Sale of Hotel Properties

6 Months Ended

Jun. 30, 2018

Discontinued Operations and Disposal Groups [Abstract]

4. Sale of Hotel Properties

During the six months ended June 30, 2018, the Company sold two hotels as summarized below.


Hotel	Date of Sale		Proceeds		Gain		Mortgage Payable Repaid
Residence Inn—Huntsville, Alabama		January 2018	$	7,587	$	—	$	7,587
Marriott—Redmond, Washington		February 2018		67,753		—		68,917

Total			$	75,340	$	—	$	76,504

The Company received proceeds of $75.3 million from the sales of these hotels, which are net of $2.5 million in selling costs. Due to the sale of these hotels, the Company made an additional principal payment of $6.6 million in order to comply with the debt yield as required under the terms of the Company’s mortgage loan agreement. During the year ended December 31, 2017, the Company recorded a $10.9 million impairment associated with classifying these hotel properties as held for sale (see Note 5). Therefore, no gain or loss was recorded during the six months ended June 30, 2018.

During the six months ended June 30, 2017, the Company sold seven hotels as summarized below.


Hotel	Date of Sale		Proceeds		Gain		Mortgage Payable Repaid
Fairfield Inn—Huntsville, Alabama		January 2017	$	4,575	$	—	$	4,444
TownePlace Suites—Arlington, Texas		January 2017		8,001		—		3,606
Springhill Suites—Clearwater, Florida		January 2017		5,767		—		4,971
TownePlace Suites—Las Colinas, Texas		January 2017		16,867		3,072		8,248
Courtyard—Albany, Georgia		February 2017		8,628		—		6,242
Springhill Suites—Arlington, Texas		March 2017		9,015		556		8,360
Courtyard – Valdosta, Georgia		June 2017		6,584		—		5,423

Total			$	59,437	$	3,628	$	41,294

The Company received proceeds of $59.4 million from the sales of these hotels, which are net of selling costs of $2.0 million. Due to the sale of the hotels, the Company made an additional principal payment of $2.6 million in order to comply with the debt yield as required under the terms of the Company’s previous mortgage loan agreement.

During the second quarter of 2017, the Company executed a letter of intent to sell the Courtyard – Valdosta, Georgia property. As a result, a test for impairment of the property was performed with fair value determined based on the estimated sales proceeds for the property. The Company estimated the sales proceeds based on the agreement of purchase and sale (subject to certain terms) entered into for the property in May 2017. The test resulted in a non-cash impairment of investment in real estate of $2.6 million for the six months ended June 30, 2017. The Courtyard – Valdosta, Georgia property was sold in June 2017.

During the second quarter of 2017, the Company executed a letter of intent to sell the Fairfield Inn – Pensacola, Florida property. As a result, a test for impairment of the property was performed with fair value determined based on the estimated sales proceeds for the property. The Company estimated the sales proceeds based on the agreement of purchase and sale (subject to certain terms) entered into for the property in May 2017. The test resulted in a non-cash impairment of investment in real estate of $0.4 million for the six months ended June 30, 2017. The Fairfield Inn – Pensacola, Florida property was sold in July 2017.

BRE Select Hotels Corp 10-Q