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): August 9, 2007

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.)

4801 Courthouse Street, Suite 201

Williamsburg, Virginia 23188

(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 2.01     Completion of Acquisition or Disposition of Assets

On August 9, 2007, an entity jointly owned by MHI Hospitality Corporation (“MHI” or the “Company”) and The Carlyle Group completed the acquisition of the newly renovated Crowne Plaza^® Resort Hollywood Beach (the “Hotel”) in Hollywood, Florida, for $74,000,000, which also included a four year lease of a development site adjacent to the Hotel which provides the lessee with the right to acquire the property during the lease term for a price to be determined via an appraisal process subject to a specified floor and cap.

The property includes a 311-room hotel, approximately 12,000 square feet of meeting space, a retail food and beverage outlet, a large outdoor swimming pool and valet parking space for 300 cars. It also includes a permanent easement for access to the beach from the Hotel property.

In September 2005, MHI entered into a contract to purchase the commercial space of the redeveloped hotel in Hollywood, Florida, upon completion by the seller and subsequently entered into a franchise agreement with InterContinental Hotels Group, through its franchising entity Holiday Hospitality Franchising, Inc., to brand the condominium hotel project as a Crowne Plaza^® Resort. In May 2007, MHI and the seller restructured the proposed condominium transaction and MHI agreed to acquire the entire hotel subject to certain conditions. Upon satisfaction of such conditions, the original purchase agreement was terminated.

The acquisition was completed through the Company’s joint venture with The Carlyle Group and the Company retains a 25% equity position in the Hotel. The Company’s equity position required a contribution of $6.0 million, which was funded by additional borrowings on the Company’s credit facility. In connection with the acquisition of the Hotel, the purchaser entered into a loan agreement with Société Générale in the amount of $57.6 million, which provides for a limited recourse guarantee and environmental guarantee by the Company. The purchase price of the Hotel was determined based on arm’s length negotiations among the parties.

The summary of the transactions described above is qualified in its entirety by the complete text of the Purchase Agreement which is attached to the Company’s Current Report on Form 8-K dated May 25, 2007, as Exhibit 10.27.

Item 2.03     Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information in this report set forth under Item 2.01 is incorporated herein by reference.

Item 7.01.     Regulation FD Disclosure.

On August 13, 2007, the Company issued a press release announcing the purchase of the Hotel. A copy of the press release is furnished as Exhibit 99.1 hereto.

Item 9.01     Financial Statements and Exhibits

(d) Exhibits

99.1 Press release of MHI Hospitality Corporation dated August 13, 2007 announcing the acquisition of the Crowne Plaza^® Resort in Hollywood, Florida.

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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: August 14, 2007

MHI HOSPITALITY CORPORATION
By:	/s/ David R. Folsom
Name:	David R. Folsom
Title:	Executive Vice President and Chief Executive Officer

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Exhibit Index

99.1 Press release of MHI Hospitality Corporation dated August 13, 2007 announcing the acquisition of the Crowne Plaza^® Resort in Hollywood, Florida.

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EX-99.1

Exhibit 99.1

	RE:	MHI Hospitality Corporation
		4801 Courthouse Street, Suite 201
		Williamsburg, VA 23188
		(757) 229-5648
		TRADED: AMEX: MDH

FOR YOUR INFORMATION:

AT THE COMPANY:	AT FINANCIAL RELATIONS BOARD:
Bill Zaiser	Vicki Baker
Chief Financial Officer	General Information
(301) 220-5400	(703) 796-1798
AT THE CARLYLE GROUP:
Christopher Ullman
Director of Global Communications
(202) 729-5399

FOR IMMEDIATE RELEASE

MONDAY, AUGUST 13, 2007

MHI HOSPITALITY CORPORATION CLOSES ACQUISITION OF CROWNE PLAZA

RESORT IN HOLLYWOOD, FLORIDA FOR $74 MILLION

Coastal Resort First Acquisition of MHI-Carlyle Group Joint Venture

Williamsburg, VA – August 13, 2007 – MHI Hospitality Corporation (AMEX: MDH) announced today that through a joint venture with The Carlyle Group, the Company has completed the acquisition of the Crowne Plaza Resort Hollywood Beach in Hollywood, Florida for $74,000,000 from developer MCZ/Centrum VI Owner, L.L.C. MHI Hospitality Corporation will retain a 25 percent equity position in the property, with The Carlyle Group retaining a 75 percent equity position.

The newly renovated 311-room Crowne Plaza Resort Hollywood Beach is well-located on the barrier island on the South Florida coast between the Intracoastal Waterway and the Atlantic Ocean. The resort hotel features approximately 12,000 square feet of meeting space, a retail food and beverage outlet, a large outdoor swimming pool and 300 valet parking spaces. A contiguous three-acre hotel development site owned by MCZ/Centrum will be leased to the joint venture for four years with an option to purchase the site at any time during the lease term.

Andrew M. Sims, President and Chief Executive Officer of MHI Hospitality Corporation, commented, “With its scale, location and value-enhancing potential, the Crowne Plaza Resort Hollywood Beach is a significant acquisition for our Company and directly fits our venture objectives with The Carlyle Group. We are delighted to announce this first investment in our partnership and look forward to a productive ongoing collaboration.”

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Robert G. Stuckey, Managing Director of The Carlyle Group and head of Carlyle Realty Partners, said, “We congratulate MHI Hospitality Corporation on their ability to source this attractive, off-market transaction. We strive to support our joint venture partners with the capital they need to create value.”

Financing of the acquisition was accomplished with a two-year $57,600,000 non-recourse loan from Societe Generale. The loan has three one-year extensions and is interest only with a rate determined by LIBOR plus 1.94 percent.

The Hotel will be managed by MHI Hotels Services, L.L.C. MHI Hospitality Corporation will be paid an asset management fee of 1.5 percent of the gross revenues of the hotel, in addition to payments from its joint venture with The Carlyle Group. The Crowne Plaza Resort Hollywood Beach is expected to open early Fall 2007.

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, Midwest and Southeastern United States. Currently, the company’s portfolio consists of seven properties comprising 1,723 rooms, all of which operate under the Hilton, InterContinental Hotels Group and Starwood Hotels and Resorts brands. In addition, the company has a leasehold interest in the common area of Shell Island Resort, a resort condominium property. MHI Hospitality Corporation was organized in 2004 and is listed on the Russell Microcap™ Index. The company is headquartered in Williamsburg, Virginia. For more information please visit www.mhihospitality.com.

About The Carlyle Group

The Carlyle Group is a global private equity firm with $71.4 billion under management. Carlyle invests in buyouts, venture & growth capital, real estate and leveraged finance in Asia, Europe and North America, focusing on aerospace & defense, automotive & transportation, consumer & retail, energy & power, healthcare, industrial, infrastructure, technology & business services and telecommunications & media. Since 1987, the firm has invested $28.3 billion of equity in 636 transactions for a total purchase price of $132.0 billion. The Carlyle Group employs more than 800 people in 19 countries. In the aggregate, Carlyle portfolio companies have more than $87 billion in revenue and employ more than 286,000 people around the world. www.carlyle.com.

Since its inception in 1993, Carlyle Realty Partners has completed more than 200 investments, investing approximately $3 billion of equity for a total capitalization of approximately $14 billion. Carlyle has more than 60 real estate professionals in Washington, DC; New York City; Los Angeles; Newport Beach, California; and Denver.

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Forward-Looking Statements

This news release 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. Economic conditions generally and the real estate market specifically, management and performance of the Company’s hotels, plans for hotel renovations, financing plans, supply and demand for hotel rooms in the Company’s current and proposed market areas, the Company’s ability to acquire additional properties and the risk that potential acquisitions may not perform in accordance with expectations, legislative/regulatory changes, including changes to laws governing taxation of real estate investment trusts and competition, and other factors, may affect the Company’s future results, performance and achievements. These risks and uncertainties are described in greater detail under “Risk Factors” in the Company’s Annual Report on Form 10-K and subsequent reports filed 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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