NOTE 3. ACQUISITION OF HOTEL PROPERTIES

During the six months ended June 30, 2017, the Company acquired five 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 included in the table below.


	Date of acquisition	Land		Buildings, improvements, and vehicle		Furniture and equipment		Intangible asset		Estimated earn out		Total purchase price		Debt originated at acquisition		Issuance of CHLP partnership units		Net cash
Home2 Suites	03/24/2017	$	905	$	14,204	$	1,351	$	40	$	-	$	16,500	$	16,455	$	45	$	-
Lexington, KY
Home2 Suites	03/24/2017		1,087		14,345		1,285		33		-		16,750		16,705		45		-
Round Rock, TX
Home2 Suites	03/24/2017		1,519		18,229		1,727		25		-		21,500		21,442		58		-
Tallahassee, FL
Home 2 Suites	04/14/2017		1,311		16,792		897		-		-		19,000		9,096		52		9,852
Southaven, MS
Hampton Inn & Suites	06/19/2017		1,200		16,432		1,773		-		(155) (1)		19,250		19,165		85		-
Lake Mary, FL
Total		$	6,022	$	80,002	$	7,033	$	98	$	(155)	$	93,000	$	82,863	$	285	$	9,852

(1)

The Lake Mary purchase price is subject to a post-closing adjustment of up to $250 to be paid to the seller if the hotel achieves a stipulated hotel net operating income level in 2017. This contingent consideration is included in the purchase price allocation at its estimated fair value on the date of the acquisition.

The total purchase price of $93,000 for these hotels was funded with the assumption of one loan with an aggregate outstanding principal balance of $9,096, draws on the credit facility totaling $73,767, the issuance of 1,211,648 partnership units from CHLP with a total value at issuance of $285, and cash of $9,852. The assumed loan bears interest at a fixed rate of 4.54%, requires monthly principal and interest payments of $48, and matures on August 1, 2024.

During the three and six months ended June 30, 2017, included in the consolidated statement of operations from the hotels we acquired during the six months ended June 30, 2017 is revenue totaling $4,325 and $4,630, respectively, and net earnings, excluding the consideration of acquisition costs, totaling $831 and $968, respectively.

The Company had no acquisitions of wholly owned properties during the six months ended June 30, 2016.

Pro Forma Results

In addition to the five properties discussed above, the Company also entered into the Atlanta JV which then acquired one hotel in August of 2016 (see Note 4) and the Company acquired one wholly owned property, the Aloft Leawood / Overland Park (Kansas City), for a purchase price of $22,500 on December 14, 2016. The following condensed pro forma financial data is presented as if all acquisitions completed in 2016 and 2017, including that completed by the Atlanta JV, had been completed on January 1, 2016. Supplemental pro forma earnings were adjusted to exclude all acquisition expense recognized in the periods presented as if these acquisition costs had been incurred in prior periods but were not adjusted to remove the results of hotels sold during and between the periods. Results for periods prior to the Company’s ownership are based on information provided by the prior owners, adjusted for differences in interest expense, depreciation expense, and management fees following the Company’s ownership. The condensed pro forma financial data is not necessarily indicative of what the actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2016, nor do they purport to represent the results of operations for future periods.


	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Total revenue	$	15,442	$	20,949	$	30,594	$	39,443
Operating income	$	2,229	$	3,477	$	3,272	$	4,520
Net earnings (loss) attributable to common shareholders	$	5,127	$	7,883	$	(8,066)	$	(2,764)
Net earnings (loss) per share attributable to common shareholders - Basic	$	0.44	$	10.37	$	(1.11)	$	(3.64)
Net earnings (loss) per share attributable to common shareholders - Diluted	$	0.41	$	1.26	$	(1.11)	$	(3.64)