8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 6, 2006

MHI HOSPITALITY CORPORATION

(Exact Name of Registrant as Specified in its Charter)

Maryland	333-118873	20-1531029
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

814 Capitol Landing Road

Williamsburg, Virginia 23185

(757) 229-5648

(Address, including Zip Code and Telephone Number, including Area Code, of Principal Executive Offices)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into a Material Definitive Agreement

On July 6, 2006, MHI Hospitality, L.P., (the “Operating Partnership”) of which MHI Hospitality Corporation (the “Company”) is the general partner, entered into a contract to acquire the 186-room Louisville Ramada Riverfront Inn (the “Hotel”) in Jeffersonville, Indiana for the aggregate purchase price of $7.6 million from Riverfront, Inn, LLC, an Indiana limited liability company (“Seller”). The purchase price includes approximately 3.3 acres of land located in Jeffersonville, Indiana, the hotel improvements located thereon consisting of the Hotel and the attached leased restaurants, all personal property and equipment owned by the Seller and located in or at the Hotel, the inventory of the Hotel as described in the purchase agreement, the operating agreements and such other assets used in connection with the operation of the Hotel.

The purchase price for the assets will be funded from the Company’s line of credit or a 1031 like-kind exchange, or a combination of the two. Following the acquisition, the Company plans to pursue an $8.0 million capital improvement program for the Hotel and to rebrand the Hotel as is consistent with the Company’s repositioning strategy. The closing of the acquisition is subject to various customary closing conditions, including the accuracy of representations and warranties through closing and conditions related to the operation and maintenance of the property.

A copy of the press release announcing the transaction is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference in its entirety.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

99.1 Press release of MHI Hospitality Corporation dated July 6, 2006 announcing agreement to purchase the Louisville Ramada Riverfront Inn.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 10, 2006

MHI HOSPITALITY CORPORATION
By:	/s/ Andrew M. Sims
Name:	Andrew M. Sims
Title:	President and Chief Executive Officer

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EX-99.1

Exhibit 99.1

	RE:	MHI Hospitality Corporation 814 Capitol Landing Road Williamsburg, VA 23185 (757) 229-5648 TRADED: AMEX: MDH

FOR YOUR INFORMATION:

AT THE COMPANY:	AT THE FINANCIAL RELATIONS BOARD:
Bill Zaiser	Georganne Palffy
Chief Financial Officer	General Information
(301) 220-5400	(312) 640-6768

FOR IMMEDIATE RELEASE

THURSDAY, JULY 6, 2006

MHI HOSPITALITY CORPORATION ANNOUNCES AGREEMENT

TO PURCHASE THE LOUISVILLE RAMADA RIVERFRONT INN

Williamsburg, VA – July 6, 2006 – MHI Hospitality Corporation (AMEX: MDH), announced today that it has entered into a definitive agreement to purchase the 186-room Louisville Ramada Riverfront Inn, located in Jeffersonville, Indiana for $7.6 million, or approximately $41,000 per unit. The hotel is located directly on the Ohio River, with unimpeded views of the Louisville skyline, and easy access to the center of downtown Louisville.

The purchase price represents a 9% capitalization rate and includes an attached commercial building with two restaurants that contributed over $300,000 to the hotel’s 2005 net operating income. MHI intends to extensively renovate and rebrand the asset, as is consistent with the company’s repositioning strategy. To facilitate the closing of the acquisition, which is expected in the late third quarter subject to customary closing conditions, MHI may access funds from either its line of credit or a 1031 like-kind exchange, or a combination of the two.

The company will commence with the capital improvements upon closing and anticipates the major physical renovations will be completed within approximately 12 months, during which time the property will remain open. Andrew M. Sims, the president and CEO of the company stated, “We are pleased to acquire the Ramada Riverfront at an attractive price and, once our renovations are completed, we are confident that this repositioned asset will be highly competitive with other upscale properties in the downtown Louisville market. Our estimated basis will be approximately $80,000 per key upon stabilization, which we feel is compelling for waterfront property in this market and well below replacement cost or the cost of new construction.”

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MHI Hospitality Corporation

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About MHI Hospitality Corporation

MHI Hospitality Corporation is a self-advised lodging REIT focused on the acquisition, redevelopment and management of mid-scale, upscale, and upper upscale full service hotels in the mid-Atlantic and southeastern United States. Currently, the company’s portfolio consists of seven properties for a total of 1,673 rooms, all of which operate under the Hilton and Intercontinental Hotels Group brands. In addition to these seven hotels, the company has a leasehold interest in the common area of a resort condominium property, Shell Island Resort, which has approximately 160 condominium suites owned by individual owners. The company is listed on the Russell Microcap™ Index, which is comprised of the smallest 1,000 securities in the small-cap Russell 2000™ Index along with the next 1,000 companies, based on a ranking of all U.S. equities by market capitalization. More information on the company may be found on its website at www.mhihospitality.com.

Forward-Looking Statements

This presentation includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable, these statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond the Company’s control. Therefore, actual outcomes and results may differ materially from what is expressed, forecasted or implied in such forward-looking statements. General economic conditions, including the timing and magnitude of the recovery in the hospitality industry, future acts of terrorism, risks associated with the hotel and hospitality business, the availability of capital, the ability of the company to acquire additional hotel properties, the timely completion of planned hotel renovations, and other factors, may affect the company’s future results, performance and achievements. These risks and uncertainties are described in greater detail in the company’s current and periodic filings with the Securities and Exchange Commission. The company undertakes no obligation and does not intend to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Although we believe our current expectations to be based upon reasonable assumptions, we can give no assurance that our expectations will be attained or that actual results will not differ materially.

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