Investment in Hotel Properties

Investment in hotel properties consisted of the following (in thousands):



	Successor			Predecessor
	December 31, 2017			December 31, 2016
Land and improvements	$	597,451		$	271,662
Buildings and improvements	1,801,302			1,801,355
Furniture, fixtures and equipment	126,590			426,692
	2,525,343			2,499,709
Accumulated depreciation	(27,463		)	(932,886		)
Investment in hotel properties, net	$	2,497,880		$	1,566,823

For the Successor period of September 1, 2017 through December 31, 2017, the Company recognized depreciation expense related to its investment in hotel properties of approximately $28.7 million. For the Predecessor period of January 1, 2017 through August 31, 2017, the Company recognized depreciation expense related to its investment in hotel properties of approximately $73.1 million. For the Predecessor years ended December 31, 2016 and 2015, the Company recognized depreciation expense related to its investment in hotel properties of approximately $114.1 million and $114.5 million.

Impairment

The Company determined that there was no impairment of any assets for the Successor period of September 1, 2017 through December 31, 2017.

During the Predecessor period of January 1, 2017 through August 31, 2017, the Company recorded a total impairment loss of $35.1 million related to two hotel properties. In March 2017, the Company recorded a $24.8 million impairment loss on one hotel property based on third-party offers to purchase the hotel property and observable market data on a price per room basis from transactions involving hotel properties in similar locations (a Level 2 input in the fair value hierarchy). In June 2017, two hotel properties, including the hotel property that was previously impaired in March 2017, were classified as held for sale on the consolidated balance sheet. The basis for these hotel properties had previously been written down to the respective fair values of the hotel properties based on third-party offers to purchase the hotel properties and observable market data on a price per room basis from transactions involving hotel properties in similar locations (a Level 2 input in the fair value hierarchy). The Company recorded an additional impairment loss of $10.3 million on these two hotel properties in order to reflect the contractual sale prices, less the estimated costs to sell.

During the Predecessor year ended December 31, 2016, the Company recorded a total impairment loss of $26.5 million, respectively, related to two hotel properties. In June 2016, the Company recorded a $6.3 million impairment loss for a hotel property that was subsequently sold in the third quarter of 2016. The impairment loss was based on an accepted third-party offer to purchase the hotel property (a Level 2 input in the fair value hierarchy), which was a price that was less than the previously estimated fair value for the hotel property. The Company had previously recorded an impairment loss of $20.9 million for this hotel property in the third quarter of 2015 (noted below). In September 2016, the Company recorded a $20.1 million impairment loss on a hotel property. The impairment loss was based on third-party offers to purchase the hotel property and observable market data on a price per room basis from transactions involving hotel properties in similar locations (a Level 2 input in the fair value hierarchy).

During the Predecessor year ended December 31, 2015, the Company recorded an impairment loss of $20.9 million related to one hotel property. During the third quarter of 2015, the Company determined that the hotel property no longer met the Company's investment criteria. Accordingly, the Company evaluated the recoverability of the hotel property's carrying value given the expectation to sell the hotel before the end of its previously estimated useful life. Based on an analysis of the estimated undiscounted net cash flows, the Company concluded that the carrying value of the hotel was not recoverable. The Company estimated the fair value of the hotel using a discounted cash flow analysis. In the analysis, the Company estimated the future net cash flows from the hotel property by using a stabilized growth rate of 3%, a discounted cash flow term of five years, a terminal capitalization rate of 8%, and a discount rate of 11% (Level 3 inputs in the fair value hierarchy). This hotel property was subsequently sold in the third quarter of 2016 (noted above).