	0.69	$	1.94
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(0.14)	$	(1.52)	$	0.12	$	(0.04)	$	(0.15)
Diluted EPS from discontinued operations		0.05		0.20		0.01		0.05		0.15
Total EPS Diluted	$	(0.09)	$	(1.32)	$	0.13	$	0.01	$	-

(1)  Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

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Subsequent Events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

NOTE 17.  SUBSEQUENT EVENTS

Subsequent Property Activity

On January 23, 2017 the Company executed an agreement to purchase a portfolio of four Home2 Suites hotels for $73,750.  The portfolio includes the Home2 Suites Memphis / Southaven, the Home2 Suites Austin / Round Rock, the Home2 Suites Lexington University / Medical Center (Kentucky), and the Home2 Suites Tallahassee State Capitol.  The closing of these acquisitions is anticipated to occur in the first quarter of 2017, but is subject to customary closing conditions including accuracy of representations and warrants and compliance with covenants and obligations.

Subsequent Debt Transactions

On January 27, 2017, the Company extended the maturity date on the WAB loan with a principal balance of $4,806 on December 31, 2016 from February 1, 2017 to February 1, 2018.  This loan was subsequently repaid in full with the refinancing discussed below.

On March 1, 2017, a significant portion of the Company’s debt (including all debt outstanding at December 31, 2016 with the exception of the two variable rate WAB loans and the two fixed rate Great Western Bank loans) was refinanced with a secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual debt maturities on debt outstanding at December 31, 2016 were as follows:

	Held for sale		Held for use		Total
2017	$	-	$	916	$	916
2018		-		930		930
2019		6,000		27,691		33,691
2020		-		14,180		14,180
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

The credit agreement provides for a $90,000 senior secured credit facility and includes an accordion feature that would allow the facility to be increased to $400,000 with additional lender commitments.  Availability under the facility is based on a borrowing base formula for the pool of hotel properties securing the facility.  As of the closing date, the collateral pool consisted of 14 hotel properties.  As of the closing date, four hotels were excluded from the borrowing base until certain conditions are satisfied and the availability under the facility was $34,250.  Those four hotels are expected to be added to the borrowing base within days after the closing and the availability under the facility is expected to increase to $41,050.  The facility is guaranteed by the Company and its material subsidiaries that do not have stand-alone financing.  Prior to the occurrence of specific capital achievements, borrowings under the facility accrue interest, at the Company’s option, at either LIBOR plus 3.95% or a base rate plus 2.95%.  Thereafter, borrowings bear interest based on a leverage-based pricing grid, at the Company’s option, at either LIBOR plus a spread ranging from 2.25% to 3.00%(depending on leverage) or a base rate plus a spread ranging from 1.25%to 2.00%  (depending on leverage).  The facility matures in two years and has an automatic one-year extension upon the completion of specific capital achievements.  The facility has two additional one-year extension options following additional capital achievements.  The facility contains customary representations and warranties, covenants and events of default.

On March 1, 2017, the Company borrowed $34,250 under the facility to repay existing indebtedness and pay reserves costs related to closing of the facility.  The Company anticipates using borrowings under the facility to acquire three out of the four Home2 Suites hotels currently under contract to be acquired, which will be added to the collateral pool for the facility.  Borrowings under the facility can also be used for future acquisitions and general corporate purposes.

Subsequent Equity Transactions

On January 24, 2017, the Company exchanged 150,540 new warrants (the “New Warrants”) to purchase common stock of the Company for 3,750,000 warrants (the “Old Warrants”, see Note 10) held by RES.The number of New Warrants issued in exchange for the Old Warrants equals the number of shares of common stock issuable upon exercise of the Old Warrants pursuant to a cashless exercise provisions of the Old Warrants. The New Warrants are exercisable for 150,540 shares of common stock, have an exercise price of $.001 for each common share and expire on January 24, 2019.  

On February 28, 2017, the holders of the Series D Preferred Stock voluntarily converted their shares into 39,032,225 shares of common stock at $1.60 per share pursuant to the terms of the preferred stock.  The terms of the Series D Preferred Stock provided for automatic conversion following certain future common stock offerings, and also provided for potential additional payments to the holders depending on the sales price of common stock in the offerings. As a result of the voluntary conversion, the holders are no longer entitled to the potential payments. To induce the holders of the Series D Preferred Stock to voluntarily convert their shares, the Company issued the holders $9,250 of a new series of preferred stock, the Series E Preferred Stock.

The Series E Preferred Stock ranks senior to the Company’s common stock and any other preferred stock issuances and receives preferential cumulative cash dividends at a rate of 6.25% per annum, payable quarterly of the $10.00 face value per share.  If the Company fails to pay a dividend then during the period that dividends are not paid, the dividend rate increases to 12.5%, if specific equity offering or offerings have not occurred, and increases 9.50% per annum if such equity or equity offerings have occurred. Dividends on the Series E Preferred Stock accrue whether or not the Company has earnings, whether or not there are funds legally available for the payment of such dividends, whether or not such dividends are declared, and whether or not such dividends are prohibited by agreement.  Subject to certain shareholder approvals, required under Nasdaq Marketplace Rules, which Condor will seek and expects to obtain at the next annual shareholders meeting, each share of Series E Preferred Stock is convertible, at the option of the holder, at any time on or after February 28, 2019, into a number of shares of common stock determined by dividing the conversion price of $2.13 into an amount equal to the $10.00 face value per share plus accrued and unpaid dividends, if any. Upon liquidation, each share of Series E Preferred Stock is entitled to $10.00 per share, accrued and unpaid dividends, and an additional amount based on liquidation preference that the holders may have foregone by converting their Series D Preferred Stock into common stock, as adjusted for stock appreciation and dividends paid on the common stock.  The conversion price is subject to anti-dilution adjustments upon the occurrence of stock splits and stock dividends. Following a specific equity offering or offerings, from time to time a number of shares of Series E Preferred Stock automatically converts into common stock if the common stock trades at 120% of the conversion price for 60 trading days, and the number of shares converted will be determined by certain trading volumes measures. The Company has rights, following a specific equity offering or offerings, to redeem up to 490,250 shares of the Series E Preferred Stock at prices from 110% to 130% of its liquidation value, and the holders have put rights commencing March 16, 2021 to put the Series E Preferred Stock to the Company at 130% of its liquidation preference, which the Company can satisfy with cash or common stock.The Series E Preferred Stock votes as a class on matters generally affecting the Series E Preferred Stock, and as long as 434,750 shares of Series E Preferred Stock (47% of the originally issued shares of Series E Preferred Stock) remain outstanding, then 75% approval of the Series E Preferred Stock will be required to approve merger, consolidation, liquidation or winding up of Condor, related party transactions exceeding $120, payment of dividends on common stock except from funds from operations or to maintain REIT status, the grant of exemptions from Condor’s charter limitation on ownership of 9.9% of any class or series of its securities (exclusive of persons currently holding exemptions), issuance of preferred stock or commitment or agreement to do any of the foregoing.

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Schedule III Real Estate And Accumulated Depreciation

12 Months Ended

Dec. 31, 2016

Schedule III Real Estate And Accumulated Depreciation [Abstract]

Schedule III Real Estate And Accumulated Depreciation

										Additions, (dispositions),
										(impairments)
				Initial cost						Subsequent to acquisition							Gross amount at December 31, 2016
Brand	Location	Acquisition date	Encumbrance	Land		Buildings & improvements		Furniture & equipment		Land		Buildings & improvements			Furniture & equipment		Land		Buildings & improvements		Furniture & equipment		Accumulated depreciation		Net book value
Super 8	Creston, Iowa	09/19/1978	GWBR	$	56	$	765	$	76	$	90	$	1,574		$	892	$	146	$	2,339	$	968	$	(2,213)	$	1,240
Quality Inn	Solomons, Maryland	06/01/1986	WAB		2,304		2,719		269		-		1,514			436		2,304		4,233		705		(3,220)		4,022
Comfort Inn	New Castle, Pennsylvania	07/01/1987	MS		57		3,732		369		(1)		344			426		56		4,076		795		(2,550)		2,377
Key West Inn	Key Largo, Florida	08/01/1987	MS		339		2,947		292		-		1,186			342		339		4,133		634		(2,553)		2,553
Comfort Inn	Harlan, Kentucky	07/01/1993	WAB		-		2,684		265		-		(1,265)			512		-		1,419		777		(532)		1,664
Quality Inn	Morgantown, West Virginia	10/01/1996	MS		398		3,749		347		-		633			704		398		4,382		1,051		(2,732)		3,099
Comfort Suites	Ft. Wayne, Indiana	11/07/2005	HUNT		1,200		3,964		840		-		1,037			591		1,200		5,001		1,431		(2,555)		5,077
Comfort Suites	Lafayette, Indiana	11/07/2005	HUNT		850		3,054		420		-		375			301		850		3,429		721		(1,561)		3,439
Comfort Inn & Suites	Warsaw, Indiana	11/07/2005	HUNT		650		2,121		380		-		380			438		650		2,501		818		(1,330)		2,639
Comfort Suites	South Bend, Indiana	11/30/2005	WAB		500		10,602		910		(250)		(4,264)			1,392		250		6,338		2,302		(1,691)		7,199
Supertel Inn	Creston, Iowa	06/30/2006	MS		235		2,364		344		-		(16)			65		235		2,348		409		(1,012)		1,980
Super 8	Billings, Montana	01/05/2007	WAB		518		4,648		159		(27)		(12)			259		491		4,636		418		(1,507)		4,038
Days Inn	Bossier City, Louisiana	04/04/2007	GWBR		1,025		5,031		87		(768)		(3,792)			750		257		1,239		837		(813)		1,520
Hilton Garden Inn	Dowell, Maryland	05/25/2012	CANTOR		1,400		9,492		323		-		621			348		1,400		10,113		671		(1,644)		10,540
SpringHill Suites	San Antonio, Texas	10/01/2015	LAT		1,597		14,353		1,550		-		114			20		1,597		14,467		1,570		(786)		16,848
Courtyard by Marriott	Jacksonville, Florida	10/02/2015	WABJ		2,100		11,050		850		-		152			3		2,100		11,202		853		(710)		13,445
Hotel Indigo	Atlanta, Georgia	10/02/2015	WABA		800		8,700		1,500		-		86			141		800		8,786		1,641		(729)		10,498
Aloft	Leawood, Kansas	12/14/2016	GWB		3,339		18,046		1,115		-		(5)			-		3,339		18,041		1,115		(57)		22,438
Subtotal Hotel Properties					17,368		110,021		10,096		(956)		(1,338)	-		7,620		16,412		108,683		17,716		(28,195)		114,616
Construction in progress					-		-				-		82			4		-		82		4		-		86
Office building					69		1,517		-		(69)		(1,517)			487		-		-		487		(318)		169
Total				$	17,437	$	111,538	$	10,096	$	(1,025)	$	(2,773)		$	8,111	$	16,412	$	108,765	$	18,207	$	(28,513)	$	114,871

Encumbrance codes refer to the following lenders:

MS	Morgan Stanley	WAB	Western Alliance Bank Fixed Rate Debt
GWBR	Great Western Bank Revolving Credit Facility	HUNT	Huntington
LAT	Latitude	CANTOR	Cantor
WABA	Western Alliance Bank Variable Rate Debt - $4.9m	WABJ	Western Alliance Bank Variable Rate Debt - $9.9m
GWB	Great Western Bank Fixed Rate Debt

See Accompanying Report of Independent Registered Public Accounting Firm

	ASSET BASIS	Total
(a)	Balance at January 1, 2014	$	248,468
	Additions		3,058
	Disposals		(32,646)
	Impairment loss		(4,295)
	Balance at December 31, 2014		214,585
	Additions		46,489
	Disposals		(65,802)
	Impairment loss		(6,373)
	Balance at December 31, 2015		188,899
	Additions		25,618
	Disposals		(68,256)
	Impairment loss		(2,877)
	Balance at December 31, 2016	$	143,384
	ACCUMULATED DEPRECIATION	Total
(b)	Balance at January 1, 2014	$	84,112
	Depreciation for the period ended December 31, 2014		6,549
	Depreciation on assets sold or disposed		(13,884)
	Impairment loss		(1,374)
	Balance at December 31, 2014		75,403
	Depreciation for the period ended December 31, 2015		5,400
	Depreciation on assets sold or disposed		(19,938)
	Impairment loss		(2,665)
	Balance at December 31, 2015		58,200
	Depreciation for the period ended December 31, 2016		5,190
	Depreciation on assets sold or disposed		(33,477)
	Impairment loss		(1,400)
	Balance at December 31, 2016	$	28,513

(c) The aggregate cost of land, buildings, furniture and equipment for Federal income tax purposes is approximately $148.4 million (unaudited).

(d) Depreciation is computed based upon the following useful lives:

Buildings and improvements     15 - 40 years

Furniture and equipment             3 - 12 years

(e) The Company has mortgages payable on the properties as noted.  Additional mortgage information can be found in Note 6 to the consolidated financial statements.

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Organization And Summary Of Significant Accounting Policies (Policy)

12 Months Ended

Dec. 31, 2016

Organization And Summary Of Significant Accounting Policies [Abstract]

Description Of Business

Description of Business

Condor Hospitality Trust, Inc. (“CDOR,” “Condor,” or the “Company”), which until July 15, 2015 was formerly named Supertel Hospitality, Inc.,was incorporated in Virginia on August 23, 1994 and was reincorporated in Maryland on November 19, 2014. CDOR is a self-administered real estate investment trust (“REIT”) for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  As of December 31, 2016, the Company owned 19 hotels in 12 states, including one hotel owned through an 80% interest in an unconsolidated joint venture (the “Atlanta JV”).

CDOR, through its wholly owned subsidiary, Condor Hospitality REIT Trust (formerly Supertel Hospitality REIT Trust), ownsa  controlling interests in Condor Hospitality Limited Partnership (“CHLP”) (formerly Supertel Limited Partnership), for which we serve as general partner.  CHLP, including its various subsidiary partnerships, holds substantially all of the Company’s assets (with the exception of the furniture and equipment of 14 properties held by TRS Leasing, Inc.) and conducts all of its operations.  At December 31, 2016, the Company owned 97.8% of the common operating units (“common units”) of CHLP with the remaining common units owned by other limited partners and long-term incentive plan unit holders (see Note 12).  The Company’s 100% owned E&P Financing Limited Partnership no longer owns any assets or conducts any operations following the sale of its last remaining property in January 2016.

In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required by the Internal Revenue Service (“IRS”) for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels.  Therefore, CHLP and its subsidiaries lease our hotel properties to the Company’s wholly owned taxable REIT subsidiary, TRS Leasing, Inc., and its wholly owned subsidiaries (the “TRS”).The TRS in turn engages third-party eligible independent contractors to manage the hotels. CHLP, the TRS, and their respective subsidiaries are consolidated into the Company’s financial statements. 

References to “we,” “our,” and “us” herein refer to Condor Hospitality Trust, Inc., including as the context requires, its direct and indirect subsidiaries.

Historically, as a result of the geographic areas in which we operate, the operations of our hotels have been seasonal in nature.  Generally, occupancy rates, revenue, and operating income have been greater in the second and third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotels located in Florida, which experience peak demand in the first and fourth quarters of the year.  The results of the hotels acquired in 2015 and 2016 (see Note 3), because of their locations and chain scale, are expected to be less seasonal in nature than our legacy portfolio of assets.

Basis Of Presentation

Basis of Presentation

The consolidated financial statements have been prepared in accordance with U.S. general accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company, as well as the accounts of CHLP and its subsidiaries and our wholly owned TRS and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Estimates, Risks And Uncertainties

Estimates, Risks, and Uncertainties

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as revenue and expenses recognized during the reporting period.  Actual results could differ from those estimates.  Because the state of the economy and of the real estate market can significantly impact hotel operational performance and the estimated fair value of our assets, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change.

Investment In Hotel Properties

Investment in Hotel Properties

At the time of acquisition, the Company allocates the purchase price of assets to asset classes based on the fair value of the acquired real estate, furniture, fixtures, and equipment, and intangible assets, if any, and the fair value of liabilities assumed, including debt. Acquisition date fair values are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers including discounted cash flows and capitalization rates.  Acquisition costs are expensed as incurred.

The Company’s investments in hotel properties are recorded at cost and are depreciated using the straight-line method over an estimated useful life of 15 to 40 years for buildings and improvements and 3 to 12 years for furniture and equipment.

Renovations and/or replacements that improve or extend the life of the hotel properties are capitalized and depreciated over their useful lives. Repairs and maintenance are expensed as incurred.

On a quarterly basis, the Company reviews the carrying value of each held for use hotel to determine if certain circumstances, known as triggering events, exist indicating impairment to the carrying value of the hotel or that depreciation periods should be modified.  These triggering events include a significant change in the cash flows of or a significant adverse change in the business climate for a hotel.  If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on these undiscounted future cash flows. If the investment is not recoverable based on this analysis, an impairment charge will be taken, if necessary, to reduce the carrying value of the hotel to the hotel’s fair value.

Investment In Joint Venture

Investment in Joint Venture

If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a variable interest entity (“VIE”) or through our voting interest in a voting interest entity (“VOE”) and we have the ability to provide significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of our investment in, advances to, and commitments to the investee. Pursuant to our Atlanta JV agreement, allocations of the profits and losses of our Atlanta JV may be allocated disproportionately to nominal ownership percentages due to specified preferred return rate thresholds.

Distributions received from a joint venture are classified in the statement of cash flows using the cumulative distributions approach.  Distributions are classified as cash inflows from operating activities unless cumulative distributions, including those from prior periods not designated as a return of investment, exceed cumulative recognized equity in earnings of the joint venture.  Excess distributions are classified as cash inflows from investing activities as a return of investment.

On an annual basis or at interim periods if events and circumstances indicate that the investment may be impaired, the Company reviews the carrying value of its investment in unconsolidated joint venture to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. The investment is considered impaired if its estimated fair value is less than the carrying amount of the investment and that impairment is other than temporary.

Assets Held For Sale And Discontinued Operations

Assets Held for Sale and Discontinued Operations

A hotel is considered held for sale (a) when a contract for sale is entered into, a substantial, nonrefundable deposit has been committed by the purchaser, and sale is expected to occur within one year, or (b) if management has committed to and is actively engaged in a plan sell the property, the property is available for sale in its current condition, and it is probable the sale will be completed within one year.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold in any period presented, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented.

Depreciation of our hotels is discontinued at the time they are considered held for sale.  If the fair value of the held for sale property less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss.  Impairment losses on held for sale properties may be subsequently recovered up to the amount of the cumulative impairment losses taken while the property is held for sale should future revisions to fair value estimates be required.  If active marketing ceases or the property no longer meets the criteria to be classified as held for sale, the property is reclassified to held for use and measured at the lower of its (a) carrying amount before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for use, or (b) its fair value at the date of the subsequent decision not to sell.

Historically, we have presented the results of operations of hotel properties that have been sold or considered held for sale as discontinued operations.  In April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. The amendments in ASU 2014-08 change the criteria for reporting a discontinued operation and require new disclosures of both discontinued operations and certain other significant disposals that do not meet the definition of a discontinued operation. Only disposals representing a strategic shift in operations that have a major effect on an entity’s operations and financial results should be presented as discontinued operations subsequent to adoption. The Company adopted the pronouncement on October 1, 2014.  As a result of this adoption, only the operations of hotels meeting the criteria to be considered held for sale prior to October 1, 2014 are included in discontinued operations for all periods presented as no individual hotel disposition represents a strategic shift in operations or has a major effect on our operations or financial results.

Gains on the sale of real estate are recognized when a property is sold, provided that the profit is determinable, meaning that collectability of the sales price is reasonably assured or can be estimated, and that the earnings process is complete, meaning that the seller is not obligated to perform significant activities after the sale in order to earn the profit.If these criteria are not met, the timing of the sale is determined based on various criteria related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the property. If the sales criteria are not met, the gain is deferred and the finance, installment, or cost recovery method, as appropriate, is applied until the sales criteria are met. To the extent we sell a property and retain a partial ownership interest in the property, we generally recognize a gain to the extent of the third party ownership interest.

Cash And Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents includes cash and highly liquid investments with original maturities of three months or less when acquired, and are carried at cost which approximates fair value. The Company maintained a major portion of its deposits with Great Western Bank, a Nebraska Corporation, at December 31, 2016 and with US Bank at December 31, 2015.  The balances on deposit at Great Western Bank and US Bank may at times exceed the federal deposit insurance limit, however, management believes that no significant credit risk exists with respect to the uninsured portion of these cash balances.

Restricted Cash

Restricted Cash

Restricted cash consists of cash held in escrow for the replacement of furniture and fixtures or for real estate taxes and property insurance as required under certain loan agreements.  For purposes of the statement of cash flows, changes in restricted cash caused by changes in required reserves for real estate taxes or property insurance are shown as operating activities. Changes in restricted cash caused by changes in required reserves for the replacement of furniture and fixtures are shown as investing activities.

Deferred Financing Cost

Deferred Financing Cost

Direct costs incurred in financing transactions are capitalized as deferred financing costs and amortized to interest expense over the term of the related loan using the effective interest method.  Deferred financing costs are presented on the balance sheet as a direct deduction from the associated debt liability.

Derivative Liabilities

Derivative Liabilities

In the normal course of business, the Company is exposed to the effects of interest rate changes, and the Company may enter into derivative instruments including interest rate swaps, caps, and collars to manage or economically hedge interest rate risk.  Additionally, prior to the first quarter of 2016, the Company was required to include on the balance sheet certain bifurcated embedded derivative instruments such as conversion features in convertible instruments and certain common stock warrants.

All derivatives recognized by the Company are reported as derivative liabilities on the balance sheet and are adjusted to their fair value at each reporting date.  Realized and unrealized gains and losses on derivative instruments are included in net gain (loss) on derivatives and convertible debt with the exception of realized gains and losses related to interest rate instruments which are included in interest expense on the statement of operations.

Noncontrolling Interest

Noncontrolling Interest

Noncontrolling interest in CHLP represents the limited partners’ proportionate share of the equity in the operating partnership and long-term incentive plan (“LTIP”) units (see Note 12).  Earnings and loss are allocated to noncontrolling interest in accordance with the weighted average percentage ownership of CHLP during the period. 

Revenue Recognition

Revenue Recognition

Revenue consists of amounts derived from hotel operations, including the sale of rooms, food and beverage, and other ancillary amenities.  Revenue from the operation of the hotel properties is recognized when rooms are occupied and services have been rendered.  Sales, use, occupancy, and similar taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the statement of operations.

Income Taxes

Income Taxes

The Company qualifies and intends to continue to qualify as a REIT under applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, a trust which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will be unable to re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT, unless we satisfy certain relief provisions.  Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income.  Except with respect to the TRS, the Company does not believe that it will be liable for significant federal or state income taxes in future years.

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 IRS 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.

Taxable income from non-REIT activities managed through the TRS, which is taxed as a C-Corporation, is subject to federal, state, and local income taxes.  We account for the federal income taxes of our TRS using the asset and liability method.  Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled.  However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible.  In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not (defined as a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.

The Company may recognize a tax benefit from an uncertain tax position when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on its technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite the Company’s belief that its filing position is supportable, the benefit of that tax position is not recognized in the statement of operations. The Company recognizes interest and penalties, as applicable, related to unrecognized tax benefits as a component of income tax expense. The Company recognizes unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement to the uncertain tax position by the applicable taxing authority or by expiration of the applicable statute of limitations. For the years ended December 31, 2016, 2015, and 2014, the Company did not record any uncertain tax positions.

Fair Value Measurements

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are utilized to determine the value of certain liabilities, to perform impairment assessments, to account for hotel acquisitions, and for disclosure purposes. Fair value measurements are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Directly or indirectly observable inputs other than quoted prices included in Level 1. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.

Level 3: Unobservable inputs for which there is little or no market data, which require a reporting entity to develop its own assumptions.

Our estimates of fair value were determined using available market information and appropriate valuation methods.  Considerable judgment is necessary to interpret market data and develop estimated fair value.  The use of different market assumptions or valuation techniques may have a material effect on estimated fair value measurements.  We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

With the exception of fixed rate debt (see Note 8) and other financial instruments carried at fair value, the carrying amounts of the Company’s financial instruments approximates their fair values due to their short-term nature or variable market-based interest rates.

Fair Value Option

Fair Value Option

Under U.S. GAAP, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in net earnings.  This option was elected for the treatment of the Company’s convertible debt entered into on March 16, 2016 (see Note 7).

Stock-Based Compensation

Stock-Based Compensation

Stock-based compensation for awards with a service condition only is measured based on the fair value of the award on the date of grant and recognized as compensation expense on a straight line basis over the service period.  The compensation cost related to awards for which vesting is contingent upon achieving a market based criteria is measured at the fair value of the award on the date of grant, including consideration of the market criteria, and amortized on a straight line basis over the performance period.  The fair value of the award at grant is measured using either the closing stock price on the date of grant (for vested and unvested share awards), the Black-Scholes model (for options and warrants), or a Monte Carlo simulation (for LTIP awards), as appropriate.  Compensation cost is recognized as additional paid-in capital for awards of the Company’s common stock and as noncontrolling interest for LTIP awards of CHLP common units.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In November 2014, the FASB issued ASU 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share is More Akin to Debt or to Equity, which clarifies certain of the criteria for determining whether derivative features in a hybrid financial instrument should be separately recognized.  ASU 2014-16 is effective for fiscal years beginning after December 15, 2015 and permits either a retrospective or cumulative effect transition method.  ASU 2014-16 was adopted by the Company on January 1, 2016 and was utilized in determining the accounting for the 6.25% Series D Cumulative Convertible Preferred Stock (“Series D Preferred Stock”) issued in March 2016 (see Note 10).

In February 2015, the FASB issued ASU No. 2015-02, Consolidation - Amendments to the Consolidation Analysis, which amends the current consolidation guidance effecting both the VIE and VOE consolidation models. The standard does not add or remove any of the characteristics in determining if an entity is a VIE or VOE, but rather enhances the way the Company assesses some of these characteristics. The Company adopted this standard on January 1, 2016 and concluded that CHLP now meets the criteria to be considered a VIE of which the Company is the primary beneficiary and, accordingly, the Company continues to consolidate CHLP. The Company’s sole significant asset is its investment in CHLP, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of CHLP. All of the Company’s debt is an obligation of CHLP.  This ASU was also used in the determination of the accounting for the Atlanta JV entered into in August 2016 (see Note 5).

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability.  The Company adopted this standard on January 1, 2016 and presents all debt issuance costs, other than issuance costs related to its revolving credit facility, as a direct deduction from the carrying value of the debt liability. Adoption of this standard was applied retrospectively for all periods presented, effecting only the presentation of the balance sheet. The adoption of this standard did not have a material impact on the Company's financial position and had no impact on the results of operations or cash flows.  For the amounts of the reclassification, see Note 6.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective.  The original updated accounting guidance was effective for annual and interim reporting periods in fiscal years beginning after December 15, 2016, however, in July 2015, the FASB approved a one year delay of the effective date to fiscal years beginning after December 15, 2017.  As such, the standard will be effective for the Company on January 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has begun to evaluate each of its revenue streams under the new model.  Based on preliminary assessments, the Company does not expect the adoption of this guidance to materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales.  Furthermore, for real estate sales to third parties, primarily a result of disposition of real estate in exchange for cash with few contingencies, we do not expect the standard to significantly impact the recognition of or accounting for these sales.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes most existing lease guidance in U.S. GAAP when it becomes effective. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability and additional qualitative and quantitative disclosures. ASU 2016-02 is effective for the Company for annual periods in fiscal years beginning after December 15, 2019, permits early adoption, and mandates a modified retrospective transition method. The Company is required to adopt ASU 2016-02 on January 1, 2020. The Company is evaluating the effect that ASU 2016-02 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accountedfor as acquisitions of assets or business combinations. This standard will be effective for annual periods beginning after December15, 2017, although early adoption is permitted. The Company is evaluating the effect that ASU 2017-01 will have on its consolidated financial statements and related disclosures.

Reclassifications

Reclassifications

Certain amounts in prior year financial statements have been reclassified to conform to current year presentation.

Beginning in the first quarter of 2016, we have revised the classification of cash payments for debt prepayment or extinguishment penalties in our statements of cash flows from where they were previously presented as operating cash flows to financing cash flows.  We have concluded that this classification is preferable as these payments are closely related to other financing cash flows, such as the repayment of debt, and reflect the impact of financing decisions made by management.  This revised policy is also consistent with the ASU 2016-15, Statement of Cash Flows, which was issued in August 2016 and becomes effective for the Company on January 1, 2018.  This revision in classification had the effect of increasing operatingcashflows and decreasing financing cash flows by $1,752,  $0, and $120 during the years ended December 31, 2016, 2015, and 2014, respectively.

Liquidity

Liquidity

The following disclosure and analysis is pursuant to ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  ASU 2014-15 requires the Company to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued.  To satisfy the requirements of this standard, the Company’s evaluation considered a 15 month period beginning January 1, 2017.

We expect to meet our short-term liquidity requirements through net cash provided by operations, existing cash balances and working capital, short-term borrowings under our revolving credit agreement with Great Western Bank, and the release of restricted cash upon the satisfaction of usage requirements.  At December 31, 2016, the Company had $8,326 million of cash and cash equivalents on hand and $1,234 of unused availability under its revolving credit agreement.  Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, recurring maintenance and capital expenditures necessary to maintain our hotels in accordance with brand standards, interest expense and scheduled principal payments on outstanding indebtedness, restricted cash funding obligations, and the payment of dividends in accordance with the REIT requirements of the Internal Revenue Code and as required in connection with our Series D Preferred Stock (which, as discussed as a subsequent event (see Note 17), was converted to common stock with $9,250 of a new class of stock, Series E Preferred Stock, issued on February 28, 2017). We presently expect to invest approximately $4,000 to $5,000 in capital expenditures related to hotel properties we currently own through March 31, 2018.

To maintain our REIT tax status, we generally must distribute at least 90% of our taxable income to our shareholders annually.  In addition, we are subject to a 4% non-deductible excise tax if the actual amount distributed to shareholders in a calendar year is less than a minimum amount specified under the federal income tax laws.  We have a general dividend policy of paying out approximately 100% of annual REIT taxable income.  The actual amount of any future dividends will be determined by the Board of Directors based on our actual results of operations, economic conditions, capital expenditure requirements, and other factors that the Board of Directors deems relevant.

Our longer-term liquidity requirements consist primarily of the cost of acquiring additional hotel properties, renovations and other one-time capital expenditures that periodically are made related to our hotel properties, and scheduled debt payments, including maturing loans.  Possible sources of liquidity to fund debt maturities and acquisitions and to meet other obligations include additional secured or unsecured debt financings and proceeds from public or private issuances of debt or equity securities. 

Prior to the consideration of any asset sales or our ability to refinance debt subsequent to December 31, 2016, contractual principal payments on our debt outstanding, including normal amortization, total $15,788 through March 31, 2018, including the February 1, 2017 maturity of one of our Western Alliance Bank (“WAB”) loans with a balance at December 31, 2016 of $4,806, the November 6, 2017 maturity of our Cantor loan with a balance at December 31, 2016 of $5,713, the December 1, 2017 maturity of our Morgan Stanley loan with a balance at December 31, 2016 of $912, and the February 1, 2018 maturity of one of our WAB loans with a balance at December 31, 2016 of $2,803.  On January 27, 2017, the WAB loan due February 1, 2017 was extended to February 1, 2018.  Subsequently, on March 1, 2017, each of these pieces of debt was refinanced with a $90,000 secured credit facility that matures on March 1, 2019.  Following this refinancing, contractual principal payments on our debt outstanding at December 31, 2016 through March 31, 2018 totaled approximately $1,100.

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Investment In Hotel Properties (Tables)

12 Months Ended

Dec. 31, 2016

Investment In Hotel Properties [Abstract]

Schedule Of Investments In Hotel Properties

	As of December 31,
	2016						2015
	Held for sale		Held for use		Total		Held for sale		Held for use		Total
Land	$	2,392	$	14,020	$	16,412	$	8,184	$	10,683	$	18,867
Acquired below market lease intangibles		-		-		-		883		-		883
Buildings, improvements, vehicles		23,118		85,565		108,683		70,932		67,174		138,106
Furniture and equipment		5,427		12,776		18,203		19,170		11,418		30,588
Construction-in-progress		23		63		86		322		133		455
Investment in hotel properties		30,960		112,424		143,384		99,491		89,408		188,899
Less accumulated depreciation		(12,247)		(16,266)		(28,513)		(44,691)		(13,509)		(58,200)
Investment in hotel properties, net	$	18,713	$	96,158	$	114,871	$	54,800	$	75,899	$	130,699

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Acquisition Of Hotel Properties (Tables)

12 Months Ended

Dec. 31, 2016

Schedule Of Pro Forma Results

	Years ended December 31,
	2016		2015
Total revenue	$	56,741	$	73,281
Operating income	$	3,970	$	6,774
Net Income attributable to common shareholders	$	3,755	$	10,816
Net Income per share available to common shareholders-basic	$	0.76	$	2.21
Net Income per share available to common shareholders-diluted	$	0.19	$	0.05

Aloft Hotel, Leawood, Kansas [Member]

Schedule Of Purchase Price Allocation

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Total purchase price		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Aloft	$	3,339	$	18,046	$	1,115	$	22,500	$	15,925	$	50	$	6,525
Leawood, KS

Hotel Indigo, Marriott And Springhill Suites [Member]

Schedule Of Purchase Price Allocation

Hotel	Acquisition date	Land		Building, improvements, and vehicles		Furniture and equipment		Total purchase price		Assumption of debt		Debt originated at acquisition		Issuance of CHLP common units		Net cash
Hotel Indigo	10/2/2015	$	800	$	8,700	$	1,500	$	11,000	$	-	$	5,000	$	150	$	5,850
Atlanta, GA
Marriott Courtyard	10/2/2015		2,100		11,050		850		14,000		-		10,100		150		3,750
Jacksonville, FL
SpringHill Suites	10/1/2015		1,597		14,353		1,550		17,500		11,220		-		150		6,130
San Antonio, TX
Total		$	4,497	$	34,103	$	3,900	$	42,500	$	11,220	$	15,100	$	450	$	15,730

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Disposition Of Hotel Properties And Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2016

Disposition Of Hotel Properties And Discontinued Operations [Abstract]

Components Of Discontinued Operations

	Year ended December 31,
		2016		2015		2014
Revenue		$	6	$	2,923	$	13,579
Hotel and property operations expense			(4)		(1,946)		(10,410)
Depreciation and amortization expense			-		-		(112)
General and administrative expense			-		-		-
Net gain on dispositions of assets			681		2,997		2,751
Interest expense			(5)		(223)		(1,140)
Loss on extinguishment of debt			-		-		(120)
Impairment recovery (loss)			-		121		(1,652)
		$	678	$	3,872	$	2,896
Capital expenditures		$	-	$	90	$	338

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Investment In Unconsolidated Joint Venture (Tables)

12 Months Ended

Dec. 31, 2016

Investment In Unconsolidated Joint Venture [Abstract]

Schedule Of Purchase Price Allocation

Hotel	Land		Buildings, improvements, and vehicles		Furniture and equipment		Land option (1)		Total purchase price		Debt originated at acquisition		Net cash
Aloft	$	13,025	$	34,048	$	2,667	$	(6,190)	$	43,550	$	33,750	$	9,800
Atlanta, GA

(1) The purchase agreement includes a provision which permits the seller to purchase the surface parking lot north of the hotel exercisable for ten years at less than market rates

Schedule Of Financial Position of Unconsolidated Joint Ventures

	As of
	December 31, 2016
Investment in hotel properties, net	$	49,305
Cash and cash equivalents		1,184
Restricted cash, property escrows		464
Accounts receivable, prepaid expenses, and other assets		320
Total Assets	$	51,273
Accounts payable, accrued expenses, and other liabilities	$	633
Land option liability		6,190
Long-term debt, net of deferred financing costs		33,155
Total Liabilities		39,978
Condor equity		9,036
TWC equity		2,259
Total Equity		11,295
Total Liabilities and Equity	$	51,273

Summary Of Results Of Operations Of Unconsolidated Joint Ventures

	Year ended December 31, 2016
Revenue
Room rentals and other hotel services	$	3,703
Operating Expenses
Hotel and property operations		2,457
Depreciation and amortization		471
Acquisition		299
Total operating expenses		3,227
Operating income		476
Net loss on disposition of assets		(2)
Net loss on derivative		(6)
Interest expense		(773)
Net loss	$	(305)
Condor allocated loss	$	(244)
TWC allocated loss		(61)
Net loss	$	(305)

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Long-Term Debt (Tables)

12 Months Ended

Dec. 31, 2016

Long-Term Debt [Abstract]

Summary Of Long Term Debt

Lender		Balance at December 31, 2016	Interest rate at December 31, 2016	Maturity	Amortization provision	Properties encumbered at December 31, 2016		Balance at December 31, 2015
Fixed rate debt
Western Alliance Bank	$	4,806	7.17%	02/2017	15 years	2	$	10,819
Western Alliance Bank		2,803	4.75%	02/2018	15 years	2		3,864
Cantor Commercial Real Estate Lending		5,713	4.25%	11/2017	30 years	1		5,826
Morgan Stanley Mortgage Capital Holdings, LLC		912	5.83%	12/2017	25 years	4		27,542
Great Western Bank (7)		14,326	4.33%	12/2021	25 years	1		-
Great Western Bank (7)		1,599	4.33%	12/2021	7 years	-		-
Total fixed rate debt		30,159						48,051
Variable rate debt
Great Western Bank (6)		-	4.75% (1)	06/2018	Interest only	2		3,215
Western Alliance Bank		4,882	4.18% (2)	11/2020	25 years	1		4,990
Western Alliance Bank		9,863	4.18% (2)	11/2020	25 years	1		10,079
The Huntington National Bank		7,361	2.87% (3)	11/2020	25 years	3		9,981
LMREC 2015 - CREI, Inc. (Latitude)		11,124	7.00% (4)	05/2018	$12 monthly (5)	1		11,220
Total variable rate debt		33,230				18		39,485
Total long-term debt	$	63,389					$	87,536
Less: Deferred financing costs		(669)						(1,525)
Total long-term debt, net of deferred financing costs		62,720						86,011
Less: Long-term debt related to hotel properties held for sale, net of deferred financing costs of $55 and $736		(5,945)						(41,344)
Long-term debt related to hotel properties held for use, net of deferred financing costs of $614 and $789	$	56,775					$	44,667

(1) Prime rate plus 1%; was fixed rate debt at 4.5% prior to amendment on June 5, 2015

(2) 90-day LIBORplus3.25%

(3) 30-day LIBOR plus 2.25%, fixed at 4.13% after giving effect to interest rate swap

(4) 30-day LIBORplus 6.25%30-day LIBOR capped at 1.0% after giving effect to market rate cap (see Note 8)

(5) $12 monthly payment began May 2016

(6) Total availability under this revolving credit facility was $1,234 at December 31, 2015; commitment fee on unused facility is 0.25%

(7) Both loans are collateralized by Aloft Leawood

Aggregate Annual Principal Payments On Debt Associated With Assets Held For Use And Held For Sale

	Held for sale		Held for use		Total
2017	$	1,574	$	11,333	$	12,907
2018		2,603		12,065		14,668
2019		52		1,120		1,172
2020		1,771		19,199		20,970
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

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Convertible Debt At Fair Value (Tables)

12 Months Ended

Dec. 31, 2016

Convertible Debt At Fair Value [Abstract]

Difference Between Fair Value And Unpaid Principal Balance Of Note

	Fair value as of December 31, 2016		Unpaid principal balance as of December 31, 2016		Fair value carrying amount over/(under) unpaid principal
6.25% Convertible Debt	$	1,315	$	1,012	$	303

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Fair Value Measurements And Derivative Instruments (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Measurements And Derivative Instruments [Abstract]

Schedule Of Interest Rate Swaps And Caps

Associated debt	Type	Terms	Effective Date	Maturity Date	Notional amount at December  31, 2016		Notional amount at December  31, 2015
Huntington	Swap	Swaps 30-day LIBOR+  2.25% for fixed rate of	11/2015	11/2020	$	7,361 (1)	$	9,981 (1)
		4.13 %; cancellable at Company's option anytime
		after 11/01/2018 without penalty
Latitude	Cap	Caps 30-day LIBOR at 1.0%	03/2016	06/2017	$	11,124 (1)	$	-
Latitude	Cap	Caps 30-day LIBOR at 2.5%	10/2015	05/2016	$	-	$	11,220 (1)

(1) Notional amounts amortize consistently with the principal amortization of the associated loans

Schedule Of Fair Value Liabilities Measured On Recurring Basis

	Fair value at
	December 31, 2016		Level 1		Level 2		Level 3
Interest rate derivative	$	8	$	-	$	8	$	-
Convertible debt		1,315		-		-		1,315
	$	1,323	$	-	$	8	$	1,315

	Fair value at
	December 31, 2015		Level 1		Level 2		Level 3
Series C preferred embedded derivative	$	6,271	$	-	$	-	$	6,271
Warrant derivative		2,411		-		-		2,411
Interest rate derivatives		77		-		77		-
	$	8,759	$	-	$	77	$	8,682

Reconciliation Of Fair Value Liabilities Measured On Recurring Basis

	Year ended December 31,
		2016							2015
	Series C Preferred embedded derivative		RES warrant derivative		Convertible debt		Total		Series C Preferred embedded derivative		RES warrant derivative		Total
Fair value, beginning of period	$	6,271	$	2,411	$	-	$	8,682	$	13,804	$	6,533	$	20,337
Net (gains) losses recognized in earnings		(4,848)		(1,800)		303		(6,345)		(7,533)		(4,122)		(11,655)
Purchase and issuances		-		-		1,012		1,012		-		-		-
Sales and settlements		(1,423)		-		-		(1,423)		-		-		-
Gross transfers into Level 3		-		-		-		-		-		-		-
Gross transfers out of Level 3 (1)		-		(611)		-		(611)		-		-		-
Fair value, end of period	$	-	$	-	$	1,315	$	1,315	$	6,271	$	2,411	$	8,682
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period	$	-	$	-	$	303	$	303	$	(7,533)	$	(4,122)	$	(11,655)

(1) RES warrants were permanently reclassified to additional paid-in capital as discussed above

Schedule Of Carrying Value And Estimated Fair Value Of Long-Term Debt

	Carrying value at December 31,				Estimated fair value at December 31,
	2016		2015		2016		2015
Held for use	$	56,775	$	44,667	$	57,456	$	45,771
Held for sale		5,945		41,344		6,433		43,508
Total	$	62,720	$	86,011	$	63,889	$	89,279

Schedule Of Impairment And Recovery Of Previously Recorded Impairment

	Year ended December 31,
	2016			2015			2014
	Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery		Number of hotels	Impairment (loss) recovery
Continuing Operations:
Held for sale hotels:
Impairment loss	4	$	(1,273)	-	$	-	-	$	-
Sold hotels:
Impairment loss	1		(204)	6		(3,914)	2		(1,388)
Recovery of impairment	-		-	1		85	1		119
Net impairment loss reported in continuing operations	5	$	(1,477)	7	$	(3,829)	3	$	(1,269)
Discontinued Operations:
Sold hotels:
Impairment loss	-	$	-	1	$	(117)	8	$	(2,450)
Recovery of impairment	-		-	3		238	5		798
Net impairment loss reported in discontinued operations	-	$	-	4	$	121	13	$	(1,652)
Total net impairment:	5	$	(1,477)	11	$	(3,708)	16	$	(2,921)

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Preferred Stock (Tables)

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Components Of Dividends Declared And Undeclared And In Kind Dividends Deemed On Preferred Stock

	Year ended December 31,
	2016		2015		2014
Preferred A dividends accrued at stated rate	$	222	$	727	$	671
Preferred A additional deemed dividends upon redemption		652		-		-
Preferred B dividends accrued at stated rate		243		831		831
Preferred B additional deemed dividends upon redemption		668		-		-
Preferred C dividends accrued at stated rate		455		2,074		1,950
Preferred C additional deemed dividends at exchange		15,418		-		-
Preferred D dividends accrued at stated rate		3,090		-		-
Dividends declared and undeclared and in kind dividends deemed on preferred stock	$	20,748	$	3,632	$	3,452

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Stock Based Compensation (Tables)

12 Months Ended

Dec. 31, 2016

Black-Scholes Option-Pricing Model [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule Of Estimated Fair Value Of Options

	$1.52 Grant		$1.92 Grant
	March 2, 2015		March 2, 2015
Volatility	53.10	%	78.60	%
Expected forfeitures	0.00	%	0.00	%
Expected term	15	days	3.00	years
Risk free interest rate	0.02	%	1.06	%

Monte Carlo Option-Pricing Model [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule Of Estimated Fair Value Of Options

	Grant Date March 2, 2015
Volatility		75.5	%
Expected forfeitures		0.00	%
Weighted average price	$	1.53
Expected term		3.00	years
Risk free interest rate		1.06	%

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Taxes [Abstract]

Schedule Of Actual Income Benefit From Continuing Operations

	Year ended December 31,
	2016		2015		2014
Computed "expected" income tax (benefit) expense	$	993	$	684	$	(118)
State income taxes, net of federal income tax (benefit) expense		139		82		(14)
(Decrease) increase in valuation allowance		(1,082)		(722)		132
Other		(50)		(44)		-
Alternative minimum tax		90		-		-
Total income tax expense	$	90	$	-	$	-

Schedule Of Deferred Tax Assets And Deferred Tax Liabilities

	As of December 31,
	2016		2015
Deferred Tax Assets
Expenses accrued for consolidated financial statement purposes, nondeductible for tax return purposes	$	99	$	113
Net operating losses carried forward for federal income tax purposes		1,477		6,902
Book depreciation in excess of tax depreciation		38		-
Subtotal deferred tax assets		1,614		7,015
Valuation allowance		(1,551)		(6,923)
Total deferred tax assets		63		92
Deferred Liabilities
Tax depreciation in excess of book depreciation		-		92
JV basis difference		63		-
Total deferred tax liabilities		63		92
Net deferred tax assets	$	-	$	-

Summary of Distributions Paid

	For the year ended December 31, 2016
	Amount		%
Common Shares:
Ordinary income	$	0.070000	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.070000	100%
Series C Preferred Stock:
Ordinary income	$	1.649124	100%
Capital gain		-	-
Return of capital		-	-
Total	$	1.649124	100%
Series D Preferred Stock:
Ordinary income	$	0.494792	100%
Capital gain		-	-
Return of capital		-	-
Total	$	0.494792	100%

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Earnings Per Share (Tables)

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Computation Of Basic And Diluted Earnings Per Common Share

	Year ended December 31,
	2016		2015		2014
Numerator: Basic (1)
Net earnings (loss) attributable to common shareholders
Continuing operations - Basic	$	1,390	$	6,055	$	(22,581)
Discontinued operations - Basic		657		3,438		2,893
Total Basic	$	2,047	$	9,493	$	(19,688)
Numerator: Diluted (1)
Net earnings (loss) attributable to common shareholders from continuing operations	$	1,390	$	6,055	$	(22,581)
Dividends on Series C Preferred Stock		-		2,074		-
Dividends on Series D Preferred Stock		3,090		-		-
Unrealized gain on warrant derivative		-		(4,122)		-
Unrealized gain on Series C Preferred Embedded Derivative		-		(7,533)		-
Continuing operations - Diluted		4,480		(3,526)		(22,581)
Discontinued operations - Diluted		657		3,438		2,893
Total Diluted	$	5,137	$	(88)	$	(19,688)
Denominator
Weighted average number of common shares - Basic		4,947,234		4,885,625		3,897,092
Unvested stock		-		4,025		-
Series C Preferred Stock		-		18,750,000		-
Series D Preferred Stock		31,033,818		-		-
Warrants - Employees		-		691		-
Warrants - RES		-		(399,778)		-
Weighted average number of common shares - Diluted		35,981,052		23,240,563		3,897,092
Earnings Per Share
Continuing operations - Basic	$	0.28	$	1.24	$	(5.79)
Discontinued operations - Basic		0.13		0.70		0.74
Total - Basic Earnings Per Share	$	0.41	$	1.94	$	(5.05)
Continuing operations - Diluted	$	0.12	$	(0.15)	$	(5.79)
Discontinued operations - Diluted		0.02		0.15		0.74
Total - Diluted Earnings Per Share	$	0.14	$	-	$	(5.05)

(1) The loss (earnings) attributable to noncontrolling interest is allocated between continuing and discontinued operations for the purpose of the EPS calculation

Schedule Of Potentially Dilutive Securities Excluded From Computation Of Earnings Per Share

	Year ended December 31,
	2016	2015	2014
Outstanding stock options	5,625	5,625	8,750
Unvested stock awards outstanding	-	-	1,541
Warrants - RES	3,750,000	-	3,750,000
Warrants - Employees	430,000	359,121	-
Series C preferred Stock	3,893,443	-	18,750,000
LTIP common units (1)	657,894	549,747	-
Convertible debt	502,690	-	551,370
CHLP common units (1)	300,728	84,556	12,126
Total potentially dilutive securities excluded from the denominator	9,540,380	999,049	23,073,787

(1) LTIP and common units of CHLP have been omitted from the denominator for the purpose of computing diluted EPS since the effect of including these amounts in the numerator and denominator would have no impact on calculated EPS

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Commitments And Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments And Contingencies [Abstract]

Schedule Of Future Minimum Lease Payments

		Lease rents
2017	$	156
2018		159
2019		138
2020		61
2021		47
	$	561

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Quarterly Operating Results (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Operating Results [Abstract]

Schedule Of Quarterly Operations

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2016		2016		2016		2016		2016
Revenue	$	12,503	$	14,155	$	13,519	$	10,470	$	50,647
Operating expenses		12,662		12,508		12,445		11,009		48,624
Operating income (loss)		(159)		1,647		1,074		(539)		2,023
Net gain on dispositions of assets		3,367		8,856		3,591		7,318		23,132
Equity in loss of joint venture		-		-		(54)		(190)		(244)
Net gain on derivatives and convertible debt		6,117		162		26		72		6,377
Other income (expense)		(21)		23		85		(32)		55
Interest expense		(1,329)		(1,248)		(1,127)		(1,006)		(4,710)
Loss on debt extinguishment		(173)		(976)		(399)		(639)		(2,187)
Impairment loss		(793)		(121)		(343)		(220)		(1,477)
Earnings from continuing operations before income tax expense		7,009		8,343		2,853		4,764		22,969
Income tax expense		-		-		-		(125)		(125)
Earnings (loss) from continuing operations		7,009		8,343		2,853		4,639		22,844
Gain from discontinued operations, net of tax		678		-		-		-		678
Net earnings		7,687		8,343		2,853		4,639		23,522
Earnings attributable to noncontrolling interest		(389)		(178)		(61)		(99)		(727)
Earnings attributable to controlling interests		7,298		8,165		2,792		4,540		22,795
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(17,740)		(1,057)		(976)		(975)		(20,748)
Net earnings (loss) attributable to common shareholders	$	(10,442)	$	7,108	$	1,816	$	3,565	$	2,047
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	(2.25)	$	1.44	$	0.37	$	0.72	$	0.28
Basic EPS from discontinued operations		0.14		-		-		-		0.13
Total EPS Basic	$	(2.11)	$	1.44	$	0.37	$	0.72	$	0.41
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(2.25)	$	0.18	$	0.06	$	0.10	$	0.12
Diluted EPS from discontinued operations		0.14		-		-		-		0.02
Total EPS Diluted	$	(2.11)	$	0.18	$	0.06	$	0.10	$	0.14

(1) Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

	Quarters ended (unaudited)
	March 31,		June 30,		September 30,		December 31,		Total
	2015		2015		2015		2015		2015
Revenue	$	12,692	$	16,733	$	15,895	$	13,394	$	58,714
Operating expenses		13,134		14,247		13,983		13,826		55,190
Operating income (loss)		(442)		2,486		1,912		(432)		3,524
Net gain (loss) on dispositions of assets		11		(137)		2,927		1,997		4,798
Net gain (loss) on derivatives and convertible debt		4,823		(4,710)		7,895		3,570		11,578
Other income (expense)		95		31		(4)		(8)		114
Interest expense		(1,547)		(1,510)		(1,137)		(1,328)		(5,522)
Loss on debt extinguishment		(7)		-		(104)		(102)		(213)
Impairment recovery (loss)		(777)		(3,053)		313		(312)		(3,829)
Earnings (loss) from continuing operations before income tax expense		2,156		(6,893)		11,802		3,385		10,450
Income tax expense		-		-		-		-		-
Earnings (loss) from continuing operations		2,156		(6,893)		11,802		3385		10,450
Gain from discontinued operations, net of tax		1,294		994		152		1,432		3,872
Net earnings (loss)		3,450		(5,899)		11,954		4,817		14,322
(Earnings) loss attributable to noncontrolling interest		(281)		284		(724)		(476)		(1,197)
Earnings (loss) attributable to controlling interests		3,169		(5,615)		11,230		4,341		13,125
Dividends declared and undeclared and in kind dividends deemed on preferred stock		(891)		(902)		(914)		(925)		(3,632)
Net earnings (loss) attributable to common shareholders	$	2,278	$	(6,517)	$	10,316	$	3,416	$	9,493
Basic Earnings Per Share (1)
Basic EPS from continuing operations	$	0.24	$	(1.52)	$	2.06	$	0.44	$	1.24
Basic EPS from discontinued operations		0.24		0.20		0.03		0.25		0.70
Total EPS Basic	$	0.48	$	(1.32)	$	2.09	$	0.69	$	1.94
Diluted Earnings Per Share (1)
Diluted EPS from continuing operations	$	(0.14)	$	(1.52)	$	0.12	$	(0.04)	$	(0.15)
Diluted EPS from discontinued operations		0.05		0.20		0.01		0.05		0.15
Total EPS Diluted	$	(0.09)	$	(1.32)	$	0.13	$	0.01	$	-

(1)  Quarterly and total annual EPS are based on the weighted average number of shares outstanding during each quarter and the annual period.Due to rounding and differences in earnings and losses between the quarterly and annual periods, the sum of the quarterly EPS amounts may not equal the reported amounts for the year.

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Subsequent Events (Tables)

12 Months Ended

Dec. 31, 2016

Subsequent Event [Line Items]

Aggregate Annual Principal Payments On Debt Associated With Assets Held For Use And Held For Sale

	Held for sale		Held for use		Total
2017	$	1,574	$	11,333	$	12,907
2018		2,603		12,065		14,668
2019		52		1,120		1,172
2020		1,771		19,199		20,970
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

Secured Credit Facility [Member]

Subsequent Event [Line Items]

Aggregate Annual Principal Payments On Debt Associated With Assets Held For Use And Held For Sale

	Held for sale		Held for use		Total
2017	$	-	$	916	$	916
2018		-		930		930
2019		6,000		27,691		33,691
2020		-		14,180		14,180
2021		-		13,672		13,672
Total	$	6,000	$	57,389	$	63,389

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Organization And Summary Of Significant Accounting Policies (Details)				12 Months Ended
	Mar. 01, 2017 USD ($)	Feb. 28, 2017 USD ($)	Jan. 27, 2017	Dec. 31, 2016 USD ($) property state loan	Dec. 31, 2015 USD ($) property	Dec. 31, 2014 USD ($) property	Mar. 31, 2018 USD ($)	Jan. 01, 2016 property	Dec. 31, 2013 USD ($)
Number of hotels | property				19
Number of states the entity owns hotels | state				12
Uncertain tax position				$ 0	$ 0	$ 0
Operating cash flows				2,668,000	4,970,000	5,507,000
Financing cash flows				$ (21,154,000)	(5,671,000)	(23,321,000)
Going concern evaluation period				15 months
Cash and cash equivalents on hand				$ 8,326,000	4,870,000	173,000			$ 45,000
Available borrowing capacity				1,234,000
Long-term debt				63,389,000	87,536,000
Restatement Adjustment [Member] | Accounting Standards Update 2016-15 [Member]
Operating cash flows				1,752,000	0	120,000
Financing cash flows				(1,752,000)	$ 0	$ (120,000)
Secured Credit Facility [Member]
Long-term debt				$ 63,389,000
Minimum [Member] | Forecast [Member]
Cash and cash equivalents on hand							$ 4,000,000
Maximum [Member] | Forecast [Member]
Cash and cash equivalents on hand							$ 5,000,000
Building And Improvements [Member] | Minimum [Member]
Estimated useful life				15 years
Building And Improvements [Member] | Maximum [Member]
Estimated useful life				40 years
Furniture And Equipment [Member] | Minimum [Member]
Estimated useful life				3 years
Furniture And Equipment [Member] | Maximum [Member]
Estimated useful life				12 years
Held For Sale [Member]
Number of hotels | property				7				16
Long-term debt				$ 6,000,000
Held For Sale [Member] | Secured Credit Facility [Member]
Long-term debt				$ 6,000,000
Sold [Member]
Number of hotels | property				25	17	13
Western Alliance Bank [Member]
Long-term debt				$ 4,806,000
Number of loans | loan				1
Maturity				Feb. 01, 2017
Cantor Commercial Real Estate Lending [Member]
Long-term debt				$ 5,713,000
Maturity				Nov. 06, 2017
Morgan Stanley Mortgage Capital Holdings [Member]
Long-term debt				$ 912,000
Maturity				Dec. 01, 2017
Western Alliance Bank [Member]
Long-term debt				$ 2,803,000
Number of loans | loan				1
Maturity				Feb. 01, 2018
Atlanta Joint Venture [Member]
Number of hotels | property				1
Ownership percentage				80.00%
Condor Hospitality Limited Partnership [Member]
Ownership percentage of minority interest				97.80%	90.10%	99.90%
E&P Financing Limited Partnership [Member]
Ownership percentage of minority interest				100.00%
TRS Leasing, Inc [Member]
Number of properties held by related parties | property				14
Subsequent Event [Member] | Secured Credit Facility [Member]
Available borrowing capacity	$ 34,250,000
Maturity	Mar. 01, 2019
Subsequent Event [Member] | Western Alliance Bank [Member]
Maturity			Feb. 01, 2018
Subsequent Event [Member] | Western Alliance Bank [Member]
Maturity			Feb. 01, 2018
Series D Preferred Stock [Member]
Preferred stock, annual dividend rate				6.25%
Preferred stock value				$ 61,333,000
Series E Preferred Stock [Member] | Subsequent Event [Member]
Preferred stock, annual dividend rate		6.25%
Preferred stock value		$ 9,250,000
March 31, 2018 [Member]
Long-term debt				$ 15,788,000
March 31, 2018 [Member] | Subsequent Event [Member]
Long-term debt		$ 1,100,000

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Investment In Hotel Properties (Schedule Of Investments In Hotel Properties) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Real Estate [Line Items]
Investment in hotel properties, Held for sale	$ 30,960	$ 99,491
Less accumulated depreciation, Held For Sale	(12,247)	(44,691)
Investment in hotel properties, net, Held For Sale	18,713	54,800
Investment in hotel properties, Held For Use	112,424	89,408
Less accumulated depreciation, Held For Use	(16,266)	(13,509)
Investments in hotel properties, net, Held For Use	96,158	75,899
Investments in hotel properties	143,384	188,899
Less accumulated depreciation	(28,513)	(58,200)
Investments in hotel properties, net, Total	114,871	130,699
Land [Member]
Real Estate [Line Items]
Investment in hotel properties, Held for sale	2,392	8,184
Investment in hotel properties, Held For Use	14,020	10,683
Investments in hotel properties	16,412	18,867
Acquired Below Market Lease Intangibles [Member]
Real Estate [Line Items]
Investment in hotel properties, Held for sale		883
Investments in hotel properties		883
Building, Improvements, Vehicle [Member]
Real Estate [Line Items]
Investment in hotel properties, Held for sale	23,118	70,932
Investment in hotel properties, Held For Use	85,565	67,174
Investments in hotel properties	108,683	138,106
Furniture And Equipment [Member]
Real Estate [Line Items]
Investment in hotel properties, Held for sale	5,427	19,170
Investment in hotel properties, Held For Use	12,776	11,418
Investments in hotel properties	18,203	30,588
Construction-In-Progress [Member]
Real Estate [Line Items]
Investment in hotel properties, Held for sale	23	322
Investment in hotel properties, Held For Use	63	133
Investments in hotel properties	$ 86	$ 455

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Acquisition Of Hotel Properties (Narrative) (Details) $ in Thousands			3 Months Ended								12 Months Ended
	Dec. 14, 2016 USD ($) property loan shares	Oct. 02, 2015 shares	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) property	Dec. 31, 2015 USD ($) property loan shares	Dec. 31, 2014 USD ($) property
Business Acquisition [Line Items]
Number of wholly-owned hotel properties acquired | property												3	0
Revenues			$ 10,470	$ 13,519	$ 14,155	$ 12,503	$ 13,394	$ 15,895	$ 16,733	$ 12,692	$ 50,647	$ 58,714	$ 58,799
Net income (loss)			$ 4,540	$ 2,792	$ 8,165	$ 7,298	$ 4,341	$ 11,230	$ (5,615)	$ 3,169	22,795	13,125	$ (16,236)
Acquisition costs											$ 550	684
Aloft Hotel, Leawood, Kansas [Member]
Business Acquisition [Line Items]
Number of wholly-owned hotel properties acquired | property	1
Aloft, Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Number of wholly-owned hotel properties acquired | property											4
Revenues											$ 12,786	2,611
Net income (loss)											$ 2,279	$ 356
Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Number of loans assumed | loan												1
Multiple Western Alliance Bank Loans [Member] | Aloft Hotel, Leawood, Kansas [Member]
Business Acquisition [Line Items]
Number of loans assumed | loan	2
Multiple GE Capital Franchise Finance Corporation Loans [Member] | Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Number of loans obtained | loan												2
Condor Hospitality Limited Partnership [Member] | Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Common units issued | shares		2,298,879
Condor Hospitality Limited Partnership [Member] | Aloft Hotel, Leawood, Kansas [Member] | Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Common units issued | shares	213,904
Condor Hospitality Limited Partnership [Member] | Hotel Indigo, Marriott And Springhill Suites [Member] | Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Common units issued | shares												2,298,879
Level 3 [Member]
Business Acquisition [Line Items]
Purchase price												$ 42,500
Level 3 [Member] | Aloft Hotel, Leawood, Kansas [Member]
Business Acquisition [Line Items]
Purchase price	$ 22,500
Debt originated at acquisition	15,925
Cash paid for acquisition	6,525
Level 3 [Member] | Aloft, Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Cash paid for acquisition												14,900
Level 3 [Member] | Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Assumption of debt												11,220
Debt originated at acquisition												15,100
Remaining amount to be funded												16,180
Level 3 [Member] | Condor Hospitality Limited Partnership [Member] | Aloft Hotel, Leawood, Kansas [Member] | Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Value of common units issued	$ 50
Level 3 [Member] | Condor Hospitality Limited Partnership [Member] | Hotel Indigo, Marriott And Springhill Suites [Member] | Noncontrolling Interest [Member]
Business Acquisition [Line Items]
Value of common units issued												$ 450

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Acquisition Of Hotel Properties (Schedule Of Purchase Price Allocation) (Details) - USD ($) $ in Thousands		12 Months Ended
	Dec. 14, 2016	Dec. 31, 2015
Hotel Indigo, Atlanta, GA [Member]
Business Acquisition [Line Items]
Acquisition date		Oct. 02, 2015
Land		$ 800
Building, improvements, and vehicles		8,700
Furniture and equipment		1,500
Total purchase price		11,000
Debt originated at acquisition		5,000
Net cash		$ 5,850
Marriott Courtyard, Jacksonville, FL [Member]
Business Acquisition [Line Items]
Acquisition date		Oct. 02, 2015
Land		$ 2,100
Building, improvements, and vehicles		11,050
Furniture and equipment		850
Total purchase price		14,000
Debt originated at acquisition		10,100
Net cash		$ 3,750
Springhill Suites, San Antonio, TX [Member]
Business Acquisition [Line Items]
Acquisition date		Oct. 01, 2015
Land		$ 1,597
Building, improvements, and vehicles		14,353
Furniture and equipment		1,550
Total purchase price		17,500
Assumption of debt		11,220
Net cash		6,130
Level 3 [Member] | Aloft Hotel, Leawood, Kansas [Member]
Business Acquisition [Line Items]
Land	$ 3,339
Building, improvements, and vehicles	18,046
Furniture and equipment	1,115
Total purchase price	22,500
Debt originated at acquisition	15,925
Net cash	6,525
Level 3 [Member] | Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Land		4,497
Building, improvements, and vehicles		34,103
Furniture and equipment		3,900
Total purchase price		42,500
Assumption of debt		11,220
Debt originated at acquisition		15,100
Net cash		15,730
Condor Hospitality Limited Partnership [Member] | Noncontrolling Interest [Member] | Hotel Indigo, Atlanta, GA [Member]
Business Acquisition [Line Items]
Issuance of common units		150
Condor Hospitality Limited Partnership [Member] | Noncontrolling Interest [Member] | Marriott Courtyard, Jacksonville, FL [Member]
Business Acquisition [Line Items]
Issuance of common units		150
Condor Hospitality Limited Partnership [Member] | Noncontrolling Interest [Member] | Springhill Suites, San Antonio, TX [Member]
Business Acquisition [Line Items]
Issuance of common units		150
Condor Hospitality Limited Partnership [Member] | Level 3 [Member] | Noncontrolling Interest [Member] | Aloft Hotel, Leawood, Kansas [Member]
Business Acquisition [Line Items]
Issuance of common units	$ 50
Condor Hospitality Limited Partnership [Member] | Level 3 [Member] | Noncontrolling Interest [Member] | Hotel Indigo, Marriott And Springhill Suites [Member]
Business Acquisition [Line Items]
Issuance of common units		$ 450

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Acquisition Of Hotel Properties (Schedule Of Pro Forma Results) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Acquisition Of Hotel Properties [Abstract]
Total revenue	$ 56,741	$ 73,281
Operating income	3,970	6,774
Net earnings (loss) attributable to common shareholders	$ 3,755	$ 10,816
Net earnings (loss) per share attributable to common shareholders - Basic	$ 0.76	$ 2.21
Net earnings (loss) per share attributable to common shareholders - Diluted	$ 0.19	$ 0.05

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Disposition Of Hotel Properties And Discontinued Operations (Narrative) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016 USD ($) property	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($) property	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) property	Dec. 31, 2015 USD ($) property	Dec. 31, 2014 USD ($) property	Jan. 01, 2016 property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of hotels | property	19								19
Number of hotels reclassified as held for sale that represent a strategic shift | property									0
Net gain (loss) on disposition of assets	$ 7,318	$ 3,591	$ 8,856	$ 3,367	$ 1,997	$ 2,927	$ (137)	$ 11	$ 23,132	$ 4,798	$ (1)
Net income (loss)	4,540	2,792	8,165	7,298	4,341	11,230	(5,615)	3,169	22,795	13,125	(16,236)
Net earnings (loss) attributable to controlling interests	$ 99	$ 61	$ 178	$ 389	$ 476	$ 724	$ (284)	$ 281	$ 727	$ 1,197	$ (23)
Sold [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of hotels | property	25				17				25	17	13
Net gain (loss) on disposition of assets									$ 24,256	$ 7,759	$ 2,749
Held For Sale [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of hotels | property	7								7			16
Number of hotels reclassified as held for sale | property									16
Alexandria Comfort Inn And Days Inn [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net income (loss)										(665)	761
Impairment expense										1,020
Net earnings (loss) attributable to controlling interests										$ 3	1
Alexandria, Virginia [Member] | Sold [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of hotels | property					2					2
Net gain (loss) on disposition of assets										$ 19,000
Continuing Operations [Member] | Sold [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net gain (loss) on disposition of assets									$ 23,575	$ 4,996	$ 0

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Disposition Of Hotel Properties And Discontinued Operations (Components Of Discontinued Operations) (Details) - USD ($) $ in Thousands	3 Months Ended					12 Months Ended
	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Gain from discontinued operations, net of tax	$ 678	$ 1,432	$ 152	$ 994	$ 1,294	$ 678	$ 3,872	$ 2,896
Discontinued Operations, Disposed of by Sale [Member]
Revenue						6	2,923	13,579
Hotel and property operations expense						(4)	(1,946)	(10,410)
Depreciation and amortization expense								(112)
General and administrative expense
Net gain on dispositions of assets						681	2,997	2,751
Interest expense						(5)	(223)	(1,140)
Loss on extinguishment of debt								(120)
Impairment recovery (loss)							121	(1,652)
Gain from discontinued operations, net of tax						$ 678	3,872	2,896
Capital expenditures							$ 90	$ 338

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Investment In Unconsolidated Joint Venture (Narrative) (Details) $ in Thousands		12 Months Ended
	Aug. 22, 2016 USD ($)	Dec. 31, 2016 USD ($) entity item	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Aug. 01, 2016 room
Schedule of Equity Method Investments [Line Items]
Management fees incurred		$ 1,619	$ 2,466	$ 3,101
Three Wall Capital LLC [Member | Spring Street Hotel Property II LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage		20.00%
Three Wall Capital LLC [Member | Spring Street Hotel OpCo II LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage		20.00%
Atlanta Joint Venture [Member]
Schedule of Equity Method Investments [Line Items]
Number of hotel rooms | room					254
Ownership percentage		80.00%
Number of companies comprised in joint venture | entity		2
Management fees incurred		$ 110
Atlanta Joint Venture [Member] | Condor Hospitality Trust, Inc. [Member]
Schedule of Equity Method Investments [Line Items]
Preferred return on capital contributions		10.00%
Buy-sell rights		3 years
Atlanta Joint Venture [Member] | Condor Hospitality Trust, Inc. [Member] | Minimum [Member]
Schedule of Equity Method Investments [Line Items]
Purchase option period		3 years
Atlanta Joint Venture [Member] | Condor Hospitality Trust, Inc. [Member] | Maximum [Member]
Schedule of Equity Method Investments [Line Items]
Purchase option period		5 years
Atlanta Joint Venture [Member] | Three Wall Capital LLC [Member
Schedule of Equity Method Investments [Line Items]
Ownership percentage		20.00%
Preferred return on capital contributions		10.00%
Buy-sell rights		5 years
Condor Hospitality Limited Partnership [Member] | Spring Street Hotel Property II LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage		80.00%
TRS Leasing, Inc [Member] | Spring Street Hotel OpCo II LLC [Member]
Schedule of Equity Method Investments [Line Items]
Ownership percentage		80.00%
Aloft Hotel, Atlanta, Georgia [Member] | Atlanta Joint Venture [Member] | Term Loan [Member]
Schedule of Equity Method Investments [Line Items]
Loan term		24 months
Number of loan extensions | item		3
Extension period		12 months
Variable rate, interest rate		5.75%
Aloft Hotel, Atlanta, Georgia [Member] | LIBOR [Member] | Atlanta Joint Venture [Member] | Term Loan [Member]
Schedule of Equity Method Investments [Line Items]
Reference rate		one-month LIBOR
Basis spread		5.00%
Interest Rate Cap [Member] | Aloft Hotel, Atlanta, Georgia [Member] | LIBOR [Member] | Atlanta Joint Venture [Member] | Term Loan [Member]
Schedule of Equity Method Investments [Line Items]
Basis spread		3.00%
Level 3 [Member]
Schedule of Equity Method Investments [Line Items]
Purchase price			42,500
Level 3 [Member] | Aloft Hotel, Atlanta, Georgia [Member] | Atlanta Joint Venture [Member]
Schedule of Equity Method Investments [Line Items]
Purchase price	$ 43,550
Cash paid for acquisition	9,800
Debt originated at acquisition	33,750
Level 3 [Member] | Aloft Hotel, Atlanta, Georgia [Member] | Atlanta Joint Venture [Member] | Condor Hospitality Trust, Inc. [Member]
Schedule of Equity Method Investments [Line Items]
Cash paid for acquisition	7,840
Acquisition costs	1,440
Level 3 [Member] | Aloft Hotel, Atlanta, Georgia [Member] | Atlanta Joint Venture [Member] | Three Wall Capital LLC [Member
Schedule of Equity Method Investments [Line Items]
Cash paid for acquisition	1,960
Acquisition costs	$ 360
Level 3 [Member] | Hotel Indigo, Marriott And Springhill Suites [Member]
Schedule of Equity Method Investments [Line Items]
Debt originated at acquisition			15,100
Level 3 [Member] | Hotel Indigo, Marriott And Springhill Suites [Member] | Great Western Bank [Member]
Schedule of Equity Method Investments [Line Items]
Cash paid for acquisition			$ 830

XML

Investment In Unconsolidated Joint Venture (Schedule Of Purchase Price Allocation) (Details) - Atlanta Joint Venture [Member] - Aloft Hotel, Atlanta, Georgia [Member] $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Provision permitting seller to purchase surface parking lot at less than market prices, exercise period	10 years
Level 3 [Member]
Business Acquisition [Line Items]
Land	$ 13,025
Building, improvements, and vehicles	34,048
Furniture and equipment	2,667
Land option	(6,190)
Total purchase price	43,550
Debt originated at acquisition	33,750
Net cash	$ 9,800

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Investment In Unconsolidated Joint Venture (Schedule Of Financial Position of Unconsolidated Joint Ventures) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Investment In Unconsolidated Joint Venture [Abstract]
Investment in hotel properties, net	$ 49,305
Cash and cash equivalents	1,184
Restricted cash, property escrows	464
Accounts receivable, prepaid expenses, and other assets	320
Total Assets	51,273
Accounts payable, accrued expenses, and other liabilities	633
Land option liability	6,190
Long-term debt, net of deferred financing costs	33,155
Total Liabilities	39,978
Condor equity	9,036
TWC equity	2,259
Total Equity	11,295
Total Liabilities and Equity	$ 51,273

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Investment In Unconsolidated Joint Venture (Summary Of Results Of Operations Of Unconsolidated Joint Ventures) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Schedule of Equity Method Investments [Line Items]
Room rentals and other hotel services	$ 3,703
Hotel and property operations	2,457
Depreciation and amortization	471
Acquisition	299
Total operating expenses	3,227
Operating income	476
Net loss on disposition of assets	(2)
Net loss on derivative	(6)
Interest expense	(773)
Net loss	(305)
Condor Hospitality Trust, Inc. [Member]
Schedule of Equity Method Investments [Line Items]
Allocated loss	(244)
Three Wall Capital LLC [Member
Schedule of Equity Method Investments [Line Items]
Allocated loss	$ (61)

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Long-Term Debt (Narrative) (Details) $ in Thousands					12 Months Ended
	Mar. 01, 2017 USD ($) loan	Jan. 27, 2017	Jun. 11, 2014 USD ($) shares	Jan. 09, 2014 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Mar. 31, 2014 USD ($)
Debt Instrument [Line Items]
Long-term debt, net of deferred financing costs					$ 56,775	$ 44,667
Fixed rate debt					30,159	48,051
Variable rate debt					33,230	39,485
Payments on revolving debt					10,305	39,056	$ 30,843
Available borrowing capacity					1,234
Fair value					1,315
Long-term debt					63,389	87,536
Real Estate Strategies, L.P. [Member]
Debt Instrument [Line Items]
Gain recognized as other income from change in fair value of common stock			$ 88
Fair value			$ 151
Issuance of common stock, shares | shares			1,250,000
Western Alliance Bank [Member]
Debt Instrument [Line Items]
Fixed rate debt					$ 4,806	10,819
Maturity date of debt					Feb. 01, 2017
Long-term debt					$ 4,806
Held For Use [Member]
Debt Instrument [Line Items]
Long-term debt, net of deferred financing costs					$ 57,389	$ 45,455
Weighted average term					2 years 10 months 24 days	3 years 3 months 18 days
Weighted average interest rate					4.89%	4.98%
Fixed rate debt					$ 26,079	$ 12,439
Fixed rate, weighted average term					2 years 9 months 18 days	1 year 7 months 6 days
Fixed rate, weighted average interest					4.78%	5.63%
Variable rate debt					$ 31,310	$ 33,016
Variable rate, weighted average term					2 years 10 months 24 days	3 years 10 months 24 days
Variable rate, weighted average interest					4.98%	4.74%
Long-term debt					$ 57,389
Held For Sale [Member]
Debt Instrument [Line Items]
Long-term debt					6,000
Subsequent Event [Member] | Western Alliance Bank [Member]
Debt Instrument [Line Items]
Maturity date of debt		Feb. 01, 2018
Variable Rate Debt [Member] | Subsequent Event [Member] | Multiple Western Alliance Bank Loans [Member]
Debt Instrument [Line Items]
Number of loans not refinanced during period | loan	2
Fixed Rate Debt [Member] | Subsequent Event [Member] | Multiple Great Western Banks [Member]
Debt Instrument [Line Items]
Number of loans not refinanced during period | loan	2
Secured Credit Facility [Member]
Debt Instrument [Line Items]
Long-term debt					63,389
Secured Credit Facility [Member] | Held For Use [Member]
Debt Instrument [Line Items]
Long-term debt					57,389
Secured Credit Facility [Member] | Held For Sale [Member]
Debt Instrument [Line Items]
Long-term debt					$ 6,000
Secured Credit Facility [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Maturity date of debt	Mar. 01, 2019
Line of credit facility, maximum borrowing capacity	$ 90,000
Available borrowing capacity	$ 34,250
Secured Credit Facility [Member] | Subsequent Event [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	3.95%
Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum borrowing capacity				$ 2,000
Amount borrowed								$ 2,000
Revolving Credit Facility [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread				7.00%

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Long-Term Debt (Summary Of Long Term Debt) (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) property	Dec. 31, 2015 USD ($)	Jun. 04, 2015
Debt Instrument [Line Items]
Total fixed rate debt	$ 30,159	$ 48,051
Total variable rate debt	33,230	39,485
Total Long-term debt	63,389	87,536
Less: Deferred financing costs	(669)	(1,525)
Total long-term debt, net of deferred financing costs	62,720	86,011
Less: Long-term debt related to hotel properties held for sale, net of deferred financing costs of $55 and $736	(5,945)	(41,344)
Less: Long-term debt related to hotel properties held for sale, net of deferred financing costs of $55 and $736	$ 56,775	44,667
Properties encumbered | property	19
Deferred financing costs	$ 55	736
Deferred finance costs, assets held-for-sale	614	789
Available borrowing capacity	$ 1,234
Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	18
Western Alliance Bank [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 4,806	10,819
Total Long-term debt	$ 4,806
Fixed rate, interest rate	7.17%
Maturity	Feb. 01, 2017
Amortization provision	15 years
Western Alliance Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	2
Western Alliance Bank [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 2,803	3,864
Total Long-term debt	$ 2,803
Fixed rate, interest rate	4.75%
Maturity	Feb. 01, 2018
Amortization provision	15 years
Western Alliance Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	2
Cantor Commercial Real Estate Lending [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 5,713	5,826
Total Long-term debt	$ 5,713
Fixed rate, interest rate	4.25%
Maturity	Nov. 06, 2017
Amortization provision	30 years
Cantor Commercial Real Estate Lending [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	1
Morgan Stanley Mortgage Capital Holdings [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 912	27,542
Total Long-term debt	$ 912
Fixed rate, interest rate	5.83%
Maturity	Dec. 01, 2017
Amortization provision	25 years
Morgan Stanley Mortgage Capital Holdings [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	4
Great Western Bank [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 14,326
Fixed rate, interest rate	4.33%
Maturity	Dec. 01, 2021
Amortization provision	25 years
Great Western Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	1
Great Western Bank [Member]
Debt Instrument [Line Items]
Total fixed rate debt	$ 1,599
Fixed rate, interest rate	4.33%
Maturity	Dec. 01, 2021
Amortization provision	7 years
Great Western Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property
Great Western Bank [Member]
Debt Instrument [Line Items]
Total variable rate debt		3,215
Fixed rate, interest rate			4.50%
Variable rate, interest rate	4.75%
Maturity	Jun. 01, 2018
Available borrowing capacity		$ 1,234
Commitment fee		0.25%
Great Western Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	2
Great Western Bank [Member] | Prime [Member]
Debt Instrument [Line Items]
Basis spread	1.00%
Western Alliance Bank [Member]
Debt Instrument [Line Items]
Total variable rate debt	$ 4,882	$ 4,990
Variable rate, interest rate	4.18%
Maturity	Nov. 01, 2020
Amortization provision	25 years
Western Alliance Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	1
Western Alliance Bank [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	3.25%
Reference rate	90-day LIBOR
Western Alliance Bank [Member]
Debt Instrument [Line Items]
Total variable rate debt	$ 9,863	10,079
Variable rate, interest rate	4.18%
Maturity	Nov. 01, 2020
Amortization provision	25 years
Western Alliance Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	1
Western Alliance Bank [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	3.25%
Reference rate	90-day LIBOR
The Huntington National Bank [Member]
Debt Instrument [Line Items]
Total variable rate debt	$ 7,361	9,981
Variable rate, interest rate	2.87%
Maturity	Nov. 01, 2020
Amortization provision	25 years
The Huntington National Bank [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	3
The Huntington National Bank [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	2.25%
Reference rate	30-day LIBOR
The Huntington National Bank [Member] | Federal Funds Effective Swap Rate [Member]
Debt Instrument [Line Items]
Basis spread	4.13%
LMREC 2015 - CREI, Inc. (Latitude) [Member]
Debt Instrument [Line Items]
Total variable rate debt	$ 11,124	$ 11,220
Variable rate, interest rate	7.00%
Maturity	May 01, 2018
Monthly payment	$ 12
LMREC 2015 - CREI, Inc. (Latitude) [Member] | Wholly Owned Properties [Member]
Debt Instrument [Line Items]
Properties encumbered | property	1
LMREC 2015 - CREI, Inc. (Latitude) [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	6.25%
Reference rate	30-day LIBOR
Interest Rate Cap [Member] | LMREC 2015 - CREI, Inc. (Latitude) [Member] | LIBOR [Member]
Debt Instrument [Line Items]
Basis spread	1.00%
Reference rate	30-day LIBOR

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Long-Term Debt (Aggregate Annual Principal Payments On Debt Associated With Assets Held For Use And Held For Sale) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
2017	$ 12,907
2018	14,668
2019	1,172
2020	20,970
2021	13,672
Total Long-term debt	63,389	$ 87,536
Held For Sale [Member]
Debt Instrument [Line Items]
2017	1,574
2018	2,603
2019	52
2020	1,771
Total Long-term debt	6,000
Held For Use [Member]
Debt Instrument [Line Items]
2017	11,333
2018	12,065
2019	1,120
2020	19,199
2021	13,672
Total Long-term debt	$ 57,389

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Convertible Debt At Fair Value (Narrative) (Details) - 6.25% Convertible Promissory Note [Member] - USD ($)	12 Months Ended
	Dec. 31, 2016	Mar. 16, 2016
Debt Instrument [Line Items]
Interest rate	6.25%	6.25%
Principal amount		$ 1,012,000
Conversion price per share		$ 10.00
Maximum ownership percentage of voting stock upon debt conversion		49.00%
Gain (loss) on derivatives and convertible debt	$ (303,000)

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Convertible Debt At Fair Value (Difference Between Fair Value And Unpaid Principal Balance Of Note) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Mar. 16, 2016
Debt Instrument [Line Items]
Fair value	$ 1,315
6.25% Convertible Promissory Note [Member]
Debt Instrument [Line Items]
Interest rate	6.25%	6.25%
Fair value	$ 1,315
Unpaid principal balance	1,012
Fair value carrying amount over/(under) unpaid principal	$ 303

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Fair Value Measurements And Derivative Instruments (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Jun. 06, 2014	Feb. 29, 2012
Fair Value Measurements And Derivative Instruments [Line Items]
Adjustment to additional paid in capital, warrant	$ 611,000
Net gain (loss) on interest rate instruments	6,680,000	$ 11,578,000	$ (14,430,000)
Transfers between levels	$ 0	$ 0	$ 0
Series C Preferred Stock [Member]
Fair Value Measurements And Derivative Instruments [Line Items]
Preferred stock, annual dividend rate	6.25%	6.25%
Debt instrument original conversion price, per share					$ 8.00
Warrants [Member]
Fair Value Measurements And Derivative Instruments [Line Items]
Common stock warrants, exercise price	$ 1.92				$ 9.60
Common stock warrants, adjusted exercise price				$ 1.92
Percentage of adjustment to conversion ratio				120.00%
Subscription Rights [Member]
Fair Value Measurements And Derivative Instruments [Line Items]
Common stock warrants, exercise price				$ 1.60

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Fair Value Measurements And Derivative Instruments (Schedule Of Interest Rate Swaps And Caps) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
The Huntington National Bank [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Effective date	Nov. 01, 2015
Maturity date	Nov. 01, 2020
Notional amount	$ 7,361	$ 9,981
Cancellation date, without penalty	Nov. 01, 2018
LMREC 2015 - CREI, Inc. (Latitude) [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Effective date	Mar. 01, 2016
Maturity date	Jun. 01, 2017
Notional amount	$ 11,124
LMREC 2015 - CREI, Inc. (Latitude) [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Effective date	Oct. 01, 2015
Maturity date	May 01, 2016
Notional amount		$ 11,220
LIBOR [Member] | The Huntington National Bank [Member]
Derivative [Line Items]
Reference rate	30-day LIBOR
Basis spread	2.25%
LIBOR [Member] | The Huntington National Bank [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Basis spread	2.25%
LIBOR [Member] | LMREC 2015 - CREI, Inc. (Latitude) [Member]
Derivative [Line Items]
Reference rate	30-day LIBOR
Basis spread	6.25%
LIBOR [Member] | LMREC 2015 - CREI, Inc. (Latitude) [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Reference rate	30-day LIBOR
Basis spread	1.00%
LIBOR [Member] | LMREC 2015 - CREI, Inc. (Latitude) [Member] | Interest Rate Cap [Member]
Derivative [Line Items]
Reference rate	30-day LIBOR
Basis spread	2.50%
Federal Funds Effective Swap Rate [Member] | The Huntington National Bank [Member]
Derivative [Line Items]
Basis spread	4.13%
Federal Funds Effective Swap Rate [Member] | The Huntington National Bank [Member] | Interest Rate Swap [Member]
Derivative [Line Items]
Basis spread	4.13%

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Fair Value Measurements And Derivative Instruments (Schedule Of Fair Value Liabilities Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Convertible debt, at fair value	$ 1,315
Fair value, liability	1,323	$ 8,759
Level 2 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability	8	77
Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Convertible debt, at fair value	1,315
Fair value, liability	1,315	8,682	$ 20,337
Series C Preferred Embedded Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability		6,271
Series C Preferred Embedded Derivative [Member] | Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability		6,271	$ 13,804
Warrant Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability		2,411
Warrant Derivative [Member] | Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability		2,411
Interest Rate Instruments [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability	8	77
Interest Rate Instruments [Member] | Level 2 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, liability	$ 8	$ 77

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Fair Value Measurements And Derivative Instruments (Reconciliation Of Fair Value Liabilities Measured On Recurring Basis) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	$ 8,759
Fair value, end of period	1,323	$ 8,759
Series C Preferred Embedded Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	6,271
Fair value, end of period		6,271
Warrant Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	2,411
Fair value, end of period		2,411
Level 3 [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	8,682	20,337
Net (gains) losses recognized in earnings	(6,345)	(11,655)
Purchases and issuances	1,012
Sales and settlements	(1,423)
Gross transfers out of Level 3	(611)
Fair value, end of period	1,315	8,682
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period	303	(11,655)
Level 3 [Member] | Series C Preferred Embedded Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	6,271	13,804
Net (gains) losses recognized in earnings	(4,848)	(7,533)
Sales and settlements	(1,423)
Fair value, end of period		6,271
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period		(7,533)
Level 3 [Member] | Warrant Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	2,411
Fair value, end of period		2,411
Level 3 [Member] | Convertible Debt [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Net (gains) losses recognized in earnings	303
Purchases and issuances	1,012
Fair value, end of period	1,315
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period	303
Real Estate Strategies, L.P. [Member] | Level 3 [Member] | Warrant Derivative [Member]
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Fair value, beginning of period	2,411	6,533
Net (gains) losses recognized in earnings	(1,800)	(4,122)
Gross transfers out of Level 3	$ (611)
Fair value, end of period		2,411
Total unrealized (gains) losses during the period included in earnings related to instruments held at end of period		$ (4,122)

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Fair Value Measurements And Derivative Instruments (Schedule Of Carrying Value And Estimated Fair Value Of Long-Term Debt) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	$ 62,720	$ 86,011
Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	63,889	89,279
Held For Use [Member] | Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	56,775	44,667
Held For Use [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	57,456	45,771
Held For Sale [Member] | Carrying Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	5,945	41,344
Held For Sale [Member] | Estimated Fair Value [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of debt	$ 6,433	$ 43,508

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Fair Value Measurements And Derivative Instruments (Schedule Of Impairment And Recovery Of Previously Recorded Impairment) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) item	Dec. 31, 2015 USD ($) item	Dec. 31, 2014 USD ($) item
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item									5	11	16
Net impairment loss reported in continuing operations	$ (220)	$ (343)	$ (121)	$ (793)	$ (312)	$ 313	$ (3,053)	$ (777)	$ (1,477)	$ (3,829)	$ (1,269)
Impairment (loss) recovery, Total net impairments									$ (1,477)	$ (3,708)	$ (2,921)
Continuing Operations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item									5	7	3
Net impairment loss reported in continuing operations									$ (1,477)	$ (3,829)	$ (1,269)
Discontinued Operations [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item										4	13
Net impairment loss reported in discontinued operations										$ 121	$ (1,652)
Held For Sale [Member] | Continuing Operations [Member] | Impairment Loss [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item									4
Impairment (loss) recovery, Continuing operations, Held for sale hotels									$ (1,273)
Sold [Member] | Continuing Operations [Member] | Impairment Loss [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item									1	6	2
Impairment (loss) recovery, Continuing operations, Sold hotels									$ (204)	$ (3,914)	$ (1,388)
Sold [Member] | Continuing Operations [Member] | Recovery Of Impairment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item										1	1
Impairment (loss) recovery, Continuing operations, Sold hotels										$ 85	$ 119
Sold [Member] | Discontinued Operations [Member] | Impairment Loss [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item										1	8
Impairment (loss) recovery, Discontinued operations, Sold hotels										$ (117)	$ (2,450)
Sold [Member] | Discontinued Operations [Member] | Recovery Of Impairment [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Number of hotels | item										3	5
Impairment (loss) recovery, Discontinued operations, Sold hotels										$ 238	$ 798

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Common Stock (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands			12 Months Ended
	Mar. 11, 2015	Jun. 06, 2014	Dec. 31, 2014	Dec. 31, 2016	Feb. 29, 2012
Class of Stock [Line Items]
Rights offering issuance costs			$ 218
Subscription Rights [Member]
Class of Stock [Line Items]
Stock issued by exercise of warrant or right		1,787,204
Common stock warrants, exercise price		$ 1.60
Number of shares called by each warrant or right		1
Value of stock issued by exercise of warrant or right		$ 2,860
Rights offering issuance costs		218
Warrants [Member]
Class of Stock [Line Items]
Common stock warrants, exercise price				$ 1.92	$ 9.60
Warrants [Member] | Executive Officer [Member]
Class of Stock [Line Items]
Stock issued by exercise of warrant or right	227,894
Common stock warrants, exercise price	$ 1.52
Revolving Credit Facility [Member] | Real Estate Strategies, L.P. [Member]
Class of Stock [Line Items]
Proceeds from revolving debt		$ 2,000

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Preferred Stock (Narrative) (Details) - USD ($)				12 Months Ended
	Feb. 28, 2017	Apr. 15, 2016	Mar. 16, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 30, 2005
Class of Stock [Line Items]
Preferred dividends, cash				$ 3,090,000
Subsequent Event [Member]
Class of Stock [Line Items]
Shares issued upon conversion	39,032,225
Real Estate Strategies, L.P. [Member]
Class of Stock [Line Items]
Preferred dividends, cash			$ 1,484,000
Percentage of voting stock			49.00%
Real Estate Strategies, L.P. [Member] | Promissory Note [Member]
Class of Stock [Line Items]
Interest rate			6.25%
Debt issued			$ 1,012,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate				8.00%	8.00%
Preferred stock, shares sold						1,521,258
Preferred stock value					$ 8,000
Dividends unpaid and accrued					$ 1,452,000
Preferred stock, redemption price		$ 10.00		$ 10.00
Preferred stock, shares outstanding		803,270			803,270
Dividends unpaid and accrued per share		$ 2.084940			$ 1.807
Redemption liability		$ 9,707,000
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate				10.00%	10.00%
Dividends unpaid and accrued					$ 1,870,000
Preferred stock, redemption price		$ 25.00		$ 25.00
Preferred stock, shares outstanding		332,500			332,500
Dividends unpaid and accrued per share		$ 6.354167			$ 5.625
Redemption liability		$ 10,425,000
Series A and B Preferred Stock [Member] | SREP III Flight Investco L.P. [Member]
Class of Stock [Line Items]
Preferred stock value			$ 20,147,000
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate				6.25%	6.25%
Preferred stock value					$ 30,000
Dividends unpaid and accrued					$ 4,492,000
Percentage of voting stock				34.00%
Preferred stock, shares outstanding					3,000,000
Dividends unpaid and accrued per share					$ 1.497
Series C Preferred Stock [Member] | Real Estate Strategies, L.P. [Member]
Class of Stock [Line Items]
Shares converted			3,000,000
Dividends unpaid and accrued			$ 4,947,000
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate				6.25%
Preferred stock value				$ 61,333,000
Percentage of voting stock				40.00%
Preferred stock, shares outstanding			6,245,156	6,245,156
Series D Preferred Stock [Member] | SREP III Flight Investco L.P. [Member]
Class of Stock [Line Items]
Preferred stock, shares sold			3,000,000
Preferred stock value			$ 30,000,000
Series D Preferred Stock [Member] | Real Estate Strategies, L.P. [Member]
Class of Stock [Line Items]
Preferred stock, shares sold			245,156
Shares issued upon conversion			3,000,000

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Preferred Stock (Series A Preferred Stock) (Narrative) (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Apr. 15, 2016 $ / shares shares	Jun. 10, 2015 item	Dec. 31, 2016 USD ($) $ / shares item	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 30, 2005 shares
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares sold | shares					1,521,258
Preferred stock, shares outstanding | shares	803,270			803,270
Preferred stock, annual dividend rate			8.00%	8.00%
Preferred stock, liquidation preference per share | $ / shares			$ 10.00
Preferred stock, fixed annual amount of dividend per share | $ / shares			0.80
Preferred stock, redemption price | $ / shares	$ 10.00		$ 10.00
Dividends unpaid and accrued | $				$ 1,452
Dividends unpaid and accrued per share | $ / shares	$ 2.084940			$ 1.807
Change in value of preferred stock | $			$ 2,326
Change in net earnings available to common shareholders | $			$ 874
Number of voting classes		1
Number of directors shareholders are entitled to elect			2
Number of directors elected		2
Series A Preferred Stock And Series B Preferred Stock [Member]
Class of Stock [Line Items]
Number of voting classes		1
Number of directors elected		2

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Preferred Stock (Series B Preferred Stock) (Narrative) (Details) $ / shares in Units, $ in Thousands			12 Months Ended
	Apr. 15, 2016 USD ($) $ / shares shares	Jun. 10, 2015 item	Dec. 31, 2016 USD ($) $ / shares	Dec. 31, 2015 USD ($) $ / shares shares	Feb. 28, 2017 $ / shares
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding | shares	332,500			332,500
Preferred stock, annual dividend rate			10.00%	10.00%
Preferred stock, liquidation preference per share			$ 25.00
Preferred stock, fixed annual amount of dividend per share			$ 2.50
Dividends unpaid and accrued | $				$ 1,870
Dividends unpaid and accrued per share	$ 6.354167			$ 5.625
Redemption liability | $	$ 10,425
Change in value of preferred stock | $			$ (2,781)
Change in net earnings available to common shareholders | $			$ (911)
Preferred stock, redemption price	$ 25.00		$ 25.00
Series A Preferred Stock And Series B Preferred Stock [Member]
Class of Stock [Line Items]
Number of voting classes | item		1
Number of directors elected | item		2
Subsequent Event [Member]
Class of Stock [Line Items]
Shares issued, price per share					$ 1.60

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Preferred Stock (Series C Preferred Stock And RES Warrants) (Narrative) (Details) $ / shares in Units, $ in Thousands			1 Months Ended	12 Months Ended
	Feb. 28, 2017 shares	Mar. 16, 2016 USD ($)	Feb. 29, 2012 $ / shares item shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares	Jun. 06, 2014 $ / shares
Class of Stock [Line Items]
Dividends paid in cash | $				$ 3,090
Series C Convertible Preferred Stock And Warrants [Member]
Class of Stock [Line Items]
Number of closings for sale of preferred stock | item			2
Preferred stock, shares issued and sold | shares			3,000,000
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, liquidation preference per share			$ 10.00
Debt instrument original conversion price, per share			$ 8.00
Preferred stock, fixed annual amount of dividend per share				$ 0.625
Preferred stock, annual dividend rate				6.25%	6.25%
Dividends unpaid and accrued | $					$ 4,492
Dividends unpaid and accrued per share					$ 1.497
Number of shares issued for each convertible preferred stock | shares				6.25
Preferred stock, voting rights per share				$ 0.78625
Percentage of voting stock				34.00%
Reduction of accumulated deficit | $		$ 20,366
Reduction of net earnings | $		$ 15,874
Warrants [Member]
Class of Stock [Line Items]
Preferred stock, shares issued and sold | shares			3,750,000
Warrants outstanding | shares				3,750,000
Common stock warrants, exercise price			$ 9.60	$ 1.92
Warrant expiration				Jan. 31, 2017
Common stock warrants, adjusted exercise price						$ 1.92
Percentage of adjustment to conversion ratio						120.00%
Subsequent Event [Member]
Class of Stock [Line Items]
Shares issued upon conversion | shares	39,032,225
Subscription Rights [Member]
Class of Stock [Line Items]
Common stock warrants, exercise price						$ 1.60

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Preferred Stock (Series D Preferred Stock) (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Feb. 28, 2017	Dec. 31, 2016	Mar. 16, 2016
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding		6,245,156	6,245,156
Preferred stock, annual dividend rate		6.25%
Preferred stock, face value		$ 10.00
Percentage of voting stock		40.00%
Conversion price per share		$ 1.60
Debt instrument conversion ratio to common stock		6.25
Preferred stock, partial redemption value		$ 30,000
Aggregate outstanding shares required for liquidation election		40.00%
Preferred stock value		$ 61,333
Series D Preferred Stock [Member] | On Or Before March 16, 2019 [Member]
Class of Stock [Line Items]
Preferred stock, redemption price		$ 12.00
Series D Preferred Stock [Member] | March 16, 2019 to March 16, 2020 [Member]
Class of Stock [Line Items]
Preferred stock, redemption price		13.00
Series D Preferred Stock [Member] | On Or After March 16, 2020 [Member]
Class of Stock [Line Items]
Preferred stock, redemption price		14.00
Series D Preferred Stock [Member] | On Or Before September 30,2021 [Member]
Class of Stock [Line Items]
Preferred stock, redemption price		$ 14.00
Series D Preferred Stock [Member] | After September 30, 2021 [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate		12.50%
Series E Preferred Stock [Member] | Subsequent Event [Member]
Class of Stock [Line Items]
Preferred stock, annual dividend rate	6.25%
Preferred stock, redemption price	$ 2.13
Preferred stock value	$ 9,250
Minimum [Member] | Series D Preferred Stock [Member]
Class of Stock [Line Items]
Debt instrument conversion amount upon closing of qualified offering		$ 50,000
Maximum [Member] | Series D Preferred Stock [Member]
Class of Stock [Line Items]
Debt instrument conversion amount upon closing of qualified offering		$ 75,000

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Preferred Stock (Components Of Dividends Declared And Undeclared And In Kind Dividends Deemed On Preferred Stock) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	$ 20,748	$ 3,632	$ 3,452
Accrued At Stated Rate [Member] | Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	222	727	671
Accrued At Stated Rate [Member] | Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	243	831	831
Accrued At Stated Rate [Member] | Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	455	$ 2,074	$ 1,950
Accrued At Stated Rate [Member] | Series D Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	3,090
Deemed Upon Notice Of Redemption [Member] | Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	652
Deemed Upon Notice Of Redemption [Member] | Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	668
Deemed At Exchange [Member] | Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Dividends declared and undeclared and in kind dividends deemed on preferred stock	$ 15,418

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Noncontrolling Interest Of Common Units In CHLP (Details) $ in Thousands			12 Months Ended
	Oct. 02, 2015 shares	Mar. 02, 2015 shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($) item shares	Dec. 31, 2014 shares
Redeemable Noncontrolling Interest [Line Items]
Number of events causing common units to increase significantly | item				2
Common units redemption to common stock			12.50%
Common units redeemed			0	0	0
Limited Partner [Member]
Redeemable Noncontrolling Interest [Line Items]
Common units outstanding			2,609,791	2,395,887
Condor Hospitality Limited Partnership [Member]
Redeemable Noncontrolling Interest [Line Items]
Ownership percentage of minority interest			97.80%	90.10%	99.90%
Common Units and LTIP [Member]
Redeemable Noncontrolling Interest [Line Items]
Redemption value | $			$ 2,008	$ 1,197
LTIP [Member]
Redeemable Noncontrolling Interest [Line Items]
Common units outstanding			5,263,152	5,263,152
Grants in period		657,894
Executive Officer [Member] | LTIP [Member]
Redeemable Noncontrolling Interest [Line Items]
Grants in period		5,263,152
Noncontrolling Interest [Member] | Condor Hospitality Limited Partnership [Member]
Redeemable Noncontrolling Interest [Line Items]
Common units outstanding			7,872,943	7,659,039
Common units issued	2,298,879

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Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands				12 Months Ended
	Mar. 17, 2015	Mar. 11, 2015	Mar. 02, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Jun. 15, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Trading period used to determine award price				20 days
Stock-based compensation				$ 305	$ 285	$ 34
2006 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized				62,500
Expiration date				Dec. 31, 2015
Shares issued to independent directors					21,422	9,711
2016 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares authorized prior to redemption of preferred stock							250,000
Shares issued to independent directors				15,349
Maximum [Member] | 2016 Stock Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized							3,000,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested options, outstanding				5,625
Vested options, weighted average exercise price				$ 7.53
Warrants [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock warrants, exercise price				$ 1.92
Warrants [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost				$ 115
Number of shares called by exercise of warrant			657,894
Common stock warrants, exercise price	$ 1.92	$ 1.52	$ 1.52
Expiration period				3 years
Unrecognized compensation cost recognition period				14 months
Shares purchased with warrants		227,894		430,000
Warrants [Member] | Executive Officer [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units earned, increments	33.33%
Warrants [Member] | Executive Officer [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Units earned, increments	50.00%
LTIP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost				$ 199
Unrecognized compensation cost recognition period				14 months
Grants in period			657,894
Units earned, increments			33.33%
LTIP [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage			12.50%
Stock price per share milestone			$ 3.50
LTIP [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock price per share milestone			4.50
LTIP [Member] | Share-based Compensation Award, Tranche Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock price per share milestone			$ 5.50
LTIP [Member] | Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Grants in period			5,263,152

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Stock-Based Compensation (Schedule Of Estimated Fair Value Of Options) (Details)	Mar. 02, 2015 $ / shares
$1.52 Grant March 2, 2015 [Member] | Black-Scholes Option-Pricing Model [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	53.10%
Expected forfeitures	0.00%
Expected term (in days/years)	15 days
Risk free interest rate	0.02%
$1.92 Grant March 2, 2015 [Member] | Black-Scholes Option-Pricing Model [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	78.60%
Expected forfeitures	0.00%
Expected term (in days/years)	3 years
Risk free interest rate	1.06%
March 2, 2015 [Member] | Monte Carlo Option-Pricing Model [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Volatility	75.50%
Expected forfeitures	0.00%
Weighted average price	$ 1.53
Expected term (in days/years)	3 years
Risk free interest rate	1.06%

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Income Taxes (Narrative) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Line Items]
Current income tax expense (benefit)	$ 0	$ 0	$ 0
Deferred income tax expense (benefit)	0	0	0
Alternative minimum tax expense	$ 35,000
U.S. federal income tax rate	34.00%
Net operating loss carryforward for federal income tax purposes	$ 1,477,000	6,902,000
Dividends		$ 0	$ 0
Minimum [Member]
Income Tax Disclosure [Line Items]
Tax year subject to examination	2013
Maximum [Member]
Income Tax Disclosure [Line Items]
Tax year subject to examination	2016
TRS Leasing, Inc [Member]
Income Tax Disclosure [Line Items]
Alternative minimum tax expense	$ 90,000
Net operating loss carryforward for federal income tax purposes	$ 3,810,000
TRS Leasing, Inc [Member] | Minimum [Member]
Income Tax Disclosure [Line Items]
Loss carryforwards expiration period	Dec. 31, 2022
TRS Leasing, Inc [Member] | Maximum [Member]
Income Tax Disclosure [Line Items]
Loss carryforwards expiration period	Dec. 31, 2035

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Income Taxes (Schedule Of Actual Income Benefit From Continuing Operations) (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Total income tax expense	$ (125)	$ (125)
TRS Leasing, Inc [Member]
Computed "expected" income tax (benefit) expense		993	$ 684	$ (118)
State income taxes, net of Federal income tax (benefit) expense		139	82	(14)
(Decrease) increase in valuation allowance		(1,082)	(722)	$ 132
Other		(50)	$ (44)
Alternative minimum tax		90
Total income tax expense		$ 90

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Income Taxes (Schedule Of Deferred Tax Assets And Deferred Tax Liabilities) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Income Taxes [Abstract]
Expenses accrued for consolidated financial statement purposes, nondeductible for tax return purposes	$ 99	$ 113
Net operating losses carried forward for federal income tax purposes	1,477	6,902
Book depreciation in excess of tax depreciation	38
Subtotal deferred tax assets	1,614	7,015
Valuation allowance	(1,551)	(6,923)
Total deferred tax assets	63	92
Tax depreciation in excess of book depreciation		92
JV bases difference	63
Total deferred tax liabilities	63	92
Net deferred tax assets

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Income Taxes (Summary Of Distributions Paid) (Details)	12 Months Ended
	Dec. 31, 2016 $ / shares
Common Shares, Ordinary income, Amount	$ 0.070000
Common Shares, Capital gain, Amount
Common Shares, Return of capital, Amount
Common Shares, Total, Amount	$ 0.070000
Common Shares, Ordinary income, Percent	100.00%
Common Shares, Capital gain, Percent
Common Shares, Return of capital, Percent
Common Shares, Total, Percent	100.00%
Series C Preferred Stock [Member]
Preferred Shares, Ordinary income, Amount	$ 1.649124
Preferred Shares, Capital gain, Amount
Preferred Shares, Return of capital, Amount
Preferred Shares, Total, Amount	$ 1.649124
Preferred Shares, Ordinary income, Percent	100.00%
Preferred Shares, Capital gain, Percent
Preferred Shares, Return of capital, Percent
Preferred Shares, Total, Percent	100.00%
Series D Preferred Stock [Member]
Preferred Shares, Ordinary income, Amount	$ 0.494792
Preferred Shares, Capital gain, Amount
Preferred Shares, Return of capital, Amount
Preferred Shares, Total, Amount	$ 0.494792
Preferred Shares, Ordinary income, Percent	100.00%
Preferred Shares, Capital gain, Percent
Preferred Shares, Return of capital, Percent
Preferred Shares, Total, Percent	100.00%

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Earnings Per Share (Computation Of Basic And Diluted Earnings Per Common Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Numerator: Basic
Net earnings (loss) attributable to common shareholders: Continuing operations - Basic									$ 1,390	$ 6,055	$ (22,581)
Net earnings (loss) attributable to common shareholders: Discontinued operations - Basic									657	3,438	2,893
Net earnings (loss) attributable to common shareholders: Total Basic	$ 3,565	$ 1,816	$ 7,108	$ (10,442)	$ 3,416	$ 10,316	$ (6,517)	$ 2,278	2,047	9,493	(19,688)
Numerator: Diluted
Continuing operations - Diluted									4,480	(3,526)	(22,581)
Discontinued operations - Diluted									657	3,438	2,893
Total Diluted									$ 5,137	$ (88)	$ (19,688)
Denominator
Weighted average number of common shares - Basic									4,947,234	4,885,625	3,897,092
Unvested stock										4,025
Warrants - Employees										691
Warrants - RES										(399,778)
Weighted average number of common shares - Diluted									35,981,052	23,240,563	3,897,092
Earnings Per Share
Continuing operations - Basic	$ 0.72	$ 0.37	$ 1.44	$ (2.25)	$ 0.44	$ 2.06	$ (1.52)	$ 0.24	$ 0.28	$ 1.24	$ (5.79)
Discontinued operations - Basic				0.14	0.25	0.03	0.20	0.24	0.13	0.70	0.74
Total - Basic Earnings per Share	0.72	0.37	1.44	(2.11)	0.69	2.09	(1.32)	0.48	0.41	1.94	(5.05)
Continuing operations - Diluted	0.10	0.06	0.18	(2.25)	(0.04)	0.12	(1.52)	(0.14)	0.12	(0.15)	(5.79)
Discontinued operations - Diluted				0.14	0.05	0.01	0.20	0.05	0.02	$ 0.15	0.74
Total - Diluted Earnings per Share	$ 0.10	$ 0.06	$ 0.18	$ (2.11)	$ 0.01	$ 0.13	$ (1.32)	$ (0.09)	$ 0.14		$ (5.05)
Series C Preferred Embedded Derivative [Member]
Numerator: Diluted
Unrealized gain on derivative										$ (7,533)
Warrant Derivative [Member]
Numerator: Diluted
Unrealized gain on derivative										(4,122)
Series C Preferred Stock [Member]
Numerator: Diluted
Dividends on Preferred Stock										$ 2,074
Denominator
Preferred Stock										18,750,000
Series D Preferred Stock [Member]
Numerator: Diluted
Dividends on Preferred Stock									$ 3,090
Denominator
Preferred Stock									31,033,818

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Earnings Per Share (Schedule Of Potentially Dilutive Securities Excluded From Computation Of Earnings Per Share) (Details) - shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	9,540,380	999,049	23,073,787
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	5,625	5,625	8,750
Unvested Stock Awards [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator			1,541
Warrants - Employees [Member}
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	430,000	359,121
Series C Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	3,893,443		18,750,000
LTIP [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	657,894	549,747
Convertible Debt [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	502,690		551,370
Common Units [Member] | Condor Hospitality Trust, Inc. [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	300,728	84,556	12,126
Real Estate Strategies, L.P. [Member] | Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total potentially dilutive securities excluded from the denominator	3,750,000		3,750,000

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Commitments And Contingencies (Narrative) (Details) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016 USD ($) property	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)	Sep. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Dec. 31, 2016 USD ($) property item	Dec. 31, 2015 USD ($) property	Dec. 31, 2014 USD ($) property	Dec. 31, 2012 USD ($)	Jan. 01, 2016 property
Loss Contingencies [Line Items]
Revenues	$ 10,470	$ 13,519	$ 14,155	$ 12,503	$ 13,394	$ 15,895	$ 16,733	$ 12,692	$ 50,647	$ 58,714	$ 58,799
Hotel and property operations									37,092	43,367	44,391
Management fees incurred									1,619	2,466	3,101
Incentive management fee									$ 190	158
Management agreement renewal additional term									1 year
Management agreement written notice of termination period									90 days
Number of hotels | property	19								19
Franchise costs									$ 3,123	3,883	4,691
Number of new leases entered into during period | item									3
Lease expense									$ 105	105	102
Lease income									86	$ 198	$ 309
Number of wholly-owned hotel properties acquired | property										3	0
Employer contribution expense									$ 73	$ 66	$ 59
Franchise Rights [Member]
Loss Contingencies [Line Items]
Number of hotels | property	17								17
Office Building [Member]
Loss Contingencies [Line Items]
Annual lease payment									$ 132
Lease expense									$ 199	163	162
Restaurant [Member]
Loss Contingencies [Line Items]
Number of real estate properties associated with lease agreements | item									2
Cell Tower [Member]
Loss Contingencies [Line Items]
Number of real estate properties associated with lease agreements | item									1
Lease One [Member]
Loss Contingencies [Line Items]
Number of real estate properties associated with lease agreements | property									1
Monthly lease payment									$ 2
Monthly lease payments, percentage of room revenue									5.00%
Real Estate Strategies, L.P. [Member]
Loss Contingencies [Line Items]
Proceeds from capital infusion												$ 25,000,000
Minimum [Member]
Loss Contingencies [Line Items]
Management fee percent									3.00%
Management agreement term									1 year
Franchise fee percent									3.30%
Other franchiser programs and service fee percent									2.50%
Franchise agreement term									10 years
Lease expiration									Dec. 31, 2019
Maximum [Member]
Loss Contingencies [Line Items]
Management fee percent									3.50%
Incentive fee percent									5.00%
Management agreement term									3 years
Franchise fee percent									5.50%
Other franchiser programs and service fee percent									6.00%
Franchise agreement term									25 years
Lease expiration									Dec. 31, 2021
Continuing Operations [Member]
Loss Contingencies [Line Items]
Revenues									$ 86	177	292
Hotel and property operations									1,619	2,348	2,521
Management fees incurred											2,521
Franchise costs									$ 3,123	$ 3,853	$ 4,051
Held For Sale [Member]
Loss Contingencies [Line Items]
Number of hotels | property	7								7				16
Wholly Owned Properties [Member]
Loss Contingencies [Line Items]
Number of hotels | property	18								18

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Commitments And Contingencies (Schedule Of Future Minimum Lease Payments) (Details) $ in Thousands	Dec. 31, 2016 USD ($)
Operating Leases, Future Minimum Payments Due, Rolling Maturity [Abstract]
2017	$ 156
2018	159
2019	138
2020	61
2021	47
Total future minimum lease payments	$ 561

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Quarterly Operating Results (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Quarterly Operating Results [Abstract]
Revenues	$ 10,470	$ 13,519	$ 14,155	$ 12,503	$ 13,394	$ 15,895	$ 16,733	$ 12,692	$ 50,647	$ 58,714	$ 58,799
Operating expenses	11,009	12,445	12,508	12,662	13,826	13,983	14,247	13,134	48,624	55,190	55,096
Operating income	(539)	1,074	1,647	(159)	(432)	1,912	2,486	(442)	2,023	3,524	3,703
Net gain (loss) on disposition of assets	7,318	3,591	8,856	3,367	1,997	2,927	(137)	11	23,132	4,798	(1)
Equity in loss of joint venture	(190)	(54)							(244)
Net gain (loss) on derivatives and convertible debt	72	26	162	6,117	3,570	7,895	(4,710)	4,823	6,377	11,578	(14,430)
Other income (expense)	(32)	85	23	(21)	(8)	(4)	31	95	55	114	116
Interest expense	(1,006)	(1,127)	(1,248)	(1,329)	(1,328)	(1,137)	(1,510)	(1,547)	(4,710)	(5,522)	(7,116)
Loss on debt extinguishment	(639)	(399)	(976)	(173)	(102)	(104)		(7)	(2,187)	(213)	(158)
Impairment recovery (loss)	(220)	(343)	(121)	(793)	(312)	313	(3,053)	(777)	(1,477)	(3,829)	(1,269)
Earnings (loss) from continuing operations before income taxes	4,764	2,853	8,343	7,009	3,385	11,802	(6,893)	2,156	22,969	10,450	(19,155)
Income tax expense	(125)								(125)
Earnings (loss) from continuing operations	4,639	2,853	8,343	7,009	3,385	11,802	(6,893)	2,156	22,844	10,450	(19,155)
Gain from discontinued operations, net of tax				678	1,432	152	994	1,294	678	3,872	2,896
Net earnings (loss)	4,639	2,853	8,343	7,687	4,817	11,954	(5,899)	3,450	23,522	14,322	(16,259)
(Earnings) loss attributable to noncontrolling interest	(99)	(61)	(178)	(389)	(476)	(724)	284	(281)	(727)	(1,197)	23
Net earnings (loss) attributable to controlling interests	4,540	2,792	8,165	7,298	4,341	11,230	(5,615)	3,169	22,795	13,125	(16,236)
Dividends declared and undeclared and in kind dividends deemed on preferred stock	(975)	(976)	(1,057)	(17,740)	(925)	(914)	(902)	(891)	(20,748)	(3,632)	(3,452)
Net earnings (loss) attributable to common shareholders: Total Basic	$ 3,565	$ 1,816	$ 7,108	$ (10,442)	$ 3,416	$ 10,316	$ (6,517)	$ 2,278	$ 2,047	$ 9,493	$ (19,688)
Basic Earnings per Share (EPS)
Continuing operations - Basic	$ 0.72	$ 0.37	$ 1.44	$ (2.25)	$ 0.44	$ 2.06	$ (1.52)	$ 0.24	$ 0.28	$ 1.24	$ (5.79)
Discontinued operations - Basic				0.14	0.25	0.03	0.20	0.24	0.13	0.70	0.74
Total - Basic Earnings per Share	0.72	0.37	1.44	(2.11)	0.69	2.09	(1.32)	0.48	0.41	1.94	(5.05)
Diluted Earnings per Share (EPS)
Continuing operations - Diluted	0.10	0.06	0.18	(2.25)	(0.04)	0.12	(1.52)	(0.14)	0.12	(0.15)	(5.79)
Discontinued operations - Diluted				0.14	0.05	0.01	0.20	0.05	0.02	$ 0.15	0.74
Total - Diluted Earnings per Share	$ 0.10	$ 0.06	$ 0.18	$ (2.11)	$ 0.01	$ 0.13	$ (1.32)	$ (0.09)	$ 0.14		$ (5.05)

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Subsequent Events (Narrative) (Details) $ / shares in Units, $ in Thousands							3 Months Ended	12 Months Ended
	Mar. 01, 2017 USD ($) property loan item	Feb. 28, 2017 USD ($) $ / shares shares	Jan. 27, 2017	Jan. 24, 2017 $ / shares shares	Jun. 11, 2014 USD ($)	Jan. 09, 2014 USD ($)	Mar. 31, 2017 USD ($) item	Dec. 31, 2016 USD ($) property	Dec. 31, 2015 USD ($) property	Dec. 31, 2014 USD ($) property	Mar. 03, 2017 USD ($)	Jan. 23, 2017 shares
Subsequent Event [Line Items]
Number of hotels acquired | property									3	0
Long-term debt								$ 63,389	$ 87,536
Number of hotels | property								19
Available borrowing capacity								$ 1,234
Proceeds from revolving debt								10,198	41,152	$ 29,692
Fair value of common stock sold									$ 346	$ 2,591
Real Estate Strategies, L.P. [Member]
Subsequent Event [Line Items]
Fair value of common stock sold					$ 1,950
Western Alliance Bank [Member]
Subsequent Event [Line Items]
Long-term debt								$ 4,806
Maturity date of debt								Feb. 01, 2017
Subsequent Event [Member]
Subsequent Event [Line Items]
Shares issued upon conversion | shares		39,032,225
Shares issued, price per share | $ / shares		$ 1.60
Subsequent Event [Member] | New Warrants [Member]
Subsequent Event [Line Items]
Warrants outstanding | shares				150,540
Number of shares called by exercise of warrant | shares				150,540
Common stock warrants, exercise price | $ / shares				$ 0.001
Warrant expiration				Jan. 24, 2019
Subsequent Event [Member] | Old Warrants [Member] | Real Estate Strategies, L.P. [Member]
Subsequent Event [Line Items]
Warrants outstanding | shares												3,750,000
Subsequent Event [Member] | Series E Preferred Stock [Member]
Subsequent Event [Line Items]
Fair value of common stock sold		$ 9,250
Preferred stock, annual dividend rate		6.25%
Preferred stock, par value | $ / shares		$ 10.00
Preferred stock, dividend rate increase resulting from failure to pay dividend, without equity offerings		12.50%
Preferred stock, dividend rate increase resulting from failure to pay dividend, with equity offerings		9.50%
Preferred stock, redemption price | $ / shares		$ 2.13
Preferred stock, percentage of conversion price at which preferred stock automatically converts to common stock		120.00%
Preferred stock, trading days for preferred stock automatically converting to common stock		60 days
Number of shares redeemable by company when market price is within defined range | shares		490,250
Preferred stock, percentage of liquidation value at which holders can sell		130.00%
Threshold of originally issued preferred stock shares outstanding required for approval of certain transactions by preferred shareholders | shares		434,750
Threshold of originally issued preferred stock shares outstanding required for approval of certain transactions by preferred shareholders, percent		47.00%
Percentage of approval required for certain transactions by preferred shareholders		75.00%
Threshold of amount of related party transactions for aprroval by preferred shareholders		$ 120
Threshold of maximum percentage of shares grantable before shareholder approval required		9.90%
Subsequent Event [Member] | Home2 Suites [Member]
Subsequent Event [Line Items]
Number of hotels acquired | item							4
Purchase price of hotel acquisition							$ 73,750
Subsequent Event [Member] | Home2 Suites [Member] | Collateral Pledged [Member]
Subsequent Event [Line Items]
Number of hotels acquired | property	3
Subsequent Event [Member] | Western Alliance Bank [Member]
Subsequent Event [Line Items]
Maturity date of debt			Feb. 01, 2018
Minimum [Member] | Subsequent Event [Member] | Series E Preferred Stock [Member]
Subsequent Event [Line Items]
Preferred stock, percentage of liquidation value at which company can redeem preferred stock		110.00%
Maximum [Member] | Subsequent Event [Member] | Series E Preferred Stock [Member]
Subsequent Event [Line Items]
Preferred stock, percentage of liquidation value at which company can redeem preferred stock		130.00%
Variable Rate Debt [Member] | Subsequent Event [Member] | Multiple Western Alliance Bank Loans [Member]
Subsequent Event [Line Items]
Number of loans not refinanced during period | loan	2
Fixed Rate Debt [Member] | Subsequent Event [Member] | Multiple Great Western Banks [Member]
Subsequent Event [Line Items]
Number of loans not refinanced during period | loan	2
Secured Credit Facility [Member]
Subsequent Event [Line Items]
Long-term debt								$ 63,389
Secured Credit Facility [Member] | Forecast [Member]
Subsequent Event [Line Items]
Increase in borrowing capacity											$ 41,050
Secured Credit Facility [Member] | Subsequent Event [Member]
Subsequent Event [Line Items]
Maturity date of debt	Mar. 01, 2019
Line of credit facility, maximum borrowing capacity	$ 90,000
Line of credit facility, accordian feature	400,000
Available borrowing capacity	$ 34,250
Loan term	2 years
Automatic extension period based on capital achievements	1 year
Number of loan extensions | item	2
Extension period	1 year
Proceeds from revolving debt	$ 34,250
Secured Credit Facility [Member] | Subsequent Event [Member] | LIBOR [Member]
Subsequent Event [Line Items]
Basis spread	3.95%
Secured Credit Facility [Member] | Subsequent Event [Member] | Base Rate [Member]
Subsequent Event [Line Items]
Basis spread	2.95%
Secured Credit Facility [Member] | Subsequent Event [Member] | Collateral Pledged [Member]
Subsequent Event [Line Items]
Number of hotels | property	14
Secured Credit Facility [Member] | Minimum [Member] | Subsequent Event [Member] | LIBOR [Member]
Subsequent Event [Line Items]
Basis spread after capital achievements	2.25%
Secured Credit Facility [Member] | Minimum [Member] | Subsequent Event [Member] | Base Rate [Member]
Subsequent Event [Line Items]
Basis spread after capital achievements	1.25%
Secured Credit Facility [Member] | Maximum [Member] | Subsequent Event [Member] | LIBOR [Member]
Subsequent Event [Line Items]
Basis spread after capital achievements	3.00%
Secured Credit Facility [Member] | Maximum [Member] | Subsequent Event [Member] | Base Rate [Member]
Subsequent Event [Line Items]
Basis spread after capital achievements	2.00%
Revolving Credit Facility [Member]
Subsequent Event [Line Items]
Line of credit facility, maximum borrowing capacity						$ 2,000
Revolving Credit Facility [Member] | LIBOR [Member]
Subsequent Event [Line Items]
Basis spread						7.00%

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Subsequent Events (Aggregate Annual Principal Payments On Debt Associated With Assets Held For Use And Held For Sale) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Debt Instrument [Line Items]
2017	$ 12,907
2018	14,668
2019	1,172
2020	20,970
2021	13,672
Total Long-term debt	63,389	$ 87,536
Secured Credit Facility [Member]
Debt Instrument [Line Items]
2017	916
2018	930
2019	33,691
2020	14,180
2021	13,672
Total Long-term debt	63,389
Held For Sale [Member]
Debt Instrument [Line Items]
2017	1,574
2018	2,603
2019	52
2020	1,771
Total Long-term debt	6,000
Held For Sale [Member] | Secured Credit Facility [Member]
Debt Instrument [Line Items]
2019	6,000
Total Long-term debt	6,000
Held For Use [Member]
Debt Instrument [Line Items]
2017	11,333
2018	12,065
2019	1,120
2020	19,199
2021	13,672
Total Long-term debt	57,389
Held For Use [Member] | Secured Credit Facility [Member]
Debt Instrument [Line Items]
2017	916
2018	930
2019	27,691
2020	14,180
2021	13,672
Total Long-term debt	$ 57,389

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Schedule III Real Estate And Accumulated Depreciation (Schedule Of Real Estate Investments And Accumulated Depreciation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	$ 17,437
Initial Cost, Buildings & Improvements	111,538
Initial Cost, Furniture & equipment	10,096
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(1,025)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(2,773)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	8,111
Gross Amount at December 31, 2016, Land	16,412
Gross Amount at December 31, 2016, Buildings & Improvements	108,765
Gross Amount at December 31, 2016, Furniture & equipment	18,207
Accumulated Depreciation	(28,513)	$ (58,200)	$ (75,403)	$ (84,112)
Net Book Value	114,871
Hotel [Member]
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	17,368
Initial Cost, Buildings & Improvements	110,021
Initial Cost, Furniture & equipment	10,096
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(956)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(1,338)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	7,620
Gross Amount at December 31, 2016, Land	16,412
Gross Amount at December 31, 2016, Buildings & Improvements	108,683
Gross Amount at December 31, 2016, Furniture & equipment	17,716
Accumulated Depreciation	(28,195)
Net Book Value	114,616
Construction-In-Progress [Member]
Real Estate and Accumulated Depreciation [Line Items]
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	82
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	4
Gross Amount at December 31, 2016, Buildings & Improvements	82
Gross Amount at December 31, 2016, Furniture & equipment	4
Net Book Value	86
Office Building [Member]
Real Estate and Accumulated Depreciation [Line Items]
Initial Cost, Land	69
Initial Cost, Buildings & Improvements	1,517
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(69)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(1,517)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	487
Gross Amount at December 31, 2016, Furniture & equipment	487
Accumulated Depreciation	(318)
Net Book Value	$ 169
Super 8 [Member] | Creston, Iowa [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Sep. 19, 1978
Encumbrance	GWBR
Initial Cost, Land	$ 56
Initial Cost, Buildings & Improvements	765
Initial Cost, Furniture & equipment	76
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	90
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	1,574
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	892
Gross Amount at December 31, 2016, Land	146
Gross Amount at December 31, 2016, Buildings & Improvements	2,339
Gross Amount at December 31, 2016, Furniture & equipment	968
Accumulated Depreciation	(2,213)
Net Book Value	$ 1,240
Super 8 [Member] | Billings, Montana [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Jan. 05, 2007
Encumbrance	WAB
Initial Cost, Land	$ 518
Initial Cost, Buildings & Improvements	4,648
Initial Cost, Furniture & equipment	159
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(27)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(12)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	259
Gross Amount at December 31, 2016, Land	491
Gross Amount at December 31, 2016, Buildings & Improvements	4,636
Gross Amount at December 31, 2016, Furniture & equipment	418
Accumulated Depreciation	(1,507)
Net Book Value	$ 4,038
Quality Inn [Member] | Solomons, Maryland [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Jun. 01, 1986
Encumbrance	WAB
Initial Cost, Land	$ 2,304
Initial Cost, Buildings & Improvements	2,719
Initial Cost, Furniture & equipment	269
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	1,514
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	436
Gross Amount at December 31, 2016, Land	2,304
Gross Amount at December 31, 2016, Buildings & Improvements	4,233
Gross Amount at December 31, 2016, Furniture & equipment	705
Accumulated Depreciation	(3,220)
Net Book Value	$ 4,022
Quality Inn [Member] | Morgantown, West Virginia [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Oct. 01, 1996
Encumbrance	MS
Initial Cost, Land	$ 398
Initial Cost, Buildings & Improvements	3,749
Initial Cost, Furniture & equipment	347
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	633
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	704
Gross Amount at December 31, 2016, Land	398
Gross Amount at December 31, 2016, Buildings & Improvements	4,382
Gross Amount at December 31, 2016, Furniture & equipment	1,051
Accumulated Depreciation	(2,732)
Net Book Value	$ 3,099
Comfort Inn [Member] | New Castle, Pennsylvania [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Jul. 01, 1987
Encumbrance	MS
Initial Cost, Land	$ 57
Initial Cost, Buildings & Improvements	3,732
Initial Cost, Furniture & equipment	369
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(1)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	344
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	426
Gross Amount at December 31, 2016, Land	56
Gross Amount at December 31, 2016, Buildings & Improvements	4,076
Gross Amount at December 31, 2016, Furniture & equipment	795
Accumulated Depreciation	(2,550)
Net Book Value	$ 2,377
Comfort Inn [Member] | Harlan, Kentucky [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Jul. 01, 1993
Encumbrance	WAB
Initial Cost, Buildings & Improvements	$ 2,684
Initial Cost, Furniture & equipment	265
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(1,265)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	512
Gross Amount at December 31, 2016, Buildings & Improvements	1,419
Gross Amount at December 31, 2016, Furniture & equipment	777
Accumulated Depreciation	(532)
Net Book Value	$ 1,664
Key West Inns [Member] | Key Largo, Florida [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Aug. 01, 1987
Encumbrance	MS
Initial Cost, Land	$ 339
Initial Cost, Buildings & Improvements	2,947
Initial Cost, Furniture & equipment	292
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	1,186
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	342
Gross Amount at December 31, 2016, Land	339
Gross Amount at December 31, 2016, Buildings & Improvements	4,133
Gross Amount at December 31, 2016, Furniture & equipment	634
Accumulated Depreciation	(2,553)
Net Book Value	$ 2,553
Comfort Suites [Member] | Ft. Wayne, Indiana [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Nov. 07, 2005
Encumbrance	HUNT
Initial Cost, Land	$ 1,200
Initial Cost, Buildings & Improvements	3,964
Initial Cost, Furniture & equipment	840
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	1,037
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	591
Gross Amount at December 31, 2016, Land	1,200
Gross Amount at December 31, 2016, Buildings & Improvements	5,001
Gross Amount at December 31, 2016, Furniture & equipment	1,431
Accumulated Depreciation	(2,555)
Net Book Value	$ 5,077
Comfort Suites [Member] | Lafayette, Indiana [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Nov. 07, 2005
Encumbrance	HUNT
Initial Cost, Land	$ 850
Initial Cost, Buildings & Improvements	3,054
Initial Cost, Furniture & equipment	420
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	375
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	301
Gross Amount at December 31, 2016, Land	850
Gross Amount at December 31, 2016, Buildings & Improvements	3,429
Gross Amount at December 31, 2016, Furniture & equipment	721
Accumulated Depreciation	(1,561)
Net Book Value	$ 3,439
Comfort Suites [Member] | South Bend, Indiana [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Nov. 30, 2005
Encumbrance	WAB
Initial Cost, Land	$ 500
Initial Cost, Buildings & Improvements	10,602
Initial Cost, Furniture & equipment	910
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(250)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(4,264)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	1,392
Gross Amount at December 31, 2016, Land	250
Gross Amount at December 31, 2016, Buildings & Improvements	6,338
Gross Amount at December 31, 2016, Furniture & equipment	2,302
Accumulated Depreciation	(1,691)
Net Book Value	$ 7,199
Comfort Inn and Suites [Member] | Warsaw, Indiana [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Nov. 07, 2005
Encumbrance	HUNT
Initial Cost, Land	$ 650
Initial Cost, Buildings & Improvements	2,121
Initial Cost, Furniture & equipment	380
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	380
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	438
Gross Amount at December 31, 2016, Land	650
Gross Amount at December 31, 2016, Buildings & Improvements	2,501
Gross Amount at December 31, 2016, Furniture & equipment	818
Accumulated Depreciation	(1,330)
Net Book Value	$ 2,639
Supertel Inn [Member] | Creston, Iowa [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Jun. 30, 2006
Encumbrance	MS
Initial Cost, Land	$ 235
Initial Cost, Buildings & Improvements	2,364
Initial Cost, Furniture & equipment	344
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(16)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	65
Gross Amount at December 31, 2016, Land	235
Gross Amount at December 31, 2016, Buildings & Improvements	2,348
Gross Amount at December 31, 2016, Furniture & equipment	409
Accumulated Depreciation	(1,012)
Net Book Value	$ 1,980
Days Inn [Member] | Bossier City, Louisiania [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Apr. 04, 2007
Encumbrance	GWBR
Initial Cost, Land	$ 1,025
Initial Cost, Buildings & Improvements	5,031
Initial Cost, Furniture & equipment	87
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Land	(768)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(3,792)
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	750
Gross Amount at December 31, 2016, Land	257
Gross Amount at December 31, 2016, Buildings & Improvements	1,239
Gross Amount at December 31, 2016, Furniture & equipment	837
Accumulated Depreciation	(813)
Net Book Value	$ 1,520
Hilton Garden Inn [Member] | Dowell, Maryland [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	May 25, 2012
Encumbrance	CANTOR
Initial Cost, Land	$ 1,400
Initial Cost, Buildings & Improvements	9,492
Initial Cost, Furniture & equipment	323
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	621
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	348
Gross Amount at December 31, 2016, Land	1,400
Gross Amount at December 31, 2016, Buildings & Improvements	10,113
Gross Amount at December 31, 2016, Furniture & equipment	671
Accumulated Depreciation	(1,644)
Net Book Value	$ 10,540
SpringHill Suites [Member] | San Antonio, Texas [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Oct. 01, 2015
Encumbrance	LAT
Initial Cost, Land	$ 1,597
Initial Cost, Buildings & Improvements	14,353
Initial Cost, Furniture & equipment	1,550
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	114
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	20
Gross Amount at December 31, 2016, Land	1,597
Gross Amount at December 31, 2016, Buildings & Improvements	14,467
Gross Amount at December 31, 2016, Furniture & equipment	1,570
Accumulated Depreciation	(786)
Net Book Value	$ 16,848
Courtyard by Mariott [Member] | Jacksonville, Florida [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Oct. 02, 2015
Encumbrance	WABJ
Initial Cost, Land	$ 2,100
Initial Cost, Buildings & Improvements	11,050
Initial Cost, Furniture & equipment	850
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	152
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	3
Gross Amount at December 31, 2016, Land	2,100
Gross Amount at December 31, 2016, Buildings & Improvements	11,202
Gross Amount at December 31, 2016, Furniture & equipment	853
Accumulated Depreciation	(710)
Net Book Value	$ 13,445
Hotel Indigo [Member] | Atlanta, Georgia [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Oct. 02, 2015
Encumbrance	WABA
Initial Cost, Land	$ 800
Initial Cost, Buildings & Improvements	8,700
Initial Cost, Furniture & equipment	1,500
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	86
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Furniture & equipment	141
Gross Amount at December 31, 2016, Land	800
Gross Amount at December 31, 2016, Buildings & Improvements	8,786
Gross Amount at December 31, 2016, Furniture & equipment	1,641
Accumulated Depreciation	(729)
Net Book Value	$ 10,498
Aloft [Member] | Leawood, Kansas [Member]
Real Estate and Accumulated Depreciation [Line Items]
Acquisition date	Dec. 14, 2016
Encumbrance	GWB
Initial Cost, Land	$ 3,339
Initial Cost, Buildings & Improvements	18,046
Initial Cost, Furniture & equipment	1,115
Additions, (Dispositions), (Impairments) Subsequent to Acquisition, Buildings & Improvements	(5)
Gross Amount at December 31, 2016, Land	3,339
Gross Amount at December 31, 2016, Buildings & Improvements	18,041
Gross Amount at December 31, 2016, Furniture & equipment	1,115
Accumulated Depreciation	(57)
Net Book Value	$ 22,438

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Schedule III Real Estate And Accumulated Depreciation (Schedule Of Changes In Rental Properties And Accumulated Depreciation) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Real Estate and Accumulated Depreciation [Line Items]
Balance	$ 188,899	$ 214,585	$ 248,468
Additions to buildings and improvements	25,618	46,489	3,058
Disposition of buildings and improvements	(68,256)	(65,802)	(32,646)
Impairment loss	(2,877)	(6,373)	(4,295)
Balance	143,384	188,899	214,585
Balance	58,200	75,403	84,112
Depreciation for the period	5,190	5,400	6,549
Depreciation on assets sold or disposed	(33,477)	(19,938)	(13,884)
Impairment loss	(1,400)	(2,665)	(1,374)
Balance	28,513	$ 58,200	$ 75,403
Aggregate cost of land, buildings, furniture and equipment for Federal income tax purposes	$ 148,400
Minimum [Member] | Building And Improvements [Member]
Real Estate and Accumulated Depreciation [Line Items]
Useful life used for computation of depreciation	15 years
Minimum [Member] | Furniture And Equipment [Member]
Real Estate and Accumulated Depreciation [Line Items]
Useful life used for computation of depreciation	3 years
Maximum [Member] | Building And Improvements [Member]
Real Estate and Accumulated Depreciation [Line Items]
Useful life used for computation of depreciation	40 years
Maximum [Member] | Furniture And Equipment [Member]
Real Estate and Accumulated Depreciation [Line Items]
Useful life used for computation of depreciation	12 years