NOTE 3. ACQUISITION OF HOTEL PROPERTIES

During the nine months ended September 30, 2018, the Company acquired two wholly owned hotel properties, each of which was acquired in the first quarter of 2018. 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 paid
TownePlace Suites	01/18/2018	$	1,435	$	16,459	$	1,729	$	190	$	19,813	$	19,813	$	-	$	-
Austin, TX
Home2 Suites	02/21/2018		998		13,485		1,854		53		16,390		14,818		50		1,522
Summerville, SC
Total		$	2,433	$	29,944	$	3,583	$	243	$	36,203	$	34,631	$	50	$	1,522

(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 statements of operations for the three and nine months ended September 30, 2018 are total revenues of $1,761 and $5,335, respectively, and total operating income of $253 and $1,420, respectively, related to the results of operations for the two hotels acquired in 2018 since the date of acquisition.

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

Pro Forma Results

The following condensed pro forma financial data is presented as if the two acquisitions completed in 2018 were completed on January 1, 2017. 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 of the periods presented.

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


	Nine months ended September 30, 2018
Total revenue	$	50,618
Operating income	$	6,601
Net earnings attributable to common shareholders	$	6,091
Net earnings per share - Basic	$	0.51
Net earnings per share - Diluted	$	0.51