NOTE 3. ACQUISITION OF HOTEL PROPERTIES

During the three months ended March 31, 2018, the Company acquired two wholly owned hotel properties. The allocation of the purchase price based on fair value was as follows:


	Date of acquisition	Land		Buildings, improvements, and vehicle		Furniture and equipment		Intangible asset		Total purchase price & acquisition costs (1)		Debt at acquisition (2)		Issuance of common units (3)		Net cash
TownePlace Suites	01/18/2018	$	1,435	$	16,453	$	1,728	$	190	$	19,806	$	19,806	$	-	$	-
Austin, TX
Home2 Suites	02/21/2018		997		13,474		1,853		53		16,377		14,818		50		1,509
Summerville, SC
Total		$	2,432	$	29,927	$	3,581	$	243	$	36,183	$	34,624	$	50	$	1,509

(1)

Contractual purchase price of $19,750 and $16,325 for Austin TownePlace Suites and Summerville Home2 Suites, respectively.

(2)

All debt was drawn from the $150,000 secured revolving credit facility (the “credit facility”) at acquisition.

(3)

Total issuance of 259,685 common units. Common units may be redeemed at a rate of one common share for 52 common units (see Note 11).

Included in the consolidated statement of operations for the three months ended March 31, 2018 are total revenues of $1,413 and total operating income of $529 which represent the results of operations for the two hotels acquired in 2018 since the date of acquisition.

During the three months ended March 31, 2017, the Company acquired three wholly owned hotel properties. The allocation of the purchase price based on fair value was as follows:


	Date of acquisition	Land		Buildings, improvements, and vehicle		Furniture and equipment		Intangible asset		Total purchase price		Debt at acquisition (1)		Issuance of common units (2)		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
Total		$	3,511	$	46,778	$	4,363	$	98	$	54,750	$	54,602	$	148	$	-

(1)

All debt was drawn from the credit facility at acquisition.

(2)

Total issuance of 593,896 common units. Common units may be redeemed at a rate of one common share for 52 common units (see Note 11).

Included in the consolidated statement of operations for the three months ended March 31, 2017 are total revenues of $305 and total operating income of $173 which represent the results of operations for the three hotels acquired in 2017 since the date of acquisition.

All purchase price allocations were determined using Level 3 fair value inputs.

Pro Forma Results

In addition to the two properties acquired in the first quarter of 2018 and the three properties acquired in the first quarter of 2017, the Company also acquired two wholly owned properties in the second quarter of 2017, the Home2 Suites Southaven, MS (purchase price of $19,000) and the Hampton Inn & Suites Lake Mary, FL (purchase price of $19,500 including post purchase adjustment of $250), and two wholly owned properties in the third quarter of 2017, the Fairfield Inn & Suites El Paso, TX (purchase price of $16,400) and the Residence Inn Austin, TX (purchase price of $22,400).

The following condensed pro forma financial data is presented as if all acquisitions completed in 2018 were completed on January 1, 2017 and all acquisitions completed in 2017 were completed on January 1, 2016. Supplemental pro forma earnings were adjusted to exclude all acquisition expenses 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 and have not been audited or reviewed by our independent auditors. All hotels were in operation for all periods presented with the exception of the TownePlace Suites Austin, TX which opened on January 3, 2017 and the Home2 Suites Summerville, SC which opened on July 18, 2017.

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, 2017 or 2016, nor do they purport to represent the results of operations for future periods.


	Three months ended March 31,
	2018		2017
Total revenue	$	17,322	$	18,025
Operating income	$	2,280	$	1,729
Net earnings (loss) attributable to common shareholders	$	671	$	(13,048)
Net earnings (loss) per share - Basic	$	0.06	$	(4.44)
Net earnings (loss) per share - Diluted	$	0.06	$	(4.44)