10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-55394

HOSPITALITY INVESTORS TRUST, INC.

(Exact Name of Registrant as Specified in its Charter)

Maryland	80-0943668
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
450 Park Avenue, Suite 1400, New York, NY	10022
(Address of Principal Executive Office)	(Zip Code)

(571) 529-6390

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x

No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o
Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The number of shares of the registrant's common stock, $0.01 par value, outstanding as of May 1, 2017 was 39,617,676.

TABLE OF CONTENTS

	Page
PART I
Item 1. Financial Statements	1
Consolidated Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016	1
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2017 and the Three Months Ended March 31, 2016	3
Consolidated Statement of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2017	4
Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2017 and for the Three Months Ended March 31, 2016	5
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II
Item 1. Legal Proceedings	61
Item 1A. Risk Factors	61
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3. Defaults Upon Senior Securities	61
Item 4. Mine Safety Disclosures	61
Item 5. Other Information	61
Item 6. Exhibits	62
Signatures	65

i

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

	March 31, 2017			December 31, 2016
	(unaudited)
ASSETS
Real estate investments:
Land	$	339,819		$	339,819
Buildings and improvements	1,848,124			1,838,594
Furniture, fixtures and equipment	211,394			212,994
Total real estate investments	2,399,337			2,391,407
Less: accumulated depreciation and amortization	(187,031		)	(169,486		)
Total real estate investments, net	2,212,306			2,221,921
Assets held for sale				—
Cash and cash equivalents	81,378			42,787
Acquisition deposits	10,500			7,500
Restricted cash	33,497			35,050
Investments in unconsolidated entities	3,309			3,490
Below-market lease asset, net	9,727			9,827
Prepaid expenses and other assets	38,075			32,836
Goodwill	31,557			—
Total Assets	$	2,420,349		$	2,353,411
LIABILITIES, NON-CONTROLLING INTEREST AND EQUITY
Mortgage notes payable, net	1,411,812			1,410,925
Promissory notes payable, net	7,030			23,380
Mandatorily redeemable preferred securities, net	241,219			288,265
Accounts payable and accrued expenses	71,076			68,519
Due to related parties	2,417			2,879
Total Liabilities	$	1,733,554		$	1,793,968
Commitments and Contingencies
Contingently Redeemable Class C Units in operating partnership; 9,152,542 units issued and outstanding ($135,000 liquidation preference)	$	121,202		$	—
Stockholders' Equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, one and zero shares issued and outstanding, respectively	—			—
Common stock, $0.01 par value, 300,000,000 shares authorized, 39,617,676 and 38,493,430 shares issued and outstanding, respectively	396			385
Additional paid-in capital	872,178			843,149
Deficit	(309,545		)	(286,852		)
Total equity of Hospitality Investors Trust, Inc. stockholders	563,029			556,682
Non-controlling interest - consolidated variable interest entity	2,564			2,761
Total Stockholders' Equity	$	565,593		$	559,443
Total Liabilities, Contingently Redeemable Class C Units, Non-controlling Interest and Equity	$	2,420,349		$	2,353,411

1

The accompanying notes are an integral part of these statements.

2

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except for share and per share data)

(Unaudited)

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Revenues
Rooms	$	135,638		$	127,378
Food and beverage	5,105			5,006
Other	2,960			2,769
Total revenue	143,703			135,153
Operating expenses
Rooms	34,165			31,924
Food and beverage	3,997			3,964
Management fees	10,471			9,961
Other property-level operating expenses	58,306			55,637
Acquisition and transaction related costs	36			25,065
General and administrative	2,926			4,294
Depreciation and amortization	26,144			23,553
Rent	1,628			1,528
Total operating expenses	137,673			155,926
Operating income (loss)	$	6,030		$	(20,773	)
Interest expense	(23,380		)	(23,133		)
Other income (expense)	12			(551		)
Equity in earnings (losses) of unconsolidated entities	(29		)	(60		)
Total other expenses, net	(23,397		)	(23,744		)
Net loss before taxes	$	(17,367	)	$	(44,517	)
Income tax benefit	(1,243		)	(603		)
Net loss and comprehensive loss	$	(16,124	)	$	(43,914	)
Less: Net income attributable to non-controlling interest	20			43
Net loss before deemed dividend	$	(16,144	)	$	(43,957	)
Deemed dividend related to beneficial conversion feature of Class C Units	(4,535		)	—
Net loss attributable to common stockholders	$	(20,679	)	$	(43,957	)
Basic and Diluted net loss attributable to common stockholders per common share	$	(0.53	)	$	(1.14	)
Basic and Diluted weighted average common shares outstanding	38,810,386			38,571,410

The accompanying notes are an integral part of these statements.

3

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In thousands, except for share data)

(Unaudited)

	Common Stock
	Number of Shares	Par Value		Additional Paid-in Capital		Deficit			Total Equity of Hospitality Investors Trust, Inc. Stockholders			Non-controlling Interest			Total Non-controlling Interest and Equity
Balance, December 31, 2016	38,493,430	$	385	$	843,149	$	(286,852	)	$	556,682		$	2,761		$	559,443
Issuance of common stock, net	808,642	8		11,820		—			11,828			—			11,828
Net loss attributable to Hospitality Investors Trust, Inc.	—	—		—		(16,144		)	(16,144		)	—			(16,144		)
Net income attributable to non-controlling interest	—	—		—		—			—			20			20
Dividends paid or declared	315,604	3		6,776		(2,014		)	4,765			(217		)	4,548
Deemed dividend related to beneficial conversion feature of Class C Units	—	—		4,535		(4,535		)	—			—			—
Share-based payments	—	—		76		—			76			—			76
Waiver of obligation from Former Advisor	—	—		5,822		—			5,822			—			5,822
Balance, March 31, 2017	39,617,676	$	396	$	872,178	$	(309,545	)	$	563,029		$	2,564		$	565,593

The accompanying notes are an integral part of these statements.

4

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31, 2017			Three Months Ended March 31, 2016
Cash flows from operating activities:
Net loss	$	(16,124	)	$	(43,914	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,144			23,553
Amortization and write-off of deferred financing costs	1,338			4,723
Change in fair value of contingent consideration	—			593
Loss of acquisition deposits	—			22,000
Other adjustments, net	347			287
Changes in assets and liabilities:
Prepaid expenses and other assets	(5,571		)	(4,525		)
Restricted cash	(3,181		)	(13,848		)
Due to related parties	(462		)	871
Accounts payable and accrued expenses	6,436			21,153
Net cash provided by operating activities	$	8,927		$	10,893
Cash flows from investing activities:
Acquisition of hotel assets, net of cash received	—			(69,892		)
Real estate investment improvements and purchases of property and equipment	(14,925		)	(33,770		)
Fees related to Property Management Transactions	(10,000		)	—
Change in restricted cash related to real estate improvements	4,734			17,109
Net cash used in investing activities	$	(20,191	)	$	(86,553	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	—			677
Proceeds from Class C Units	135,000			—
Payment of Class C Units issuance costs	(13,798		)	—
Payment of offering costs	—			(73		)
Dividends/Distributions paid	(217		)	(8,323		)
Mandatorily redeemable preferred securities redemptions	(47,250		)	(2,270		)
Proceeds from mortgage note payable	—			70,384
Deferred financing fees	(212		)	(723		)
Repayments of promissory and mortgage notes payable	(23,668		)	—
Restricted cash for debt service	—			(3,029		)
Net cash provided by financing activities	$	49,855		$	56,643
Net change in cash and cash equivalents	38,591			(19,017		)
Cash and cash equivalents, beginning of period	42,787			46,829
Cash and cash equivalents, end of period	$	81,378		$	27,812
Supplemental disclosure of cash flow information:
Interest paid	$	22,073		$	15,755
Income tax paid (refund)	$	(10	)	$	72
Non-cash investing and financing activities:
Deemed dividend related to beneficial conversion feature of Class C Units	$	(4,535	)	$	—
Waiver of obligation from Former Advisor	$	(5,822	)	$	—
Real estate investment improvements and purchases of property and equipment in accounts payable and accrued expenses	$	13,750		$	24,851

5

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31, 2017		Three Months Ended March 31, 2016
Class B Units in operating partnership converted and redeemed for Common Stock	$	7,659	$	—
Note payable to Former Property Manager	$	4,000	$	—
Common stock issued to Former Property Manager	$	4,076	$	—
Seller financed acquisition deposit	$	3,000	$	7,500
Seller financed acquisition	$	—	$	20,000
Dividends declared but not paid	$	—	$	5,279
Common stock issued through distribution reinvestment plan	$	—	$	7,077

The accompanying notes are an integral part of these statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Note 1 - Organization

Hospitality Investors Trust, Inc. (the "Company") was incorporated on July 25, 2013 as a Maryland corporation and qualified as a real estate investment trust ("REIT") beginning with the taxable year ended December 31, 2014. The Company was formed primarily to acquire lodging properties in the midscale limited service, extended stay, select service, upscale select service, and upper upscale full service segments within the hospitality sector. As of March 31, 2017, the Company had acquired or had an interest in a total of 141 hotels with a total of 17,193 guest rooms located in 32 states. As of March 31, 2017, all but one of these hotels operated under a franchise or license agreement with a national brand owned by one of Hilton Worldwide, Inc., Marriott International, Inc., Hyatt Hotels Corporation, Intercontinental Hotels Group, and Red Lion Hotels Corporation or one of their respective subsidiaries or affiliates. On April 27, 2017, the Company acquired an additional seven hotels (the “April Acquisition”) with a total of 651 guest rooms, which also operate under a franchise or license agreement with a national brand owned by one of these companies.

On January 7, 2014, the Company commenced its primary initial public offering (the "IPO" or the "Offering") on a "reasonable best efforts" basis of up to 80,000,000 shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form S-11 (File No. 333-190698), as well as up to 21,052,631 shares of common stock available pursuant to the Distribution Reinvestment Plan (the "DRIP") under which the Company's common stockholders could elect to have their cash distributions reinvested in additional shares of the Company's common stock.

On November 15, 2015, the Company suspended its IPO, and, on November 18, 2015, Realty Capital Securities, LLC (the "Former Dealer Manager"), the dealer manager of the IPO, suspended sales activities, effective immediately. On December 31, 2015, the Company terminated the Former Dealer Manager as the dealer manager of the IPO.

On March 28, 2016, the Company announced that, because it required funds in addition to operating cash flow and cash on hand to meet its capital requirements, beginning with distributions payable with respect to April 2016 the Company would pay distributions to its stockholders in shares of common stock instead of cash.

On July 1, 2016, the Company's board of directors approved an estimated net asset value per share of common stock (“Estimated Per-Share NAV”) equal to $21.48 based on an estimated fair value of the Company's assets less the estimated fair value of our liabilities, divided by 36,636,016 shares of common stock outstanding on a fully diluted basis as of March 31, 2016, which was published on the same date. This was the first time that the Company’s board of directors determined an Estimated Per-Share NAV. It is currently anticipated that the Company will publish an updated Estimated Per-Share NAV on at least an annual basis.

On January 7, 2017, the third anniversary of the commencement of the IPO, it terminated in accordance with its terms.

On January 12, 2017, the Company along with its operating partnership, Hospitality Investors Trust Operating Partnership, L.P. (then known as American Realty Capital Hospitality Operating Partnership, L.P.) (the "OP"), entered into (i) a Securities Purchase, Voting and Standstill Agreement (the “SPA”) with Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC (the “Brookfield Investor”), as well as related guarantee agreements with certain affiliates of the Brookfield Investor, and (ii) a Framework Agreement (the “Framework Agreement”) with the Company’s former advisor, American Realty Capital Hospitality Advisors, LLC (the "Former Advisor"), the Company’s former property managers, American Realty Capital Hospitality Properties, LLC and American Realty Capital Hospitality Grace Portfolio, LLC (together, the “Former Property Manager”), Crestline Hotels & Resorts, LLC (“Crestline”), then an affiliate of the Former Advisor and the Former Property Manager, American Realty Capital Hospitality Special Limited Partnership, LLC (the “Former Special Limited Partner”), another affiliate of the Former Advisor and the Former Property Manager, and, for certain limited purposes, the Brookfield Investor.

In connection with the Company’s entry into the SPA, the Company suspended paying distributions to stockholders entirely and suspended the DRIP. Currently, under the Brookfield Approval Rights (as defined below), prior approval is required before the Company can declare or pay any distributions or dividends to its common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

On March 31, 2017, the initial closing under the SPA (the “Initial Closing”) occurred and various transactions and agreements contemplated by the SPA were consummated and executed, including but not limited to:

• the sale by the Company and purchase by the Brookfield Investor of one share of a new series of preferred stock designated as the Redeemable Preferred Share, par value $0.01 per share (the “Redeemable Preferred Share”), for a nominal purchase price; and

• the sale by the Company and purchase by the Brookfield Investor of 9,152,542.37 units of a new class of units of limited partnership in our operating partnership entitled "Class C Units" (the “Class C Units”), for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate.

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail in Note 3 - Brookfield Investment and Related Transactions.

Subject to the terms and conditions of the SPA, the Company, through the OP, also has the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units in an aggregate amount of up to $265.0 million at subsequent closings (each, a "Subsequent Closing") that may occur through February 2019. The Subsequent Closings are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.

Substantially all of the Company’s business is conducted through the OP. Prior to the Initial Closing, the Company was the sole general partner and held substantially all of the units of limited partnership in the OP entitled “OP Units” ("OP Units"). Following the Initial Closing, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $135.0 million in liquidation preference with respect to the OP that ranks senior in payment of distributions and in the distribution of assets to the OP Units held by the Company, and BSREP II Hospitality II Special GP, OP LLC (the “Special General Partner”) is the special general partner of the OP, with certain non-economic rights that apply if the OP is unable to redeem the Class C Units when required to do so, as described below. Class C Units are convertible into OP Units based on an initial conversion price of $14.75, subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions. OP Units, in turn, are generally redeemable for shares of the Company's common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at the Company’s election, in accordance with the terms of the limited partnership agreement of the OP. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative cash distribution at a rate of 7.50% per annum from legally available funds. If the Company fails to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative distribution payable in Class C Units at a rate of 5% per annum ("PIK Distributions"). Upon our failure to redeem the Brookfield Investor when required to do so pursuant to the limited partnership agreement of the OP, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50% and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.50%.

Without obtaining the prior approval of the majority of the then outstanding Class C Units, the OP is restricted from taking certain actions including equity issuances, debt incurrences, payment of dividends or other distributions, redemptions or repurchases of securities, property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business. In addition, pursuant to the terms of the Redeemable Preferred Share, in addition to other governance and board rights, the Brookfield Investor has elected and has a continuing right to elect two directors (each, a “Redeemable Preferred Director”) to the Company’s board of directors and the Company is similarly restricted from taking those actions without the prior approval of at least one of the Redeemable Preferred Directors. Prior approval of at least one of the Redeemable Preferred Directors is also required to approve the annual business plan (including the annual operating and capital budget) required under the terms of the Redeemable Preferred Share (the "Annual Business Plan"), hiring and compensation decisions related to certain key personnel (including our executive officers) and various matters related to the structure and composition of the Company’s board of directors. These restrictions (collectively referred to herein as the “Brookfield Approval Rights”) are subject to certain exceptions and conditions, including that, after March 31, 2022, no prior approval will be required for equity issuances, debt incurrences and property sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full. Subject to certain limitations, the Brookfield Approval Rights are subject to temporary and permanent suspension in connection with any failure by the Brookfield Investor to purchase Class C Units at any Subsequent Closing as required pursuant to the SPA. In addition, the Brookfield Approval

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Rights will no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the limited partnership agreement of the OP.

Prior to March 31, 2022, if the OP consummates a liquidation sale of all or substantially all of its assets, dissolution or winding-up, whether voluntary or involuntary, sale, merger, reorganization, reclassification or recapitalization or other similar event (a “Fundamental Sale Transaction”), it is required to redeem the Class C Units for cash at a premium based on how long the Class C Units have been outstanding. Following March 31, 2022, the holders of Class Units may require the OP to redeem any or all Class C Units for an amount in cash equal to the liquidation preference. The OP will also be required, at the option of the holders thereof, to redeem Class C Units, for the same premium applicable in a Fundamental Sale Transaction, upon the occurrence of certain events related to its failure to qualify as a REIT, the occurrence of a material breach by the OP of certain provisions of the limited partnership agreement of the OP or, for an amount equal to the liquidation preference, the rendering of a judgment enjoining or otherwise preventing the exercise of certain rights under the limited partnership agreement of the OP. If the OP is unable to redeem any Class C Units when required to do so, the Brookfield Investor will be able to elect a majority of the Company's board of directors and may cause the OP, through the exercise of the rights of the Special General Partner, to commence selling its assets until the Class C Units have been fully redeemed.

At any time and from time to time on or after March 31, 2022, the OP has the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference. In addition, if the Company lists its common stock on a national securities exchange prior to that date, it will have certain rights to redeem all but $0.10 of the liquidation preference of each issued and outstanding Class C Units for cash subject to payment of a make whole premium and certain rights of their Class C Unit holders to convert their retained liquidation preference into OP Units prior to March 31, 2024.

Also at the Initial Closing, as contemplated by the SPA and the Framework Agreement, the Company changed its name from American Realty Capital Hospitality Trust, Inc. to Hospitality Investors Trust, Inc. and the name of the OP from American Realty Capital Hospitality Operating Partnership, L.P. to Hospitality Investors Trust Operating Partnership, L.P. and completed various other actions required to effect the Company’s transition from external management to self-management.

Prior to the Initial Closing, the Company had no employees, and the Company depended on the Former Advisor to manage certain aspects of its affairs on a day-to-day basis pursuant to the advisory agreement with the Former Advisor (the "Advisory Agreement"). In addition, the Former Property Manager, served as the Company's property manager and had retained Crestline to provide services, including locating investments, negotiating financing and operating certain hotel assets in the Company's portfolio.

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, LLC (“AR Capital”), the parent of American Realty Capital IX, LLC (“ARC IX”), and AR Global Investments, LLC ("AR Global"), the successor to certain of AR Capital's businesses. ARC IX served as the Company’s sponsor prior to its transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. Following the Initial Closing, the Company had approximately 25 full-time employees. The staff at the Company’s hotels are employed by our third-party hotel managers. At the Initial Closing, the Company also terminated all of its other agreements with affiliates of the Former Advisor except for its hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which the Company will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Prior to the Initial Closing, the Company, directly or indirectly through its taxable REIT subsidiaries had entered into agreements with the Former Property Manager, which, in turn, had engaged Crestline or a third-party sub-property manager to manage the Company’s hotel properties. These agreements were intended to be coterminous, meaning that the term of the agreement with the Company’s Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions. Following the Initial Closing, the Company no longer has any agreements with the Former Property Manager and instead contracts directly or indirectly, through its taxable REIT subsidiaries, with Crestline and the other third-party property management companies that previously served as sub-property managers to manage the Company’s hotel properties.

As of March 31, 2017, following the Initial Closing, 72 of the hotel assets the Company has acquired were managed by Crestline and 69 of the hotel assets the Company has acquired were managed by third-party property managers. As of March 31, 2017, the Company’s third-party property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), Interstate Management Company, LLC (5 hotels), InnVentures IVI, LP (2 hotels) and McKibbon Hotel Management, Inc. (21 hotels). On April 3, 2017, as contemplated by the Framework Agreement, the five hotels managed by Interstate Management Company, LLC became managed by Crestline.

See Note 3 - Brookfield Investment and Related Transactions for additional information regarding the terms of the SPA and the Framework Agreement and the other transactions and agreements contemplated thereby.

Note 2 - Summary of Significant Accounting Policies

The accompanying consolidated financial statements of the Company included herein were prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as percentage ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary.

Certain amounts in prior periods have been reclassified in order to conform to current period presentation, specifically, the Company changed the presentation of its Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to "general and administrative expenses" and "acquisition and transaction related costs". The change in presentation was to reclassify these line items so that they are included as a component of Operating income (loss). The Company made this change in presentation for all periods presented.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding purchase price allocations to record investments in real estate, the useful lives of real estate and real estate taxes, as applicable.

Real Estate Investments

The Company allocates the purchase price of properties acquired in real estate investments to tangible and identifiable intangible assets acquired based on their respective fair values at the date of acquisition. Tangible assets include land, land improvements, buildings and furniture, fixtures and equipment. The Company utilizes various estimates, processes and information to determine the property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and furniture, fixtures and equipment are based on purchase price allocation studies performed by independent third

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

parties or on the Company’s analysis of comparable properties in the Company’s portfolio. Identifiable intangible assets and liabilities, as applicable, are typically related to contracts, including operating lease agreements, ground lease agreements and hotel management agreements, which will be recorded at fair value. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Investments in real estate that are not considered to be business combinations under GAAP are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation of the Company's long-lived assets is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for furniture, fixtures and equipment, and the shorter of the useful life or the remaining lease term for leasehold interests.

The Company is required to make subjective assessments as to the useful lives of the Company’s assets for purposes of determining the amount of depreciation to record on an annual basis with respect to the Company’s investments in real estate. These assessments have a direct impact on the Company’s net income because if the Company were to shorten the expected useful lives of the Company’s investments in real estate, the Company would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Below-Market Lease

The below-market lease intangible is based on the difference between the market rent and the contractual rent and is discounted to a present value using an interest rate reflecting the Company's current assessment of the risk associated with the leases acquired (See Note 5 - Leases). Acquired lease intangible assets are amortized over the remaining lease term. The amortization of a below-market lease is recorded as an increase to rent expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Impairment of Long-Lived Assets and Investments in Unconsolidated Entities

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income. An impairment loss of $2.4 million was recorded on one hotel during the quarter ended June 30, 2016. The Company has not recorded an impairment in any other periods.

Assets Held for Sale (Long Lived-Assets)

When the Company initiates the sale of long-lived assets, it assesses whether the assets meet the criteria to be considered assets held for sale. The review is based on whether the following criteria are met:

• Management has committed to a plan to sell the asset group;

• The subject assets are available for immediate sale in their present condition;

• The Company is actively locating buyers as well as other initiatives required to complete the sale;

• The sale is probable and the transfer is expected to qualify for recognition as a complete sale in one year;

• The long-lived asset is being actively marketed for sale at a price that is reasonable in relation to fair value; and

• Actions necessary to complete the plan indicate it is unlikely significant changes will be made to the plan or the plan will be withdrawn.

If all the criteria are met, a long-lived asset held for sale is measured at the lower of its carrying amount or fair value less cost to sell, and the Company will cease recording depreciation.

Goodwill

During the three months ended March 31, 2017, the Company recognized $31.6 million as goodwill (See Note 4 - Business

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Combinations). The goodwill balance will be tested for impairment at least annually, or upon the occurrence of any “triggering events,” if sooner.

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

Restricted Cash

Restricted cash consists of amounts required under mortgage agreements for future capital improvements to owned assets, future interest and property tax payments and cash flow deposits while subject to mortgage agreement restrictions. For purposes of the statement of cash flows, changes in restricted cash caused by changes to the amount needed for future capital improvements are treated as investing activities, changes related to future debt service payments are treated as financing activities, and changes related to real estate tax payments and excess cash flow deposits are treated as operating activities.

Deferred Financing Fees

Deferred financing fees represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These fees are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing fees are expensed in full when the associated debt is refinanced or repaid before maturity.Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not be successful.

Variable Interest Entities

Accounting Standards Codification ("ASC") 810 contains the guidance surrounding the definition of variable interest entities ("VIE"), the definition of variable interests and the consolidation rules surrounding VIEs. In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

Once it is determined that the Company holds a variable interest in an entity, GAAP requires that the Company perform a qualitative analysis to determine (i) which entity has the power to direct the matters that most significantly impact the VIE’s financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. The entity that has both of these characteristics is deemed to be the primary beneficiary and is required to consolidate the VIE.

In February 2015, the FASB issued Accounting Standards Update 2015-02 (ASU 2015-02), which amended ASC 810. The amendment modifies the evaluation of whether certain legal entities are VIEs, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs. The revised guidance was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company’s partnership interest in the OP representing the OP Units held by the Company corresponding to shares of the Company's common stock is considered a majority voting interest. As such, the new guidance did not have an impact on the Company’s consolidated financial statements. At the Initial Closing the Company analyzed the rights of the Class C Units holders and determined that the Company continues to be the primary beneficiary of the OP, with the power to direct activities that most significantly impact its economic performance.

The Company also has variable interests in VIEs through its investments in BSE/AH Blacksburg Hotel, LLC (the "HGI Blacksburg JV"), an entity that owns the assets of the Hilton Garden Inn Blacksburg, and an interest in TCA Block 7 Hotel, LLC (the "Westin Virginia Beach JV"), an entity that owns the assets of the Westin Virginia Beach Town Center (the "Westin Virginia Beach").

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

The Company has concluded that it is the primary beneficiary, with the power to direct activities that most significantly impact its economic performance of the HGI Blacksburg JV, and has therefore consolidated the entity in its consolidated financial statements.

The Company has concluded it is not the primary beneficiary with the power to direct activities that most significantly impact economic performance of the Westin Virginia Beach JV, and has therefore not consolidated the entity. The Company has accounted for the entity under the equity method of accounting and included it in investments in unconsolidated entities in the accompanying Consolidated Balance Sheets.

The Company classifies the distributions from its investments in unconsolidated entities in the Consolidated Statement of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution. For example, distributions of cash generated by property operations are classified as cash flows from operating activities. However, distributions received as a result of property sales are classified as cash flows from investing activities.

Revenue Recognition

The Company recognizes hotel revenue as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel services.

Income Taxes

The Company qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code") commencing with its tax year ended December 31, 2014. In order to continue to qualify as a REIT, the Company must annually distribute to its stockholders 90% of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain, and must comply with various other organizational and operational requirements. The Company generally will not be subject to federal corporate income tax on that portion of its REIT taxable income that it distributes to its stockholders. The Company may be subject to certain state and local taxes on its income, property tax and federal income and excise taxes on its undistributed income. The Company's hotels are leased to taxable REIT subsidiaries which are owned by the OP. The taxable REIT subsidiaries are subject to federal, state and local income taxes.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss, capital loss, and tax credit carryovers. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which such amounts are expected to be realized or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. The Company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement in order to determine the amount of benefit to recognize in the financial statements. This accounting standard applies to all tax positions related to income taxes.

Earnings/Loss per Share

The Company calculates basic income or loss per share by dividing net income or loss for the period by the weighted-average shares of its common stock outstanding for a respective period. Diluted income per share takes into account the effect of dilutive instruments, such as stock options and unvested stock awards, except when doing so would be anti-dilutive. Beginning with distributions payable with respect to April 2016 and through the period from January 1, 2017 to January 13, 2017, the date these distributions were suspended, the Company has paid cumulative distributions of 2,047,877 shares of common stock and adjusted retroactively for all periods presented its computation of loss per share in order to reflect this change in capital structure (See Note 10 - Common Stock).

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Fair Value Measurements

In accordance with ASC 820, Fair Value Measurement, certain assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction on the measurement date. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

The Company’s financial instruments recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

• Level 1 - Inputs that are based upon quoted prices for identical instruments traded in active markets.

• Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar investments in markets that are not active, or models based on valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the investment.

• Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Advertising Costs

The Company expenses advertising costs for hotel operations as incurred. These costs were $4.2 million for the three months ended March 31, 2017, and $3.8 million for the three months ended March 31, 2016.

Allowance for Doubtful Accounts

Receivables consist principally of trade receivables from customers and are generally unsecured and are due within 30 to 90 days. The Company records a provision for uncollectible accounts using the allowance method. Expected credit losses associated with trade receivables are recorded as an allowance for doubtful accounts. The allowance for doubtful accounts is estimated based upon historical patterns of credit losses for aged receivables as well as specific provisions for certain identifiable, potentially uncollectible balances. When internal collection efforts on accounts have been exhausted, the accounts are written off and the associated allowance for doubtful accounts is reduced. Trade receivable balances, net of the allowance for doubtful accounts, are included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets, and are as follows (in thousands):

	March 31, 2017			December 31, 2016
Trade receivables	$	7,332		$	6,238
Allowance for doubtful accounts	(316		)	(434		)
Trade receivables, net of allowance	$	7,016		$	5,804

Reportable Segments

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate room revenue and other income through the operation of the properties, which comprise 100% of the total consolidated revenues. Management evaluates the operating performance of the Company’s investments in real estate on an individual property level, none of which represent a reportable segment.

Derivative Transactions

The Company at certain times enters into derivative instruments to hedge exposure to changes in interest rates. The Company’s derivatives as of March 31, 2017, consist of interest rate cap agreements which it believes will help to mitigate its exposure to increasing borrowing costs under floating rate indebtedness. The Company has elected not to designate its interest rate cap agreements as cash flow hedges. The impact of the interest rate caps for the three months ended March 31, 2017, was immaterial to the consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled to for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In April 2015, the FASB proposed an accounting standards update for ASU 2014-09 for the deferral of the effective date of ASU 2014-09. This proposal defers the effective date of ASU 2014-09 from annual reporting periods beginning after December 15, 2016, back one year, to annual reporting periods beginning after December 15, 2017 for all public business entities, certain not-for-profit entities, and certain employee benefit plans. Early application of ASU 2014-09 is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In April and May 2016, two amendments ("ASU 2016-10" and "ASU 2016-12") were made in which guidance related to accounting for revenue from contracts with customers was clarified further. ASU 2016-10 provides clarity around identifying performance obligations and licensing implementation guidance. ASU 2016-12 addresses topics such as collectability criterion, presentation of sales tax, non-cash consideration, completed contracts at transition and technical corrections. There have been no adjustments to the effective date of ASU 2014-09. The Company is evaluating the effect that ASU 2014-09, ASU 2016-10 and ASU 2016-12 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 Leases ("ASU 2016-02"), which requires an entity to separate lease components from nonlease components in a contract. ASU 2016-02 provides more guidance on how to identify and separate components than did previous GAAP. ASU 2016-02 requires lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This amendment has not fundamentally changed lessor accounting, however some changes have been made to align and conform to the lessee guidance. The adoption of ASU 2016-02 becomes effective for the Company for the fiscal year beginning after December 15, 2018, and all subsequent annual and interim periods. Upon adoption, the Company will be required to recognize its operating leases, which are primarily comprised of one operating lease with respect to the Georgia Tech Hotel & Conference Center and nine ground leases, under which it is the lessee, as liabilities on the Consolidated Balance Sheets. Early adoption is permitted.

In March 2016, the FASB issued ASU 2016-07 Investments—Equity Method and Joint Ventures ("ASU 2016-07"), which requires that an equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The adoption of ASU 2016-07 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-07 did not have a material effect on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09 Compensation—Stock Compensation ("ASU 2016-09"), which requires that all excess tax benefits and all tax deficiencies should be recognized as income tax expense or benefits in the income statement. These benefits and deficiencies are discrete items in the reporting period in which they occur. An entity should not consider these benefits or deficiencies in determining the annual estimated tax rate. The adoption of ASU 2016-09 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on the Company’s consolidated financial statements.

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which addresses the presentation and classification of certain cash flow receipts and payments. The adoption of ASU 2016-15 becomes effective for the Company for the fiscal year beginning after December 15, 2017, and all subsequent annual and interim periods. The adoption of ASU 2016-15 is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business, with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Additionally, this update also narrows the definition of an output. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business, thus reducing the number of transactions that need to be further evaluated. ASU 2017-01 is effective for the Company for fiscal years beginning after December 15, 2018, and early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption.

Note 3 - Brookfield Investment and Related Transactions

Securities Purchase, Voting and Standstill Agreement

On January 12, 2017, the Company and the OP entered into the SPA with the Brookfield Investor, as well as related guarantee agreements with certain affiliates of the Brookfield Investor. Pursuant to the terms of the SPA, at the Initial Closing, the Brookfield Investor agreed to purchase (i) the Redeemable Preferred Share, for a nominal purchase price, and (ii) 9,152,542.37 Class C Units, for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate. The Initial Closing occurred on March 31, 2017.

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company has measured the Class C Units at fair value, or $135.0 million, representing the gross proceeds of the issuance of the Class C Units at the Initial Closing. As discussed below, the Class C Units include conversion rights. Because the effective conversion price of the Class C Units under GAAP of $14.09 (which is calculated on a net investment basis after transaction fees and costs payable to the Brookfield Investor as $129.0 million divided by 9,152,542.37 Class C Units issued ) is less than the fair value of the Company’s common stock of $14.59 (See Note 10 - Common Stock), the conversion rights represent a “beneficial conversion feature” under GAAP. The Company measured the beneficial conversion feature at $4.5 million, and has recognized the beneficial conversion feature as a deemed dividend as of March 31, 2017, reducing income available to common stockholders for purposes of calculating earnings per share. The Class C Units are reflected on the Consolidated Balance Sheets at $121.2 million, net of costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield in the form of expense reimbursements and a commitment fee.

Following the Initial Closing, subject to the terms and conditions of the SPA, the Company also has the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units at the same price per unit as at the Initial Closing upon 15 business days’ prior written notice and in an aggregate amount not to exceed $265.0 million at Subsequent Closings as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

• On or prior to February 27, 2018, but no earlier than January 3, 2018, up to an amount that would be sufficient to reduce the outstanding amount of the Grace Preferred Equity Interests to approximately $223.5 million (the "First Subsequent Closing"). Proceeds from the First Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the First Subsequent Closing, redeem then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, but no earlier than January 3, 2019, up to the then outstanding amount of the Grace Preferred Equity Interests (the "Second Subsequent Closing"). Proceeds from the Second Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the Second Subsequent Closing, redeem all then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, in one or more transactions, up to an amount equal to the difference between the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment and the outstanding amount of the Grace Preferred Equity Interests. Proceeds from these Subsequent Closings must be used by the OP exclusively to fund brand-mandated property improvement plans ("PIPs") and related lender reserves, repay amounts then outstanding with respect to mortgage debt principal and interest and working capital.

Consummation of any Subsequent Closing is subject to the satisfaction of certain conditions, and there can be no assurance they will be completed on their current terms, or at all. In addition, from February 27, 2018 through February 27, 2019, the Brookfield Investor will have the right to purchase, and the OP has agreed to sell, in one or more transactions, the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment in transactions of no less than $25.0 million each.

The SPA also contains certain standstill and voting restrictions applicable to the Brookfield Investor and certain of its affiliates.

The Redeemable Preferred Share

The Redeemable Preferred Share ranks on parity with the Company’s common stock, with the same rights with respect to preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and conditions as the Company’s common stock, except as provided therein.

For so long as the Brookfield Investor holds the Redeemable Preferred Share, (i) the Brookfield Investor has the right to elect two Redeemable Preferred Directors (neither of whom may be subject to an event that would require disclosure pursuant to Item 401(f) of Regulation S-K, which relates to involvement in certain legal proceedings, in any definitive proxy statement filed by the Company), as well as to approve (such approval not to be unreasonably withheld, conditioned or delayed) two additional independent directors (each, an “Approved Independent Director”) to be recommended and nominated by the Board for election by our stockholders at each annual meeting, (ii) each committee of the Company’s board of directors, except any committee formed with authority and jurisdiction over the review and approval of conflicts of interest involving the Brookfield Investor and its affiliates, on the one hand, and the Company, on the other hand (a “Conflicts Committee”), is required to include at least one of the Redeemable Preferred Directors as selected by the holder of the Redeemable Preferred Share (or, if neither of the Redeemable Preferred Directors satisfies all requirements applicable to such committee, with respect to independence and otherwise, of the Company’s charter, the SEC and any national securities exchange on which any shares of the Company’s stock are then listed, at least one of the Approved Independent Directors as selected by the Company’s board of directors), and (iii) the Company will not make a general delegation of the powers of the Company’s board of directors to any committee thereof which does not include as a member a Redeemable Preferred Director, other than to a Conflicts Committee.

Beginning three months after the failure of the OP to redeem Class C Units when required to do so, until all Class C Units requested to be redeemed have been redeemed, the holder of the Redeemable Preferred Share will have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created by the expansion of the Company’s board of directors, subject to compliance with the provisions of the Company’s charter requiring at least a majority of the Company’s directors to be Independent Directors.

The Brookfield Investor is not permitted to transfer the Redeemable Preferred Share, except to an affiliate of the Brookfield Investor.

The holder of the Redeemable Preferred Share generally votes together as a single class with the holders of the Company’s common stock at any annual or special meeting of stockholders of the Company. However, any action that would alter the terms of the Redeemable Preferred Share or the rights of its holder (including any amendment to the Company's charter, including the Articles Supplementary) is subject to a separate class vote of the Redeemable Preferred Share.

In addition, the Redeemable Preferred Directors have the Brookfield Approval Rights.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

At its election and subject to notice requirements, the Company may redeem the Redeemable Preferred Share for a cash amount equal to par value upon the occurrence of any of the following: (i) the first date on which no Class C Units remain outstanding; (ii) the date the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA; or (iii) in connection with a failure of the Brookfield Investor to consummate the applicable purchase of Class C Units at any Subsequent Closing (subject to the terms set forth in the SPA, a “Funding Failure”), the 11th business day after the date the Company obtains a final, non-appealable judgment of a court of competent jurisdiction in connection with such Funding Failure. Under the circumstances described in clause (iii) in the foregoing sentence, in addition, (i) the Brookfield Approval Rights would be permanently terminated, (ii) the OP would be entitled to redeem all or any portion of the then outstanding Class C Units in cash for their liquidation preference, (iii) all Class C Units received in respect of all PIK Distributions accrued from the date of the Initial Closing would be forfeited, and (iv) the Brookfield Investor would be required to cause each of the Redeemable Preferred Directors to resign from the Company’s board of directors.

Class C Units

At the Initial Closing, the Brookfield Investor, the Special General Partner and the Company, in its capacity as general partner of the OP, entered into an amendment and restatement (the "A&R LPA") of the OP's existing agreement of limited partnership, which established the terms, rights, obligations and preferences of the Class C Units as set forth in more detail below.

Rank

The Class C Units rank senior to the OP Units and all other equity interests in the OP with respect to priority in payment of distributions and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the OP, whether voluntary or involuntary, or any other distribution of the assets of the OP among its equity holders for the purpose of winding up its affairs.

Distributions

Commencing on June 30, 2017, holders of Class C Units are entitled to receive, with respect to each Class C Unit, fixed, quarterly cumulative cash distributions at a rate of 7.50% per annum from legally available funds. If the Company fails to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero.

Commencing on June 30, 2017 and subject to the occurrence of a Funding Failure, holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative PIK Distribution at a rate of 5% per annum payable in Class C Units. Upon the Company’s failure to redeem the Brookfield Investor when required to do so pursuant to the A&R LPA, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

The number of Class C Units delivered in respect of the PIK Distributions on any distribution payment date will be equal to the number obtained by dividing the amount of PIK Distribution by $14.75.

The Brookfield Investor is also entitled to receive tax distributions under certain limited circumstances.

Liquidation Preference

The liquidation preference with respect to each Class C Unit as of a particular date is the original purchase price paid under the SPA or the value upon issuance of any Class C Unit received as a PIK Distribution, plus, with respect to such Class C Unit up to but not including such date, (i) any accrued and unpaid cash distributions and (ii) any accrued and unpaid PIK Distributions.

Conversion Rights

At any time and subject to the occurrence of a Funding Failure, the Class C Units are convertible into OP Units at any time at the option of the holder thereof at an initial conversion price of $14.75 (the "Conversion Price"). The Conversion Price is subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions.

Notwithstanding the foregoing, the convertibility of certain Class C Units may be restricted in certain circumstances described in the A&R LPA, and, to the extent any Class C Units submitted for conversion are not converted as a result of these restrictions, the holder will instead be entitled to receive an amount in cash equal to two times the liquidation preference of any unconverted Class C Units.

OP Units, in turn, are generally redeemable for shares of the Company’s common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at the election of the Company, in accordance with the terms of the A&R LPA. Notwithstanding the foregoing, with respect to any redemptions in exchange for shares of the Company’s common stock that would result in the converting holder owning 49.9% or more of the shares of the Company’s common stock then outstanding

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

after giving effect to the redemption, for the number of shares of the Company’s common stock exceeding the 49.9% threshold, the redeeming holder may elect to retain OP Units or to request delivery in cash of the cash value of a corresponding number of shares.

Mandatory Redemption

Upon the consummation of any Fundamental Sale Transaction prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units are entitled to receive, prior to and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of any other limited partnership interests in the OP:

• in the case of a Fundamental Sale Transaction consummated on or prior to February 27, 2019, an amount per Class C Unit in cash equal to such Class C Unit’s pro rata share (determined based on the respective liquidation preferences of all Class C Units) of an amount equal to (I) $800.0 million less (II) the sum of (i) the difference between (A) $400.0 million and (B) the aggregate purchase price paid under the SPA of all outstanding Class C Units (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes) and (ii) all cash distributions actually paid to date;

• in the case of a Fundamental Sale Transaction consummated after February 27, 2019 and prior to January 1, 2022, the date that is 57 months and one day after the date of the Initial Closing, an amount per Class C Unit in cash equal to (x) two times the purchase price under the SPA of such Class C Unit (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes), less (y) all cash distributions actually paid to date; and

• in the case of a Fundamental Sale Transaction consummated on or after January 1, 2022, an amount per Class C Unit in cash equal to the liquidation preference of such Class C Unit plus a make whole premium for such Class C Unit calculated based on a discount rate of 5% and the assumption that such Class C Unit had not been redeemed until March 31, 2022, the fifth anniversary of the Initial Closing (the "Make Whole Premium").

Holder Redemptions

Upon the occurrence of a REIT Event (as defined and more fully described in the A&R LPA, the Company’s failure to satisfy any of the requirements for qualification and taxation as a real estate investment trust under certain circumstances) or a Material Breach (as defined and more fully described in the A&R LPA, generally a breach by the Company of certain material obligations under the A&R LPA), in each case, subject to certain notice and cure rights, holders of Class C Units have the right to require the Company to redeem any Class C Units submitted for redemption for an amount equivalent to what the holders of Class C Units would have been entitled to receive in a Fundamental Sale Transaction if the date of redemption were the date of the consummation of the Fundamental Sale Transaction.

From time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, and at any time following the rendering of a judgment enjoining or otherwise preventing the holders of Class C Units, the Brookfield Investor or the Special General Partner from exercising their respective rights under the A&R LPA or the Articles Supplementary, any holder of Class C Units may, at its election, require the Company to redeem any or all of its Class C Units for an amount in cash equal to the liquidation preference.

The OP is not required to make any redemption of less than all of the Class C Units held by any holder requiring a payment of less than $15.0 million. If any redemption request would result in the total liquidation preference of Class C Units remaining outstanding being equal to less than $35.0 million, the OP has the right to redeem all then outstanding Class C Units in full.

Remedies Upon Failure to Redeem

Three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, the Special General Partner has the exclusive right, power and authority to sell the assets or properties of the OP for cash at such time or times as the Special General Partner may determine, upon engaging a reputable, national third party sales broker or investment bank reasonably acceptable to holders of a majority of the then outstanding Class C Units to conduct an auction or similar process designed to maximize the sales price. The proceeds from sales of assets or properties by the Special General Partner must be used first to make any and all payments or distributions due or past due with respect to the Class C Units, regardless of the impact of such payments or distributions on the Company or the OP.

In addition and as described elsewhere herein, three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA:

• the holder of the Redeemable Preferred Share would have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created thereby subject to compliance with provisions of the Company's charter requiring at least a majority of the Company’s directors to be Independent Directors (as defined in the Company's charter); and

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

• the 5% per annum PIK Distribution rate would increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

Company Liquidation Preference Reduction Upon Listing

In the event a listing of the Company’s common stock on a national stock exchange occurs prior to March 31, 2022, the fifth anniversary of the Initial Closing, the OP would also have certain other rights to elect to reduce the liquidation preference of any Class C Units outstanding described in more detail in the A&R LPA.

Company Redemption After Five Years

At any time and from time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, the Company has the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference.

Transfer Restrictions

Subject to certain exceptions, the Brookfield Investor is generally permitted to make transfers of Class C Units without the prior consent of the Company, provided that any transferee must customarily invest in these types of securities or real estate investments of any type or have in excess of $100.0 million of assets.

Preemptive Rights

Subject to the occurrence of a Funding Failure, if the Company or the OP proposes to issue additional equity securities, subject to certain exceptions and in accordance with the procedures in the A&R LPA, any holder of Class C Units that owns Class C Units representing more than 5% of the outstanding shares of the Company’s common stock on an as-converted basis has certain preemptive rights.

Brookfield Approval Rights

The Articles Supplementary restrict the Company from taking certain actions without the prior approval of at least one of the Redeemable Preferred Directors, and the A&R LPA restricts the OP from taking certain actions without the prior approval of the majority of the then outstanding Class C Units. Subject to certain limitations, both sets of rights are subject to temporary and permanent suspension in connection with any Funding Failure and no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA.

In general, subject to certain exceptions, prior approval is required before the Company or its subsidiaries (including the OP) are permitted to take any of the following actions: equity issuances; organizational document amendments; debt incurrences; affiliate transactions; sale of all or substantially all assets; bankruptcy or insolvency declarations; declarations or payments of dividends or other distributions; redemptions or repurchases of securities; adoption of, and amendments to, the Annual Business Plan; hiring and compensation decisions related to certain key personnel (including executive officers); property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business; entry into new lines of business; settlement of material litigation; changes to material agreements; increasing or decreasing the number of directors on the Company’s board of directors; nominating or appointing a director (other than a Redeemable Preferred Director) who is not independent; nominating or appointing the chairperson of the Company’s board of directors; and certain other matters.

After December 31, 2021, the 57-month anniversary of the Initial Closing, no prior approval will be required for debt incurrences, equity issuances and asset sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full.

Framework Agreement

On January 12, 2017, the Company and the OP, entered into the Framework Agreement with the Former Advisor, the Former Property Manager, Crestline, the Former Special Limited Partner, and, for certain limited purposes, the Brookfield Investor.

The Framework Agreement provides for the Company transitioning from an externally managed company with no employees of its own that is dependent on the Former Advisor and its affiliates to manage its day-to-day operations to a self-managed company. The transactions contemplated by the Framework Agreement generally were consummated at, and as a condition to, the Initial Closing, and the Framework Agreement would have terminated automatically upon the termination of the SPA in accordance with its terms prior to the Initial Closing.

At the Initial Closing, pursuant to the Framework Agreement, the Advisory Agreement was terminated. The Framework Agreement also provided for the extension or renewal of the Advisory Agreement on specified terms under certain circumstances, none of which occurred.

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Until the expiration without renewal or termination of the Advisory Agreement, the Former Advisor and its affiliates agreed to use their respective commercially reasonable efforts to assist the Company and its subsidiaries to take such actions as the Company and its subsidiaries reasonably deemed necessary to transition to self-management, including, but not limited to providing books and records, accounting systems, software and office equipment. In addition, the Former Advisor also granted the Company the right to hire certain of employees of the Former Advisor or its affiliates who were then involved in the management of the Company’s day-to-day operations, including all of the Company’s current executive officers, and made other agreements in order to promote retention of these individuals which relate to the compensation payable to them and other terms of their employment by the Former Advisor and its affiliates prior to the Initial Closing.

Pursuant to the Framework Agreement, at the Initial Closing, the Company and the Former Advisor and/or certain of its affiliates, as applicable, entered into a series of agreements to facilitate the transition of self-management, including the agreements described in more detail below.

Property Management Transactions

Prior to the Initial Closing, the Company, directly or indirectly through its taxable REIT subsidiaries, had entered into agreements with the Former Property Manager, which, in turn, engaged Crestline or a third-party sub-property manager to manage the Company’s hotel properties. These agreements were intended to be coterminous, meaning that the term of the agreement with the Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions.

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company, through its taxable REIT subsidiaries, the Former Property Manager, Crestline and the Company’s third-party sub-property managers entered into a series of amendments, assignments and terminations with respect to the then existing property management arrangements (collectively, the "Property Management Transactions") pursuant to the Framework Agreement.

At the consummation of the Property Management Transactions, among other things:

• property management agreements for a total of 69 hotels sub-managed by Crestline (collectively, the "Crestline Agreements") were assigned by the Former Property Manager to Crestline;

• property management agreements for a total of five additional hotels (together with the Crestline Agreements, the "Long-Term Agreements") are being transitioned to Crestline and the sub-property management agreements with Interstate Management Company, LLC related to these properties were terminated effective April 3, 2017;

• in connection with the assignment of the Long-Term Agreements to Crestline, they were amended as follows:

• the total property management fee of up to 4.0% of the monthly gross receipts from the properties was reduced to 3.0%;

• no change to the remaining term (generally 18 to 19 years), which will renew automatically for threefive year terms unless either party provides advance notice of non-renewal;

• the termination provisions were changed from being generally only terminable by the Company prior to expiration for cause and not in connection with a sale such that, beginning on April 1, 2021, the first day of the 49th month following the Initial Closing, the Company will have an "on-sale" termination right upon payment of a fee in an amount equal to two and one half times the property management fee in the trailing 12 months, subject to customary adjustments; and

• if, prior to March 31, 2023, the six-year anniversary of the Initial Closing, the Company sells a hotel managed pursuant to a Long-Term Agreement, the Company has the right to terminate the applicable Long-Term Agreement with respect to any property that is being sold and concurrently replace it with a comparable hotel owned by the Company and managed pursuant to a short-term agreement, by terminating that hotel’s existing property manager and retaining Crestline on the same terms as the Long-Term Agreement being replaced; and

• the property management agreements with the Former Property Manager for the Company’s 65 other hotels were terminated and the sub-property managers managing these hotels prior to the Initial Closing continued to do so following the Initial Closing in accordance with property management agreements with the Company’s taxable REIT subsidiaries under the property management terms in effect prior to the Initial Closing.

As consideration for the Property Management Transactions, the Company and the OP:

• paid a one-time cash amount equal to $10.0 million to the Former Property Manager;

• have made and will continue to make a monthly cash payment in the amount of $333,333.33, $4.0 million in the aggregate, to the Former Property Manager on the 15th day of each month for the 12 months following the Initial Closing (See Note 7 - Promissory Notes Payable);

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

• issued 279,329 shares of the Company’s common stock to the Former Property Manager, for which the fair value on the date of grant has been determined to be $14.59 per share (See Note 10 - Common Stock);

• waived any and all obligations of the Former Advisor to refund or otherwise repay any Organization or Offering Expenses (as defined in the Advisory Agreement) to the Company in an amount acknowledged to be $5,821,988, which amount had been reflected as a reduction in offering proceeds due to it being directly related to issuing shares of common stock in prior periods; and

• converted all 524,956 units of limited partnership in the OP entitled “Class B Units” (“Class B Units") held by the Former Advisor into 524,956 OP Units, and, immediately following such conversion, redeemed such 524,956 OP Units for 524,956 shares of the Company’s common stock.

The foregoing consideration aggregates to $31.6 million and has been recorded as goodwill on the Company’s Consolidated Balance Sheets (See Note 4 - Business Combinations).

Assignment and Assumption Agreement

At the Initial Closing, as contemplated by the Framework Agreement, the Company, the Former Advisor and AR Global entered into an assignment and assumption agreement, pursuant to which the Former Advisor and AR Global assigned to the Company all right, title and interest in the following assets that are relevant to the Company and the OP: (i) accounting systems, (ii) IT equipment and (iii) certain office furniture and equipment.

Facilities Use Agreement

The Framework Agreement contemplates that the Company would enter into a Facilities Use Agreement with Crestline at the Initial Closing in the form attached to the Framework Agreement (the “Facilities Use Agreement”), pursuant to which the OP would sublease office space at Crestline’s principal place of business, 3950 University Drive, Fairfax, Virginia 22030, and would pay a portion of the total rent equivalent to the portion of the total space used. The term of the sublease would continue through December 31, 2019, automatically renewing for successive one-year periods unless either party delivers written notice to the other at least 120 days prior the expiration of the initial term or any renewal term. While the Facilities Use Agreement was not entered into at the Initial Closing, the Company commenced its occupation of the space at the Initial Closing on the terms contemplated by the Facilities Use Agreement, and the Company expects to ultimately enter into the Facilities Use Agreement on the terms contemplated by the Framework Agreement.

Transition Services Agreements

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which it will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. As compensation for the foregoing services, the Former Advisor will receive a one-time fee of $225,000 (payable $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline will receive a fee of $25,000 per month. The Former Advisor and Crestline are also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate upon 40 days' written notice to the other party and the monthly fee of $25,000 will continue to be payable. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Registration Rights Agreement

At the Initial Closing, as contemplated by and pursuant to the SPA and the Framework Agreement, the Company, the Brookfield Investor, the Former Advisor and the Former Property Manager entered into a Registration Rights Agreement (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, holders of Class C Units have certain shelf, demand and piggyback rights with respect to the registration of the resale under the Securities Act of 1933, as amended (the "Securities Act") of the shares of Company’s common stock issuable upon redemption of OP Units issuable upon conversion of Class C Units, and the Former Advisor and the Former Property Manager have similar rights with respect to the 524,956 and 279,329 shares of the Company’s common stock issued to them, respectively, pursuant to the Framework Agreement.

Note 4 - Business Combinations

Summit Acquisition: On June 2, 2015, the Company entered into agreements with affiliates of Summit Hotel Properties, Inc. (the "Summit Sellers"), as amended from time to time thereafter, to purchase fee simple interests in a portfolio of 26 hotels in three separate closings for a total purchase price of approximately $347.4 million, subject to closing prorations and other adjustments.

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

On October 15, 2015, the Company completed the acquisition of ten hotels (the "First Summit Closing") for $150.1 million, which was funded with $7.6 million previously paid as an earnest money deposit, $45.6 million from the IPO and $96.9 million from an advance, secured by a mortgage on the hotels in the First Summit Closing, under the SN Term Loan (as defined below) (See Note 6 - Mortgage Notes Payable).

On December 29, 2015, the Company and the Summit Sellers agreed to terminate the purchase agreement pursuant to which the Company had the right to acquire a fee simple interest in ten hotels (the "Second Summit Closing") for a total purchase price of $89.1 million. As a result of this termination, the Company forfeited $9.1 million in non-refundable earnest money deposits.

On February 11, 2016, the Company completed the acquisition of six hotels (the "Third Summit Closing") from the Summit Sellers for an aggregate purchase price of $108.3 million, which together with certain closing costs, was funded with $18.5 million previously paid as an earnest money deposit, $20.0 million in proceeds from a loan from the Summit Sellers (the "Summit Loan") described in Note 7 - Promissory Notes Payable, and $70.4 million from an advance, secured by a mortgage on the hotels in the Third Summit Closing, under the SN Term Loan.

Also on February 11, 2016, the Company entered into an agreement with the Summit Sellers to reinstate, with certain changes, the purchase agreement (the "Reinstatement Agreement") related to the hotels in the Second Summit Closing, pursuant to which the Company had been scheduled to acquire from the Summit Sellers ten hotels for an aggregate purchase price of $89.1 million.

Pursuant to the Reinstatement Agreement, the Second Summit Closing was re-scheduled to occur on December 30, 2016 and $7.5 million (the “New Deposit”) borrowed by the Company from the Summit Sellers was used as a new earnest money deposit.

Under the Reinstatement Agreement, the Summit Sellers have the right to market and ultimately sell any or all of the hotels in the Second Summit Closing to a bona fide third party purchaser without the consent of the Company at any time prior to the Company completing its acquisition of the Second Summit Closing. If any hotel is sold in this manner, the Reinstatement Agreement will terminate with respect to such hotel and the purchase price will be reduced by the amount allocated to such hotel. If all (but not less than all) of the hotels in the Second Summit Closing are sold in this manner, or if the Reinstatement Agreement is terminated with respect to all (but not less than all) of the hotels in the Second Summit Closing under certain other circumstances (including if there are title issues or material casualties or condemnations involving a particular hotel), then the New Deposit will be automatically applied towards any then outstanding principal balance of the Summit Loan, and any remaining balance of the New Deposit will be remitted to the Company. In June 2016, the Summit Sellers informed the Company that two of the ten hotels had been sold, thereby reducing the Second Summit Closing to eight hotels for an aggregate purchase price of $77.2 million.

On January 12, 2017, the Company, through a wholly owned subsidiary of the OP, entered into an amendment (the “Summit Amendment”) to the Reinstatement Agreement. Under the Summit Amendment, the closing date for the purchase of seven of the hotels remaining to be purchased under the Reinstatement Agreement for an aggregate purchase price of $66.8 million was extended from January 12, 2017 to April 27, 2017, following an amendment entered into on December 30, 2016 to extend the closing date from December 30, 2016 to January 10, 2017, and an amendment entered into on January 10, 2017 to extend the closing date from January 10, 2017 to January 12, 2017. The closing date for the purchase of an eighth hotel to be purchased under the Reinstatement Agreement for an aggregate purchase price of $10.5 million was extended from January 12, 2017 to October 24, 2017. The Summit Sellers have informed the Company that this eighth hotel is subject to a pending purchase and sale agreement with a third party, and, if this sale is completed, the Company’s right and obligation to purchase this hotel will terminate in accordance with the terms of the Reinstatement Agreement. Concurrent with the Company’s entry into the Summit Amendment, the Company entered into an amendment to the Summit Loan (the “Loan Amendment”) and Summit agreed to loan the Company an additional $3.0 million (the "Additional Loan Agreement") as consideration for the Summit Amendment. For additional discussion see Note 7 - Promissory Notes Payable.

On April 27, 2017, the Company completed the April Acquisition, which constituted the acquisition of the seven hotels to be purchased under the Reinstatement Agreement on that date (See Note 15 - Subsequent Events).

Framework Agreement: The Company has determined that the consummation of the transactions contemplated by the Framework Agreement and the transfer of consideration in exchange for an in-place workforce, intellectual property and infrastructure assets represent a business combination as defined by FASB ASC 805 - Business Combinations. The Company

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

anticipates an increased economic return to its investors in the form of reduced advisory and property management fees as a result of the transactions completed at the Initial Closing pursuant to the Framework Agreement. The acquisition of the foregoing assets at the Initial Closing was immaterial to the consolidated financial statements.

The Company determined total consideration remitted as a result of the transactions completed at the Initial Closing pursuant to the Framework Agreement was $31.6 million, comprised of a cash payment of $10.0 million, a non-interest bearing short-term note payable of $4.0 million, a waiver of repayment by the Former Advisor of Organization or Offering Expenses owed to the Company of $5.8 million, newly issued common stock of $4.1 million, and common stock issued upon conversion and redemption of Class B Units of $7.7 million (See Note 3 - Brookfield Investment and Related Transactions). The Company determined the fair value on the date of grant of the Company's common stock to be $14.59 per share (See Note 10 - Common Stock). The Company determined this value by utilizing income and market based approaches further adjusted for fair value of debt and the Class C Units, and applied a discount for lack of marketability. As part of the process, the Company made the determination after consulting with a nationally recognized third party advisor.

In applying the acquisition method of accounting, the Company recognized all consideration transferred of $31.6 million as goodwill since no value was allocated to the immaterial infrastructure fixed assets and immaterial intellectual property. The recognized goodwill balance is representative of employees acquired and the synergies expected to be achieved through reduced fees. The goodwill balance will be tested for impairment at least annually, or upon the occurrence of any “triggering events,” if identified sooner.

Note 5 - Leases

In connection with its acquisitions the Company has assumed various lease agreements. These lease agreements primarily comprise one operating lease with respect to the Georgia Tech Hotel & Conference Center and nine ground leases which are also classified as operating leases. The following table summarizes the Company's future minimum rental commitments under these leases (in thousands):

	Minimum Rental Commitments		Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the nine months ending December 31, 2017	$	3,909	$	299
Year ending December 31, 2018	5,217		398
Year ending December 31, 2019	5,227		398
Year ending December 31, 2020	5,265		398
Year ending December 31, 2021	5,271		398
Thereafter	81,743		7,836
Total	$	106,632	$	9,727

The Company has allocated values to certain above and below-market lease intangibles based on the difference between market rents and rental commitments under the leases. During the three months endedMarch 31, 2017 and March 31, 2016, amortization of below-market lease intangibles, net, to rent expense was $0.1 million and $0.1 million, respectively. Rent expense for the three months endedMarch 31, 2017 and March 31, 2016, was $1.5 million and $1.4 million, respectively.

Note 6 - Mortgage Notes Payable

The Company’s mortgage notes payable as of March 31, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

	Outstanding Mortgage Notes Payable
Encumbered Properties	March 31, 2017		December 31, 2016		Interest Rate	Payment	Maturity
Baltimore Courtyard & Providence Courtyard	$	45,500	$	45,500	4.30%	Interest Only, Principal paid at Maturity	April 2019
Hilton Garden Inn Blacksburg Joint Venture	10,500		10,500		4.31%	Interest Only, Principal paid at Maturity	June 2020
Assumed Grace Mortgage Loan - 95 properties in Grace Portfolio (1)	793,606		793,647		LIBOR plus 3.31%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Assumed Grace Mezzanine Loan - 95 properties in Grace Portfolio (2)	101,826		101,794		LIBOR plus 4.77%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Refinanced Additional Grace Mortgage Loan - 20 properties in Grace Portfolio and one additional property	232,000		232,000		4.96%	Interest Only, Principal paid at Maturity	October 2020
SN Term Loan - 20 properties in Summit and Noble Portfolios (3)	235,484		235,484		LIBOR plus between 3.25% and 3.75%	Interest Only, Principal paid at Maturity	August 2018, subject to two, one year extension rights
Total Mortgage Notes Payable	$	1,418,916	$	1,418,925
Less: Deferred Financing Fees, Net	$	7,104	$	8,000
Total Mortgage Notes Payable, Net	$	1,411,812	$	1,410,925

(1) The Assumed Grace Mortgage Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 2.56%. The principal amount of the new loan is $805.0 million and is secured by 87 of the Company’s hotel properties, all of which served as collateral for the Assumed Grace Mortgage Loan (See Note 15 - Subsequent Events).

(2) The Assumed Grace Mezzanine Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 6.50%. The principal amount of the new loan is $110.0 million. (See Note 15 - Subsequent Events).

(3) The SN Term Loan was refinanced on April 27, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate of one-month LIBOR plus 3.00%. The principal amount of the new loan is $310.0 million and is collateralized by 28 of the Company’s hotel properties, 20 of which served as collateral for the SN Term Loan, the seven hotels acquired on the same date as the refinancing pursuant to the April Acquisition, and one unencumbered hotel from the Company's existing portfolio (See Note 15 - Subsequent Events).

Interest expense related to the Company's mortgage notes payable for the three months ended March 31, 2017 and for the three months ended March 31, 2016, was $15.7 million and $14.5 million, respectively

Baltimore Courtyard and Providence Courtyard    

The Baltimore Courtyard and Providence Courtyard Loan matures on April 6, 2019. On May 6, 2014 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.30%. The entire principal amount is due at maturity.

Hilton Garden Inn Blacksburg Joint Venture    

The Hilton Garden Inn Blacksburg Joint Venture Loan matures June 6, 2020. On July 6, 2015 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.31%. The entire principal amount is due at maturity.

Assumed Grace Indebtedness

On February 27, 2015, the Company acquired a portfolio of 116 hotels (the "Grace Portfolio") through fee simple or leasehold interests from certain subsidiaries of Whitehall Real Estate Funds, an investment arm controlled by The Goldman Sachs Group, Inc. In connection with this acquisition, the Company assumed existing mortgage and mezzanine indebtedness encumbering those hotels (comprising the "Assumed Grace Mortgage Loan" and the "Assumed Grace Mezzanine Loan",

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

collectively, the "Assumed Grace Indebtedness"). The Assumed Grace Mortgage Loan carries an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.31%, and the Assumed Grace Mezzanine Loan carries an interest rate of LIBOR plus 4.77%, for a combined weighted average interest rate of LIBOR plus 3.47%. Pursuant to the Assumed Grace Indebtedness, the Company has agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Assumed Grace Indebtedness includes the following financial covenants: minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

The Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan were refinanced on April 28, 2017 (See Note 15 - Subsequent Events).

Refinanced Additional Grace Mortgage Loan

A portion of the purchase price of the Grace Portfolio was financed through additional mortgage financing (the "Original Additional Grace Mortgage Loan"). The Original Additional Grace Mortgage Loan was refinanced during October 2015 (the “Refinanced Additional Grace Mortgage Loan”). The Refinanced Additional Grace Mortgage Loan carries a fixed annual interest rate of 4.96% per annum with a maturity date on October 6, 2020. Pursuant to the Refinanced Additional Grace Mortgage Loan, the Company agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Refinanced Additional Grace Mortgage Loan includes the following financial covenants: minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

SN Term Loan

On August 21, 2015, the Company entered into a Term Loan Agreement with Deutsche Bank AG New York Branch, as administrative agent and Deutsche Bank Securities Inc., as sole lead arranger and book-running manager (as amended, the "SN Term Loan"). On October 15, 2015, the Company amended and restated the SN Term Loan and made the initial draw down of borrowings of $96.9 million in connection with the First Summit Closing. On November 2, 2015, the Company drew down borrowings of $26.0 million in connection with the First Noble Closing. On December 2, 2015 the Company drew down borrowings of $42.3 million in connection with the Second Noble Closing. On February 11, 2016, the Company drew down borrowings of $70.4 million in connection with the Third Summit Closing, and amended the SN Term Loan to reduce the lenders’ total commitment from $450.0 million to $293.4 million. On July 1, 2016, the period in which the Company had the ability to further draw down on the SN Term Loan expired, reducing the lenders' total commitment to $235.5 million. No additional amounts are available to be drawn under the SN Term Loan. Due to the amendment and the expiration, the Company recorded a reduction to its deferred financing fees associated with the SN Term Loan. The reduction of $3.0 million was reflected as a general and administrative expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). 

The SN Term Loan provided for financing (the “Loans”) at a rate equal to a base rate plus a spread of between 3.25% and 3.75% for Eurodollar rate Loans and between 2.25% and 2.75% for base rate Loans, depending on the aggregate debt yield and aggregate loan-to-value of the properties securing the Loans measured periodically. Prior to November 1, 2015, all spreads were 0.5% less than they will be during the rest of the term.

Pursuant to the SN Term Loan, the Company agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The SN Term Loan includes the following financial covenants: minimum debt service coverage ratio, minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

The SN Term Loan was refinanced on April 27, 2017 (See Note 15 - Subsequent Events).

Note 7 - Promissory Notes Payable

The Company’s promissory notes payable as of March 31, 2017 and December 31, 2016 were as follows (in thousands):

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

	Outstanding Promissory Notes Payable
Notes Payable	March 31, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	3,030	$	23,405	14.0	%
Note Payable to Former Property Manager	$	4,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	7,030	$	23,380

Summit Loan Promissory Note

On February 11, 2016, the Summit Sellers loaned the Company $27.5 million under the Summit Loan. Proceeds from the Summit Loan totaling $20.0 million were used to pay a portion of the purchase price of the Third Summit Closing and proceeds from the Summit Loan totaling $7.5 million were used as a new purchase price deposit on the reinstated Second Summit Closing. On January 12, 2017, the Company entered into the Loan Amendment, amending the Summit Loan. See Note 4 - Business Combinations.

The interest rate on the Summit Loan, as amended, included 9.0% paid in cash monthly and an additional 4%, which accrued and is compounded monthly and added to the outstanding principal balance at maturity unless otherwise paid in cash by the Company. The Summit Loan, as amended, had a maturity date of February 11, 2018, however, if the closing of the April Acquisition occurred prior to February 11, 2018, then the outstanding principal of the Summit Loan and any accrued interest thereon becomes immediately due and payable in full. The Company was also permitted to pre-pay the Summit Loan in whole or in part without penalty at any time.

On January 12, 2017, the Company and Summit entered into the Additional Loan Agreement pursuant to which Summit agreed to loan the Company an additional $3.0 million as consideration for the Summit Amendment. The maturity date of the Additional Loan under the Additional Loan Agreement is July 31, 2017, however, if the sale of the seven hotels to be sold pursuant to the Reinstatement Agreement on April 27, 2017 is completed on that date, the entire principal amount of the Additional Loan will be deemed paid in full and the interest accrued thereon shall become immediately due and payable.

On March 31, 2017, at the Initial Closing and using a portion of the proceeds therefrom, the Company paid in full the Summit Loan. On April 27, 2017, the Company completed the acquisition of seven of the hotels remaining to be purchased under the Reinstatement Agreement, and as a result, the Additional Loan was deemed paid in full (See Note 15 - Subsequent Events).

Note Payable to Former Property Manager

As part of the consideration for the Property Management Transactions, the Company and the OP agreed pursuant to the Framework Agreement to make certain cash payments to the Former Property Manager, which agreement is classified under GAAP as a short-term note payable with the Former Property Manager. The note payable is non-interest bearing and is required to be repaid in twelve monthly installments of $333,333.33, with the final payment in March 2018 (see Note 3 - Brookfield Investment and Related Transactions).

Interest expense related to the Company's promissory notes payable for the three months ended March 31, 2017 was $0.9 million and for the three months ended March 31, 2016 was $0.5 million.

Note 8 - Mandatorily Redeemable Preferred Securities

In February 2015, approximately $447.1 million of the contract purchase price for the Grace Portfolio was satisfied by the issuance to the sellers of the Grace Portfolio of preferred equity interests (the "Grace Preferred Equity Interests") in two newly-formed Delaware limited liability companies, HIT Portfolio I Holdco, LLC and HIT Portfolio II Holdco, LLC (formerly known as ARC Hospitality Portfolio I Holdco, LLC and ARC Hospitality Portfolio II Holdco, LLC, respectively, and, together, the "Holdco entities"), each of which is an indirect subsidiary of the Company and an indirect owner of the 115 hotels currently comprising the Grace Portfolio. The two Holdco entities correspond, respectively, to the pool of hotels encumbered by the Assumed Grace Indebtedness and the pool of hotels encumbered by the Refinanced Additional Grace Mortgage Loan. In connection with the refinancing of the Assumed Grace Indebtedness in April 2017 (See Note 15 - Subsequent Events), the limited liability company agreement of the Holdco entity corresponding to the pool of hotels encumbered by the Assumed Grace Indebtedness was amended and restated to provide for the fact that eight of those hotels were not included in the pool of hotels encumbered by the refinanced loan.

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

The holders of the Grace Preferred Equity Interests were entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing, through August 2016, and 8.00% per annum thereafter. On liquidation of the Holdco entities, the holders of the Grace Preferred Equity Interests are entitled to receive their original value (as reduced by redemptions) prior to any distributions being made to the Company or the Company's stockholders. Beginning in April 2015, the Company became obligated to use 35% of any IPO proceeds to redeem the Grace Preferred Equity Interests at par, up to a maximum of $350.0 million in redemptions for any 12-month period. As of March 31, 2017, and following the redemption of $47.3 million of the Grace Preferred Equity Interests with a portion of the proceeds from the Initial Closing, the Company has redeemed $204.2 million of the Grace Preferred Equity Interests, resulting in $242.9 million of liquidation value remaining outstanding under the Grace Preferred Equity Interests.

The Company is required to redeem 50.0% of the Grace Preferred Equity Interests originally issued, or an additional $19.4 million by February 27, 2018, and is required to redeem the remaining $223.5 million by February 27, 2019.

The Company is also required, in certain circumstances, to apply debt proceeds to redeem the Grace Preferred Equity Interests at par. In addition, the Company has the right, at its option, to redeem the Grace Preferred Equity Interests, in whole or in part, at any time at par. The holders of the Grace Preferred Equity Interests have certain consent rights over major actions by the Company relating to the Grace Portfolio. In connection with the issuance of the Grace Preferred Equity Interests, the Company and the OP have made certain guarantees and indemnities to the sellers and their affiliates or indemnifying the sellers and their affiliates related to the Grace Portfolio. If the Company is unable to satisfy the redemption, distribution or other requirements of the Grace Preferred Equity Interests (including if there is a default under the related guarantees provided by the Company and the OP), the holders of the Grace Preferred Equity Interests have certain rights, including the ability to assume control of the operations of the Grace Portfolio through the assumption of control of the Holdco entities. Due to the fact that the Grace Preferred Equity Interests are mandatorily redeemable and certain of their other characteristics, the Grace Preferred Equity Interests are treated as debt in accordance with GAAP.

Note 9 - Accounts Payable and Accrued Expenses

The following is a summary of the components of accounts payable and accrued expenses (in thousands):

	March 31, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,892	$	55,489
Contingent consideration from Barceló Portfolio (See Note 12 - Commitments and Contingencies) (1)	4,619		4,619
Hotel accrued salaries and related liabilities	9,565		8,411
Total	$	71,076	$	68,519

(1) The Company paid the contingent consideration in April 2017 with proceeds from the refinanced SN Term Loan (See Note 15 - Subsequent Events).

Note 10 - Common Stock

The Company had 39,617,676 shares and 38,493,430 shares of common stock outstanding and had received total proceeds therefrom of $913.0 million and $913.0 million as of March 31, 2017 and December 31, 2016, respectively. The shares of common stock outstanding include shares issued as distributions through March 31, 2017, as a result of the Company's change in distribution policy adopted by the Company's board of directors in March 2016 as described below. During the three months ended March 31, 2017, the Company issued 315,383 shares of common stock as stock distributions with respect to December 2016 and the period from January 1, 2017 through January 13, 2017, the date these distributions were suspended.

Common Stock Issuances

At the Initial Closing the Company issued 279,329 shares of the Company’s common stock to the Former Property Manager, and converted all 524,956 Class B Units held by the Former Advisor into 524,956 OP Units, and, immediately following such conversion, redeemed such 524,956 OP Units for 524,956 shares of the Company’s common stock.

The Company determined the fair value on the date of issuance of the Company's common stock to be $14.59 per share. The Company determined this value by utilizing income and market based approaches further adjusted for fair value of debt and the Class C Units, and applied a discount for lack of marketability. As part of the process, the Company made the determination after consulting with a nationally recognized third party advisor.

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Distributions

On February 3, 2014, the Company's board of directors declared distributions payable to stockholders of record each day during the applicable month at a rate equal to $0.0046575343 per day (or $0.0046448087 if a 366-day year), or $1.70 per annum, per share of common stock. The first distribution was paid in May 2014 to holders of record in April 2014.

To date, the Company has funded all of its cash distributions with proceeds from the Offering, which was suspended as of December 31, 2015.

In March 2016 the Company’s board of directors changed the distribution policy, such that distributions paid with respect to April 2016 were paid in shares of common stock instead of cash to all stockholders, and not at the election of each stockholder. Accordingly, the Company paid a cash distribution to stockholders of record each day during the quarter ended March 31, 2016, but distributions for subsequent periods have been paid in shares of common stock. Distributions for the quarter ended June 30, 2016 were paid in common stock in an amount equivalent to $1.70 per annum, divided by $23.75.

On July 1, 2016, the Company's board of directors approved an Estimated Per-Share NAV, which was published on the same date. This was the first time that the Company’s board of directors determined an Estimated Per-Share NAV. In connection with its determination of Estimated Per-Share NAV, the Company’s board of directors revised the amount of the distribution to $1.46064 per share per annum, equivalent to a 6.80% annual rate based on Estimated Per-Share NAV, automatically adjusting if and when the Company publishes an updated Estimated Per-Share NAV. The Company anticipates it will publish an updated Estimated Per-Share NAV no less frequently than once each calendar year. The Company’s board of directors authorized distributions, payable in shares of common stock, at a rate of 0.068 multiplied by the Estimated Per-Share NAV in effect as of the close of business on the applicable date. Therefore, beginning with distributions payable with respect to July 2016, the Company paid distributions to its stockholders in shares of common stock on a monthly basis to stockholders of record each day during the prior month in an amount equal to 0.000185792 per share per day, or $1.46064 per annum, divided by $21.48.

On January 13, 2017, in connection with its approval of the Company’s entry into the SPA, the Company’s board of directors suspended paying distributions to the Company's stockholders entirely. Currently, under the Brookfield Approval Rights, prior approval is required before the Company can declare or pay any distributions or dividends to its common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

Share Repurchase Program

In order to provide stockholders with interim liquidity, the Company’s board of directors adopted a share repurchase program (“SRP”) that enabled the Company’s stockholders to sell their shares back to the Company after having held them for at least one year, subject to significant conditions and limitations, including that the Company's board of directors had the right to reject any request for repurchase, in its sole discretion, and could amend, suspend or terminate the SRP upon 30 days' notice. In connection with the Company’s entry into the SPA, the Company's board of directors suspended the SRP effective as of January 23, 2017. In connection with the Initial Closing, the Company's board of directors terminated the SRP, effective as of April 30, 2017. The Company did not make any repurchase of common stock during the year ended December 31, 2016, or during the period between January 1, 2017 and the effectiveness of the termination of the SRP.

Distribution Reinvestment Plan

Pursuant to the DRIP, to the extent the Company pays distributions in cash, stockholders may elect to reinvest distributions by purchasing shares of common stock. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. The shares purchased pursuant to the DRIP have the same rights and are treated in the same manner as all other shares of the Company's common stock. The Company's board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend or suspend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the Consolidated Balance Sheets in the period distributions are paid. Commencing with distributions paid with respect to April 2016, the Company has paid distributions in shares of common stock instead of cash. Shares are only issued pursuant to the DRIP in connection with distributions paid in cash.

All shares issued under the DRIP were purchased at $23.75 per share. If and when the Company issues any additional shares of common stock under the DRIP, distributions reinvested in common stock will be at a price equal to the Estimated Per-Share NAV.

On January 13, 2017, as authorized by the Company’s board of directors, the DRIP was suspended effective as of February 12, 2017.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Note 11 - Fair Value Measurements

The Company is required to disclose the fair value of financial instruments which it is practicable to estimate. The fair value of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate their carrying amounts due to the relatively short maturity of these items. The following table shows the carrying values and the fair values of material liabilities that qualify as financial instruments (in thousands):

	March 31, 2017
	Carrying Amount		Fair Value
Mortgage notes payable(1)	$	1,418,916	$	1,419,081
(1) Carrying amount does not include the associated deferred financing fees as of March 31, 2017.

The fair value of the mortgage notes payable were determined using the discounted cash flow method and applying current market rates and is classified as level 3 under the fair value hierarchy. As described in Note 12 - Commitments and Contingencies, the carrying amount of the contingent consideration related to the Barceló Portfolio acquisition was remeasured to fair value as of March 31, 2017.

Note 12 - Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company at the date of this filing.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Contingent Consideration

Included as part of the acquisition of the Barceló Portfolio is a contingent consideration payable to the seller based on the operating results of the Baltimore Courtyard, Providence Courtyard and Stratford Homewood Suites. During August 2016, the Company and the seller entered into an agreement extending and modifying the payment terms of the contingent consideration. The amount payable is calculated by applying a contractual capitalization rate to the excess earnings before interest, taxes, and depreciation and amortization, earned in the third year after the acquisition over an agreed upon target, provided the contingent consideration generally will not be less than $4.1 million or exceed $4.6 million. The contingent consideration payable as of March 31, 2017 is $4.6 million. The Company paid the contingent consideration in April 2017 with proceeds used from the refinanced SN Term Loan (See Note 15 - Subsequent Events).

Note 13 - Related Party Transactions and Arrangements

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, the parent of ARC IX, and AR Global, the successor to certain of AR Capital's businesses. ARC IX served as the Company’s sponsor prior to its transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

Prior to the Initial Closing, the Former Advisor and its affiliates were entitled to a variety of fees, and may incur and pay costs and fees on behalf of the Company for which they were entitled to reimbursement. The Company had a payable due to related parties related to operating, acquisition, financing and offering costs of $2.4 million and $2.9 million as of March 31, 2017 and December 31, 2016, respectively.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. The Company also terminated all of its other agreements with affiliates of the Former Advisor except for its hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline.

The Company's Former Dealer Manager served as the dealer manager of the IPO. SK Research, LLC and American National Stock Transfer, LLC ("ANST"), both subsidiaries of the parent company of the Former Dealer Manager, provided

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

other general professional services through December 2015 and January 2016, respectively. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Capital, the parent of the Company's sponsor, and AR Global. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc.

See Note 3 - Brookfield Investment and Related Transactions for additional information regarding all payments and issuances of common stock made to the Former Advisor and the Former Property Manager at the Initial Closing during the three months endedMarch 31, 2017, as well as other terms of the transactions contemplated by the Framework Agreement, including the transitions services agreements with the Former Advisor and Crestline, that would result in additional payments to the Former Advisor and the Former Property Manager or their affiliates in future periods.

Fees Paid in Connection with the Offering

The Former Dealer Manager was paid fees and compensation in connection with the sale of the Company's common stock in the Offering prior to its suspension. The Former Dealer Manager was paid a selling commission of up to 7.0% of the per share purchase price of the Company’s Offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Former Dealer Manager was paid up to 3.0% of the gross proceeds from the sale of shares, before reallowance to participating broker-dealers, as a dealer-manager fee. The Former Dealer Manager was entitled to reallow its dealer-manager fee to participating broker-dealers. A participating broker dealer was entitled to elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares by such participating broker dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option was elected, the dealer manager fee has been reduced to 2.5% of gross proceeds.

On December 31, 2016, the Company, the Former Advisor and the Former Dealer Manager mutually agreed, pursuant to a termination agreement dated December 31, 2016, to terminate the Exclusive Dealer Manager Agreement dated January 7, 2014 among the Company, the Former Advisor and the Former Dealer Manager.

No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP.

The table below shows the commissions and fees incurred from and payable to the Former Dealer Manager for the Offering during the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to former related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total commissions and fees incurred from the Former Dealer Manager	$	—	$	71	$	—	$	—

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services provided by ANST, an affiliate of the Former Dealer Manager. The Company is responsible for the Offering and related costs (excluding selling commissions and dealer manager fees) up to a maximum of 2.0% of gross proceeds received from the Offering, measured at the end of the Offering. Offering costs in excess of the 2.0% cap as of the end of the Offering are the Former Advisor’s responsibility. As of March 31, 2017, Offering and related costs (excluding selling commissions and dealer manager fees) exceeded 2.0% of gross proceeds received from the Offering by $5.8 million. At the Initial Closing, pursuant to the Framework Agreement, the Company waived the Former Advisor's obligations to reimburse the Company for these Offering and related costs (See Note 3 - Brookfield Investment and Related Transactions).

Offering costs incurred by the Former Advisor or its affiliated entities on behalf of the Company have generally been recorded as a reduction to additional paid-in-capital on the accompanying Consolidated Balance Sheets. The table below shows compensation and reimbursements incurred and payable to the Former Advisor and its affiliates for services relating to the Offering during the three months endedMarch 31, 2017 and 2016, and the associated amounts payable as of March 31, 2017

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

and December 31, 2016, which is recorded in due to related parties on the Company’s Consolidated Balance Sheets (in thousands).

	Three Months Ended  March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total compensation and reimbursement for services provided by the Former Advisor and its affiliates related to the Offering	$	—	$	—	$	447	$	447

AR Capital was a party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), an affiliate of the Former Dealer Manager, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. AR Capital instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.

The Company was also party to a transfer agency agreement with ANST, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by a third-party transfer agent. AR Global received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST Systems, Inc. ("DST"), its previous provider of sub-transfer agency services, to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). Following the suspension of the IPO on November 15, 2015, fees payable with respect to transfer agency services are included in general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss) during the period the service was provided.

Following the Initial Closing, in April 2017, the Company entered into a settlement agreement terminating DST as its transfer agent effective as of May 15, 2017 and entered into an agreement with Computershare Trust Company, N.A. to replace DST in that capacity on such date.

Fees Paid in Connection With the Operations of the Company

Fees Paid to the Former Advisor

Prior to the Initial Closing, the Former Advisor received an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Former Advisor was also reimbursed for expenses incurred in the process of acquiring properties, in addition to third-party costs the Company may pay directly to, or reimbursed the Former Advisor for. Additionally, the Company reimbursed the Former Advisor for legal expenses it or its affiliates directly incurred in the process of acquiring properties in an amount not to exceed 0.1% of the contract purchase price of the Company’s assets acquired. Fees paid to the Former Advisor related to acquisitions are reported as a component of net income (loss) in the period incurred. The aggregate amounts of acquisition fees, acquisition expenses and financing coordination fees (as described below) were also subject to certain limitation that never became applicable during the term of the Advisory Agreement.

Prior to the Initial Closing, if the Former Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Former Advisor or its assignees a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Fees paid to the Former Advisor related to debt financings are deferred and amortized over the term of the related debt instrument.

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Prior to the Initial Closing, the Former Advisor received a subordinated participation for asset management services it provided to the Company. For asset management services provided by the Former Advisor prior to October 1, 2015, the subordinated participation was issued quarterly in the form of performance-based restricted, forfeitable Class B Units.

On November 11, 2015, the Company, the OP and the Former Advisor agreed to an amendment to the advisory agreement (as amended, the "Advisory Agreement"), pursuant to which, effective October 1, 2015, the Company became required to pay asset management fees in cash (subject to certain coverage limitations during the pendency of the Offering), or shares of the Company's common stock, or a combination of both, at the Former Advisor’s election, and the asset management fee is paid on a monthly basis. The monthly fees were equal to:

• The cost of the Company’s assets (until July 1, 2016, then the lower of the cost of the Company's assets or the fair market value of the Company's assets), multiplied by

• 0.0625%.

For asset management services provided by the Former Advisor prior to October 1, 2015, the Company issued Class B Units on a quarterly basis in an amount equal to:

•The cost of the Company’s assets multiplied by

•0.1875%, divided by

• The value of one share of common stock as of the last day of such calendar quarter, which was equal to $22.50 (the Offering price prior to its suspension minus selling commissions and dealer manager fees).

In March 2016, the Company amended its agreement with the Former Advisor to give the Company the right, for a period commencing on June 1, 2016 and ending on June 1, 2017, subject to certain conditions, to pay up to $500,000 per month of asset management fees payable to the Former Advisor under the Company's agreement with the Former Advisor in shares of common stock. These conditions were never met and no asset management fees were paid in shares of common stock during the term of the Advisory Agreement, which terminated at the Initial Closing.

The Former Advisor was entitled to receive distributions on the Class B Units it had received in connection with its asset management subordinated participation at the same rate as distributions received on the Company’s common stock. Such distributions are in addition to the incentive fees and other distributions the Former Advisor and its affiliates were entitled to receive from the Company and the OP, including without limitation, the annual subordinated performance fee and the subordinated participation in net sales proceeds, the subordinated incentive listing distribution or the subordinated distribution upon termination of the Advisory Agreement, each as described below.

The restricted Class B Units were not scheduled to become unrestricted Class B Units until certain performance conditions are satisfied, including until the adjusted market value of the OP’s assets plus applicable distributions equals or exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors, and the occurrence of a sale of all or substantially all of the OP’s assets, a listing of the Company’s common stock, or a termination of the Advisory Agreement without cause. As of March 31, 2017, a total of 524,956 Class B Units had been issued for asset management services performed by the Former Advisor, and a total of 25,454 shares of common stock had been issued to the Former Advisor as distributions payable on the Class B Units. At the Initial Closing, pursuant to the Framework Agreement, all 524,956 Class B Units held by the Former Advisor were converted into 524,956 OP Units, and, immediately following such conversion, those 524,956 OP Units were redeemed for 524,956 shares of the Company's common stock (See Note 3 - Brookfield Investment and Related Transactions). In applying the acquisition method of accounting, the Company recognized the conversion and subsequent redemption of the Class B Units as part of the consideration transferred pursuant to the Framework Agreement and, accordingly, as goodwill. (See Note 4 - Business Combinations).

The issuance of Class B Units did not result in any expense on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss), except for distributions paid on the Class B Units. The distributions payable on Class B Units for periods through March 31, 2016 were paid in cash. Beginning in the second quarter ended June 30, 2016, the Company began paying distributions on the Class B Units in shares of common stock on the same terms paid to the Company’s stockholders.

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

The table below presents the Class B Units distribution expense for the three months endedMarch 31, 2017 and 2016 respectively, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Class B Units distribution expense	$	26	$	222	$	1	$	65

The table below presents the asset management fees, acquisition fees, acquisition cost reimbursements and financing coordination fees charged by the Former Advisor in connection with the operations of the Company for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Asset management fees	$	4,581	$	4,457	$	4	$	8
Acquisition fees	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	206	$	—	$	—
	$	4,581	$	6,395	$	4	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to the limitation that the Company would not reimburse the Former Advisor for any amount by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairment or other similar non-cash reserves and excluding any gain from the sale of assets for that period, unless the Company’s independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Former Advisor in subsequent periods. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company has not reimbursed the Former Advisor for personnel costs, including executive salaries, in connection with services for which the Former Advisor received acquisition fees, acquisition expenses or real estate commissions.

The table below represents reimbursements to the Former Advisor for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	869	$	579	$	179	$	522

Following the Initial Closing, all of the above fees and reimbursements are no longer payable to the Former Advisor as the Advisory Agreement has been terminated (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid to the Former Property Manager and Crestline

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Prior to the Initial Closing, the Company paid a property management fee of up to 4.0% of the monthly gross receipts from the Company's properties to the Former Property Manager. The Former Property Manager, in turn, paid a portion of the property management fees to Crestline or a third-party sub-property manager, as applicable. The Company also reimbursed Crestline or a third-party sub-property manager, as applicable, for property level expenses, as well as fees and expenses of such sub-property manager. The Company did not, however, reimburse Crestline or any third-party sub-property manager for general overhead costs or for the wages and salaries and other employee-related expenses of employees of such sub-property managers, other than employees or subcontractors who are engaged in the on-site operation, management, maintenance or access control of the Company’s properties, and, in certain circumstances, who are engaged in off-site activities.

Prior to the Initial Closing, the Company also paid the Former Property Manager (which payment was assigned to Crestline) an annual incentive fee equal to 15% of the amount by which the operating profit from the properties sub-managed by Crestline for such fiscal year (or partial fiscal year) exceeds 8.5% of the total investment of such properties. Incentive fees incurred by the Company were $0.1 million for the three months endedMarch 31, 2017 and were $0.1 million for the three months endedMarch 31, 2016, respectively.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company from Crestline or the Former Property Manager (and not payable to a third party sub-property manager) during three months endedMarch 31, 2017 and 2016, respectively, and the associated payable as of March 31, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	4,291	$	3,722	$	1,774	$	1,306
Total management fees incurred from Former Property Manager	$	2,035	$	1,946	$	15	$	532
Total	$	6,326	$	5,668	$	1,789	$	1,838

Following the Initial Closing, the Company no longer has any agreements with the Former Property Manager and instead contracts directly or indirectly, through its taxable REIT subsidiaries, with Crestline and the third-party property management companies that previously served as sub-property managers to manage the Company’s hotel properties pursuant to terms amended in connection with the consummation of the transactions contemplated by the Framework Agreement (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid in Connection with the Liquidation or Listing

Prior to the Initial Closing, the Company was required to pay the Former Advisor an annual subordinated performance fee calculated on the basis of the Company’s total return to stockholders, payable monthly in arrears, such that for any year in which the Company’s total return on stockholders’ capital exceeds 6.0% per annum, the Former Advisor was entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee was payable only upon the sale of assets, other disposition or refinancing of such assets, which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no such fee was payable in connection with the Initial Closing.

Prior to the Initial Closing, the Company could pay a brokerage commission to the Former Advisor on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third-party broker is also involved; provided, however, that in no event could the real estate commissions paid to the Former Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Former Advisor if the Former Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. In connection with the sale of a hotel on October 14, 2016, the Company paid the Former Advisor a brokerage

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

commission of approximately $0.3 million. No such commissions were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no commissions were payable in connection with the Initial Closing.

Prior to the Initial Closing, the Former Special Limited Partner was entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of the remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax, non-compounded annual return on the capital contributed by investors. The Former Special Limited Partner was not entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a 6.0% cumulative non-compounded return on their capital contributions plus the return of their capital. No such participation became due and payable during the three months endedMarch 31, 2017 or 2016, and no such participation was payable in connection with the Initial Closing.

Prior to the Initial Closing, if the common stock of the Company was listed on a national exchange, the Former Special Limited Partner would have been entitled to receive a subordinated incentive listing distribution of 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return on their capital contributions. The Former Special Limited Partner would not have been entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions have been incurred during the three months endedMarch 31, 2017 or 2016, and no such distributions were payable in connection with the Initial Closing.

Prior to the Initial Closing, in the event of a termination or non-renewal of the advisory agreement with the Former Advisor, with or without cause, the Former Special Limited Partner, through its controlling interest in the Former Advisor, was entitled to receive distributions from the OP equal to 15.0% of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors. No such distributions have been incurred as of March 31, 2017 and no such distributions were payable in connection with the Initial Closing.

At the Initial Closing, the Former Special Limited Partner's right to these distributions and participations was automatically forfeited and redeemed by the OP without the payment of any consideration to the Former Special Limited Partner of any of its affiliates (See Note 3 - Brookfield Investment and Related Transactions).

Note 14 - Economic Dependency

Prior to the Initial Closing, under various agreements, the Company had engaged the Former Advisor and its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations. As a result of these relationships, the Company was dependent upon the Former Advisor and its affiliates.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. As a result of the Company becoming self-managed, the Company now leases office space, has its own communications and information systems and directly employs a staff. The Company also terminated all of its other agreements with affiliates of the Former Advisor except for hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which the Company will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Until the Initial Closing, the Former Advisor and its affiliates used their respective commercially reasonable efforts to assist the Company and its subsidiaries to take such actions as the Company and its subsidiaries reasonably deemed necessary to transition to self-management, including, but not limited to providing books and records, accounting systems, software and

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

office equipment. Pursuant to the Framework Agreement, the Company also entered into certain other agreements at the Initial Closing to facilitate the transition to self-management (See Note 3 - Brookfield Investment and Related Transactions).

Note 15 - Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the accompanying condensed consolidated financial statements except for the following transactions:

Completion of April Acquisition

On April 27, 2017, the Company, through the OP, completed the April Acquisition of seven hotels from Summit pursuant to the Reinstatement Agreement for an aggregate purchase price of $66.8 million.

Repayment of Additional Loan

On April 27, 2017, concurrent with the completion of the April Acquisition, the Additional Loan was deemed repaid in full.

Refinancing of the SN Term Loan

On April 27, 2017, the Company and the OP, as guarantors, and certain wholly-owned subsidiaries of the OP (each a “Term Loan Borrower” and collectively the “Term Loan Borrowers”), as borrowers, entered into a Second Amended and Restated Term Loan Agreement (the “Refinanced Term Loan”) in an aggregate principal amount of $310.0 million to amend, restate and refinance the SN Term Loan. The Refinanced Term Loan is collateralized by 28 of the Company’s hotel properties, 20 of which served as collateral for the SN Term Loan, the seven hotels acquired on the same date as the refinancing pursuant to the April Acquisition, and one unencumbered hotel from Company’s existing portfolio (each, a “Term Loan Collateral Property”).

At the closing of the Refinanced Term Loan, the net proceeds after accrued interest and closing costs were used (i) to repay the $235.5 million principal amount then outstanding under the SN Term Loan; (ii) to fund $33.4 million of the purchase price of the hotels purchased in the April Acquisition; (iii) to deposit $30.0 million to fund the 87-Pack PIP Reserve (as defined below); and (iv) to pay in full the contingent consideration payable to the seller as part of an acquisition of hotels by the Company during March 2014 of $4.6 million.

The Refinanced Term Loan matures on May 1, 2019, subject to threeone-year extension rights which, if all three extension rights are exercised, would result in an outside maturity date of May 1, 2022. The Refinanced Term Loan is prepayable in whole or in part at any time, subject to payment of (i) LIBOR breakage, if any, and (ii) except for the first $99,073,180 paydown of the loan balance, certain fees applicable prior to May 1, 2018.

The Refinanced Term Loan requires monthly interest payments at a variable rate of one-month LIBOR plus 3.00%. Pursuant to an interest rate cap agreement, the LIBOR portions of the interest rates due under the Refinanced Term Loan is capped at 4.00% during the initial term, a rate based on a debt service coverage ratio during any extension term.

In connection with a sale or disposition to a third party of an individual Term Loan Collateral Property, such Term Loan Collateral Property may be released from the Refinanced Term Loan, subject to certain prepayment fees and conditions.

The Refinanced Term Loan also provides for certain amounts to be deposited into reserve accounts, including with respect to all costs associated with the PIPs required pursuant to any franchise agreement related to any Term Loan Collateral Property.

The Refinanced Term Loan (i) is non-recourse except for certain environmental indemnities and certain so-called “bad boy” events and (ii) is fully recourse (subject in certain cases to a specified cap) upon the occurrence of certain other “bad boy” events.

For the term of the Refinanced Term Loan, the Company, the OP and the Term Loan Borrowers are required to maintain, on a consolidated basis, a net worth of $250.0 million (excluding accumulated depreciation and amortization).

Refinancing of the Assumed Grace Indebtedness

On April 28, 2017, the Company and the OP through certain wholly-owned subsidiaries of the OP, entered into a mortgage loan agreement (the “87-Pack Mortgage Loan”) and a mezzanine loan agreement (the “87-Pack Mezzanine Loan” and, collectively with the 87-Pack Mortgage Loan, the “87-Pack Loans”) with an aggregate principal balance of $915.0 million to refinance the Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan. The principal amount of the 87-Pack

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2017

(Unaudited)

Mortgage Loan is $805.0 million and the 87-Pack Mortgage Loan is secured by 87 of the Company’s hotel properties, all of which served as collateral for the Assumed Grace Mortgage Loan (each, a “87-Pack Collateral Property”). The principal amount of the 87-Pack Mezzanine Loan is $110.0 million and the 87-Pack Mezzanine Loan is secured by the ownership interest in the entities which own the 87-Pack Collateral Properties and the related operating lessees.

At the closing of the 87-Pack Loans, the net proceeds after accrued interest and closing costs were used to repay the $895.4 million principal amount then outstanding under the Assumed Grace Indebtedness and pay $1.0 million into the Reserve Funds (as defined below).

The 87-Pack Loans mature on May 1, 2019, subject to threeone-year extension rights which, if all three extension rights are exercised, would result in an outside maturity date of May 1, 2022. Loans issued under the 87-Pack Loans are fully prepayable with certain prepayment fees applicable on or prior to November 1, 2018, after which each loan made under the 87-Pack Loans is prepayable without any prepayment fee or any other fee or penalty. Prepayments under the 87-Pack Mortgage Loan are generally conditioned on a pro-rata prepayment being made under the 87-Pack Mezzanine Loan.

The 87-Pack Mortgage Loan requires monthly interest payments at a variable rate equal to one-month LIBOR plus 2.56%, and the 87-Pack Mezzanine Loan requires monthly interest payments at a variable rate equal to one-month LIBOR plus 6.50%. Pursuant to an interest rate cap agreement, the LIBOR portions of the interest rates due under the 87-Pack Loans are effectively capped at the greater of (i) 4.0% and (ii) a rate that would result in a debt service coverage ratio specified in the loan documents.

In connection with a sale or disposition to a third party of an individual 87-Pack Collateral Property, such 87-Pack Collateral Property may be released from the 87-Pack Loans, subject to certain conditions and limitations, by prepayment of a portion of the 87-Pack Loans at a release price calculated in accordance with the terms of the 87-Pack Loans.

At closing, the 87-Pack Borrower deposited $30.0 million to fund a reserve (the “87-Pack PIP Reserve”) in order to fund expenditures for work required to be performed under PIPs required by franchisors of the 87-Pack Collateral Properties. The 87-Pack PIP Reserve was funded with a portion of the proceeds of the Refinanced Term Loan. The 87-Pack Loans also provides for certain additional amounts to be deposited in reserve accounts (collectively with the 87-Pack PIP Reserve, the “Reserve Funds”).

The 87-Pack Loans (i) are non-recourse except for certain environmental indemnities and certain so-called “bad boy” events and (ii) are fully recourse (subject in certain cases to a specified cap) upon the occurrence of certain other “bad boy” events.

For the term of the 87-Pack Loans, the Company and the OP are required to maintain, on a consolidated basis, a net worth of $250.0 million (excluding accumulated depreciation and amortization).

38

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the accompanying condensed consolidated financial statements of Hospitality Investors Trust, Inc. and the notes thereto. As used herein, the terms "Company," "we," "our," "our company" or "us" refer to Hospitality Investors Trust, Inc., a Maryland corporation, including, as required by context, to Hospitality Investors Trust Operating Partnership, L.P. (the "OP"), the Company’s operating partnership and a Delaware limited partnership, and to its subsidiaries.

Forward-Looking Statements

Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of our company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:

• We have entered into agreements with Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC (the “Brookfield Investor”), pursuant to which, among other things, the Brookfield Investor has purchased $135.0 million in units of a new class of units of limited partnership in our operating partnership entitled "Class C Units" (the “Class C Units”), and the Brookfield Investor has agreed to purchase additional Class C Units in an aggregate amount of up to $265.0 million at subsequent closings (“Subsequent Closings”). We may require funds, which may not be available on favorable terms or at all, in addition to our operating cash flow, cash on hand and the proceeds that may be available from sales of Class C Units at Subsequent Closings, which are subject to conditions, to meet our capital requirements.

• The interests of the Brookfield Investor may conflict with our interests and the interests of our stockholders, and the Brookfield Investor has significant governance and other rights that could be used to control or influence our decisions or actions.

• The prior approval rights of the Brookfield Investor will restrict our operational and financial flexibility and could prevent us from taking actions that we believe would be in the best interest of our business.

• We no longer pay distributions and there can be no assurance we will resume paying distributions in the future.

• We may not be able to make additional investments unless we are able to identify an additional source of capital on favorable terms and obtain prior approval from the Brookfield Investor.

• We have a history of operating losses and there can be no assurance that we will ever achieve profitability.

• We have terminated our advisory agreement with our advisor, American Realty Capital Hospitality Advisors, LLC (the “Former Advisor”), and other agreements with its affiliates as part of our transition from external management to self-management. As part of this transition, our business may be disrupted and we may become exposed to risks to which we have not historically been exposed.

• No public market currently exists, or may ever exist, for shares of our common stock and our shares are, and may continue to be, illiquid.

• All of the properties we own are hotels, and we are subject to risks inherent in the hospitality industry.

• Increases in interest rates could increase the amount of our debt payments.

• We have incurred substantial indebtedness, which may limit our future operational and financial flexibility.

• We depend on our operating partnership and its subsidiaries for cash flow and are effectively structurally subordinated in right of payment to their obligations, which include distribution and redemption obligations to holders of Class C Units and the preferred equity interests issued by two of our subsidiaries that indirectly own 115 of our hotels (the “Grace Preferred Equity Interests”).

• The amount we would be required to pay holders of Class C Units in a fundamental sale transaction may discourage a third party from acquiring us in a manner that might otherwise result in a premium price to our stockholders.

• We may fail to realize the expected benefits of our acquisitions of hotels within the anticipated timeframe or at all and we may incur unexpected costs.

• Our operating results will be affected by economic and regulatory changes that have an adverse impact on the real estate market in general, and we may not be profitable or realize growth in the value of our real estate properties.

• A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could harm our investments.

• Our real estate investments are relatively illiquid and subject to some restrictions on sale, and therefore we may not be able to dispose of properties at the time of our choosing or on favorable terms.

39

• Our failure to continue to qualify to be treated as a real estate investment trust for U.S. federal income tax purposes ("REIT") could have a material adverse effect on us.

All forward-looking statements should also be read in light of the risks identified in Item 1A of our Annual Report on Form 10-K.

40

Overview

We were incorporated on July 25, 2013 as a Maryland corporation and qualified as a REIT beginning with the taxable year ended December 31, 2014. We were formed primarily to acquire lodging properties in the midscale limited service, extended stay, select service, upscale select service, and upper upscale full service segments within the hospitality sector. As of March 31, 2017, we had acquired or had an interest in a total of 141 hotels with a total of 17,193 guest rooms located in 32 states. As of March 31, 2017, all but one of our hotels operated under a franchise or license agreement with a national brand owned by one of Hilton Worldwide, Inc., Marriott International, Inc., Hyatt Hotels Corporation,Intercontinental Hotels Group and Red Lion Hotels Corporation or one of their respective subsidiaries or affiliates. On April 27, 2017, we acquired an additional seven hotels (the “April Acquisition”) with a total of 651 guest rooms, which also operate under a franchise or license agreement with a national brand owned by one of these companies.

On January 7, 2014, we commenced our primary initial public offering (the "IPO" or the "Offering") on a "reasonable best efforts" basis of up to 80,000,000 shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form S-11 (File No. 333-190698), as well as up to 21,052,631 shares of common stock available pursuant to the Distribution Reinvestment Plan (the "DRIP") under which our common stockholders could elect to have their cash distributions reinvested in additional shares of our common stock.

On November 15, 2015, we suspended our IPO, and, on November 18, 2015, Realty Capital Securities, LLC (the "Former Dealer Manager"), the dealer manager of our IPO, suspended sales activities, effective immediately. On December 31, 2015, we terminated the Former Dealer Manager as the dealer manager of our IPO.

On March 28, 2016, we announced that, because we required funds in addition to our operating cash flow and cash on hand to meet our capital requirements, beginning with distributions payable with respect to April 2016, we would pay distributions to our stockholders in shares of common stock instead of cash.

On July 1, 2016, our board of directors approved an estimated net asset value per share of common stock (“Estimated Per-Share NAV”) equal to $21.48 based on an estimated fair value of our assets less the estimated fair value of our liabilities, divided by 36,636,016 shares of our common stock outstanding on a fully diluted basis as of March 31, 2016, which was published on the same date. This was the first time that our board of directors determined an Estimated Per-Share NAV. We anticipate that we will publish an updated Estimated Per-Share NAV on at least an annual basis.

On January 7, 2017, the third anniversary of the commencement of our IPO, it terminated in accordance with its terms.

On January 12, 2017, we, along with our operating partnership, Hospitality Investors Trust Operating Partnership, L.P. (then known as American Realty Capital Hospitality Operating Partnership, L.P.) (the “OP”), entered into (i) a Securities Purchase, Voting and Standstill Agreement (the “SPA”) with the Brookfield Investor, as well as related guarantee agreements with certain affiliates of the Brookfield Investor, and (ii) a Framework Agreement (the “Framework Agreement”) with the Former Advisor, our former property managers, American Realty Capital Hospitality Properties, LLC and American Realty Capital Hospitality Grace Portfolio, LLC (together, the “Former Property Manager”), Crestline Hotels & Resorts, LLC (“Crestline”), then an affiliate of the Former Advisor and the Former Property Manager, American Realty Capital Hospitality Special Limited Partnership, LLC (the “Former Special Limited Partner”), another affiliate of the Former Advisor and the Former Property Manager, and, for certain limited purposes, the Brookfield Investor.

In connection with our entry into the SPA, we suspended paying distributions to stockholders entirely and suspended our DRIP. Currently, under the Brookfield Approval Rights (as defined below), prior approval is required before we can declare or pay any distributions or dividends to our common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

On March 31, 2017, the initial closing under the SPA (the “Initial Closing”) occurred and various transactions and agreements contemplated by the SPA were consummated and executed, including but not limited to:

• the sale by us and purchase by the Brookfield Investor of one share of a new series of preferred stock designated as the Redeemable Preferred Share, par value $0.01 per share (the “Redeemable Preferred Share”), for a nominal purchase price; and

• the sale by us and purchase by the Brookfield Investor of 9,152,542.37 Class C Units, for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate.

41

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail in Note 3 - Brookfield Investment and Related Transactions to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q.

Subject to the terms and conditions of the SPA, we also have the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units in an aggregate amount of up to $265.0 million at subsequent closings (each, a "Subsequent Closing") that may occur through February 2019. The Subsequent Closings are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.

Substantially all of our business is conducted through the OP. Prior to the Initial Closing, we were the sole general partner and held substantially all of the units of limited partnership in the OP entitled “OP Units” ("OP Units"). Following the Initial Closing, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $135.0 million in liquidation preference with respect to the OP that ranks senior in payment of distributions and in the distribution of assets to the OP Units held by us, and BSREP II Hospitality II Special GP, OP LLC (the “Special General Partner”) is the special general partner of the OP, with certain non-economic rights that apply if we are unable to redeem the Class C Units when required to do so, as described below. Class C Units are convertible into OP Units based on an initial conversion price of $14.75, subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions. OP Units, in turn, are generally redeemable for shares of our common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at our election, in accordance with the terms of the limited partnership agreement of the OP. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly cumulative cash distribution at a rate of 7.50% per annum from legally available funds. If we fail to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly cumulative distribution payable in Class C Units at a rate of 5% per annum ("PIK Distributions"). Upon our failure to redeem the Brookfield Investor when required to do so pursuant to the limited partnership agreement of the OP, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50% and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.50%.

Without obtaining the prior approval of the majority of the then outstanding Class C Units, the OP is restricted from taking certain actions including equity issuances, debt incurrences, payment of dividends or other distributions, redemptions or repurchases of securities, property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business. In addition, pursuant to the terms of the Redeemable Preferred Share, in addition to other governance and board rights, the Brookfield Investor has elected and has a continuing right to elect two directors (each, a "Redeemable Preferred Director") to our board of directors, and we are similarly restricted from taking those actions without the prior approval of at least one of the Redeemable Preferred Directors. Prior approval of at least one of the Redeemable Preferred Directors is also required to approve the annual business plan (including the annual operating and capital budget) required under the terms of the Redeemable Preferred Share (the "Annual Business Plan"), hiring and compensation decisions related to certain key personnel (including our executive officers) and various matters related to the structure and composition of our board of directors. These restrictions (collectively referred to herein as the “Brookfield Approval Rights”) are subject to certain exceptions and conditions, including that, after March 31, 2022, no prior approval will be required for equity issuances, debt incurrences and property sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full. Subject to certain limitations, the Brookfield Approval Rights are subject to temporary and permanent suspension in connection with any failure by the Brookfield Investor to purchase Class C Units at any Subsequent Closing as required pursuant to the SPA. In addition, the Brookfield Approval Rights will no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the limited partnership agreement of the OP.

Prior to March 31, 2022, if we consummate a liquidation, sale of all or substantially all of the assets, dissolution or winding-up, whether voluntary or involuntary, sale, merger, reorganization, reclassification or recapitalization or other similar event (a “Fundamental Sale Transaction”), we are required to redeem the Class C Units for cash at a premium based on how long the Class C Units have been outstanding. Following March 31, 2022, the holders of Class Units may require us to redeem any or all Class C Units for an amount in cash equal to the liquidation preference. We will also be required, at the option of the holders thereof, to redeem Class C Units, for the same premium applicable in a Fundamental Sale Transaction, upon the occurrence of certain events related to our failure to qualify as a REIT, the occurrence of a material breach by us of certain provisions of the limited partnership agreement of the OP or, for an amount equal to the liquidation preference, the rendering of a judgment enjoining or otherwise preventing the exercise of certain rights under the limited partnership agreement of the OP. If we are unable to redeem any Class C Units when required to do so, the Brookfield Investor will be able to elect a majority of

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our board of directors and may cause us, through the exercise of the rights of the Special General Partner, to commence selling our assets until the Class C Units have been fully redeemed.

At any time and from time to time on or after March 31, 2022, we have the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference. In addition, if we list our common stock on a national securities exchange prior to that date, we will have certain rights to redeem all but $0.10 of the liquidation preference of each issued and outstanding Class C Unit for cash subject to payment of a make whole premium and certain rights of the Class C Unit holders to convert their retained liquidation preference into OP Units prior to March 31, 2024.

Also at the Initial Closing, as contemplated by the SPA and the Framework Agreement, we changed our name from American Realty Capital Hospitality Trust, Inc. to Hospitality Investors Trust, Inc. and the name of the OP from American Realty Capital Hospitality Operating Partnership, L.P. to Hospitality Investors Trust Operating Partnership, L.P. and completed various other actions required to effect our transition from external management to self-management.

Prior to the Initial Closing, we had no employees, and we depended on the Former Advisor to manage certain aspects of our affairs on a day-to-day basis pursuant to our advisory agreement with the Former Advisor (the "Advisory Agreement"). In addition, the Former Property Manager served as our property manager and had retained Crestline to provide services, including locating investments, negotiating financing and operating certain hotel assets in our portfolio.

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, LLC ("AR Capital"), the parent of American Realty Capital IX, LLC (“ARC IX”), and AR Global Investments, LLC ("AR Global"), the successor to certain of AR Capital's businesses. ARC IX served as our sponsor prior to our transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of our day-to-day operations, including all of our executive officers, became our employees. Following the Initial Closing, we had approximately 25 full-time employees. The staff at our hotels are employed by our third-party hotel managers. At the Initial Closing, we also terminated all of our other agreements with affiliates of the Former Advisor except for our hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which we will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Prior to the Initial Closing, we, directly or indirectly through our taxable REIT subsidiaries, had entered into agreements with the Former Property Manager, which, in turn, had engaged Crestline or a third-party sub-property manager to manage our hotel properties. These agreements were intended to be coterminous, meaning that the term of our agreement with the Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions. Following the Initial Closing, we no longer have any agreements with the Former Property Manager and instead contract directly or indirectly, through our taxable REIT subsidiaries, with Crestline and the other third-party property management companies that previously served as sub-property managers to manage our hotel properties.

As of March 31, 2017, following the Initial Closing, 72 of the hotel assets we have acquired were managed by Crestline and 69 of the hotel assets we have acquired were managed by third-party property managers. As of March 31, 2017, our third-party property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), Interstate Management Company, LLC (5 hotels), InnVentures IVI, LP (2 hotels) and McKibbon Hotel Management, Inc. (21 hotels). On April 3, 2017, as contemplated by the Framework Agreement, the five hotels managed by Interstate Management Company, LLC became managed by Crestline.

See Note 3 - Brookfield Investment and Related Transactions to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information regarding the terms of the SPA and the Framework Agreement and the other transactions and agreements contemplated thereby.

Significant Accounting Estimates and Critical Accounting Policies

Principles of Consolidation and Basis of Presentation

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The accompanying consolidated financial statements include our accounts and our subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. In determining whether we have a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, we consider factors such as percentage ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which we are the primary beneficiary.

Certain amounts in prior periods have been reclassified in order to conform to current period presentation, specifically, we changed the presentation of our Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to "general and administrative expenses" and "acquisition and transaction related costs". The change in presentation was to reclassify these line items so that they are included as a component of Operating income (loss). We made this change in presentation for all periods presented.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding purchase price allocations to record investments in real estate, the useful lives of real estate and real estate taxes, as applicable.

Real Estate Investments

We allocate the purchase price of properties acquired in real estate investments to tangible and identifiable intangible assets acquired based on their respective fair values at the date of acquisition. Tangible assets include land, land improvements, buildings and furniture, fixtures and equipment. We utilize various estimates, processes and information to determine the property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and furniture, fixtures and equipment are based on purchase price allocation studies performed by independent third parties or our analysis of comparable properties in our portfolio. Identifiable intangible assets and liabilities, as applicable, are typically related to contracts, including operating lease agreements, ground lease agreements and hotel management agreements, which will be recorded at fair value. We also consider information obtained about each property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Investments in real estate that are not considered to be business combinations under GAAP are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation of our assets is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for furniture, fixtures and equipment, and the shorter of the useful life or the remaining lease term for leasehold interests.

We are required to make subjective assessments as to the useful lives of our assets for purposes of determining the amount of depreciation to record on an annual basis with respect to our investments in real estate. These assessments have a direct impact our net income because if we were to shorten the expected useful lives of our investments in real estate, we would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Below-Market Lease

The below-market lease intangible is based on the difference between the market rent and the contractual rent and is discounted to a present value using an interest rate reflecting our current assessment of the risk associated with the leases assumed at acquisition. Acquired lease intangible assets are amortized over the remaining lease term. The amortization of a below-market lease is recorded as an increase to rent expense on the Consolidated Statements of Operations and Comprehensive Income(Loss).

Impairment of Long-Lived Assets and Investment in Unconsolidated Entities

When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of demand, competition and other factors. If an impairment exists due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the

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carrying value exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income.

Assets Held for Sale (Long-Lived Assets)

When we initiate the sale of long-lived assets, we assess whether the assets meet the criteria to be considered assets held for sale. The review is based on whether the following criteria are met:

• Management has committed to a plan to sell the asset group;

• The subject assets are available for immediate sale in their present condition;

• We are actively locating buyers as well as other initiatives required to complete the sale;

• The sale is probable and the transfer is expected to qualify for recognition as a complete sale in one year;

• The long-lived asset is being actively marketed for sale at a price that is reasonable in relation to fair value; and

• Actions necessary to complete the plan indicate it is unlikely significant changes will be made to the plan or the plan will be withdrawn.

If all the criteria are met, a long-lived asset held for sale is measured at the lower of its carrying amount or fair value less cost to sell, and we will cease recording depreciation.

Goodwill

During the three months ended March 31, 2017, we recognized $31.6 million as goodwill (See Note 4 - Business Combinations to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q). The goodwill balance will be tested for impairment at least annually, or upon the occurrence of any “triggering events,” if sooner.

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

Restricted Cash

Restricted cash consists of amounts required under mortgage agreements for future capital improvements to owned assets, future interest and property tax payments and cash flow deposits while subject to mortgage agreement restrictions. For purposes of the statement of cash flows, changes in restricted cash caused by changes to the amount needed for future capital improvements are treated as investing activities, changes related to future debt service payments are treated as financing activities, and changes related to real estate tax payments and excess cash flow deposits are treated as operating activities.

Deferred Financing Fees

Deferred financing fees represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These fees are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing fees are expensed when the associated debt is refinanced or repaid before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not be successful.

Variable Interest Entities

Accounting Standards Codification ("ASC") 810, contains the guidance surrounding the definition of variable interest entities ("VIE"), the definition of variable interests and the consolidation rules surrounding VIEs. In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support. We have variable interests in VIEs through our investments in entities which own the Westin Virginia Beach Town Center (the "Westin Virginia Beach") and the Hilton Garden Inn Blacksburg.

Once it is determined that we hold a variable interest in an entity, GAAP requires that we perform a qualitative analysis to determine (i) which entity has the power to direct the matters that most significantly impact the VIE’s financial performance; and (ii) if we have the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. The entity that has both of these characteristics is deemed to be the primary beneficiary and is required to consolidate the VIE.

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In February 2015, the FASB issued Accounting Standards Update 2015-02 (“ASU 2015-02”), which amended ASC 810. The amendment modifies the evaluation of whether certain legal entities are VIEs, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs. The revised guidance was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. We adopted this guidance effective January 1, 2016. We have evaluated the impact of the adoption of the new guidance on its consolidated financial statements and we have determined that the OP is considered a VIE. However, we meet the disclosure exemption criteria as we are the primary beneficiary of the VIE and our partnership interest is considered a majority voting interest. As such, the new guidance did not have an impact on our consolidated financial statements. At the Initial Closing we analyzed the rights of the Class C Units holders and determined that we continue to be the primary beneficiary of the OP, with the power to direct activities that most significantly impact its economic performance.

We also hold an interest in BSE/AH Blacksburg Hotel, LLC (the "HGI Blacksburg JV"), an entity that owns the assets of the Hilton Garden Inn Blacksburg, and an interest in TCA Block 7 Hotel, LLC (the "Westin Virginia Beach JV"), an entity that owns the assets of the Westin Virginia Beach.

During the quarter ended June 30, 2015, upon the acquisition of an additional equity interest in the HGI Blacksburg JV, we concluded that we were the primary beneficiary, with the power to direct activities that most significantly impact its economic performance, and therefore consolidated the entity in our consolidated financial statements subsequent to the acquisition. We have concluded we are not the primary beneficiary with the power to direct activities that most significantly impact economic performance of the Westin Virginia Beach JV, and have therefore not consolidated the entity. We have accounted for the Westin Virginia Beach JV under the equity method of accounting and included it in investments in unconsolidated entities in the accompanying Consolidated Balance Sheets.

Revenue Recognition

We recognize hotel revenue as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel services.

Income Taxes

We elected and qualified to be taxed as a REIT under Sections 856 through 860 of the Code commencing with our tax year ended December 31, 2014. In order to continue to qualify as a REIT, we must annually distribute to our stockholders 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain, and must comply with various other organizational and operational requirements. We generally will not be subject to federal corporate income tax on that portion of our REIT taxable income that we distribute to our stockholders. We may be subject to certain state and local taxes on our income, property tax and federal income and excise taxes on our undistributed income. Our hotels are leased to taxable REIT subsidiaries which are owned by the OP. The taxable REIT subsidiary are subject to federal, state and local income taxes.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss, capital loss, and tax credit carryovers. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which such amounts are expected to be realized or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. We must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement in order to determine the amount of benefit to recognize in the financial statements. This accounting standard applies to all tax positions related to income taxes.

Earnings/Loss per Share

We calculate basic income or loss per share by dividing net income or loss for the period by the weighted-average shares of its common stock outstanding for a respective period. Diluted income per share takes into account the effect of dilutive instruments, such as stock options and unvested stock awards, except when doing so would be anti-dilutive. Beginning with

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distributions payable with respect to April 2016 and through January 2017, we have paid cumulative distributions of 2,047,877 shares of common stock and adjusted retroactively for all periods presented our computation of loss per share in order to reflect this change in capital structure (See Note 10 - Common Stock to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q).

Fair Value Measurements

In accordance with ASC 820, Fair Value Measurement, certain assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction on the measurement date. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

Our financial instruments recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

• Level 1 - Inputs that are based upon quoted prices for identical instruments traded in active markets.

• Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar investments in markets that are not active, or models based on valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the investment.

• Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Advertising Costs

We expense advertising costs for hotel operations as incurred. These costs were $4.2 million for the three months ended March 31, 2017 and $3.8 million for the three months ended March 31, 2016.

Allowance for Doubtful Accounts

Receivables consist principally of trade receivables from customers and are generally unsecured and are due within 30 to 90 days. We record a provision for uncollectible accounts using the allowance method. Expected credit losses associated with trade receivables are recorded as an allowance for doubtful accounts. The allowance for doubtful accounts is estimated based upon historical patterns of credit losses for aged receivables as well as specific provisions for certain identifiable, potentially uncollectible balances. When internal collection efforts on accounts have been exhausted, the accounts are written off and the associated allowance for doubtful accounts is reduced.

Derivative Transactions

We at certain times enter into derivative instruments to hedge exposure to changes in interest rates. Our derivatives as of March 31, 2017, consisted of interest rate cap agreements, which we believe will help to mitigate our exposure to increasing borrowing costs under floating rate indebtedness. We have elected not to designate our interest rate cap agreements as cash flow hedges. The impact of the interest rate caps for the three months ended March 31, 2017, to the consolidated financial statements was immaterial.

Reportable Segments

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We have determined that we have one reportable segment, with activities related to investing in real estate. Our investments in real estate generate room revenue and other income through the operation of the properties, which comprise 100% of the total consolidated revenues. Management evaluates the operating performance of our investments in real estate on an individual property level, none of which represent a reportable segment.

Revenue Performance Metrics

We measure hotel revenue performance by evaluating revenue metrics such as:

• Occupancy percentage (“Occ”) - Occ represents the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occ measures the utilization of our hotels' available capacity.

• Average Daily Rate (“ADR”) - ADR represents total hotel revenues divided by the total number of rooms sold in a given period.

• Revenue per Available room (“RevPAR”) - RevPAR is the product of ADR and Occ.

Occ, ADR, and RevPAR are commonly used measures within the hotel industry to evaluate hotel operating performance. ADR and RevPAR do not include food and beverage or other revenues generated by the hotels. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget, to prior periods and to the competitive set in the market, as well as on a company-wide and regional basis.

Our Occ, ADR and RevPAR performance may be affected by macroeconomic factors such as regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, new hotel property construction, and the pricing strategies of competitors. In addition, our Occ, ADR and RevPAR performance is dependent on the continued success of our franchisors and brands.

We generally expect that room revenues will make up a significant majority of our total revenues, and our revenue results will therefore be highly dependent on maintaining and improving Occ and ADR, which drive RevPAR.

Results of Operations

Prior to the suspension of our IPO in November 2015, we depended, and expected to continue to depend, in substantial part on proceeds from our IPO to meet our major capital requirements. Following the suspension of our IPO in 2015, our primary business objective has been a focus on meeting our capital requirements and on maximizing the value of our existing portfolio by continuing to invest in our hotels primarily through brand-mandated property improvement plans (“PIPs”), and through intensive asset management. Because we required funds in addition to operating cash flow and cash on hand to meet our capital requirements, we undertook and evaluated a variety of transactions to generate additional liquidity to address our capital requirements, including changing our distribution policy, extending certain of our obligations under PIPs, extending obligations to pay contingent consideration, marketing and selling assets and seeking debt or equity financing transactions. In January 2017, we entered into the SPA and the Framework Agreement, and the consummation of the transactions contemplated by these agreements in March 2017 has generated, and is expected to continue to generate, additional liquidity through the sale of Class C Units to the Brookfield Investor at the Initial Closing and at Subsequent Closings, as well as cost savings realized as part of our transition to self-management through reduced property management fees and the elimination of external asset management fees to the Former Advisor (offset by expenses previously borne by the Former Advisor that will now be incurred directly by us as a self-managed company). The Subsequent Closings are subject to conditions, and may not be completed on their current terms, or at all, and the cost savings from our transition to self-management may not be realized to the extent we are anticipating, or at all.

While receipt of all the proceeds from our sale of Class C Units at the Initial Closing and Subsequent Closings would provide the liquidity needed to satisfy certain of our liquidity and capital requirements, including our obligation to redeem the $242.9 million of the Grace Preferred Equity Interests outstanding following the Initial Closing by February 27, 2019 and certain of our PIP obligations, these amounts may not be sufficient to satisfy all of our capital requirements. We may need to seek additional debt or equity financing consisting of common stock, preferred stock or warrants, or any combination thereof to meet our capital requirements, which may not be available on favorable terms or at all, and may only be obtained subject to the Brookfield Approval Rights. Moreover, the Subsequent Closings are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.

Any transactions we undertake in the future to generate additional liquidity could continue to have an effect on our results of operations. Further asset sales and the deferral of PIP obligations, if completed, could adversely impact our operating results.

PIP renovation work has adversely impacted our operating results due to the disruptions to the operations of the hotels being renovated. Additionally, we have significant PIP renovation work that we will be required to make during 2017 and in future years which will also adversely impact our operating results.

Our results of operations have in the past, and may continue to be, impacted by our acquisition activity.

In March 2014 we closed on the acquisition of interests in six hotels through fee simple, leasehold and joint venture interests (the "Barceló Portfolio") for an aggregate purchase price of $110.1 million, exclusive of closing costs. In February 2015, we closed on the acquisition of interests in 116 hotels through fee simple and leasehold interests (the "Grace Portfolio") for an aggregate purchase price of $1.8 billion, exclusive of closing costs. In October 2015, we closed on the acquisition of interests in 10 hotels through fee simple interests (the "First Summit Portfolio") from Summit Hotel OP, LP, the operating partnership of Summit Hotel Properties, Inc., and affiliates thereof (collectively, "Summit") for an aggregate purchase price of $150.1 million, exclusive of closing costs. In November and December 2015, we closed on the acquisition of interests in four hotels through fee simple interests (the "First Noble and Second Noble Portfolios") for an aggregate purchase price of $107.6 million, exclusive of closing costs. During December 2015 and January 2016, we terminated our obligations to acquire 24 additional hotels, including obligations to Summit, and as a result forfeited an aggregate of $41.1 million in non-refundable deposits. In February 2016, we completed the acquisition of six hotels through fee simple interests from Summit (the "Third Summit Portfolio”) for an aggregate purchase price of $108.3 million, exclusive of closing costs, $20.0 million of which was funded with the proceeds from a loan (the "Summit Loan") from Summit.

Also in February 2016, we reinstated our obligation under a previously terminated agreement with Summit, to purchase ten hotels for an aggregate purchase price of $89.1 million from Summit, made a new purchase price deposit of $7.5 million with proceeds from the Summit Loan. Under the reinstated agreement, Summit has the right to market and ultimately sell any or all of the hotels to be purchased to a bona fide third party purchaser without our consent at any time prior to the completion of any acquisition pursuant to the reinstated agreement. In June 2016, Summit informed us that two of the ten hotels had been sold, thereby reducing the number of hotels that could be purchased under the reinstated agreement to eight hotels for an aggregate purchase price of $77.2 million. In January 2017, in connection with our entry into the SPA, we extended the scheduled closing date of the acquisition of seven of the remaining hotels to April 27, 2017 (or October 24, 2017 in the case of one hotel) and made an additional purchase price deposit of $3.0 million in the form of a new loan by Summit to us (the “Additional Loan”).

At the Initial Closing on March 31, 2017, we repaid the outstanding balance of the Summit Loan with $23.7 million of the proceeds from the sale of Class C Units. On April 27, 2017, we completed the April Acquisition of seven hotels from Summit for an aggregate purchase price of $66.8 million. Concurrent with the completion of the April Acquisition the Additional Loan was deemed repaid in full.

Summit has informed us that the hotel that is scheduled to be sold on October 24, 2017 is subject to a pending purchase and sale agreement with a third party, but we will require additional debt or equity financing to fund the remaining $10.5 million of the closing consideration for this hotel if Summit does not sell it to a third party and we are ultimately required to purchase it. There can be no assurance such financing will be available on favorable terms, or at all. Moreover, such financing may only be obtained subject to the Brookfield Approval Rights, and there can be no assurance this prior approval will be provided when requested. Any failure to complete this acquisition, if required to do so, could cause us to default under the reinstated purchase agreement and forfeit the $1.0 million remaining deposit.

Although we are permitted under the Brookfield Approval Rights to complete this acquisition, we are significantly restricted in our ability to make future acquisitions, and there can be no assurance any required prior approval would be provided when requested. We also do not expect to make future acquisitions unless we can obtain equity or debt financing in addition to the additional capital available to us from the sale of the Class C Units at Subsequent Closings, which also would require prior approval.

Comparison of the Three Months Ended March 31, 2017 to the Three Months Ended March 31, 2016

Room revenues for the portfolio were $135.6 million for the three months ended March 31, 2017, compared to room revenues of $127.4 million for the three months ended March 31, 2016. The increase in room revenues was primarily driven by the impact of the Third Summit Closing which occurred in February 2016, increases in occupancy and ADR, partially offset by the sale of one hotel in October 2016.

The following table presents actual operating information of the hotels in our portfolio for the periods in which we have owned them.

	Three Months Ended
Total Portfolio	March 31, 2017			March 31, 2016
Number of rooms	17,194			17,351
Occ	72.7		%	69.5		%
ADR	$	122.33		$	119.94
RevPAR	$	88.89		$	83.39

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Our results of operations only include the results of operations of the hotels we have acquired beginning on the date of each hotel's acquisition. The following table presents pro-forma operating information of the hotels in our portfolio as if we had owned each hotel in our portfolio as of March 31, 207, for the full periods presented.

	Three Months Ended
Pro forma (141 hotels)	March 31, 2017			March 31, 2016
Number of rooms	17,194			17,193
Occ	72.7		%	69.6		%
ADR	$	122.33		$	119.89
RevPAR	$	88.89		$	83.48
RevPAR change	6.5		%

The information in the table below only includes the hotels that we classify as not under renovation for the full periods presented. We consider hotels to be under renovation beginning in the quarter that they start material renovations and continuing until the end of the fourth full quarter following the substantial completion of the renovations. The hotel business is capital-intensive and renovations are a regular part of the business. A large-scale capital project that would cause a hotel to be considered to be under renovation is an extensive renovation of core aspects of the hotel, such as rooms, meeting space, lobby, bars, restaurants, and other public spaces. Both quantitative and qualitative factors are taken into consideration in determining if a particular renovation would cause a hotel to be considered to be under renovation for these purposes, including unusual or exceptional circumstances such as: a reduction or increase in room count, a significant alteration of the business operations, or the closing of material portions of the hotel during the renovation.

	Three Months Ended
Pro forma hotels not under renovation (100 hotels)	March 31, 2017			March 31, 2016
Number of rooms	12,138			12,137
Occ	72.3		%	71.5		%
ADR	$	120.98		$	119.53
RevPAR	$	87.44		$	85.47
RevPAR change	2.3		%

The pro-forma RevPAR growth rate for the three months ended March 31, 2017, compared to the three months ended March 31, 2016, increased by 6.5% due to an increase in occupancy and ADR. Pro-forma RevPAR for our hotels not under renovation increased 2.3% in the current period as compared to the prior year period, also due to an increase in occupancy and ADR.

Other non-room operating revenues for the portfolio include food and beverage, and other ancillary revenues such as conference center, market, parking, telephone and cancellation fees. Total non-room operating revenues, including the results of the hotels in our portfolio as if we had owned each hotel in our portfolio for the three months ended March 31, 2017, and the three months ended March 31, 2016, increased 2.9% over the prior year period driven primarily by other ancillary revenue.

Our hotel operating expenses include labor expenses incurred in the day-to-day operation of our hotels. Our hotels have a variety of fixed expenses, such as essential hotel staff, real estate taxes and insurance, and these expenses do not change materially even if the revenues at the hotels fluctuate. Our primary hotel operating expenses are described below:

• Rooms expense: These costs include labor (housekeeping and rooms operation), reservation systems, room supplies, linen and laundry services. Occupancy is the major driver of rooms expense, due to the cost of cleaning the rooms, with additional expenses that vary with the level of service and amenities provided.

• Food and beverage expense: These expenses primarily include labor and the cost of food and beverage. Occupancy and the type of customer staying at the hotel (for example, catered functions generally are more profitable than outlet sales) are the major drivers of food and beverage expense, which correlates closely with food and beverage revenue.

• Management fees: Base management fees paid are computed as a percentage of gross revenue. Beginning as of the Initial Closing, the base management fees will be reduced from up to 4% to up to 3%. Incentive management fees may be paid when operating profit or other performance metrics exceed certain threshold levels. Asset management fees

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payable under the Advisory Agreement, which was terminated at the Initial Closing, were computed as a percentage of the lower of the cost or the fair market value of our assets.

• Other property-level operating costs: These expenses include labor and other costs associated with other ancillary revenue, such as conference center, parking, market and other guest services, as well as labor and other costs associated with administrative and general, sales and marketing, brand related fees, repairs, maintenance and utility costs. In addition, these expenses include real and personal property taxes and insurance, which are relatively inflexible and do not necessarily change based on changes in revenue or performance at the hotels.

Total hotel operating expenses (which exclude acquisition and transaction costs, general and administrative, depreciation and amortization and impairment of long-lived assets), including the results of the hotels in our portfolio as if we had owned each hotel in our portfolio for the three months ended March 31, 2017, and the three months ended March 31, 2016, increased approximately 3.7% over the prior year period primarily due to growth in rooms expense associated with growth in room revenue.

Acquisition and transaction costs decreased $25.0 million for the three months ended March 31, 2017, compared to the prior year period, primarily due to costs associated with the acquisition of the Third Summit Portfolio and forfeited deposits related to terminated acquisitions of approximately $22.0 million during the three months ended March 31, 2016.

General and administrative decreased approximately $1.4 million for the three months ended March 31, 2017, compared to the prior year period, primarily due to the write-off of deferred financing fees of $2.2 million during the three months ended March 31, 2016, partially offset by an increase in professional fees.

Depreciation and amortization increased approximately $2.6 million for the three months ended March 31, 2017, compared to the prior year period, due primarily to completed PIPs.

Interest expense increased $0.2 million for the three months ended March 31, 2017, compared to the prior year period.

Other income (expense) changed by approximately $0.6 million for the three months ended March 31, 2017, compared to the prior year period, primarily due to the change in the fair value associated with the contingent consideration payable due in connection with the acquisition of the Barceló Portfolio during the three months ended March 31, 2014.

Non-GAAP Financial Measures

This section includes non-GAAP financial measures, including funds from operations ("FFO"), modified funds from operations ("MFFO"), and hotel earnings before interest, taxes and depreciation and amortization ("Hotel EBITDA"). Descriptions of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income (loss), is provided below.

Funds from Operations and Modified Funds from Operations

The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using the historical accounting convention for depreciation and certain other items may not be fully informative.

Because of these factors, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has published a standardized measure of performance known as FFO, which is used in the REIT industry as a supplemental performance measure. We believe FFO, which excludes certain items such as real estate-related depreciation and amortization, is an appropriate supplemental measure of a REIT’s operating performance. FFO is not equivalent to our net income or loss as determined under GAAP.

We define FFO, a non-GAAP financial measure, consistent with the standards set forth in the White Paper on FFO approved by the Board of Governors of NAREIT, as revised in February 2004 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, but excluding gains or losses from sales of property and real estate related impairments, plus real estate related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures.

We believe that the use of FFO provides a more complete understanding of our performance to investors and to management, and, when compared year over year, reflects the impact on our operations from trends in occupancy rates, ADR, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss as determined under GAAP.

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Changes in the accounting and reporting promulgations under GAAP that were put into effect in 2009 subsequent to the establishment of NAREIT’s definition of FFO, such as the change to expense as incurred rather than capitalize and depreciate acquisition fees and expenses incurred for business combinations or property acquisitions, has resulted in acquisition fees and expenses being expensed under GAAP. These changes had a particularly significant impact on publicly registered, non-listed REITs, which typically have a significant amount of acquisition activity in the early part of their existence, particularly during the period when they are raising capital through ongoing initial public offerings and typically paying acquisition fees.

Because of these factors, the Investment Program Association (the “IPA”), an industry trade group, has published a standardized measure of performance known as MFFO, which the IPA has recommended as a supplemental measure for publicly registered, non-listed REITs. MFFO is designed to be reflective of the ongoing operating performance of publicly registered, non-listed REITs by adjusting for those costs that are more reflective of acquisitions and investment activity, along with other items the IPA believes are not indicative of the ongoing operating performance of a publicly registered, non-listed REITs, such as straight-lining of rents as required by GAAP. We believe it is appropriate to use MFFO as a supplemental measure of operating performance because we believe that, when compared year over year, both before and after we have deployed all of our Offering proceeds and are no longer incurring a significant amount of acquisitions fees or other related costs, it reflects the impact on our operations from trends in occupancy rates, ADR, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income or loss as determined under GAAP. MFFO is not equivalent to our net income or loss as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (the “Practice Guideline”) issued by the IPA in November 2010. The Practice Guideline defines MFFO as FFO further adjusted for acquisition and transaction related fees and expenses and other items. In calculating MFFO, we follow the Practice Guideline and exclude acquisition and transaction-related fees and expenses, amounts relating to deferred rent receivables and amortization of above and below market leases and liabilities (which are adjusted in order to reflect such payments from a GAAP accrual basis to a cash basis of disclosing the rent and lease payments), accretion of discounts and amortization of premiums on debt investments, mark-to-market adjustments included in net income, gains or losses included in net income from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan, unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting, and after adjustments for consolidated and unconsolidated partnerships and joint ventures, with such adjustments calculated to reflect MFFO on the same basis.

We believe that, because MFFO excludes costs that we consider more reflective of acquisition activities and other non-operating items, MFFO can provide, on a going-forward basis, an indication of the sustainability (that is, the capacity to continue to be maintained) of our operating performance after the period in which we are acquiring properties and once our portfolio is stabilized. We also believe that MFFO is a recognized measure of sustainable operating performance by the non-listed REIT industry and allows for an evaluation of our performance against other publicly registered, non-listed REITs.

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Not all REITs, including publicly registered, non-listed REITs, calculate FFO and MFFO the same way. Accordingly, comparisons with other REITs, including publicly registered, non-listed REITs, may not be meaningful. Furthermore, FFO and MFFO are not indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) or income (loss) from continuing operations as determined under GAAP as an indication of our performance, as an alternative to cash flows from operations, as an indication of our liquidity, or indicative of funds available to fund our cash needs including our ability to make distributions to our stockholders (although we are not currently paying cash distributions). FFO and MFFO should be reviewed in conjunction with other GAAP measurements as an indication of our performance. FFO and MFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The methods utilized to evaluate the performance of a publicly registered, non-listed REIT under GAAP should be construed as more relevant measures of operational performance and considered more prominently than the non-GAAP measures, FFO and MFFO, and the adjustments to GAAP in calculating FFO and MFFO.

Neither the SEC, NAREIT, the IPA nor any other regulatory body or industry trade group has passed judgment on the acceptability of the adjustments that we use to calculate FFO or MFFO. In the future, NAREIT, the IPA or another industry trade group may publish updates to the White Paper or the Practice Guideline or the SEC or another regulatory body could standardize the allowable adjustments across the publicly registered, non-listed REIT industry and we would have to adjust our calculation and characterization of FFO or MFFO accordingly.

The table below reflects the items deducted from or added to net income (loss) attributable to stockholders in our calculation of FFO and MFFO for the periods indicated. In calculating our FFO and MFFO, we exclude the impact of amounts attributable to our non-controlling interests and the portion of the adjustment allocable to non-controlling interests.

	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
Net loss before deemed dividend (in accordance with GAAP)	$	(16,144	)	$	(43,957	)
Depreciation and amortization	26,144			23,553
Adjustment to our share of depreciation and amortization for variable interest entities	(11		)	7
FFO attributable to common stockholders	$	9,989		$	(20,397	)
Acquisition and transaction related costs	36			25,065
Change in fair value of contingent consideration	—			593
Amortization of below-market lease obligation	100			100
MFFO attributable to common stockholders	$	10,125		$	5,361

Hotel EBITDA

Hotel EBITDA is used by management as a performance measure and we believe it is useful to investors as a supplemental measure in evaluating our financial performance because it is a measure of hotel profitability that excludes expenses that we believe may not be indicative of the operating performance of our hotels. We believe that using Hotel EBITDA, which excludes the effect of non-operating expenses and non-cash charges, all of which are based on historical cost and may be of limited significance in evaluating current performance, facilitates comparison of hotel operating profitability between periods. For example, interest expense is not linked to the operating performance of a hotel and Hotel EBITDA is not affected by whether the financing is at the hotel level or corporate level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the hotel level. We believe that investors should consider our Hotel EBITDA in conjunction with net income (loss) and other required GAAP measures of our performance to improve their understanding of our operating results.

Hotel EBITDA, or similar measures, are commonly used as performance measures by other public hotel REITs. However, not all public hotel REITs calculate Hotel EBITDA, or similar measures, the same way. Hotel EBITDA should be reviewed in conjunction with other GAAP measurements as an indication of our performance. Hotel EBITDA should not be construed to be

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more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance.

The following table reconciles our net loss in accordance with GAAP to Hotel EBITDA for the three months ended March 31, 2017, and for the three months ended March 31, 2016:

	For the Three Months Ended March 31, 2017			For the Three Months Ended March 31, 2016
Net loss before deemed dividend (in accordance with GAAP)	$	(16,144	)	$	(43,957	)
Less: Net income attributable to non-controlling interest	20			43
Net loss and comprehensive loss (in accordance with GAAP)	$	(16,124	)	$	(43,914	)
Depreciation and amortization	26,144			23,553
Interest expense	23,380			23,133
Acquisition and transaction related costs	36			25,065
Other income (expense)	(12		)	551
Equity in earnings of unconsolidated entities	29			60
General and administrative	2,926			4,294
Income tax benefit	(1,243		)	(603		)
Hotel EBITDA	$	35,136		$	32,139

Cash Flows

Net cash provided by operating activities was $8.9 million for the three months ended March 31, 2017. Cash provided by operating activities was positively impacted primarily by increases in accounts payable and accrued expenses, partially offset by increases in restricted cash, and increases in prepaid expenses and other assets.

Net cash used in investing activities was $20.2 million for the three months ended March 31, 2017, attributable to payment of cash consideration to the Former Property Manager at the Initial Closing and capital investments in our properties, partially offset by a decrease in restricted cash.

Net cash flow provided by financing activities was $49.9 million for the three months ended March 31, 2017. Cash provided by financing activities was primarily impacted by the net proceeds from the sale of Class C Units at the Initial Closing, partially offset by the use of a portion of those net proceeds to redeem Grace Preferred Equity Interests and repay the Summit Loan in full.

Election as a REIT

We elected and qualified to be taxed as a REIT commencing with our taxable year ended December 31, 2014. In order to continue to qualify as a REIT, we must annually distribute to our stockholders 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. As a REIT, we generally will not be subject to U.S. federal income tax on that portion of our taxable income or capital gain which is distributed to our stockholders. Each of our hotels is leased to a taxable REIT subsidiary which is owned by the OP. A taxable REIT subsidiary is subject to federal, state and local income taxes. If we fail to remain qualified as a REIT in any subsequent year after electing REIT status and do not qualify for certain statutory relief provisions, our income for that year will be taxed at regular corporate rates, and we may be precluded from qualifying for treatment as a REIT for the four-year period following our failure to qualify as a REIT. Such an event could materially and adversely affect our net income and cash available for distribution. However, we believe that we will continue to operate so as to remain qualified as a REIT.

Liquidity and Capital Resources

As of March 31, 2017, we had cash on hand of $81.4 million. Under certain of our debt obligations, we are required to maintain minimum liquidity of $15.0 million to comply with financial covenants, and we expect to satisfy this covenant through liquidity we maintain at individual hotels as well as through other sources.

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As of March 31, 2017, we had principal outstanding of $1.4 billion under our indebtedness plus an additional $242.9 million in liquidation value of Grace Preferred Equity Interests (which are treated as indebtedness for accounting purposes), most of which was incurred in acquiring the properties we currently own. As of March 31, 2017, we were required to redeem 50.0% of the Grace Preferred Equity Interests originally issued, or an additional $19.4 million in liquidation value, by February 27, 2018, and we are required to redeem the remaining $223.5 million in liquidation value by February 27, 2019.

Our major capital requirements following the Initial Closing include capital expenditures required pursuant to our PIPs and related reserve deposits, interest and principal payments under our indebtedness, distributions and mandatory redemptions payable with respect to the Grace Preferred Equity Interests and distributions payable with respect to Class C Units.

Prior to the suspension of our IPO in November 2015, we depended, and expected to continue to depend, in substantial part on proceeds from our IPO to meet our major capital requirements. Our IPO terminated in accordance with its terms in January 2017.

Because we required funds in addition to operating cash flow and cash on hand to meet our capital requirements, we undertook and evaluated a variety of transactions to generate additional liquidity to address our capital requirements, including changing our distribution policy, extending certain of our obligations under PIPs, extending obligations to pay contingent consideration, marketing and selling assets and seeking debt or equity financing transactions. In January 2017, we entered into the SPA and the Framework Agreement, and the consummation of the transactions contemplated by these agreements in March 2017 has, and is expected to continue to, generate additional liquidity through the sale of Class C Units to the Brookfield Investor at the Initial Closing and at Subsequent Closings, as well as cost savings realized as part of our transition to self-management through reduced property management fees and the elimination of external asset management fees to the Former Advisor (offset by expenses previously borne by the Former Advisor that will now be incurred directly by us as a self-managed company).

As of March 31, 2017, we had $895.4 million in principal outstanding under mortgage and mezzanine loans encumbering 95 of our hotels that was scheduled to mature in May 2017. During April 2017, we refinanced this indebtedness with new mortgage and mezzanine loans encumbering 87 of those properties (the “87-Pack Loans”). The 87-Pack Loans have an aggregate principal amount of $915.0 million and mature in May 2019, subject to three one-year extension rights. Also during April 2017, we refinanced $235.5 million principal amount then outstanding under one of our other mortgage loans secured by 20 of our hotels that was scheduled to mature in August 2018 with a new term loan secured by those hotels as well as the seven hotels acquired in the April Acquisition and one unencumbered hotel from our existing portfolio (the “Refinanced Term Loan”). The Refinanced Term Loan has an aggregate principal amount of $310.0 million and matures in May 2019, subject to three one-year extension rights.

Pursuant to the SPA, at the Initial Closing, we used a portion of the net proceeds to redeem $47.3 million in outstanding Grace Preferred Equity Interests and to pay in full the $23.7 million outstanding under the Summit Loan. Pursuant to the SPA, subsequent to the Initial Closing, we used $26.9 million of the net proceeds to pay a portion of the purchase price for the April Acquisition. The Brookfield Investor has agreed to purchase additional Class C Units at Subsequent Closings in an aggregate amount not to exceed $265.0 million. Generally, the proceeds from the sale of Class C Units at Subsequent Closings may be used to redeem the Grace Preferred Equity Interests required to be redeemed at or around the time they are required to be redeemed, with the balance available to fund PIPs and related lender reserves, repay amounts then outstanding with respect to mortgage debt principal and interest and working capital. Following the Initial Closing, $242.9 million in liquidation value of Grace Preferred Equity Interests was outstanding, and, accordingly, $22.1 million in Class C Units was available to be issued at Subsequent Closings to meet any other capital requirements. Pursuant to the SPA, $15.0 million of the net proceeds from the Initial Closing may be used to fund PIPs and related lender reserves.

On April 27, 2017, we completed the April Acquisition of seven hotels from Summit for an aggregate purchase price of $66.8 million, and $26.9 million of the purchase price was funded with proceeds from the Initial Closing pursuant to the SPA. The remaining amount was funded by (i) $33.4 million in net proceeds from the Refinanced Term Loan and (ii) $6.5 million previously paid by us as an earnest money deposit. In addition to paying this amount and the principal outstanding under the indebtedness being financed, the net proceeds from the Refinanced Term Loan were also used to pay in full the $4.6 in contingent consideration payable with respect to one of our prior acquisitions and to fund $30.0 million in a reserve under the 87-Pack Loans in order to fund expenditures for work required to be performed under PIPs required by hotels securing the 87-Pack Loans. This reserve is in addition to (not a replacement of) ongoing obligations under the 87-Pack Loans and the Refinancing Term Loan, which are similar to obligations that were applicable under the indebtedness that was refinanced, to reserve certain amounts to fund capital expenditures required pursuant to our PIPs. The 87-Pack Loans also provides for certain additional amounts to be deposited in reserve accounts, into which $1.0 million of the proceeds from the 87-Pack Loans was deposited.

Concurrent with the completion of the April Acquisition the Additional Loan was deemed repaid in full.

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In addition to our other capital requirements, we are also required to fund up to $10.5 million in closing consideration for a pending acquisition of one hotel from Summit (including amounts we intend to finance), and failure to do so could cause us to forfeit up to $1.0 million in non-refundable earnest money deposits previously paid. Summit has informed us that the hotel, which we are scheduled to acquire on October 24, 2017, is subject to a pending purchase and sale agreement with a third party, so we will only be required to fund the remaining $10.5 million of the closing consideration for this hotel if Summit does not sell it to a third party and we are ultimately required to purchase it. There can be no assurance such financing will be available on favorable terms, or at all. Moreover, such financing may only be obtained subject to the Brookfield Approval Rights, and there can be no assurance this prior approval will be provided when requested, or at all. Any failure to complete this acquisition, if required to do so, could cause us to default under the reinstated purchase agreement and forfeit the $1.0 million remaining deposit.

We believe our current sources of additional liquidity will allow us to meet our existing capital requirements, although there can be no assurance the amounts actually generated will be sufficient for these purposes. The Subsequent Closings are subject to conditions, and may not be completed on their current terms, or at all, and the cost savings from our transition to self-management may not be realized to the extent we are anticipating, or at all. Accordingly, we may require additional liquidity to meet our capital requirements, which may not be available on favorable terms or at all. Any additional debt or equity financing consisting of common stock, preferred stock or warrants, or any combination thereof to meet our capital requirements may also only be obtained subject to the Brookfield Approval Rights, and there can be no assurance this prior approval will be provided when requested, or at all. If obtained, any additional or alternative debt or equity financing could be on terms that would not be favorable to us or our stockholders, including high interest rates, in the case of debt financing, and substantial dilution, in the case of equity issuances or convertible securities. Moreover, because we are required to use 35% of the proceeds from the issuance of interests in us or any of our subsidiaries, to redeem the Grace Preferred Equity Interests at par, up to a maximum of $350 million in redemptions for any 12-month period, it may be more difficult to obtain equity financing from an alternative source in an amount required to meet our capital requirements.

As of March 31, 2017, our loan-to-value ratio was 69.2% including the Grace Preferred Equity Interests, which are treated as indebtedness for accounting purposes, and our loan-to-value ratio excluding the Grace Preferred Equity Interests was 59.1%.

Under our charter, the maximum amount of our total indebtedness may not exceed 300% of our total “net assets” (which is generally defined in our charter as our assets less our liabilities) as of the date of any borrowing, which is generally equal to approximately 75% of the cost of our investments; however, we may exceed that limit if such excess is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following that borrowing, along with the justification for exceeding the limit. This charter limitation, however, does not apply to individual real estate assets or investments. In all events, we expect that our secured and unsecured borrowings will be reasonable in relation to the net value of our assets and will be reviewed by our board of directors at least quarterly.

Prior to our entry into agreements related to our acquisition and financing activities during 2014 and 2015, a majority of our independent directors waived the total portfolio leverage requirement of our charter with respect to acquisition and financing activities should such total portfolio leverage exceed 300% of our total "net assets" in connection with such acquisition and financing activities. Our total portfolio leverage (which includes the Grace Preferred Equity Interests) has significantly exceeded this 300% limit at times. As of March 31, 2017, our total portfolio leverage was 190%.

Pursuant to the Brookfield Approval Rights, prior approval of any debt incurrence is required except for as specifically set forth in the Annual Business Plan and the refinancing of existing debt in a principal amount not greater than the amount to be refinanced and on terms no less favorable to us. We are also subject to certain covenants in our existing indebtedness that restrict our ability to make future borrowings.

The form of our indebtedness may be long term or short term, secured or unsecured, fixed or floating rate or in the form of a revolving credit facility, repurchase agreements or warehouse lines of credit. We will seek to obtain financing on our behalf on the most favorable terms available.

Distributions

On February 3, 2014, our board of directors declared distributions payable to stockholders of record each day during the applicable month at a rate equal to $0.0046575343 per day (or $0.0046448087 if a 366-day year), or $1.70 per annum, per share of common stock. The first distribution was paid in May to holders of record in April 2014.

To date, we have funded all of our cash distributions with proceeds from our IPO, which was suspended on November 15, 2015 and terminated on January 7, 2017, the third anniversary of the commencement of our IPO, in accordance with its terms.

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In March 2016, our board of directors changed the distribution policy, such thatdistributions paid with respect to April 2016, were paid in shares of common stock instead of cash to all stockholders, and not at the election of each stockholder. Accordingly, we paid a cash distribution to stockholders of record each day during the quarter ended March 31, 2016, but distributions for subsequent periods have been paid in shares of common stock. Distributions for the quarter ended June 30, 2016 were paid in common stock in an amount equivalent to $1.70 per annum, divided by $23.75.

On July 1, 2016, in connection with its determination of Estimated Per-Share NAV, our board of directors revised the amount of the distribution to $1.46064 per share per annum, equivalent to a 6.80% annual rate based on the Estimated Per-Share NAV, automatically adjusting if and when we publish an updated Estimated Per-Share NAV. Distributions for the period from July 1, 2016 to December 31, 2016 were paid in shares of common stock in an amount equal to 0.000185792 per share per day, or $1.46064 per annum, divided by $21.48. We anticipate that the Company will publish an updated Estimated Per-Share NAV no less frequently than once each calendar year.

On January 13, 2017, our board of directors suspended paying distributions to stockholders entirely. Currently, under the Brookfield Approval Rights, prior approval is required before we can declare or pay any distributions or dividends to our common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

Our distribution policy is subject to revision at the discretion of our board of directors, and may be changed at any time. There can be no assurance that we will continue to pay distributions in shares of common stock as set forth above or be able to pay distributions in cash in the future. Our ability to make future cash distributions will depend on our future cash flows and may be dependent on our ability to obtain additional liquidity, which may not be available on favorable terms, or at all.

Following the Initial Closing, commencing on June 30, 2017, holders of Class C Units are entitled to receive, with respect to each Class C Unit, fixed, quarterly cumulative cash distributions at a rate of 7.50% per annum from legally available funds. If we fail to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero.

Also commencing on June 30, 2017, holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative distribution payable in Class C Units at a rate of 5% per annum. Upon our failure to redeem the Brookfield Investor when required to do so pursuant to the limited partnership agreement of the OP, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

The number of Class C Units delivered in respect of the PIK Distributions on any distribution payment date will be equal to the number obtained by dividing the amount of PIK Distribution by $14.75.

Following the Initial Closing, the holders of Class C Units are also entitled to tax distributions under the certain limited circumstances described in the limited partnership agreement of the OP.

The following table shows the sources for the payment of cash distributions to common stockholders for the periods presented (in thousands):

	Three Months Ended March 31,
	2017					2016
Distributions:
Cash distributions paid	$	—				$	8,323
Cash distributions reinvested	—					7,074
Total distributions	$	—				$	15,397
Source of distribution coverage:
Cash flows provided by operations	$	—		—	%	$	—		—	%
Offering proceeds from issuance of common stock	$	—		—	%	$	8,323		54.1	%
Offering proceeds reinvested in common stock issued under DRIP	$	—		—	%	$	7,074		45.9	%
Total sources of distributions	$	—		—	%	$	15,397		100.0	%
Cash flows provided by operations (GAAP)	$	8,927				$	10,893
Net income (loss) (GAAP)	$	(16,124	)			$	(43,914	)

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For the period from our inception in July 2013 through May 2016 when we commenced paying distributions in common stock, we paid distributions in cash, all of which were funded with proceeds from our IPO and proceeds realized from the sale of common stock issued pursuant to our DRIP.

The below table shows the total distributions paid on shares outstanding in shares of our common stock valued at $21.48 price per share for the three months ended March 31, 2017 (in thousands).

Payment Date	Weighted Average Shares Outstanding (1)	Amount Paid in Cash	Amount Reinvested under DRIP	Issuance of Common Stock for Distributions
January 4, 2017	38,707	$—	$—	$4,765(2)
February 2, 2017	38,801	$—	$—	$2,014(3)
Total		$—	$—	$6,779
(1) Represents the weighted average shares outstanding for the period related to the respective payment date (2) Represents 221,833 shares of common stock valued at $21.48 per share (3) Represents 93,771 shares of common stock valued at $21.48 per share

Contractual Obligations

We have the following contractual obligations as of March 31, 2017:

Debt Obligations:

The following is a summary of our mortgage notes payable obligations as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Principal payments due on mortgage notes payable	$	1,418,913	$	—	$	1,418,913	$	—	$	—
Interest payments due on mortgage notes payable	165,860		45,309		120,551		—		—
Total	$	1,584,773	$	45,309	$	1,539,464	$	—	$	—

Mortgage notes payable due dates assume exercise of all borrower extension options. The foregoing summary does not include the impact of the refinancing transactions which were closed during April 2017. See Note 15 - Subsequent Events to our consolidated financial statements included in this report.

The following is a summary of our promissory notes payable obligations as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Principal payments due on promissory notes payable	$	7,041	$	6,041	$	1,000	$	—	$	—
Interest payments due on promissory note payable	20		20		—		—		—
Total	$	7,061	$	6,061	$	1,000	$	—	$	—

The following is a summary of the Grace Preferred Equity Interests, our mandatorily redeemable preferred securities as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Mandatory redemptions due on mandatorily redeemable preferred securities	$	242,938	$	—	$	242,938	$	—	$	—
Monthly distributions due on mandatorily redeemable preferred securities	35,859		13,422		22,437		—		—
Total	$	278,797	$	13,422	$	265,375	$	—	$	—

57

Class C Unit Obligations:

The following table reflects the cash distributions on the Class C Units due from us over the next five years and thereafter for our arrangements as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Distributions on Class C Units	$	57,113	$	7,753	$	33,799	$	12,433	$	3,128

The foregoing summary does not include the impact of Class C Units that may be issued at Subsequent Closings or as PIK Distributions.

Lease Obligations:

The following table reflects the minimum base rental cash payments due from us over the next five years and thereafter for our arrangements as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Lease payments due	$	106,564	$	3,841	$	15,709	$	5,271	$	81,743

Property Improvement Plan Reserve Deposits:

The following table reflects estimated PIP reserve deposits that are required under our mortgage debt obligations over the next five years as of March 31, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
PIP reserve deposits due	$	31,635	$	18,672	$	12,963	$	—	$	—

The foregoing summary does not include the impact of the refinancing transactions which resulted from our entry into the 87-Pack Loans and the Refinanced Term Loan during April 2017. See Note 15 - Subsequent Events to our consolidated financial statements included in this report.

Related Party Transactions and Agreements

See Note 13 - Related Party Transactions and Arrangements to our consolidated financial statements included in this report.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

58

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The market risk associated with financial instruments and derivative financial instruments is the risk of loss from adverse changes in market prices or interest rates. Our long-term debt, which consists of secured financings, bears interest at fixed and variable rates. Our interest rate risk management objectives are to limit the impact of interest rate changes in earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, from time to time, we may enter into interest rate hedge contracts such as swaps, collars and treasury lock agreements in order to mitigate our interest rate risk with respect to various debt instruments. We would not hold or issue these derivative contracts for trading or speculative purposes.

As of March 31, 2017, we had not fixed the interest rate for $1.1 billion of our secured variable-rate debt. As a result, we are subject to the potential impact of rising interest rates, which could negatively impact our profitability and cash flows. In order to mitigate our exposures to changes in interest rates, we have entered into interest rate cap agreements with respect to approximately $1.1 billion of our variable-rate debt. The estimated impact on our annual results of operations, of an increase of 100 basis points in interest rates, would be to increase annual interest expense by approximately $11.5 million. Decreasing interest rates by the lesser of 100 basis points or to the lowest possible rate, but to no lower than a zero percent variable rate, would decrease annual interest expense by $9.6 million. The estimated impact assumes no changes in our capital structure, including as a result of the refinancing transactions we closed during April 2017, which increased the principal amount of the applicable indebtedness but did not otherwise affect the exposure of such indebtedness to changes in interest rates. As the information presented above includes only those exposures that exist as of March 31, 2017, it does not consider those exposures or positions that could arise after that date. The information represented herein has limited predictive value. Future actual realized gains or losses with respect to interest rate fluctuations will depend on cumulative exposures, hedging strategies employed and the magnitude of the fluctuations.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic reports pursuant to the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

We carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a -15(e) as of the end of the period covered by this report. Based upon this evaluation and as a result of the material weakness described below under “Changes in Internal Control Over Financial Reporting,” our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report.

Notwithstanding the material weakness described below, management believes that the consolidated financial statements included in this Quarterly Report on Form 10-Q are fairly presented in all material respects in accordance with GAAP. Our chief executive officer and chief financial officer have certified that, based on their knowledge, the consolidated financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for each of the periods presented in this report.

Changes in Internal Control Over Financial Reporting

As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2016, management identified a material weakness in our internal control over financial reporting as of December 31, 2016. Specifically, as previously disclosed, we determined that we did not effectively operate controls over the monitoring and oversight of compliance with a single financial covenant included in a non-recourse carve-out guarantee entered into with respect to one of our mortgage loans, which resulted in us possibly misinterpreting the methodology for calculating compliance with this covenant. As a result, management determined that, to the extent we are unable to remedy this control deficiency, it is reasonably possible that an undetected failure to comply with a covenant could occur, which in turn could result in a material misstatement of our annual and interim consolidated financial statements that would not be prevented or detected on a timely basis.

Other than the commencement of the implementation of the remediation plan described below, there were no changes in internal control over financial reporting during the first quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

59

Management has begun taking and intends to take a number of steps to remediate the underlying causes of the material weakness described above, including the following:

• Evaluating the processes surrounding the monitoring and oversight of the compliance of financial covenants to determine if new and improved processes are warranted and, if so, to identify and implement such processes;

• Instituting an additional level of review and analysis of covenant compliance calculations and enhancing ongoing monitoring and forecasting of such compliance;

• Enhancing procedures regarding the reporting by management to our board of directors and audit committee regarding financial covenant calculation and compliance; and

• Engaging in a thorough review of all debt agreements and providing additional tools for key personnel to track covenant compliance requirements.

Management expects that these remedial actions will strengthen our internal control over financial reporting and address the material weakness that was identified as of December 31, 2016. However, there cannot be any assurance that these remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. The material weakness will be fully remediated when, in the opinion of our management, the revised control processes have been operating for a sufficient period of time to provide reasonable assurance as to their effectiveness. The remediation and ultimate resolution of this material weaknesses will be reviewed with our audit committee.

60

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any material pending legal proceedings.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in our 2016 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

We did not sell any equity securities that were not registered under the Securities Act during the quarter ended March 31, 2017, except with respect to which information has been included in a Current Report on Form 8-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.

EXHIBIT INDEX

The following exhibits are included in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Description
3.1(1)	Articles Supplementary of Hospitality Investors Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on January 13, 2017.
3.2(2)	Articles of Amendment for Hospitality Investors Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on March 31, 2017.
3.3(2)	Articles Supplementary of Hospitality Investors Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on March 31, 2017.
3.4(2)	Certificate of Notice of Hospitality Investors Trust, Inc. filed with the State Department of Assessments and Taxation of Maryland on March 31, 2017.
3.5(2)	Amended and Restated Bylaws of Hospitality Investors Trust, Inc.
4.1(2)	Amended and Restated Agreement of Limited Partnership of Hospitality Investors Trust Operating Partnership L.P., dated as of March 31, 2017, by and among Hospitality Investors Trust, Inc., Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC and BSREP II Hospitality II Special GP OP LLC.
4.2(2)	Form of Stock Certificate of the Redeemable Preferred Share.
10.1(1)	Securities Purchase, Voting and Standstill Agreement, dated as of January 12, 2017, by and among Hospitality Investors Trust, Inc., American Realty Capital Hospitality Operating Partnership, LP and Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC.
10.2(1)	Framework Agreement, dated as of January 12, 2017, by and among American Realty Capital Hospitality Advisors, LLC, American Realty Capital Hospitality Properties, LLC, American Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts, LLC, Hospitality Investors Trust, Inc., American Realty Capital Hospitality Operating Partnership, LP, American Realty Capital Hospitality Special Limited Partnership, LLC, and solely in connection with Sections 7(b), 7(d), 8, 9 and 10 through 22 (inclusive) thereto, Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC.
10.3(1)	Letter Agreement, dated as of January 12, 2017, by and among Summit Hotel OP, LP and certain related sellers and American Realty Capital Hospitality Portfolio SMT ALT, LLC.
10.4(1)	First Amendment, dated as of January 12, 2017, to the Loan Agreement, dated as of February 11, 2016, between Hospitality Investors Trust, Inc. as Borrower and Summit Hotel OP, LP, as Lender.
10.5(1)	Loan Agreement, dated as of January 12, 2017, between Hospitality Investors Trust, Inc. as Borrower and Summit Hotel OP, LP, as Lender.
10.6(2)	Ownership Limit Waiver Agreement, dated as of March 31, 2017, between Hospitality Investors Trust, Inc. and Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC.
10.7(2)	Registration Rights Agreement, dated as of March 31, 2017, by and among Hospitality Investors Trust, Inc., Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC, American Realty Capital Hospitality Advisors, LLC and American Realty Capital Hospitality Properties, LLC.
10.8(2)	Transition Services Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Advisors, LLC, Hospitality Investors Trust, Inc. and Hospitality Investors Trust Operating Partnership, L.P.
10.9(2)	Transition Services Agreement, dated as of March 31, 2017, by and among Crestline Hotels & Resorts LLC, Hospitality Investors Trust, Inc. and Hospitality Investors Trust Operating Partnership, L.P.
10.10(2)	Assignment and Amendment of Current Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts, LLC, HIT Portfolio I TRS, LLC, HIT Portfolio I NTC TRS, LP and HIT Portfolio I MISC TRS, LLC.
10.11(2)	Assignment and Amendment of Current Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts, LLC, HIT Portfolio II NTC TRS, LP, HIT Portfolio II TRS, LLC and HIT Portfolio II MISC TRS, LLC.
10.12(2)	Assignment and Amendment of Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts, LLC, HIT Portfolio I TRS, LLC, HIT Portfolio I NTC TRS, LP, HIT Portfolio II NTC TRS, LP, HIT Portfolio I DEKS TRS, LLC and HIT Portfolio I KS TRS, LLC.

62

Exhibit No.	Description
10.13(2)	Assignment and Amendment of Crestline SWN Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Properties, LLC, Crestline Hotels & Resorts, LLC, HIT SWN INT NTC TRS, LP, HIT SWN TRS, LLC and HIT SWN CRS NTC TRS, LP.
10.14(2)	Assignment and Amendment of Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Properties, LLC, Crestline Hotels & Resorts, LLC, HIT TRS Baltimore, LLC, HIT TRS Providence, LLC, HIT TRS GA Tech, LLC and HIT TRS Stratford, LLC.
10.15(2)	Omnibus Agreement for Termination of Sub-Management Agreements, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, American Realty Capital Hospitality Properties, LLC, Crestline Hotels & Resorts, LLC and Crestline Hotels Ohio BEVCO, LLC.
10.16(2)	Omnibus Agreement for Termination of Management Agreements, dated as of March 31, 2017, by and among HIT Portfolio I HIL TRS, LLC, HIT Portfolio I NTC HIL TRS, LP, HIT Portfolio II HIL TRS, LLC, HIT II NTC HIL TRS, LP, HIT Portfolio I MCK TRS, LLC, HIT Portfolio I NTC TRS, LP, HIT Portfolio II MISC TRS, LLC, HIT Portfolio II NTC TRS, LP, HIT Portfolio I MISC TRS, LLC, HIT SWN INT NTC TRS, LP, HIT SWN TRS, LLC, American Realty Capital Hospitality Grace Portfolio, LLC and American Realty Capital Hospitality Properties, LLC.
10.17(2)	Omnibus Assignment and Amendment of Management Agreement, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, HIT Portfolio I HIL TRS, LLC, HIT Portfolio I NTC HIL TRS, LP, HIT Portfolio II HIL TRS, LLC, HIT Portfolio II NTC HIL TRS, LP, Hampton Inns Management LLC and Homewood Suites Management LLC.
10.18(2)	Assignment and Amendment of Management Agreements, dated as of March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, HIT Portfolio I MCK TRS, LLC, HIT Portfolio I NTC TRS, LP, HIT Portfolio II NTC TRS, LP, HIT Portfolio II MISC TRS, LLC and McKibbon Hotel Management, Inc.
10.19(2)	Assignment and Amendment of Management Agreements, dated March 31, 2017, by and among American Realty Capital Hospitality Grace Portfolio, LLC, HIT Portfolio I MISC TRS, LLC and Innventures IVI, LP.
10.20(2)	Assignment and Assumption Agreement, dated March 31, 2017, by and among American Realty Capital Hospitality Advisors, LLC, AR Global Investment, LLC and Hospitality Investors Trust Operating Partnership, L.P.
10.21(2)	Mutual Waiver and Release, dated as of March 31, 2017 by and among American Realty Capital Hospitality Advisors, LLC, American Realty Capital Hospitality Properties, LLC, American Realty Capital Hospitality Grace Portfolio, LLC, Crestline Hotels & Resorts, LLC, Hospitality Investors Trust, Inc., Hospitality Investors Trust Operating Partnership, L.P., American Realty Capital Hospitality Special Limited Partnership, LLC and Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC.
10.22(2)	Trademark License Agreement, dated as of March 31, 2017, by and between (i) AR Capital, LLC and American Realty Capital Hospitality Advisors, LLC and (ii) Hospitality Investors Trust, Inc. and Hospitality Investors Trust Operating Partnership, L.P.
10.23(2)	First Amendment, dated as of March 31, 2017, to the Amended and Restated Limited Liability Company Agreement of HIT Portfolio I Holdco, LLC, dated as of February 27, 2015.
10.24(2)	Second Amendment, dated as of March 31, 2017, to the Amended and Restated Limited Liability Company Agreement of HIT Portfolio II Holdco, LLC, dated as of February 27, 2015.
10.25(2)	Amended and Restated Employee and Director Incentive Restricted Share Plan of Hospitality Investors Trust, Inc.
10.26(2)	Form of Restricted Share Unit Award Agreement (officers).
10.27(2)	Employment Agreement, dated as of March 31, 2017, by and between Jonathan P. Mehlman and Hospitality Investors Trust, Inc.
10.28(2)	Employment Agreement, dated as of March 31, 2017, by and between Edward Hoganson and Hospitality Investors Trust, Inc.
10.29(2)	Employment Agreement, dated as of March 31, 2017, by and between Paul C. Hughes and Hospitality Investors Trust, Inc.
10.30(2)	Compensation Payment Agreement, dated as of March 31, 2017, by and among Hospitality Investors Trust, Inc., Lowell G. Baron, Bruce G. Wiles and BSREP II Hospitality II Board LLC
10.31(2)	Form of Indemnification Agreement.
10.32(3)	Mortgage Loan Agreement, dated as of April 28, 2017, by and among the Entities Listed on Schedule 1-A thereto, collectively, as borrower, and the Entities Listed on Schedule 1-B thereto, collectively, as operating lessee and Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp., and JPMorgan Chase Bank, National Association, collectively, as lender.

63

Exhibit No.	Description
10.33(3)	Mezzanine Loan Agreement, dated as of April 28, 2017, by and among the Entities Listed on Schedule 1-A thereto, collectively, as borrower, and the Entities Listed on Schedule 1-B thereto, collectively, as operating lessee and Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp., and JPMorgan Chase Bank, National Association, collectively, as lender.
10.34(3)	Second Amended and Restated Term Loan Agreement, dated as of April 27, 2017, by and among the Borrowers Party thereto, as borrowers, Hospitality Investors Trust, Inc. and Hospitality Investors Trust Operating Partnership, L.P., as guarantors, the Initial Lenders named therein, as initial lenders, and Citibank, N.A., as administrative agent and as collateral agent, with Citigroup Global Markets Inc. and Deutsche Bank Securities Inc., as joint lead arrangers and joint book running managers.
10.35(3)	Guaranty of Recourse Obligations by Hospitality Investors Trust Operating Partnership, LP and Hospitality Investors Trust, Inc. to and for the benefit of Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, dated as of April 28, 2017.
10.36(3)	Guaranty of Recourse Obligations by Hospitality Investors Trust Operating Partnership, LP and Hospitality Investors Trust, Inc. to and for the benefit of Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, dated as of April 28, 2017.
10.37(3)	Environmental Indemnity Agreement, dated as of April 28, 2017, on behalf of Hospitality Investors Trust, Inc., Hospitality Investors Trust Operating Partnership, L.P. and the Entities Listed on Schedule I, as indemnitors, in favor of Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, as indemnitee.
10.38(3)	Environmental Indemnity Agreement, dated as of April 28, 2017, on behalf of Hospitality Investors Trust, Inc., Hospitality Investors Trust Operating Partnership, L.P. and the Entities Listed on Schedule I, as indemnitors, in favor of Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, as indemnitee.
10.39*	Second Amended and Restated Limited Liability Company Agreement of HIT Portfolio I Holdco, LLC, dated as of April 28, 2017.
31.1*	Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32*	Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	XBRL (eXtensible Business Reporting Language). The following materials from Hospitality Investors Trust, Inc. Quarterly Report on Form 10-Q for the three months ended March 31, 2017, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Loss, (iii) the Consolidated Statements of Changes in Stockholders' Equity, (iv) the Consolidated Statements of Cash Flows and (v) the Notes to the Consolidated Financial Statements.

* Filed herewith

1. Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on January 13, 2017.

2. Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on March 31, 2017.

3. Filed as an exhibit to the Company’s Current Report on Form 8-K filed with the SEC on May 3, 2017.

64

HOSPITALITY INVESTORS TRUST, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HOSPITALITY INVESTORS TRUST, INC.
Dated: May 15, 2017	By: /s/ Jonathan P. Mehlman Name: Jonathan P. Mehlman Title: Chief Executive Officer and President (Principal Executive Officer)
Dated: May 15, 2017	By: /s/ Edward T. Hoganson Name: Edward T. Hoganson Title: Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

65

EX-10.39

Exhibit 10.39

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT

OF

HIT PORTFOLIO I HOLDCO, LLC

AMONG

HIT PORTFOLIO MEMBER, LP,

W2007 EQUITY INNS SENIOR MEZZ, LLC

and

WILLIAM G. POPEO

Dated: April 28, 2017

IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION AND QUALIFICATION, THE LIMITED LIABILITY COMPANY INTERESTS DESCRIBED IN AND ISSUED PURSUANT TO THIS AGREEMENT HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT (AS DEFINED HEREIN) OR THE SECURITIES LAWS OF ANY STATE OR THE DISTRICT OF COLUMBIA. ACCORDINGLY, NO SUCH LIMITED LIABILITY COMPANY INTEREST MAY BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE FEDERAL OR STATE SECURITIES LAWS. ANY VIOLATION OF SUCH PROVISIONS COULD EXPOSE THE SELLING MEMBER AND THE COMPANY TO LIABILITY.

INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THEIR INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. IN MAKING THE DECISION WHETHER TO BE A MEMBER IN THE COMPANY INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE COMPANY AND THE TERMS OF THE LIMITED LIABILITY COMPANY INTERESTS.

Exhibit 10.39

TABLE OF CONTENTS

Page

ARTICLE 1 DEFINITIONS4

1.1Definitions    4

1.2Terms Generally    24

ARTICLE 2 THE COMPANY AND ITS BUSINESS24

2.1Members; Continuation of the Company    24

2.2Company Name    24

2.3Term    24

2.4Filing of Amendments to the Certificate    24

2.5Purpose    24

2.6Principal Office; Registered Agent    25

2.7Classes of Members    25

2.8Names and Addresses of the Members    26

2.9Authorized Persons    27

2.10Representations by the Class B Member    28

2.11Representations by the Class A Member    30

2.12Certain Tax Matters    31

ARTICLE 3 MANAGEMENT OF COMPANY BUSINESS;POWERS AND DUTIES OF THE MEMBERS    32

3.1Management of the Company Business    32

3.2Appointment of Initial Managing Member    33

3.3Class A Member’s Rights Following a Changeover Event    33

3.4Buy/Sell Following a Changeover Event; Remedy Not Exclusive    36

3.5The Class B Member’s Rights Following a Changeover Event    39

3.6Significant Decisions    40

3.7Class B Member Affiliate Contracts    43

3.8Cooperation    43

3.9The Class A Member’s Right to Cure Senior Loan Defaults    43

3.10Mortgage Loan    43

ARTICLE 4 RIGHTS AND DUTIES OF MEMBERS43

4.1Duties and Obligations of the Class B Member    43

2

Exhibit 10.39

4.2Prohibition of Other Activities of the Class B Member    44

4.3Limitation on Member Liability; Indemnification    44

4.4Compensation of Members and their Affiliates    46

4.5Use of Company Property    46

4.6Tax Contests    46

4.7Duty of the Class A Member    46

ARTICLE 5 BOOKS AND RECORDS; ANNUAL REPORTS; EXPENSES AND OTHER MATTERS47

5.1Books of Account    47

5.2Availability of Books of Account    47

5.3Annual Reports and Statements; Annual Budgets    47

5.4Class A Member’s Expenses    48

5.5Cash Management Account    48

5.6Plan Assets    49

5.7Insurance    49

5.8Casualty/Condemnation    49

5.9Existence; Compliance with Legal Requirements    50

5.10Impositions and Other Claims    50

5.11Litigation    50

5.12Access to Properties    50

5.13Notice of Default    51

5.14Intentionally Omitted    51

5.15Conduct of Business    51

5.16Standard of Operation    51

5.17No Sales of Assets    51

5.18Compliance with Senior Loans    51

5.19Intentionally Omitted    51

5.20Prohibited Persons    51

5.21Forgiveness of Debt    52

ARTICLE 6 CAPITAL CONTRIBUTIONS, LOANS AND LIABILITIES    52

6.1Initial Capital Contributions of the Members    52

6.2Protective Capital/Additional Capital    52

3

Exhibit 10.39

6.3Application of Capital    53

6.4Capital of the Company    53

ARTICLE 7 INTENTIONALLY OMITTED53

ARTICLE 8 APPLICATIONS AND DISTRIBUTIONSOF AVAILABLE CASH; REDEMPTION    54

8.1Distributions of Cash    54

8.2Sales; Financings; Qualified Capital Raises    54

8.3Redemption Right    55

8.4Distribution of Capital Event Proceeds    55

8.5Distribution After Changeover Event    56

ARTICLE 9 TRANSFER OF COMPANY INTERESTS56

9.1Restrictions on Transfers by the Class B Member    56

9.2Transfers by the Class A Member    57

9.3Assignment Binding on Company    58

9.4Bankruptcy of a Member    58

9.5Substituted Members    58

9.6Acceptance of Prior Acts    59

9.7Additional Limitations    59

9.8Restraining Order; Specific Performance; Other Remedies    59

ARTICLE 10 DISSOLUTION OF THE COMPANY; WINDING UP AND DISTRIBUTION OF ASSETS60

10.1Dissolution    60

10.2Winding Up    61

10.3Distribution of Assets    61

ARTICLE 11 AMENDMENTS62

11.1Amendments    62

11.2Additional Members    62

ARTICLE 12 MISCELLANEOUS62

12.1Further Assurances    62

12.2Notices    63

12.3Remedies of the Class B Member    63

12.4Exculpation    63

12.5Headings and Captions    63

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Exhibit 10.39

12.6Variance of Pronouns    63

12.7Counterparts    64

12.8Governing Law    64

12.9Consent to Jurisdiction    64

12.10Arbitration    64

12.11Partition    65

12.12Invalidity    65

12.13Successors and Assigns    65

12.14Entire Agreement    66

12.15Waivers    66

12.16No Brokers    66

12.17Press Releases    66

12.18No Third Party Beneficiaries    66

12.19Construction of Documents    66

12.20Time of Essence    66

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Exhibit 10.39

SCHEDULES

Schedule A-1    Mortgage Loan Properties

Schedule A-2    8-Pack Properties

Schedule 1.1(a)    Allocated Amounts

Schedule 1.1(b)    Mortgage Loan Documents

Schedule 1.1(c)    First Mezzanine Loan Documents

Schedule 5.15(a)    Special Purpose Covenants

Schedule 5.15(b)    Anti-Terrorism and Anti-Money Laundering Laws; Embargoed Persons

Schedule 6.1    Initial Capital Contributions and Percentage Interests of the Members

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Exhibit 10.39

SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OFHIT PORTFOLIO I HOLDCO, LLC

This SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT, dated as of April 28, 2017, is made by and among HIT PORTFOLIO MEMBER, LP, a Delaware limited partnership (together with its successors and permitted assigns each in such Person’s capacity as a member of the Company, the “Class B Member”), W2007 EQUITY INNS SENIOR MEZZ, LLC, a Delaware limited liability company (together with its successors and permitted assigns each in such Person’s capacity as a member of the Company, the “Class A Member”), and WILLIAM G. POPEO, as the initial Special Member.

R E C I T A L S

WHEREAS, the Company (as defined herein) was formed under the Act pursuant to a Certificate of Formation of the Company, which was filed with the Secretary of State of the State of Delaware on October 7, 2014, and that certain Limited Liability Company Agreement, dated as of November 7, 2014, by the Class B Member, as the sole member (the “Original LLC Agreement”);

WHEREAS, pursuant to the terms of that certain Amended & Restated Real Estate Sale Agreement, dated as of November 11, 2014 (the “Sale Agreement”), by and among the parties listed on Schedule 1A attached thereto, as the sellers (the “Sellers”), and the parties listed on Schedule 1B attached thereto, as the purchasers, Original Borrower, as herein defined, acquired the Properties and the Company issued the Interest (as herein defined) described herein to the Class A Member (on behalf of its wholly-owned subsidiaries, who were the sellers under the Sale Agreement) in partial consideration for such sale;

WHEREAS, the Class A Member, the Class B Member and William G. Popeo are parties to that certain Amended and Restated Limited Liability Company Agreement of the Company, dated as of February 27, 2015 (the “LLC Agreement”);

WHEREAS, in accordance with that certain consent letter, dated as of March 31, 2017, by and among the Class A Member, the Class B Member, Hospitality Investors Trust Operating Partnership, L.P. (“HIT OP”) and Hospitality Investors Trust, Inc. (“HIT REIT”), the Class A Member and the Class B Member made certain amendments to the LLC Agreement;

WHEREAS, in accordance with that certain consent letter, dated as of April 28, 2017, by and among the Class A Member, the Class B Member, HIT OP and HIT REIT, the Class A Member and the Class B Member have agreed to amend and restate, in its entirety, the LLC Agreement

WHEREAS, the Company (i) is the ninety-nine percent (99%) limited partner of HIT Portfolio I Mezz, LP, a Delaware limited partnership (the “First Mezzanine Borrower”), (ii) is the sole member of HIT Portfolio I Mezz, GP, a Delaware limited liability company (the “Mezzanine

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Exhibit 10.39

GP”), which in turn is the one percent (1%) general partner of First Mezzanine Borrower; (iii) is the sole member of HIT Portfolio I TRS Holdco, LLC, a Delaware limited liability company (“TRS Holdco”); (iv) is the sole member of HIT Portfolio I 8PK Owner Holdco, LLC, a Delaware limited liability company (“8PK Holdco”) and (v) is the sole member of HIT Portfolio I 8PK TRS Holdco, LLC, a Delaware limited liability company (“8PK TRS Holdco”);

WHEREAS, the First Mezzanine Borrower is (i) the sole member of each of HIT Portfolio I Owner, LLC, a Delaware limited liability company (“LLC Borrower”), HIT Portfolio I BHGL Owner, LLC, a Delaware limited liability company (“BHGL Borrower”), HIT Portfolio I PXGL Owner, LLC, a Delaware limited liability company (“PXGL Borrower”), HIT Portfolio I GBGL Owner, LLC, a Delaware limited liability company (“GBGL Borrower”), HIT Portfolio I NFGL Owner, LLC, a Delaware limited liability company (“NFGL Borrower”), HIT Portfolio I MBGL 1000 Owner, LLC, a Delaware limited liability company (“MBGL 1000 Owner”), HIT Portfolio I MBGL 950 Owner, LLC, a Delaware limited liability company (“MBGL 950 Borrower”), (ii) the sole member of HIT Portfolio I NTC Owner GP, LLC, a Delaware limited liability company (“Owner GP”), which in turn is the one percent (1%) general partner of each of HIT Portfolio I NTC Owner, LP, a Delaware limited partnership (“LP Borrower”), HIT Portfolio I DLGL Owner, LP, a Delaware limited partnership (“DLGL Borrower”), and HIT Portfolio I SAGL Owner, LP, a Delaware limited partnership (“SAGL Owner”; LLC Borrower, BHGL Borrower, PXGL Borrower, GBGL Borrower, NFGL Borrower, MBGL 1000 Owner, MBGL 950 Borrower, LP Borrower, and DLGL Borrower are individually and collectively, as the context may require, referred to as the “Mortgage Borrowers” and, together with MBGL 1000 Owner and SAGL Owner, the “Existing Mortgage Borrowers”), and (iii) the ninety-nine percent (99%) limited partner of LP Borrower, DLGL Borrower, and SAGL Owner;

WHEREAS TRS Holdco is (i) is the sole member of HIT Portfolio I TRS, LLC, a Delaware limited liability company (“Main TRS”), HIT Portfolio I HIL TRS, LLC, a Delaware limited liability company (“HIL TRS”), HIT Portfolio I MCK TRS, LLC, a Delaware limited liability company (“MCK TRS”), HIT Portfolio I MISC TRS, LLC, a Delaware limited liability company (“MISC TRS”), and HIT Portfolio I DEKS TRS, LLC, a Delaware limited liability company (“DEKS TRS”), which is the sole member of HIT Hospitality Portfolio I KS TRS, LLC,, a Kansas limited liability company (“KS TRS”), (ii) the sole member of HIT Portfolio I NTC TRS GP, a Delaware limited liability company (“TRS GP”), which is the one percent (1%) general partner of each of HIT Portfolio I NTC TRS, LP, a Delaware limited partnership (“Main LP TRS”), and HIT Portfolio I NTC HIL TRS, LP, a Delaware limited partnership (“HIL LP TRS”; and together with Main TRS, HIL TRS, MCK TRS, MISC TRS, Main LP TRS and DEKS TRS, the “TRS”) and (iii) the ninety-nine percent (99%) limited partner of Main LP TRS and HIL LP TRS;

WHEREAS, 8PK Holdco is (i) the sole member of each of HIT Portfolio I 8PK Chattanooga Owner, LLC, a Delaware limited liability company (“Chattanooga Owner”), HIT Portfolio I 8PK CO Springs Owner, LLC, a Delaware limited liability company (“CO Springs Owner”), HIT Portfolio I 8PK Columbus Owner, LLC, a Delaware limited liability company (Columbus Owner), HIT Portfolio I 8PK Charleston I 8PK Owner, LLC, a Delaware limited liability company (“Charleston Owner”) and HIT Portfolio I 8PK Atlanta Owner, LCC, a

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Exhibit 10.39

Delaware limited liability company (“Atlanta Owner”), (ii) the sole member of HIT Portfolio I 8PK NTC Owner GP, LLC, a Delaware limited liability company (“8PK Owner GP”) which in turn is the one percent (1%) general partner of HIT Portfolio I 8PK Fayetteville Owner, LP, a Delaware limited partnership (“Fayetteville Owner”), and (iii) the ninety-nine percent (99%) limited partner of Fayetteville Owner;

WHEREAS 8PK TRS Holdco is (i) the sole member of each of HIT Portfolio I 8PK HIL TRS, LLC, a Delaware limited liability company (“8PK HIL TRS”), HIT Portfolio I 8PK MGBL 1000 TRS, LLC a Delaware limited liability company (“MGBL 1000 TRS”), HIT Portfolio I 8PK Atlanta TRS, LLC, a Delaware limited liability company (“Atlanta TRS”), (ii) the sole member of HIT Portfolio I 8PK NTC TRS GP, LLC, a Delaware limited liability company (“8PK NTC TRS”) which in turn is the one percent (1%) general partner of HIT Portfolio I 8PK Fayetteville TRS, LP, a Delaware limited partnership (“Fayetteville TRS”) and HIT Portfolio SAGL TRS, LP, a Delaware limited partnership (“SAGL TRS”; Chattanooga TRS, CO Springs TRS, Columbus TRS, Charleston TRS, MBGL 1000 TRS, Atlanta TRS, Fayetteville TRS and SAGL TRS are individually and collectively, as the context may require, referred to as the “8PK TRS”) and (iii) the ninety-nine percent (99%) limited partner of Fayetteville TRS and SAGL TRS;

WHEREAS, on or after the closing of the Senior Loans, as defined herein, (i) First Mezzanine Borrower intends to, respectively, assign its sole membership interest in MBGL 1000 Owner to 8PK Holdco, (ii) First Mezzanine Borrower and Mezzanine GP intend to assign their ninety-nine percent (99%) limited partner and one percent (1%) general partner interests, respectively, in SAGL Owner to 8PK Holdco and 8PK Owner GP, (iii) LLC Owner will transfer its interest in the applicable 8PK Property, as defined herein and as set forth on Schedule A-2 hereto, to Chattanooga Owner, CO Springs Owner, Columbus Owner, Charleston Owner and Atlanta Owner and (iv) LP Borrower will assign its interest in the applicable 8PK Property, as defined herein and as set forth on Schedule A-2 hereto, to Fayetteville Owner (such assignments and transfers, individually and collectively as the context requires, the “8PK Transfer”);

WHEREAS, Mortgage Borrower owns the fee or ground leasehold (as applicable) interests in the Senior Loan Properties (as herein defined) and the 8PK Owner owns the fee or ground leasehold (as applicable) interests in the 8PK Properties (as herein defined);

WHEREAS, TRS has operating leases for all of the Properties granted by Mortgage Borrowers (the “Operating Leases”) and 8PK TRS has operating leases for all of the 8PK Properties granted by 8PK Owner; and

WHEREAS, the Class A Member and the Class B Member now desire to amend and restate, in its entirety, the LLC Agreement as more particularly set forth herein.

NOW, THEREFORE, in order to carry out the intentions expressed above and in consideration of the mutual agreements hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the Class A Member, the Class B Member and the Special Member hereby agree to amend and restate the

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Exhibit 10.39

LLC Agreement to read in its entirety as follows (as amended and restated herein, the “Agreement”):

ARTICLE 1DEFINITIONS

1.1Definitions. As used in this Agreement, the following terms shall have the meanings set forth below, which meanings shall be applicable equally to the singular and plural of the terms defined:

“8PK Owner” has the meaning set forth in the Recitals; provided, however, that MBGL 1000 Owner shall be deemed a Mortgage Borrower until such time as it consummates the 8PK Transfer and SAGL Owner shall be deemed a Mortgage Borrower until such time as it consummates the 8PK Transfer.

“8PK Properties” means the land and improvements at the locations set forth on Schedule A-1 hereto and “8PK Property” means the land and improvements at each such location, along with all personal property relating thereto and owned or controlled by the 8PK Owner or 8PK TRS (including, without limitation, the operating leases held by 8PK TRS); provided, however, that an 8PK Property shall be deemed a Senior Loan Property until such time as the 8PK Transfer has been consummated with respect to the 8PK Owner and 8PK TRS of such 8PK Property.

“8PK Property Management Agreements” means, collectively, each agreement to manage one or more of the 8PK Properties between the Company or a Subsidiary and a Property Manager; provided that each such agreement (together with any modification thereto) must be approved by the Class A Member (which approval shall not be unreasonably withheld, delayed or conditioned) unless, if such agreement constitutes a Class B Member Affiliate Contract, if and to the extent such agreement is terminable by the Class A Member following the declaration of a Changeover Event without payment of any termination or similar fee (which termination right may be documented in a separate subordination, non-disclosure and attornment agreement with the Class A Member); provided, however, that an 8PK Property Management Agreement shall be deemed a Senior Loan Property Management Agreement until such time as the 8PK Transfer is consummated with respect to all 8PK Property to be managed under such 8PK Property Management Agreement.

“8PK Property Manager” means each manager of an 8PK Property appointed by the Company or a Subsidiary provided that each such manager must be approved by the Class A Member (which approval shall not be unreasonably withheld, delayed or conditioned) and the agreement with such manager complies with the terms set forth in the definition of “8PK Property Management Agreements” above; provided, however, that an 8PK Property Manager shall be deemed a Senior Loan Property Manager until such time as the 8PK Transfer is consummated with respect to all 8PK Property managed by such 8PK Property Manager.

“8PK Transfer” has the meaning set forth in the Recitals.

“8PK TRS” has the meaning set forth in the Recitals.

“A&R LPA” means the Amended and Restated Limited Partnership Agreement of HIT OP, dated and as in effect as of March 31, 2017 (as the same may be amended, restated, modified or supplemented except to the extent any such amendment, restatement, modification or supplement would require the consent of the Class A Member under this Agreement that has not been obtained).

“Accrual Period” means the period from and including a Scheduled Distribution Date to but excluding the next Scheduled Distribution Date, except that the first Accrual Period shall be the period from and including the Original Closing Date to but excluding the first Scheduled Distribution Date thereafter.

“Act” means the Delaware Limited Liability Company Act (6 Del. C. § 18-101 etseq.), as amended from time to time.

“Additional Class B Member Deposit” has the meaning set forth in Section 3.4(h).

“Additional Mezzanine Lender” means, with respect to any Additional Mezzanine Loan, the holder(s), from time to time, of such Additional Mezzanine Loan.

“Additional Mezzanine Loan” means any additional mezzanine loan incurred by a Subsidiary of the Company as an “Approved Mezzanine Loan” in accordance with the terms of the Mortgage Loan Agreement and the First Mezzanine Loan Agreement.

“Additional Mezzanine Loan Agreement” means, with respect to each Additional Mezzanine Loan, the mezzanine loan agreement evidencing such Additional Mezzanine Loan, as the same may be amended, supplemented or modified from time to time.

“Additional Mezzanine Loan Documents” means, with respect to each Additional Mezzanine Loan, the Additional Mezzanine Loan Agreement evidencing such Additional Mezzanine Loan, the notes, pledges, environmental indemnities, guarantees and all other agreements, instruments or documents relating to, evidencing or securing such Additional Mezzanine Loan, as any of the foregoing may be amended, supplemented or modified from time to time.

“Additional Mezzanine Loan Obligations” means the indebtedness evidenced, secured or otherwise governed by the Additional Mezzanine Loan Documents.

“Affiliate” means with respect to any Person, (i) any other Person that directly or indirectly through one or more intermediaries Controls or is Controlled by or is under common Control with such Person and (ii) any other Person owning or controlling twenty-five percent (25%) or more of the outstanding voting securities of, or other ownership interests in, such Person; provided that, notwithstanding the foregoing, each of the following entities shall be deemed an Affiliate of each of the Class B Member and the Guarantors: HIT OP, HIT REIT, and each of their respective Affiliates; provided further that, notwithstanding the foregoing, in no event shall Brookfield or any of its Affiliates be deemed to be an Affiliate of the Class B Member, the Company, any Subsidiary of the Company, HIT REIT or HIT OP under clause (ii) of this definition.

“Agreement” means this Second Amended and Restated Limited Liability Company Agreement of the Company, together with the Schedules attached hereto, as it may hereafter be amended, supplemented or otherwise modified from time to time.

“Allocated Amount” means, with respect to a Property, an amount equal to the portion of the total of the Class A Member’s Initial Capital Contributions allocated to such Property, as set forth on Schedule 1.1(a), which amount shall be increased from time to time in order to reflect any additional Capital Contributions made by the Class A Member with respect to such Property.

“Annual Budget” means the annual budget for the Company and its Subsidiaries (which shall include both an operating budget and a capital expenditure budget) and each of the Properties, on an aggregate and individual Property basis, which annual budget shall set forth, on a month-by-month basis, in reasonable detail, each line item of operating income, operating expenses and capital expenses for the applicable Budget Year.

“Articles Supplementary” means the Articles Supplementary of HIT REIT, dated and as in effect as of March 31, 2017 (as the same may be amended, restated, modified or supplemented except to the extent any such amendment, restatement, modification or supplement would require the consent of the Class A Member under this Agreement that has not been obtained).

“Assignee” means any Person to whom a limited liability company interest in the Company has been Transferred in a Transfer expressly permitted hereunder and who has not been admitted as a Substituted Member.

“Available Cash” means for any period, the excess, if any, of (A) the sum of (i) the amount of all cash receipts during such period of the Company and any Subsidiary thereof, without duplication (to the extent, in the case of amounts received by a Subsidiary that is the First Mezzanine Borrower or one of its Subsidiaries, such cash is permitted by the Senior Loan Documents to be distributed by such Subsidiary to the Company after payment of all expenses of such Subsidiary incurred by such Subsidiary to the extent such expenses are not prohibited by this Agreement or the Senior Loan Documents (collectively the “Permitted Subsidiary Expenses”)) and (ii) any working capital of the Company existing at the start of such period less (B) the sum of (i) all cash amounts payable in such period on account of expenses incurred directly by the Company in accordance with and as permitted by this Agreement (but specifically excluding sums payable to the Class B Member or any Affiliate thereof (except for the Permitted Subsidiary Expenses) unless approved by the Class A Member or permitted hereunder), and (ii) reserves of amounts required for the working capital, capital expenditures and future needs of the Company and its Subsidiaries, including, without limitation, current and future property improvement plans and other franchisor requirements, as established by the Class B Member in its reasonable determination.

“Bad Boy Guaranty” means that certain Bad Boy Guaranty, dated as of the February 27, 2015, made by the Guarantors in favor of the Class A Member.

“Bankruptcy” means, with respect to the affected party, (i) the entry of an order for relief under the Bankruptcy Code, (ii) the admission by such party in writing of its inability to pay its debts as they mature, (iii) the making by it of an assignment for the benefit of creditors, (iv) the filing by it of a petition in bankruptcy or a petition for relief under the Bankruptcy Code or any other applicable federal or state bankruptcy or insolvency statute or any similar law, (v) the application by such party for the appointment of a receiver for the assets of such party, (vi) the filing of an involuntary petition seeking liquidation, reorganization, arrangement or readjustment of its debts or any other similar relief under the Bankruptcy Code or any other federal or state insolvency law that is not discharged, stayed or dismissed within sixty (60) days or (vii) the imposition of a judicial or statutory lien on all or a substantial part of its assets that is not discharged, stayed or dismissed within sixty (60) days. With respect to a Member, the foregoing definition of “Bankruptcy” is intended to replace and shall supersede and replace the definition of “Bankruptcy” set forth in Sections 18-101(1) and 18-304 of the Act.

“Bankruptcy Code” means Title 11 of the United States Code, as amended.

“Brookfield” means Brookfield Asset Management, Inc. and its successors and assigns.

“Brookfield Closing Date” means March 31, 2017.

“Brookfield Fund Entities” means Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC, a Delaware limited liability company, BSREP II Hospitality II Special GP OP LLC, a Delaware limited liability company, Brookfield Strategic Real Estate Partners II-A L.P., a Delaware limited partnership, Brookfield Strategic Real Estate Partners II-A (ER) L.P., a Delaware limited partnership, Brookfield Strategic Real Estate Partners II-B L.P., a Delaware limited partnership, Brookfield Strategic Real Estate Partners II-C L.P., a Delaware limited partnership, Brookfield Strategic Real Estate Partners II-C (ER) L.P., a Delaware limited partnership, Brookfield Strategic Real Estate Partners II BPY Borrower L.P., a Delaware limited partnership, and BSREP II BIV BPY Cayman L.P., a limited partnership organized under the laws of the Cayman Islands.

“Brookfield Obligors” means Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC, a Delaware limited liability company, and BSREP II Hospitality II Special GP OP LLC, a Delaware limited liability company.

“Budget Year” means, with respect to the Fiscal Year 2015 or any Fiscal Year thereafter, the period beginning on January 1 and ending on December 31 of such year.

“Business Day” means any day other than a Saturday, a Sunday or a legal holiday on which national banks are not open for general business in the State of New York.

“Buy/Sell Response Notice” has the meaning set forth in Section 3.4.

“Capital Contribution” when used with respect to any Member means the aggregate amount of capital contributed (including any amounts deemed contributed) to the Company by such Member in accordance with Article 6.

“Capital Event” means: (i) any sale, transfer or other disposition or liquidation of the Properties or any portion thereof, or any direct or indirect interest therein owned by the Company or any Subsidiary or any portion thereof (including, in each case, a foreclosure sale or deed‑in‑lieu thereof); (ii) any Casualty; (iii) any Condemnation; or (iv) any financing or refinancing of all or any of the Properties or any direct or indirect interest therein owned by the Company or any Subsidiary or all of any of the Senior Loans.

“Capital Event Proceeds” means Net Sales Proceeds, Net Disposition Proceeds and Net Financing Proceeds, collectively.

“Cash Management Account” has the meaning set forth in Section 5.5.

“Cash Management Agreement” means that certain Deposit Account Control Agreement, dated as of February 27, 2015, among Wells Fargo Bank, National Association, the Company, the Class A Member and the Class B Member, as the same may be amended, supplemented or otherwise modified from time to time with the approval of the Class A Member.

“Cash Management Bank” has the meaning set forth in Section 5.5.

“Casualty” means, with respect to any Property, any fire, explosion, flood, collapse or other casualty affecting all or any portion of such Property.

“Certificate” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on October 7, 2014, as the same may hereafter be amended and/or restated from time to time.

“Changeover Event” means the occurrence of any of the following events:

(1)any failure (regardless of the availability of funds) of the Company to distribute on any Scheduled Distribution Date the full Class A Return for the Accrual Period ending on that Scheduled Distribution Date, it being understood that if such a failure occurs, the Class A Return Rate used to calculate any amounts then owing to the Class A Member or that become due to the Class A Member at any time following such failure will be the Increased Rate, with the Increased Return resulting from such failure accruing interest at the Increased Rate until paid and such additional interest being due on the next Scheduled Distribution Date; provided, however, that with respect to each of the first two times that the Company fails to pay the Class A Return in full on a Scheduled Distribution Date only, such failure to pay shall not constitute a Changeover Event hereunder if the Company pays such amount in full (together with interest thereon at the Increased Rate) to the Class A Member within five (5) Business Days following the Class A Member’s delivery of written notice to the Class B Member of such failure to pay;

(2)any failure of the Class B Member to contribute any Protective Capital to the Company or to reimburse the Class A Member for contributions of Protective Capital made by the Class A Member, in either case within the time set forth in, and otherwise in accordance with Section 6.2 hereof; provided that such failure of the Class B Member to contribute Protective Capital pursuant to Section 6.2(a) hereof shall not constitute a Changeover Event unless either (A) such failure is not remedied by the Class B Member within sixty (60) days after the Class A Member’s written notice to the Class B Member of such failure or (B) if the Class A Member funds any Protective Capital pursuant to Section 6.2(a) hereof, then the Class B Member shall have a period of sixty (60) days following the funding of such Protective Capital to cure such default by reimbursing the full amount of such Protective Capital (together with a return thereon at the Increased Rate) to the Class A Member;

(3)the failure (regardless of the availability of funds) of the Company or the Class B Member (a) to redeem or cause to be redeemed the Class A Member’s Interest in full, and to pay in full the Redemption Price, on or before the Mandatory Redemption Date or (b) to pay to the Class A Member in full the Release Payment for any Property upon the sale or other disposition of any Property (or any direct or indirect interest therein owned by any of the Company or its Subsidiaries) or (c) to pay to the Class A Member in full the QCR Redemption Amount in respect of any Qualified Capital Raise in accordance with the provisions hereof or (d) to pay to the Class A Member all of the Net Financing Proceeds from the incurrence of any Additional Mezzanine Loan by the Company or any of its Subsidiaries upon such incurrence or (e) to pay to the Class A Member all of the Capital Event Proceeds from any other Capital Event affecting any Property ((but, in the event such Capital Event only affects certain Properties (as opposed to all Properties), only in an amount up to the Release Payment for such Property)) upon the occurrence of such Capital Event;

(4)the failure (regardless of the availability of funds) of the Company or the Class B Member to pay the Class A Member any amounts not described in clause (1), (2) or (3) above when due and payable hereunder unless such payment is made within ten (10) Business Days after notice from the Class A Member that such payment is delinquent, provided, however, that interest at the Increased Rate will accrue on any such amounts not paid when due, irrespective of the amount owed, from the day first due until paid in full;

(5)if the Company or any Subsidiary takes any action that constitutes a breach of Section 3.1(b);

(6)if the Company fails to comply with any of the covenants in any of Sections 5.5(a), 5.6, 5.10 (unless caused by the Senior Lender’s failure to pay taxes or insurance premiums despite there being sufficient amounts in the reserves held by the Senior Lender for such purposes), 5.15(a), 5.17 or Schedule 5.15(a) hereof, or fails to maintain the insurance required by Section 5.7; provided, however, that with respect to a violation or breach of any of the covenants set forth in Section 5.15(a) or Schedule 5.15(a), such violation or breach shall not constitute a Changeover Event in the event that (1) such violation or breach is not intentional, (2) such violation or breach is immaterial, (3) such violation or breach shall be remedied in a timely and expedient manner and in any event within not more than sixty (60) days, and (4) within fifteen (15) Business Days following the request of the Class A Member, but not prior to the date on which such violation or breach shall have been remedied in accordance with the immediately foregoing clause (3), the Company delivers to the Class A Member (I) a new non-consolidation opinion or (II) a modification of a non-consolidation opinion that was previously delivered to the Class A Member to the effect that such breach or violation shall not in any way impair, negate or adversely change the opinions rendered in such opinion, which opinion or opinion modification and any counsel delivering such opinion or opinion modification shall be acceptable to the Class A Member in its reasonable discretion;

(7)any Prohibited Transfer occurs or if the Class B Member ceases to be Controlled, directly or indirectly, by HIT OP, or if HIT OP ceases to be Controlled, directly or indirectly by HIT REIT, or if a REIT Change of Control occurs;

(8)if, as of the third (3rd) anniversary of the Original Closing Date, the Company has failed to make payments to the Class A Member in respect of its Unrecovered Capital in an amount equal to or greater than fifty percent (50%) of the Initial Capital Contributions made by the Class A Member;

(9)if, as of the fourth (4th) anniversary of the Original Closing Date, the Company has failed to make payments to the Class A Member in respect of its Unrecovered Capital in an amount equal to or greater than one hundred percent (100%) of the Initial Capital Contributions made by the Class A Member;

(10)any representation or warranty made by the Class B Member in Section 2.10 of this Agreement or any other representation made by the Class B Member or by any Guarantor in any other Transaction Document shall be untrue, incorrect or misleading in any material respect on or as of the date made; provided, however, that as to any such untrue, incorrect or misleading representation or warranty which (a) was unintentionally made to the Class A Member and (b) which can be made true and correct by action of the Class B Member, the Class B Member shall have a period of thirty (30) days following written notice thereof to the Class B Member to undertake and complete all action necessary to make such representation or warranty, true and correct in all material respects; provided, further, that if the same cannot be cured within such thirty (30) day period, if the Class B Member commences to take action to cure such breach within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, the Class B Member shall have such additional time as is reasonably necessary to effect such cure, but in no event in excess of an additional ninety (90) days;

(11)the occurrence of any default in any material respect or of any material nature by the Class B Member, any Guarantor or any Affiliate of any of them in the performance of any obligation under any of the Transaction Documents (other than any default described elsewhere in this definition of “Changeover Event”), if such default shall continue for thirty (30) days after notice of such default; provided, however, that if such default is a default which cannot be cured by the payment of a sum of money and is otherwise susceptible of cure but cannot reasonably be cured within such 30-day period, and provided further that the Class B Member shall have commenced to cure such default within such 30-day period and shall thereafter diligently and expeditiously proceed to cure the same, such 30-day period shall be extended for such time as is reasonably necessary for the Class B Member in the exercise of due diligence to cure such default, such additional period not to exceed ninety (90) days;

(12)the occurrence of any “event of default” (i.e., after applicable grace and cure periods, if any) arising pursuant to any of the Senior Loan Documents or pursuant to any loan document evidencing or relating to any subsequent financing entered into by the Company or any of its Subsidiaries, or the failure to pay the Senior Loans or any such subsequent financing at the stated or accelerated maturity of the Senior Loans or such subsequent financing (whether such accelerated maturity occurs by declaration of the lender or otherwise);

(13)if (a) the Company, the Class B Member, any Guarantor or any Subsidiary commences any action or proceeding for the purpose of asserting or alleging that any provision of this Agreement or any other Transaction Document is not enforceable by the Class A Member in accordance with its terms, or (b) it is determined by any court or other tribunal or governmental authority that any provision of this Agreement or any Transaction Document is not in full force and effect or valid or enforceable by the Class A Member in accordance with its terms to the extent that such provision relates to the Class A Member’s right to receive amounts otherwise payable or due hereunder (other than to the extent such determination is that such amounts are usurious under applicable law), the priority of any such amounts and/or the right of the Class A Member to exercise any of its rights or remedies hereunder; provided, however, that this clause (b) shall not be applicable to the extent that such determination is made solely due to the Class A Member’s failure, as of the Original Closing Date, to obtain any governmental order, consent, approval or authorization (or failure, as of the Original Closing Date, to make any registration or other filing with any governmental authority) in connection with its receipt of its Interest on the Original Closing Date;

(14)if the Class B Member or any Guarantor shall, or shall cause or permit the Company or any of its Subsidiaries to, make an assignment for the benefit of creditors or admit, in any legal proceeding, its inability to pay its debts as they become due or generally not be paying its debts as they become due;

(15)if any receiver, liquidator or trustee shall be appointed for the Class B Member, any Guarantor, the Company or any Subsidiary, or if a Bankruptcy occurs with respect to any such Person, or if any proceeding shall be instituted for the dissolution or liquidation of any such Person or its assets;

(16)intentionally omitted;

(17)a final, non-appealable, uninsured judgment for the payment of money in excess of $5,000,000 shall be rendered against the Company by a court of competent jurisdiction and is not satisfied in full within ten (10) days;

(18)the occurrence of a Liability Indemnification Event under a Guaranty that remains unpaid for ten (10) Business Days after written notice thereof, provided that interest at the Increased Rate will accrue on any such amounts not paid when due, irrespective of the amount owed, from the day first due until paid in full;

(19)the occurrence of any “event of default” (i.e., after applicable grace and cure periods, if any) arising pursuant to any ground lease to which the Company or any Subsidiary is a party to the extent such event of default could reasonably be expected to have a Material Adverse Effect;

(20)the occurrence of any “event of default” (i.e., after applicable grace and cure periods, if any) arising pursuant to any franchise agreement to which the Company or any Subsidiary is a party to the extent such event of default could reasonably be expected to have a Material Adverse Effect, if such default shall continue for sixty (60) days after notice of such default or, if (x) such default is not reasonably susceptible of being cured within such 60-day period, (y) the Company is diligently and continuously attempting to cure such breach and (z) such breach does not cause any imminent danger to one or more of the Properties or of termination of such franchise agreement by the franchisor as a result of the continuation of such default without cure thereof, such longer period as is reasonably necessary to cure such default using diligent efforts, provided that such cure period in the aggregate shall not exceed one hundred eighty (180) days;

(21)if the Class B Member, any Guarantor or any of their respective Affiliates misappropriates the funds of the Company or any Subsidiary or the funds of any Affiliate of the Company or otherwise commits a fraudulent act in connection with the business of the Company or any Subsidiary or the business of any Affiliate of the Company, or if the Class B Member, any Guarantor or any of their respective Affiliates is convicted of a felony (whether or not such felony is related to the Company or any Subsidiary) or commits an act of dishonesty, willful misconduct or gross negligence, or breaches a fiduciary duty, in connection with the Company or any Subsidiary or in connection with its activities as a Member (if applicable) or the performance of its duties hereunder or under any Transaction Documents; and/or

(22)if any of the assumptions contained in any non-consolidation opinion delivered to the Class A Member in connection with its investment in the Company, or in any other non-consolidation opinion delivered subsequently to the Class A Member’s investment in the Company, is or becomes untrue in any material respect.

“Class A Interest Sale Price” has the meaning set forth in Section 3.4.

“Class A Member” has the meaning set forth in the Preamble.

“Class A Member Deposit” has the meaning set forth in Section 3.4(d).

“Class A Member Protective Advance” has the meaning set forth in Section 6.2.

“Class A Return” means, with respect to any Accrual Period, an amount equal to the product of (i) the weighted average outstanding Unrecovered Capital of the Class A Member during such period multiplied by (ii) the Class A Return Rate for such Accrual Period, multiplied by (iii) a fraction the numerator of which is the number of days in such Accrual Period and the denominator of which is 365.

“Class A Return Rate” means, (i) with respect the first eighteen (18) months following the Original Closing Date, a rate equal to 7.50% per annum, and (ii) thereafter, a rate equal to 8.00% per annum; provided, however, that (i) if any Changeover Event has occurred, the Class A Return Rate applicable in calculating any Class A Return shall automatically (without any action required by the Class A Member) increase to the Increased Rate and (ii) the rate that will accrue on any Protective Capital funded by the Class A Member shall be the Increased Rate.

“Class B Interest Sale Price” has the meaning set forth in Section 3.4.

“Class B Member” has the meaning set forth in the Preamble.

“Class B Member Affiliate Contract” means any contract or other agreement between or among the Company and/or any Subsidiary, on the one hand, and the Class B Member, any Guarantor or any of their respective Affiliates, on the other hand, regardless of whether there are other Persons party to such contract or other agreement.

“Class B Member Deposit” has the meaning set forth in Section 3.4(h).

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, or any corresponding provision(s) of succeeding law and/or regulation.

“Collateral” means all tangible and intangible property in respect of which a security interest or pledge is granted under the Senior Loan Documents.

“Company” means HIT Portfolio I Holdco, LLC, a Delaware limited liability company, as said company from time to time hereafter may be constituted; unless the context clearly requires otherwise, all references herein to the “Company” include the Company and each Subsidiary.

“Company Assets” means all right, title and interest of the Company in and to all or any portion of the assets of the Company and any property (real, personal, tangible or intangible) or estate acquired in exchange therefor or in connection therewith.

“Condemnation” means any taking or voluntary conveyance during the term hereof of all or any part of any Property or any interest therein or right accruing thereto or use thereof, as the result of, or in settlement of, any condemnation or other eminent domain proceeding by any Governmental Authority, whether or not the same shall actually have been commenced.

“Consent Letters” means either or both of (as the context may require) (i) that certain letter agreement, dated March 31, 2017, by and among HIT OP, HIT REIT, the Class B Member and the Class A Member with respect to the Brookfield investment and related matters, (ii) that certain letter agreement, dated March 31, 2017, by and among HIT OP, HIT REIT, the Class B Member and the Class A Member with respect to a potential refinancing of the Original Mortgage Loan and related matters, and (iii) that certain letter agreement, dated April 28, 2017, by and among HIT OP, HIT REIT, the Class B Member and the Class A Member with respect to the incurrence of the Senior Loan and related matters.

“Contingent Obligation” means any obligation of any Subsidiary or the Company directly or indirectly guaranteeing any indebtedness or other obligation of any other Person in any manner.

“Control”, when used with respect to any Person, means the power to direct the management and policies of such Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” have meanings correlative to the foregoing.

“Delaware Court” has the meaning set forth in Section 12.9.

“Deposit” has the meaning set forth in Section 3.4(d).

“Effective Date” means the date of this Agreement set forth in the introductory paragraph hereto.

“Election Notice” has the meaning set forth in Section 3.4(a).

“Environmental Claim” means any written notice, claim, proceeding, investigation, demand or other communication by any Person or Governmental Authority alleging or asserting liability with respect to any Subsidiary or any Property arising out of, based on or resulting from (i) the presence, use or release of any Hazardous Substance, (ii) any fact, circumstance, condition or occurrence forming the basis of any violation, or alleged violation, of any Environmental Law, or (iii) any alleged injury or threat of injury to property, health or safety or to the environment caused by Hazardous Substances.

“Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement, dated as of February 27, 2015, by the Guarantors for the benefit of the Class A Member.

“Environmental Laws” has the meaning assigned to such term in the Environmental Indemnity Agreement.

“Equity Members” means the Class B Member and the Class A Member.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated thereunder.

“ERISA Affiliate, ” at any time, means each trade or business (whether or not incorporated) that would, at the time, be treated together with the Company or any of its Subsidiaries as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.

“Executive Order” has the meaning set forth in Schedule 5.15(b).

“Existing Mortgage Borrowers” has the meaning set forth in the Recitals.

“First Mezzanine Borrower” has the meaning set forth in the Recitals.

“First Mezzanine Lender” means the holder(s), from time to time, of the First Mezzanine Loan.

“First Mezzanine Loan” means that certain loan in the original principal amount of $110,000,000.00 made by Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp., and JPMorgan Chase Bank, National Association, as the original First Mezzanine Lender, to HIT Portfolio I Mezz, LP, a Delaware limited partnership.

“First Mezzanine Loan Agreement” means that certain Mezzanine Loan Agreement, dated as April 28, 2017, between HIT Portfolio I Mezz, LP, a Delaware limited partnership, HIT Portfolio I TRS Holdco, LLC and the original First Mezzanine Lender, as the same may be amended, supplemented or modified from time to time.

“First Mezzanine Loan Documents” means the First Mezzanine Loan Agreement, the notes, pledges, environmental indemnities, guarantees and all other agreements, instruments or documents relating to, evidencing or securing the First Mezzanine Loan including those documents listed on Schedule 1.1(c), as any of the foregoing may be amended, supplemented or modified from time to time.

“First Mezzanine Loan Obligations” means the indebtedness evidenced, secured or otherwise governed by the First Mezzanine Loan Documents.

“Fiscal Year” means the fiscal year of the Company, which shall be the calendar year; but upon termination of the Company, “Fiscal Year” shall mean the period from the end of the last preceding Fiscal Year to the date of such termination.

“Fundamental Decision” has the meaning set forth in Section 3.3(g).

“Governmental Authority” means any court, board, agency, commission, office or authority of any nature whatsoever of or for any governmental unit (federal, state, county, district, municipal, city or otherwise), whether now or hereafter in existence.

“GS Group” means The Goldman Sachs Group, Inc., a Delaware corporation, together with its successors and assigns by merger, consolidation and/or sale of all or substantially all of its assets.

“Guarantees” means, collectively, the Mandatory Redemption Guaranty and the Bad Boy Guaranty and “Guaranty” shall mean either of them.

“Guarantors” means each of HIT OP and HIT REIT.

“Hazardous Substances” has the meaning assigned to such term in the Environmental Indemnity Agreement.

“HIT OP” has the meaning set forth in the Recitals.

“HIT REIT” has the meaning set forth in the Recitals.

“Increased Rate” means a rate per annum calculated on a cumulative basis and compounded monthly if not paid currently, equal to the sum of (i) the then-applicable Class A Return Rate plus (ii) five percent (5%).

“Increased Return” means any amount paid or due and payable to the Class A Member as a result of an increase in the Class A Return Rate to the Increased Rate.

“Indebtedness” of a Person, at a particular date, means the sum (without duplication) at such date of (a) indebtedness or liability for borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other similar instruments; (c) obligations for the deferred purchase price of property or services (including trade obligations); (d) obligations under letters of credit; (e) obligations under acceptance facilities; (f) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or otherwise to assure a creditor against loss; and (g) obligations secured by any Liens voluntarily granted on such Person’s property, whether or not the obligation have been assumed by such Person.

“Initial Class B Member Deposit” has the meaning set forth in Section 3.4(c).

“Insurance Requirements” means, collectively, (i) all material terms of any insurance policy required pursuant to this Agreement and (ii) all material regulations and then-current standards applicable to or affecting any Property or any part thereof or any use or condition thereof, which may, at any time, be recommended by the Board of Fire Underwriters, if any, having jurisdiction over any Property, or such other body exercising similar functions.

“Interest” means, with respect to any Member, the entire limited liability company interest of that Member in the Company, including the right of such Member to any and all benefits to which a Member may be entitled as provided in this Agreement, together with the obligations of such Member to comply with all the terms and provisions of this Agreement.

“Investment Company Act” has the meaning set forth in Section 2.11(c).

“IRS” means the Internal Revenue Service and any successor agency or entity thereto.

“Legal Requirements” means:

(i)all governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting the Company, any Guarantor, any Subsidiary, the Class B Member or any Property or any part thereof or the construction, ownership, use, alteration or operation thereof or any part thereof (whether now or hereafter enacted and in force),

(ii)all permits, licenses and authorizations and regulations relating thereto, and

(iii)all covenants, conditions and restrictions contained in any instruments at any time in force (whether or not involving Governmental Authorities) affecting any Property or any part thereof which, in the case of this clause (iii), require repairs, modifications or alterations in or to any Property or any part thereof, or in any material way limit or restrict the existing use and enjoyment thereof.

“Liability Indemnification Event” means any event or occurrence that entitles the Class A Member to a payment under a Guaranty.

“Lien” means any mortgage, deed of trust, lien (statutory or other), pledge, hypothecation, assignment, preference, priority, security interest, or any other encumbrance or charge on or affecting any Property or Collateral or any portion thereof, or any interest therein (including, without limitation, any conditional sale or other title retention agreement, any sale-leaseback, any financing lease having substantially the same economic effect as any of the foregoing, the filing of any financing statement or similar instrument under the Uniform Commercial Code or comparable law of any other jurisdiction, domestic or foreign, and mechanics’, materialmen’s and other similar liens and encumbrances).

“Lockout Expiration Date” has the meaning set forth in Section 9.2.

“Managing Member” means, initially, the Class B Member, provided, that if for any reason the Class B Member ceases to be the Managing Member pursuant to the terms hereof, the term “Managing Member” shall thereafter mean the Class A Member or such other Person as may be so designated by the Class A Member in its sole discretion. The Managing Member is hereby designated as a “manager” of the Company within the meaning of Section 18-101(10) of the Act.

“Mandatory Redemption Date” means the earlier of (i) the date on which a Changeover Event first occurs, and (ii) August 1, 2019.

“Mandatory Redemption Guaranty” means that certain Mandatory Redemption Guaranty, dated as of February 27, 2015, made by the Guarantors in favor of the Class A Member.

“Material Adverse Effect” means a material adverse effect on (i) the use, operation, financial performance or prospects or value of the Company and its Subsidiaries taken as a whole or of the Properties taken as a whole, (ii) the current or future financial position or results of operations or business of the Company and its Subsidiaries taken as a whole, (iii) the ability of the Class A Member to enforce any Transaction Document or (iv) the ability of the Company, any Guarantor or the Class B Member to perform its obligations under any Transaction Document.

“Member” means each of the Class B Member, the Class A Member and the Company’s Special Member and any additional Persons hereafter admitted as a member of the Company in accordance with the provisions of this Agreement, for so long as such Person shall be a member of the Company and any transferee of such Person permitted hereunder and admitted as a member of the Company in accordance with Section 9.5, and “Members” shall mean such Persons, collectively.

“Mortgage Borrower” has the meaning set forth in the Recitals.

“Mortgage Lender” means the holder(s), from time to time, of the Mortgage Loan.

“Mortgage Loan” means that certain loan in the original principal amount of $805,000,000.00 made by Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, as, collectively, the original Mortgage Lender, to the Mortgage Borrower.

“Mortgage Loan Agreement” means that certain Loan Agreement, dated as of April 28, 2017, among the Mortgage Borrower, TRS, Deutsche Bank AG, New York Branch, Citigroup Global Markets Realty Corp. and JPMorgan Chase Bank, National Association, as, collectively, the original Mortgage Lender, as the same may be subsequently amended, supplemented or modified from time to time.

“Mortgage Loan Documents” means the Mortgage Loan Agreement, the notes, mortgages, deeds of trust, assignments of leases, pledges, environmental indemnities, guarantees and all other agreements, instruments or documents relating to, evidencing or securing the Mortgage Loan including those documents listed on Schedule 1.1(b), as any of the foregoing may be amended, supplemented or modified from time to time.

“Mortgage Loan Obligations” means the indebtedness evidenced, secured or otherwise governed by the Mortgage Loan Documents.

“Net Disposition Proceeds” means Casualty or Condemnation proceeds not applied to restoring, repairing, replacing or rebuilding one or more Properties or, with respect to the Senior Loan Properties, retained by the Senior Lender under the Senior Loan Documents.

“Net Financing Proceeds” has the meaning set forth in Section 8.2(b).

“Net Sale Proceeds” has the meaning set forth in Section 8.2(a).

“New York Court” has the meaning set forth in Section 12.9.

“Offer Price” has the meaning set forth in Section 3.4.

“Original Closing Date” means February 27, 2015.

“Organizational Document” means with respect to any Person (i) in the case of a corporation, such Person’s certificate of incorporation and by-laws, and any shareholder agreement, voting trust or similar arrangement applicable to any of such Person’s authorized shares of capital stock or the holders thereof, (ii) in the case of a limited partnership, such Person’s certificate of limited partnership, limited partnership agreement and any voting trusts or similar arrangements applicable to its partners or any of its partnership interests, (iii) in the case of a limited liability company, such Person’s certificate of formation or certificate of organization, limited liability company agreement and any other document affecting the rights or duties of managers or holders of limited liability company interests or (iv) in the case of any other legal entity, such Person’s organizational documents and all other documents establishing or affecting the duties or rights of holders of equity interests in such Person.

“Original LLC Agreement” has the meaning set forth in the Recitals.

“Percentage Interest” means, with respect to any Member, initially, the percentage following such Member’s name on Schedule 6.1.

“Permitted Transfer” has the meaning assigned to it in Section 9.1(a).

“Person” means any individual, partnership, corporation, limited liability company, trust or other legal entity.

“Plan” means an employee benefit plan (i) which is maintained for employees of Company or its Subsidiaries or any ERISA Affiliate and which is subject to Title IV of ERISA or (ii) with respect to which Company or its Subsidiaries or any ERISA Affiliate could be subjected to any liability under Title IV of ERISA (including Section 4069 of ERISA).

“Plan Assets” means assets of any Plan, including any employee benefit plan subject to Part 4, Subtitle A, Title I of ERISA.

“Prohibited Person” has the meaning set forth in Schedule 5.15(b).

“Prohibited Transfer” means (i) any violation of Section 5.17 hereof, and (ii) any Transfer of the Class B Member’s Interest or any direct or indirect equity interest in the Class B Member in violation of the terms hereof.

“Properties” means, collectively, the 8PK Properties and the Senior Loan Properties.

“Property Management Agreements” means, collectively, the 8PK Property Management Agreements and the Senior Loan Property Management Agreements.

“Property Manager” means, collectively, the 8PK Property Managers and the Senior Loan Property Managers.

“Protective Capital” has the meaning set forth in Section 6.2.

“Qualified Capital Raise” means the issuance of interests in HIT REIT or any subsidiary of HIT REIT (excluding any such issuance completed on or prior to the Original Closing Date and in respect of amounts due under the Sale Agreement as of the Original Closing Date).

“QCR Redemption Amount” means, with respect to each Qualified Capital Raise, twenty-seven and nineteen hundredths percent (27.19%) of the gross amount of proceeds received by the issuer from such Qualified Capital Raise; provided, however, that in no event shall the aggregate QCR Redemption Amounts payable to the Class A Member exceed $271, 880, 000 during any twelve-month period.

“Redemption Price” means, as of any date, an amount equal to the sum of (i) the Unrecovered Capital as of such date plus (ii) the accrued and unpaid Class A Return as of such date plus (iii) any other amounts then due or payable to the Class A Member hereunder or under the other Transaction Documents.

“Redemption Right” has the meaning set forth in Section 8.3.

“REIT Change of Control” means, subject to the next sentence, the happening of any of the following: (i) the consummation of a merger of HIT REIT into or consolidation of HIT REIT with another entity, or the closing of a sale or other disposition of all or substantially all of HIT REIT’s assets (in one or a substantially concurrent or otherwise related series of transactions); provided, however, that a REIT Change in Control under this clause (i) shall not be deemed to have occurred by reason of a transaction, or a substantially concurrent or otherwise related series of transactions, upon the completion of which the beneficial ownership of securities representing 50% or more of the combined voting power of HIT REIT, the surviving entity or entity directly or indirectly controlling HIT REIT or the surviving entity, as the case may be, is held by the same Persons as held the securities representing the beneficial ownership of the combined voting power of HIT REIT immediately prior to the transaction or the substantially concurrent or otherwise related series of transactions; or (ii) the “beneficial ownership” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934 (the “Exchange Act”) of securities representing greater than 50% of the combined voting power of HIT REIT is held by any “person” or “group” as defined in Sections 13(d) and 14(d) of the Exchange Act; or (iii) any “person” or “group” as defined in Sections 13(d) and 14(d) of the Exchange Act shall have obtained the right or power (whether or not exercised) to elect or appoint a majority of the members of the board of directors (or similar governing body) of HIT REIT; or (iv) individuals who at March 31, 2017 constituted the board of directors of HIT REIT (together with (A) any new directors whose election by the board of directors of HIT REIT or whose nomination for election by the stockholders of HIT REIT was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of such period or whose elections or nomination for election was previously so approved or (B) any two new directors at any one time designated from time to time by an Affiliate of Brookfield) cease for any reason other than death or disability to constitute a majority of the directors then in office. Notwithstanding anything in this definition to the contrary, a “REIT Change of Control” (a) shall not include the exercise of any rights or remedies granted to the holder of the Redeemable Preferred Share (as defined in the Articles Supplementary), except as set forth in clause (c)(iii) below, as those rights and remedies are expressly set forth in the Articles Supplementary (without giving effect to any additional rights or remedies granted after the Brookfield Closing Date; provided that no inference shall be drawn from the exclusion of any such rights or remedies as to whether or not the same constitute or result in a REIT Change of Control), provided that the holder of the Redeemable Preferred Share is and at all times Controlled by Brookfield and Brookfield Controls the exercise of the rights of the Redeemable Preferred Share, (b) shall not include the exercise of any rights or remedies granted to the holder of the Class C Units (as defined in the A&R LPA) as those rights and remedies are expressly set forth in the A&R LPA (without giving effect to any additional rights or remedies granted after the Brookfield Closing Date; provided that no inference shall be drawn from the exclusion of any such rights or remedies as to whether or not the same constitute or result in a REIT Change of Control), provided that Brookfield at all times directly or indirectly Controls the exercise of the governance rights of the Class C Unit Holders set forth in the A&R LPA, if any remain in effect, and (c) shall include, without limiting the provisions of the immediately preceding sentence, any or all of (i) a transfer of the Redeemable Preferred Share to an entity that is not Controlled by Brookfield or a transfer of direct or indirect interests in the holder of the Redeemable Preferred Share or any other event or action, in each case, that results in Brookfield not Controlling the exercise of the rights of the Redeemable Preferred Share, (ii) a direct or indirect transfer of any of the Class C Units, any direct or indirect interest in any holder of the Class C Units or any other event or action, in each case, that results in Brookfield not directly or indirectly Controlling the exercise of the governance rights of the Class C Unit Holders set forth in the A&R LPA, if any remain in effect, or (iii) the appointment by Brookfield or any of its Affiliates of a majority of the board of directors of HIT REIT.

“Related Person” means with respect to any Person (i) an Affiliate of such Person, (ii) any officer, director, employee, agent, representative, shareholder, partner, member, manager, beneficial owner, servant, contractor or subcontractor of such Person or any Affiliate of such Person and (iii) any Person who controls any of the foregoing.

“Release Payment” means, with respect to the sale or other disposition of any Property, or any direct or indirect interest owned therein by the Company or any Subsidiary, (a) (i) 110% of the aggregate Allocated Amount for such Property less (ii) the amount of any distributions in respect of the Unrecovered Capital of the Class A Member that were previously made to the Class A Member with Net Sale Proceeds, Net Disposition Proceeds and/or Net Financing Proceeds from such Property plus (b) in the case of the 8PK Properties only, fifty percent (50%) of the aggregate Net Sale Proceeds, Net Disposition Proceeds and/or Net Financing Proceeds from such Property in excess of the amount specified in clause (a) of this definition with respect to such Property.

“Sale Agreement” has the meaning set forth in the Recitals.

“Scheduled Distribution Date” means in any calendar month the first (1st) day of such month or, if such day is not a Business Day, the immediately succeeding Business Day; provided, however, that in the event the payment date under the Senior Loan Documents should be hereafter modified, the Scheduled Distribution Date shall also be modified so that the Scheduled Distribution Date hereunder is also the payment date under the Senior Loan Documents.

“Scheduled Redemption Notice” has the meaning set forth in Section 5.5.

“Securities Act” has the meaning set forth in Section 2.11(c).

“Sellers” has the meaning set forth in the Recitals.

“Senior Lender” means, individually or collectively as the context may require, Mortgage Lender, First Mezzanine Lender and each Additional Mezzanine Lender.

“Senior Loans” means, individually or collectively as the context may require, the Mortgage Loan, the First Mezzanine Loan and each Additional Mezzanine Loan.

“Senior Loan Documents” means, individually or collectively as the context may require, the Mortgage Loan Documents, the First Mezzanine Loan Documents and the Additional Mezzanine Loan Documents.

“Senior Loan Properties” means the land and improvements at the locations set forth on Schedule A hereto and “Senior Loan Property” means the land and improvements at each such location, along with all personal property relating thereto and owned or controlled by the Mortgage Borrower or TRS (including, without limitation, the operating leases held by TRS).

“Senior Loan Property Management Agreements” means, collectively, each agreement to manage one or more of the Senior Loan Properties between the Company or a Subsidiary and a Property Manager; provided that each such agreement (together with any modification thereto) must be approved by the Class A Member (which approval shall not be unreasonably withheld, delayed or conditioned) unless (i) such agreement has been approved by the Senior Lender pursuant to the terms of the Senior Loan Documents or otherwise conforms with the terms of the Senior Loan Documents and (ii) if such agreement constitutes a Class B Member Affiliate Contract, if and to the extent such agreement is terminable by the Class A Member following the declaration of a Changeover Event without payment of any termination or similar fee (which termination right may be documented in a separate subordination, non-disclosure and attornment agreement with the Class A Member); provided, further, that if the Senior Lender receives a subordination or other agreement from the manager and/or any sub-manager, then such manager and/or sub-manager shall have entered into an agreement for the benefit of the Class A Member in substantially the same form and substance as the subordination or other agreement provided to the Senior Lender.

“Senior Loan Property Manager” means each manager of a Senior Loan Property appointed by the Company or a Subsidiary provided that each such manager must be approved by the Class A Member (which approval shall not be unreasonably withheld, delayed or conditioned) unless such appointment (i) has been approved by the Senior Lender pursuant to the terms of the Senior Loan Documents or otherwise complies with the terms of the Senior Loan Documents and (ii) the agreement with such manager complies with the terms set forth in the definition of “Senior Loan Property Management Agreements” above.

“Senior Obligations” means, individually or collectively as the context may require, the Mortgage Loan Obligations, the First Mezzanine Loan Obligations and the Additional Mezzanine Loan Obligations.

“Significant Decision” has the meaning set forth in Section 3.6.

“SPA” means that certain Securities Purchase, Voting and Standstill Agreement, by and among HIT REIT, HIT OP and Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC, dated and as in effect as of January 12, 2017 (as the same may be amended, restated, modified or supplemented except to the extent any such amendment, restatement, modification or supplement would require the consent of the Class A Member under this Agreement that has not been obtained).

“Special Form” has the meaning set forth in Section 5.7(a).

“Special Member” means (i) with respect to the Company, the individual appointed and admitted as a Special Member in accordance with Section 2.7, who initially is William G. Popeo, (ii) with respect to the general partner of the Class B Member, the individual appointed and admitted as a special member of the general partner of the Class B Member in accordance with the terms hereof, and (iii) with respect to each Subsidiary, the individuals appointed and admitted as independent managers or independent directors of such Subsidiary in accordance with the terms hereof. The Special Member of the Company shall only have those rights and duties expressly set forth in this Agreement.

“Subsidiary” means First Mezzanine Borrower, Mortgage Borrower, Owner GP, TRS Holdco, TRS GP, TRS, 8PK TRS Holdco, 8PK TRS Holdco, 8PK Owner, 8PK Owner GP, 8PK NTC TRS, HIT Portfolio I KS TRS, LLC, a Kansas limited liability company, HIT Portfolio I Concessions, LLC, LLC, a Delaware limited liability company (“TX Concessions”), HIT Portfolio I TX Management, LLC, a Delaware limited liability company (“TX Management”), HIT Portfolio I TX Holdings, LLC, a Delaware limited liability company (“TX Holdings”), HIT Portfolio I TX Beverage Company, LLC, a Delaware limited liability company (“TX Beverage”), HIT Portfolio I 8PK Concessions, LLC (“8PK Concessions”), HIT Portfolio I 8PK TX Management, LLC (“8PK TX Management”), HIT Portfolio I 8PK TX Holdings, LLC (“8PK TX Holdings”), HIT Portfolio I 8PK TX Beverage Company, LLC (“8PK TX Beverage”) and any other entity in which the Company holds any ownership interest, whether directly or through one or more other Persons.

“Substituted Member” means any Person admitted to the Company as a Member pursuant to the provisions of Section 9.5.

“Transaction Documents” means collectively, this Agreement, the Environmental Indemnity Agreement, the Guarantees, the Cash Management Agreement, the certificate of formation and limited liability company agreement of each Subsidiary, the Consent Letters and each other instrument, agreement or certificate delivered by the Class B Member, any Guarantor or any Affiliate of any of them concurrently herewith or hereafter to or for the benefit of the Class A Member or any of its Affiliates in connection with this Agreement.

“Transfer” means, with respect to the Interest of any Member or the interests of the Company in any Subsidiary, any of the Properties or any other asset, any transfer, sale, pledge, hypothecation, encumbrance, assignment or other disposition, directly or indirectly (including of any interest in a Member or through any one or more intermediaries), of all or any portion of such asset or other asset or any right to receive proceeds therefrom (whether voluntarily, involuntarily, by operation of law or otherwise).

“Treasury Regulations” means the regulations promulgated under the Code, as such regulations are in effect on the date hereof.

“TRS” has the meaning set forth in the Recitals.

“Unrecovered Capital” means, as of any date, with respect to the Class A Member an amount (but not less than zero) equal to the excess of (a) the aggregate amount of the Class A Member’s Capital Contributions theretofore made pursuant to Article 6 over (b) the sum of the aggregate amount theretofore distributed to the Class A Member as a return of capital pursuant to Article 8. Amounts distributed or paid to the Class A Member as a Class A Return, an Increased Return or indemnification for Damages will not be considered a “return of capital”. As of the date hereof, the Class A Member’s Unrecovered Capital is equal to the amount set forth in Schedule 6.1 opposite its name.

“Whitehall Parallel” means Whitehall Parallel Global Real Estate Limited Partnership 2007, a Delaware limited partnership, together with its successors and assigns by merger, consolidation and/or sale of all or substantially all of its assets.

“Whitehall Street” means Whitehall Street Global Real Estate Limited Partnership 2007, a Delaware limited partnership, together with its successors and assigns by merger, consolidation and/or sale of all or substantially all of its assets.

1.2Terms Generally. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(a)the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision;

(b)the words “including” and “include” and other words of similar import shall be deemed to be followed by the phrase “without limitation”; and

(c)references herein to a “Schedule” are to one of the Schedules attached to this Agreement and references to an Article or a Section are to one of the Articles or Sections of this Agreement. Each Schedule attached hereto and referred to herein is hereby incorporated herein by reference.

ARTICLE 2THE COMPANY AND ITS BUSINESS

2.1Members; Continuation of the Company. The members of the Company shall be the Class B Member, the Class A Member and the Company’s Special Member. Each of the Members hereby agrees to continue the Company in accordance with the terms hereof and pursuant to the Act.

2.2Company Name. The business of the Company shall be conducted under the name of “HIT Portfolio I Holdco, LLC” in the State of Delaware and under such name or such assumed names as the Managing Member deems necessary or appropriate to comply with the requirements of any other jurisdiction in which the Company may be required to qualify.

2.3Term. The term of the Company commenced with the filing of the Certificate with the Secretary of State of the State of Delaware on October 7, 2014 and shall continue in full force and effect perpetually unless the Company is dissolved as hereinafter provided.

2.4Filing of Amendments to the Certificate. Each of the Members hereby agrees to execute and file any required amendments to the Certificate and to do or cause to be done all other acts requisite for the continuation of the Company as a limited liability company pursuant to the laws of the State of Delaware or any other applicable law.

2.5Purpose. The Company is formed solely for the purpose of owning, operating managing, selling, financing and otherwise dealing with the Properties through the Subsidiaries. The Company may engage in any and all activities necessary or incidental to the foregoing. Notwithstanding anything contained herein to the contrary, the Company may not engage in any business, and may not have any purpose, unrelated to the Properties and may not acquire or own any real property or other assets other than those related to the ownership of the Properties through the Subsidiaries and the proceeds thereof (e.g., cash distributions received from the Subsidiaries).

2.6Principal Office; Registered Agent. The principal office of the Company will be 3950 University Drive, Fairfax, Virginia 22030. The Company may change its place of business to such location or locations in the United States as may at any time or from time to time be designated by the Managing Member upon written notice to the Class A Member. The mailing address of the Company will be 3950 University Drive, Fairfax, Virginia 22030, or such other address as may be selected from time to time by the Managing Member. The Company shall maintain a registered office at c/o Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808. The name and address of the Company’s registered agent is Corporation Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware 19808.

2.7Classes of Members.

(a)The Company shall have three classes of Members: a Class A Member and a Class B Member (collectively defined herein as “Equity Members”) and a special non-economic Member, who shall be a Special Member. For so long as any of the Senior Loans remains outstanding and the Class A Member has not been fully redeemed, the Company at all times shall have at least one Special Member who shall be a natural person appointed by the Class A Member and who Class A Member may confirm shall not have been at the time of appointment as Special Member, shall not thereafter become and shall not have been at any time during the five years preceding appointment (i) a member, manager or director (other than an “independent director” or “special member”) of, or an officer or employee of, the Company, any Member or any of their respective members, managers, investors or Affiliates, (ii) a customer of, supplier or service provider (including a provider of professional services) to, the Company, any Member, or any of their respective members, managers, investors or Affiliates such that such individual’s annual revenues derived from the Company, any Member, and their respective members, managers, investors or Affiliates exceeded 5% of such individual’s annual revenues for any of the preceding three years, (iii) a Person Controlling or under common Control with any of the Persons described in the foregoing clauses (i) or (ii), or (iv) a member of the immediate family of any such member, manager, director, officer, employee, supplier or customer or a member of the immediate family of any other member or manager described in the foregoing clauses (i) or (ii). Upon the occurrence of any event that causes the Special Member to cease to be a member of the Company, a new Special Member shall be appointed forthwith by the Class A Member, and no decision stated in this Agreement as requiring the consent of the Special Member shall be taken in the interim period until a new Special Member is appointed. No resignation or removal of a Special Member, and no appointment of a successor Special Member, shall be effective until such successor shall have accepted his or her appointment as a Special Member by a written instrument in which he or she agrees to be bound by all of the terms and conditions of this Agreement applicable to the Special Member. All right, power and authority of the Special Member shall be limited to the extent necessary to exercise those rights and perform those duties specifically set forth in this Agreement as being the responsibility of the Special Member. No Special Member shall at any time serve as trustee in bankruptcy for any Affiliate of the Company.

(b)The Equity Members will be the only Members of the Company that have any interest in the profits, losses or capital of the Company. Except for the rights specifically granted to the Special Member in this Agreement, the Equity Members will be the only members of the Company with any voting or management rights.

(c)The Special Member agrees to remain independent from the Equity Members and perform its obligations under this Agreement, agrees to be a Member of the Company for the limited purposes provided herein and to perform its obligations as the Special Member hereunder, and the Company and the Equity Members agree that the Special Member will be a Member of the Company only for such limited purposes. The Company, the Equity Members and the Special Member agree that the Special Member: (a) in accordance with Section 18-301 of the Act: (i) will not make, and will not be obligated to make, a contribution to the Company, and (ii) will not own, and will not be obligated to acquire, an Interest in the Company and (b) will have no management, approval, voting, consent or veto rights in the Company, other than to the extent that its affirmative vote, approval or consent is required for the Company or the Equity Members to perform certain acts or take certain actions as expressly provided in this Agreement. The Special Member may not bind the Company.

(d)The limited liability company interests issued to the Equity Members pursuant to this Agreement have been duly authorized and are validly issued limited liability company interests in the Company.

2.8Names and Addresses of the Members.

The names and addresses for notices of the Equity Members are as follows:

Class A Member:

c/o Goldman Sachs Realty Management, L.P.

6011 Connection Drive

Irving, TX 75039

Attn: Greg Fay

Facsimile No.: (972) 368-3699

Telephone No.: (972) 368-2743

with copies to:

Whitehall Street Global Real Estate Limited Partnership

2007 c/o Goldman, Sachs & Co.

200 West Street

New York, NY 10282

Attn: Chief Financial Officer

Facsimile No.: (212) 357-5505

Telephone No.: (212) 902-5520

and to:

Sullivan & Cromwell LLP

125 Broad Street

New York, NY 10004

Attn: Anthony J. Colletta, Esq.

Facsimile No.: (212) 291-9029

Telephone No.: (212) 558-4608

Class B Member:

c/o Hospitality Investors Trust, Inc.

3950 University Drive

Fairfax, Virginia 22030

Attn: Jon Mehlman

with copies to:

c/o Hospitality Investors Trust, Inc.

3950 University Drive

Fairfax, Virginia 22030

Attn: Paul Hughes

and to:

Proskauer Rose LLP

11 Times Square

New York, New York

Attn: Steven L. Lichtenfeld, Esq.

Tel.: (212) 969-3735

Facsimile: (212) 969-2900

Special Member:

c/o Corporation Service Company

2711 Centerville Road, Suite 400

Wilmington, DE 19808

Attn: Independent Director Services

Facsimile No.: (302) 636-5454

Telephone No.: (302) 636-5401, ext. 65466

2.9Authorized Persons. Erin Corbett, was previously designated as an “authorized person” within the meaning of the Act, and has executed, delivered and filed the Certificate of Formation of the Company with the Secretary of State of the State of Delaware. Upon the filing of the Certificate of Formation with the Secretary of State of the State of Delaware, his (or her) powers as an “authorized person” ceased, and the Managing Member thereupon became the designated “authorized person” and shall continue as the designated “authorized person” within the meaning of the Act. The Managing Member shall execute, deliver and file any other certificates (and any amendments and/or restatements thereof) necessary for the Company to qualify to do business in any jurisdiction in which the Company may wish to conduct business. Any actions taken by any of the foregoing persons in connection with the execution, delivery or filing of the Certificate with the Secretary of State of the State of Delaware or the qualification of the Company or the Subsidiaries to do business or any other action relating thereto is hereby ratified, confirmed and approved by the Members as having been authorized by the Company.

2.10Representations by the Class B Member. The Class B Member represents, warrants and agrees to and for the benefit of the Class A Member that, as of the Original Closing Date and again as of the Effective Date:

(a)it is a corporation, a limited liability company or limited partnership, as the case may be, duly organized or formed and validly existing and in good standing under the laws of the state of its organization or formation; it has all requisite corporate, limited liability company or partnership power and authority to enter into this Agreement, to acquire and hold its Interest and to perform its obligations hereunder; and the execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party has been duly authorized by all necessary corporate, limited liability company or partnership action;

(b)its execution and delivery of this Agreement and each other Transaction Document to which it is a party and the performance of its obligations hereunder and thereunder will not conflict with, result in a breach of or constitute a default (or any event that, with notice or lapse of time, or both, would constitute a default) or result in the acceleration of any obligation under any of the terms, conditions or provisions of any other agreement or instrument to which it is a party or by which it is bound or to which any of its property or assets are subject, conflict with or violate any of the provisions of its Organizational Documents, or violate any statute or any order, rule or regulation of any court or governmental or regulatory agency, body or official, in any manner that would adversely affect the performance of its duties hereunder; such Member has obtained any consent, approval, authorization or order of any court or governmental agency or body required for the execution, delivery and performance by such Member of its obligations hereunder and thereunder;

(c)there is no action, suit or proceeding pending against the Class B Member or, to its knowledge, threatened in any court or by or before any other governmental agency or instrumentality that would prohibit its entering into or performing its obligations under this Agreement or any other Transaction Document;

(d)this Agreement and each other Transaction Document to which it is a party is a binding agreement on the part of the Class B Member enforceable against the Class B Member in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights;

(e)each of the Company and each of the Subsidiaries has filed, or caused to be filed, all material tax returns (federal, state, local and foreign) required to be filed and paid all amounts of taxes shown thereon to be due (including interest and penalties) and has paid all other taxes, fees, assessments and other governmental charges (excluding real estate taxes and assessments in respect of the Properties, but including any taxes payable as a result of the consummation of the transactions contemplated by the Sale Agreement) owing by it, except for such taxes (i) which are not yet delinquent or (ii) as are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with generally accepted accounting principles;

(f)each of the Company, each Guarantor and the Class B Member is in full compliance with all Legal Requirements applicable to it, except for such instances of noncompliance when taken individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect;

(g)none of the Company, any Subsidiary, the Class B Member or any ERISA Affiliate of any of the foregoing has incurred any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan subject to Title IV or Section 302 of ERISA or Section 412 of the Code. The consummation of the transactions contemplated hereby will not constitute or result in any transaction prohibited by Section 406 of ERISA or Section 4975 of the Code;

(h)none of the Company, the Subsidiaries or the Class B Member is (i) an “investment company” as defined in the Investment Company Act, or controlled by such a company, or (ii) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, or the Interstate Commerce Act, each as amended;

(i)none of the Company, any Subsidiary, the Class B Member or any Guarantor has filed or, to its knowledge, is contemplating the filing of a petition under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of its assets or property, and to its knowledge, no Person has threatened or is contemplating the filing of any such petition against the Company, any Subsidiary, the Class B Member or any Guarantor;

(j)neither the Company nor any Subsidiary has any outstanding Indebtedness other than as permitted under the Senior Loan Documents, and the Class B Member does not have any outstanding Indebtedness for borrowed money;

(k)there are no actions, suits or legal, equitable, arbitration or administrative proceedings pending or, to its knowledge, threatened against the Company, any Subsidiary or the Class B Member or any Guarantor which, if adversely determined could be reasonably expected to result in a Material Adverse Effect;

(l)none of the Class B Member, the Company, any Subsidiary or any Person controlling any of the foregoing has violated any of the covenants contained in Schedule 5.15(a) hereto (other than with respect to any obligations requiring a Special Member prior to the Original Closing Date);

(m)none of the Company, any Subsidiary or the Class B Member (or, if the Class B Member is disregarded as separate from its owner for tax purposes, the owner of the Class B Member for tax purposes) is a “foreign person” within the meaning of § 1445(f)(3) of the Code;

(n)neither the Company nor any Subsidiary has entered any agreement or other arrangement for the provision of asset or property management, leasing or other advisory services or any franchise agreement with respect to any of the Properties prior to February 27, 2015, except for any such agreements that (x) forms of which have been delivered to the Class A Member at least two (2) Business Days prior to the Original Closing Date and (y) would comply with the terms of this Agreement if entered into by the Company or any of its Subsidiaries following the Original Closing Date.

2.11Representations by the Class A Member. The Class A Member represents, warrants and agrees to and for the benefit of the Class B Member that, as of the Original Closing Date and again, in the case of clause (a) of this Section 2.11, as of the Effective Date:

(a)it is a limited liability company, duly formed and validly existing and in good standing under the laws of the state of its formation; it has all requisite limited liability company power and authority to enter into this Agreement, to acquire and hold its Interest and to perform its obligations hereunder; and the execution, delivery and performance of this Agreement and each other Transaction Document to which it is a party has been duly authorized by all necessary limited liability company action;

(b)the Class A Member is acquiring its Interest for its own account, solely for investment purposes and not with a view to resale or distribution thereof;

(c)the Class A Member acknowledges that (1) the offering and sale of the Interest (A) has not been and will not be registered under the U.S. Securities Act of 1933, as amended from time to time (the “Securities Act”), the securities laws of any state of the United States or the securities laws of any other jurisdiction, nor is such registration contemplated, (B) is being made in reliance upon federal and state exemptions for transactions not involving a public offering and/or rules governing offers and sales made outside the United States and (2) the Company will not be registered as an investment company under the U.S. Investment Company Act of 1940, as amended from time to time (the “Investment Company Act”). In furtherance thereof, the Class A Member represents and warrants that it is an “accredited investor” (as defined in Regulation D under the Securities Act), and a “qualified purchaser” (as defined in the Investment Company Act);

(d)the Class A Member (either alone or together with any advisers retained by such person in connection with evaluating the merits and risks of prospective investments) has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of purchasing the Interest. The Class A Member’s financial situation is such that the Class A Member can afford to bear the economic risk of holding its Interest for an indefinite period of time, and the Class A Member can afford to suffer the complete loss of the Class A Member’s investment. The Class A Member understands that (A) its Interest has not been and will not be registered under the Securities Act or the securities laws of any U.S. state and accordingly may not be offered, sold, transferred or pledged unless its Interest is duly registered under the Securities Act and all other applicable securities laws or financial services laws or regulations of any jurisdiction or such offer or sale is made in accordance with an exemption from registration (including, if applicable, Regulation S), (B) this Agreement contains substantial restrictions on the transferability of its Interest, (C) no market for resale of its Interest exists or is expected to develop, (D) the Class A Member may not be able to liquidate its investment in the Company and (E) any instruments representing its Interest may bear legends restricting the transfer thereof. The Class A Member understands that its Interest will not be evidenced by a certificate subject to Article 8 of the Uniform Commercial Code; and

(e)the Class A Member has been furnished with, and has carefully read, this Agreement and has been given the opportunity to (i) ask questions of, and receive answers from, the Managing Member or any Affiliate thereof concerning the terms and conditions pertaining to an investment in the Company and (ii) obtain any additional information which the Managing Member can acquire without unreasonable effort or expense that is necessary to evaluate the merits and risks of an investment in the Company. To the full satisfaction of the Class A Member, the Class A Member has been furnished with any materials the Class A Member has requested relating to the Company or the issuance of its Interest. In considering its acquisition of its Interest, the Class A Member is not relying, and will not rely with respect to its Interest upon any representations or warranties made by, or other information (including, without limitation, any advertisement, article, notice or other communication published in any newspaper, magazine, website or similar media or broadcast over television or radio, and any seminars or meetings whose attendees have been invited by any general solicitation or advertising) furnished by or on behalf of, the Company, the Managing Member, the Class B Member, any Affiliate of the foregoing or any of their respective directors, officers, employees, partners, shareholders, advisers, attorneys-in-fact, representatives or agents, written or otherwise, other than as set forth in this Agreement, the other Transaction Documents and/or any separate agreement in writing with the Managing Member executed in conjunction with the Class A Member’s acquisition of its Interest. The Class A Member acknowledges that it was offered its Interest through private negotiations, not through any general solicitation or advertising. The Class A Member has carefully considered and has, to the extent it believes such discussion necessary or appropriate, discussed with legal, tax, accounting and financial advisers the suitability of an investment in the Company in light of its particular tax and financial situation, and has determined that its Interest is a suitable investment for it.

2.12Certain Tax Matters.

(a)The Members and the Company agree that for tax purposes, the Class A Member’s Initial Capital Contribution in exchange for its rights to the distributions set forth in Article 8 and Section 10.3 shall be treated as a disguised sale (under Section 707 of the Code and the Treasury Regulations thereunder) from the Class A Member to the Class B Member on the Original Closing Date, and that the rights to receive the distributions set forth in Article 8 and Section 10.3 shall be treated as an obligation of the Class B Member to make such payments as consideration for such disguised sale.

(b)The Members intend that the Company be disregarded as an entity separate from the owner of the Class B Member for tax purposes, and that the Class A Member not be treated as a “partner” of the Company for tax purposes. The Company shall not elect to be classified as an association taxable as a corporation on Internal Revenue Service Form 8832.

(c)The Members and the Company agree, except as otherwise required by applicable law (as agreed to by the Managing Member and the Class A Member) or pursuant to a “determination” within the meaning of Section 1313(a) of the Code, not to take an inconsistent position with such treatment on any tax return. Subject to the preceding sentence, in the event that the Class A Member is required to be treated as a “partner” of the Company for tax purposes, income, gain, loss and deduction with respect to any property contributed to the capital of the Company by the Members shall, solely for tax purposes, be allocated among the Members so as to take into account any variation between the adjusted basis of such property for federal income tax purposes and the value of such property reflected on the books of the Company using the “ remedial method” described in Treasury Regulations Section 1.704-3(b).

(d)The Members acknowledge that the Class B Member is an Affiliate of HIT REIT and agree to manage the Company and its Subsidiaries in a manner that enables HIT REIT to qualify as a real estate investment trust within the meaning of Section 856 of the Code and that recognizes the income, asset and operating requirements applicable to a real estate investment trust under the Code. To this end, the Members shall cooperate to cause the Company and its Subsidiaries (i) to (A) limit the investment of amounts deposited in the Cash Management Account to investments treated as cash, cash items or government securities for purposes of Section 856(c)(4) of the Code and (B) otherwise operate in such a manner such that the Company, assuming it were a real estate investment trust, would satisfy the income and asset tests applicable to real estate investment trusts and would not be subject to any taxes under Section 857 of the Code, and (ii) to avoid taking any action that could otherwise result in HIT REIT failing to qualify as a real estate investment trust under the Code. Notwithstanding the preceding provisions of this Section 2.12(d), nothing herein shall in any way limit the rights or remedies of the Class A Member hereunder or under any of the other Transaction Documents or modify the economic or other terms of this Agreement or the other Transaction Documents. The provisions of this Section 2.12(d) shall continue to apply for so long as the Class B Member owns an economic interest in the Company and, if the Class B Member is not the Managing Member, the Managing Member shall provide the Class B Member with any information regarding the Company it reasonably requests for purposes of establishing the Company’s compliance with this Section 2.12(d).

ARTICLE 3MANAGEMENT OF COMPANY BUSINESS;POWERS AND DUTIES OF THE MEMBERS

3.1Management of the Company Business.

(a)Subject to the provisions of this Article 3 and the other provisions of this Agreement, the Managing Member shall have the right, power and authority and the duty to manage the day-to-day operations of the Company in accordance with the terms hereof, this Agreement and applicable laws and regulations. The Managing Member shall devote such time to the Company and its business as is necessary to conduct the operations of the Company in an efficient manner and to carry out the Managing Member’s responsibilities as set forth herein. In furtherance of the foregoing, but subject to the limitations in this Article 3 and the other provisions of this Agreement and the Senior Loan Documents, the Managing Member shall have the right, authority and duty to deal with, operate and manage the Properties on behalf of the Company and its Subsidiaries.

(b)The Managing Member shall not have any right, power or authority under this Agreement or otherwise to (and shall not) bind or take any action on behalf of or in the name of the Company, or enter into any commitment or obligation binding upon the Company, that would constitute a Significant Decision, unless authorized by the Class A Member in advance in the manner set forth herein. To the fullest extent permitted by law, and without limiting its indemnification pursuant to Section 4.3(a), the Managing Member shall indemnify and hold harmless the Company and the other Members and their Affiliates from and against any and all claims, demands, losses, damages, liabilities, lawsuits and other proceedings, judgments and awards, and costs and expenses (including, but not limited to, reasonable attorneys’ fees) arising, directly or indirectly, in whole or in part, out of any breach of the provisions of this Section 3.1(b) by the Managing Member or any Affiliate of the Managing Member. The Managing Member shall not be entitled to any compensation from the Company for performance of its duties as Managing Member.

(c)The Managing Member shall meet in person or telephonically with the Class A Member and/or its agents or designees at such reasonable times as the Class A Member may reasonably request to discuss the business and affairs of the Company, but in no event more frequently than monthly.

3.2Appointment of Initial Managing Member. Subject to Section 3.3 and the other provisions of this Agreement, the Members hereby appoint the Class B Member as the initial Managing Member with the rights and responsibilities set forth in Section 3.1 and subject to the limitations set forth in Section 3.1(b), Section 3.6 and elsewhere in this Agreement. The rights of the Class B Member as Managing Member may not be assigned voluntarily or by operation of law by the Class B Member, and the duties of the Class B Member as Managing Member may not be delegated voluntarily or otherwise by the Class B Member.

3.3Class A Member’s Rights Following a Changeover Event.

(a)Notwithstanding the appointment set forth in Section 3.2 or any other provision of this Agreement to the contrary, upon the occurrence of a Changeover Event (subject to the provisions of Section 3.5 solely in the case of those events described in clauses (4), (5), (6), (10), (11), (18), (19), (20), (21) and (22) of the definition of Changeover Event) and the delivery by the Class A Member to the Class B Member of notice to such effect: (i) the Class B Member automatically, immediately and without any further action by the Class A Member or any other Person shall cease to be the Managing Member, (ii) all references in this Agreement to the term “Managing Member” shall refer to the Class A Member or such other Person as the Class A Member may then designate as Managing Member, (iii) the Class A Member, individually, or together with any designee appointed by it to act as Managing Member, shall have the exclusive right, power and authority, to make any and all decisions and take any actions (including, without limitation, any Significant Decisions) on behalf of or with respect to the Company and each of its Subsidiaries, provided, however, that the duties and obligations of the Managing Member to the other Members shall not be assumed by the Class A Member, and (iv) the Class A Member shall have the exclusive right, power and authority in its sole and absolute discretion to terminate the Property Management Agreements in accordance with the terms thereof (and each such Property Management Agreement entered into with an Affiliate of the Class B Member (and any related sub-property management agreement) shall provide that it shall be terminable by the Class A Member in such instance without payment of any termination or similar fee), and, with respect to the Senior Loan Property Management Agreements, subject to the terms of the Senior Loan Documents, appoint a replacement. Any reasonable, out-of-pocket expenses incurred by the Class A Member, including any amounts payable to Affiliates of the Class A Member, in acting as the Managing Member of the Company shall be promptly reimbursed by the Company. The Class A Member’s authority and rights pursuant to the preceding sentence are in addition to, and not in limitation or to the exclusion of, any of the Class A Member’s other rights or remedies herein or in any of the other Transaction Documents following a Changeover Event. Upon the declaration of a Changeover Event by the Class A Member, the Class A Member shall deliver, or cause its Affiliate to deliver, to Senior Lender the replacement guaranty and environmental indemnity required by the terms of the Senior Loan Documents.

(b)For the avoidance of any doubt, and without limiting the foregoing, the Class B Member hereby consents and agrees that upon the declaration by the Class A Member of the occurrence of a Changeover Event (subject to the provisions of Section 3.5 solely in the case of the events described in clauses (4), (5), (6), (10), (11), (18), (19), (20), (21) and (22) of the definition of Changeover Event), the Class A Member shall have sole and exclusive right, power and authority (i) to sell the Company or the direct or indirect interests of the Company in its Subsidiaries or cause the Company and each Subsidiary to sell or refinance all or any portion of its assets at such time or times as the Class A Member in its sole discretion shall determine, regardless of market conditions, real estate values or financial conditions at such time or times, regardless of the impact of such sale or refinancing or the timing thereof on the Company or the Class B Member (and regardless of the benefits derived by the Class A Member or the consequences suffered by the Class B Member or any Affiliate thereof by virtue of or from such sale or refinancing), provided that in no event may the Class A Member sell the Company or any of its Subsidiaries or any of the Properties to the Class A Member or an Affiliate of the Class A Member, (ii) to cause the Company and/or its applicable Subsidiaries to incur one or more Additional Mezzanine Loans pursuant to the terms of the Senior Loan Documents, (iii) to cause the Company promptly to make any and all payments and/or distributions to the Class A Member and any of its Affiliates to the extent of any amounts then due or past due or that thereafter become payable pursuant to this Agreement or any other Transaction Document or of all or any portion of the Class A Member’s Unrecovered Capital (whether or not then “due”), regardless of the impact of such payments or distributions on the Company or the Class B Member, (iv) to cause the Company to liquidate pursuant to Article 10, and (v) to exercise the rights and powers granted to it pursuant to paragraph (a) above, including, without limitation, the making of any Significant Decision, in such manner as the Class A Member determines, in its sole discretion, and, in each of the foregoing cases, take (or cause the Company or any of its Subsidiaries to take) all actions and make all decisions that are reasonably related to its exercise of the foregoing remedies).

(c)In financing or refinancing a Property or any other asset of the Company or any Subsidiary under the circumstances described in (b) above, the Class A Member may conduct the financing process or refinancing process, as applicable, in any manner the Class A Member determines, in its sole discretion, provided, that in no event may the Class A Member cause the Company or any Subsidiary to enter into financings or refinancings with the Class A Member or an Affiliate of the Class A Member.

(d)The Class B Member acknowledges and agrees that in exercising the authority granted to the Class A Member in the foregoing provisions and elsewhere in this Agreement and each other Transaction Document relating to or following a Changeover Event, to the fullest extent permitted by law, the Class A Member shall have no duty, obligation or liability (fiduciary or otherwise) to the Class B Member or any Affiliate thereof or any other Person whatsoever (other than as expressly set forth in this Agreement), it being understood that the Class A Member shall be entitled to exercise such authority in any manner it deems necessary or desirable to maximize the value of its investment in the Company or to fulfill any other Class A Member objective.

(e)In addition to the rights and remedies set forth in this Article 3 and elsewhere in this Agreement, following the occurrence of a Changeover Event, the Unrecovered Capital shall accrue a return in favor of the Class A Member at the Increased Rate.

(f)The Class B Member acknowledges and agrees that the authority granted to the Class A Member in this Article 3 was a material inducement and conditions precedent to the Class A Member’s willingness to make its investment in the Company, and that the Class A Member would have refused to make its investment absent such authority.

(g)Notwithstanding the foregoing provisions of this Section 3.3, following the replacement of the Managing Member by the Class A Member pursuant to the terms of Section 3.3(a), the Managing Member shall not take or cause the Company or any Subsidiary to take any of the following actions (each, a “Fundamental Decision”), unless such action has been approved by all of the Equity Members in writing and in advance:

(1)causing the Company or any Subsidiary to engage in any business other than the business described in Section 2.5 hereof;

(2)acquiring any other real property other than the Properties and any fee estate(s) underlying any Property that is subject to a ground lease;

(3)except for mergers between or only the Company and its Subsidiaries, causing the Company or any Subsidiary to undertake a merger or consolidation;

(4)instituting proceedings to adjudicate the Company or any Subsidiary a bankrupt, or consenting to the filing of a bankruptcy proceeding against the Company or any Subsidiary, or filing a petition or answer or consent seeking reorganization of the Company or any Subsidiary under the Bankruptcy Code or any other similar applicable federal, state or foreign law, or consenting to the filing of any such petition against the Company or any Subsidiary, or consenting to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or any Subsidiary or of its property, or making an assignment for the benefit of creditors of the Company or any Subsidiary or otherwise taking action that would trigger full recourse to any guarantor of any Senior Loan that is an Affiliate of the Class B Member; or

(5)terminating the operating lease for Properties between, as applicable, Mortgage Borrower and TRS, and/or 8PK Owner and 8PK TRS, except for the termination of the operating lease with respect to any Properties which are sold by Mortgage Borrower or 8PK Owner or in connection with the 8PK Transfer.

(6)causing the Company or any Subsidiary to enter into any agreement or arrangement with the Class A Member or an Affiliate of the Class A Member unless such agreement or arrangement is on arm’s-length commercially reasonable terms.

3.4Buy/Sell Following a Changeover Event; Remedy Not Exclusive.

(a)Subject to Section 3.5, if the Class A Member gives the Class B Member notice of a Changeover Event, then, in addition to all other rights of the Class A Member hereunder at law or otherwise, the Class A Member shall have the right (but not the obligation), in its sole and absolute discretion to initiate the following “buy/sell” procedure by delivering an election notice to the Class B Member (such notice, an “Election Notice”). Such Election Notice shall state that the Class A Member has elected to initiate the buy/sell procedures in this Section 3.4, pursuant to which the Company will be sold to either the Class B Member or the Class A Member. Within ten (10) Business Days after receiving an Election Notice from the Class A Member (with time being of the essence), the Class B Member shall deliver to the Class A Member a response (the “Buy/Sell Response Notice”) setting forth a proposed price (the “Offer Price”) for the Company. Any such Buy/Sell Response Notice shall state that it is, and in any event shall be deemed, an irrevocable and unconditional offer by the Class B Member (i) to buy the Interest of the Class A Member for (A) the amount that the Class A Member would have received if the Company were sold for the Offer Price and the proceeds thereof were distributed to the Members in accordance with Section 8.4, plus (B) without duplication, any amounts owed to the Class A Member and any of its Affiliates pursuant to the terms hereof (including as a result of the Changeover Event in question), less (C) the amount of the Class B Member Deposit (as hereinafter defined) posted by the Class B Member (the “Class A Interest Sale Price”) and (ii) to sell to the Class A Member the Interest of the Class B Member for (A) the amount that the Class B Member would have received if the Company were sold for the Offer Price and the proceeds thereof were distributed to the Members in accordance with Section 8.4, less (B) without duplication, any amounts owed to the Class A Member and any of its Affiliates pursuant to the terms hereof (including as a result of the Changeover Event in question), less (C) the amount of the Class A Member Deposit (as hereinafter defined) posted by the Class A Member (the “Class B Interest Sale Price”). If the Class B Member shall fail to deliver a Buy/Sell Response Notice within such 10-Business Day period, then the Class B Member shall nevertheless be deemed to have delivered, and the Class A Member shall be deemed to have received, a Buy/Sell Response Notice with an Offer Price equal to the Redemption Price. The Class A Member shall have the right, by notice to the Class B Member within ten (10) Business Days after the delivery (or deemed delivery) of the Buy/Sell Response Notice, either:

(1)to buy (or have its designee buy) the Interest of the Class B Member for the Class B Interest Sale Price, or

(2)sell the Class A Member’s Interest in the Company to the Class B Member (or to their designee) for the Class A Interest Sale Price.

(b)If the Class A Member does not respond to a Buy/Sell Response Notice within ten (10) Business Days following its receipt (or deemed receipt) thereof and the Class A Interest Sale Price set forth in such Buy/Sell Response Notice is greater than the Redemption Price, the Class A Member shall be deemed to have elected to sell its Interest to the Class B Member for such Class A Interest Sale Price. If the Class A Member does not respond to a Buy/Sell Response Notice within ten (10) Business Days of receipt thereof and the Class A Interest Sale Price set forth in such Buy/Sell Response Notice is equal to or less than the Redemption Price, the value of the Interest of the Class B Member shall conclusively be deemed to be zero ($0) and the Class A Member shall be deemed to have elected to buy the Interest of the Class B Member for a Class B Interest Sale Price equal to $1.

(c)If the Class A Member elects (or is deemed to have elected) to sell its Interest to the Class B Member (or its designee) for the Class A Interest Sale Price, then, within thirty (30) days following such election, the Class B Member shall fund to the Class A Member a non‑refundable earnest money deposit in the amount of five percent (5%) of the Class A Interest Sale Price (the “Initial Class B Member Deposit”). If the Class B Member shall fail to fund the Initial Class B Member Deposit to the Class A Member on or prior to the expiration of such 30‑day period, then (i) the election of the Class A Member to sell its Interest to the Class B Member (or its designee) for the Class A Interest Sale Price shall be deemed revoked and the Class A Member shall instead be deemed to have elected to purchase the Class B Member’s Interest for the Class B Interest Sale Price and (ii) the Class B Interest Sale Price for such acquisition shall be $1.

(d)If the Class A Member elects to acquire the Interest of the Class B Member for the Class B Interest Sale Price, then, within thirty (30) days following such election, the Class A Member shall fund to the Class B Member a non-refundable earnest money deposit in the amount of five percent (5%) of the Class B Interest Sale Price (the “Class A Member Deposit” and each of the Class A Member Deposit and the Class B Member Deposit being referred to herein as a “Deposit”). If the Class A Member shall fail to fund the Class A Member Deposit to the Class B Member on or prior to the expiration of such 30-day period, then the Class A Member shall be deemed to have elected to sell its Interest to the Class B Member for the Class A Interest Sale Price and the Class B Member shall have a period of ten (10) Business Days to either (1) elect to acquire the Internet of the Class A Member for the Class A Interest Sale Price or (2) elect not to acquire the Interest of the Class A Member, in which case the Class A Member may not issue a new Election Notice for a period of thirty (30) days.

(e)Subject to Section 3.4(h), the closing for any such sale transaction shall occur no later than sixty (60) days after the date on which the Initial Class B Member Deposit or the Class A Member Deposit (as applicable) has been funded, with time being of the essence. If either Member defaults on its obligation to close within the 60-day period described above, then, in addition to any other rights and remedies available to the non-defaulting Member, (x) if the non- defaulting Member received a Deposit from the defaulting Member, the non-defaulting Member shell be entitled to keep such Deposit, together with any interest thereon, as liquidated damages, it being agreed that the non-defaulting Member’s actual damages would be difficult, if not impossible, to ascertain and that the liquidated damages hereinabove specified are a fair and reasonable estimate of the actual damages that the non-defaulting Member would suffer in the event of a default by the other Member; each Member hereby acknowledges and agrees that said liquidated damages are in no way a penalty or forfeiture, but instead represent the Members’ best estimate of the actual damages that would be suffered by the non-defaulting Member in the event of such a default, and (y) if the non-defaulting Member funded a Deposit, the non-defaulting Member shall be entitled to receive a return of such Deposit and seek specific performance of the defaulting Member’s obligation to sell its Interest to the non-defaulting Member.

(f)Each of the Class A Member and the Class B Member hereby acknowledges and agrees that upon exercise by the Class A Member (or its designee) of the buy/sell option as described above, the selling Member must and will transfer its Interest free and clear of all Liens and adverse claims other than Liens arising pursuant to the terms of the Senior Loan Documents, this Agreement or any other Transaction Document. In the event that a Member shall have created or suffered any unauthorized Liens or other adverse claims against all or any portion of its Interest, then in addition to any other remedies then available, the acquiring Member or its designee shall be entitled to an action for specific performance to compel the selling Member and its constituent members and controlling persons to cause such adverse interests to be removed without any cost to the Company or the acquiring Member.

(g)At the closing of any sale of a Member’s Interest under this Section, each of the buying Member and the selling Member shall be deemed to have released the other from any and all claims, obligations, liabilities, actions, judgments, suits or proceedings relating to the Company, the Members’ Interests and the Properties, except for liabilities arising under the Guarantees or the Environmental Indemnity Agreement which by their terms survive redemption of the Interests of the Class A Member. Each Member agrees to deliver any additional documents reasonably requested by the other Member to evidence or effectuate such releases.

(h)In connection with any acquisition by the Class B Member of the Class A Member’s Interest pursuant to the terms of this Section 3.4, the Class B Member must comply with all applicable assumption, transfer and change in control conditions and provisions of the Senior Loan Documents and must obtain a release of the Class A Member and/or its Affiliates from their respective obligations under any guarantees and/or indemnities provided to the Senior Lenders in connection with the declaration of a Changeover Event, which compliance and release shall each be a condition to the obligation of the Class A Member to sell its Interest to the Class B Member pursuant to this Section 3.4. If the Class B Member fails to satisfy the conditions to closing set forth in the immediately preceding sentence prior to the expiration of the 60-day period described in paragraph (c) above, then the Class A Member’s election to sell its Interest to the Class B Member shall be null and void and the Class A Member shall instead be deemed to have elected to acquire the Class B Member’s Interest, provided that the Class B Interest Sale Price for such acquisition shall be $1; provided that the Class B Member shall be entitled to extend such 60-day period for an additional thirty (30) days in order to satisfy such condition if the Class B Member funds to the Class A Member an additional non-refundable earnest money deposit in the amount of five percent (5%) of the Class A Interest Sale Price (the “Additional Class B Member Deposit” and, together with the Initial Class B Member Deposit, collectively, the “Class B Member Deposit”).

(i)The Class B Member will bear the costs incurred by both parties in connection with the exercise of the buy/sell, including reasonable attorneys’ fees and expenses, transfer taxes, termination fees (including contractual damages) and the costs of obtaining any consents or approvals.

(j)Subject to Section 3.4(g), the Class B Member hereby acknowledges and agrees that none of the rights granted in this Section 3.4 is intended or shall be deemed to be exclusive, but that each is intended to and will be in addition to all the other rights available to the Class A Member following a Changeover Event, whether pursuant to the terms of this Agreement, any other Transaction Document, at law, in equity, or otherwise.

(k)Nothing herein shall limit the Class B Member’s right to redeem the Class A Member’s Interest in the Company pursuant to terms of Section 8.3 hereof.

3.5The Class B Member’s Rights Following a Changeover Event. If, the Class A Member gives the Class B Member a notice alleging the occurrence of a Changeover Event pursuant to Section 3.3 (such notice, a “Changeover Notice”) alleges only the occurrence of events of the type described in clauses (4), (5), (6), (10), (11), (18), (19), (20), (21) and (22) of the definition of Changeover Event and not of events described in any other clauses of the definition of Changeover Event, then, unless an arbitration award or judicial determination has already been issued supporting the allegations of the Changeover Notice, the Class B Member shall be entitled, within ten (10) Business Days after delivery of the Changeover Notice, to contest such allegations by delivering good faith written notice containing reasonable detail as to its basis for contesting such allegations (a “Dispute Notice”) within such 10-Business Day period to the Class A Member and, within such 10-Business Day period, submitting the same to arbitration in accordance with the provisions of Section 12.10. If the Class B Member fails to give such Dispute Notice within such 10-Business Day period, then (i) it shall be automatically and conclusively deemed that the allegations in the Changeover Notice are true and (ii) the Class A Member shall be entitled to exercise all of its rights hereunder, including its rights to initiate the buy/sell and sell the Properties, the Company or the Subsidiaries. If the Class B Member timely delivers a Dispute Notice and submits the matter to arbitration as aforesaid and the arbitration panel appointed pursuant to Section 12.10 determines that (x) one or more of the events described in the Changeover Notice did constitute one or more Changeover Events, then the Class A Member shall be entitled to exercise all of its rights and remedies hereunder retroactive, as applicable, to the date on which the Class A Member delivered the Changeover Notice, including its rights to charge the Increased Rate and to initiate the buy/sell and sell the Company, the Subsidiaries or the Properties, or (y) none of the events described in the Changeover Notice constituted a Changeover Event, then it shall be automatically and conclusively deemed that the Changeover Events specified in the Changeover Notice did not occur and the Class B Member shall be reinstated as the Managing Member (if it was acting as Managing Member immediately prior to the Class A Member’s declaration of a Changeover Event) and the Class A Member shall not be entitled to exercise its rights with respect to such Changeover Notice (without prejudice to its rights and remedies with respect to any other occurrence of a Changeover Event). In no event may the arbitration panel consider the enforceability of any provision of this Agreement, and the scope of any proceeding before the arbitration panel shall be limited to whether the grounds for the declaration of a Changeover Event in fact existed. Pending the ruling of such arbitration panel, a Changeover Event subject to this Section 3.5 will not be deemed to have occurred with respect to the matters before the arbitration panel, the Class A Member will not have the right to sell the Properties, the Company or the Subsidiaries or initiate the buy/sell procedures described in Section 3.4 in respect of such Changeover Event and the Managing Member shall continue to operate the Company and the Subsidiaries in the ordinary course of business and in accordance with the terms of this Agreement. In no event may the Class B Member arbitrate the occurrence of any Changeover Event described in clauses (1), (2), (3), (7), (8), (9), (12), (13), (14), (15), (16) or (17) of the definition of “Changeover Event” and any declaration by the Class A Member of a Changeover Event based in whole or in part on any one or more of the events described in such clauses shall be effective immediately.

3.6Significant Decisions. Notwithstanding anything to the contrary set forth in this Agreement but subject to Section 3.3, no Member shall take or cause or permit the Company or any Subsidiary to take any of the following actions, expend any amount of money, make any decision or incur any obligation on behalf of the Company or any Subsidiary with respect to any matter within the scope of any of the matters enumerated below (each a “Significant Decision”) unless the action, expenditure or other decision has been approved by the Class A Member in writing and in advance and has been approved in accordance with any other requirements of this Agreement:

(1)except for any sale of one or more Properties where the Net Disposition Proceeds therefrom are sufficient to pay all amounts owing to the Senior Lenders in respect of such sale and for the Company to pay the Release Payment required to be paid to the Class A Member in respect of such sale, sell, transfer, assign or otherwise dispose of, or enter into or cause or permit any Subsidiary to enter into any agreement or option to sell, transfer, assign or otherwise dispose of, all or any portion of any of the Properties or any other Company Asset (except immaterial items of personal property sold in the ordinary course of business) or of any of the Company’s direct or indirect interests in any Property or any Subsidiary;

(2)(a) change the nature of the business or the method of conducting the affairs of the Company or any Subsidiary or the use of any Property or (b) acquire any land or other real property or interest therein;

(3)enter into any agreement or other arrangement with the Class B Member, any Guarantor or any of their respective Affiliates unless (i) such agreement or other arrangement is on arm’s-length commercially reasonable terms and (ii) such agreement or other arrangement is terminable by the Class A Member following the declaration of a Changeover Event without payment of any termination or similar fee; provided that the Mortgage Loan Documents, First Mezzanine Loan Documents and Operating Leases are hereby approved in their current form;

(4)fail to comply with any of the covenants set forth in Section 5.15;

(5)to the fullest extent permitted by law, dissolve and wind-up the Company or any Subsidiary or elect to continue the Company or any Subsidiary or elect to continue the business of the Company or any Subsidiary (or permit any Subsidiary to do any of the foregoing) (other than dissolving and winding up any Subsidiary whose sole direct or indirect asset was a Property sold in accordance with the provisions hereof);

(6)except (i) as permitted under the Senior Loan Documents with respect to the Senior Loan Properties, (ii) any refinancing of any of the Senior Loans in which the Company concurrently redeems the Class A Member’s Interest in full for the Redemption Price, and (iii) any incurrence of Additional Mezzanine Loans in accordance with the terms of the Senior Loan Documents where the Company concurrently pays the Class A Member all of the Net Financing Proceeds from the incurrence thereof, incur, renew or refinance Indebtedness of the Company or any Subsidiary (or permit any Subsidiary to do any of the foregoing);

(7)except for modifications that are both not material and not adverse to the Class A Member or the Company or any of its Subsidiaries, modify (i) any loan documentation (including the Senior Loan Documents) executed by the Company or any Subsidiary or (ii) any other material agreement (including any franchise, leasing or property or asset management agreement) the execution of which required the approval of the Class A Member (or permit any Subsidiary to do any of the foregoing);

(8)institute proceedings to adjudicate the Company or any Subsidiary a bankrupt, or consent to the filing of a bankruptcy proceeding against the Company or any Subsidiary, or file a petition or answer or consent seeking reorganization of the Company or any Subsidiary under the Bankruptcy Code or any other similar applicable federal, state or foreign law, or consent to the filing of any such petition against the Company or any Subsidiary, or consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or any Subsidiary or of its property, or make an assignment for the benefit of creditors of the Company or any Subsidiary, or admit, in any legal proceeding, the Company’s or any Subsidiary’s inability to pay its debts generally as they become due (or permit any Subsidiary to do any of the foregoing); or make any decision on behalf of the Company or any Subsidiary with respect to any Bankruptcy or other similar proceeding under any present or future federal, state, local or other law involving the Company, any Subsidiary or any portion of the Property;

(9)organize or form any Subsidiary of the Company or of any Subsidiary or become a member of any such entity (it being understood that (A) the Company already is a member of Mezzanine GP, TRS Holdco, 8PK Holdco and 8PK TRS Holdco and a limited partner of First Mezzanine Borrower, (b) Mezzanine GP is the general partner of Mezzanine, (C) First Mezzanine Borrower is already a member of LLC Borrower, BHGL Borrower, PXGL Borrower, GBGL Borrower, NFGL Borrower, MBGL 100 Borrower, MBGL 950 Borrower and Owner GP, and a limited partner of LP Borrower, DLGL Borrower and SAGL Owner (D) Owner GP is already the general partner of LP Borrower, DLGL Borrower and SAGL Owner, (E) TRS Holdco is already a member of Main TRS, HIL TRS, MCK TRS, MISC TRS, DEKS TRS, and TRS GP and a limited partner of Main LP TRS and HIL LP TRS, (E) DEKS TRS is already a member of KS TRS, (F) TRS GP is already a general partner of Main LP TRS and HIL LP TRS, (H) Main LP TRS is already a member of TX Concessions, (H) TX Concessions is already a member of TX Management, (I) TX Management is already a member of TX Holdings, (J) TX Holdings is already a member of TX Beverage, (K) 8PK Holdco is already a member of Chattanooga Owner, CO Springs Owner, Columbus Owner, Atlanta Owner and 8PK Owner GP and a limited partner of Fayetteville Owner, (L) 8PK Owner GP is already the general partner of Fayetteville Owner, (M) 8PK TRS Holdco is already the member of 8PK HIL TRS, MGBL 1000 TRS, Atlanta TRS, 8PK NTC TRS, and the limited partner of Fayetteville TRS and SAGL TRS, (N) 8PK NTC TRS is already the general partner of Fayetteville TRS and SAGL TRS, (O) 8PK Holdco intends to become the member of MBGL 1000 TRS and the limited partner of SAGL TRS and (P) 8PK Owner GP intends to become the general partner of SAGL TRS), other than in connection with the incurrence of an Additional Mezzanine Loan in accordance with the terms of this Agreement, in which case the Company shall own one hundred percent (100%) of the interests in the Subsidiary formed for the purpose of incurring such Additional Mezzanine Loan, which in turn shall own one hundred percent (100%) of the interests in the First Mezzanine Borrower;

(10)amend this Agreement, the Certificate or any other Organizational Document of the Company, any Subsidiary (or permit any Subsidiary to do the same) or the Class B Member;

(11)merge or consolidate the Company or any Subsidiary with or into any other Person (or permit any Subsidiary to do the same) (or engage in any other transaction having substantially the same effect);

(12)make distributions to Members other than as required in, and in accordance with, Article 8 of this Agreement;

(13)create or permit the creation of any encumbrance on any Property or the Company’s direct or indirect interest in any Subsidiary or any other Company Asset (or permit any Subsidiary to do any of the foregoing) other than space leases entered into in the ordinary course and, with respect to Senior Loan Property, in accordance with the terms of the Senior Loan Documents and, with respect to Senior Loan Property, such other encumbrances as are permitted by the terms of the Senior Loan Documents, provided, however, that, with respect to the Senior Loan Properties, the Subsidiaries may, without the consent of the Class A Member, contest mechanics’ liens as permitted by the terms of the Senior Loan Documents;

(14)permit any demolition, construction, alteration or removal with respect to any Property unless, with respect to Senior Loan Property, in accordance with the Senior Loan Documents, including matters related to casualty or condemnation (unless requisite consent is obtained); and

(15)appoint any replacement Managing Member.

Upon the declaration of a Changeover Event, the Class A Member or any Person designated by it shall have the exclusive authority to take each of the foregoing actions and make each of the foregoing decisions on behalf of the Company as it deems appropriate in its sole discretion and any requirement in this Agreement, at law or otherwise that it seek approval from or consult with the Class B Member or any other Person shall be of no force or effect.

3.7Class B Member Affiliate Contracts. The Class B Member shall enforce in all material respects the material obligations of each counterparty to a Class B Member Affiliate Agreement. If the Class A Member shall request in writing to the Class B Member that the Class B Member enforce any material obligation of a counterparty to any Class B Member Affiliate Contract and the Class B Member shall not, promptly following receipt of such request, proceed diligently to enforce such material obligation, then the Class A Member may, in the name of the Company and/or any of its Subsidiaries, exercise any right or remedy available to the Company and/or any of its Subsidiaries under the Class B Member Affiliate Contract in question.

3.8Cooperation. If the Managing Member is removed as Managing Member in accordance with the provisions of this Article 3 or otherwise pursuant to the terms of this Agreement, and a replacement Managing Member has been selected by the Class A Member, or if the Class A Member has elected to exercise any of the remedies set forth in Section 3.3, then, in each case, the Managing Member shall cooperate fully with the Class A Member and, to the extent applicable, the replacement Managing Member, and furnish all books and records and any and all other information in its possession, or reasonably obtainable by the existing Managing Member, related to the management and development of the Company and the Properties as reasonably requested by such persons.

3.9The Class A Member’s Right to Cure Senior Loan Defaults. If the Class A Member receives notice or otherwise becomes aware of any default (i.e., an event that would constitute an “event of default” after applicable grace and cure periods) under any of the Senior Loan Documents, then, in addition to the rights of the Class A Member to fund Protective Capital pursuant to Section 6.2 below, the Class A Member shall have the right to take any such action on behalf of the Company and its Subsidiaries as is reasonably necessary to cure such default, provided that the Class A Member first provide the Class B Member with at least two (2) Business Days’ prior notice of such proposed action unless there is not sufficient time to provide such prior notice and cure such default within the applicable grace or cure period, in which case, the Class A Member shall provide the Class B Member notice of such action concurrently with taking such action.

3.10SeniorLoan and 8PK Transfer. For the avoidance of doubt, the Class A Member and the Class B Member have approved certain matters described the Consent Letter specified in clause (iii) of the definition thereof.

ARTICLE 4RIGHTS AND DUTIES OF MEMBERS

4.1Duties and Obligations of the Class B Member.

(a)In addition to such duties as are described elsewhere in this Agreement, the Managing Member shall (or shall cause the applicable Property Managers to) (i) prepare and deliver to the Class A Member (or cause to be prepared and delivered to the Class A Member) the Annual Budget for each Budget Year in accordance with Section 5.3, (ii) deliver (and cause the Property Manager to deliver) to the Class A Member promptly upon its receipt, copies of all (x) summonses and complaints served on the Company, any Subsidiary or the Class B Member (as the Managing Member of the Company) which are (I) served against the Company or the Managing Member or (II) not covered by insurance or (III) reasonably expected to result in a Material Adverse Effect and (y) written notices of default on any loan or other indebtedness for borrowed money of the Company or any Subsidiary or of any judgment or attachment against any Company Asset, the Property or the direct or indirect interests of Company in the Subsidiaries that is either against the Company or in excess of $1,000,000, (iii) monitor the Company’s and the Subsidiaries’ compliance with the Senior Loan Documents (and use diligent efforts to cause their compliance with the terms thereof), mortgages (and cause their compliance with the terms thereof) and any other agreements to which the Company or any Subsidiary is bound unless any such non-compliance is not reasonably expected to be material (and taking appropriate steps on behalf of the Company to cure any non-compliance to the extent permitted under this Agreement and promptly notifying the Class A Member of any such non-compliance), and (iv) carry out its responsibilities under Section 4.2 and the other sections of this Agreement.

(b)In the event the Class B Member shall fail to perform or comply with, or to cause the performance of or compliance with, any obligation or duty imposed on the Managing Member pursuant to this Agreement, then, without limiting any other remedy available to the Class A Member, the Class A Member shall have the right (but not the obligation) after ten (10) Business Days’ notice to the Managing Member to perform or comply with, or cause the performance of or compliance with, such obligation, any such additional cost or expense to be reimbursed by the Company.

4.2Prohibition of Other Activities of the Class B Member. The Class B Member agrees that it will not engage in any activity not related to the Company or invest in any venture other than the Company or possess any interest therein independently or with others. Notwithstanding the foregoing, any owner of a direct or indirect interest in the Class B Member may engage or invest in any other activity or venture or possess any interest therein independently or with others whether or not in competition with the Company or any Subsidiary. In addition, no owner of a direct or indirect interest in the Class B Member or any other Person employed by, related to or in any way affiliated with any such Person shall have, by virtue of the terms of this Agreement, any duty or obligation to disclose or offer to the Company or the Members, or obtain for the benefit of the Company or the Members, any other activity or venture or interest therein, and none of the Company, the Members, the creditors of the Company or any other Person having any interest in the Company shall have (A) any claim, right or cause of action under this Agreement against the Class B Member or any owner of a direct or indirect interest in the Class B Member or any other Person employed by, related to or in any way affiliated with any such Person, by reason of any direct or indirect investment or other participation, whether active or passive, in any such activity or venture or any interest therein or (B) any right under this Agreement to participate therein.

4.3Limitation on Member Liability; Indemnification.

(a)Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be the debts, obligations and liabilities solely of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member of the Company; provided, however, that the foregoing shall not: (i) relieve the Guarantors from any liability arising under the Guarantees or the Environmental Indemnity Agreement or otherwise limit or impair the obligations of the Guarantors thereunder or (ii) have any effect on the liability of such Persons for their own willful or tortious misconduct.

(b)In any threatened, pending or completed action, suit or proceeding, to the fullest extent permitted by law, each Member shall be fully protected, indemnified and held harmless by the Company against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, proceedings, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, reasonable attorneys’ fees, costs of investigation, fines, judgments and amounts paid in settlement, actually incurred by such Member in connection with the business of the Company any Subsidiary or any Property in connection with such action, suit or proceeding) (collectively, “Damages”) by virtue of its status as Member or with respect to any action or omission taken or suffered in good faith, other than liabilities and losses resulting from the fraud, gross negligence or willful misconduct of such Member; provided, however, such Member shall not be so indemnified for any acts determined by any adjudicative or arbitration procedure to be in contravention of an express term of this Agreement or in breach of its fiduciary duties. The indemnification provided by this Section 4.3(b) shall be recoverable only out of the assets of the Company, and no indemnity payment from funds of the Company (as distinct from funds from other sources, such as insurance) shall be payable under this Section from amounts owing to the Class A Member.

(c)The Company shall indemnify, reimburse, defend and hold harmless the Class A Member and its Related Persons for, from and against any and all Damages of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against them, in any way relating to or arising out of the following: (i) the making of the Class A Member’s Capital Contribution, (ii) owning or holding the Class A Member’s interest, (iii) enforcing the Class A Member’s rights or remedies under this Agreement, (iv) any acts or omissions of the Class A Member (directly or through its Affiliates) as a Member or Managing Member, as applicable, or (v) any Environmental Claim resulting from any circumstance, condition, action or event first occurring after February 27, 2015 (other than Environmental Claims arising from circumstances, conditions, actions or events first occurring after the date of the declaration of a Changeover Event and not caused by the Class B Member or an Affiliate thereof); provided, however, that neither the Class A Member nor any of its Related Persons shall have the right to be indemnified under this subsection (c) for the Class A Member’s or its Affiliates’ own gross negligence, illegal acts, fraud or willful misconduct. For purposes of this Section 4.3(c), the Company shall not be deemed to be an Affiliate of the Class A Member unless and until the Class A Member exercises control over the Company following the declaration of a Changeover Event. The provisions of and undertakings and indemnification set forth in this subsection (c) shall survive the repayment in full of all sums otherwise due the Class A Member under this Agreement or in respect of its Interest, the transfer of the entirety of the Class A Member’s Interest to unaffiliated third parties, and the termination of this Agreement or liquidation of the Company.

(d)All obligations in this Agreement to indemnify, defend, or hold harmless the Class A Member shall survive the Transfer or redemption of the Class A Member’s Interest, and the sale or other Transfer of any Property.

4.4Compensation of Members and their Affiliates. No Member, nor any of their respective Affiliates, shall be entitled to compensation from the Company in connection with any matter that may be undertaken in connection with the fulfillment of its duties and responsibilities hereunder.

4.5Use of Company Property. No Member shall make use of the property or funds of the Company, or assign its rights to specific Company property, other than for the business or benefit of the Company.

4.6Tax Contests. The Class B Member shall give prompt notice to the Class A Member of any and all tax proceedings relating to any matters covered in Section 2.12. The Managing Member shall furnish the Class A Member with timely and reasonably detailed status reports regarding any such tax proceedings promptly after any material new development, and the Class A Member shall be given reasonable advance notice by the Managing Member so that it shall have the opportunity to participate, and permit its professional tax advisers to participate, in person in all of such tax proceedings (including prior review of submissions by the Company and any of its Subsidiaries in respect of any such tax proceedings). The Class B Member shall not to settle any such tax proceeding which would have an adverse effect on the Class A Member without obtaining the prior approval of the Class A Member, such approval not to be unreasonably withheld, conditioned or delayed.

4.7Duty of the Class A Member. To the fullest extent permitted by law, the Class A Member shall have no fiduciary or other duty to any other Member or to the Company, and each other Member waives any fiduciary or other duty or claim based thereon; provided, however, that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. In furtherance of the foregoing, each Member acknowledges and agrees that the Class A Member shall be entitled, in granting or withholding any consent or approval or carrying out any of its rights or remedies hereunder, to consider only the interests of the Class A Member and such other factors as the Class A Member determines in its sole discretion (even if such interests are different than or at odds or in conflict with the interests of the Company or other Members) and that the Class A Member has no duty or obligation to give any consideration to any interest of, or factors affecting, the Company or the other Members; provided, however, that the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. Whenever the Class A Member is permitted to make a determination in “good faith” or another express standard, the Class A Member shall act under such express standard and shall not be subject to any other or different standard imposed by any other relevant provision of law or otherwise. Whenever the Class A Member is permitted to consent, withhold consent, approve, withhold approval or to take any other action under the terms of this Agreement, it may do so in its sole and absolute discretion and judgment unless this Agreement expressly states otherwise, and any approval or consent of the Class A Member shall not be effective unless given in writing. The Class B Member acknowledges and agrees that the Class A Member and/or any owner of a direct or indirect interest in the Class A Member may engage or invest in any other activity or venture or possess any interest therein independently or with others whether or not in competition with the Company or any Subsidiary notwithstanding any provision to the contrary at law or in equity. Neither the Class A Member nor any owner of a direct or indirect interest in the Class A Member or any other Person employed by, related to or in any way affiliated with any such Person shall have any duty or obligation to disclose or offer to the Company or the Members, or obtain for the benefit of the Company or the Members, any other activity or venture or interest therein, and none of the Company, the Members, the creditors of the Company or any other Person having any interest in the Company shall have (A) any claim, right or cause of action against the Class A Member or any owner of a direct or indirect interest in the Class A Member or any other Person employed by, related to or in any way affiliated with any such Person, by reason of any direct or indirect investment or other participation, whether active or passive, in any such activity or venture or any interest therein or (B) any right to participate therein.

ARTICLE 5BOOKS AND RECORDS; ANNUAL REPORTS;EXPENSES AND OTHER MATTERS

5.1Books of Account. At all times during the continuance of the Company, the Class B Member (in its capacity as Managing Member) shall keep or cause to be kept true and complete books of account in which shall be entered fully and accurately each transaction of the Company. Such books shall be kept on the basis of the Fiscal Year in accordance with the accrual method of accounting, and shall reflect all Company transactions in accordance with generally accepted accounting principles prevailing in the United States of America.

5.2Availability of Books of Account. All of the books of account referred to in Section 5.1, together with an executed copy of this Agreement and the Certificate, and any amendments thereto, shall at all times be maintained at the principal office of the Company or such other location as the Managing Member may propose and the Class A Member shall approve, and upon reasonable advance written notice to the Managing Member, shall be open to the inspection and examination of each other Member or its representatives during reasonable business hours.

5.3Annual Reports and Statements; Annual Budgets. ( The Class B Member (in its capacity as Managing Member) shall provide to each other Member, copies of all quarterly and annual financial statements and other financial reports delivered to the Mortgage Lender concurrently with the delivery of such reports to the Mortgage Lender, it being agreed that the foregoing shall include financial statements and other financial reports presenting the financial results and other information for the Company and its Subsidiaries on a consolidated basis. In addition, the Class B Member (in its capacity as Managing Member) shall send to each Member (i) all other material written notices, reports and other material information required to be delivered by the Subsidiaries under any of the Senior Loan Documents concurrently with the delivery of such materials to the applicable Senior Lender(s), (ii) all completed IRS Forms 1099 for the review and approval of the Managing Member and the Class A Member no later than ten (10) days prior to the due date of such Schedules, but in no event later than February 15 of each year in draft form and February 28 of each year in final form and (iii) such other information concerning the Company and reasonably requested by any Member as is necessary for the preparation of such Member’s federal, state and local income or other tax returns.

(a)Not later than December 1 of the prior Budget Year with respect to each Budget Year, the Managing Member shall prepare for the Company for the Budget Year in question, the Annual Budget for the Company. The Class A Member shall not have the right to approve any proposed Annual Budget; provided that the Class B Member shall promptly respond to any inquiries made, or additional information requested, by the Class A Member with respect to each proposed Annual Budget.

(b)The Company shall cause the Company’s independent accountants to prepare (under the oversight of the Managing Member), on an accrual basis, all federal, state and local tax returns required to be filed by the Company or any Subsidiary, and shall cause each Subsidiary to file all such returns and other reports that it is required by law to file. The Company shall prepare or cause to be prepared all required returns as if the Company and the Subsidiaries named in the return in a manner consistent with Section 2.12.

5.4Class A Member’s Expenses. The Company covenants and agrees to reimburse the Class A Member upon receipt of written notice from the Class A Member for all reasonable out-of-pocket expenses incurred by the Class A Member (including reasonable attorneys’ fees and other legal expenses) in connection with (A) the negotiation, preparation, execution, delivery and administration of any consents, amendments, waivers or other modifications to this Agreement and the other Transaction Documents and any other documents or matters requested by the Class B Member; (B) enforcing or preserving any rights, in response to third party claims or the prosecuting or defending of any action or proceeding or other litigation in each case against, under or affecting the Class B Member, the Company, any Subsidiary, this Agreement, the other Transaction Documents or the Collateral or any Property; (C) enforcing any obligations of or collecting any payments due from the Class B Member or the Company under this Agreement, the other Transaction Documents or with respect to any Property (including any modification, restructuring or “work out” related to the Transaction Documents or the obligations thereunder); and (D) any insolvency or bankruptcy proceedings.

5.5Cash Management Account. The Managing Member has opened an interest bearing account (or such successor account as the Managing Member may select or establish thereafter for such purpose, the “Cash Management Account”) with Wells Fargo Bank, National Association (or such other banking institution as the Class A Member may select hereafter; the “Cash Management Bank”). The Company shall cause (i) all excess cash, after payment of Senior Loan debt service, reserves and property-level expenses, allowed to be distributed to the Company pursuant to the Senior Loan Documents and available after payment of rent by the TRS as required under the Operating Leases to be deposited in the Cash Management Account on the first Business Day that such distribution would be allowed under the Senior Loan Documents and (ii) all other excess cash, after payment of property-level expenses, of the Company and its Subsidiaries with respect to the 8-Pack Properties and available after payment of rent by the TRS as required under the operating leases with respect to the 8-Pack Properties to be deposited in the Cash Management Account on the date received by the Company or the first Business Day following the date received by its Subsidiaries. The Company may not establish or maintain any other bank accounts, securities accounts or other accounts without the prior approval of the Class A Member (which approval, among other things, may be expressly conditioned on appropriate cash management agreements in favor of the Class A Member). Amounts on deposit in the Cash Management Account shall be distributed in accordance with Sections 8.1 and 8.4.

(a)Pursuant to the terms of the Cash Management Agreement (and any substitute or additional cash management agreement for any substitute or additional Company accounts), (i) until the declaration of a Changeover Event, the Class B Member shall have control over, and the sole right to withdraw funds from, the Cash Management Account (and any substitute or additional Company accounts), and (ii) following the declaration of a Changeover Event, the Class A Member shall have control over, and the sole right to withdraw funds from, the Cash Management Account (and any substitute or additional Company accounts).

(b)All reasonable costs and expenses for establishing and maintaining the Cash Management Account shall be paid by the Company. All interest on the Cash Management Account shall be added to and become a part of the Cash Management Account and shall be disbursed in the same manner as other monies deposited in the Cash Management Account. The Class A Member shall not be liable for any loss sustained on the investment of any funds in accordance with this Agreement.

5.6Plan Assets. Neither the Company nor any of its Affiliates shall at any time (a) hold any Plan Assets; (b) maintain or contribute to, or agree to maintain or contribute to, or permit any ERISA Affiliate to maintain or contribute to or agree to maintain or contribute to, or permit any ERISA Affiliate to maintain or contribute to or agree to maintain or contribute to, any employee benefit plan subject to Title IV or Section 302 of ERISA or Section 312 of the Code; or (c) engage in a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code, as such sections relate to the Company and its Affiliates, or in any transaction that would cause any obligation or action taken or to be taken hereunder or under the Transaction Documents to be a non-exempt prohibited transaction under ERISA.

5.7Insurance. (a) The Company shall cause each Subsidiary to keep the Properties it owns insured at all times with the coverage and in the amounts required hereunder against loss or damage by fire and against loss or damage by other risks and hazards covered by a standard extended coverage insurance policy (including, without limitation, riot and civil commotion, vandalism, malicious mischief, burglary and theft on the “Special Form” (formerly an “All Risk” form)). Such insurance shall be in an amount (i) equal to at least the full replacement cost of the improvements, furniture, fixtures and equipment owned by such Subsidiaries (exclusive of the cost of foundations and footings), without deduction for physical depreciation, (ii) such that the insurer would not deem any Subsidiary a co-insurer thereunder and (iii) at least equal in type and amount to the types of coverage and amounts required by the lender in any of the Senior Loan Documents.

(a)The Company will maintain the insurance policies described in Section 5.1 of the Mortgage Loan Agreement whether or not the Mortgage Loan Documents remain in effect.

5.8Casualty/Condemnation. (a) In the event of any Casualty or Condemnation requiring notice to the Mortgage Lender, the Company shall give prompt notice thereof to each of the Managing Member and the Class A Member. Subject to the terms of any of Senior Loan Documents, the Managing Member may settle and adjust any claims and the reasonable expenses incurred by them in the adjustment and collection of such proceeds shall be reimbursed by the Company upon request therefor.

(a)Notwithstanding anything to the contrary contained herein, if the Company or any of its Subsidiaries is required under the terms of the Senior Loan Documents to restore any Senior Loan Property, then the Company and the Subsidiaries shall be entitled to apply the insurance proceeds or the condemnation awards from the casualty or condemnation affecting such Property to such restoration in accordance with the Senior Loan Documents.

5.9Existence; Compliance with Legal Requirements. The Company shall cause each Subsidiary to do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence as a limited liability company and all rights, licenses, permits, franchises and other agreements necessary for the continued use and operation of its business, and shall comply with all Legal Requirements and Insurance Requirements applicable to each Subsidiary and each Property and, with respect to the Senior Loan Properties, in accordance with the provisions of the Senior Loan Documents. In addition, and whether or not required by law, the Company shall cause each Subsidiary at all times to maintain, preserve and protect all of the Properties to the extent necessary for the continued conduct of its business and maintain the Properties in a condition at least as good as that on the Original Closing Date except for reasonable wear and use, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto, or, in each case, such higher standard as required under any applicable franchise license agreement entered into by any Subsidiary in each case, with respect to the Senior Loan Properties, in accordance with the provisions of the Senior Loan Documents.

5.10Impositions and Other Claims. The Company shall and shall cause each Subsidiary to pay and discharge, or cause to be paid or discharged, all taxes, assessments and governmental charges levied upon it, its income and assets as and when such taxes, assessments and charges are due and payable (including, without limitation, all impositions), as well as all lawful claims for labor, materials and supplies or otherwise, which could become a lien or encumbrance on any of its assets, subject to, in the case of any Senior Loan Property, any rights to contest permitted under the Senior Loan Documents. The Company shall not permit or suffer (and shall cause the Subsidiaries not to permit or suffer) to exist any Lien on any Property, the Company’s direct or indirect interest in the Subsidiaries or any other Company Asset, other than Permitted Encumbrances (as defined in the Senior Loan Documents) or the security interest of the Class A Member in the Cash Management Account; provided, however, that, in the case of any Senior Loan Property, the Subsidiaries may, without the consent of the Class A Member, contest mechanics’ liens as permitted by the terms of the Senior Loan Documents. If a Lien is imposed on a Property due solely to Senior Lender’s failure to pay taxes that, under the Senior Loan Documents, the Senior Lender is obligated to pay and for which sufficient funds in the Senior Loan tax reserve are available, the imposition of such Lien will not constitute a breach of this covenant or a Changeover Event.

5.11Litigation. The Managing Member shall give prompt written notice to the Class A Member of any litigation or governmental proceedings pending or threatened (in writing) against the Company, the Class B Member, any Guarantor or any Subsidiary of which it has actual knowledge which, if determined adversely to such Person, could reasonably be expected to have a Material Adverse Effect.

5.12Access to Properties. The Company shall, and shall cause each Subsidiary to, permit agents, representatives and employees of the Class A Member or its Affiliates to inspect all of the Properties or any part thereof and the books and records of the Company and each Subsidiary at any time and from time to time as may be requested by the Class A Member or such Affiliates.

5.13Notice of Default. The Managing Member shall promptly advise the Class A Member of any change in the condition, financial or otherwise, of the Company, any Guarantor or any Subsidiary which has had or is reasonably expected to have any Material Adverse Effect, or of the occurrence to the best of the Managing Member’s knowledge of the occurrence of any Changeover Event or of any event that, with the giving of notice of the passage of time, could become a Changeover Event.

5.14Intentionally Omitted.

5.15Conduct of Business.

(a)The Class B Member, the Company and each Subsidiary shall conduct their respective affairs in accordance with each of the covenants and restrictions set forth on Schedule 5.15(a) (which schedule is hereby incorporated into and made a part of this Agreement) and neither the Company nor the Class B Member shall take any action or refrain from taking any action (or permit any Subsidiary to take any action or refrain from taking any action), inconsistent with the foregoing.

(b)The Company and the Class B Member agree to the representations, warranties and covenants set forth in Schedule 5.15(b).

5.16Standard of Operation. Subject to Section 3.6 and, with respect to Senior Loan Properties, the terms of the Senior Loan Documents, the Company shall operate or cause to be operated the Properties at all times in a manner consistent with at least the standard of operation of the Properties as of the Original Closing Date (or, if greater, in accordance with the terms of the applicable franchise license agreements entered into by any Subsidiary).

5.17No Sales of Assets. Without the prior written consent of the Class A Member, the Company will not, and will not enter into any agreement or option to, sell, transfer, assign or otherwise dispose of any of the Company’s interests in any Company Asset including any direct or indirect interest in any Subsidiary or any Property (excluding transfers of immaterial items of personal property in the ordinary course of business), nor will it permit any Subsidiary to, or to enter into any agreement or option to, sell, transfer, assign or otherwise dispose of any Property (excluding transfers of immaterial items of personal property in the ordinary course of business), except (i) for all-cash consideration and (ii) in an amount that would (in the case of the Senior Loan Properties, after taking into account any amounts payable under the Senior Loan Documents) result in the Company receiving an amount equal to or greater than such Property’s Release Payment, unless the Redemption Price is paid in full.

5.18Compliance with Senior Loans. At all times, whether or not the Senior Loans remain outstanding, the Managing Member and the Company shall comply, and cause each Subsidiary and Senior Loan Property Manager that is an Affiliate of the Class B Member to comply with all provisions of the Senior Loan Documents.

5.19Intentionally Omitted.

5.20Prohibited Persons. The Class B Member shall not permit the Company or any Subsidiary to: (i) conduct any business, nor engage in any transaction or dealing, with any Prohibited Person, including, but not limited to, the making or receiving of any contribution of funds, goods, or services, to or for the benefit of a Prohibited Person; or (ii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set in Executive Order.

5.21Forgiveness of Debt. None of the Company, the Class B Member or any Subsidiary shall cancel or otherwise forgive or release any material claim or debt owed to it by any Person, except for adequate consideration or in the ordinary course of its business.

ARTICLE 6CAPITAL CONTRIBUTIONS,LOANS AND LIABILITIES

6.1Initial Capital Contributions of the Members. Each of the Members is hereby deemed to have made initial contributions to the Company (the “Initial Capital Contributions”) and to have Percentage Interests as set forth in Schedule 6.1. The limited liability company interests issued to each Equity Member pursuant to this Agreement have been duly authorized and are validly issued limited liability company interests.

6.2Protective Capital/Additional Capital. In the event that the Company has insufficient cash on hand (i) to pay debt service owing pursuant to any of the Senior Loan Documents or to cure or avoid a default under any of the Senior Loan Documents (including to make any repairs or replacements, capital improvements or other expenditures required under the Senior Loan Documents), (ii) to pay real estate taxes, insurance premiums or ground rents, or (iii) to make any expenditures (including, without limitation, to fund the costs of any environmental remediation) or other disbursements to third parties that are necessary to preserve or protect any of the Properties or the Company’s direct or indirect interest therein (any additional funds required for purposes of funding any of the foregoing items are referred to herein as “Protective Capital”), the Class B Member shall contribute to the Company additional capital, in cash, in an amount sufficient to enable the Company to meet the obligation giving rise to such need on a timely basis, in which event sums so contributed shall be treated as an additional Capital Contribution. If the Class B Member fails to contribute such Protective Capital within the applicable time period set forth in paragraph (b) below after the Class A Member gives the Class B Member written notice that it has reasonably determined that the Company is in need of such additional capital, then, subject to the limitations set forth in paragraph (b) below, the Class A Member shall have the right, power and authority, but not the obligation, to make such payments on the Company’s behalf and, notwithstanding the limitations set forth in Article 3, to take any other actions reasonably related thereto in the Company’s name and on the Company’s behalf to fulfill the purpose for which the Protective Capital was needed, and the amount of any advance made by the Class A Member, together with any expenses incurred by the Class A Member in connection therewith (collectively, the “Class A Member Protective Advance”), shall constitute an additional Capital Contribution by the Class A Member, which shall be returned in full (together with a return thereon at the Increased Rate) prior to any distributions to the Class B Member. The provisions of this Agreement, including this Section 6.2, are intended to benefit the Members and, to the fullest extent permitted by law, shall not be construed as conferring any benefit upon any creditor of the Company (and no such creditor of the Company shall be a third-party beneficiary of this Agreement).

(a)The Class A Member shall not be entitled to make any Protective Capital contribution unless it has first given the Class B Member at least five (5) Business Days’ prior written notice of its intention to make the contribution (which notice will specify the amount of the proposed contribution and the purpose for which the contribution is being made), provided, however, that the Class A Member may make a Protective Capital contribution upon one (1) day’s prior notice to the Class B Member in the case of an emergency (e.g., an expense necessary to prevent the incurrence by the Company or any Subsidiary of penalties or late fees or a default under the Senior Loan Documents, to prevent other imminent material harm to the Company, the Subsidiaries or the Properties or to preserve human health and/or safety), or with such shorter or no prior notice (but subsequent notice of such emergency and the Protective Capital contribution relating thereto as soon as possible thereafter) to the extent that one (1) day’s notice would jeopardize the ability of the Class A Member to respond to the emergency. The Class B Member shall contribute to the Company funds necessary to enable the Company to reimburse the Class A Member for any such emergency contribution within five (5) days after receipt of notice that the contribution was made, together with interest thereon at the Increased Rate until repaid.

(b)Notwithstanding anything to the contrary herein, the Class A Member shall not be required under any circumstance to contribute additional capital or other amounts to the Company and no other Member shall be required to contribute additional capital except as set forth in this Section 6.2. Following the occurrence of a Changeover Event, the Class A Member shall be entitled to fund additional Capital Contributions from time to time as necessary to manage, operate, finance and sell the Company and its Subsidiaries and the Properties, as determined by the Class A Member in its sole and absolute discretion.

6.3Application of Capital. The Class B Member shall take such actions as are reasonably necessary on behalf of the Company and/or any of its Subsidiaries to disburse the proceeds of any Capital Contributions or Protective Capital for the purposes for which the funds were contributed.

6.4Capital of the Company. Except as expressly provided for in this Agreement, no Member shall be entitled to withdraw or receive any interest or other return on, or return of, all or any part of its Capital Contribution, or to receive any Company Assets (other than cash) in return for its Capital Contribution. The Class A Member shall not be entitled to make a Capital Contribution to the Company except as expressly authorized or required by this Agreement.

ARTICLE 7INTENTIONALLY OMITTED

ARTICLE 8APPLICATIONS AND DISTRIBUTIONS OF AVAILABLE CASH;REDEMPTION

8.1Distributions of Cash. The Managing Member shall cause the Company to distribute all Available Cash (other than Net Sales Proceeds, Net Disposition Proceeds, Net Financing Proceeds and the QCR Redemption Amount, which shall be distributed in accordance with Section 8.4) monthly on each Scheduled Distribution Date as follows:

(1)First, 100% to the Class A Member until it has received payment of the unpaid Increased Return, if any, and then any other Class A Return, if any, for any Accrual Periods ending on or prior to such Scheduled Distribution Date;

(2)Second, 100% to the Class A Member until it has received payment of all Protective Capital contributed by the Class A Member plus, to the extent not returned under clause (i), the Increased Return thereon calculated from the date such contribution was made until repaid in full;

(3)Third, if a Changeover Event has occurred, 100% to the Class A Member until the Class A Member has received in full the Redemption Price as of such Scheduled Distribution Date; and

(4)Fourth, all remaining cash flow may be distributed to the Class B Member or, if the Class A Member has purchased the Interest of the Class B Member pursuant to Section 3.4, shall be distributed to the Class A Member.

(b)The unavailability of cash to pay in full the amounts due to the Class A Member shall not excuse the Company’s obligation to pay such amounts, which shall be an unconditional obligation.

(c)Notwithstanding the foregoing, if the Sellers shall at any time be obligated to pay any First Pool Offset Amounts (as such term is defined in the Sale Agreement), then the Company shall pay such obligation to the Class B Member from amounts which would otherwise be distributed to the Class A Member (but any such payment shall nonetheless constitute distribution(s) to the Class A Member for purposes of this Agreement).

8.2Sales; Financings; Qualified Capital Raises.

(a)In the event of a sale, transfer, assignment or other disposition of any Property by any Subsidiary or of any of the Company’s direct or indirect interests in any Property or any Subsidiary, as applicable, the net proceeds to the Company (taking into account amounts paid to the Senior Lender pursuant to the Senior Loan Documents) from such sale, transfer, assignment or other disposition after deduction of reasonable third-party costs approved by the Class A Member (such proceeds, the “Net Sale Proceeds”), shall be distributed as provided in Section 8.4.

(b)In the event of (i) the Company or any of its Subsidiaries incurs any Additional Mezzanine Loans or (ii) there is a refinancing of any of the Senior Loans or any financing of the 8PK Properties, then the net proceeds to the Company (taking into account, in the case of the Senior Loan Properties, amounts paid to the Senior Lender pursuant to the Senior Loan Documents) from such financing or refinancing, as applicable, after deduction of all reasonable third-party costs approved by the Class A Member (such net proceeds, the “Net Financing Proceeds”), shall be distributed as provided in Section 8.4.

(c)In the event of the occurrence of any Qualified Capital Raise during any calendar month, the Class B Member shall cause an amount equal to the QCR Redemption Amount for such Qualified Capital Raise (together with an accounting of all Qualified Capital Raises that occurred during such month) to be contributed to the Company by no later than the fifth (5th) day of the next calendar month (or the next Business Day if such 5th day is not a Business Day) and the Company shall immediately distribute such amount as provided in Section 8.4.

8.3Redemption Right.

(a)On any date from and after the Effective Date, the Class B Member shall have the right, on ten (10) days’ prior written notice to the Class A Member, to redeem all or any portion of the Class A Member’s Interest in the Company at a price equal to the Redemption Price as of such date (or, in the case of a redemption in part, the amount being so redeemed in an amount no less than $1,000,000, together with the amounts described in clauses (ii), (iii) and (iv) of the definition of “Redemption Price” contained herein), provided, however, that if a Changeover Event has been declared, then such redemption right may only be exercised until the earliest to occur of (i) in the case of a Changeover Event only, the completion of the “buy/sell” procedure described in Section 3.4 and (ii) the occurrence of a Bankruptcy with respect to the Company, the Class B Member or any Subsidiary (and after the first to occur of any of these events, neither Company nor the Class B Member shall have any right to redeem the Class A Member).

(b)Upon any closing of a redemption of one hundred percent (100%) of the Class A Member’s Interest permitted hereunder, and assuming that the Company has paid in full the Redemption Price and any and all fees and expense reimbursements then owing to the Class A Member and any of their Affiliates or designees, the Class A Member shall assign its Interest to the Class B Member or its designee without recourse and without representation or warranty other than that it owns the Interest and the same has not been transferred, pledged or otherwise encumbered (other than such encumbrances as are being released or terminated concurrently with such transfer).

8.4Distribution of Capital Event Proceeds. Net Sale Proceeds, Net Disposition Proceeds, Net Financing Proceeds and the QCR Redemption Amount shall be distributed immediately upon receipt as follows:

(1)First, 100% to the Class A Member until it has received payment of the unpaid Increased Return, if any, and then any other Class A Return, if any, for any Accrual Periods ending on or prior to such date;

(2)Second, 100% to the Class A Member until it has received payment of all Protective Capital contributed by the Class A Member plus, to the extent not returned under clause (1), the Increased Return thereon calculated from the date such contribution was made until repaid in full;

(3)Third, 100% to the Class A Member until the Class A Member has received: (i) in the event the Capital Event in question is a refinancing of any of the Senior Loans, the full Redemption Price as of the date such distribution is made, (ii) in the event the Capital Event in question is a sale of one of more of the Properties (or any indirect interest therein), the full Release Payments for such Properties (or such indirect interest, as applicable), (iii) in the case of a distribution of the QCR Redemption Amount in respect of any Qualified Capital Raise, such QCR Redemption Amount, and (iv) in the event of any other Capital Event, all of the Capital Event Proceeds from such other Capital Event (but, in the event such Capital Event only affects certain Properties (as opposed to all Properties), only in an amount up to the Release Payment for such Property), which distribution pursuant to this clause (3) shall be considered a return of, and reduce, the Class A Member’s Unrecovered Capital;

(4)Fourth, if a Changeover Event has occurred, 100% to the Class A Member until the Class A Member has received in full the Redemption Price as of the date such distribution is made; and

(5)Fifth, 100% to the Class B Member or, if the Class A Member has purchased the Interest of the Class B Member pursuant to Section 3.4, 100% to the Class A Member.

8.5Distribution After Changeover Event. Notwithstanding anything to the contrary herein, in no event will the Class B Member receive or be entitled to receive distributions or other amounts from the Company or any Subsidiary after a Changeover Event has occurred until the Class A Member has received all sums due it hereunder including the Redemption Price, and thereafter all sums shall be payable to the Class B Member.

ARTICLE 9TRANSFER OF COMPANY INTERESTS

9.1Restrictions on Transfers by the Class B Member.

(a)Except as expressly permitted by the rules set forth in Section 9.1(b) (any such permitted transfers, “Permitted Transfers”), the Class B Member may not Transfer, nor permit the Transfer of, all or any of its Interest to any Person and no Person owning any direct or indirect legal, beneficial or other interest in the Class B Member may Transfer, or permit the Transfer, of such interest, in each case without the Class A Member’s prior written consent.

(b)The direct or indirect transfer of membership interests in the members of the Class B Member by which, in a single transaction or a series of transactions, in the aggregate, not more than forty-nine percent (49%) of the direct and indirect membership interests in any member of the Class B Member shall be vested in parties not having an ownership interest as of the Original Closing Date shall constitute a Permitted Transfer if (i) such Transfer constitutes (x) a Qualified Capital Raise pursuant to the terms hereof or (y) a subsequent transfer of Class C Units, or OP Units or REIT Shares issued upon conversion or redemption thereof (all as defined in the A&R LPA) issued pursuant to a Qualified Capital Raise, so long as, in the case of this clause (y), the transferee agrees to be bound by that certain Payover Guaranty executed by the Brookfield Obligors on or about March 31, 2017 in respect to amounts received by such transferee and that certain Debt Standstill Agreement executed by the Brookfield Fund Entities on or about March 31, 2017, subject to reasonable carveouts similar in nature to the carve out for Brookfield Excluded Affiliates (as set forth in the SPA), and Brookfield continues to directly or indirectly Control the exercise of (A) the governance rights of the Class C Unit Holders set forth in the A&R LPA, if any remain in effect and (B) the rights and remedies granted to the holder of the Redeemable Preferred Share (as defined in the Articles Supplementary), to the extent such Redeemable Preferred Share remains outstanding, (ii) such Transfer does not violate the terms of the Senior Loan Documents, (iii) except for Transfers of direct or indirect interests in HIT OP, no Changeover Event has occurred and remains uncured, (iv) the Company and the Subsidiaries continue to be in compliance with the single purpose covenants set forth in Schedule 5.15(a), (v) except for Transfers of direct or indirect interests in HIT OP, the Class A Member receives not less than ten (10) days’ prior written notice of such proposed transfer, and (vi) following such Transfer, the Class B Member continues to be Controlled, directly or indirectly, by HIT OP, HIT OP continues to be Controlled, directly or indirectly by HIT REIT, and a REIT Change of Control has not occurred; provided that, notwithstanding the forty-nine percent (49%) limitation set forth above, in the case of subsequent direct or indirect transfers of Class C Units by Brookfield pursuant to clause (i)(y) above, Brookfield may directly or indirectly transfer up to seventy-five percent (75%) of the Class C Units in the aggregate (in a single transaction or a series of transactions) so long as all of the conditions set forth in clauses (i)(y) and (ii) through (vi) above are, and continue to be, satisfied.

9.2Transfers by the Class A Member.

(a)Until the occurrence of a Changeover Event (the date of such occurrence, “Lockout Expiration Date”), any direct or indirect transfer of any direct or indirect interests in the Class A Member shall be permitted without the consent of the Class B Member so long as (w) Whitehall Street and/or any other Controlled Affiliate of GS Group shall continue to own, directly or indirectly, at least twenty-five percent (25%) of the membership interests in the Class A Member, (x) GS Group shall continue to, directly or indirectly, Control the Class A Member, (y) the transferee is not a Person whose primary business is the ownership of select service or limited service hotels, and (z) such transfer does not violate the terms of the Senior Loan Documents. At any time on or after the Lockout Expiration Date, the Class A Member may, from time to time and without the consent or approval of any other Member, directly or indirectly transfer all or any portion of its Interest and/or of direct or indirect interests in the Class A Member to any Person as long as such Transfer does not violate the terms of the Senior Loan Documents (or if such Transfer would violate the terms of the Senior Loan Documents, the Class A Member has received consent thereto from the Senior Lender), and no change in Control of the Class A Member or transfer of direct or indirect ownership of the Class A Member or its Interest shall constitute a breach or a default hereunder. Notwithstanding the foregoing, (x) the Class A Member shall be entitled to Transfer all or any portion of its interest, and transfers of direct or indirect interests in the Class A Member shall be permitted, in either such case, if required by applicable law or regulation, and (y) Transfers of preferred stock issued by W2007 Grace Acquisition I, Inc. and/or W2007 Equity Inns Statutory Trust I shall be permitted at any time without the consent of the Class B Member.

(b)The Class B Member shall cooperate (and cause each Guarantor to cooperate) in any Transfer by the Class A Member of its Interest, including by executing amendments to this Agreement or any other Transaction Document so long as any such amendment does not alter any of the economic terms of any such agreement.

9.3Assignment Binding on Company. No Transfer of all or any part of the Interest of a Member otherwise permitted to be made under this Agreement shall be binding upon the Company unless and until a duplicate original of the assignment agreement or other instrument of transfer, duly executed and acknowledged by the assignor or transferor, has been delivered to the Company, and such instrument evidences (i) the written acceptance by the assignee of all of the terms and provisions of this Agreement, (ii) the assignee’s confirmation of the accuracy of each of the representations and warranties set forth in Section 2.10 (in the case of an assignment by the Class B Member) and the assignee’s representation that such assignment was made in accordance with all applicable laws and regulations and (iii) the consent to the Transfer of the Interest required pursuant to Section 9.1, if any. In addition, the Class A Member, in its discretion and as a condition precedent to such Person becoming a transferee, also may require any Person to whom a Transfer may be made pursuant to this Article 9 to make certain reasonable and customary representations, warranties and covenants solely to evidence compliance with U.S. federal and state securities laws including, but not limited to, representations as to its net worth, sophistication and investment intent.

9.4Bankruptcy of a Member. To the fullest extent permitted by law, the Company shall not be dissolved or terminated solely by reason of the Bankruptcy, removal, withdrawal, dissolution or admission of any Member.

9.5Substituted Members.

(a)Any Member that assigns all of its Interests pursuant to an assignment or assignments permitted under this Agreement shall cease to be a Member of the Company except that unless and until a Substituted Member is admitted in its stead, the assigning Member shall not cease to be a Member of the Company under the Act and shall retain the rights and powers of a member under the Act and hereunder, provided that such assigning Member may, prior to the admission of a Substituted Member, assign its economic interest in its Interest, to the extent otherwise permitted under this Article 9. Any Person who is an assignee of any portion of the Interest of a Member pursuant to an assignment satisfying the requirements of this Article 9 shall become a Substituted Member only when (i) the Managing Member has entered such assignee as a Member on the books and records of the Company, which the Managing Member is hereby directed to do upon satisfaction of such requirements, and (ii) such assignee has paid all of the Company’s reasonable legal fees and filing costs in connection with the substitution as a member. Any assignee who acquires an interest in the Company by operation of law (but which acquisition is or would have been prohibited by this Article 9) shall not become a Substituted Member under any circumstance.

(b)Any Person who is an assignee of any of the Interest of a Member pursuant to an assignment satisfying the requirements of this Article 9 but who does not become a Substituted Member (or pursuant to an assignment by operation of law, who shall not become a Substituted Member) and desires to make a further assignment of any such Interest, shall be subject to all the provisions of this Article 9 to the same extent and in the same manner as any Member desiring to make an assignment of its Interest.

9.6Acceptance of Prior Acts. Any person who becomes a Member, by becoming a Member, accepts, ratifies and agrees to be bound by all actions duly taken pursuant to the terms and provisions of this Agreement by the Company or any of its members prior to the date such Person became a Member and, without limiting the generality of the foregoing, specifically ratifies and approves all agreements and other instruments as may have been executed and delivered on behalf of the Company prior to said date and which are in force and effect on said date.

9.7Additional Limitations. Notwithstanding anything contained in this Agreement, no Transfer by the Class B Member shall be made unless (i) registration is not required under the Securities Act in respect of such Transfer; (ii) such Transfer does not violate any applicable federal or state securities, real estate syndication, or comparable laws; (iii) such Transfer will not be subject to, or such Transfer, when aggregated with prior Transfers in accordance with applicable law will not result in the imposition of, any state, city or local transfer taxes, including, without limitation, any transfer gains taxes, unless such assignor pays such taxes; and (iv) such Transfer will not cause the Company to be treated as a “publicly-traded partnership” within the meaning of Section 7704 of the Code. The Class A Member may elect prior to any Transfer by the Class B Member to require an opinion of counsel, or in the case of an indirect Transfer of a portion of the Class B Member’s Interest, other reasonable legal assurance with respect to any of the foregoing matters.

9.8Restraining Order; Specific Performance; Other Remedies.

(a)If the Class B Member shall attempt (or any holder of a direct or indirect interest in the Class B Member attempts) to Transfer all or any portion of its interest in the Company in violation of any of the provisions of this Agreement, the Class A Member, in addition to all rights and remedies hereunder, at law and/or equity, shall be entitled to seek a decree or order restraining and enjoining such Transfer and the Class B Member shall not plead in defense thereto that there would be an adequate remedy at law; it being hereby expressly acknowledged and agreed that damages at law shall be an inadequate remedy for a breach or threatened breach or violation of the provisions concerning Transfers set forth in this Agreement.

(b)It is expressly agreed that the remedy at law for breach of any of the obligations relating to Transfers set forth in this Article 9 and elsewhere in this Agreement is inadequate in view of:

(1)The complexities and uncertainties in measuring the actual damages that would be sustained by reason of the failure of a party to comply fully with each of said obligations; and

(2)The uniqueness of each Member’s business and assets and the relationship of the Members.

Accordingly, each of the aforesaid obligations shall be, and is hereby expressly made, enforceable by specific performance.

ARTICLE 10DISSOLUTION OF THE COMPANY;WINDING UP AND DISTRIBUTION OF ASSETS

10.1Dissolution.

(a)The Company shall be dissolved and its affairs shall be wound up only upon the first to occur of the following:

(1)so long as the Senior Obligations have been repaid in full, the joint written direction of the Managing Member and the Class A Member;

(2)the entry of a decree of judicial dissolution under Section 18-802 of the Act; or

(3)the termination of the legal existence of the last remaining Member of the Company or the occurrence of any other event which terminates the continued membership of the last remaining Member in the Company unless the business of the Company is continued in a manner permitted by this Agreement or the Act. Upon the occurrence of any event that causes the last remaining member of the Company to cease to be a member of the Company, to the fullest extent permitted by law, the personal representative of such member is hereby authorized and directed to, and shall, within ninety (90) days after the occurrence of the event that terminated the continued membership of such member in the Company, agree in writing (i) to continue the Company and (ii) to the admission of the personal representative or its nominee or designee, as the case may be, as a substitute Member of the Company, effective as of the occurrence of the event that terminated the continued membership of the last remaining Member.

(b)No Member shall have the right to (i) withdraw or resign as a Member of the Company, (ii) redeem or otherwise require redemption of its limited liability company interest in the Company or any part thereof or (iii) to the fullest extent permitted by law, dissolve itself voluntarily.

(c)Notwithstanding any other provision of this Agreement, the Bankruptcy of any of the Members shall not cause such Member to cease to be a Member of the Company and upon the occurrence of such an event, the business of the Company shall continue without dissolution.

(d)Notwithstanding any other provision of this Agreement, each Member waives any right it might have under Section 18-801(b) of the Act to agree in writing to dissolve the Company upon the Bankruptcy of any of the Members, or the occurrence of an event that causes any of the Members to cease to be a Member of the Company.

10.2Winding Up.

(a)In the event of the dissolution of the Company pursuant to Section 10.1(a), the Managing Member and the Class A Member, acting together may wind up the Company’s affairs.

(b)Upon dissolution of the Company and until the filing of a certificate of cancellation as provided in the Act, the Class A Member and the Managing Member, or a liquidating trustee, as the case may be, may, in the name of, and for and on behalf of, the Company, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the Company’s business, dispose of and convey the Company’s property, discharge or make reasonable provision for the Company’s liabilities, and distribute to the Members in accordance with Section 10.3 any remaining assets of the Company, all without affecting the liability of Members and without imposing liability on any liquidating trustee.

(c)Upon the completion of winding up of the Company, the Class A Member and the Managing Member, or a liquidating trustee, as the case may be, shall file a certificate of cancellation in the Office of the Secretary of State of the State of Delaware as provided in the Act and any other similar certificates of cancellation or termination required to discontinue its status as a legal entity or its authorization to do business in New York or any other relevant jurisdiction. The existence of the Company as a separate legal entity shall continue until cancellation of the Certificate as provided in the Act.

10.3Distribution of Assets. Upon the winding up of the Company, the assets shall be distributed as follows:

(1)to the satisfaction of debts and liabilities of the Company (whether by payment or the making of reasonable provision for payment thereof), in order of priority as provided by law, other than debts and liabilities owed to Members, including to the payment of expenses of the liquidation and to the setting up of any reserves that the Class A Member and the Managing Member, or the liquidating trustee, as the case may be, shall determine are reasonably necessary for any contingent, conditional or unmatured liabilities or obligations of the Company;

(2)to the Class A Member until the Class A Member has received all Increased Return then due and payable and then all Unrecovered Capital;

(3)to the satisfaction of debts and liabilities of the Company owed to Members; and

(4)to the Class B Member or to the Class A Member if the Class A Member has purchased the Interest of the Class B Member pursuant to Section 3.4.

ARTICLE 11AMENDMENTS

11.1Amendments.

(a)Any amendment or supplement to this Agreement implemented solely to recognize substitution of any Member expressly permitted hereunder or an assignment of any Interest made in full compliance with Article 9 may be made by either of the Managing Member or the Class A Member without the consent or approval of any other Member. In all other cases, this Agreement may only be amended, supplemented or otherwise modified with the prior written consent of the Managing Member and the Class A Member (and, if the Class B Member is not the Managing Member and a proposed amendment would either (x) affect the economic rights provided herein of the Class B Member or (y) modify the rights of the Class B Member to approve the Fundamental Decisions specified herein, with the prior written consent of the Class B Member) and except with respect to the rights of the Special Member of the Company referred to in paragraph (b) below, no other Member shall have any right to approve or disapprove any amendment, supplement or other modification to this Agreement that has been approved by the Managing Member and the Class A Member. No amendment, modification, supplement, discharge or waiver hereof or hereunder shall require the consent of any Person not a party to this Agreement.

(b)For so long as any of the Senior Loans remain outstanding, no Member shall be entitled to implement any amendment, supplement or other modification of any of Section 2.5, 2.7, 5.15 or 10.1 or this Section 11.1(b) except with the prior written approval of each of the Managing Member, the Class A Member and the Special Member of the Company, and then only if such amendment, supplement or modification is not otherwise prohibited by the provisions of any Senior Loan Documents then outstanding.

11.2Additional Members. In addition to the requirements of Section 11.1, if this Agreement shall be amended for the purpose of adding or substituting any Member, the amendment shall be signed by the Person to be added or substituted and by the assigning Member, if any. In making any amendments, the Managing Member shall prepare and file for recordation such documents and certificates as shall be required to be prepared and filed. Except for transferees of the Class A Member’s Interest, for which no consent shall be required, additional Members may be admitted to the Company only upon the unanimous consent of all Members.

ARTICLE 12MISCELLANEOUS

12.1Further Assurances. Each party to this Agreement agrees to execute, acknowledge, deliver, file and record such further certificates, amendments, instruments and documents, and to do all such other acts and things, as may be required by law or as, in the reasonable judgment of the Class A Member or the Managing Member may be necessary or advisable to carry out the intent and purpose of this Agreement.

12.2Notices. Unless otherwise specified in this Agreement, all notices, demands, elections, requests or other communications that any party to this Agreement may desire or be required to give hereunder shall be in writing and shall be given by hand by depositing the same in the United States mail, first class postage prepaid, certified mail, return receipt requested, or by a recognized overnight courier service providing confirmation of delivery, to the addresses set forth in Section 2.6 or 2.8, as applicable, or at such other address as may be designated by the addressee thereof (which in the case of the Company, shall be designated by the Class B Member) upon written notice to all of the Members. All notices given pursuant to this Section 12.2 shall be deemed to have been given (i) if delivered by hand on the date of delivery or on the date delivery was refused by the addressee or (ii) if delivered by United States mail or by overnight courier, on the date of delivery as established by the return receipt or courier service confirmation (or the date on which the return receipt or courier service confirms that acceptance of delivery was refused by the addressee).

12.3Remedies of the Class B Member. The Class A Member shall be required to act reasonably only in those cases expressly provided for herein. In the event that a claim or adjudication is made that the Class A Member or its agents have acted unreasonably or unreasonably delayed acting in any case where, by law or under this Agreement or the Transaction Documents, the Class A Member or such agent, as the case may be, has an obligation to act reasonably, that neither the Class A Member nor its agents shall be liable for any monetary damages, and the Class B Member’s sole remedy shall be limited to commencing an action seeking injunctive relief or declaratory judgment. Any action or proceeding to determine whether the Class A Member has acted reasonably shall be determined by an action seeking declaratory judgment, and the Class B Member hereby waives its right to seek indirect, special, punitive and/or consequential damages from the Class A Member.

12.4Exculpation. Subject to the qualifications below, the Class A Member shall not enforce any liability or obligation of the Class B Member or the Company under this Agreement or the other Transaction Documents against any direct or indirect owner, employee or officer of the Class B Member. The provisions of this Section shall not, however, (a) constitute a waiver, release or impairment of any obligation evidenced or secured by any of the Transaction Documents; (b) affect the validity or enforceability of the Environmental Indemnity Agreement or the Guarantees or any of the rights and remedies of the Class A Member against the Company or the Class B Member under this Agreement and the other Transaction Documents; (c) constitute a prohibition against the Class A Member pursuing its rights and remedies against the Company; or (d) constitute a waiver of the right of the Class A Member to enforce the liability and obligation of the Company, by money judgment or otherwise. Nothing in this Section 12.4 shall be deemed to modify, limit or expand any exculpation provisions set forth in the Senior Loan Documents.

12.5Headings and Captions. All headings and captions contained in this Agreement and in the table of contents hereto are inserted for convenience only and shall not be deemed a part of this Agreement.

12.6Variance of Pronouns. All pronouns and all variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the Person may require.

12.7Counterparts. THIS AGREEMENT MAY BE EXECUTED IN TWO OR MORE COUNTERPARTS, EACH OF WHICH SHALL CONSTITUTE AN ORIGINAL AND ALL OF WHICH, WHEN TAKEN TOGETHER, SHALL CONSTITUTE ONE AGREEMENT.

12.8Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

12.9Consent to Jurisdiction. To the fullest extent permitted by law, each party hereto hereby irrevocably consents and agrees, for the benefit of each party, that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter under or arising out of or in connection with this Agreement and with respect to the enforcement, modification, vacation or correction of an award rendered in an arbitration proceeding shall be brought in any city, state or federal court located in the Borough of Manhattan, The City of New York (a “New York Court”) or in the State of Delaware (a “Delaware Court”), and hereby irrevocably accepts and submits to the exclusive jurisdiction of each such New York Court and Delaware Court with respect to any such action, suit or proceeding. Each party hereto also hereby irrevocably consents and agrees, for the benefit of each other party, that any legal action, suit or proceeding against it shall be brought in any New York Court or any Delaware Court, and hereby irrevocably accepts and submits to the exclusive jurisdiction of each such New York Court and Delaware Court with respect to any such action, suit or proceeding. Each party hereto waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings brought in any such New York Court or Delaware Court and hereby further waives and agrees not to plead or claim in any such New York Court or Delaware Court that any such action, suit or proceeding brought therein has been brought in an inconvenient forum. Each party agrees that (i) to the fullest extent permitted by law, service of process may be effectuated hereinafter by mailing a copy of the summons and complaint or other pleading by certified mail, return receipt requested, at its address set forth above and (ii) all notices that are required to be given hereunder may be given by the attorneys for the respective parties.

12.10Arbitration.

(a)Arbitration administered by the American Arbitration Association shall be the exclusive method for resolution of any claims or disputes arising out of, relating to or in connection with this Agreement or the breach thereof, and the determination of the arbitrators shall be final and binding (except to the extent there exist grounds for vacation or an award under applicable arbitration statutes) on the Members. The parties agree that they will give conclusive effect to the arbitrators’ determination and award and that judgment thereon may be entered in any court having jurisdiction. The arbitrators will have no authority to award punitive damages or any other damage not measured by the prevailing party’s actual damages, and may not, in any event, make any ruling, finding or award that does not conform to the terms and conditions of this Agreement. Each party shall bear its own costs in any arbitration.

(b)The number of arbitrators shall be three, each of whom shall be disinterested in the dispute or controversy and shall be impartial with respect to all parties hereto. The Class A Members shall appoint one arbitrator, the Class B Member shall appoint one arbitrator and the third arbitrator shall be appointed in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association, which rules shall apply to any arbitration proceeding commenced hereunder.

(c)The place of arbitration shall be the Borough of Manhattan, The City of New York. The arbitration shall be conducted in the English language. The arbitrators shall give effect insofar as possible to the desire of the parties hereto that the dispute or controversy be resolved in accordance with good commercial practice. The arbitrators shall decide such dispute in accordance with the law of the State of Delaware, without regard to conflict of law provisions thereof. The arbitrators shall decide such dispute as expeditiously as possible and, in any event, within fifteen (15) Business Days of selection of the third arbitrator. They shall apply the commercial arbitration rules of the American Arbitration Association and Title 9 of the U.S. Code.

(d)Notwithstanding any provision of this Agreement to the contrary, Section 3.5 and this Section 12.10 shall be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Uniform Arbitration Act (10 Del. C. § 5701, etseq.) (the “Delaware Arbitration Act”). If, nevertheless, it shall be determined by a court of competent jurisdiction that any provision or wording of Section 3.5 or this Section 12.10, including any Commercial Arbitration Rules or rules of the American Arbitration Association, shall be invalid or unenforceable under the Delaware Arbitration Act, or other applicable law, such invalidity shall not invalidate all of Section 3.5 or this Section 12.10. In that case, Section 3.5 or this Section 12.10, as applicable, shall be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the even such term or provision cannot be so limited, Section 3.5 or Section 12.10, as applicable, shall be construed to omit such invalid or unenforceable provision.

12.11Partition. The Members hereby agree that no Member nor any successor‑in‑interest to any Member shall have the right to have the property of the Company partitioned, or to file a complaint or institute any proceeding at law or in equity to have the property of the Company partitioned, and each Member, on behalf of himself, his successors, representatives, heirs and assigns, hereby waives any such right.

12.12Invalidity. Every provision of this Agreement is intended to be severable. The invalidity and unenforceability of any particular provision of this Agreement in any jurisdiction shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted.

12.13Successors and Assigns. This Agreement shall be binding upon the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and legal assigns and shall inure to the benefit of the parties hereto and, except as otherwise provided herein, their respective successors, executors, administrators, legal representatives, heirs and legal assigns. No Person other than the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and permitted assigns shall have any rights or claims under this Agreement.

12.14Entire Agreement. This Agreement, including the Schedules hereto, supersedes all prior agreements among the parties with respect to the subject matter hereof and together with the other Transaction Documents contains the entire Agreement among the parties with respect to such subject matter.

12.15Waivers. No waiver of any provision hereof by any party hereto shall be deemed a waiver by any other party nor shall any such waiver by any party be deemed a continuing waiver of any matter by such party.

12.16No Brokers. Each of the Members hereto warrant to each other that there are no brokerage commissions or finders’ fees (or any basis therefor) resulting from any action taken by such Member or any Person acting or purporting to act on their behalf upon entering into this Agreement. Each Member agrees to indemnify and hold harmless each other Member for all costs, damages or other expenses arising out of any misrepresentation made in this Section 12.16.

12.17Press Releases. No Member shall issue any press release or other public communication about the formation or existence of the Company without the express prior written consent of all Members.

12.18No Third Party Beneficiaries. Except as expressly stated herein, this Agreement is not intended and shall not be construed as granting any rights, benefits or privileges to any Person not a party to this Agreement. Without limiting the generality of the foregoing, no creditor of the Company shall have any right whatsoever to require any Member to contribute capital to the Company.

12.19Construction of Documents. The parties hereto acknowledge that they were represented by separate and independent counsel in connection with the review, negotiation and drafting of this Agreement and that this Agreement shall not be subject to the principle of construing its meaning against the party that drafted same.

12.20Time of Essence. Time is of the essence in the performance of each and every term of this Agreement.

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Exhibit 10.39

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

CLASS B MEMBER:
HIT PORTFOLIO MEMBER, LP
By:	HIT Portfolio Member GP, LLC
	its general partner
	By: /s/ Jonathan P. Mehlman
	Name: Jonathan P. Mehlman
	Title: President and CEO

[Signatures continue on next page]

5

Exhibit 10.39

CLASS A MEMBER:
W2007 EQUITY INNS SENIOR MEZZ, LLC
By:	/s/ Greg Fay
	Name: Greg Fay
	Title: Manager

[Signatures continue on next page]

Signature Page to Second Amended and Restated Limited Liability Company Agreement of
HIT Portfolio I Holdco, LLC

Exhibit 10.39

SPECIAL MEMBER:

/s/ William G. Popeo

William G. Popeo

Signature Page to Second Amended and Restated Limited Liability Company Agreement of
HIT Portfolio I Holdco, LLC

Exhibit 10.39

SCHEDULE A-1

Mortgage Loan Properties

Property Name	Address (Street)	Address (City, State, Zip Code)
1.Hampton Inn Birmingham/Mountain Brook	2731 US Highway 280	Birmingham, AL 35223
2.Courtyard Dallas Medical/Market Center	2150 Market Center Blvd.	Dallas, TX 75207
3.Hampton Inn Baltimore/Glen Burnie	6617 Ritchie Highway	Glen Burnie, MD 21061
4.Residence Inn Mobile	950 West I-65 Service Road S.	Mobile , AL 36609
5.Hampton Inn Norfolk-Naval Base	8501 Hampton Boulevard	Norfolk, VA 23505
6.Courtyard Asheville	One Buckstone Place	Asheville, NC 28805
7.Hampton Inn Char1otte/Gastonia	1859 Remount Road	Gastonia, NC 28054
8.Hampton Inn Dallas -Addison	4505 Beltway Drive	Addison, TX 75001
9.Hilton Garden Inn Austin/Round Rock	2310 North IH35	Round Rock, TX 78681
10.Homewood Suites by Hilton San Antonio-Northwest	4323 Spectrum One	San Antonio, TX 78230
11.Residence Inn Los Angeles LAX/El Segundo	2135 East El Segundo Boulevard	El Segundo, CA 90245
12.Residence Inn San Diego Rancho Bernardo/Scripps Poway	12011 Scripps Highlands Drive	San Diego, CA 92131
13.Spring Hill Suites Austin Round Rock	2960 Hoppe Trail	Round Rock, TX 78681
14.Spring Hill Suites Houston Hobby Airport	7922 Mosley Road	Houston, TX 77061
15.Spring Hill Suites San Diego Rancho Bernardo/Scripps Poway	12032 Scripps Highlands Drive	San Diego, CA 92131
16.Courtyard Athens Downtown	166 North Finley Street	Athens, GA 30601
17.Courtyard Bowling Green Convention Center	1010 Wilkinson Trace	Bowling Green, KY 42104
18.Courtyard Chicago Elmhurst/Oakbrook Area	370 North IL Route 83	Elmhurst, II 60126
19.Courtyard Gainesville	3700 SW 42nd Street	Gainesville, FL 32608
20.Courtyard Jacksonville Airport Northeast	14668 Duval Road	Jacksonville, FL 32218

[NEWYORK 3343449_4]

Exhibit 10.39

Property Name	Address (Street)	Address (City, State, Zip Code)
21.Courtyard Knoxville Cedar Bluff	216 Langley Place	Knoxville, TN 37922
22.Courtyard Lexington South/Hamburg Place	1951 Pleasant Ridge	Lexington, KY 40509
23.Courtyard Louisville Downtown	100 South Second Street	Louisville, KY40202
24.Courtyard Orlando Altamonte Springs/Maitland	1750 Pembrook Drive	Orlando, FL 32810
25.Courtyard Sarasota Bradenton Airport	850 University Parkway	Sarasota, FL 34234
26.Courtyard Tallahassee North/I-10 Capital Circle	1972 Raymond Diehl Road	Tallahassee, FL 32308
27.Embassy Suites Orlando International Drive/Jamaican Court	8250 Jamaican Court	Orlando, FL 32819
28.Fairfield Inn & Suites Dallas Medical/Market Center	2110 Market Center Boulevard at Stemmons	Dallas, TX 75207
29.Hampton Inn & Suites Boynton Beach	1475 West Gateway Boulevard	Boynton Beach, FL 33426
30.Hampton Inn & Suites Nashville/Franklin (Cool Springs)	7141 South Springs Drive	Franklin, TN 37067
31.Hampton Inn Albany-Wolf Road (Airport)	10 Ulenski Drive	Albany, NY 12005
32.Hampton Inn Beckley	110 Harper Park Drive	Beckley, WV 25801
33.Hampton Inn Boca Raton	1455 Yamato Road	Boca Raton, FL 33431
34.Hampton Inn Boca Raton – Deerfield Beach	660 West Hillsboro Boulevard	Deerfield Beach, FL 33441
35.Hampton Inn Boston/Peabody	59 Newbury Street Route 1 North	Peabody, MA 01960
36.Hampton Inn Chicago/Gurnee	5550 Grand Avenue	Gurnee, IL 60031
37.Hampton Inn Cleveland/Westlake	29690 Detroit Road	Westlake, OH 44145
38.Hampton Inn Columbia - I-26 Airport	1094 Chris Drive	West Columbia, SC 29169
39.Hampton Inn Columbus/Dublin	3920 Tuller Road	Dublin, OH 43017
40.Hampton Inn Detroit/Madison Heights/South Troy	32420 Stephenson Highway	Madison Heights, MI 48071
41.Hampton Inn Detroit/Northville	20600 Haggerty Road	Northville, MI 48167
42.Hampton Inn Grand Rapids- North	500 Center Drive	Grand Rapids, MI 49544

9

Exhibit 10.39

Property Name	Address (Street)	Address (City, State, Zip Code)
43.Hampton Inn Kansas City/Overland Park	10591 Metcalf Frontage Road	Overland Park, KS 66212
44.Hampton Inn Kansas City- Airport	11212 North Newark Circle	Kansas City, MO 64153
45.Hampton Inn Memphis-Poplar	5320 Poplar Avenue	Memphis, TN 38119
46.Hampton Inn Morgantown	1053 Van Voorhis Road	Morgantown, WV 26505
47.Hampton Inn Palm Beach Gardens	4001 RCA Boulevard	Palm Beach Gardens, FL 33410
48.Hampton Inn Pickwick Dam - at Shiloh Falls	90 Old South Road	Counce, TN 38326
49.Hampton Inn Scranton at Montage Mountain	22 Montage Mountain Road	Scranton, PA 18507
50.Hampton Inn St. Louis/Westport	2454 Old Dorsett Road	Maryland Heights, MO 63043
51.Hampton Inn State College	1101 East College Avenue	State College, PA 16801
52.Hampton Inn West Palm Beach Florida Turnpike	2025 Vista Parkway	West Palm Beach, FL 33411
53.Holiday Inn Express and Suites: Kendall East-Miami	11520 SW 88th Street	Miami, FL 33176
54.Homewood Suites by Hilton Boston-Peabody	57 Newbury Street	Boston, MA 01960
55.Homewood Suites by Hilton Chicago-Downtown	40 East Grand Avenue	Chicago, IL 60611
56.Homewood Suites by Hilton Hartford/Windsor Locks	65 Ella Grasso Turnpike	Windsor Locks, CT 06096
57.Homewood Suites by Hilton Memphis-Germantown	7855 Wolf River Boulevard	Germantown, TN 38138
58.Hyatt Place Albuquerque/Uptown	6901 Arvada North East	Albuquerque, NM 87110
59.Hyatt Place Baltimore/BWI Airport	940 International Drive	Linthicum Heights, MD 21090
60.Hyatt Place Baton Rouge/I-10	6080 Bluebonnet Boulevard	Baton Rouge, LA 70809
61.Hyatt Place Birmingham/Hoover	2980 John Hawkins Parkway	Birmingham, AL 35244
62.Hyatt Place Cincinnati Blue Ash	11435 Reed Hartman Highway	Blue Ash, OH 45241
63.Hyatt Place Columbus/Worthington	7490 Vantage Drive	Columbus, OH 43235
64.Hyatt Place Indianapolis/Keystone	9104 Keystone Crossing	Indianapolis, IN 46240
65.Hyatt Place Kansas City/Overland Park/Metcalf	6801 West 112th Street	Overland Park, KS 66211

10

Exhibit 10.39

Property Name	Address (Street)	Address (City, State, Zip Code)
66.Hyatt Place Las Vegas	4520 Paradise Road	Las Vegas, NV 89109
67.Hyatt Place Memphis/Wolfchase Galleria	7905 Giacosa Place	Memphis, TN 38133
68.Hyatt Place Miami Airport - West/Doral	3655 NW 82nd Avenue	Miami, FL 33166
69.Hyatt Place Minneapolis Airport-South	7800 International Drive	Bloomington, MN 55425
70.Hyatt Place Nashville/Franklin/Cool Springs	650 Bakers Bridge Avenue	Franklin, TN 37067
71.Hyatt Place Richmond/Innsbrook	4100 Cox Road	Glen Allen, VA 23060
72.Hyatt Place Tampa Airport/Westshore	4811 West Main Street	Tampa Airport/Westshore, FL 33607
73.Residence Inn Boise Downtown	1401 Lusk Avenue	Boise, ID 83706
74.Residence Inn Chattanooga Downtown	215 Chestnut Street	Chattanooga, TN 37402
75.Residence Inn Fort Myers	2960 Colonial Boulevard	Fort Myers, FL 33912
76.Residence Inn Knoxville Cedar Bluff	215 Langley Place at North Peters Road	Knoxville, TN 37922
77.Residence Inn Lexington South/Hamburg Place	2688 Pink Pigeon Parkway	Lexington, KY 40509
78.Residence Inn Macon	3900 Sheraton Drive	Macon, GA 31210
79.Residence Inn Portland Downtown/Lloyd Center	1710 NE Multnomah Street	Portland, OR 97232
80.Residence Inn Sarasota Bradenton	1040 University Parkway	Sarasota, FL 34234
81.Residence Inn Savannah Midtown	5710 White Bluff Road	Savannah, GA 31405
82.Residence Inn Tallahassee North/I-10 Capital Circle	1880 Raymond Diehl Road	Tallahassee, FL 32308
83.Residence Inn Tampa North/I- 75 Fletcher	13420 North Telecom Parkway	Tampa, FL 33637
84.Residence Inn Tampa Sabal Park/Brandon	9719 Princess Palm Avenue	Tampa, FL 33619
85.Spring Hill Suites Grand Rapids North	450 Center Drive	Grand Rapids, MI 49544
86.Spring Hill Suites Lexington Near the University of Kentucky	863 S. Broadway	Lexington, KY 40504
87.Homewood Suites by Hilton Phoenix-Biltmore	2001 East Highland Avenue	Phoenix, AZ 85016

11

Exhibit 10.39

Schedule A-2

8PK Properties

Property Name	Address (Street)	Address (City, State, Zip Code)
1.Spring Hill Suites San Antonio Medical Center/Northwest	3636 NW Loop 410	San Antonio, TX 78201
2.Courtyard Mobile	1000 West I-65 Service Road	Mobile, AL 36609
3.Hampton Inn Charleston- Airport/Coliseum	4701 Saul White Boulevard North	Charleston, SC 29418
4.Hampton Inn Chattanooga- Airport/I-75	7013 Shallowford Road	Chattanooga, TN 37421
5.Hampton Inn and Suites Colorado Springs Air Force Academy I-25 North	7245 Commerce Center Drive	Colorado Springs, CO 80919
6.Hampton Inn Columbus- Airport	5585 Whitesville Road	Columbus, GA 31904
7.Fairfield Inn & Suites Atlanta Vinings	2450 Paces Ferry Road	Atlanta , GA 30339
8.Hampton Inn Fayetteville I-95 10/25/2007	1922 Cedar Creek Road	Fayetteville, NC 28312

[NEWYORK 3343449_4]

Exhibit 10.39

SCHEDULE 1.1(a)

Allocated Amounts

Property Allocated Amount ($)

Courtyard Asheville	4, 129, 406
Courtyard Athens	2, 975, 618
Courtyard Bowling Green	3, 304, 333
Courtyard Chicago	2, 588, 269
Courtyard Dallas	6, 285, 769
Courtyard Gainesville	4, 042, 194
Courtyard Jacksonville	1, 570, 072
Courtyard Knoxville	2, 989, 932
Courtyard Lexington South Hamburg	4, 395, 475
Courtyard Louisville	9, 270, 273
Courtyard Orlando Maitland	3, 851, 382
Courtyard Sarasota	2, 742, 066
Courtyard Tallahassee	3, 139, 435
Embassy Suites Orlando	5, 657, 167
Fairfield Inn & Suites Dallas	2, 029, 639
Hampton Inn & Suites Nashville Franklin Cool Springs	4, 994, 940
Hampton Inn & Suites Palm Beach (Boynton Beach)	7, 704, 136
Hampton Inn Albany	5, 438, 237
Hampton Inn Baltimore	2, 042, 114
Hampton Inn Beckley	4, 622, 089
Hampton Inn Birmingham (Mountain Brook)	2, 206, 693
Hampton Inn Boca Raton	3, 326, 057
Hampton Inn Boston	3, 103, 857
Hampton Inn Chicago (Gurnee)	3, 072, 906
Hampton Inn Cleveland	3, 592, 361
Hampton Inn Columbia	1, 426, 006
Hampton Inn Columbus Dublin	2, 999, 745
Hampton Inn Dallas	2, 555, 689
Hampton Inn Deerfield Beach	3, 044, 432
Hampton Inn Detroit (Madison Heights)	3, 734, 145
Hampton Inn Detroit (Northville)	2, 323, 620
Hampton Inn Gastonia	2, 814, 403
Hampton Inn Grand Rapids	3, 537, 531
Hampton Inn Kansas City, MO	2, 203, 577
Hampton Inn Kansas City, Overland Park KS	2, 576, 845

13

Exhibit 10.39

Hampton Inn Memphis	3, 647, 639
Hampton Inn Morgantown	4, 202, 368
Hampton Inn Norfolk	1, 390, 356
Hampton Inn Palm Beach Gardens	4, 980, 578
Hampton Inn Pickwick	594, 169
Hampton Inn Scranton	3, 295, 404
Hampton Inn St. Louis	2, 353, 870
Hampton Inn State College	3, 291, 704
Hampton Inn West Palm Beach	4, 419, 350
Hilton Garden Inn Austin	3, 903, 589
Holiday Inn Charleston	1, 877, 574
Holiday Inn Express Kendall East	2, 022, 915
Homewood Suites Boston	2, 546, 526
Homewood Suites Chicago	17, 418, 255
Homewood Suites Hartford	2, 929, 417
Homewood Suites Memphis	2, 553, 786
Homewood Suites Phoenix Biltmore	5, 896, 458
Homewood Suites San Antonio	4, 191, 481
Hyatt Place Albuquerque	5, 227, 283
Hyatt Place Baltimore	2, 965, 158
Hyatt Place Baton Rouge	3, 107, 597
Hyatt Place Birmingham	2, 430, 269
Hyatt Place Cincinnati (Blue Ash)	2, 456, 900
Hyatt Place Columbus	3, 173, 490
Hyatt Place Indianapolis	3, 864, 949
Hyatt Place Kansas City	2, 364, 634
Hyatt Place Las Vegas	4, 731, 154
Hyatt Place Memphis	3, 747, 384
Hyatt Place Miami (Airport)	4, 725, 845
Hyatt Place Minneapolis	3, 486, 059
Hyatt Place Nashville Franklin Cool Springs	4, 724, 774
Hyatt Place Richmond	2, 169, 631
Hyatt Place Tampa Airport/Westshore	4, 970, 953
Residence Inn (North-I75) Tampa	2, 545, 318
Residence Inn Boise	3, 010, 936
Residence Inn Chattanooga	3, 208, 438
Residence Inn Ft Myers	2, 835, 855
Residence Inn Knoxville	3, 389, 941
Residence Inn Lexington	4, 181, 766
Residence Inn Los Angeles	9, 533, 183
Residence Inn Macon	1, 166, 308
Residence Inn Mobile	2, 263, 457
Residence Inn Portland	12, 092, 065

14

Exhibit 10.39

Residence Inn San Diego	6, 683, 389
Residence Inn Sarasota	3, 318, 908
Residence Inn Savannah	2, 669, 306
Residence Inn Tallahassee	2, 879, 321
Residence Inn Tampa (Sabal Park)	4, 055, 216
Spring Hill Suites Austin	2, 408, 380
Spring Hill Suites Grand Rapids	2, 712, 702
Spring Hill Suites Houston	3, 137, 419
Spring Hill Suites Lexington	4, 335, 962
Spring Hill Suites San Diego	5, 036, 342
Courtyard Mobile	1, 354, 442
Fairfield Inn & Suites Atlanta Vinings	2, 044, 980
Hampton Inn Charleston	1, 950, 250
Hampton Inn Chattanooga	1, 984, 525
Hampton Inn Colorado Springs	1, 736, 995
Hampton Inn Columbus	1, 402, 239
Hampton Inn Fayetteville	2, 062, 821
Spring Hill Suites San Antonio	1, 345, 627
Total $347, 298, 021

15

Exhibit 10.39

SCHEDULE 1.1(b)

Mortgage Loan Documents

Except as defined above , all defined terms set forth in this Section 1.1(b) shall have the definitions contained in this Section 1.1(b) and in the Mortgage Loan Documents by and among HIT PORTFOLIO I OWNER, LLC, a Delaware limited liability company (“LLC Borrower”), HIT PORTFOLIO I BHGL OWNER, LLC, a Delaware limited liability company (“BHGL Borrower”), HIT PORTFOLIO I PXGL OWNER, LLC, a Delaware limited liability company (“PXGL Borrower”), HIT PORTFOLIO I GBGL OWNER, LLC, a Delaware limited liability company (“GBGL Borrower”), HIT PORTFOLIO I NFGL OWNER, LLC, a Delaware limited liability company (“NFGL Borrower”), HIT PORTFOLIO I MBGL 950 OWNER, LLC, a Delaware limited liability company (“MBGL 950 Borrower”), HIT PORTFOLIO I NTC OWNER, LP, a Delaware limited partnership (“LP Borrower”), and HIT PORTFOLIO I DLGL OWNER, LP, a Delaware limited partnership (“DLGL Borrower”; LLC Borrower, BHGL Borrower, PXGL Borrower, GBGL Borrower, NFGL Borrower, MBGL 950 Borrower, LP Borrower, and DLGL Borrower are individually and collectively, as the context may require, referred to as “Borrower”), each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030, HIT PORTFOLIO I TRS, LLC, a Delaware limited liability company (“Main TRS”), HIT PORTFOLIO I HIL TRS, LLC, a Delaware limited liability company (“HIL TRS”), HIT PORTFOLIO I MCK TRS, LLC, a Delaware limited liability company (“MCK TRS”), HIT PORTFOLIO I MISC TRS, LLC, a Delaware limited liability company (“MISC TRS”), HIT PORTFOLIO I DEKS TRS, LLC, a Delaware limited liability company (“DEKS TRS”), HIT PORTFOLIO I NTC TRS, LP, a Delaware limited partnership (“NTC TRS”), and HIT PORTFOLIO I NTC HIL TRS, LP, a Delaware limited partnership (“HIL LP TRS”; and together with Main TRS, HIL TRS, MCK TRS, MISC TRS, Main LP TRS and DEKS TRS, the “TRS”), each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030, DEUTSCHE BANK AG, NEW YORK BRANCH, with an address at 60 Wall Street, 10th Floor, New York, New York 10005, CITIGROUP, GLOBAL MARKETS REALTY CORP., with an address at 390 Greenwich Street, New York, New York 10013, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, with an address at 383 Madison Avenue, New York, New York 10179 (“Lender”), HOSPITALITY INVESTORS TRUST, Inc., a Maryland corporation (“HIT REIT”), and HOSPITALITY INVESTORS TRUST, OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“HIT OP”); HIT REIT and HIT OP are individually and collectively, as the context may require, referred to as “Guarantor” and together with Borrower, the “Indemnitors”), each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030. All documents are dated as of the date hereof unless otherwise noted.

1. The Mortgage Loan Agreement, as defined in the Agreement above.

2. Promissory Note A-1 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $322,000,000.00;

[NEWYORK 3343449_4]

Exhibit 10.39

3. Promissory Note A-2 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $322,000,000.00;

4. Promissory Note A-3 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $161,000,000.00;

5. Collateral Assignment of Interest Rate Protection Agreement, by Borrower for the benefit of Lender;

6. Those certain UCC Financing Statements naming Borrower as debtor therein, and Lender as secured party therein, and filed with the appropriate recorder or clerk in which the Mortgage Loan Properties are located and in the records of the Secretary of State of Delaware;

7. The Mortgages (as defined in the Mortgage Loan Agreement), executed by the applicable Borrower and TRS with respect to each of the Mortgage Loan Properties;

8. The Assignments of Leases (as defined in the Mortgage Loan Agreement) executed by the applicable Borrower and TRS with respect to each of the Mortgage Loan Properties;

9. Environmental Indemnity Agreement, executed by the Indemnitors in favor of Lender;

10. Guaranty of Recourse Obligations, executed by Guarantor in favor of Lender;

11. Cash Management Agreement, executed by Borrower, TRS, HIT Portfolio I TRS Holdco, LLC, a Delaware limited liability company (“TRS Holdco”) and Mezz Borrower (as defined below);

12. Pledge and Security Agreement (Kansas), executed by DEKS TRS for the benefit of Lender;

13. Liquor License Agreement (Kansas), executed by HIT Portfolio I KS TRS, LLC, a Kansas limited liability company, DEKS TRS and LLC Borrower for the benefit of Lender;

14. Pledge and Security Agreement (Texas), executed by HIT Portfolio I TX Holdings, LLC, a Delaware limited liability company, for the benefit of Lender;

15. Liquor License Agreement (Texas), executed by HIT Portfolio I TX Beverage Company, LLC, a Delaware limited liability company, NTC TRS and LP Borrower for the benefit of Lender;

16. Assignment of Management Agreement and Subordination of Management Fees, executed by LLC Borrower, LP Borrower, DLGL Borrower, Main TRS, MISC TRS, NTC TRS, Lender, and Crestline Hotels & Resorts, LLC, a Delaware limited liability company (“Crestline”), as manager, for the benefit of Lender;

17. Assignment of Management Agreement and Subordination of Management Fees, executed by LLC Borrower, BHGL Borrower, LP Borrower, NFGL Borrower, HIL TRS, NTC HIL

17

Exhibit 10.39

TRS, Lender, and Hampton Inns Management LLC, a Delaware limited liability company (“Hilton-Hampton”), as manager, for the benefit of Lender;

18. Assignment of Management Agreement and Subordination of Management Fees, executed by LLC Borrower, PXGL Borrower, LP Borrower, HIL TRS, NTC HIL TRS, Lender, and Homewood Suites Management LLC, a Delaware limited liability company (“Hilton- Homewood”), as manager, for the benefit of Lender;

19. Assignment of Management Agreement and Subordination of Management Fees, executed by LLC Borrower, LP Borrower, MBGL 950 Borrower, MCK TRS, NTC TRS, Lender, and McKibbon Hotel Management, Inc. (“McKibbon”), as manager, for the benefit of Lender;

20. Assignment of Management Agreement and Subordination of Management Fees executed by LLC Borrower, MISC TRS, Lender, and InnVentures IVI, LP (“Innventures”), as manager, for the benefit of Lender;

21. Deposit Account Control Agreement executed by TRS Holdco, TRS, Mortgage Borrower, Lender and Wells Fargo;

22. Deposit Account Control Agreement executed by TRS Holdco, TRS, Mortgage Borrower, Lender and Wells Fargo;

23. Deposit Account Control Agreement executed by TRS Holdco, TRS, Mortgage Borrower, Lender and Wells Fargo;

24. Deposit Account Control Agreement executed by TRS Holdco, TRS, Mortgage Borrower, Lender and Wells Fargo;

25. Contribution Agreement executed by Mortgage Borrower;

26. Post-Closing Agreement executed by Mortgage Borrower, TRS and Lender.

18

Exhibit 10.39

SCHEDULE 1.1(c)

First Mezzanine Loan Documents

Except as defined above , all defined terms set forth in this Section 1.1(b) shall have the definitions contained in this Section 1.1(b) and in the Mortgage Loan Documents by and among HIT PORTFOLIO I MEZZ, LP, a Delaware limited liability company (“Mezz Borrower”), TRS Holdco, each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030, DEUTSCHE BANK AG, NEW YORK BRANCH, with an address at 60 Wall Street, 10th Floor, New York, New York 10005, CITIGROUP, GLOBAL MARKETS REALTY CORP., with an address at 390 Greenwich Street, New York, New York 10013, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, with an address at 383 Madison Avenue, New York, New York 10179 (“Mezz Lender”), HIT REIT and HIT OP; HIT REIT and HIT OP are individually and collectively, as the context may require, referred to as “Mezz Guarantor” and together with Borrower, the “Mezz Indemnitors”), each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030, each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030, DEUTSCHE BANK AG, NEW YORK BRANCH, with an address at 60 Wall Street, 10th Floor, New York, New York 10005, CITIGROUP, GLOBAL MARKETS REALTY CORP., with an address at 390 Greenwich Street, New York, New York 10013, and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, with an address at 383 Madison Avenue, New York, New York 10179 (“Lender”), HOSPITALITY INVESTORS TRUST, Inc., a Maryland corporation (“HIT REIT”), and HOSPITALITY INVESTORS TRUST, OPERATING PARTNERSHIP, L.P., a Delaware limited partnership (“HIT OP”); HIT REIT and HIT OP are individually and collectively, as the context may require, referred to as “Guarantor” and together with Borrower, the “Indemnitors”), each with a mailing address at c/o Hospitality Investors Trust, 3950 University Drive, Fairfax, Virginia 22030. All documents are dated as of the date hereof unless otherwise noted.

1. First Mezzanine Loan Agreement as defined in the Agreement above.

2. Mezzanine Promissory Note A-1 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $44,000,000.00;

3. Mezzanine Promissory Note A-2 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $44,000,000.00;

4. Mezzanine Promissory Note A-3 (together with all addenda, modifications, amendments, riders, exhibits and supplements thereto), in the original principal amount of $22,000,000.00;

5. Collateral Assignment of Interest Rate Protection Agreement (Mezzanine), by Mezz Borrower for the benefit of Mezz Lender;

[NEWYORK 3343449_4]

Exhibit 10.39

6. Environmental Indemnity Agreement (Mezzanine) executed by the Indemnitors in favor of Mezz Lender;

7. Guaranty of Recourse Obligations (Mezzanine) executed by Guarantor in favor of Lender;

8. Cash Management Agreement, executed by Borrower, TRS, TRS Holdco and Mezz Borrower;

9. Assignment of Title Proceeds by Mezz Borrower

10. Pledge and Security Agreement, executed by Mezz Borrower and TRS Holdco for the benefit of Lender;

11. Mezzanine Subordination of Management Agreement, executed by Mezz Borrower, TRS Holdco, Main TRS, MISC TRS, NTC TRS, Lender, and Crestline, as manager, for the benefit of Lender;

17. Mezzanine Subordination of Management Agreement, executed by Mezz Borrower, TRS Holdco, HIL TRS, NTC HIL TRS, Lender, and Hilton-Hampton, as manager, for the benefit of Lender;

18. Mezzanine Subordination of Management Agreement, executed by Mezz Borrower, TRS Holdco, HIL TRS, NTC HIL TRS, Lender, and Hilton-Homewood, as manager, for the benefit of Lender;

19. Mezzanine Subordination of Management Agreement, executed by Mezz Borrower, TRS Holdco, MCK TRS, NTC TRS, Lender, and McKibbon, as manager, for the benefit of Lender;

20. Mezzanine Subordination of Management Agreement, executed by Mezz Borrower, TRS Holdco, MISC TRS, Lender, and Innventures, as manager, for the benefit of Lender;

21. Cash Management Agreement, executed by Borrower, TRS, TRS Holdco and Mezz Borrower.

20

Exhibit 10.39

SCHEDULE 5.15(a)

Special Purpose Covenants

1. With respect to each Subsidiary, such Subsidiary shall comply with the single purpose entity and bankruptcy remoteness requirements of the Senior Loan Documents, whether or not the applicable Senior Loan remains outstanding.

2. With respect to the Company:

(a)The Company (i) has been, is, and will be organized solely for the purpose of acquiring, developing, owning, holding, financing, selling, leasing, transferring, exchanging, managing and operating such the Properties through the Subsidiaries, entering into this Agreement and the other Transaction Documents, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than (A) its limited liability company and limited partnership interests in the Subsidiaries and (B) incidental personal property necessary for the ownership or operation of such limited liability company interests.

(b)The Company has not engaged and will not engage in any business other than the ownership, management and operation of the Properties through the Subsidiaries and business incidental thereto.

(c)The Company has not and will not enter into any Class B Member Affiliate Contract unless (i) such agreement or other arrangement is on arm’s-length commercially reasonable terms and (ii) such agreement or other arrangement is terminable by the Class A Member following the declaration of a Changeover Event without payment of any termination or similar fee.

(d)The Company has not incurred and will not incur any Indebtedness other than its obligations under this Agreement and the other Transaction Documents.

(e)Except as contemplated in this Agreement and the other Transaction Documents, the Company has not made and will not make any loans or advances to any third party (including the Class B Member, any Guarantor and/or any of their respective Affiliates), and has not and shall not acquire obligations or securities of its Affiliates.

(f)The Company is and intends to remain solvent and the Company has, in all material respects, paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Company to make any additional capital contributions to the Company; and provided further that it shall not be a breach of this subsection (f) to the extent that the Company does (or did) not pay such debts or liabilities because it does not have (or did not have) sufficient cash flow.

[NEWYORK 3343449_4]

Exhibit 10.39

(g)The Company has done or caused to be done, and will do, all things necessary to observe organizational formalities and preserve its existence, and the Company has not and will not, (i) terminate or fail other than to a de minimis and immaterial extent, to comply with the provisions of its Organizational Documents, or (ii) from and after the date hereof only, unless the Class A Member has consented, amend, modify or otherwise change its certificate of formation, operating agreement or other Organizational Documents.

(h)The Company has, in all material respects, maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person. The Company’s assets will not be listed as assets on the financial statement of any other Person, provided, however, that the Company’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Company and such Affiliates and to indicate that the Company’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets shall be listed on the Company’s own separate balance sheet. The Company will file its own tax returns (to the extent the Company is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person (for the avoidance of doubt, the inclusion of the results of operations, income, profits, losses or other tax attributes of a Person that is a disregarded entity for federal or state income tax purposes in the federal or state income tax returns of the beneficial owner of such Person shall not constitute the filing of an income tax return by such Person), except to the extent that the Company is (i) required to file consolidated tax returns by law or (ii) is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law. The Company has maintained and shall maintain its books, records, resolutions and agreements in accordance with this Agreement.

(i)The Company has been, will be, and at all times has held and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of the Class B Member or any Guarantor), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or department or part of the other and shall maintain and utilize separate stationery, invoices and checks bearing its own name.

(j)The Company intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided that nothing in this clause (j) shall be interpreted to require the partners, members or other principals of the Company to make any capital contributions or loans to such entity or arrange for any such capital contribution or loan by any third party.

(k)None of the Company, any Affiliate Controlling the Company, the Class B Member, any Guarantor or any other Person holding any direct or Controlling indirect

22

Exhibit 10.39

interest in the Company, has sought or intends to seek or effect the liquidation, dissolution, winding up, consolidation or merger, in whole or in part, of the Company.

(l)The Company has not and will not commingle the funds and other assets of the Company with those of any Affiliate, the Class B Member, any Guarantor or any other Person, and has held and will hold all of its assets in its own name.

(m)The Company has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate, the Class B Member, any Guarantor or any other Person.

(n)The Company has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.

(o)The Company shall be a single purpose entity and shall have at all times (except for the limited and temporary circumstances described in Section 2.7 of this Agreement) at least one Special Member that has the rights and responsibilities described in this Agreement.

(p)The Company has conducted and shall conduct its business so that the assumptions made with respect to the Company in any non-consolidation opinion delivered to the Class A Member in connection with its investment in the Company, or in any other non-consolidation opinion delivered subsequently to the Class A Member’s investment in the Company, shall be true and correct in all material respects.In connection with the foregoing, the Company hereby covenants and agrees that it will comply in all material respects with or cause the compliance in all material respects with, (i) all of the facts and assumptions (whether regarding the Company or any other Person) set forth in such non-consolidation opinion letter, (ii) all of the representations, warranties and covenants in this Schedule 5.15(a), and (iii) its Organizational Documents other than to a de minimis and immaterial extent.

(q)Except as contemplated in this Agreement, the Company has not permitted and will not permit any Affiliate of the Class B Member or any Guarantor or any other Person holding any direct or indirect interest in the Company, independent access to its bank accounts.

(r)Except as contemplated in this Agreement, the Company has, in all material respects, paid and shall pay its own liabilities and expenses, including the salaries of its own employees (if any) from its own funds; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Company to make any additional capital contributions to the Company; provided further that it shall not be a breach of this subsection (r) to the extent that the Company does (or did) not pay such liabilities or expenses because it does not have (or did not have) sufficient cash flow.

23

Exhibit 10.39

(s)Except as contemplated in this Agreement, the Company has compensated and shall compensate each of its consultants and agents from its own funds for services provided to it and pay from its own assets all obligations of any kind incurred; provided that it shall not be a breach of this subsection (s) to the extent the Company does (or did) not compensate such consultants or agents or pay such obligations because it does not have (or did not have) sufficient cash flow.

(t)The Company has not, and without the prior written consent of its Special Member, will not, (i) file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of the Company’s properties, (iii) make any assignment for the benefit of the Company’s creditors, or (iv) take any action in furtherance of the foregoing.

(u)Except as contemplated in this Agreement, the Company has, in all material respects, maintained and will maintain an arm’s-length relationship with its Affiliates; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Company to make any additional capital contributions to the Company.

(v)The Company has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space.

(w)Except pursuant to the Transaction Documents, the Company has not pledged and will not pledge its assets for the benefit of any other Person.

(x)The Company has and will have no obligation to indemnify its officers, directors, members or partners, as the case may be, or has such an obligation that is fully subordinated to the obligations owed to the Class A Member under this Agreement and the other Transaction Documents and will not constitute a claim against it if cash flow in excess of the amount required to pay the obligations owed to the Class A Member under this Agreement is insufficient to pay such indemnification obligation.

(y)Except for the Guarantees, the Company has not, does not, and will not have any of its obligations guaranteed by any Affiliate.

(z)The Company shall have one Special Member who will consider only the interests of the Company, including its creditors, in acting or otherwise voting on the matters for which its approval is required. Except as provided in the immediately preceding, the Special Member shall not have any fiduciary duties to any other Member or any other Person bound by this Agreement; provided, however, the foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing. To the fullest extent permitted by law, including Section 18-1101(e) of the Act, the Special Member shall not be liable to the Company, any other Member or any other Person bound by this Agreement for breach of

24

Exhibit 10.39

contract or breach of duties (including fiduciary duties), unless the Special Member acted in bad faith or engaged in willful misconduct.

3. With respect to the Class B Member, the Class B Member shall comply with each of the following:

(a)The Class B Member (i) has been, is, and will be organized solely for the purpose of acquiring, owning, holding, selling, transferring, exchanging, managing and operating its limited liability company interests in the Company, entering into this Agreement and the other Transaction Documents, and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing, and (ii) has not owned, does not own, and will not own any asset or property other than (A) its limited liability company interests in the Subsidiaries and (B) incidental personal property necessary for the ownership or operation of such limited liability company interests.

(b)The Class B Member has not engaged and will not engage in any business other than the ownership, management and operation of its limited liability company interests in the Company and business incidental thereto.

(c)The Class B Member has not and will not enter into any contract or agreement with any Affiliate of the Class B Member, except upon terms and conditions that are intrinsically fair, commercially reasonable, and no less favorable to it than would be available on an arms-length basis with third parties other than any such party.

(d)The Class B Member has not incurred and will not incur any Indebtedness other than its obligations under this Agreement and the other Transaction Documents.

(e)Except as contemplated in this Agreement and the other Transaction Documents, the Class B Member has not made and will not make any loans or advances to any third party (including any Guarantor and/or any of their respective Affiliates), and has not and shall not acquire obligations or securities of its Affiliates.

(f)The Class B Member is and intends to remain solvent and the Class B Member has, in all material respects, paid and will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Class B Member to make any additional capital contributions to the Class B Member; and provided further that it shall not be a breach of this subsection (f) to the extent that the Class B Member does (or did) not pay such debts or liabilities because it does not have (or did not have) sufficient cash flow.

(g)The Class B Member has done or caused to be done, and will do, all things necessary to observe organizational formalities and preserve its existence, and the Class B Member has not and will not, (i) terminate or fail other than to a de minimis and immaterial extent, to comply with the provisions of its Organizational Documents, or (ii) from and after

25

Exhibit 10.39

the date hereof only, unless the Class A Member has consented, amend, modify or otherwise change its certificate of formation, operating agreement or other Organizational Documents.

(h)The Class B Member has, in all material respects, maintained and will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any other Person. The Class B Member’s assets will not be listed as assets on the financial statement of any other Person, provided, however, that the Class B Member’s assets may be included in a consolidated financial statement of its Affiliates provided that (i) appropriate notation shall be made on such consolidated financial statements to indicate the separateness of the Class B Member and such Affiliates and to indicate that the Class B Member’s assets and credit are not available to satisfy the debts and other obligations of such Affiliates or any other Person, and (ii) such assets shall be listed on the Class B Member’s own separate balance sheet. The Class B Member will file its own tax returns (to the extent the Class B Member is required to file any such tax returns) and will not file a consolidated federal income tax return with any other Person (for the avoidance of doubt, the inclusion of the results of operations, income, profits, losses or other tax attributes of a Person that is a disregarded entity for federal or state income tax purposes in the federal or state income tax returns of the beneficial owner of such Person shall not constitute the filing of an income tax return by such Person), except to the extent that the Class B Member is (i) required to file consolidated tax returns by law or (ii) is treated as a “disregarded entity” for tax purposes and is not required to file tax returns under applicable law.The Class B Member has maintained and shall maintain its books, records, resolutions and agreements in accordance with this Agreement.

(i)The Class B Member has been, will be, and at all times has held and will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate of any Guarantor), shall correct any known misunderstanding regarding its status as a separate entity, shall conduct business in its own name, shall not identify itself or any of its Affiliates as a division or department or part of the other and shall maintain and utilize separate stationery, invoices and checks bearing its own name.

(j)The Class B Member intends to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations; provided that nothing in this clause (j) shall be interpreted to require the partners, members or other principals of the Class B Member to make any capital contributions or loans to such entity or arrange for any such capital contribution or loan by any third party.

(k)None of the Class B Member, any Affiliate Controlling the Class B Member, any Guarantor or any other Person holding any direct or Controlling indirect interest in the Class B Member, has sought or intends to seek or effect the liquidation, dissolution, winding up, consolidation or merger, in whole or in part, of the Class B Member.

(l)The Class B Member has not and will not commingle the funds and other assets of the Class B Member with those of any Affiliate, any Guarantor or any other Person, and has held and will hold all of its assets in its own name.

26

Exhibit 10.39

(m)The Class B Member has and will maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate, any Guarantor or any other Person.

(n)The Class B Member has not and will not assume or guarantee or become obligated for the debts of any other Person and does not and will not hold itself out to be responsible for or have its credit available to satisfy the debts or obligations of any other Person.

(o)The Class B Member shall be a single purpose entity and its general partner shall have at all times at least one Special Member that has the rights and responsibilities described in this Agreement.

(p)The Class B Member has conducted and shall conduct its business so that the assumptions made with respect to the Class B Member in any non-consolidation opinion delivered to the Class A Member in connection with its investment in the Company, or in any other non-consolidation opinion delivered subsequently to the Class A Member’s investment in the Company in any non-consolidation opinion delivered to the Class A Member in connection with its investment in the Company, or in any other non-consolidation opinion delivered subsequently to the Class A Member’s investment in the Company, shall be true and correct in all material respects. In connection with the foregoing, the Class B Member hereby covenants and agrees that it will comply in all material respects with or cause the compliance in all material respects with, (i) all of the facts and assumptions (whether regarding the Class B Member or any other Person) set forth in such non-consolidation opinion letter, (ii) all of the representations, warranties and covenants in this Schedule 5.15(a), and (iii) its Organizational Documents other than to a de minimis and immaterial extent.

(q)Except as contemplated in this Agreement, the Class B Member has not permitted and will not permit any Affiliate, any Guarantor or any other Person holding any direct or indirect interest in the Class B Member, independent access to its bank accounts.

(r)Except as contemplated in this Agreement, the Class B Member has, in all material respects, paid and shall pay its own liabilities and expenses, including the salaries of its own employees (if any) from its own funds; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Class B Member to make any additional capital contributions to the Class B Member; provided further that it shall not be a breach of this subsection (r) to the extent that the Class B Member does (or did) not pay such liabilities or expenses because it does not have (or did not have) sufficient cash flow.

(s)Except as contemplated in this Agreement, the Class B Member has compensated and shall compensate each of its consultants and agents from its own funds for services provided to it and pay from its own assets all obligations of any kind incurred; provided that it shall not be a breach of this subsection (s) to the extent the Class B Member

27

Exhibit 10.39

does (or did) not compensate such consultants or agents or pay such obligations because it does not have (or did not have) sufficient cash flow.

(t)The Class B Member has not, and without the prior written consent of the Special Member of its general partner, will not, (i) file a bankruptcy, insolvency or reorganization petition or otherwise institute insolvency proceedings or otherwise seek any relief under any laws relating to the relief from debts or the protection of debtors generally, (ii) seek or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator, custodian or any similar official for such entity or for all or any portion of the Class B Member’s properties, (iii) make any assignment for the benefit of the Class B Member’s creditors, or (iv) take any action in furtherance of the foregoing.

(u)Except as contemplated in this Agreement, the Class B Member has, in all material respects, maintained and will maintain an arm’s-length relationship with its Affiliates; provided that the foregoing shall not require any direct or indirect member, partner or shareholder of the Class B Member to make any additional capital contributions to the Class B Member.

(v)The Class B Member has allocated and will allocate fairly and reasonably any overhead expenses that are shared with any Affiliate, including shared office space.

(w)Except pursuant to the Transaction Documents, the Class B Member has not pledged and will not pledge its assets for the benefit of any other Person.

(x)The Class B Member has and will have no obligation to indemnify its officers, directors, members or partners, as the case may be, or has such an obligation that is fully subordinated to the obligations owed to the Class A Member under this Agreement and the other Transaction Documents and will not constitute a claim against it if cash flow in excess of the amount required to pay the obligations owed to the Class A Member under this Agreement is insufficient to pay such indemnification obligation.

(y)Except for the Guarantees, the Class B Member has not, does not, and will not have any of its obligations guaranteed by any Affiliate.

(z)The general partner of the Class B Member shall have one Special Member who will consider only the interests of the Class B Member, including its creditors, in acting or otherwise voting on the matters for which its approval is required.

28

Exhibit 10.39

SCHEDULE 5.15(b)

Anti-Terrorism and Anti-Money Laundering Laws; Embargoed Persons

(a)Compliance with Anti-Terrorism and Anti-Money Laundering Laws. (i) None of the Company, the Guarantors, the Subsidiaries, the Class B Member, their respective constituents, investors and Affiliates is in violation of any Legal Requirements relating to terrorism or money laundering, including Executive Order No. 13224 on Terrorist Financing (effective September 24, 2001 (the “Executive Order”) and the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56, the “Patriot Act”).

(i)None of the Company, the Guarantors, the Subsidiaries, the Class B Member, their respective constituents, investors and Affiliates or other agents (if any), acting or benefiting in any capacity in connection with this Agreement or the transactions contemplated herein, is a “Prohibited Person” which is defined as:

(1)a Person or entity that is listed in the Annex to, or is otherwise subject to the provisions of the Executive Order;

(2)a Person or entity owned or Controlled by, or acting for or on behalf of any person or entity that is listed in the Annex to, or is otherwise subject to the provisions of, the Executive Order;

(3)a Person or entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any terrorism or money laundering Legal Requirements, including the Executive Order and the Patriot Act;

(4)a Person or entity who commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order;

(5)a Person or entity that is named as a “specially designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gove/ofac/t11sdn.pdf or at any replacement website or other replacement official publication of such list; and

(6)a Person or entity who is an Affiliate of a Person or entity listed above.

(i)None of the Company, the Guarantors, the Subsidiaries, the Class B Member, their respective constituents, investors and Affiliates, any of their respective brokers or other agents, if any, acting in any capacity in connection with this Agreement or the Properties is or knowingly will (i) conduct any business or engage in any transaction or dealing with any Prohibited Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Prohibited Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order; or (iii) engage in or conspire to engage in any transaction that evades or

[NEWYORK 3343449_4]

Exhibit 10.39

avoids, or has the purposes of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order or the Patriot Act.

(ii)The Guarantors, the Subsidiaries and the Class B Member shall not knowingly use funds from any Prohibited Person to make any payment due to the Company hereunder, and the Company shall not knowingly use funds from any Prohibited Person to make any payment due to the Class A Member hereunder, provided that this provision shall not excuse the Company, the Guarantors, the Subsidiaries or the Class B Member from any of their payment obligations or allow any of them to defer the same.

(iii)The Company, the Guarantors, and the Class B Member covenant and agree to deliver to the Class A Member any certification or other evidence requested from time to time by the Class A Member in its reasonable discretion, confirming, to its Knowledge, the compliance with this section by the Company, the Guarantors, the Subsidiaries and the Class B Member.

(b)Embargoed Person. To the Knowledge of the Company, the Guarantors, and the Class B Member, (a) none of the funds or other assets of the Company or any of its Subsidiaries constitute property of, or are beneficially owned, directly or indirectly, by any Embargoed Person (as defined below); (b) no Embargoed Person has any interest of any nature whatsoever in the Company or any of its Subsidiaries (whether directly or indirectly); and (c) none of the funds of the Class B Member have been derived from any unlawful activity with the result that the investment in Class B Member is prohibited by law. “Embargoed Person” means any person, entity or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder.

30

Exhibit 10.39

SCHEDULE 6.1

Initial Capital Contributions and Percentage Interests of the Members

Member	Initial Capital Contribution		Initial Percentage Interest
Class A Member	$	347,298,021	0%
Class B Member	$	100	100%
Special Member	$	—	0%

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Jonathan P. Mehlman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hospitality Investors Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	May 15, 2017	/s/ Jonathan P. Mehlman
		Jonathan P. Mehlman Chief Executive Officer and President (Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Edward T. Hoganson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Hospitality Investors Trust, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	May 15, 2017	/s/ Edward T. Hoganson
		Edward T. Hoganson Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

This Certificate is being delivered pursuant to the requirements of Section 1350 of Chapter 63 (Mail Fraud) of Title 18 (Crimes and Criminal Procedures) of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed for purposes of Section 18 of the Securities Act of 1934, as amended.

The undersigned, who are the Chief Executive Officer and Chief Financial Officer of Hospitality Investors Trust, Inc. (the “Company”), each hereby certify to his knowledge as follows:

The Quarterly Report on Form 10-Q of the Company, which accompanies this Certificate, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and all information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	May 15, 2017	/s/ Jonathan P. Mehlman
		Jonathan P. Mehlman Chief Executive Officer and President (Principal Executive Officer)
Date:	May 15, 2017	/s/ Edward T. Hoganson
		Edward T. Hoganson Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	May 01, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Hospitality Investors Trust, Inc.
Entity Central Index Key	0001583077
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		39,617,676

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Real estate investments:
Land	$ 339,819	$ 339,819
Buildings and improvements	1,848,124	1,838,594
Furniture, fixtures and equipment	211,394	212,994
Total real estate investments	2,399,337	2,391,407
Less: accumulated depreciation and amortization	(187,031)	(169,486)
Total real estate investments, net	2,212,306	2,221,921
Assets held for sale		0
Cash and cash equivalents	81,378	42,787
Acquisition deposits	10,500	7,500
Restricted cash	33,497	35,050
Investments in unconsolidated entities	3,309	3,490
Below-market lease asset, net	9,727	9,827
Prepaid expenses and other assets	38,075	32,836
Goodwill	31,557	0
Total Assets	2,420,349	2,353,411
LIABILITIES, NON-CONTROLLING INTEREST AND EQUITY
Mortgage notes payable, net	1,411,812	1,410,925
Promissory notes payable, net	7,030	23,380
Mandatorily redeemable preferred securities, net	241,219	288,265
Accounts payable and accrued expenses	71,076	68,519
Due to related parties	2,417	2,879
Total Liabilities	1,733,554	1,793,968
Commitments and Contingencies
Contingently Redeemable Class C Units in operating partnership; 9,152,542 units issued and outstanding ($135,000 liquidation preference)	121,202	0
Stockholders' Equity
Preferred stock, $0.01 par value, 50,000,000 shares authorized, one and zero shares issued and outstanding, respectively	0	0
Common stock, $0.01 par value, 300,000,000 shares authorized, 39,617,676 and 38,493,430 shares issued and outstanding, respectively	396	385
Additional paid-in capital	872,178	843,149
Deficit	(309,545)	(286,852)
Total equity of Hospitality Investors Trust, Inc. stockholders	563,029	556,682
Non-controlling interest - consolidated variable interest entity	2,564	2,761
Total Stockholders' Equity	565,593	559,443
Total Liabilities, Contingently Redeemable Class C Units, Non-controlling Interest and Equity	$ 2,420,349	$ 2,353,411

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Contingently redeemable class c units in operating partnership, shares issued (in shares)	9,152,542	9,152,542
Contingently redeemable class c units in operating partnership, shares outstanding (in shares)	9,152,542	9,152,542
Contingently redeemable class c units in operating partnership, liquidation preference	$ 135,000	$ 135,000
Preferred stock, par value (usd per share)	$ 0.01	$ 0.01
Preferred stock, authorized (in shares)	50,000,000	50,000,000
Preferred stock, issued (in shares)	1	0
Preferred stock, outstanding (in shares)	1	0
Common stock, par value (usd per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	300,000,000	300,000,000
Common stock, issued (in shares)	39,617,676	38,493,430
Common stock, outstanding (in shares)	39,617,676	38,493,430

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues
Rooms	$ 135,638	$ 127,378
Food and beverage	5,105	5,006
Other	2,960	2,769
Total revenue	143,703	135,153
Operating expenses
Rooms	34,165	31,924
Food and beverage	3,997	3,964
Management fees	10,471	9,961
Other property-level operating expenses	58,306	55,637
Acquisition and transaction related costs	36	25,065
General and administrative	2,926	4,294
Depreciation and amortization	26,144	23,553
Rent	1,628	1,528
Total operating expenses	137,673	155,926
Income from operations	6,030	(20,773)
Interest expense	(23,380)	(23,133)
Other income (expense)	12	(551)
Equity in earnings (losses) of unconsolidated entities	(29)	(60)
Total other expenses, net	(23,397)	(23,744)
Net loss before taxes	(17,367)	(44,517)
Income tax benefit	(1,243)	(603)
Net loss and comprehensive loss	(16,124)	(43,914)
Less: Net income attributable to non-controlling interest	20	43
Net loss before deemed dividend	(16,144)	(43,957)
Deemed dividend related to beneficial conversion feature of Class C Units	(4,535)	0
Net loss attributable to common stockholders	$ (20,679)	$ (43,957)
Basic and Diluted net loss attributable to common stockholders per common share (usd per share)	$ (0.53)	$ (1.14)
Basic and Diluted weighted average common shares outstanding (shares)	38,810,386	38,571,410

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - 3 months ended Mar. 31, 2017 - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Deficit	Total Equity of Hospitality Investors Trust, Inc. Stockholders	Non-controlling Interest
Beginning balance (in shares) at Dec. 31, 2016	38,493,430	38,493,430
Beginning balance at Dec. 31, 2016	$ 559,443	$ 385	$ 843,149	$ (286,852)	$ 556,682	$ 2,761
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net (in shares)		808,642
Issuance of common stock, net	11,828	$ 8	11,820		11,828
Net loss attributable to Hospitality Investors Trust, Inc.	(16,144)			(16,144)	(16,144)
Net income attributable to non-controlling interest	20					20
Dividends paid or declared (in shares)		315,604
Dividends paid or declared	4,548	$ 3	6,776	(2,014)	4,765	(217)
Deemed dividend related to beneficial conversion feature of Class C Units			4,535	(4,535)
Share-based payments	76		76		76
Waiver of obligation from Former Advisor	$ 5,822		5,822		5,822
Ending balance (in shares) at Mar. 31, 2017	39,617,676	39,617,676
Ending balance at Mar. 31, 2017	$ 565,593	$ 396	$ 872,178	$ (309,545)	$ 563,029	$ 2,564

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net loss	$ (16,124)	$ (43,914)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	26,144	23,553
Amortization and write-off of deferred financing costs	1,338	4,723
Change in fair value of contingent consideration	0	593
Loss of acquisition deposits	0	22,000
Other adjustments, net	347	287
Changes in assets and liabilities:
Prepaid expenses and other assets	(5,571)	(4,525)
Restricted cash	(3,181)	(13,848)
Due to related parties	(462)	871
Accounts payable and accrued expenses	6,436	21,153
Net cash provided by operating activities	8,927	10,893
Cash flows from investing activities:
Acquisition of hotel assets, net of cash received	0	(69,892)
Real estate investment improvements and purchases of property and equipment	(14,925)	(33,770)
Fees related to Property Management Transactions	(10,000)	0
Change in restricted cash related to real estate improvements	4,734	17,109
Net cash used in investing activities	(20,191)	(86,553)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	0	677
Proceeds from Class C Units	135,000	0
Payment of Class C Units issuance costs	(13,798)	0
Payment of offering costs	0	(73)
Dividends/Distributions paid	(217)	(8,323)
Mandatorily redeemable preferred securities redemptions	(47,250)	(2,270)
Proceeds from mortgage note payable	0	70,384
Deferred financing fees	(212)	(723)
Repayments of promissory and mortgage notes payable	(23,668)	0
Restricted cash for debt service	0	(3,029)
Net cash provided by financing activities	49,855	56,643
Net change in cash and cash equivalents	38,591	(19,017)
Cash and cash equivalents, beginning of period	42,787	46,829
Cash and cash equivalents, end of period	81,378	27,812
Supplemental disclosure of cash flow information:
Interest paid	22,073	15,755
Taxes paid	(10)	72
Non-cash investing and financing activities:
Deemed dividend related to beneficial conversion feature of Class C Units	(4,535)	0
Waiver of obligation from Former Advisor	(5,822)	0
Real estate investment improvements and purchases of property and equipment in accounts payable and accrued expenses	13,750	24,851
Class B Units in operating partnership converted and redeemed for Common Stock	7,659	0
Note payable to Former Property Manager	4,000	0
Common stock issued to Former Property Manager	4,076	0
Seller financed acquisition deposit	3,000	7,500
Seller financed acquisition	0	20,000
Dividends declared but not paid	0	5,279
Common stock issued through distribution reinvestment plan	$ 0	$ 7,077

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Organization

3 Months Ended

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

Organization

Hospitality Investors Trust, Inc. (the "Company") was incorporated on July 25, 2013 as a Maryland corporation and qualified as a real estate investment trust ("REIT") beginning with the taxable year ended December 31, 2014. The Company was formed primarily to acquire lodging properties in the midscale limited service, extended stay, select service, upscale select service, and upper upscale full service segments within the hospitality sector. As of March 31, 2017, the Company had acquired or had an interest in a total of 141 hotels with a total of 17,193 guest rooms located in 32 states. As of March 31, 2017, all but one of these hotels operated under a franchise or license agreement with a national brand owned by one of Hilton Worldwide, Inc., Marriott International, Inc., Hyatt Hotels Corporation, Intercontinental Hotels Group, and Red Lion Hotels Corporation or one of their respective subsidiaries or affiliates. On April 27, 2017, the Company acquired an additional seven hotels (the “April Acquisition”) with a total of 651 guest rooms, which also operate under a franchise or license agreement with a national brand owned by one of these companies.

On January 7, 2014, the Company commenced its primary initial public offering (the "IPO" or the "Offering") on a "reasonable best efforts" basis of up to 80,000,000 shares of common stock, $0.01 par value per share, at a price of $25.00 per share, subject to certain volume and other discounts, pursuant to a registration statement on Form S-11 (File No. 333-190698), as well as up to 21,052,631 shares of common stock available pursuant to the Distribution Reinvestment Plan (the "DRIP") under which the Company's common stockholders could elect to have their cash distributions reinvested in additional shares of the Company's common stock.

On November 15, 2015, the Company suspended its IPO, and, on November 18, 2015, Realty Capital Securities, LLC (the "Former Dealer Manager"), the dealer manager of the IPO, suspended sales activities, effective immediately. On December 31, 2015, the Company terminated the Former Dealer Manager as the dealer manager of the IPO.

On March 28, 2016, the Company announced that, because it required funds in addition to operating cash flow and cash on hand to meet its capital requirements, beginning with distributions payable with respect to April 2016 the Company would pay distributions to its stockholders in shares of common stock instead of cash.

On July 1, 2016, the Company's board of directors approved an estimated net asset value per share of common stock (“Estimated Per-Share NAV”) equal to $21.48 based on an estimated fair value of the Company's assets less the estimated fair value of our liabilities, divided by 36,636,016 shares of common stock outstanding on a fully diluted basis as of March 31, 2016, which was published on the same date. This was the first time that the Company’s board of directors determined an Estimated Per-Share NAV. It is currently anticipated that the Company will publish an updated Estimated Per-Share NAV on at least an annual basis.

On January 7, 2017, the third anniversary of the commencement of the IPO, it terminated in accordance with its terms.

On January 12, 2017, the Company along with its operating partnership, Hospitality Investors Trust Operating Partnership, L.P. (then known as American Realty Capital Hospitality Operating Partnership, L.P.) (the "OP"), entered into (i) a Securities Purchase, Voting and Standstill Agreement (the “SPA”) with Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC (the “Brookfield Investor”), as well as related guarantee agreements with certain affiliates of the Brookfield Investor, and (ii) a Framework Agreement (the “Framework Agreement”) with the Company’s former advisor, American Realty Capital Hospitality Advisors, LLC (the "Former Advisor"), the Company’s former property managers, American Realty Capital Hospitality Properties, LLC and American Realty Capital Hospitality Grace Portfolio, LLC (together, the “Former Property Manager”), Crestline Hotels & Resorts, LLC (“Crestline”), then an affiliate of the Former Advisor and the Former Property Manager, American Realty Capital Hospitality Special Limited Partnership, LLC (the “Former Special Limited Partner”), another affiliate of the Former Advisor and the Former Property Manager, and, for certain limited purposes, the Brookfield Investor.

In connection with the Company’s entry into the SPA, the Company suspended paying distributions to stockholders entirely and suspended the DRIP. Currently, under the Brookfield Approval Rights (as defined below), prior approval is required before the Company can declare or pay any distributions or dividends to its common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

On March 31, 2017, the initial closing under the SPA (the “Initial Closing”) occurred and various transactions and agreements contemplated by the SPA were consummated and executed, including but not limited to:

• the sale by the Company and purchase by the Brookfield Investor of one share of a new series of preferred stock designated as the Redeemable Preferred Share, par value $0.01 per share (the “Redeemable Preferred Share”), for a nominal purchase price; and

• the sale by the Company and purchase by the Brookfield Investor of 9,152,542.37 units of a new class of units of limited partnership in our operating partnership entitled "Class C Units" (the “Class C Units”), for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate.

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail in Note 3 - Brookfield Investment and Related Transactions.

Subject to the terms and conditions of the SPA, the Company, through the OP, also has the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units in an aggregate amount of up to $265.0 million at subsequent closings (each, a "Subsequent Closing") that may occur through February 2019. The Subsequent Closings are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.

Substantially all of the Company’s business is conducted through the OP. Prior to the Initial Closing, the Company was the sole general partner and held substantially all of the units of limited partnership in the OP entitled “OP Units” ("OP Units"). Following the Initial Closing, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $135.0 million in liquidation preference with respect to the OP that ranks senior in payment of distributions and in the distribution of assets to the OP Units held by the Company, and BSREP II Hospitality II Special GP, OP LLC (the “Special General Partner”) is the special general partner of the OP, with certain non-economic rights that apply if the OP is unable to redeem the Class C Units when required to do so, as described below. Class C Units are convertible into OP Units based on an initial conversion price of $14.75, subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions. OP Units, in turn, are generally redeemable for shares of the Company's common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at the Company’s election, in accordance with the terms of the limited partnership agreement of the OP. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative cash distribution at a rate of 7.50% per annum from legally available funds. If the Company fails to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative distribution payable in Class C Units at a rate of 5% per annum ("PIK Distributions"). Upon our failure to redeem the Brookfield Investor when required to do so pursuant to the limited partnership agreement of the OP, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50% and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.50%.

Without obtaining the prior approval of the majority of the then outstanding Class C Units, the OP is restricted from taking certain actions including equity issuances, debt incurrences, payment of dividends or other distributions, redemptions or repurchases of securities, property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business. In addition, pursuant to the terms of the Redeemable Preferred Share, in addition to other governance and board rights, the Brookfield Investor has elected and has a continuing right to elect two directors (each, a “Redeemable Preferred Director”) to the Company’s board of directors and the Company is similarly restricted from taking those actions without the prior approval of at least one of the Redeemable Preferred Directors. Prior approval of at least one of the Redeemable Preferred Directors is also required to approve the annual business plan (including the annual operating and capital budget) required under the terms of the Redeemable Preferred Share (the "Annual Business Plan"), hiring and compensation decisions related to certain key personnel (including our executive officers) and various matters related to the structure and composition of the Company’s board of directors. These restrictions (collectively referred to herein as the “Brookfield Approval Rights”) are subject to certain exceptions and conditions, including that, after March 31, 2022, no prior approval will be required for equity issuances, debt incurrences and property sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full. Subject to certain limitations, the Brookfield Approval Rights are subject to temporary and permanent suspension in connection with any failure by the Brookfield Investor to purchase Class C Units at any Subsequent Closing as required pursuant to the SPA. In addition, the Brookfield Approval Rights will no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the limited partnership agreement of the OP.

Prior to March 31, 2022, if the OP consummates a liquidation sale of all or substantially all of its assets, dissolution or winding-up, whether voluntary or involuntary, sale, merger, reorganization, reclassification or recapitalization or other similar event (a “Fundamental Sale Transaction”), it is required to redeem the Class C Units for cash at a premium based on how long the Class C Units have been outstanding. Following March 31, 2022, the holders of Class Units may require the OP to redeem any or all Class C Units for an amount in cash equal to the liquidation preference. The OP will also be required, at the option of the holders thereof, to redeem Class C Units, for the same premium applicable in a Fundamental Sale Transaction, upon the occurrence of certain events related to its failure to qualify as a REIT, the occurrence of a material breach by the OP of certain provisions of the limited partnership agreement of the OP or, for an amount equal to the liquidation preference, the rendering of a judgment enjoining or otherwise preventing the exercise of certain rights under the limited partnership agreement of the OP. If the OP is unable to redeem any Class C Units when required to do so, the Brookfield Investor will be able to elect a majority of the Company's board of directors and may cause the OP, through the exercise of the rights of the Special General Partner, to commence selling its assets until the Class C Units have been fully redeemed.

At any time and from time to time on or after March 31, 2022, the OP has the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference. In addition, if the Company lists its common stock on a national securities exchange prior to that date, it will have certain rights to redeem all but $0.10 of the liquidation preference of each issued and outstanding Class C Units for cash subject to payment of a make whole premium and certain rights of their Class C Unit holders to convert their retained liquidation preference into OP Units prior to March 31, 2024.

Also at the Initial Closing, as contemplated by the SPA and the Framework Agreement, the Company changed its name from American Realty Capital Hospitality Trust, Inc. to Hospitality Investors Trust, Inc. and the name of the OP from American Realty Capital Hospitality Operating Partnership, L.P. to Hospitality Investors Trust Operating Partnership, L.P. and completed various other actions required to effect the Company’s transition from external management to self-management.

Prior to the Initial Closing, the Company had no employees, and the Company depended on the Former Advisor to manage certain aspects of its affairs on a day-to-day basis pursuant to the advisory agreement with the Former Advisor (the "Advisory Agreement"). In addition, the Former Property Manager, served as the Company's property manager and had retained Crestline to provide services, including locating investments, negotiating financing and operating certain hotel assets in the Company's portfolio.

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, LLC (“AR Capital”), the parent of American Realty Capital IX, LLC (“ARC IX”), and AR Global Investments, LLC ("AR Global"), the successor to certain of AR Capital's businesses. ARC IX served as the Company’s sponsor prior to its transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. Following the Initial Closing, the Company had approximately 25 full-time employees. The staff at the Company’s hotels are employed by our third-party hotel managers. At the Initial Closing, the Company also terminated all of its other agreements with affiliates of the Former Advisor except for its hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which the Company will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Prior to the Initial Closing, the Company, directly or indirectly through its taxable REIT subsidiaries had entered into agreements with the Former Property Manager, which, in turn, had engaged Crestline or a third-party sub-property manager to manage the Company’s hotel properties. These agreements were intended to be coterminous, meaning that the term of the agreement with the Company’s Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions. Following the Initial Closing, the Company no longer has any agreements with the Former Property Manager and instead contracts directly or indirectly, through its taxable REIT subsidiaries, with Crestline and the other third-party property management companies that previously served as sub-property managers to manage the Company’s hotel properties.

As of March 31, 2017, following the Initial Closing, 72 of the hotel assets the Company has acquired were managed by Crestline and 69 of the hotel assets the Company has acquired were managed by third-party property managers. As of March 31, 2017, the Company’s third-party property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), Interstate Management Company, LLC (5 hotels), InnVentures IVI, LP (2 hotels) and McKibbon Hotel Management, Inc. (21 hotels). On April 3, 2017, as contemplated by the Framework Agreement, the five hotels managed by Interstate Management Company, LLC became managed by Crestline.

See Note 3 - Brookfield Investment and Related Transactions for additional information regarding the terms of the SPA and the Framework Agreement and the other transactions and agreements contemplated thereby.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

The accompanying consolidated financial statements of the Company included herein were prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature.

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as percentage ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary.

Certain amounts in prior periods have been reclassified in order to conform to current period presentation, specifically, the Company changed the presentation of its Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to "general and administrative expenses" and "acquisition and transaction related costs". The change in presentation was to reclassify these line items so that they are included as a component of Operating income (loss). The Company made this change in presentation for all periods presented.

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding purchase price allocations to record investments in real estate, the useful lives of real estate and real estate taxes, as applicable.

Real Estate Investments

The Company allocates the purchase price of properties acquired in real estate investments to tangible and identifiable intangible assets acquired based on their respective fair values at the date of acquisition. Tangible assets include land, land improvements, buildings and furniture, fixtures and equipment. The Company utilizes various estimates, processes and information to determine the property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and furniture, fixtures and equipment are based on purchase price allocation studies performed by independent third parties or on the Company’s analysis of comparable properties in the Company’s portfolio. Identifiable intangible assets and liabilities, as applicable, are typically related to contracts, including operating lease agreements, ground lease agreements and hotel management agreements, which will be recorded at fair value. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Investments in real estate that are not considered to be business combinations under GAAP are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation of the Company's long-lived assets is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for furniture, fixtures and equipment, and the shorter of the useful life or the remaining lease term for leasehold interests.

The Company is required to make subjective assessments as to the useful lives of the Company’s assets for purposes of determining the amount of depreciation to record on an annual basis with respect to the Company’s investments in real estate. These assessments have a direct impact on the Company’s net income because if the Company were to shorten the expected useful lives of the Company’s investments in real estate, the Company would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Below-Market Lease

The below-market lease intangible is based on the difference between the market rent and the contractual rent and is discounted to a present value using an interest rate reflecting the Company's current assessment of the risk associated with the leases acquired (See Note 5 - Leases). Acquired lease intangible assets are amortized over the remaining lease term. The amortization of a below-market lease is recorded as an increase to rent expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Impairment of Long-Lived Assets and Investments in Unconsolidated Entities

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income. An impairment loss of $2.4 million was recorded on one hotel during the quarter ended June 30, 2016. The Company has not recorded an impairment in any other periods.

Assets Held for Sale (Long Lived-Assets)

When the Company initiates the sale of long-lived assets, it assesses whether the assets meet the criteria to be considered assets held for sale. The review is based on whether the following criteria are met:

• Management has committed to a plan to sell the asset group;

• The subject assets are available for immediate sale in their present condition;

• The Company is actively locating buyers as well as other initiatives required to complete the sale;

• The sale is probable and the transfer is expected to qualify for recognition as a complete sale in one year;

• The long-lived asset is being actively marketed for sale at a price that is reasonable in relation to fair value; and

• Actions necessary to complete the plan indicate it is unlikely significant changes will be made to the plan or the plan will be withdrawn.

If all the criteria are met, a long-lived asset held for sale is measured at the lower of its carrying amount or fair value less cost to sell, and the Company will cease recording depreciation.

Goodwill

During the three months ended March 31, 2017, the Company recognized $31.6 million as goodwill (See Note 4 - Business Combinations). The goodwill balance will be tested for impairment at least annually, or upon the occurrence of any “triggering events,” if sooner.

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

Restricted Cash

Restricted cash consists of amounts required under mortgage agreements for future capital improvements to owned assets, future interest and property tax payments and cash flow deposits while subject to mortgage agreement restrictions. For purposes of the statement of cash flows, changes in restricted cash caused by changes to the amount needed for future capital improvements are treated as investing activities, changes related to future debt service payments are treated as financing activities, and changes related to real estate tax payments and excess cash flow deposits are treated as operating activities.

Deferred Financing Fees

Deferred financing fees represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These fees are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing fees are expensed in full when the associated debt is refinanced or repaid before maturity.Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not be successful.

Variable Interest Entities

Accounting Standards Codification ("ASC") 810 contains the guidance surrounding the definition of variable interest entities ("VIE"), the definition of variable interests and the consolidation rules surrounding VIEs. In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

Once it is determined that the Company holds a variable interest in an entity, GAAP requires that the Company perform a qualitative analysis to determine (i) which entity has the power to direct the matters that most significantly impact the VIE’s financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. The entity that has both of these characteristics is deemed to be the primary beneficiary and is required to consolidate the VIE.

In February 2015, the FASB issued Accounting Standards Update 2015-02 (ASU 2015-02), which amended ASC 810. The amendment modifies the evaluation of whether certain legal entities are VIEs, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs. The revised guidance was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company’s partnership interest in the OP representing the OP Units held by the Company corresponding to shares of the Company's common stock is considered a majority voting interest. As such, the new guidance did not have an impact on the Company’s consolidated financial statements. At the Initial Closing the Company analyzed the rights of the Class C Units holders and determined that the Company continues to be the primary beneficiary of the OP, with the power to direct activities that most significantly impact its economic performance.

The Company also has variable interests in VIEs through its investments in BSE/AH Blacksburg Hotel, LLC (the "HGI Blacksburg JV"), an entity that owns the assets of the Hilton Garden Inn Blacksburg, and an interest in TCA Block 7 Hotel, LLC (the "Westin Virginia Beach JV"), an entity that owns the assets of the Westin Virginia Beach Town Center (the "Westin Virginia Beach").

The Company has concluded that it is the primary beneficiary, with the power to direct activities that most significantly impact its economic performance of the HGI Blacksburg JV, and has therefore consolidated the entity in its consolidated financial statements.

The Company has concluded it is not the primary beneficiary with the power to direct activities that most significantly impact economic performance of the Westin Virginia Beach JV, and has therefore not consolidated the entity. The Company has accounted for the entity under the equity method of accounting and included it in investments in unconsolidated entities in the accompanying Consolidated Balance Sheets.

The Company classifies the distributions from its investments in unconsolidated entities in the Consolidated Statement of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution. For example, distributions of cash generated by property operations are classified as cash flows from operating activities. However, distributions received as a result of property sales are classified as cash flows from investing activities.

Revenue Recognition

The Company recognizes hotel revenue as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel services.

Income Taxes

The Company qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code") commencing with its tax year ended December 31, 2014. In order to continue to qualify as a REIT, the Company must annually distribute to its stockholders 90% of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain, and must comply with various other organizational and operational requirements. The Company generally will not be subject to federal corporate income tax on that portion of its REIT taxable income that it distributes to its stockholders. The Company may be subject to certain state and local taxes on its income, property tax and federal income and excise taxes on its undistributed income. The Company's hotels are leased to taxable REIT subsidiaries which are owned by the OP. The taxable REIT subsidiaries are subject to federal, state and local income taxes.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss, capital loss, and tax credit carryovers. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which such amounts are expected to be realized or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. The Company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement in order to determine the amount of benefit to recognize in the financial statements. This accounting standard applies to all tax positions related to income taxes.

Earnings/Loss per Share

The Company calculates basic income or loss per share by dividing net income or loss for the period by the weighted-average shares of its common stock outstanding for a respective period. Diluted income per share takes into account the effect of dilutive instruments, such as stock options and unvested stock awards, except when doing so would be anti-dilutive. Beginning with distributions payable with respect to April 2016 and through the period from January 1, 2017 to January 13, 2017, the date these distributions were suspended, the Company has paid cumulative distributions of 2,047,877 shares of common stock and adjusted retroactively for all periods presented its computation of loss per share in order to reflect this change in capital structure (See Note 10 - Common Stock).

Fair Value Measurements

In accordance with ASC 820, Fair Value Measurement, certain assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction on the measurement date. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

The Company’s financial instruments recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

• Level 1 - Inputs that are based upon quoted prices for identical instruments traded in active markets.

• Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar investments in markets that are not active, or models based on valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the investment.

• Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Advertising Costs

The Company expenses advertising costs for hotel operations as incurred. These costs were $4.2 million for the three months ended March 31, 2017, and $3.8 million for the three months ended March 31, 2016.

Allowance for Doubtful Accounts

Receivables consist principally of trade receivables from customers and are generally unsecured and are due within 30 to 90 days. The Company records a provision for uncollectible accounts using the allowance method. Expected credit losses associated with trade receivables are recorded as an allowance for doubtful accounts. The allowance for doubtful accounts is estimated based upon historical patterns of credit losses for aged receivables as well as specific provisions for certain identifiable, potentially uncollectible balances. When internal collection efforts on accounts have been exhausted, the accounts are written off and the associated allowance for doubtful accounts is reduced. Trade receivable balances, net of the allowance for doubtful accounts, are included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets, and are as follows (in thousands):

	March 31, 2017			December 31, 2016
Trade receivables	$	7,332		$	6,238
Allowance for doubtful accounts	(316		)	(434		)
Trade receivables, net of allowance	$	7,016		$	5,804

Reportable Segments

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate room revenue and other income through the operation of the properties, which comprise 100% of the total consolidated revenues. Management evaluates the operating performance of the Company’s investments in real estate on an individual property level, none of which represent a reportable segment.

Derivative Transactions

The Company at certain times enters into derivative instruments to hedge exposure to changes in interest rates. The Company’s derivatives as of March 31, 2017, consist of interest rate cap agreements which it believes will help to mitigate its exposure to increasing borrowing costs under floating rate indebtedness. The Company has elected not to designate its interest rate cap agreements as cash flow hedges. The impact of the interest rate caps for the three months ended March 31, 2017, was immaterial to the consolidated financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled to for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In April 2015, the FASB proposed an accounting standards update for ASU 2014-09 for the deferral of the effective date of ASU 2014-09. This proposal defers the effective date of ASU 2014-09 from annual reporting periods beginning after December 15, 2016, back one year, to annual reporting periods beginning after December 15, 2017 for all public business entities, certain not-for-profit entities, and certain employee benefit plans. Early application of ASU 2014-09 is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In April and May 2016, two amendments ("ASU 2016-10" and "ASU 2016-12") were made in which guidance related to accounting for revenue from contracts with customers was clarified further. ASU 2016-10 provides clarity around identifying performance obligations and licensing implementation guidance. ASU 2016-12 addresses topics such as collectability criterion, presentation of sales tax, non-cash consideration, completed contracts at transition and technical corrections. There have been no adjustments to the effective date of ASU 2014-09. The Company is evaluating the effect that ASU 2014-09, ASU 2016-10 and ASU 2016-12 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 Leases ("ASU 2016-02"), which requires an entity to separate lease components from nonlease components in a contract. ASU 2016-02 provides more guidance on how to identify and separate components than did previous GAAP. ASU 2016-02 requires lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This amendment has not fundamentally changed lessor accounting, however some changes have been made to align and conform to the lessee guidance. The adoption of ASU 2016-02 becomes effective for the Company for the fiscal year beginning after December 15, 2018, and all subsequent annual and interim periods. Upon adoption, the Company will be required to recognize its operating leases, which are primarily comprised of one operating lease with respect to the Georgia Tech Hotel & Conference Center and nine ground leases, under which it is the lessee, as liabilities on the Consolidated Balance Sheets. Early adoption is permitted.

In March 2016, the FASB issued ASU 2016-07 Investments—Equity Method and Joint Ventures ("ASU 2016-07"), which requires that an equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The adoption of ASU 2016-07 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-07 did not have a material effect on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09 Compensation—Stock Compensation ("ASU 2016-09"), which requires that all excess tax benefits and all tax deficiencies should be recognized as income tax expense or benefits in the income statement. These benefits and deficiencies are discrete items in the reporting period in which they occur. An entity should not consider these benefits or deficiencies in determining the annual estimated tax rate. The adoption of ASU 2016-09 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which addresses the presentation and classification of certain cash flow receipts and payments. The adoption of ASU 2016-15 becomes effective for the Company for the fiscal year beginning after December 15, 2017, and all subsequent annual and interim periods. The adoption of ASU 2016-15 is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business, with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Additionally, this update also narrows the definition of an output. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business, thus reducing the number of transactions that need to be further evaluated. ASU 2017-01 is effective for the Company for fiscal years beginning after December 15, 2018, and early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption.

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Brookfield Investment and Related Transactions

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Brookfield Investment and Related Transactions

Brookfield Investment and Related Transactions

Securities Purchase, Voting and Standstill Agreement

On January 12, 2017, the Company and the OP entered into the SPA with the Brookfield Investor, as well as related guarantee agreements with certain affiliates of the Brookfield Investor. Pursuant to the terms of the SPA, at the Initial Closing, the Brookfield Investor agreed to purchase (i) the Redeemable Preferred Share, for a nominal purchase price, and (ii) 9,152,542.37 Class C Units, for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate. The Initial Closing occurred on March 31, 2017.

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company has measured the Class C Units at fair value, or $135.0 million, representing the gross proceeds of the issuance of the Class C Units at the Initial Closing. As discussed below, the Class C Units include conversion rights. Because the effective conversion price of the Class C Units under GAAP of $14.09 (which is calculated on a net investment basis after transaction fees and costs payable to the Brookfield Investor as $129.0 million divided by 9,152,542.37 Class C Units issued ) is less than the fair value of the Company’s common stock of $14.59 (See Note 10 - Common Stock), the conversion rights represent a “beneficial conversion feature” under GAAP. The Company measured the beneficial conversion feature at $4.5 million, and has recognized the beneficial conversion feature as a deemed dividend as of March 31, 2017, reducing income available to common stockholders for purposes of calculating earnings per share. The Class C Units are reflected on the Consolidated Balance Sheets at $121.2 million, net of costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield in the form of expense reimbursements and a commitment fee.

Following the Initial Closing, subject to the terms and conditions of the SPA, the Company also has the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units at the same price per unit as at the Initial Closing upon 15 business days’ prior written notice and in an aggregate amount not to exceed $265.0 million at Subsequent Closings as follows:

• On or prior to February 27, 2018, but no earlier than January 3, 2018, up to an amount that would be sufficient to reduce the outstanding amount of the Grace Preferred Equity Interests to approximately $223.5 million (the "First Subsequent Closing"). Proceeds from the First Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the First Subsequent Closing, redeem then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, but no earlier than January 3, 2019, up to the then outstanding amount of the Grace Preferred Equity Interests (the "Second Subsequent Closing"). Proceeds from the Second Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the Second Subsequent Closing, redeem all then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, in one or more transactions, up to an amount equal to the difference between the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment and the outstanding amount of the Grace Preferred Equity Interests. Proceeds from these Subsequent Closings must be used by the OP exclusively to fund brand-mandated property improvement plans ("PIPs") and related lender reserves, repay amounts then outstanding with respect to mortgage debt principal and interest and working capital.

Consummation of any Subsequent Closing is subject to the satisfaction of certain conditions, and there can be no assurance they will be completed on their current terms, or at all. In addition, from February 27, 2018 through February 27, 2019, the Brookfield Investor will have the right to purchase, and the OP has agreed to sell, in one or more transactions, the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment in transactions of no less than $25.0 million each.

The SPA also contains certain standstill and voting restrictions applicable to the Brookfield Investor and certain of its affiliates.

The Redeemable Preferred Share

The Redeemable Preferred Share ranks on parity with the Company’s common stock, with the same rights with respect to preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and conditions as the Company’s common stock, except as provided therein.

For so long as the Brookfield Investor holds the Redeemable Preferred Share, (i) the Brookfield Investor has the right to elect two Redeemable Preferred Directors (neither of whom may be subject to an event that would require disclosure pursuant to Item 401(f) of Regulation S-K, which relates to involvement in certain legal proceedings, in any definitive proxy statement filed by the Company), as well as to approve (such approval not to be unreasonably withheld, conditioned or delayed) two additional independent directors (each, an “Approved Independent Director”) to be recommended and nominated by the Board for election by our stockholders at each annual meeting, (ii) each committee of the Company’s board of directors, except any committee formed with authority and jurisdiction over the review and approval of conflicts of interest involving the Brookfield Investor and its affiliates, on the one hand, and the Company, on the other hand (a “Conflicts Committee”), is required to include at least one of the Redeemable Preferred Directors as selected by the holder of the Redeemable Preferred Share (or, if neither of the Redeemable Preferred Directors satisfies all requirements applicable to such committee, with respect to independence and otherwise, of the Company’s charter, the SEC and any national securities exchange on which any shares of the Company’s stock are then listed, at least one of the Approved Independent Directors as selected by the Company’s board of directors), and (iii) the Company will not make a general delegation of the powers of the Company’s board of directors to any committee thereof which does not include as a member a Redeemable Preferred Director, other than to a Conflicts Committee.

Beginning three months after the failure of the OP to redeem Class C Units when required to do so, until all Class C Units requested to be redeemed have been redeemed, the holder of the Redeemable Preferred Share will have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created by the expansion of the Company’s board of directors, subject to compliance with the provisions of the Company’s charter requiring at least a majority of the Company’s directors to be Independent Directors.

The Brookfield Investor is not permitted to transfer the Redeemable Preferred Share, except to an affiliate of the Brookfield Investor.

The holder of the Redeemable Preferred Share generally votes together as a single class with the holders of the Company’s common stock at any annual or special meeting of stockholders of the Company. However, any action that would alter the terms of the Redeemable Preferred Share or the rights of its holder (including any amendment to the Company's charter, including the Articles Supplementary) is subject to a separate class vote of the Redeemable Preferred Share.

In addition, the Redeemable Preferred Directors have the Brookfield Approval Rights.

At its election and subject to notice requirements, the Company may redeem the Redeemable Preferred Share for a cash amount equal to par value upon the occurrence of any of the following: (i) the first date on which no Class C Units remain outstanding; (ii) the date the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA; or (iii) in connection with a failure of the Brookfield Investor to consummate the applicable purchase of Class C Units at any Subsequent Closing (subject to the terms set forth in the SPA, a “Funding Failure”), the 11th business day after the date the Company obtains a final, non-appealable judgment of a court of competent jurisdiction in connection with such Funding Failure. Under the circumstances described in clause (iii) in the foregoing sentence, in addition, (i) the Brookfield Approval Rights would be permanently terminated, (ii) the OP would be entitled to redeem all or any portion of the then outstanding Class C Units in cash for their liquidation preference, (iii) all Class C Units received in respect of all PIK Distributions accrued from the date of the Initial Closing would be forfeited, and (iv) the Brookfield Investor would be required to cause each of the Redeemable Preferred Directors to resign from the Company’s board of directors.

Class C Units

At the Initial Closing, the Brookfield Investor, the Special General Partner and the Company, in its capacity as general partner of the OP, entered into an amendment and restatement (the "A&R LPA") of the OP's existing agreement of limited partnership, which established the terms, rights, obligations and preferences of the Class C Units as set forth in more detail below.

Rank

The Class C Units rank senior to the OP Units and all other equity interests in the OP with respect to priority in payment of distributions and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the OP, whether voluntary or involuntary, or any other distribution of the assets of the OP among its equity holders for the purpose of winding up its affairs.

Distributions

Commencing on June 30, 2017, holders of Class C Units are entitled to receive, with respect to each Class C Unit, fixed, quarterly cumulative cash distributions at a rate of 7.50% per annum from legally available funds. If the Company fails to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero.

Commencing on June 30, 2017 and subject to the occurrence of a Funding Failure, holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative PIK Distribution at a rate of 5% per annum payable in Class C Units. Upon the Company’s failure to redeem the Brookfield Investor when required to do so pursuant to the A&R LPA, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

The number of Class C Units delivered in respect of the PIK Distributions on any distribution payment date will be equal to the number obtained by dividing the amount of PIK Distribution by $14.75.

The Brookfield Investor is also entitled to receive tax distributions under certain limited circumstances.

Liquidation Preference

The liquidation preference with respect to each Class C Unit as of a particular date is the original purchase price paid under the SPA or the value upon issuance of any Class C Unit received as a PIK Distribution, plus, with respect to such Class C Unit up to but not including such date, (i) any accrued and unpaid cash distributions and (ii) any accrued and unpaid PIK Distributions.

Conversion Rights

At any time and subject to the occurrence of a Funding Failure, the Class C Units are convertible into OP Units at any time at the option of the holder thereof at an initial conversion price of $14.75 (the "Conversion Price"). The Conversion Price is subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions.

Notwithstanding the foregoing, the convertibility of certain Class C Units may be restricted in certain circumstances described in the A&R LPA, and, to the extent any Class C Units submitted for conversion are not converted as a result of these restrictions, the holder will instead be entitled to receive an amount in cash equal to two times the liquidation preference of any unconverted Class C Units.

OP Units, in turn, are generally redeemable for shares of the Company’s common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at the election of the Company, in accordance with the terms of the A&R LPA. Notwithstanding the foregoing, with respect to any redemptions in exchange for shares of the Company’s common stock that would result in the converting holder owning 49.9% or more of the shares of the Company’s common stock then outstanding after giving effect to the redemption, for the number of shares of the Company’s common stock exceeding the 49.9% threshold, the redeeming holder may elect to retain OP Units or to request delivery in cash of the cash value of a corresponding number of shares.

Mandatory Redemption

Upon the consummation of any Fundamental Sale Transaction prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units are entitled to receive, prior to and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of any other limited partnership interests in the OP:

• in the case of a Fundamental Sale Transaction consummated on or prior to February 27, 2019, an amount per Class C Unit in cash equal to such Class C Unit’s pro rata share (determined based on the respective liquidation preferences of all Class C Units) of an amount equal to (I) $800.0 million less (II) the sum of (i) the difference between (A) $400.0 million and (B) the aggregate purchase price paid under the SPA of all outstanding Class C Units (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes) and (ii) all cash distributions actually paid to date;

• in the case of a Fundamental Sale Transaction consummated after February 27, 2019 and prior to January 1, 2022, the date that is 57 months and one day after the date of the Initial Closing, an amount per Class C Unit in cash equal to (x) two times the purchase price under the SPA of such Class C Unit (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes), less (y) all cash distributions actually paid to date; and

• in the case of a Fundamental Sale Transaction consummated on or after January 1, 2022, an amount per Class C Unit in cash equal to the liquidation preference of such Class C Unit plus a make whole premium for such Class C Unit calculated based on a discount rate of 5% and the assumption that such Class C Unit had not been redeemed until March 31, 2022, the fifth anniversary of the Initial Closing (the "Make Whole Premium").

Holder Redemptions

Upon the occurrence of a REIT Event (as defined and more fully described in the A&R LPA, the Company’s failure to satisfy any of the requirements for qualification and taxation as a real estate investment trust under certain circumstances) or a Material Breach (as defined and more fully described in the A&R LPA, generally a breach by the Company of certain material obligations under the A&R LPA), in each case, subject to certain notice and cure rights, holders of Class C Units have the right to require the Company to redeem any Class C Units submitted for redemption for an amount equivalent to what the holders of Class C Units would have been entitled to receive in a Fundamental Sale Transaction if the date of redemption were the date of the consummation of the Fundamental Sale Transaction.

From time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, and at any time following the rendering of a judgment enjoining or otherwise preventing the holders of Class C Units, the Brookfield Investor or the Special General Partner from exercising their respective rights under the A&R LPA or the Articles Supplementary, any holder of Class C Units may, at its election, require the Company to redeem any or all of its Class C Units for an amount in cash equal to the liquidation preference.

The OP is not required to make any redemption of less than all of the Class C Units held by any holder requiring a payment of less than $15.0 million. If any redemption request would result in the total liquidation preference of Class C Units remaining outstanding being equal to less than $35.0 million, the OP has the right to redeem all then outstanding Class C Units in full.

Remedies Upon Failure to Redeem

Three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, the Special General Partner has the exclusive right, power and authority to sell the assets or properties of the OP for cash at such time or times as the Special General Partner may determine, upon engaging a reputable, national third party sales broker or investment bank reasonably acceptable to holders of a majority of the then outstanding Class C Units to conduct an auction or similar process designed to maximize the sales price. The proceeds from sales of assets or properties by the Special General Partner must be used first to make any and all payments or distributions due or past due with respect to the Class C Units, regardless of the impact of such payments or distributions on the Company or the OP.

In addition and as described elsewhere herein, three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA:

• the holder of the Redeemable Preferred Share would have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created thereby subject to compliance with provisions of the Company's charter requiring at least a majority of the Company’s directors to be Independent Directors (as defined in the Company's charter); and

• the 5% per annum PIK Distribution rate would increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

Company Liquidation Preference Reduction Upon Listing

In the event a listing of the Company’s common stock on a national stock exchange occurs prior to March 31, 2022, the fifth anniversary of the Initial Closing, the OP would also have certain other rights to elect to reduce the liquidation preference of any Class C Units outstanding described in more detail in the A&R LPA.

Company Redemption After Five Years

At any time and from time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, the Company has the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference.

Transfer Restrictions

Subject to certain exceptions, the Brookfield Investor is generally permitted to make transfers of Class C Units without the prior consent of the Company, provided that any transferee must customarily invest in these types of securities or real estate investments of any type or have in excess of $100.0 million of assets.

Preemptive Rights

Subject to the occurrence of a Funding Failure, if the Company or the OP proposes to issue additional equity securities, subject to certain exceptions and in accordance with the procedures in the A&R LPA, any holder of Class C Units that owns Class C Units representing more than 5% of the outstanding shares of the Company’s common stock on an as-converted basis has certain preemptive rights.

Brookfield Approval Rights

The Articles Supplementary restrict the Company from taking certain actions without the prior approval of at least one of the Redeemable Preferred Directors, and the A&R LPA restricts the OP from taking certain actions without the prior approval of the majority of the then outstanding Class C Units. Subject to certain limitations, both sets of rights are subject to temporary and permanent suspension in connection with any Funding Failure and no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA.

In general, subject to certain exceptions, prior approval is required before the Company or its subsidiaries (including the OP) are permitted to take any of the following actions: equity issuances; organizational document amendments; debt incurrences; affiliate transactions; sale of all or substantially all assets; bankruptcy or insolvency declarations; declarations or payments of dividends or other distributions; redemptions or repurchases of securities; adoption of, and amendments to, the Annual Business Plan; hiring and compensation decisions related to certain key personnel (including executive officers); property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business; entry into new lines of business; settlement of material litigation; changes to material agreements; increasing or decreasing the number of directors on the Company’s board of directors; nominating or appointing a director (other than a Redeemable Preferred Director) who is not independent; nominating or appointing the chairperson of the Company’s board of directors; and certain other matters.

After December 31, 2021, the 57-month anniversary of the Initial Closing, no prior approval will be required for debt incurrences, equity issuances and asset sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full.

Framework Agreement

On January 12, 2017, the Company and the OP, entered into the Framework Agreement with the Former Advisor, the Former Property Manager, Crestline, the Former Special Limited Partner, and, for certain limited purposes, the Brookfield Investor.

The Framework Agreement provides for the Company transitioning from an externally managed company with no employees of its own that is dependent on the Former Advisor and its affiliates to manage its day-to-day operations to a self-managed company. The transactions contemplated by the Framework Agreement generally were consummated at, and as a condition to, the Initial Closing, and the Framework Agreement would have terminated automatically upon the termination of the SPA in accordance with its terms prior to the Initial Closing.

At the Initial Closing, pursuant to the Framework Agreement, the Advisory Agreement was terminated. The Framework Agreement also provided for the extension or renewal of the Advisory Agreement on specified terms under certain circumstances, none of which occurred.

Until the expiration without renewal or termination of the Advisory Agreement, the Former Advisor and its affiliates agreed to use their respective commercially reasonable efforts to assist the Company and its subsidiaries to take such actions as the Company and its subsidiaries reasonably deemed necessary to transition to self-management, including, but not limited to providing books and records, accounting systems, software and office equipment. In addition, the Former Advisor also granted the Company the right to hire certain of employees of the Former Advisor or its affiliates who were then involved in the management of the Company’s day-to-day operations, including all of the Company’s current executive officers, and made other agreements in order to promote retention of these individuals which relate to the compensation payable to them and other terms of their employment by the Former Advisor and its affiliates prior to the Initial Closing.

Pursuant to the Framework Agreement, at the Initial Closing, the Company and the Former Advisor and/or certain of its affiliates, as applicable, entered into a series of agreements to facilitate the transition of self-management, including the agreements described in more detail below.

Property Management Transactions

Prior to the Initial Closing, the Company, directly or indirectly through its taxable REIT subsidiaries, had entered into agreements with the Former Property Manager, which, in turn, engaged Crestline or a third-party sub-property manager to manage the Company’s hotel properties. These agreements were intended to be coterminous, meaning that the term of the agreement with the Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions.

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company, through its taxable REIT subsidiaries, the Former Property Manager, Crestline and the Company’s third-party sub-property managers entered into a series of amendments, assignments and terminations with respect to the then existing property management arrangements (collectively, the "Property Management Transactions") pursuant to the Framework Agreement.

At the consummation of the Property Management Transactions, among other things:

• property management agreements for a total of 69 hotels sub-managed by Crestline (collectively, the "Crestline Agreements") were assigned by the Former Property Manager to Crestline;

• property management agreements for a total of five additional hotels (together with the Crestline Agreements, the "Long-Term Agreements") are being transitioned to Crestline and the sub-property management agreements with Interstate Management Company, LLC related to these properties were terminated effective April 3, 2017;

• in connection with the assignment of the Long-Term Agreements to Crestline, they were amended as follows:

• the total property management fee of up to 4.0% of the monthly gross receipts from the properties was reduced to 3.0%;

• no change to the remaining term (generally 18 to 19 years), which will renew automatically for threefive year terms unless either party provides advance notice of non-renewal;

• the termination provisions were changed from being generally only terminable by the Company prior to expiration for cause and not in connection with a sale such that, beginning on April 1, 2021, the first day of the 49th month following the Initial Closing, the Company will have an "on-sale" termination right upon payment of a fee in an amount equal to two and one half times the property management fee in the trailing 12 months, subject to customary adjustments; and

• if, prior to March 31, 2023, the six-year anniversary of the Initial Closing, the Company sells a hotel managed pursuant to a Long-Term Agreement, the Company has the right to terminate the applicable Long-Term Agreement with respect to any property that is being sold and concurrently replace it with a comparable hotel owned by the Company and managed pursuant to a short-term agreement, by terminating that hotel’s existing property manager and retaining Crestline on the same terms as the Long-Term Agreement being replaced; and

• the property management agreements with the Former Property Manager for the Company’s 65 other hotels were terminated and the sub-property managers managing these hotels prior to the Initial Closing continued to do so following the Initial Closing in accordance with property management agreements with the Company’s taxable REIT subsidiaries under the property management terms in effect prior to the Initial Closing.

As consideration for the Property Management Transactions, the Company and the OP:

• paid a one-time cash amount equal to $10.0 million to the Former Property Manager;

• have made and will continue to make a monthly cash payment in the amount of $333,333.33, $4.0 million in the aggregate, to the Former Property Manager on the 15th day of each month for the 12 months following the Initial Closing (See Note 7 - Promissory Notes Payable);

• issued 279,329 shares of the Company’s common stock to the Former Property Manager, for which the fair value on the date of grant has been determined to be $14.59 per share (See Note 10 - Common Stock);

• waived any and all obligations of the Former Advisor to refund or otherwise repay any Organization or Offering Expenses (as defined in the Advisory Agreement) to the Company in an amount acknowledged to be $5,821,988, which amount had been reflected as a reduction in offering proceeds due to it being directly related to issuing shares of common stock in prior periods; and

• converted all 524,956 units of limited partnership in the OP entitled “Class B Units” (“Class B Units") held by the Former Advisor into 524,956 OP Units, and, immediately following such conversion, redeemed such 524,956 OP Units for 524,956 shares of the Company’s common stock.

The foregoing consideration aggregates to $31.6 million and has been recorded as goodwill on the Company’s Consolidated Balance Sheets (See Note 4 - Business Combinations).

Assignment and Assumption Agreement

At the Initial Closing, as contemplated by the Framework Agreement, the Company, the Former Advisor and AR Global entered into an assignment and assumption agreement, pursuant to which the Former Advisor and AR Global assigned to the Company all right, title and interest in the following assets that are relevant to the Company and the OP: (i) accounting systems, (ii) IT equipment and (iii) certain office furniture and equipment.

Facilities Use Agreement

The Framework Agreement contemplates that the Company would enter into a Facilities Use Agreement with Crestline at the Initial Closing in the form attached to the Framework Agreement (the “Facilities Use Agreement”), pursuant to which the OP would sublease office space at Crestline’s principal place of business, 3950 University Drive, Fairfax, Virginia 22030, and would pay a portion of the total rent equivalent to the portion of the total space used. The term of the sublease would continue through December 31, 2019, automatically renewing for successive one-year periods unless either party delivers written notice to the other at least 120 days prior the expiration of the initial term or any renewal term. While the Facilities Use Agreement was not entered into at the Initial Closing, the Company commenced its occupation of the space at the Initial Closing on the terms contemplated by the Facilities Use Agreement, and the Company expects to ultimately enter into the Facilities Use Agreement on the terms contemplated by the Framework Agreement.

Transition Services Agreements

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which it will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. As compensation for the foregoing services, the Former Advisor will receive a one-time fee of $225,000 (payable $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline will receive a fee of $25,000 per month. The Former Advisor and Crestline are also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate upon 40 days' written notice to the other party and the monthly fee of $25,000 will continue to be payable. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Registration Rights Agreement

At the Initial Closing, as contemplated by and pursuant to the SPA and the Framework Agreement, the Company, the Brookfield Investor, the Former Advisor and the Former Property Manager entered into a Registration Rights Agreement (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, holders of Class C Units have certain shelf, demand and piggyback rights with respect to the registration of the resale under the Securities Act of 1933, as amended (the "Securities Act") of the shares of Company’s common stock issuable upon redemption of OP Units issuable upon conversion of Class C Units, and the Former Advisor and the Former Property Manager have similar rights with respect to the 524,956 and 279,329 shares of the Company’s common stock issued to them, respectively, pursuant to the Framework Agreement.

Related Party Transactions and Arrangements

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, the parent of ARC IX, and AR Global, the successor to certain of AR Capital's businesses. ARC IX served as the Company’s sponsor prior to its transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

Prior to the Initial Closing, the Former Advisor and its affiliates were entitled to a variety of fees, and may incur and pay costs and fees on behalf of the Company for which they were entitled to reimbursement. The Company had a payable due to related parties related to operating, acquisition, financing and offering costs of $2.4 million and $2.9 million as of March 31, 2017 and December 31, 2016, respectively.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. The Company also terminated all of its other agreements with affiliates of the Former Advisor except for its hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline.

The Company's Former Dealer Manager served as the dealer manager of the IPO. SK Research, LLC and American National Stock Transfer, LLC ("ANST"), both subsidiaries of the parent company of the Former Dealer Manager, provided other general professional services through December 2015 and January 2016, respectively. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Capital, the parent of the Company's sponsor, and AR Global. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc.

See Note 3 - Brookfield Investment and Related Transactions for additional information regarding all payments and issuances of common stock made to the Former Advisor and the Former Property Manager at the Initial Closing during the three months endedMarch 31, 2017, as well as other terms of the transactions contemplated by the Framework Agreement, including the transitions services agreements with the Former Advisor and Crestline, that would result in additional payments to the Former Advisor and the Former Property Manager or their affiliates in future periods.

Fees Paid in Connection with the Offering

The Former Dealer Manager was paid fees and compensation in connection with the sale of the Company's common stock in the Offering prior to its suspension. The Former Dealer Manager was paid a selling commission of up to 7.0% of the per share purchase price of the Company’s Offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Former Dealer Manager was paid up to 3.0% of the gross proceeds from the sale of shares, before reallowance to participating broker-dealers, as a dealer-manager fee. The Former Dealer Manager was entitled to reallow its dealer-manager fee to participating broker-dealers. A participating broker dealer was entitled to elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares by such participating broker dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option was elected, the dealer manager fee has been reduced to 2.5% of gross proceeds.

On December 31, 2016, the Company, the Former Advisor and the Former Dealer Manager mutually agreed, pursuant to a termination agreement dated December 31, 2016, to terminate the Exclusive Dealer Manager Agreement dated January 7, 2014 among the Company, the Former Advisor and the Former Dealer Manager.

No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP.

The table below shows the commissions and fees incurred from and payable to the Former Dealer Manager for the Offering during the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to former related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total commissions and fees incurred from the Former Dealer Manager	$	—	$	71	$	—	$	—

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services provided by ANST, an affiliate of the Former Dealer Manager. The Company is responsible for the Offering and related costs (excluding selling commissions and dealer manager fees) up to a maximum of 2.0% of gross proceeds received from the Offering, measured at the end of the Offering. Offering costs in excess of the 2.0% cap as of the end of the Offering are the Former Advisor’s responsibility. As of March 31, 2017, Offering and related costs (excluding selling commissions and dealer manager fees) exceeded 2.0% of gross proceeds received from the Offering by $5.8 million. At the Initial Closing, pursuant to the Framework Agreement, the Company waived the Former Advisor's obligations to reimburse the Company for these Offering and related costs (See Note 3 - Brookfield Investment and Related Transactions).

Offering costs incurred by the Former Advisor or its affiliated entities on behalf of the Company have generally been recorded as a reduction to additional paid-in-capital on the accompanying Consolidated Balance Sheets. The table below shows compensation and reimbursements incurred and payable to the Former Advisor and its affiliates for services relating to the Offering during the three months endedMarch 31, 2017 and 2016, and the associated amounts payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company’s Consolidated Balance Sheets (in thousands).

	Three Months Ended  March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total compensation and reimbursement for services provided by the Former Advisor and its affiliates related to the Offering	$	—	$	—	$	447	$	447

AR Capital was a party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), an affiliate of the Former Dealer Manager, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. AR Capital instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.

The Company was also party to a transfer agency agreement with ANST, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by a third-party transfer agent. AR Global received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST Systems, Inc. ("DST"), its previous provider of sub-transfer agency services, to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). Following the suspension of the IPO on November 15, 2015, fees payable with respect to transfer agency services are included in general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss) during the period the service was provided.

Following the Initial Closing, in April 2017, the Company entered into a settlement agreement terminating DST as its transfer agent effective as of May 15, 2017 and entered into an agreement with Computershare Trust Company, N.A. to replace DST in that capacity on such date.

Fees Paid in Connection With the Operations of the Company

Fees Paid to the Former Advisor

Prior to the Initial Closing, the Former Advisor received an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Former Advisor was also reimbursed for expenses incurred in the process of acquiring properties, in addition to third-party costs the Company may pay directly to, or reimbursed the Former Advisor for. Additionally, the Company reimbursed the Former Advisor for legal expenses it or its affiliates directly incurred in the process of acquiring properties in an amount not to exceed 0.1% of the contract purchase price of the Company’s assets acquired. Fees paid to the Former Advisor related to acquisitions are reported as a component of net income (loss) in the period incurred. The aggregate amounts of acquisition fees, acquisition expenses and financing coordination fees (as described below) were also subject to certain limitation that never became applicable during the term of the Advisory Agreement.

Prior to the Initial Closing, if the Former Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Former Advisor or its assignees a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Fees paid to the Former Advisor related to debt financings are deferred and amortized over the term of the related debt instrument.

Prior to the Initial Closing, the Former Advisor received a subordinated participation for asset management services it provided to the Company. For asset management services provided by the Former Advisor prior to October 1, 2015, the subordinated participation was issued quarterly in the form of performance-based restricted, forfeitable Class B Units.

On November 11, 2015, the Company, the OP and the Former Advisor agreed to an amendment to the advisory agreement (as amended, the "Advisory Agreement"), pursuant to which, effective October 1, 2015, the Company became required to pay asset management fees in cash (subject to certain coverage limitations during the pendency of the Offering), or shares of the Company's common stock, or a combination of both, at the Former Advisor’s election, and the asset management fee is paid on a monthly basis. The monthly fees were equal to:

• The cost of the Company’s assets (until July 1, 2016, then the lower of the cost of the Company's assets or the fair market value of the Company's assets), multiplied by

• 0.0625%.

For asset management services provided by the Former Advisor prior to October 1, 2015, the Company issued Class B Units on a quarterly basis in an amount equal to:

•The cost of the Company’s assets multiplied by

•0.1875%, divided by

• The value of one share of common stock as of the last day of such calendar quarter, which was equal to $22.50 (the Offering price prior to its suspension minus selling commissions and dealer manager fees).

In March 2016, the Company amended its agreement with the Former Advisor to give the Company the right, for a period commencing on June 1, 2016 and ending on June 1, 2017, subject to certain conditions, to pay up to $500,000 per month of asset management fees payable to the Former Advisor under the Company's agreement with the Former Advisor in shares of common stock. These conditions were never met and no asset management fees were paid in shares of common stock during the term of the Advisory Agreement, which terminated at the Initial Closing.

The Former Advisor was entitled to receive distributions on the Class B Units it had received in connection with its asset management subordinated participation at the same rate as distributions received on the Company’s common stock. Such distributions are in addition to the incentive fees and other distributions the Former Advisor and its affiliates were entitled to receive from the Company and the OP, including without limitation, the annual subordinated performance fee and the subordinated participation in net sales proceeds, the subordinated incentive listing distribution or the subordinated distribution upon termination of the Advisory Agreement, each as described below.

The restricted Class B Units were not scheduled to become unrestricted Class B Units until certain performance conditions are satisfied, including until the adjusted market value of the OP’s assets plus applicable distributions equals or exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors, and the occurrence of a sale of all or substantially all of the OP’s assets, a listing of the Company’s common stock, or a termination of the Advisory Agreement without cause. As of March 31, 2017, a total of 524,956 Class B Units had been issued for asset management services performed by the Former Advisor, and a total of 25,454 shares of common stock had been issued to the Former Advisor as distributions payable on the Class B Units. At the Initial Closing, pursuant to the Framework Agreement, all 524,956 Class B Units held by the Former Advisor were converted into 524,956 OP Units, and, immediately following such conversion, those 524,956 OP Units were redeemed for 524,956 shares of the Company's common stock (See Note 3 - Brookfield Investment and Related Transactions). In applying the acquisition method of accounting, the Company recognized the conversion and subsequent redemption of the Class B Units as part of the consideration transferred pursuant to the Framework Agreement and, accordingly, as goodwill. (See Note 4 - Business Combinations).

The issuance of Class B Units did not result in any expense on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss), except for distributions paid on the Class B Units. The distributions payable on Class B Units for periods through March 31, 2016 were paid in cash. Beginning in the second quarter ended June 30, 2016, the Company began paying distributions on the Class B Units in shares of common stock on the same terms paid to the Company’s stockholders.

The table below presents the Class B Units distribution expense for the three months endedMarch 31, 2017 and 2016 respectively, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Class B Units distribution expense	$	26	$	222	$	1	$	65

The table below presents the asset management fees, acquisition fees, acquisition cost reimbursements and financing coordination fees charged by the Former Advisor in connection with the operations of the Company for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Asset management fees	$	4,581	$	4,457	$	4	$	8
Acquisition fees	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	206	$	—	$	—
	$	4,581	$	6,395	$	4	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to the limitation that the Company would not reimburse the Former Advisor for any amount by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairment or other similar non-cash reserves and excluding any gain from the sale of assets for that period, unless the Company’s independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Former Advisor in subsequent periods. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company has not reimbursed the Former Advisor for personnel costs, including executive salaries, in connection with services for which the Former Advisor received acquisition fees, acquisition expenses or real estate commissions.

The table below represents reimbursements to the Former Advisor for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	869	$	579	$	179	$	522

Following the Initial Closing, all of the above fees and reimbursements are no longer payable to the Former Advisor as the Advisory Agreement has been terminated (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid to the Former Property Manager and Crestline

Prior to the Initial Closing, the Company paid a property management fee of up to 4.0% of the monthly gross receipts from the Company's properties to the Former Property Manager. The Former Property Manager, in turn, paid a portion of the property management fees to Crestline or a third-party sub-property manager, as applicable. The Company also reimbursed Crestline or a third-party sub-property manager, as applicable, for property level expenses, as well as fees and expenses of such sub-property manager. The Company did not, however, reimburse Crestline or any third-party sub-property manager for general overhead costs or for the wages and salaries and other employee-related expenses of employees of such sub-property managers, other than employees or subcontractors who are engaged in the on-site operation, management, maintenance or access control of the Company’s properties, and, in certain circumstances, who are engaged in off-site activities.

Prior to the Initial Closing, the Company also paid the Former Property Manager (which payment was assigned to Crestline) an annual incentive fee equal to 15% of the amount by which the operating profit from the properties sub-managed by Crestline for such fiscal year (or partial fiscal year) exceeds 8.5% of the total investment of such properties. Incentive fees incurred by the Company were $0.1 million for the three months endedMarch 31, 2017 and were $0.1 million for the three months endedMarch 31, 2016, respectively.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company from Crestline or the Former Property Manager (and not payable to a third party sub-property manager) during three months endedMarch 31, 2017 and 2016, respectively, and the associated payable as of March 31, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	4,291	$	3,722	$	1,774	$	1,306
Total management fees incurred from Former Property Manager	$	2,035	$	1,946	$	15	$	532
Total	$	6,326	$	5,668	$	1,789	$	1,838

Following the Initial Closing, the Company no longer has any agreements with the Former Property Manager and instead contracts directly or indirectly, through its taxable REIT subsidiaries, with Crestline and the third-party property management companies that previously served as sub-property managers to manage the Company’s hotel properties pursuant to terms amended in connection with the consummation of the transactions contemplated by the Framework Agreement (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid in Connection with the Liquidation or Listing

Prior to the Initial Closing, the Company was required to pay the Former Advisor an annual subordinated performance fee calculated on the basis of the Company’s total return to stockholders, payable monthly in arrears, such that for any year in which the Company’s total return on stockholders’ capital exceeds 6.0% per annum, the Former Advisor was entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee was payable only upon the sale of assets, other disposition or refinancing of such assets, which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no such fee was payable in connection with the Initial Closing.

Prior to the Initial Closing, the Company could pay a brokerage commission to the Former Advisor on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third-party broker is also involved; provided, however, that in no event could the real estate commissions paid to the Former Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Former Advisor if the Former Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. In connection with the sale of a hotel on October 14, 2016, the Company paid the Former Advisor a brokerage commission of approximately $0.3 million. No such commissions were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no commissions were payable in connection with the Initial Closing.

Prior to the Initial Closing, the Former Special Limited Partner was entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of the remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax, non-compounded annual return on the capital contributed by investors. The Former Special Limited Partner was not entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a 6.0% cumulative non-compounded return on their capital contributions plus the return of their capital. No such participation became due and payable during the three months endedMarch 31, 2017 or 2016, and no such participation was payable in connection with the Initial Closing.

Prior to the Initial Closing, if the common stock of the Company was listed on a national exchange, the Former Special Limited Partner would have been entitled to receive a subordinated incentive listing distribution of 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return on their capital contributions. The Former Special Limited Partner would not have been entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions have been incurred during the three months endedMarch 31, 2017 or 2016, and no such distributions were payable in connection with the Initial Closing.

Prior to the Initial Closing, in the event of a termination or non-renewal of the advisory agreement with the Former Advisor, with or without cause, the Former Special Limited Partner, through its controlling interest in the Former Advisor, was entitled to receive distributions from the OP equal to 15.0% of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors. No such distributions have been incurred as of March 31, 2017 and no such distributions were payable in connection with the Initial Closing.

At the Initial Closing, the Former Special Limited Partner's right to these distributions and participations was automatically forfeited and redeemed by the OP without the payment of any consideration to the Former Special Limited Partner of any of its affiliates (See Note 3 - Brookfield Investment and Related Transactions).

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Business Combinations

3 Months Ended

Mar. 31, 2017

Business Combinations [Abstract]

Business Combinations

Business Combinations

Summit Acquisition: On June 2, 2015, the Company entered into agreements with affiliates of Summit Hotel Properties, Inc. (the "Summit Sellers"), as amended from time to time thereafter, to purchase fee simple interests in a portfolio of 26 hotels in three separate closings for a total purchase price of approximately $347.4 million, subject to closing prorations and other adjustments.

On October 15, 2015, the Company completed the acquisition of ten hotels (the "First Summit Closing") for $150.1 million, which was funded with $7.6 million previously paid as an earnest money deposit, $45.6 million from the IPO and $96.9 million from an advance, secured by a mortgage on the hotels in the First Summit Closing, under the SN Term Loan (as defined below) (See Note 6 - Mortgage Notes Payable).

On December 29, 2015, the Company and the Summit Sellers agreed to terminate the purchase agreement pursuant to which the Company had the right to acquire a fee simple interest in ten hotels (the "Second Summit Closing") for a total purchase price of $89.1 million. As a result of this termination, the Company forfeited $9.1 million in non-refundable earnest money deposits.

On February 11, 2016, the Company completed the acquisition of six hotels (the "Third Summit Closing") from the Summit Sellers for an aggregate purchase price of $108.3 million, which together with certain closing costs, was funded with $18.5 million previously paid as an earnest money deposit, $20.0 million in proceeds from a loan from the Summit Sellers (the "Summit Loan") described in Note 7 - Promissory Notes Payable, and $70.4 million from an advance, secured by a mortgage on the hotels in the Third Summit Closing, under the SN Term Loan.

Also on February 11, 2016, the Company entered into an agreement with the Summit Sellers to reinstate, with certain changes, the purchase agreement (the "Reinstatement Agreement") related to the hotels in the Second Summit Closing, pursuant to which the Company had been scheduled to acquire from the Summit Sellers ten hotels for an aggregate purchase price of $89.1 million.

Pursuant to the Reinstatement Agreement, the Second Summit Closing was re-scheduled to occur on December 30, 2016 and $7.5 million (the “New Deposit”) borrowed by the Company from the Summit Sellers was used as a new earnest money deposit.

Under the Reinstatement Agreement, the Summit Sellers have the right to market and ultimately sell any or all of the hotels in the Second Summit Closing to a bona fide third party purchaser without the consent of the Company at any time prior to the Company completing its acquisition of the Second Summit Closing. If any hotel is sold in this manner, the Reinstatement Agreement will terminate with respect to such hotel and the purchase price will be reduced by the amount allocated to such hotel. If all (but not less than all) of the hotels in the Second Summit Closing are sold in this manner, or if the Reinstatement Agreement is terminated with respect to all (but not less than all) of the hotels in the Second Summit Closing under certain other circumstances (including if there are title issues or material casualties or condemnations involving a particular hotel), then the New Deposit will be automatically applied towards any then outstanding principal balance of the Summit Loan, and any remaining balance of the New Deposit will be remitted to the Company. In June 2016, the Summit Sellers informed the Company that two of the ten hotels had been sold, thereby reducing the Second Summit Closing to eight hotels for an aggregate purchase price of $77.2 million.

On January 12, 2017, the Company, through a wholly owned subsidiary of the OP, entered into an amendment (the “Summit Amendment”) to the Reinstatement Agreement. Under the Summit Amendment, the closing date for the purchase of seven of the hotels remaining to be purchased under the Reinstatement Agreement for an aggregate purchase price of $66.8 million was extended from January 12, 2017 to April 27, 2017, following an amendment entered into on December 30, 2016 to extend the closing date from December 30, 2016 to January 10, 2017, and an amendment entered into on January 10, 2017 to extend the closing date from January 10, 2017 to January 12, 2017. The closing date for the purchase of an eighth hotel to be purchased under the Reinstatement Agreement for an aggregate purchase price of $10.5 million was extended from January 12, 2017 to October 24, 2017. The Summit Sellers have informed the Company that this eighth hotel is subject to a pending purchase and sale agreement with a third party, and, if this sale is completed, the Company’s right and obligation to purchase this hotel will terminate in accordance with the terms of the Reinstatement Agreement. Concurrent with the Company’s entry into the Summit Amendment, the Company entered into an amendment to the Summit Loan (the “Loan Amendment”) and Summit agreed to loan the Company an additional $3.0 million (the "Additional Loan Agreement") as consideration for the Summit Amendment. For additional discussion see Note 7 - Promissory Notes Payable.

On April 27, 2017, the Company completed the April Acquisition, which constituted the acquisition of the seven hotels to be purchased under the Reinstatement Agreement on that date (See Note 15 - Subsequent Events).

Framework Agreement: The Company has determined that the consummation of the transactions contemplated by the Framework Agreement and the transfer of consideration in exchange for an in-place workforce, intellectual property and infrastructure assets represent a business combination as defined by FASB ASC 805 - Business Combinations. The Company anticipates an increased economic return to its investors in the form of reduced advisory and property management fees as a result of the transactions completed at the Initial Closing pursuant to the Framework Agreement. The acquisition of the foregoing assets at the Initial Closing was immaterial to the consolidated financial statements.

The Company determined total consideration remitted as a result of the transactions completed at the Initial Closing pursuant to the Framework Agreement was $31.6 million, comprised of a cash payment of $10.0 million, a non-interest bearing short-term note payable of $4.0 million, a waiver of repayment by the Former Advisor of Organization or Offering Expenses owed to the Company of $5.8 million, newly issued common stock of $4.1 million, and common stock issued upon conversion and redemption of Class B Units of $7.7 million (See Note 3 - Brookfield Investment and Related Transactions). The Company determined the fair value on the date of grant of the Company's common stock to be $14.59 per share (See Note 10 - Common Stock). The Company determined this value by utilizing income and market based approaches further adjusted for fair value of debt and the Class C Units, and applied a discount for lack of marketability. As part of the process, the Company made the determination after consulting with a nationally recognized third party advisor.

In applying the acquisition method of accounting, the Company recognized all consideration transferred of $31.6 million as goodwill since no value was allocated to the immaterial infrastructure fixed assets and immaterial intellectual property. The recognized goodwill balance is representative of employees acquired and the synergies expected to be achieved through reduced fees. The goodwill balance will be tested for impairment at least annually, or upon the occurrence of any “triggering events,” if identified sooner.

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Leases

3 Months Ended

Mar. 31, 2017

Leases [Abstract]

Leases

Leases

In connection with its acquisitions the Company has assumed various lease agreements. These lease agreements primarily comprise one operating lease with respect to the Georgia Tech Hotel & Conference Center and nine ground leases which are also classified as operating leases. The following table summarizes the Company's future minimum rental commitments under these leases (in thousands):

	Minimum Rental Commitments		Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the nine months ending December 31, 2017	$	3,909	$	299
Year ending December 31, 2018	5,217		398
Year ending December 31, 2019	5,227		398
Year ending December 31, 2020	5,265		398
Year ending December 31, 2021	5,271		398
Thereafter	81,743		7,836
Total	$	106,632	$	9,727

The Company has allocated values to certain above and below-market lease intangibles based on the difference between market rents and rental commitments under the leases. During the three months endedMarch 31, 2017 and March 31, 2016, amortization of below-market lease intangibles, net, to rent expense was $0.1 million and $0.1 million, respectively. Rent expense for the three months endedMarch 31, 2017 and March 31, 2016, was $1.5 million and $1.4 million, respectively.

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Mortgage Notes Payable

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Mortgage Notes Payable

Mortgage Notes Payable

The Company’s mortgage notes payable as of March 31, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

	Outstanding Mortgage Notes Payable
Encumbered Properties	March 31, 2017		December 31, 2016		Interest Rate	Payment	Maturity
Baltimore Courtyard & Providence Courtyard	$	45,500	$	45,500	4.30%	Interest Only, Principal paid at Maturity	April 2019
Hilton Garden Inn Blacksburg Joint Venture	10,500		10,500		4.31%	Interest Only, Principal paid at Maturity	June 2020
Assumed Grace Mortgage Loan - 95 properties in Grace Portfolio (1)	793,606		793,647		LIBOR plus 3.31%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Assumed Grace Mezzanine Loan - 95 properties in Grace Portfolio (2)	101,826		101,794		LIBOR plus 4.77%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Refinanced Additional Grace Mortgage Loan - 20 properties in Grace Portfolio and one additional property	232,000		232,000		4.96%	Interest Only, Principal paid at Maturity	October 2020
SN Term Loan - 20 properties in Summit and Noble Portfolios (3)	235,484		235,484		LIBOR plus between 3.25% and 3.75%	Interest Only, Principal paid at Maturity	August 2018, subject to two, one year extension rights
Total Mortgage Notes Payable	$	1,418,916	$	1,418,925
Less: Deferred Financing Fees, Net	$	7,104	$	8,000
Total Mortgage Notes Payable, Net	$	1,411,812	$	1,410,925

(1) The Assumed Grace Mortgage Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 2.56%. The principal amount of the new loan is $805.0 million and is secured by 87 of the Company’s hotel properties, all of which served as collateral for the Assumed Grace Mortgage Loan (See Note 15 - Subsequent Events).

(2) The Assumed Grace Mezzanine Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 6.50%. The principal amount of the new loan is $110.0 million. (See Note 15 - Subsequent Events).

(3) The SN Term Loan was refinanced on April 27, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate of one-month LIBOR plus 3.00%. The principal amount of the new loan is $310.0 million and is collateralized by 28 of the Company’s hotel properties, 20 of which served as collateral for the SN Term Loan, the seven hotels acquired on the same date as the refinancing pursuant to the April Acquisition, and one unencumbered hotel from the Company's existing portfolio (See Note 15 - Subsequent Events).

Interest expense related to the Company's mortgage notes payable for the three months ended March 31, 2017 and for the three months ended March 31, 2016, was $15.7 million and $14.5 million, respectively

Baltimore Courtyard and Providence Courtyard    

The Baltimore Courtyard and Providence Courtyard Loan matures on April 6, 2019. On May 6, 2014 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.30%. The entire principal amount is due at maturity.

Hilton Garden Inn Blacksburg Joint Venture    

The Hilton Garden Inn Blacksburg Joint Venture Loan matures June 6, 2020. On July 6, 2015 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.31%. The entire principal amount is due at maturity.

Assumed Grace Indebtedness

On February 27, 2015, the Company acquired a portfolio of 116 hotels (the "Grace Portfolio") through fee simple or leasehold interests from certain subsidiaries of Whitehall Real Estate Funds, an investment arm controlled by The Goldman Sachs Group, Inc. In connection with this acquisition, the Company assumed existing mortgage and mezzanine indebtedness encumbering those hotels (comprising the "Assumed Grace Mortgage Loan" and the "Assumed Grace Mezzanine Loan", collectively, the "Assumed Grace Indebtedness"). The Assumed Grace Mortgage Loan carries an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.31%, and the Assumed Grace Mezzanine Loan carries an interest rate of LIBOR plus 4.77%, for a combined weighted average interest rate of LIBOR plus 3.47%. Pursuant to the Assumed Grace Indebtedness, the Company has agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Assumed Grace Indebtedness includes the following financial covenants: minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

The Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan were refinanced on April 28, 2017 (See Note 15 - Subsequent Events).

Refinanced Additional Grace Mortgage Loan

A portion of the purchase price of the Grace Portfolio was financed through additional mortgage financing (the "Original Additional Grace Mortgage Loan"). The Original Additional Grace Mortgage Loan was refinanced during October 2015 (the “Refinanced Additional Grace Mortgage Loan”). The Refinanced Additional Grace Mortgage Loan carries a fixed annual interest rate of 4.96% per annum with a maturity date on October 6, 2020. Pursuant to the Refinanced Additional Grace Mortgage Loan, the Company agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Refinanced Additional Grace Mortgage Loan includes the following financial covenants: minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

SN Term Loan

On August 21, 2015, the Company entered into a Term Loan Agreement with Deutsche Bank AG New York Branch, as administrative agent and Deutsche Bank Securities Inc., as sole lead arranger and book-running manager (as amended, the "SN Term Loan"). On October 15, 2015, the Company amended and restated the SN Term Loan and made the initial draw down of borrowings of $96.9 million in connection with the First Summit Closing. On November 2, 2015, the Company drew down borrowings of $26.0 million in connection with the First Noble Closing. On December 2, 2015 the Company drew down borrowings of $42.3 million in connection with the Second Noble Closing. On February 11, 2016, the Company drew down borrowings of $70.4 million in connection with the Third Summit Closing, and amended the SN Term Loan to reduce the lenders’ total commitment from $450.0 million to $293.4 million. On July 1, 2016, the period in which the Company had the ability to further draw down on the SN Term Loan expired, reducing the lenders' total commitment to $235.5 million. No additional amounts are available to be drawn under the SN Term Loan. Due to the amendment and the expiration, the Company recorded a reduction to its deferred financing fees associated with the SN Term Loan. The reduction of $3.0 million was reflected as a general and administrative expense in the Consolidated Statements of Operations and Comprehensive Income (Loss). 

The SN Term Loan provided for financing (the “Loans”) at a rate equal to a base rate plus a spread of between 3.25% and 3.75% for Eurodollar rate Loans and between 2.25% and 2.75% for base rate Loans, depending on the aggregate debt yield and aggregate loan-to-value of the properties securing the Loans measured periodically. Prior to November 1, 2015, all spreads were 0.5% less than they will be during the rest of the term.

Pursuant to the SN Term Loan, the Company agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The SN Term Loan includes the following financial covenants: minimum debt service coverage ratio, minimum consolidated net worth and minimum consolidated liquidity. As of March 31, 2017, the Company was in compliance with these financial covenants.

The SN Term Loan was refinanced on April 27, 2017 (See Note 15 - Subsequent Events).

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Promissory Notes Payable

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Promissory Notes Payable

Promissory Notes Payable

The Company’s promissory notes payable as of March 31, 2017 and December 31, 2016 were as follows (in thousands):

	Outstanding Promissory Notes Payable
Notes Payable	March 31, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	3,030	$	23,405	14.0	%
Note Payable to Former Property Manager	$	4,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	7,030	$	23,380

Summit Loan Promissory Note

On February 11, 2016, the Summit Sellers loaned the Company $27.5 million under the Summit Loan. Proceeds from the Summit Loan totaling $20.0 million were used to pay a portion of the purchase price of the Third Summit Closing and proceeds from the Summit Loan totaling $7.5 million were used as a new purchase price deposit on the reinstated Second Summit Closing. On January 12, 2017, the Company entered into the Loan Amendment, amending the Summit Loan. See Note 4 - Business Combinations.

The interest rate on the Summit Loan, as amended, included 9.0% paid in cash monthly and an additional 4%, which accrued and is compounded monthly and added to the outstanding principal balance at maturity unless otherwise paid in cash by the Company. The Summit Loan, as amended, had a maturity date of February 11, 2018, however, if the closing of the April Acquisition occurred prior to February 11, 2018, then the outstanding principal of the Summit Loan and any accrued interest thereon becomes immediately due and payable in full. The Company was also permitted to pre-pay the Summit Loan in whole or in part without penalty at any time.

On January 12, 2017, the Company and Summit entered into the Additional Loan Agreement pursuant to which Summit agreed to loan the Company an additional $3.0 million as consideration for the Summit Amendment. The maturity date of the Additional Loan under the Additional Loan Agreement is July 31, 2017, however, if the sale of the seven hotels to be sold pursuant to the Reinstatement Agreement on April 27, 2017 is completed on that date, the entire principal amount of the Additional Loan will be deemed paid in full and the interest accrued thereon shall become immediately due and payable.

On March 31, 2017, at the Initial Closing and using a portion of the proceeds therefrom, the Company paid in full the Summit Loan. On April 27, 2017, the Company completed the acquisition of seven of the hotels remaining to be purchased under the Reinstatement Agreement, and as a result, the Additional Loan was deemed paid in full (See Note 15 - Subsequent Events).

Note Payable to Former Property Manager

As part of the consideration for the Property Management Transactions, the Company and the OP agreed pursuant to the Framework Agreement to make certain cash payments to the Former Property Manager, which agreement is classified under GAAP as a short-term note payable with the Former Property Manager. The note payable is non-interest bearing and is required to be repaid in twelve monthly installments of $333,333.33, with the final payment in March 2018 (see Note 3 - Brookfield Investment and Related Transactions).

Interest expense related to the Company's promissory notes payable for the three months ended March 31, 2017 was $0.9 million and for the three months ended March 31, 2016 was $0.5 million.

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Mandatorily Redeemable Preferred Securities

3 Months Ended

Mar. 31, 2017

Temporary Equity Disclosure [Abstract]

Mandatorily Redeemable Preferred Securities

Mandatorily Redeemable Preferred Securities

In February 2015, approximately $447.1 million of the contract purchase price for the Grace Portfolio was satisfied by the issuance to the sellers of the Grace Portfolio of preferred equity interests (the "Grace Preferred Equity Interests") in two newly-formed Delaware limited liability companies, HIT Portfolio I Holdco, LLC and HIT Portfolio II Holdco, LLC (formerly known as ARC Hospitality Portfolio I Holdco, LLC and ARC Hospitality Portfolio II Holdco, LLC, respectively, and, together, the "Holdco entities"), each of which is an indirect subsidiary of the Company and an indirect owner of the 115 hotels currently comprising the Grace Portfolio. The two Holdco entities correspond, respectively, to the pool of hotels encumbered by the Assumed Grace Indebtedness and the pool of hotels encumbered by the Refinanced Additional Grace Mortgage Loan. In connection with the refinancing of the Assumed Grace Indebtedness in April 2017 (See Note 15 - Subsequent Events), the limited liability company agreement of the Holdco entity corresponding to the pool of hotels encumbered by the Assumed Grace Indebtedness was amended and restated to provide for the fact that eight of those hotels were not included in the pool of hotels encumbered by the refinanced loan.

The holders of the Grace Preferred Equity Interests were entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing, through August 2016, and 8.00% per annum thereafter. On liquidation of the Holdco entities, the holders of the Grace Preferred Equity Interests are entitled to receive their original value (as reduced by redemptions) prior to any distributions being made to the Company or the Company's stockholders. Beginning in April 2015, the Company became obligated to use 35% of any IPO proceeds to redeem the Grace Preferred Equity Interests at par, up to a maximum of $350.0 million in redemptions for any 12-month period. As of March 31, 2017, and following the redemption of $47.3 million of the Grace Preferred Equity Interests with a portion of the proceeds from the Initial Closing, the Company has redeemed $204.2 million of the Grace Preferred Equity Interests, resulting in $242.9 million of liquidation value remaining outstanding under the Grace Preferred Equity Interests.

The Company is required to redeem 50.0% of the Grace Preferred Equity Interests originally issued, or an additional $19.4 million by February 27, 2018, and is required to redeem the remaining $223.5 million by February 27, 2019.

The Company is also required, in certain circumstances, to apply debt proceeds to redeem the Grace Preferred Equity Interests at par. In addition, the Company has the right, at its option, to redeem the Grace Preferred Equity Interests, in whole or in part, at any time at par. The holders of the Grace Preferred Equity Interests have certain consent rights over major actions by the Company relating to the Grace Portfolio. In connection with the issuance of the Grace Preferred Equity Interests, the Company and the OP have made certain guarantees and indemnities to the sellers and their affiliates or indemnifying the sellers and their affiliates related to the Grace Portfolio. If the Company is unable to satisfy the redemption, distribution or other requirements of the Grace Preferred Equity Interests (including if there is a default under the related guarantees provided by the Company and the OP), the holders of the Grace Preferred Equity Interests have certain rights, including the ability to assume control of the operations of the Grace Portfolio through the assumption of control of the Holdco entities. Due to the fact that the Grace Preferred Equity Interests are mandatorily redeemable and certain of their other characteristics, the Grace Preferred Equity Interests are treated as debt in accordance with GAAP.

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Accounts Payable and Accrued Expenses

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Accounts Payable and Accrued Expenses

Accounts Payable and Accrued Expenses

The following is a summary of the components of accounts payable and accrued expenses (in thousands):

	March 31, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,892	$	55,489
Contingent consideration from Barceló Portfolio (See Note 12 - Commitments and Contingencies) (1)	4,619		4,619
Hotel accrued salaries and related liabilities	9,565		8,411
Total	$	71,076	$	68,519

(1) The Company paid the contingent consideration in April 2017 with proceeds from the refinanced SN Term Loan (See Note 15 - Subsequent Events).

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Common Stock

3 Months Ended

Mar. 31, 2017

Equity [Abstract]

Common Stock

Common Stock

The Company had 39,617,676 shares and 38,493,430 shares of common stock outstanding and had received total proceeds therefrom of $913.0 million and $913.0 million as of March 31, 2017 and December 31, 2016, respectively. The shares of common stock outstanding include shares issued as distributions through March 31, 2017, as a result of the Company's change in distribution policy adopted by the Company's board of directors in March 2016 as described below. During the three months ended March 31, 2017, the Company issued 315,383 shares of common stock as stock distributions with respect to December 2016 and the period from January 1, 2017 through January 13, 2017, the date these distributions were suspended.

Common Stock Issuances

At the Initial Closing the Company issued 279,329 shares of the Company’s common stock to the Former Property Manager, and converted all 524,956 Class B Units held by the Former Advisor into 524,956 OP Units, and, immediately following such conversion, redeemed such 524,956 OP Units for 524,956 shares of the Company’s common stock.

The Company determined the fair value on the date of issuance of the Company's common stock to be $14.59 per share. The Company determined this value by utilizing income and market based approaches further adjusted for fair value of debt and the Class C Units, and applied a discount for lack of marketability. As part of the process, the Company made the determination after consulting with a nationally recognized third party advisor.

Distributions

On February 3, 2014, the Company's board of directors declared distributions payable to stockholders of record each day during the applicable month at a rate equal to $0.0046575343 per day (or $0.0046448087 if a 366-day year), or $1.70 per annum, per share of common stock. The first distribution was paid in May 2014 to holders of record in April 2014.

To date, the Company has funded all of its cash distributions with proceeds from the Offering, which was suspended as of December 31, 2015.

In March 2016 the Company’s board of directors changed the distribution policy, such that distributions paid with respect to April 2016 were paid in shares of common stock instead of cash to all stockholders, and not at the election of each stockholder. Accordingly, the Company paid a cash distribution to stockholders of record each day during the quarter ended March 31, 2016, but distributions for subsequent periods have been paid in shares of common stock. Distributions for the quarter ended June 30, 2016 were paid in common stock in an amount equivalent to $1.70 per annum, divided by $23.75.

On July 1, 2016, the Company's board of directors approved an Estimated Per-Share NAV, which was published on the same date. This was the first time that the Company’s board of directors determined an Estimated Per-Share NAV. In connection with its determination of Estimated Per-Share NAV, the Company’s board of directors revised the amount of the distribution to $1.46064 per share per annum, equivalent to a 6.80% annual rate based on Estimated Per-Share NAV, automatically adjusting if and when the Company publishes an updated Estimated Per-Share NAV. The Company anticipates it will publish an updated Estimated Per-Share NAV no less frequently than once each calendar year. The Company’s board of directors authorized distributions, payable in shares of common stock, at a rate of 0.068 multiplied by the Estimated Per-Share NAV in effect as of the close of business on the applicable date. Therefore, beginning with distributions payable with respect to July 2016, the Company paid distributions to its stockholders in shares of common stock on a monthly basis to stockholders of record each day during the prior month in an amount equal to 0.000185792 per share per day, or $1.46064 per annum, divided by $21.48.

On January 13, 2017, in connection with its approval of the Company’s entry into the SPA, the Company’s board of directors suspended paying distributions to the Company's stockholders entirely. Currently, under the Brookfield Approval Rights, prior approval is required before the Company can declare or pay any distributions or dividends to its common stockholders, except for cash distributions equal to or less than $0.525 per annum per share.

Share Repurchase Program

In order to provide stockholders with interim liquidity, the Company’s board of directors adopted a share repurchase program (“SRP”) that enabled the Company’s stockholders to sell their shares back to the Company after having held them for at least one year, subject to significant conditions and limitations, including that the Company's board of directors had the right to reject any request for repurchase, in its sole discretion, and could amend, suspend or terminate the SRP upon 30 days' notice. In connection with the Company’s entry into the SPA, the Company's board of directors suspended the SRP effective as of January 23, 2017. In connection with the Initial Closing, the Company's board of directors terminated the SRP, effective as of April 30, 2017. The Company did not make any repurchase of common stock during the year ended December 31, 2016, or during the period between January 1, 2017 and the effectiveness of the termination of the SRP.

Distribution Reinvestment Plan

Pursuant to the DRIP, to the extent the Company pays distributions in cash, stockholders may elect to reinvest distributions by purchasing shares of common stock. No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP. The shares purchased pursuant to the DRIP have the same rights and are treated in the same manner as all other shares of the Company's common stock. The Company's board of directors may designate that certain cash or other distributions be excluded from the DRIP. The Company has the right to amend or suspend any aspect of the DRIP or terminate the DRIP with ten days’ notice to participants. Shares issued under the DRIP are recorded to equity in the Consolidated Balance Sheets in the period distributions are paid. Commencing with distributions paid with respect to April 2016, the Company has paid distributions in shares of common stock instead of cash. Shares are only issued pursuant to the DRIP in connection with distributions paid in cash.

All shares issued under the DRIP were purchased at $23.75 per share. If and when the Company issues any additional shares of common stock under the DRIP, distributions reinvested in common stock will be at a price equal to the Estimated Per-Share NAV.

On January 13, 2017, as authorized by the Company’s board of directors, the DRIP was suspended effective as of February 12, 2017.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company is required to disclose the fair value of financial instruments which it is practicable to estimate. The fair value of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate their carrying amounts due to the relatively short maturity of these items. The following table shows the carrying values and the fair values of material liabilities that qualify as financial instruments (in thousands):

	March 31, 2017
	Carrying Amount		Fair Value
Mortgage notes payable(1)	$	1,418,916	$	1,419,081
(1) Carrying amount does not include the associated deferred financing fees as of March 31, 2017.

The fair value of the mortgage notes payable were determined using the discounted cash flow method and applying current market rates and is classified as level 3 under the fair value hierarchy. As described in Note 12 - Commitments and Contingencies, the carrying amount of the contingent consideration related to the Barceló Portfolio acquisition was remeasured to fair value as of March 31, 2017.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Litigation

In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company at the date of this filing.

Environmental Matters

In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.

Contingent Consideration

Included as part of the acquisition of the Barceló Portfolio is a contingent consideration payable to the seller based on the operating results of the Baltimore Courtyard, Providence Courtyard and Stratford Homewood Suites. During August 2016, the Company and the seller entered into an agreement extending and modifying the payment terms of the contingent consideration. The amount payable is calculated by applying a contractual capitalization rate to the excess earnings before interest, taxes, and depreciation and amortization, earned in the third year after the acquisition over an agreed upon target, provided the contingent consideration generally will not be less than $4.1 million or exceed $4.6 million. The contingent consideration payable as of March 31, 2017 is $4.6 million. The Company paid the contingent consideration in April 2017 with proceeds used from the refinanced SN Term Loan (See Note 15 - Subsequent Events).

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Related Party Transactions and Arrangements

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Related Party Transactions and Arrangements

Brookfield Investment and Related Transactions

Securities Purchase, Voting and Standstill Agreement

On January 12, 2017, the Company and the OP entered into the SPA with the Brookfield Investor, as well as related guarantee agreements with certain affiliates of the Brookfield Investor. Pursuant to the terms of the SPA, at the Initial Closing, the Brookfield Investor agreed to purchase (i) the Redeemable Preferred Share, for a nominal purchase price, and (ii) 9,152,542.37 Class C Units, for a purchase price of $14.75 per Class C Unit, or $135.0 million in the aggregate. The Initial Closing occurred on March 31, 2017.

The Redeemable Preferred Share has been classified as permanent equity and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company has measured the Class C Units at fair value, or $135.0 million, representing the gross proceeds of the issuance of the Class C Units at the Initial Closing. As discussed below, the Class C Units include conversion rights. Because the effective conversion price of the Class C Units under GAAP of $14.09 (which is calculated on a net investment basis after transaction fees and costs payable to the Brookfield Investor as $129.0 million divided by 9,152,542.37 Class C Units issued ) is less than the fair value of the Company’s common stock of $14.59 (See Note 10 - Common Stock), the conversion rights represent a “beneficial conversion feature” under GAAP. The Company measured the beneficial conversion feature at $4.5 million, and has recognized the beneficial conversion feature as a deemed dividend as of March 31, 2017, reducing income available to common stockholders for purposes of calculating earnings per share. The Class C Units are reflected on the Consolidated Balance Sheets at $121.2 million, net of costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield in the form of expense reimbursements and a commitment fee.

Following the Initial Closing, subject to the terms and conditions of the SPA, the Company also has the right to sell, and the Brookfield Investor has agreed to purchase, additional Class C Units at the same price per unit as at the Initial Closing upon 15 business days’ prior written notice and in an aggregate amount not to exceed $265.0 million at Subsequent Closings as follows:

• On or prior to February 27, 2018, but no earlier than January 3, 2018, up to an amount that would be sufficient to reduce the outstanding amount of the Grace Preferred Equity Interests to approximately $223.5 million (the "First Subsequent Closing"). Proceeds from the First Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the First Subsequent Closing, redeem then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, but no earlier than January 3, 2019, up to the then outstanding amount of the Grace Preferred Equity Interests (the "Second Subsequent Closing"). Proceeds from the Second Subsequent Closing must be used by the OP exclusively to, concurrently with the closing of the Second Subsequent Closing, redeem all then outstanding Grace Preferred Equity Interests.

• On or prior to February 27, 2019, in one or more transactions, up to an amount equal to the difference between the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment and the outstanding amount of the Grace Preferred Equity Interests. Proceeds from these Subsequent Closings must be used by the OP exclusively to fund brand-mandated property improvement plans ("PIPs") and related lender reserves, repay amounts then outstanding with respect to mortgage debt principal and interest and working capital.

Consummation of any Subsequent Closing is subject to the satisfaction of certain conditions, and there can be no assurance they will be completed on their current terms, or at all. In addition, from February 27, 2018 through February 27, 2019, the Brookfield Investor will have the right to purchase, and the OP has agreed to sell, in one or more transactions, the then unfunded portion of the Brookfield Investor’s $400.0 million funding commitment in transactions of no less than $25.0 million each.

The SPA also contains certain standstill and voting restrictions applicable to the Brookfield Investor and certain of its affiliates.

The Redeemable Preferred Share

The Redeemable Preferred Share ranks on parity with the Company’s common stock, with the same rights with respect to preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, terms and conditions of redemption and other terms and conditions as the Company’s common stock, except as provided therein.

For so long as the Brookfield Investor holds the Redeemable Preferred Share, (i) the Brookfield Investor has the right to elect two Redeemable Preferred Directors (neither of whom may be subject to an event that would require disclosure pursuant to Item 401(f) of Regulation S-K, which relates to involvement in certain legal proceedings, in any definitive proxy statement filed by the Company), as well as to approve (such approval not to be unreasonably withheld, conditioned or delayed) two additional independent directors (each, an “Approved Independent Director”) to be recommended and nominated by the Board for election by our stockholders at each annual meeting, (ii) each committee of the Company’s board of directors, except any committee formed with authority and jurisdiction over the review and approval of conflicts of interest involving the Brookfield Investor and its affiliates, on the one hand, and the Company, on the other hand (a “Conflicts Committee”), is required to include at least one of the Redeemable Preferred Directors as selected by the holder of the Redeemable Preferred Share (or, if neither of the Redeemable Preferred Directors satisfies all requirements applicable to such committee, with respect to independence and otherwise, of the Company’s charter, the SEC and any national securities exchange on which any shares of the Company’s stock are then listed, at least one of the Approved Independent Directors as selected by the Company’s board of directors), and (iii) the Company will not make a general delegation of the powers of the Company’s board of directors to any committee thereof which does not include as a member a Redeemable Preferred Director, other than to a Conflicts Committee.

Beginning three months after the failure of the OP to redeem Class C Units when required to do so, until all Class C Units requested to be redeemed have been redeemed, the holder of the Redeemable Preferred Share will have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created by the expansion of the Company’s board of directors, subject to compliance with the provisions of the Company’s charter requiring at least a majority of the Company’s directors to be Independent Directors.

The Brookfield Investor is not permitted to transfer the Redeemable Preferred Share, except to an affiliate of the Brookfield Investor.

The holder of the Redeemable Preferred Share generally votes together as a single class with the holders of the Company’s common stock at any annual or special meeting of stockholders of the Company. However, any action that would alter the terms of the Redeemable Preferred Share or the rights of its holder (including any amendment to the Company's charter, including the Articles Supplementary) is subject to a separate class vote of the Redeemable Preferred Share.

In addition, the Redeemable Preferred Directors have the Brookfield Approval Rights.

At its election and subject to notice requirements, the Company may redeem the Redeemable Preferred Share for a cash amount equal to par value upon the occurrence of any of the following: (i) the first date on which no Class C Units remain outstanding; (ii) the date the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA; or (iii) in connection with a failure of the Brookfield Investor to consummate the applicable purchase of Class C Units at any Subsequent Closing (subject to the terms set forth in the SPA, a “Funding Failure”), the 11th business day after the date the Company obtains a final, non-appealable judgment of a court of competent jurisdiction in connection with such Funding Failure. Under the circumstances described in clause (iii) in the foregoing sentence, in addition, (i) the Brookfield Approval Rights would be permanently terminated, (ii) the OP would be entitled to redeem all or any portion of the then outstanding Class C Units in cash for their liquidation preference, (iii) all Class C Units received in respect of all PIK Distributions accrued from the date of the Initial Closing would be forfeited, and (iv) the Brookfield Investor would be required to cause each of the Redeemable Preferred Directors to resign from the Company’s board of directors.

Class C Units

At the Initial Closing, the Brookfield Investor, the Special General Partner and the Company, in its capacity as general partner of the OP, entered into an amendment and restatement (the "A&R LPA") of the OP's existing agreement of limited partnership, which established the terms, rights, obligations and preferences of the Class C Units as set forth in more detail below.

Rank

The Class C Units rank senior to the OP Units and all other equity interests in the OP with respect to priority in payment of distributions and in the distribution of assets in the event of the liquidation, dissolution or winding-up of the OP, whether voluntary or involuntary, or any other distribution of the assets of the OP among its equity holders for the purpose of winding up its affairs.

Distributions

Commencing on June 30, 2017, holders of Class C Units are entitled to receive, with respect to each Class C Unit, fixed, quarterly cumulative cash distributions at a rate of 7.50% per annum from legally available funds. If the Company fails to pay these cash distributions when due, the per annum rate will increase to 10% until all accrued and unpaid distributions required to be paid in cash are reduced to zero.

Commencing on June 30, 2017 and subject to the occurrence of a Funding Failure, holders of Class C Units are also entitled to receive, with respect to each Class C Unit, a fixed, quarterly, cumulative PIK Distribution at a rate of 5% per annum payable in Class C Units. Upon the Company’s failure to redeem the Brookfield Investor when required to do so pursuant to the A&R LPA, the 5% per annum PIK Distribution rate will increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

The number of Class C Units delivered in respect of the PIK Distributions on any distribution payment date will be equal to the number obtained by dividing the amount of PIK Distribution by $14.75.

The Brookfield Investor is also entitled to receive tax distributions under certain limited circumstances.

Liquidation Preference

The liquidation preference with respect to each Class C Unit as of a particular date is the original purchase price paid under the SPA or the value upon issuance of any Class C Unit received as a PIK Distribution, plus, with respect to such Class C Unit up to but not including such date, (i) any accrued and unpaid cash distributions and (ii) any accrued and unpaid PIK Distributions.

Conversion Rights

At any time and subject to the occurrence of a Funding Failure, the Class C Units are convertible into OP Units at any time at the option of the holder thereof at an initial conversion price of $14.75 (the "Conversion Price"). The Conversion Price is subject to anti-dilution and other adjustments upon the occurrence of certain events and transactions.

Notwithstanding the foregoing, the convertibility of certain Class C Units may be restricted in certain circumstances described in the A&R LPA, and, to the extent any Class C Units submitted for conversion are not converted as a result of these restrictions, the holder will instead be entitled to receive an amount in cash equal to two times the liquidation preference of any unconverted Class C Units.

OP Units, in turn, are generally redeemable for shares of the Company’s common stock on a one-for-one-basis or the cash value of a corresponding number of shares, at the election of the Company, in accordance with the terms of the A&R LPA. Notwithstanding the foregoing, with respect to any redemptions in exchange for shares of the Company’s common stock that would result in the converting holder owning 49.9% or more of the shares of the Company’s common stock then outstanding after giving effect to the redemption, for the number of shares of the Company’s common stock exceeding the 49.9% threshold, the redeeming holder may elect to retain OP Units or to request delivery in cash of the cash value of a corresponding number of shares.

Mandatory Redemption

Upon the consummation of any Fundamental Sale Transaction prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units are entitled to receive, prior to and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of any other limited partnership interests in the OP:

• in the case of a Fundamental Sale Transaction consummated on or prior to February 27, 2019, an amount per Class C Unit in cash equal to such Class C Unit’s pro rata share (determined based on the respective liquidation preferences of all Class C Units) of an amount equal to (I) $800.0 million less (II) the sum of (i) the difference between (A) $400.0 million and (B) the aggregate purchase price paid under the SPA of all outstanding Class C Units (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes) and (ii) all cash distributions actually paid to date;

• in the case of a Fundamental Sale Transaction consummated after February 27, 2019 and prior to January 1, 2022, the date that is 57 months and one day after the date of the Initial Closing, an amount per Class C Unit in cash equal to (x) two times the purchase price under the SPA of such Class C Unit (with the purchase price for Class C Units issued as PIK Distributions being zero for these purposes), less (y) all cash distributions actually paid to date; and

• in the case of a Fundamental Sale Transaction consummated on or after January 1, 2022, an amount per Class C Unit in cash equal to the liquidation preference of such Class C Unit plus a make whole premium for such Class C Unit calculated based on a discount rate of 5% and the assumption that such Class C Unit had not been redeemed until March 31, 2022, the fifth anniversary of the Initial Closing (the "Make Whole Premium").

Holder Redemptions

Upon the occurrence of a REIT Event (as defined and more fully described in the A&R LPA, the Company’s failure to satisfy any of the requirements for qualification and taxation as a real estate investment trust under certain circumstances) or a Material Breach (as defined and more fully described in the A&R LPA, generally a breach by the Company of certain material obligations under the A&R LPA), in each case, subject to certain notice and cure rights, holders of Class C Units have the right to require the Company to redeem any Class C Units submitted for redemption for an amount equivalent to what the holders of Class C Units would have been entitled to receive in a Fundamental Sale Transaction if the date of redemption were the date of the consummation of the Fundamental Sale Transaction.

From time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, and at any time following the rendering of a judgment enjoining or otherwise preventing the holders of Class C Units, the Brookfield Investor or the Special General Partner from exercising their respective rights under the A&R LPA or the Articles Supplementary, any holder of Class C Units may, at its election, require the Company to redeem any or all of its Class C Units for an amount in cash equal to the liquidation preference.

The OP is not required to make any redemption of less than all of the Class C Units held by any holder requiring a payment of less than $15.0 million. If any redemption request would result in the total liquidation preference of Class C Units remaining outstanding being equal to less than $35.0 million, the OP has the right to redeem all then outstanding Class C Units in full.

Remedies Upon Failure to Redeem

Three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, the Special General Partner has the exclusive right, power and authority to sell the assets or properties of the OP for cash at such time or times as the Special General Partner may determine, upon engaging a reputable, national third party sales broker or investment bank reasonably acceptable to holders of a majority of the then outstanding Class C Units to conduct an auction or similar process designed to maximize the sales price. The proceeds from sales of assets or properties by the Special General Partner must be used first to make any and all payments or distributions due or past due with respect to the Class C Units, regardless of the impact of such payments or distributions on the Company or the OP.

In addition and as described elsewhere herein, three months after the failure of the OP to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA:

• the holder of the Redeemable Preferred Share would have the right to increase the size of the Company’s board of directors by a number of directors that would result in the holder of the Redeemable Preferred Share being entitled to nominate and elect a majority of the Company’s board of directors and fill the vacancies created thereby subject to compliance with provisions of the Company's charter requiring at least a majority of the Company’s directors to be Independent Directors (as defined in the Company's charter); and

• the 5% per annum PIK Distribution rate would increase to a per annum rate of 7.50%, and would further increase by 1.25% per annum for the next four quarterly periods thereafter, up to a maximum per annum rate of 12.5%.

Company Liquidation Preference Reduction Upon Listing

In the event a listing of the Company’s common stock on a national stock exchange occurs prior to March 31, 2022, the fifth anniversary of the Initial Closing, the OP would also have certain other rights to elect to reduce the liquidation preference of any Class C Units outstanding described in more detail in the A&R LPA.

Company Redemption After Five Years

At any time and from time to time on or after March 31, 2022, the fifth anniversary of the Initial Closing, the Company has the right to elect to redeem all or any part of the issued and outstanding Class C Units for an amount in cash equal to the liquidation preference.

Transfer Restrictions

Subject to certain exceptions, the Brookfield Investor is generally permitted to make transfers of Class C Units without the prior consent of the Company, provided that any transferee must customarily invest in these types of securities or real estate investments of any type or have in excess of $100.0 million of assets.

Preemptive Rights

Subject to the occurrence of a Funding Failure, if the Company or the OP proposes to issue additional equity securities, subject to certain exceptions and in accordance with the procedures in the A&R LPA, any holder of Class C Units that owns Class C Units representing more than 5% of the outstanding shares of the Company’s common stock on an as-converted basis has certain preemptive rights.

Brookfield Approval Rights

The Articles Supplementary restrict the Company from taking certain actions without the prior approval of at least one of the Redeemable Preferred Directors, and the A&R LPA restricts the OP from taking certain actions without the prior approval of the majority of the then outstanding Class C Units. Subject to certain limitations, both sets of rights are subject to temporary and permanent suspension in connection with any Funding Failure and no longer apply if the liquidation preference applicable to all Class C Units held by the Brookfield Investor and its affiliates is reduced to $100.0 million or less due to the exercise by holders of Class C Units of their redemption rights under the A&R LPA.

In general, subject to certain exceptions, prior approval is required before the Company or its subsidiaries (including the OP) are permitted to take any of the following actions: equity issuances; organizational document amendments; debt incurrences; affiliate transactions; sale of all or substantially all assets; bankruptcy or insolvency declarations; declarations or payments of dividends or other distributions; redemptions or repurchases of securities; adoption of, and amendments to, the Annual Business Plan; hiring and compensation decisions related to certain key personnel (including executive officers); property acquisitions and property sales and dispositions that do not meet transaction-size limits and other defined criteria and would be outside of the OP’s normal course of business; entry into new lines of business; settlement of material litigation; changes to material agreements; increasing or decreasing the number of directors on the Company’s board of directors; nominating or appointing a director (other than a Redeemable Preferred Director) who is not independent; nominating or appointing the chairperson of the Company’s board of directors; and certain other matters.

After December 31, 2021, the 57-month anniversary of the Initial Closing, no prior approval will be required for debt incurrences, equity issuances and asset sales if the proceeds therefrom are used to redeem the then outstanding Class C Units in full.

Framework Agreement

On January 12, 2017, the Company and the OP, entered into the Framework Agreement with the Former Advisor, the Former Property Manager, Crestline, the Former Special Limited Partner, and, for certain limited purposes, the Brookfield Investor.

The Framework Agreement provides for the Company transitioning from an externally managed company with no employees of its own that is dependent on the Former Advisor and its affiliates to manage its day-to-day operations to a self-managed company. The transactions contemplated by the Framework Agreement generally were consummated at, and as a condition to, the Initial Closing, and the Framework Agreement would have terminated automatically upon the termination of the SPA in accordance with its terms prior to the Initial Closing.

At the Initial Closing, pursuant to the Framework Agreement, the Advisory Agreement was terminated. The Framework Agreement also provided for the extension or renewal of the Advisory Agreement on specified terms under certain circumstances, none of which occurred.

Until the expiration without renewal or termination of the Advisory Agreement, the Former Advisor and its affiliates agreed to use their respective commercially reasonable efforts to assist the Company and its subsidiaries to take such actions as the Company and its subsidiaries reasonably deemed necessary to transition to self-management, including, but not limited to providing books and records, accounting systems, software and office equipment. In addition, the Former Advisor also granted the Company the right to hire certain of employees of the Former Advisor or its affiliates who were then involved in the management of the Company’s day-to-day operations, including all of the Company’s current executive officers, and made other agreements in order to promote retention of these individuals which relate to the compensation payable to them and other terms of their employment by the Former Advisor and its affiliates prior to the Initial Closing.

Pursuant to the Framework Agreement, at the Initial Closing, the Company and the Former Advisor and/or certain of its affiliates, as applicable, entered into a series of agreements to facilitate the transition of self-management, including the agreements described in more detail below.

Property Management Transactions

Prior to the Initial Closing, the Company, directly or indirectly through its taxable REIT subsidiaries, had entered into agreements with the Former Property Manager, which, in turn, engaged Crestline or a third-party sub-property manager to manage the Company’s hotel properties. These agreements were intended to be coterminous, meaning that the term of the agreement with the Former Property Manager was the same as the term of the Former Property Manager’s agreement with the applicable sub-property manager for the applicable hotel properties, with certain exceptions.

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company, through its taxable REIT subsidiaries, the Former Property Manager, Crestline and the Company’s third-party sub-property managers entered into a series of amendments, assignments and terminations with respect to the then existing property management arrangements (collectively, the "Property Management Transactions") pursuant to the Framework Agreement.

At the consummation of the Property Management Transactions, among other things:

• property management agreements for a total of 69 hotels sub-managed by Crestline (collectively, the "Crestline Agreements") were assigned by the Former Property Manager to Crestline;

• property management agreements for a total of five additional hotels (together with the Crestline Agreements, the "Long-Term Agreements") are being transitioned to Crestline and the sub-property management agreements with Interstate Management Company, LLC related to these properties were terminated effective April 3, 2017;

• in connection with the assignment of the Long-Term Agreements to Crestline, they were amended as follows:

• the total property management fee of up to 4.0% of the monthly gross receipts from the properties was reduced to 3.0%;

• no change to the remaining term (generally 18 to 19 years), which will renew automatically for threefive year terms unless either party provides advance notice of non-renewal;

• the termination provisions were changed from being generally only terminable by the Company prior to expiration for cause and not in connection with a sale such that, beginning on April 1, 2021, the first day of the 49th month following the Initial Closing, the Company will have an "on-sale" termination right upon payment of a fee in an amount equal to two and one half times the property management fee in the trailing 12 months, subject to customary adjustments; and

• if, prior to March 31, 2023, the six-year anniversary of the Initial Closing, the Company sells a hotel managed pursuant to a Long-Term Agreement, the Company has the right to terminate the applicable Long-Term Agreement with respect to any property that is being sold and concurrently replace it with a comparable hotel owned by the Company and managed pursuant to a short-term agreement, by terminating that hotel’s existing property manager and retaining Crestline on the same terms as the Long-Term Agreement being replaced; and

• the property management agreements with the Former Property Manager for the Company’s 65 other hotels were terminated and the sub-property managers managing these hotels prior to the Initial Closing continued to do so following the Initial Closing in accordance with property management agreements with the Company’s taxable REIT subsidiaries under the property management terms in effect prior to the Initial Closing.

As consideration for the Property Management Transactions, the Company and the OP:

• paid a one-time cash amount equal to $10.0 million to the Former Property Manager;

• have made and will continue to make a monthly cash payment in the amount of $333,333.33, $4.0 million in the aggregate, to the Former Property Manager on the 15th day of each month for the 12 months following the Initial Closing (See Note 7 - Promissory Notes Payable);

• issued 279,329 shares of the Company’s common stock to the Former Property Manager, for which the fair value on the date of grant has been determined to be $14.59 per share (See Note 10 - Common Stock);

• waived any and all obligations of the Former Advisor to refund or otherwise repay any Organization or Offering Expenses (as defined in the Advisory Agreement) to the Company in an amount acknowledged to be $5,821,988, which amount had been reflected as a reduction in offering proceeds due to it being directly related to issuing shares of common stock in prior periods; and

• converted all 524,956 units of limited partnership in the OP entitled “Class B Units” (“Class B Units") held by the Former Advisor into 524,956 OP Units, and, immediately following such conversion, redeemed such 524,956 OP Units for 524,956 shares of the Company’s common stock.

The foregoing consideration aggregates to $31.6 million and has been recorded as goodwill on the Company’s Consolidated Balance Sheets (See Note 4 - Business Combinations).

Assignment and Assumption Agreement

At the Initial Closing, as contemplated by the Framework Agreement, the Company, the Former Advisor and AR Global entered into an assignment and assumption agreement, pursuant to which the Former Advisor and AR Global assigned to the Company all right, title and interest in the following assets that are relevant to the Company and the OP: (i) accounting systems, (ii) IT equipment and (iii) certain office furniture and equipment.

Facilities Use Agreement

The Framework Agreement contemplates that the Company would enter into a Facilities Use Agreement with Crestline at the Initial Closing in the form attached to the Framework Agreement (the “Facilities Use Agreement”), pursuant to which the OP would sublease office space at Crestline’s principal place of business, 3950 University Drive, Fairfax, Virginia 22030, and would pay a portion of the total rent equivalent to the portion of the total space used. The term of the sublease would continue through December 31, 2019, automatically renewing for successive one-year periods unless either party delivers written notice to the other at least 120 days prior the expiration of the initial term or any renewal term. While the Facilities Use Agreement was not entered into at the Initial Closing, the Company commenced its occupation of the space at the Initial Closing on the terms contemplated by the Facilities Use Agreement, and the Company expects to ultimately enter into the Facilities Use Agreement on the terms contemplated by the Framework Agreement.

Transition Services Agreements

At the Initial Closing, as contemplated by and pursuant to the Framework Agreement, the Company entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which it will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. As compensation for the foregoing services, the Former Advisor will receive a one-time fee of $225,000 (payable $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline will receive a fee of $25,000 per month. The Former Advisor and Crestline are also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate upon 40 days' written notice to the other party and the monthly fee of $25,000 will continue to be payable. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Registration Rights Agreement

At the Initial Closing, as contemplated by and pursuant to the SPA and the Framework Agreement, the Company, the Brookfield Investor, the Former Advisor and the Former Property Manager entered into a Registration Rights Agreement (the "Registration Rights Agreement"). Pursuant to the Registration Rights Agreement, holders of Class C Units have certain shelf, demand and piggyback rights with respect to the registration of the resale under the Securities Act of 1933, as amended (the "Securities Act") of the shares of Company’s common stock issuable upon redemption of OP Units issuable upon conversion of Class C Units, and the Former Advisor and the Former Property Manager have similar rights with respect to the 524,956 and 279,329 shares of the Company’s common stock issued to them, respectively, pursuant to the Framework Agreement.

Related Party Transactions and Arrangements

As of March 31, 2017, the Former Advisor, the Former Property Manager and Crestline were under common control with AR Capital, the parent of ARC IX, and AR Global, the successor to certain of AR Capital's businesses. ARC IX served as the Company’s sponsor prior to its transition to self-management at the Initial Closing. Following the sale of AR Global’s membership interest in Crestline in April 2017, Crestline is no longer under common control with AR Global and AR Capital.

Prior to the Initial Closing, the Former Advisor and its affiliates were entitled to a variety of fees, and may incur and pay costs and fees on behalf of the Company for which they were entitled to reimbursement. The Company had a payable due to related parties related to operating, acquisition, financing and offering costs of $2.4 million and $2.9 million as of March 31, 2017 and December 31, 2016, respectively.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. The Company also terminated all of its other agreements with affiliates of the Former Advisor except for its hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline.

The Company's Former Dealer Manager served as the dealer manager of the IPO. SK Research, LLC and American National Stock Transfer, LLC ("ANST"), both subsidiaries of the parent company of the Former Dealer Manager, provided other general professional services through December 2015 and January 2016, respectively. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Capital, the parent of the Company's sponsor, and AR Global. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name, Aretec Group, Inc.

See Note 3 - Brookfield Investment and Related Transactions for additional information regarding all payments and issuances of common stock made to the Former Advisor and the Former Property Manager at the Initial Closing during the three months endedMarch 31, 2017, as well as other terms of the transactions contemplated by the Framework Agreement, including the transitions services agreements with the Former Advisor and Crestline, that would result in additional payments to the Former Advisor and the Former Property Manager or their affiliates in future periods.

Fees Paid in Connection with the Offering

The Former Dealer Manager was paid fees and compensation in connection with the sale of the Company's common stock in the Offering prior to its suspension. The Former Dealer Manager was paid a selling commission of up to 7.0% of the per share purchase price of the Company’s Offering proceeds before reallowance of commissions earned by participating broker-dealers. In addition, the Former Dealer Manager was paid up to 3.0% of the gross proceeds from the sale of shares, before reallowance to participating broker-dealers, as a dealer-manager fee. The Former Dealer Manager was entitled to reallow its dealer-manager fee to participating broker-dealers. A participating broker dealer was entitled to elect to receive a fee equal to 7.5% of the gross proceeds from the sale of shares by such participating broker dealer, with 2.5% thereof paid at the time of such sale and 1.0% thereof paid on each anniversary of the closing of such sale up to and including the fifth anniversary of the closing of such sale. If this option was elected, the dealer manager fee has been reduced to 2.5% of gross proceeds.

On December 31, 2016, the Company, the Former Advisor and the Former Dealer Manager mutually agreed, pursuant to a termination agreement dated December 31, 2016, to terminate the Exclusive Dealer Manager Agreement dated January 7, 2014 among the Company, the Former Advisor and the Former Dealer Manager.

No dealer manager fees or selling commissions are paid with respect to shares purchased pursuant to the DRIP.

The table below shows the commissions and fees incurred from and payable to the Former Dealer Manager for the Offering during the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to former related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total commissions and fees incurred from the Former Dealer Manager	$	—	$	71	$	—	$	—

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services provided by ANST, an affiliate of the Former Dealer Manager. The Company is responsible for the Offering and related costs (excluding selling commissions and dealer manager fees) up to a maximum of 2.0% of gross proceeds received from the Offering, measured at the end of the Offering. Offering costs in excess of the 2.0% cap as of the end of the Offering are the Former Advisor’s responsibility. As of March 31, 2017, Offering and related costs (excluding selling commissions and dealer manager fees) exceeded 2.0% of gross proceeds received from the Offering by $5.8 million. At the Initial Closing, pursuant to the Framework Agreement, the Company waived the Former Advisor's obligations to reimburse the Company for these Offering and related costs (See Note 3 - Brookfield Investment and Related Transactions).

Offering costs incurred by the Former Advisor or its affiliated entities on behalf of the Company have generally been recorded as a reduction to additional paid-in-capital on the accompanying Consolidated Balance Sheets. The table below shows compensation and reimbursements incurred and payable to the Former Advisor and its affiliates for services relating to the Offering during the three months endedMarch 31, 2017 and 2016, and the associated amounts payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company’s Consolidated Balance Sheets (in thousands).

	Three Months Ended  March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total compensation and reimbursement for services provided by the Former Advisor and its affiliates related to the Offering	$	—	$	—	$	447	$	447

AR Capital was a party to a services agreement with RCS Advisory Services, LLC ("RCS Advisory"), an affiliate of the Former Dealer Manager, pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by AR Global with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. AR Capital instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.

The Company was also party to a transfer agency agreement with ANST, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by a third-party transfer agent. AR Global received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST Systems, Inc. ("DST"), its previous provider of sub-transfer agency services, to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). Following the suspension of the IPO on November 15, 2015, fees payable with respect to transfer agency services are included in general and administrative expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss) during the period the service was provided.

Following the Initial Closing, in April 2017, the Company entered into a settlement agreement terminating DST as its transfer agent effective as of May 15, 2017 and entered into an agreement with Computershare Trust Company, N.A. to replace DST in that capacity on such date.

Fees Paid in Connection With the Operations of the Company

Fees Paid to the Former Advisor

Prior to the Initial Closing, the Former Advisor received an acquisition fee of 1.5% of (A) the contract purchase price of each acquired property and (B) the amount advanced for a loan or other investment. The Former Advisor was also reimbursed for expenses incurred in the process of acquiring properties, in addition to third-party costs the Company may pay directly to, or reimbursed the Former Advisor for. Additionally, the Company reimbursed the Former Advisor for legal expenses it or its affiliates directly incurred in the process of acquiring properties in an amount not to exceed 0.1% of the contract purchase price of the Company’s assets acquired. Fees paid to the Former Advisor related to acquisitions are reported as a component of net income (loss) in the period incurred. The aggregate amounts of acquisition fees, acquisition expenses and financing coordination fees (as described below) were also subject to certain limitation that never became applicable during the term of the Advisory Agreement.

Prior to the Initial Closing, if the Former Advisor provided services in connection with the origination or refinancing of any debt that the Company obtained and used to acquire properties or to make other permitted investments, or that was assumed, directly or indirectly, in connection with the acquisition of properties, the Company paid the Former Advisor or its assignees a financing coordination fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Fees paid to the Former Advisor related to debt financings are deferred and amortized over the term of the related debt instrument.

Prior to the Initial Closing, the Former Advisor received a subordinated participation for asset management services it provided to the Company. For asset management services provided by the Former Advisor prior to October 1, 2015, the subordinated participation was issued quarterly in the form of performance-based restricted, forfeitable Class B Units.

On November 11, 2015, the Company, the OP and the Former Advisor agreed to an amendment to the advisory agreement (as amended, the "Advisory Agreement"), pursuant to which, effective October 1, 2015, the Company became required to pay asset management fees in cash (subject to certain coverage limitations during the pendency of the Offering), or shares of the Company's common stock, or a combination of both, at the Former Advisor’s election, and the asset management fee is paid on a monthly basis. The monthly fees were equal to:

• The cost of the Company’s assets (until July 1, 2016, then the lower of the cost of the Company's assets or the fair market value of the Company's assets), multiplied by

• 0.0625%.

For asset management services provided by the Former Advisor prior to October 1, 2015, the Company issued Class B Units on a quarterly basis in an amount equal to:

•The cost of the Company’s assets multiplied by

•0.1875%, divided by

• The value of one share of common stock as of the last day of such calendar quarter, which was equal to $22.50 (the Offering price prior to its suspension minus selling commissions and dealer manager fees).

In March 2016, the Company amended its agreement with the Former Advisor to give the Company the right, for a period commencing on June 1, 2016 and ending on June 1, 2017, subject to certain conditions, to pay up to $500,000 per month of asset management fees payable to the Former Advisor under the Company's agreement with the Former Advisor in shares of common stock. These conditions were never met and no asset management fees were paid in shares of common stock during the term of the Advisory Agreement, which terminated at the Initial Closing.

The Former Advisor was entitled to receive distributions on the Class B Units it had received in connection with its asset management subordinated participation at the same rate as distributions received on the Company’s common stock. Such distributions are in addition to the incentive fees and other distributions the Former Advisor and its affiliates were entitled to receive from the Company and the OP, including without limitation, the annual subordinated performance fee and the subordinated participation in net sales proceeds, the subordinated incentive listing distribution or the subordinated distribution upon termination of the Advisory Agreement, each as described below.

The restricted Class B Units were not scheduled to become unrestricted Class B Units until certain performance conditions are satisfied, including until the adjusted market value of the OP’s assets plus applicable distributions equals or exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors, and the occurrence of a sale of all or substantially all of the OP’s assets, a listing of the Company’s common stock, or a termination of the Advisory Agreement without cause. As of March 31, 2017, a total of 524,956 Class B Units had been issued for asset management services performed by the Former Advisor, and a total of 25,454 shares of common stock had been issued to the Former Advisor as distributions payable on the Class B Units. At the Initial Closing, pursuant to the Framework Agreement, all 524,956 Class B Units held by the Former Advisor were converted into 524,956 OP Units, and, immediately following such conversion, those 524,956 OP Units were redeemed for 524,956 shares of the Company's common stock (See Note 3 - Brookfield Investment and Related Transactions). In applying the acquisition method of accounting, the Company recognized the conversion and subsequent redemption of the Class B Units as part of the consideration transferred pursuant to the Framework Agreement and, accordingly, as goodwill. (See Note 4 - Business Combinations).

The issuance of Class B Units did not result in any expense on the Company’s Consolidated Statements of Operations and Comprehensive Income (Loss), except for distributions paid on the Class B Units. The distributions payable on Class B Units for periods through March 31, 2016 were paid in cash. Beginning in the second quarter ended June 30, 2016, the Company began paying distributions on the Class B Units in shares of common stock on the same terms paid to the Company’s stockholders.

The table below presents the Class B Units distribution expense for the three months endedMarch 31, 2017 and 2016 respectively, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Class B Units distribution expense	$	26	$	222	$	1	$	65

The table below presents the asset management fees, acquisition fees, acquisition cost reimbursements and financing coordination fees charged by the Former Advisor in connection with the operations of the Company for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Asset management fees	$	4,581	$	4,457	$	4	$	8
Acquisition fees	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	206	$	—	$	—
	$	4,581	$	6,395	$	4	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to the limitation that the Company would not reimburse the Former Advisor for any amount by which the Company’s operating expenses at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income other than any additions to reserves for depreciation, bad debt, impairment or other similar non-cash reserves and excluding any gain from the sale of assets for that period, unless the Company’s independent directors determine that such excess was justified based on unusual and nonrecurring factors which they deem sufficient, in which case the excess amount may be reimbursed to the Former Advisor in subsequent periods. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company has not reimbursed the Former Advisor for personnel costs, including executive salaries, in connection with services for which the Former Advisor received acquisition fees, acquisition expenses or real estate commissions.

The table below represents reimbursements to the Former Advisor for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	869	$	579	$	179	$	522

Following the Initial Closing, all of the above fees and reimbursements are no longer payable to the Former Advisor as the Advisory Agreement has been terminated (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid to the Former Property Manager and Crestline

Prior to the Initial Closing, the Company paid a property management fee of up to 4.0% of the monthly gross receipts from the Company's properties to the Former Property Manager. The Former Property Manager, in turn, paid a portion of the property management fees to Crestline or a third-party sub-property manager, as applicable. The Company also reimbursed Crestline or a third-party sub-property manager, as applicable, for property level expenses, as well as fees and expenses of such sub-property manager. The Company did not, however, reimburse Crestline or any third-party sub-property manager for general overhead costs or for the wages and salaries and other employee-related expenses of employees of such sub-property managers, other than employees or subcontractors who are engaged in the on-site operation, management, maintenance or access control of the Company’s properties, and, in certain circumstances, who are engaged in off-site activities.

Prior to the Initial Closing, the Company also paid the Former Property Manager (which payment was assigned to Crestline) an annual incentive fee equal to 15% of the amount by which the operating profit from the properties sub-managed by Crestline for such fiscal year (or partial fiscal year) exceeds 8.5% of the total investment of such properties. Incentive fees incurred by the Company were $0.1 million for the three months endedMarch 31, 2017 and were $0.1 million for the three months endedMarch 31, 2016, respectively.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company from Crestline or the Former Property Manager (and not payable to a third party sub-property manager) during three months endedMarch 31, 2017 and 2016, respectively, and the associated payable as of March 31, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	4,291	$	3,722	$	1,774	$	1,306
Total management fees incurred from Former Property Manager	$	2,035	$	1,946	$	15	$	532
Total	$	6,326	$	5,668	$	1,789	$	1,838

Following the Initial Closing, the Company no longer has any agreements with the Former Property Manager and instead contracts directly or indirectly, through its taxable REIT subsidiaries, with Crestline and the third-party property management companies that previously served as sub-property managers to manage the Company’s hotel properties pursuant to terms amended in connection with the consummation of the transactions contemplated by the Framework Agreement (See Note 3 - Brookfield Investment and Related Transactions).

Fees Paid in Connection with the Liquidation or Listing

Prior to the Initial Closing, the Company was required to pay the Former Advisor an annual subordinated performance fee calculated on the basis of the Company’s total return to stockholders, payable monthly in arrears, such that for any year in which the Company’s total return on stockholders’ capital exceeds 6.0% per annum, the Former Advisor was entitled to 15.0% of the excess total return but not to exceed 10.0% of the aggregate total return for such year. This fee was payable only upon the sale of assets, other disposition or refinancing of such assets, which results in the return on stockholders’ capital exceeding 6.0% per annum. No subordinated performance fees were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no such fee was payable in connection with the Initial Closing.

Prior to the Initial Closing, the Company could pay a brokerage commission to the Former Advisor on the sale of property, not to exceed the lesser of 2.0% of the contract sale price of the property and 50.0% of the total brokerage commission paid if a third-party broker is also involved; provided, however, that in no event could the real estate commissions paid to the Former Advisor, its affiliates and unaffiliated third parties exceed the lesser of 6.0% of the contract sales price and a reasonable, customary and competitive real estate commission, in each case, payable to the Former Advisor if the Former Advisor or its affiliates, as determined by a majority of the independent directors, provided a substantial amount of services in connection with the sale. In connection with the sale of a hotel on October 14, 2016, the Company paid the Former Advisor a brokerage commission of approximately $0.3 million. No such commissions were incurred during the three months endedMarch 31, 2017 or 2016, respectively, and no commissions were payable in connection with the Initial Closing.

Prior to the Initial Closing, the Former Special Limited Partner was entitled to receive a subordinated participation in the net sales proceeds of the sale of real estate assets of 15.0% of the remaining net sale proceeds after return of capital contributions to investors plus payment to investors of a 6.0% cumulative, pre-tax, non-compounded annual return on the capital contributed by investors. The Former Special Limited Partner was not entitled to the subordinated participation in net sale proceeds unless the Company’s investors have received a 6.0% cumulative non-compounded return on their capital contributions plus the return of their capital. No such participation became due and payable during the three months endedMarch 31, 2017 or 2016, and no such participation was payable in connection with the Initial Closing.

Prior to the Initial Closing, if the common stock of the Company was listed on a national exchange, the Former Special Limited Partner would have been entitled to receive a subordinated incentive listing distribution of 15.0% of the amount by which the Company’s market value plus distributions exceeds the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return on their capital contributions. The Former Special Limited Partner would not have been entitled to the subordinated incentive listing distribution unless investors have received a 6.0% cumulative, pre-tax non-compounded annual return on their capital contributions. No such distributions have been incurred during the three months endedMarch 31, 2017 or 2016, and no such distributions were payable in connection with the Initial Closing.

Prior to the Initial Closing, in the event of a termination or non-renewal of the advisory agreement with the Former Advisor, with or without cause, the Former Special Limited Partner, through its controlling interest in the Former Advisor, was entitled to receive distributions from the OP equal to 15.0% of the amount by which the sum of the Company’s market value plus distributions exceeds the sum of the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors. No such distributions have been incurred as of March 31, 2017 and no such distributions were payable in connection with the Initial Closing.

At the Initial Closing, the Former Special Limited Partner's right to these distributions and participations was automatically forfeited and redeemed by the OP without the payment of any consideration to the Former Special Limited Partner of any of its affiliates (See Note 3 - Brookfield Investment and Related Transactions).

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Economic Dependency

3 Months Ended

Mar. 31, 2017

Economic Dependency [Abstract]

Economic Dependency

Economic Dependency

Prior to the Initial Closing, under various agreements, the Company had engaged the Former Advisor and its affiliates to provide certain services that are essential to the Company, including asset management services, supervision of the management, asset acquisition and disposition decisions, as well as other administrative responsibilities for the Company including accounting services and investor relations. As a result of these relationships, the Company was dependent upon the Former Advisor and its affiliates.

At the Initial Closing, the Advisory Agreement was terminated and certain employees of the Former Advisor or its affiliates (including Crestline) who had been involved in the management of the Company’s day-to-day operations, including all of its executive officers, became employees of the Company. As a result of the Company becoming self-managed, the Company now leases office space, has its own communications and information systems and directly employs a staff. The Company also terminated all of its other agreements with affiliates of the Former Advisor except for hotel-level property management agreements with Crestline and entered into a transition services agreement with each of the Former Advisor and Crestline, pursuant to which the Company will receive their assistance in connection with investor relations/shareholder services and support services for pending transactions in the case of the Former Advisor and accounting and tax related services in the case of Crestline until June 29, 2017 except as set forth below. The transition services agreement with Crestline for accounting and tax related services will automatically renew for successive 90-day periods unless either party elects to terminate. The transition services agreement with the Former Advisor with respect to the support services for pending transactions expired on April 30, 2017.

Until the Initial Closing, the Former Advisor and its affiliates used their respective commercially reasonable efforts to assist the Company and its subsidiaries to take such actions as the Company and its subsidiaries reasonably deemed necessary to transition to self-management, including, but not limited to providing books and records, accounting systems, software and office equipment. Pursuant to the Framework Agreement, the Company also entered into certain other agreements at the Initial Closing to facilitate the transition to self-management (See Note 3 - Brookfield Investment and Related Transactions).

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Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to disclosures in the accompanying condensed consolidated financial statements except for the following transactions:

Completion of April Acquisition

On April 27, 2017, the Company, through the OP, completed the April Acquisition of seven hotels from Summit pursuant to the Reinstatement Agreement for an aggregate purchase price of $66.8 million.

Repayment of Additional Loan

On April 27, 2017, concurrent with the completion of the April Acquisition, the Additional Loan was deemed repaid in full.

Refinancing of the SN Term Loan

On April 27, 2017, the Company and the OP, as guarantors, and certain wholly-owned subsidiaries of the OP (each a “Term Loan Borrower” and collectively the “Term Loan Borrowers”), as borrowers, entered into a Second Amended and Restated Term Loan Agreement (the “Refinanced Term Loan”) in an aggregate principal amount of $310.0 million to amend, restate and refinance the SN Term Loan. The Refinanced Term Loan is collateralized by 28 of the Company’s hotel properties, 20 of which served as collateral for the SN Term Loan, the seven hotels acquired on the same date as the refinancing pursuant to the April Acquisition, and one unencumbered hotel from Company’s existing portfolio (each, a “Term Loan Collateral Property”).

At the closing of the Refinanced Term Loan, the net proceeds after accrued interest and closing costs were used (i) to repay the $235.5 million principal amount then outstanding under the SN Term Loan; (ii) to fund $33.4 million of the purchase price of the hotels purchased in the April Acquisition; (iii) to deposit $30.0 million to fund the 87-Pack PIP Reserve (as defined below); and (iv) to pay in full the contingent consideration payable to the seller as part of an acquisition of hotels by the Company during March 2014 of $4.6 million.

The Refinanced Term Loan matures on May 1, 2019, subject to threeone-year extension rights which, if all three extension rights are exercised, would result in an outside maturity date of May 1, 2022. The Refinanced Term Loan is prepayable in whole or in part at any time, subject to payment of (i) LIBOR breakage, if any, and (ii) except for the first $99,073,180 paydown of the loan balance, certain fees applicable prior to May 1, 2018.

The Refinanced Term Loan requires monthly interest payments at a variable rate of one-month LIBOR plus 3.00%. Pursuant to an interest rate cap agreement, the LIBOR portions of the interest rates due under the Refinanced Term Loan is capped at 4.00% during the initial term, a rate based on a debt service coverage ratio during any extension term.

In connection with a sale or disposition to a third party of an individual Term Loan Collateral Property, such Term Loan Collateral Property may be released from the Refinanced Term Loan, subject to certain prepayment fees and conditions.

The Refinanced Term Loan also provides for certain amounts to be deposited into reserve accounts, including with respect to all costs associated with the PIPs required pursuant to any franchise agreement related to any Term Loan Collateral Property.

The Refinanced Term Loan (i) is non-recourse except for certain environmental indemnities and certain so-called “bad boy” events and (ii) is fully recourse (subject in certain cases to a specified cap) upon the occurrence of certain other “bad boy” events.

For the term of the Refinanced Term Loan, the Company, the OP and the Term Loan Borrowers are required to maintain, on a consolidated basis, a net worth of $250.0 million (excluding accumulated depreciation and amortization).

Refinancing of the Assumed Grace Indebtedness

On April 28, 2017, the Company and the OP through certain wholly-owned subsidiaries of the OP, entered into a mortgage loan agreement (the “87-Pack Mortgage Loan”) and a mezzanine loan agreement (the “87-Pack Mezzanine Loan” and, collectively with the 87-Pack Mortgage Loan, the “87-Pack Loans”) with an aggregate principal balance of $915.0 million to refinance the Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan. The principal amount of the 87-Pack Mortgage Loan is $805.0 million and the 87-Pack Mortgage Loan is secured by 87 of the Company’s hotel properties, all of which served as collateral for the Assumed Grace Mortgage Loan (each, a “87-Pack Collateral Property”). The principal amount of the 87-Pack Mezzanine Loan is $110.0 million and the 87-Pack Mezzanine Loan is secured by the ownership interest in the entities which own the 87-Pack Collateral Properties and the related operating lessees.

At the closing of the 87-Pack Loans, the net proceeds after accrued interest and closing costs were used to repay the $895.4 million principal amount then outstanding under the Assumed Grace Indebtedness and pay $1.0 million into the Reserve Funds (as defined below).

The 87-Pack Loans mature on May 1, 2019, subject to threeone-year extension rights which, if all three extension rights are exercised, would result in an outside maturity date of May 1, 2022. Loans issued under the 87-Pack Loans are fully prepayable with certain prepayment fees applicable on or prior to November 1, 2018, after which each loan made under the 87-Pack Loans is prepayable without any prepayment fee or any other fee or penalty. Prepayments under the 87-Pack Mortgage Loan are generally conditioned on a pro-rata prepayment being made under the 87-Pack Mezzanine Loan.

The 87-Pack Mortgage Loan requires monthly interest payments at a variable rate equal to one-month LIBOR plus 2.56%, and the 87-Pack Mezzanine Loan requires monthly interest payments at a variable rate equal to one-month LIBOR plus 6.50%. Pursuant to an interest rate cap agreement, the LIBOR portions of the interest rates due under the 87-Pack Loans are effectively capped at the greater of (i) 4.0% and (ii) a rate that would result in a debt service coverage ratio specified in the loan documents.

In connection with a sale or disposition to a third party of an individual 87-Pack Collateral Property, such 87-Pack Collateral Property may be released from the 87-Pack Loans, subject to certain conditions and limitations, by prepayment of a portion of the 87-Pack Loans at a release price calculated in accordance with the terms of the 87-Pack Loans.

At closing, the 87-Pack Borrower deposited $30.0 million to fund a reserve (the “87-Pack PIP Reserve”) in order to fund expenditures for work required to be performed under PIPs required by franchisors of the 87-Pack Collateral Properties. The 87-Pack PIP Reserve was funded with a portion of the proceeds of the Refinanced Term Loan. The 87-Pack Loans also provides for certain additional amounts to be deposited in reserve accounts (collectively with the 87-Pack PIP Reserve, the “Reserve Funds”).

The 87-Pack Loans (i) are non-recourse except for certain environmental indemnities and certain so-called “bad boy” events and (ii) are fully recourse (subject in certain cases to a specified cap) upon the occurrence of certain other “bad boy” events.

For the term of the 87-Pack Loans, the Company and the OP are required to maintain, on a consolidated basis, a net worth of $250.0 million (excluding accumulated depreciation and amortization).

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Basis of Accounting

The accompanying consolidated financial statements of the Company included herein were prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP"). The consolidated financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. These adjustments are considered to be of a normal, recurring nature.

Principles of Consolidation and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as percentage ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity for which the Company is the primary beneficiary.

Certain amounts in prior periods have been reclassified in order to conform to current period presentation, specifically, the Company changed the presentation of its Consolidated Statements of Operations and Comprehensive Income (Loss) with respect to "general and administrative expenses" and "acquisition and transaction related costs". The change in presentation was to reclassify these line items so that they are included as a component of Operating income (loss). The Company made this change in presentation for all periods presented.

Use of Estimates

Use of Estimates

The preparation of the accompanying consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding purchase price allocations to record investments in real estate, the useful lives of real estate and real estate taxes, as applicable.

Real Estate Investments and Below-Market Lease

Real Estate Investments

The Company allocates the purchase price of properties acquired in real estate investments to tangible and identifiable intangible assets acquired based on their respective fair values at the date of acquisition. Tangible assets include land, land improvements, buildings and furniture, fixtures and equipment. The Company utilizes various estimates, processes and information to determine the property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and furniture, fixtures and equipment are based on purchase price allocation studies performed by independent third parties or on the Company’s analysis of comparable properties in the Company’s portfolio. Identifiable intangible assets and liabilities, as applicable, are typically related to contracts, including operating lease agreements, ground lease agreements and hotel management agreements, which will be recorded at fair value. The Company also considers information obtained about each property as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.

Investments in real estate that are not considered to be business combinations under GAAP are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred. Depreciation of the Company's long-lived assets is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for furniture, fixtures and equipment, and the shorter of the useful life or the remaining lease term for leasehold interests.

The Company is required to make subjective assessments as to the useful lives of the Company’s assets for purposes of determining the amount of depreciation to record on an annual basis with respect to the Company’s investments in real estate. These assessments have a direct impact on the Company’s net income because if the Company were to shorten the expected useful lives of the Company’s investments in real estate, the Company would depreciate these investments over fewer years, resulting in more depreciation expense and lower net income on an annual basis.

Below-Market Lease

The below-market lease intangible is based on the difference between the market rent and the contractual rent and is discounted to a present value using an interest rate reflecting the Company's current assessment of the risk associated with the leases acquired (See Note 5 - Leases). Acquired lease intangible assets are amortized over the remaining lease term. The amortization of a below-market lease is recorded as an increase to rent expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Impairment of Long-Lived Assets and Investments in Unconsolidated Entities

Impairment of Long-Lived Assets and Investments in Unconsolidated Entities

When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. The estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss will be recorded to the extent that the carrying value exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income.

Assets Held for Sale (Long Lived-Assets)

Assets Held for Sale (Long Lived-Assets)

When the Company initiates the sale of long-lived assets, it assesses whether the assets meet the criteria to be considered assets held for sale. The review is based on whether the following criteria are met:

• Management has committed to a plan to sell the asset group;

• The subject assets are available for immediate sale in their present condition;

• The Company is actively locating buyers as well as other initiatives required to complete the sale;

• The sale is probable and the transfer is expected to qualify for recognition as a complete sale in one year;

• The long-lived asset is being actively marketed for sale at a price that is reasonable in relation to fair value; and

• Actions necessary to complete the plan indicate it is unlikely significant changes will be made to the plan or the plan will be withdrawn.

If all the criteria are met, a long-lived asset held for sale is measured at the lower of its carrying amount or fair value less cost to sell, and the Company will cease recording depreciation.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less.

Restricted Cash

Restricted Cash

Restricted cash consists of amounts required under mortgage agreements for future capital improvements to owned assets, future interest and property tax payments and cash flow deposits while subject to mortgage agreement restrictions. For purposes of the statement of cash flows, changes in restricted cash caused by changes to the amount needed for future capital improvements are treated as investing activities, changes related to future debt service payments are treated as financing activities, and changes related to real estate tax payments and excess cash flow deposits are treated as operating activities.

Deferred Financing Fees

Deferred Financing Fees

Deferred financing fees represent commitment fees, legal fees and other costs associated with obtaining commitments for financing. These fees are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing fees are expensed in full when the associated debt is refinanced or repaid before maturity.Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not be successful.

Variable Interest Entities

Variable Interest Entities

Accounting Standards Codification ("ASC") 810 contains the guidance surrounding the definition of variable interest entities ("VIE"), the definition of variable interests and the consolidation rules surrounding VIEs. In general, VIEs are entities in which equity investors lack the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support.

Once it is determined that the Company holds a variable interest in an entity, GAAP requires that the Company perform a qualitative analysis to determine (i) which entity has the power to direct the matters that most significantly impact the VIE’s financial performance; and (ii) if the Company has the obligation to absorb the losses of the VIE that could potentially be significant to the VIE or the right to receive the benefits of the VIE that could potentially be significant to the VIE. The entity that has both of these characteristics is deemed to be the primary beneficiary and is required to consolidate the VIE.

In February 2015, the FASB issued Accounting Standards Update 2015-02 (ASU 2015-02), which amended ASC 810. The amendment modifies the evaluation of whether certain legal entities are VIEs, eliminates the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with VIEs. The revised guidance was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company adopted this guidance effective January 1, 2016. The Company has evaluated the impact of the adoption of the new guidance on its consolidated financial statements and has determined the OP is considered a VIE. However, the Company meets the disclosure exemption criteria as the Company is the primary beneficiary of the VIE and the Company’s partnership interest in the OP representing the OP Units held by the Company corresponding to shares of the Company's common stock is considered a majority voting interest. As such, the new guidance did not have an impact on the Company’s consolidated financial statements. At the Initial Closing the Company analyzed the rights of the Class C Units holders and determined that the Company continues to be the primary beneficiary of the OP, with the power to direct activities that most significantly impact its economic performance.

The Company also has variable interests in VIEs through its investments in BSE/AH Blacksburg Hotel, LLC (the "HGI Blacksburg JV"), an entity that owns the assets of the Hilton Garden Inn Blacksburg, and an interest in TCA Block 7 Hotel, LLC (the "Westin Virginia Beach JV"), an entity that owns the assets of the Westin Virginia Beach Town Center (the "Westin Virginia Beach").

The Company has concluded that it is the primary beneficiary, with the power to direct activities that most significantly impact its economic performance of the HGI Blacksburg JV, and has therefore consolidated the entity in its consolidated financial statements.

The Company has concluded it is not the primary beneficiary with the power to direct activities that most significantly impact economic performance of the Westin Virginia Beach JV, and has therefore not consolidated the entity. The Company has accounted for the entity under the equity method of accounting and included it in investments in unconsolidated entities in the accompanying Consolidated Balance Sheets.

The Company classifies the distributions from its investments in unconsolidated entities in the Consolidated Statement of Cash Flows based upon an evaluation of the specific facts and circumstances of each distribution. For example, distributions of cash generated by property operations are classified as cash flows from operating activities. However, distributions received as a result of property sales are classified as cash flows from investing activities.

Revenue Recognition

Revenue Recognition

The Company recognizes hotel revenue as earned, which is generally defined as the date upon which a guest occupies a room or utilizes the hotel services.

Income Taxes

Income Taxes

The Company qualified to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code") commencing with its tax year ended December 31, 2014. In order to continue to qualify as a REIT, the Company must annually distribute to its stockholders 90% of its REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain, and must comply with various other organizational and operational requirements. The Company generally will not be subject to federal corporate income tax on that portion of its REIT taxable income that it distributes to its stockholders. The Company may be subject to certain state and local taxes on its income, property tax and federal income and excise taxes on its undistributed income. The Company's hotels are leased to taxable REIT subsidiaries which are owned by the OP. The taxable REIT subsidiaries are subject to federal, state and local income taxes.

Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for net operating loss, capital loss, and tax credit carryovers. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which such amounts are expected to be realized or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of available evidence, including future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies.

GAAP prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken in a tax return. The Company must determine whether it is "more-likely-than-not" that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. Once it is determined that a position meets the more-likely-than-not recognition threshold, the position is measured at the largest amount of benefit that is greater than 50% likely of being realized upon settlement in order to determine the amount of benefit to recognize in the financial statements. This accounting standard applies to all tax positions related to income taxes.

Earnings/Loss per Share

Earnings/Loss per Share

The Company calculates basic income or loss per share by dividing net income or loss for the period by the weighted-average shares of its common stock outstanding for a respective period. Diluted income per share takes into account the effect of dilutive instruments, such as stock options and unvested stock awards, except when doing so would be anti-dilutive. Beginning with distributions payable with respect to April 2016 and through the period from January 1, 2017 to January 13, 2017, the date these distributions were suspended, the Company has paid cumulative distributions of 2,047,877 shares of common stock and adjusted retroactively for all periods presented its computation of loss per share in order to reflect this change in capital structure

Fair Value Measurements

Fair Value Measurements

In accordance with ASC 820, Fair Value Measurement, certain assets and liabilities are recorded at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability between market participants in an orderly transaction on the measurement date. The market in which the reporting entity would sell the asset or transfer the liability with the greatest volume and level of activity for the asset or liability is known as the principal market. When no principal market exists, the most advantageous market is used. This is the market in which the reporting entity would sell the asset or transfer the liability with the price that maximizes the amount that would be received or minimizes the amount that would be paid. Fair value is based on assumptions market participants would make in pricing the asset or liability. Generally, fair value is based on observable quoted market prices or derived from observable market data when such market prices or data are available. When such prices or inputs are not available, the reporting entity should use valuation models.

The Company’s financial instruments recorded at fair value on a recurring basis are categorized based on the priority of the inputs used to measure fair value. The inputs used in measuring fair value are categorized into three levels, as follows:

• Level 1 - Inputs that are based upon quoted prices for identical instruments traded in active markets.

• Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar investments in markets that are not active, or models based on valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the investment.

• Level 3 - Inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Advertising Costs

Advertising Costs

The Company expenses advertising costs for hotel operations as incurred.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

Receivables consist principally of trade receivables from customers and are generally unsecured and are due within 30 to 90 days. The Company records a provision for uncollectible accounts using the allowance method. Expected credit losses associated with trade receivables are recorded as an allowance for doubtful accounts. The allowance for doubtful accounts is estimated based upon historical patterns of credit losses for aged receivables as well as specific provisions for certain identifiable, potentially uncollectible balances. When internal collection efforts on accounts have been exhausted, the accounts are written off and the associated allowance for doubtful accounts is reduced.

Reportable Segments

Reportable Segments

The Company has determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate room revenue and other income through the operation of the properties, which comprise 100% of the total consolidated revenues. Management evaluates the operating performance of the Company’s investments in real estate on an individual property level, none of which represent a reportable segment.

Derivative Transactions

Derivative Transactions

The Company at certain times enters into derivative instruments to hedge exposure to changes in interest rates. The Company’s derivatives as of March 31, 2017, consist of interest rate cap agreements which it believes will help to mitigate its exposure to increasing borrowing costs under floating rate indebtedness. The Company has elected not to designate its interest rate cap agreements as cash flow hedges.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09 Revenue from Contracts with Customers ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled to for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In April 2015, the FASB proposed an accounting standards update for ASU 2014-09 for the deferral of the effective date of ASU 2014-09. This proposal defers the effective date of ASU 2014-09 from annual reporting periods beginning after December 15, 2016, back one year, to annual reporting periods beginning after December 15, 2017 for all public business entities, certain not-for-profit entities, and certain employee benefit plans. Early application of ASU 2014-09 is permitted as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In April and May 2016, two amendments ("ASU 2016-10" and "ASU 2016-12") were made in which guidance related to accounting for revenue from contracts with customers was clarified further. ASU 2016-10 provides clarity around identifying performance obligations and licensing implementation guidance. ASU 2016-12 addresses topics such as collectability criterion, presentation of sales tax, non-cash consideration, completed contracts at transition and technical corrections. There have been no adjustments to the effective date of ASU 2014-09. The Company is evaluating the effect that ASU 2014-09, ASU 2016-10 and ASU 2016-12 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02 Leases ("ASU 2016-02"), which requires an entity to separate lease components from nonlease components in a contract. ASU 2016-02 provides more guidance on how to identify and separate components than did previous GAAP. ASU 2016-02 requires lessees to recognize assets and liabilities arising from operating leases on the balance sheet. This amendment has not fundamentally changed lessor accounting, however some changes have been made to align and conform to the lessee guidance. The adoption of ASU 2016-02 becomes effective for the Company for the fiscal year beginning after December 15, 2018, and all subsequent annual and interim periods. Upon adoption, the Company will be required to recognize its operating leases, which are primarily comprised of one operating lease with respect to the Georgia Tech Hotel & Conference Center and nine ground leases, under which it is the lessee, as liabilities on the Consolidated Balance Sheets. Early adoption is permitted.

In March 2016, the FASB issued ASU 2016-07 Investments—Equity Method and Joint Ventures ("ASU 2016-07"), which requires that an equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The adoption of ASU 2016-07 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-07 did not have a material effect on the Company’s consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09 Compensation—Stock Compensation ("ASU 2016-09"), which requires that all excess tax benefits and all tax deficiencies should be recognized as income tax expense or benefits in the income statement. These benefits and deficiencies are discrete items in the reporting period in which they occur. An entity should not consider these benefits or deficiencies in determining the annual estimated tax rate. The adoption of ASU 2016-09 became effective for the Company beginning January 1, 2017. The adoption of ASU 2016-09 did not have a material effect on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15 Statement of Cash Flows—Classification of Certain Cash Receipts and Cash Payments ("ASU 2016-15"), which addresses the presentation and classification of certain cash flow receipts and payments. The adoption of ASU 2016-15 becomes effective for the Company for the fiscal year beginning after December 15, 2017, and all subsequent annual and interim periods. The adoption of ASU 2016-15 is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) Clarifying the Definition of a Business, with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Additionally, this update also narrows the definition of an output. ASU 2017-01 requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not a business, thus reducing the number of transactions that need to be further evaluated. ASU 2017-01 is effective for the Company for fiscal years beginning after December 15, 2018, and early adoption is permitted. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), which simplifies the measurement of goodwill by eliminating Step 2 from the current goodwill impairment test in the event that there is evidence of an impairment based on qualitative or quantitative assessments. ASU 2017-04 does not change how the goodwill impairment is identified, and the Company will continue to perform a qualitative assessment annually to determine whether the two step impairment test is required. Until the adoption, current accounting standards require the impairment loss to be recognized under Step 2 of the impairment test. This requires the Company to calculate the implied fair value of goodwill by assigning fair value to the reporting unit’s assets and liabilities as if the reporting unit has been acquired in a business combination, then subsequently subtracting the implied goodwill from the carrying amount of the goodwill. The new standard would require the Company to determine the fair value of the reporting unit and subtract the carrying value from the fair value of the reporting unit to determine if there is an impairment. ASU 2017-04 is effective for the Company for fiscal years after December 15, 2019, and early adoption is permitted. ASU 2017-04 is required to be adopted prospectively, and the adoption is effective for annual goodwill impairment tests performed in the year of adoption.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Accounting Policies [Abstract]

Schedule of Accounts, Notes, Loans and Financing Receivable

Trade receivable balances, net of the allowance for doubtful accounts, are included in prepaid expenses and other assets in the accompanying Consolidated Balance Sheets, and are as follows (in thousands):

	March 31, 2017			December 31, 2016
Trade receivables	$	7,332		$	6,238
Allowance for doubtful accounts	(316		)	(434		)
Trade receivables, net of allowance	$	7,016		$	5,804

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Leases (Tables)

3 Months Ended

Mar. 31, 2017

Leases [Abstract]

Schedule of Future Minimum Lease Payments for Operating Leases

The following table summarizes the Company's future minimum rental commitments under these leases (in thousands):

	Minimum Rental Commitments		Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the nine months ending December 31, 2017	$	3,909	$	299
Year ending December 31, 2018	5,217		398
Year ending December 31, 2019	5,227		398
Year ending December 31, 2020	5,265		398
Year ending December 31, 2021	5,271		398
Thereafter	81,743		7,836
Total	$	106,632	$	9,727

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Mortgage Notes Payable (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The Company’s mortgage notes payable as of March 31, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

	Outstanding Mortgage Notes Payable
Encumbered Properties	March 31, 2017		December 31, 2016		Interest Rate	Payment	Maturity
Baltimore Courtyard & Providence Courtyard	$	45,500	$	45,500	4.30%	Interest Only, Principal paid at Maturity	April 2019
Hilton Garden Inn Blacksburg Joint Venture	10,500		10,500		4.31%	Interest Only, Principal paid at Maturity	June 2020
Assumed Grace Mortgage Loan - 95 properties in Grace Portfolio (1)	793,606		793,647		LIBOR plus 3.31%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Assumed Grace Mezzanine Loan - 95 properties in Grace Portfolio (2)	101,826		101,794		LIBOR plus 4.77%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Refinanced Additional Grace Mortgage Loan - 20 properties in Grace Portfolio and one additional property	232,000		232,000		4.96%	Interest Only, Principal paid at Maturity	October 2020
SN Term Loan - 20 properties in Summit and Noble Portfolios (3)	235,484		235,484		LIBOR plus between 3.25% and 3.75%	Interest Only, Principal paid at Maturity	August 2018, subject to two, one year extension rights
Total Mortgage Notes Payable	$	1,418,916	$	1,418,925
Less: Deferred Financing Fees, Net	$	7,104	$	8,000
Total Mortgage Notes Payable, Net	$	1,411,812	$	1,410,925

(1) The Assumed Grace Mortgage Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 2.56%. The principal amount of the new loan is $805.0 million and is secured by 87 of the Company’s hotel properties, all of which served as collateral for the Assumed Grace Mortgage Loan (See Note 15 - Subsequent Events).

(2) The Assumed Grace Mezzanine Loan was refinanced on April 28, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate equal to one-month LIBOR plus 6.50%. The principal amount of the new loan is $110.0 million. (See Note 15 - Subsequent Events).

(3) The SN Term Loan was refinanced on April 27, 2017. The new loan matures on May 1, 2019, subject to threeone-year extension rights and has a variable interest rate of one-month LIBOR plus 3.00%. The principal amount of the new loan is $310.0 million and is collateralized by 28 of the Company’s hotel properties, 20 of which served as collateral for the SN Term Loan, the seven hotels acquired on the same date as the refinancing pursuant to the April Acquisition, and one unencumbered hotel from the Company's existing portfolio (See Note 15 - Subsequent Events).

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Promissory Notes Payable (Tables)

3 Months Ended

Mar. 31, 2017

Debt Disclosure [Abstract]

Schedule of Promissory Notes

The Company’s promissory notes payable as of March 31, 2017 and December 31, 2016 were as follows (in thousands):

	Outstanding Promissory Notes Payable
Notes Payable	March 31, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	3,030	$	23,405	14.0	%
Note Payable to Former Property Manager	$	4,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	7,030	$	23,380

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Accounts Payable and Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2017

Payables and Accruals [Abstract]

Schedule of Accounts Payable and Accrued Liabilities

The following is a summary of the components of accounts payable and accrued expenses (in thousands):

	March 31, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,892	$	55,489
Contingent consideration from Barceló Portfolio (See Note 12 - Commitments and Contingencies) (1)	4,619		4,619
Hotel accrued salaries and related liabilities	9,565		8,411
Total	$	71,076	$	68,519

(1) The Company paid the contingent consideration in April 2017 with proceeds from the refinanced SN Term Loan (See Note 15 - Subsequent Events).

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The following table shows the carrying values and the fair values of material liabilities that qualify as financial instruments (in thousands):

	March 31, 2017
	Carrying Amount		Fair Value
Mortgage notes payable(1)	$	1,418,916	$	1,419,081
(1) Carrying amount does not include the associated deferred financing fees as of March 31, 2017.

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Related Party Transactions and Arrangements (Tables)

3 Months Ended

Mar. 31, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The table below presents the Class B Units distribution expense for the three months endedMarch 31, 2017 and 2016 respectively, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Class B Units distribution expense	$	26	$	222	$	1	$	65

The table below represents reimbursements to the Former Advisor for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	869	$	579	$	179	$	522

The table below presents the asset management fees, acquisition fees, acquisition cost reimbursements and financing coordination fees charged by the Former Advisor in connection with the operations of the Company for the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Asset management fees	$	4,581	$	4,457	$	4	$	8
Acquisition fees	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	206	$	—	$	—
	$	4,581	$	6,395	$	4	$	8

The table below shows the commissions and fees incurred from and payable to the Former Dealer Manager for the Offering during the three months endedMarch 31, 2017 and 2016, and the associated payable as of March 31, 2017 and December 31, 2016, which is recorded in due to former related parties on the Company's Consolidated Balance Sheets (in thousands):

	Three Months Ended March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total commissions and fees incurred from the Former Dealer Manager	$	—	$	71	$	—	$	—

The table below shows compensation and reimbursements incurred and payable to the Former Advisor and its affiliates for services relating to the Offering during the three months endedMarch 31, 2017 and 2016, and the associated amounts payable as of March 31, 2017 and December 31, 2016, which is recorded in due to related parties on the Company’s Consolidated Balance Sheets (in thousands).

	Three Months Ended  March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total compensation and reimbursement for services provided by the Former Advisor and its affiliates related to the Offering	$	—	$	—	$	447	$	447

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company from Crestline or the Former Property Manager (and not payable to a third party sub-property manager) during three months endedMarch 31, 2017 and 2016, respectively, and the associated payable as of March 31, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   March 31,				Payable as of
	2017		2016		March 31, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	4,291	$	3,722	$	1,774	$	1,306
Total management fees incurred from Former Property Manager	$	2,035	$	1,946	$	15	$	532
Total	$	6,326	$	5,668	$	1,789	$	1,838

XML

Organization - Narrative (Details)			3 Months Ended
	Mar. 31, 2017 USD ($) employee hotel period state hotel_room $ / shares shares	Jan. 13, 2017 $ / shares	Mar. 31, 2017 USD ($) employee hotel period state hotel_room $ / shares shares	Apr. 27, 2017 hotel hotel_room	Dec. 31, 2016 USD ($) $ / shares shares	Jul. 31, 2016 $ / shares	Jul. 01, 2016 $ / shares	Jun. 30, 2016 $ / shares	Mar. 31, 2016 shares	Jan. 07, 2014 $ / shares shares
Class of Stock [Line Items]
Number of properties owned (property) | hotel	141		141
Number of guest rooms (hotel room) | hotel_room	17,193		17,193
Number of states in which entity operates (state) | state	32		32
Shares authorized (in shares) | shares	300,000,000		300,000,000		300,000,000					80,000,000
Par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01
Share price (in dollars per share)	$ 22.50		$ 22.50
Denominator for common stock equivalent of dividends declared (in dollars per share)						$ 21.48	$ 21.48	$ 23.75
Common stock, outstanding (in shares) | shares	39,617,676		39,617,676		38,493,430				36,636,016
Preferred stock, par value (in dollars per share)	$ 0.01		$ 0.01		$ 0.01
Liquidation preference | $	$ 135,000,000		$ 135,000,000		$ 135,000,000
Number of full time employees | employee	25		25
TSA period of automatic renewal	90 days		90 days
Affiliated Entity | Crestline Hotels and Resorts, LLC | United States
Class of Stock [Line Items]
Number of hotels managed by related party (hotel) | hotel	72		72
Sub-Property Managers | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel) | hotel	69		69
Sub-Property Managers | Hampton Inns Management LLC and Homewood Suites Management LLC | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel) | hotel	41		41
Sub-Property Managers | Interstate Management Company, LLC | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel) | hotel	5		5
Sub-Property Managers | InnVentures IVI, LP | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel) | hotel	2		2
Sub-Property Managers | McKibbon Hotel Management, Inc. | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel) | hotel	21		21
Common Stock
Class of Stock [Line Items]
Par value (in dollars per share)										$ 0.01
Share price (in dollars per share)	$ 14.59		$ 14.59							$ 25
Distribution Reinvestment Plan
Class of Stock [Line Items]
Shares authorized (in shares) | shares										21,052,631
Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Cash dividends per share declared (in dollars per share)		$ 0.525	0.525
Securities Purchase, Voting and Standstill Agreement | Redeemable Preferred Stock
Class of Stock [Line Items]
Preferred stock, par value (in dollars per share)	$ 0.01		$ 0.01
Number of shares sold (in shares) | shares			1
Class C Units
Class of Stock [Line Items]
Cash distribution per annum	7.50%		7.50%
Cash distribution potential increased rate	10.00%		10.00%
Cash dividend | $			$ 0
PIK distribution per annum	5.00%		5.00%
PIK distribution potential increased rate	7.50%		7.50%
PIK distribution potential additional increased rate	1.25%		1.25%
PIK distribution, number of quarterly periods | period	4		4
PIK maximum percent per year	12.50%		12.50%
Class C Units | Investor
Class of Stock [Line Items]
Liquidation preference | $	$ 100,000,000		$ 100,000,000
Class C Units | Hospitality Investors Trust Operating Partnership, L.P.
Class of Stock [Line Items]
Unredeemable liquidation preference (in dollars per share)	$ 0.10		$ 0.10
Class C Units | Initial Closing | Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Number of shares sold (in shares) | shares	9,152,542.37		9,152,542.37
Share price (in dollars per share)	$ 14.75		$ 14.75
Consideration received from sale of stock | $	$ 135,000,000		$ 135,000,000
Class C Units | Follow-On Funding | Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Consideration received from sale of stock | $	$ 265,000,000		$ 265,000,000
April Acquisition | Subsequent Event
Class of Stock [Line Items]
Number of properties owned (property) | hotel				7
Number of guest rooms (hotel room) | hotel_room				651

XML

Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands	3 Months Ended			9 Months Ended
	Mar. 31, 2017 USD ($) segment lease	Jun. 30, 2016 USD ($) hotel	Mar. 31, 2016 USD ($)	Jan. 13, 2017 shares	Dec. 31, 2016 USD ($)
Summary of Significant Accounting Policies [Line Items]
Goodwill	$ 31,557				$ 0
Impairment of long-lived assets		$ 2,400
Number of impaired hotels (hotel) | hotel		1
Advertising expense	$ 4,200		$ 3,800
Number of reportable segments (segment) | segment	1
Number of operating leases (lease) | lease	1
Number of ground leases (lease) | lease	9
Sales Revenue, Net
Summary of Significant Accounting Policies [Line Items]
Percentage of total consolidated/ combined revenues	100.00%
Minimum
Summary of Significant Accounting Policies [Line Items]
Period after which receivables are due (days)	30 days
Maximum
Summary of Significant Accounting Policies [Line Items]
Period after which receivables are due (days)	90 days
Change in EPS Calculation from Change in Capital Structure | Common Stock
Summary of Significant Accounting Policies [Line Items]
Distributions paid (in shares) | shares				2,047,877
Building
Summary of Significant Accounting Policies [Line Items]
Useful life (years)	40 years
Land Improvements
Summary of Significant Accounting Policies [Line Items]
Useful life (years)	15 years
Furniture, Fixtures and Equipment
Summary of Significant Accounting Policies [Line Items]
Useful life (years)	5 years
Series of Individually Immaterial Business Acquisitions
Summary of Significant Accounting Policies [Line Items]
Goodwill	$ 31,600

XML

Summary of Significant Accounting Policies - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Trade receivables	$ 7,332	$ 6,238
Allowance for doubtful accounts	(316)	(434)
Trade receivables, net of allowance	$ 7,016	$ 5,804

XML

Brookfield Investment and Related Transactions - Securities Purchase, Voting and Standstill Agreement (Details) - USD ($)		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Jan. 07, 2014
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 22.50	$ 22.50
Deemed dividend		$ 4,535,000	$ 0
Class C Units carrying value	$ 121,202,000	$ 121,202,000		$ 0
Common Stock
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 14.59	$ 14.59			$ 25
Common stock, fair value (usd per share)	$ 14.59	$ 14.59
Securities Purchase, Voting and Standstill Agreement | Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC | Follow-On Funding
Related Party Transaction [Line Items]
Funding commitment	$ 400,000,000.0
Funding commitment per transaction	$ 25,000,000.0
Securities Purchase, Voting and Standstill Agreement | Class C Units | Initial Closing
Related Party Transaction [Line Items]
Number of shares sold (in shares)	9,152,542.37	9,152,542.37
Share price (in dollars per share)	$ 14.75	$ 14.75
Consideration received from sale of stock	$ 135,000,000	$ 135,000,000
Class C Units fair value	$ 135,000,000	$ 135,000,000
Conversion price (usd per share)	14.09	14.09
Net investment basis after transaction fees and costs payable	$ 129,000,000	$ 129,000,000
Deemed dividend		4,500,000
Class C Units carrying value	121,200,000	121,200,000
Expense reimbursements and fees	6,000,000
Securities Purchase, Voting and Standstill Agreement | Class C Units | Follow-On Funding
Related Party Transaction [Line Items]
Consideration received from sale of stock	$ 265,000,000	$ 265,000,000
Period of written notice to sell additional units	15 days
Securities Purchase, Voting and Standstill Agreement | Class C Units | First Follow-On Funding
Related Party Transaction [Line Items]
Consideration received from sale of stock	$ 223,500,000

XML

Brookfield Investment and Related Transactions - The Redeemable Preferred Share (Details) - Class C Units $ in Millions	Mar. 31, 2017 USD ($) shares
Related Party Transaction [Line Items]
Number of units remaining outstanding to allow redemption (shares) | shares	0
Liquidation preference | $	$ 100.0

XML

Brookfield Investment and Related Transactions - Class C Units (Details) $ / shares in Units, $ in Millions		3 Months Ended
	Mar. 31, 2017 USD ($) period $ / shares	Mar. 31, 2017 USD ($) period
Related Party Transaction [Line Items]
Minimum percent of Class C Units to outstanding common stock to trigger preemptive rights	5.00%
OP Units
Related Party Transaction [Line Items]
Conversion price (in dollars per share) | $ / shares	$ 14.75
Ownership percentage for election of OP units or cash	49.90%
Class C Units
Related Party Transaction [Line Items]
Cash distribution per annum	7.50%	7.50%
Cash distribution potential increased rate	10.00%	10.00%
PIK distribution per annum	5.00%	5.00%
PIK distribution potential increased rate	7.50%	7.50%
PIK distribution potential additional increased rate	1.25%	1.25%
PIK distribution, number of quarterly periods | period	4	4
PIK maximum percent per year	12.50%	12.50%
Denominator for PIK distribution (in dollars per share) | $ / shares	$ 14.75
Distribution base amount	$ 800.0
Distribution amount subtracted from base	$ 400.0
Consummation period after initial closing	57 months 1 day
Distribution multiple	2
Distribution discount rate assumption	5.00%
Payment amount (less than)	$ 15.0
Liquidation preference for right to redeem outstanding units (less than)	35.0	$ 35.0
Class C Units | Investor
Related Party Transaction [Line Items]
Minimum amount of assets for transfer without consent	$ 100.0

XML

Brookfield Investment and Related Transactions - Property Management Transactions (Details)			3 Months Ended
	Mar. 31, 2017 USD ($) hotel term $ / shares shares	Mar. 30, 2017	Mar. 31, 2017 USD ($) $ / shares shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($) shares
Related Party Transaction [Line Items]
Automatic renewal period	5 years
Common stock, issued (in shares)	39,617,676		39,617,676		38,493,430
Goodwill | $	$ 31,557,000		$ 31,557,000		$ 0
Property Manager
Related Party Transaction [Line Items]
Property management fee (percent)			4.00%
Fees incurred with the offering | $			$ 6,326,000	$ 5,668,000
Common stock, issued (in shares)	279,329		279,329
Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering | $			$ 4,581,000	6,395,000
Common stock, issued (in shares)	524,956		524,956
Class B Units
Related Party Transaction [Line Items]
Fees incurred with the offering | $			$ 26,000	$ 222,000
Class B Units | Advisor
Related Party Transaction [Line Items]
Conversion of stock (shares)			524,956
OP Units | Advisor
Related Party Transaction [Line Items]
Conversion of stock (shares)			524,956
Shares issued in conversion (shares)			524,956
Common Stock
Related Party Transaction [Line Items]
Common stock, fair value (usd per share) | $ / shares	$ 14.59		$ 14.59
Common Stock | Advisor
Related Party Transaction [Line Items]
Shares issued in conversion (shares)			524,956
Property Management Transactions
Related Party Transaction [Line Items]
Number of hotels assigned to related party (hotel) | hotel	69
Number of additional hotels transitioned to related party (hotel) | hotel	5
Property management fee (percent)	3.00%	4.00%
Number of automatic renewal periods | term	3
Percent fee multiple	2.5
Number of hotels with terminated property management agreements (hotel) | hotel	65
Property Management Transactions | Property Manager
Related Party Transaction [Line Items]
Fees incurred with the offering | $	$ 10,000,000
Cash payment per month | $	333,333.33		$ 333,333.33
Aggregate cash payments | $	$ 4,000,000		$ 4,000,000
Period of monthly cash payments	12 months
Common stock, issued (in shares)	279,329		279,329
Property Management Transactions | Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering | $	$ 5,821,988
Property Management Transactions | Minimum
Related Party Transaction [Line Items]
Term of agreement	18 years
Property Management Transactions | Maximum
Related Party Transaction [Line Items]
Term of agreement	19 years
Property Management Transactions | Class B Units | Advisor
Related Party Transaction [Line Items]
Conversion of stock (shares)	524,956
Property Management Transactions | OP Units | Advisor
Related Party Transaction [Line Items]
Conversion of stock (shares)	524,956
Shares issued in conversion (shares)	524,956
Property Management Transactions | Common Stock | Advisor
Related Party Transaction [Line Items]
Shares issued in conversion (shares)	524,956

XML

Brookfield Investment and Related Transactions - Brookfield Approval Rights (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Liquidation preference	$ 135,000	$ 135,000
Class C Units | Investor
Related Party Transaction [Line Items]
Liquidation preference	$ 100,000

XML

Brookfield Investment and Related Transactions - Facilities Use Agreement (Details)	Mar. 31, 2017
Related Party Transaction [Line Items]
Automatic renewal period	5 years
Facilities Use Agreement
Related Party Transaction [Line Items]
Automatic renewal period	1 year
Written notice to cancel automatic renewal	120 days

XML

Brookfield Investment and Related Transactions - Transition Services Agreements (Details) - USD ($) $ in Thousands			2 Months Ended	3 Months Ended
	May 15, 2017	Mar. 31, 2017	May 15, 2017	Mar. 31, 2017	Mar. 31, 2016
Related Party Transaction [Line Items]
TSA period of automatic renewal		90 days		90 days
Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering				$ 4,581	$ 6,395
Transition Services Agreement
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 25
TSA period of written notice for termination of automatic renewal		40 days
Transition Services Agreement | Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 150
Transition Services Agreement | Advisor | Subsequent Event
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 75		$ 225

XML

Brookfield Investment and Related Transactions - Registration Rights Agreement (Details) - shares	Mar. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Common stock, issued (in shares)	39,617,676	38,493,430
Advisor
Related Party Transaction [Line Items]
Common stock, issued (in shares)	524,956
Property Manager
Related Party Transaction [Line Items]
Common stock, issued (in shares)	279,329

XML

Business Combinations - Summit Acquisition (Details) $ in Thousands							1 Months Ended	3 Months Ended
	Apr. 27, 2017 USD ($) hotel	Jan. 12, 2017 USD ($) hotel	Feb. 11, 2016 USD ($) hotel	Dec. 29, 2015 USD ($) hotel	Oct. 15, 2015 USD ($) hotel	Jun. 02, 2015 USD ($) hotel closing_transaction	Jun. 30, 2016 USD ($) hotel	Mar. 31, 2017 USD ($) hotel	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Number of properties owned (property) | hotel								141
Proceeds from issuance of common stock, net								$ 0	$ 677
Acquisition deposits								$ 10,500		$ 7,500
Additional Summit Loan Agreement | Loan
Business Acquisition [Line Items]
Proceeds from loan		$ 3,000
Summit Portfolio
Business Acquisition [Line Items]
Number of real estate properties expected to be acquired | hotel						26
Number of closing transactions | closing_transaction						3
Business combination purchase price					$ 150,100	$ 347,400
Number of properties owned (property) | hotel			6		10
Deposits to acquire businesses					$ 7,600
Proceeds from issuance of common stock, net					45,600
Number of properties no longer expected to be acquired (hotel) | hotel				10
Escrow deposit forfeited				$ 9,100
Summit Portfolio | Summit Loan Promissory Note | Loan
Business Acquisition [Line Items]
Proceeds from loan			$ 20,000
Acquisition deposits			7,500
Summit Portfolio | Secured Debt | Deutsche Bank Term Loan
Business Acquisition [Line Items]
Proceeds from issuance of long term debt			$ 70,400		$ 96,900
Summit Portfolio, Second Closing
Business Acquisition [Line Items]
Number of real estate properties expected to be acquired | hotel			10				8
Business combination purchase price			$ 89,100	$ 89,100			$ 77,200
Number of properties no longer expected to be acquired (hotel) | hotel							2
Acquisition deposits			7,500
Summit Portfolio, Third Closing
Business Acquisition [Line Items]
Business combination purchase price			108,300
Previously paid earnest money deposit			18,500
Summit Portfolio, Third Closing | Summit Loan Promissory Note
Business Acquisition [Line Items]
Proceeds from loan			20,000
Summit Portfolio, Third Closing | Secured Debt | Deutsche Bank Term Loan
Business Acquisition [Line Items]
Proceeds from issuance of long term debt			$ 70,400
Summit Portfolio, Summit Amendment, First Seven Hotels
Business Acquisition [Line Items]
Number of real estate properties expected to be acquired | hotel		7
Business combination purchase price		$ 66,800
Summit Portfolio, Summit Amendment, Eighth Hotel
Business Acquisition [Line Items]
Business combination purchase price		$ 10,500
April Acquisition | Subsequent Event
Business Acquisition [Line Items]
Business combination purchase price	$ 66,800
Number of properties owned (property) | hotel	7

XML

Business Combinations - Framework Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Jan. 07, 2014
Business Acquisition [Line Items]
Purchase price settled in cash		$ 10,000	$ 0
Share price (in dollars per share)	$ 22.50	$ 22.50
Goodwill	$ 31,557	$ 31,557		$ 0
Common Stock
Business Acquisition [Line Items]
Share price (in dollars per share)	$ 14.59	$ 14.59			$ 25
Series of Individually Immaterial Business Acquisitions
Business Acquisition [Line Items]
Business combination purchase price	$ 31,600
Purchase price settled in cash	10,000
Liabilities incurred	4,000
Waiver of repayment	5,800
Goodwill	31,600	$ 31,600
Series of Individually Immaterial Business Acquisitions | Common Stock
Business Acquisition [Line Items]
Value of common stock	$ 4,100
Share price (in dollars per share)	$ 14.59	$ 14.59
Conversion and Redemption of Class B Units to Common Stock | Series of Individually Immaterial Business Acquisitions | Common Stock
Business Acquisition [Line Items]
Value of common stock	$ 7,700

XML

Leases - Narrative (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($) lease	Mar. 31, 2016 USD ($)
Leases [Abstract]
Number of operating leases (lease) | lease	1
Number of ground leases (lease) | lease	9
Amortization of below-market lease intangibles, net, to rent expense | $	$ 0.1	$ 0.1
Rent expense | $	$ 1.5	$ 1.4

XML

Leases - Schedule of Future Minimum Lease Payments for Operating Leases (Details) $ in Thousands	Mar. 31, 2017 USD ($)
Minimum Rental Commitments
For the nine months ending December 31, 2017	$ 3,909
Year ending December 31, 2018	5,217
Year ending December 31, 2019	5,227
Year ending December 31, 2020	5,265
Year ending December 31, 2021	5,271
Thereafter	81,743
Total	106,632
Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the nine months ending December 31, 2017	299
Year ending December 31, 2018	398
Year ending December 31, 2019	398
Year ending December 31, 2020	398
Year ending December 31, 2021	398
Thereafter	7,836
Total	$ 9,727

XML

Mortgage Notes Payable (Details)			3 Months Ended
	Apr. 28, 2017 USD ($) property extension	Apr. 27, 2017 USD ($) extension	Mar. 31, 2017 USD ($) hotel property extension	Apr. 27, 2017 hotel	Apr. 27, 2017 property	Dec. 31, 2016 USD ($)	Jul. 01, 2016 USD ($)	Feb. 11, 2016 USD ($)	Oct. 31, 2015	Oct. 15, 2015 USD ($)	Feb. 27, 2015 hotel
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 1,418,916,000			$ 1,418,925,000
Less: Deferred Financing Fees, Net			7,104,000			8,000,000
Mortgage notes payable, net			$ 1,411,812,000			1,410,925,000
Number of encumbered properties (property) | hotel			141
The Grace Acquisition
Debt Instrument [Line Items]
Number of encumbered properties (property) | hotel											115
The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			3.47%
April Acquisition | Subsequent Event
Debt Instrument [Line Items]
Number of encumbered properties (property) | hotel				7
Mortgage notes payable | Grace Mortgage Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 793,606,000			793,647,000
Number of extension rights | extension			2
Extension right (years)			1 year
Mortgage notes payable | Grace Mortgage Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			3.31%
Mortgage notes payable | Grace Mortgage Loan | The Grace Acquisition
Debt Instrument [Line Items]
Number of encumbered properties (property) | property			95
Mortgage notes payable | Grace Mezzanine Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 101,826,000			101,794,000
Number of extension rights | extension			2
Extension right (years)			1 year
Mortgage notes payable | Grace Mezzanine Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			4.77%
Mortgage notes payable | Grace Mezzanine Loan | The Grace Acquisition
Debt Instrument [Line Items]
Number of encumbered properties (property) | property			95
Mortgage notes payable | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 232,000,000			232,000,000
Interest rate (percent)			4.96%
Number of encumbered properties (property) | property			1
Mortgage notes payable | New Additional Grace Mortgage Loan | The Grace Acquisition
Debt Instrument [Line Items]
Number of encumbered properties (property) | property			20
Mortgage notes payable | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 235,484,000			235,484,000
Number of extension rights | extension			2
Extension right (years)			1 year
Mortgage notes payable | Deutsche Bank Term Loan | Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			3.25%
Mortgage notes payable | Deutsche Bank Term Loan | Maximum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			3.75%
Mortgage notes payable | Deutsche Bank Term Loan | SWN Acquisitions
Debt Instrument [Line Items]
Number of encumbered properties (property) | property			20
Mortgage notes payable | Baltimore Courtyard & Providence Courtyard
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 45,500,000			45,500,000
Interest rate (percent)			4.30%
Mortgage notes payable | Hilton Garden Inn Blacksburg Joint Venture
Debt Instrument [Line Items]
Outstanding mortgage notes payable			$ 10,500,000			$ 10,500,000
Interest rate (percent)			4.31%
Secured Debt | The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate			3.31%
Secured Debt | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Interest rate (percent)									4.96%
Secured Debt | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Amount of loan							$ 235,500,000.0	$ 293,400,000.0		$ 450,000,000
Secured Debt | HIT REIT 87-Pack Mortgage Loan | Subsequent Event
Debt Instrument [Line Items]
Number of extension rights | extension	3
Extension right (years)	1 year
Number of encumbered properties (property) | property	87
Amount of loan	$ 805,000,000.0
Secured Debt | HIT REIT 87-Pack Mortgage Loan | London Interbank Offered Rate (LIBOR) | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate	2.56%
Secured Debt | HIT REIT 87-Pack Mezzanine Loan | Subsequent Event
Debt Instrument [Line Items]
Number of extension rights | extension	3
Extension right (years)	1 year
Amount of loan	$ 110,000,000.0
Secured Debt | HIT REIT 87-Pack Mezzanine Loan | London Interbank Offered Rate (LIBOR) | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate	6.50%
Secured Debt | HIT REIT Term Loan | Subsequent Event
Debt Instrument [Line Items]
Number of extension rights | extension		3
Extension right (years)		1 year
Number of encumbered properties (property) | property					28
Number of unencumbered properties (property) | property					1
Amount of loan		$ 310,000,000.0
Secured Debt | HIT REIT Term Loan | London Interbank Offered Rate (LIBOR) | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Secured Debt | HIT REIT Term Loan | Minimum | London Interbank Offered Rate (LIBOR) | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Secured Debt | HIT REIT Term Loan | Maximum | London Interbank Offered Rate (LIBOR) | Subsequent Event
Debt Instrument [Line Items]
Basis spread on variable rate		4.00%
Secured Debt | HIT REIT Term Loan | SWN Acquisitions | Subsequent Event
Debt Instrument [Line Items]
Number of encumbered properties (property) | property					20
Secured Debt | HIT REIT Term Loan | April Acquisition | Subsequent Event
Debt Instrument [Line Items]
Number of encumbered properties (property)				7	7

XML

Mortgage Notes Payable - Narrative (Details) - USD ($)					3 Months Ended
	Feb. 11, 2016	Dec. 02, 2015	Nov. 02, 2015	Oct. 15, 2015	Mar. 31, 2017	Mar. 31, 2016	Jul. 01, 2016	Oct. 31, 2015
Debt Instrument [Line Items]
General and administrative					$ 2,926,000	$ 4,294,000
The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					3.47%
Mortgage notes payable
Debt Instrument [Line Items]
Interest expense					$ 15,700,000	$ 14,500,000
Mortgage notes payable | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Interest rate (percent)					4.96%
Mortgage notes payable | Deutsche Bank Term Loan | Minimum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					3.25%
Mortgage notes payable | Deutsche Bank Term Loan | Maximum | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					3.75%
Mezzanine Mortgage | The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					4.77%
Secured Debt | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Interest rate (percent)								4.96%
Secured Debt | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Amount of loan	$ 293,400,000.0			$ 450,000,000			$ 235,500,000.0
Additional amounts available to be drawn							$ 0
General and administrative	3,000,000
Percent less of spreads					0.50%
Secured Debt | Deutsche Bank Term Loan | Minimum | Eurodollar
Debt Instrument [Line Items]
Basis spread on variable rate					3.25%
Secured Debt | Deutsche Bank Term Loan | Minimum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate					2.25%
Secured Debt | Deutsche Bank Term Loan | Maximum | Eurodollar
Debt Instrument [Line Items]
Basis spread on variable rate					3.75%
Secured Debt | Deutsche Bank Term Loan | Maximum | Base Rate
Debt Instrument [Line Items]
Basis spread on variable rate					2.75%
Secured Debt | The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate					3.31%
Secured Debt | Summit Portfolio | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Proceeds from issuance of long term debt	$ 70,400,000			$ 96,900,000
Secured Debt | Noble Portfolio | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Proceeds from issuance of long term debt		$ 42,300,000	$ 26,000,000
Baltimore Courtyard & Providence Courtyard | Mortgage notes payable
Debt Instrument [Line Items]
Interest rate (percent)					4.30%
Hilton Garden Inn Blacksburg Joint Venture | Mortgage notes payable
Debt Instrument [Line Items]
Interest rate (percent)					4.31%

XML

Promissory Notes Payable - Schedule of Promissory Notes (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Notes Payable	$ 1,418,916	$ 1,418,925
Less: Deferred Financing Fees, Net	7,104	8,000
Loan
Debt Instrument [Line Items]
Less: Deferred Financing Fees, Net	0	25
Promissory Notes Payable, Net	7,030	23,380
Loan | Summit Loan Promissory Note
Debt Instrument [Line Items]
Notes Payable	$ 3,030	23,405
Interest rate (percent)	14.00%
Loan | Note Payable to Former Property Manager
Debt Instrument [Line Items]
Notes Payable	$ 4,000	$ 0
Interest rate (percent)	0.00%

XML

Promissory Notes Payable - Narrative (Details)			3 Months Ended
	Jan. 12, 2017 USD ($)	Feb. 11, 2016 USD ($) hotel	Mar. 31, 2017 USD ($) hotel	Mar. 31, 2016 USD ($)	Apr. 27, 2017 hotel	Dec. 31, 2016 USD ($)	Oct. 15, 2015 hotel
Debt Instrument [Line Items]
Acquisition deposits			$ 10,500,000			$ 7,500,000
Number of properties owned (property) | hotel			141
Property Management Transactions | Property Manager
Debt Instrument [Line Items]
Cash payment per month			$ 333,333.33
Additional Summit Loan Agreement
Debt Instrument [Line Items]
Interest rate, percent paid in cash	9.00%
Additional interest rate	4.00%
Summit Portfolio
Debt Instrument [Line Items]
Number of properties owned (property) | hotel		6					10
April Acquisition | Subsequent Event
Debt Instrument [Line Items]
Number of properties owned (property) | hotel					7
Loan
Debt Instrument [Line Items]
Interest expense			900,000	$ 500,000
Loan | Summit Loan Promissory Note
Debt Instrument [Line Items]
Amount of loan		$ 27,500,000.0
Loan | Additional Summit Loan Agreement
Debt Instrument [Line Items]
Proceeds from loan	$ 3,000,000
Loan | Note Payable to Former Property Manager | Property Management Transactions | Property Manager
Debt Instrument [Line Items]
Cash payment per month			$ 333,333.33
Loan | Summit Portfolio | Summit Loan Promissory Note
Debt Instrument [Line Items]
Proceeds from loan		20,000,000
Acquisition deposits		$ 7,500,000

XML

Mandatorily Redeemable Preferred Securities (Details) $ in Thousands			1 Months Ended	3 Months Ended
	Mar. 31, 2017 USD ($) hotel	Feb. 27, 2015 USD ($) hotel company	Apr. 30, 2015 USD ($)	Mar. 31, 2017 USD ($) hotel	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Number of properties owned (property) | hotel	141			141
Mandatorily redeemable preferred securities redemptions				$ 47,250	$ 2,270
Mandatorily redeemable preferred securities, net	$ 241,219			241,219		$ 288,265
Grace Amendments | Securities Purchase, Voting and Standstill Agreement | Redemption of Grace Preferred Equity Interests
Business Acquisition [Line Items]
Consideration received from sale of stock	47,300
The Grace Acquisition
Business Acquisition [Line Items]
Number of newly formed LLCs | company		2
Number of properties owned (property) | hotel		115
The Grace Acquisition | Redeemable Preferred Stock
Business Acquisition [Line Items]
Proceeds from issuance of preferred limited partner units		$ 447,100
Distribution period		18 months
Percent of equity offering proceeds to redeem preferred equity interests at par			35.00%
Maximum offering proceeds used to redeem preferred equity interests at par			$ 350,000
Period for maximum equity offering proceeds used to redeem preferred equity interests at par			12 months
Mandatorily redeemable preferred securities redemptions				204,200
Mandatorily redeemable preferred securities, net	$ 242,900			$ 242,900
Percentage of preferred equity interests required to be redeemed by 2018		50.00%
Amount of preferred equity interests required to be redeemed by 2018		$ 19,400
Percentage of preferred equity interests required to be redeemed by 2019		$ 223,500
The Grace Acquisition | Redeemable Preferred Stock | Minimum
Business Acquisition [Line Items]
Distribution rate		7.50%
The Grace Acquisition | Redeemable Preferred Stock | Maximum
Business Acquisition [Line Items]
Distribution rate		8.00%

XML

Accounts Payable and Accrued Expenses - Schedule of Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Trade accounts payable and accrued expenses	$ 56,892	$ 55,489
Contingent consideration from Barceló Portfolio	4,619	4,619
Hotel accrued salaries and related liabilities	9,565	8,411
Total	$ 71,076	$ 68,519

XML

Common Stock - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions					1 Months Ended	3 Months Ended
	Mar. 31, 2017	Jan. 13, 2017	Jul. 01, 2016	Feb. 03, 2014	Jul. 31, 2016	Mar. 31, 2017	Jun. 30, 2016	Dec. 31, 2016	Mar. 31, 2016
Class of Stock [Line Items]
Common stock, outstanding (in shares)	39,617,676					39,617,676		38,493,430	36,636,016
Cumulative proceeds from issuance of common stock, net	$ 913.0					$ 913.0		$ 913.0
Common stock, issued (in shares)	39,617,676					39,617,676		38,493,430
Dividends declared per day (in dollars per share)				$ 0.0046575343	$ 0.000185792
Dividends declared per day if leap year (in dollars per share)				0.0046448087
Dividends declared per year (in dollars per share)				$ 1.7	1.46064		$ 1.70
Denominator for common stock equivalent of dividends declared (in dollars per share)			$ 21.48		$ 21.48		$ 23.75
Annual distribution rate			6.80%
Period shares have been held before a repurchase request can be made						1 year
Notice period to amend, suspend or terminate the SRP						30 days
Notice period to amend, suspend or terminate the DRIP						10 days
Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Cash dividends per share declared (in dollars per share)		$ 0.525				$ 0.525
Property Manager
Class of Stock [Line Items]
Common stock, issued (in shares)	279,329					279,329
Advisor
Class of Stock [Line Items]
Common stock, issued (in shares)	524,956					524,956
Property Management Transactions | Property Manager
Class of Stock [Line Items]
Common stock, issued (in shares)	279,329					279,329
Class B Units | Advisor
Class of Stock [Line Items]
Conversion of stock (shares)						524,956
Class B Units | Property Management Transactions | Advisor
Class of Stock [Line Items]
Conversion of stock (shares)	524,956
OP Units | Advisor
Class of Stock [Line Items]
Conversion of stock (shares)						524,956
Shares issued in conversion (shares)						524,956
OP Units | Property Management Transactions | Advisor
Class of Stock [Line Items]
Conversion of stock (shares)	524,956
Shares issued in conversion (shares)	524,956
Common Stock
Class of Stock [Line Items]
Common stock issued through Distribution Reinvestment Plan (in shares)						315,383
Common stock, fair value (usd per share)	$ 14.59					$ 14.59
Common Stock | Distribution Reinvestment Plan
Class of Stock [Line Items]
Common stock, fair value (usd per share)	$ 23.75					$ 23.75
Common Stock | Advisor
Class of Stock [Line Items]
Shares issued in conversion (shares)						524,956
Common Stock | Property Management Transactions | Advisor
Class of Stock [Line Items]
Shares issued in conversion (shares)	524,956
Common Stock
Class of Stock [Line Items]
Common stock, outstanding (in shares)	39,617,676					39,617,676		38,493,430

XML

Fair Value Measurements - Fair Value, by Balance Sheet Grouping (Details) - Mortgage and promissory notes payable - Level 3 $ in Thousands	Mar. 31, 2017 USD ($)
Carrying Amount
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Mortgage and promissory notes payable	$ 1,418,916
Fair Value
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Mortgage and promissory notes payable	$ 1,419,081

XML

Commitments and Contingencies - Narrative (Details) - The Barcelo Acquisition	Mar. 31, 2017 USD ($)
Other Commitments [Line Items]
Business combination, contingent consideration arrangements, minimum	$ 4,100,000.0
Business combination, contingent consideration arrangements, maximum	4,600,000.00
Contingent consideration payable	$ 4,600,000

XML

Related Party Transactions and Arrangements - Narrative (Details) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Related Party Transactions [Abstract]
Due to related parties	$ 2,417	$ 2,879

XML

Related Party Transactions and Arrangements - Fees Paid in Connection with the Offering (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Related Party Transaction [Line Items]
Due to related parties	$ 2,417		$ 2,879
Liability for initial public offering costs (percent)	2.00%
Offering and related costs in excess of gross proceeds form the offering limit	$ 5,800
Participating Broker Dealers
Related Party Transaction [Line Items]
Sales commissions earned by related party (percent)	7.50%
Brokerage fees earned by related party (percent)	1.00%
Dealer Manager
Related Party Transaction [Line Items]
Sales commissions earned by related party (percent)	7.00%
Gross proceeds from the sales of common stock, before reallowance (percent)	3.00%
Brokerage fees earned by related party (percent)	2.50%
Commissions and Brokerage Fees | Dealer Manager
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 0	$ 71
Due to related parties	0		0
Compensation and Reimbursement for Services | Advisor and Affiliates
Related Party Transaction [Line Items]
Fees incurred with the offering	0	$ 0
Due to related parties	$ 447		$ 447

XML

Related Party Transactions and Arrangements - Fees Paid in Connection With the Operations of the Company (Details) - USD ($)	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Jan. 07, 2014
Related Party Transaction [Line Items]
Quarterly asset management fee earned by related party, percent of benchmark	0.0625%
Quarterly asset management fee earned (percent)	0.1875%
Share price (in dollars per share)	$ 22.50
Due to related parties	$ 2,417,000		$ 2,879,000
Common Stock
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 14.59			$ 25
Class B Units
Related Party Transaction [Line Items]
Cumulative capital investment return (percent)	6.00%
Fees incurred with the offering	$ 26,000	$ 222,000
Due to related parties	1,000		65,000
Advisor
Related Party Transaction [Line Items]
Maximum monthly asset management fee payable		500,000
Fees incurred with the offering	4,581,000	6,395,000
Due to related parties	4,000		8,000
Advisor | Asset management fees
Related Party Transaction [Line Items]
Fees incurred with the offering	4,581,000	4,457,000
Due to related parties	4,000		8,000
Advisor | Acquisition fees
Related Party Transaction [Line Items]
Fees incurred with the offering	0	1,624,000
Due to related parties	0		0
Advisor | Acquisition cost reimbursements
Related Party Transaction [Line Items]
Fees incurred with the offering	0	108,000
Due to related parties	0		0
Advisor | Financing coordination fees
Related Party Transaction [Line Items]
Fees incurred with the offering	0	206,000
Due to related parties	0		0
Advisor | Reimbursement for Administrative Services and Personnel Costs
Related Party Transaction [Line Items]
Fees incurred with the offering	869,000	579,000
Due to related parties	$ 179,000		522,000
Advisor | Common Stock
Related Party Transaction [Line Items]
Stock issued for service (shares)	25,454
Shares issued in conversion (shares)	524,956
Advisor | Class B Units
Related Party Transaction [Line Items]
Stock issued for service (shares)	524,956
Conversion of stock (shares)	524,956
Advisor | OP Units
Related Party Transaction [Line Items]
Conversion of stock (shares)	524,956
Shares issued in conversion (shares)	524,956
Property Manager
Related Party Transaction [Line Items]
Cumulative capital investment return (percent)	8.50%
Fees incurred with the offering	$ 6,326,000	5,668,000
Due to related parties	$ 1,789,000		1,838,000
Property management fee (percent)	4.00%
Annual incentive fee (percent)	15.00%
Property Manager | Incentive Fees
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 100,000	100,000
Property Manager | Total management fees and reimbursable expenses incurred from Crestline
Related Party Transaction [Line Items]
Fees incurred with the offering	4,291,000	3,722,000
Due to related parties	1,774,000		1,306,000
Property Manager | Total management fees incurred from Former Property Manager
Related Party Transaction [Line Items]
Fees incurred with the offering	2,035,000	$ 1,946,000
Due to related parties	$ 15,000		$ 532,000
ARC Realty Finance Advisors, LLC
Related Party Transaction [Line Items]
Real estate acquisition fee	1.50%
Real estate acquisition fee reimbursement maximum (percent)	0.10%
Annual asset management fee lower of cost of assets or net asset value (percent)	0.75%
Reimbursement costs for administrative services maximum of operating expenses (percent)	2.00%
Reimbursement costs for administrative services maximum of net income (percent)	25.00%

XML

Related Party Transactions and Arrangements - Fees Paid in Connection with the Liquidation or Listing (Details) - USD ($)		3 Months Ended
	Oct. 14, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Related Party Transaction [Line Items]
Due to related parties		$ 2,417,000		$ 2,879,000
ARC Realty Finance Advisors, LLC
Related Party Transaction [Line Items]
Subordinated performance fee return threshold (percent)		6.00%
Subordinated participation in asset sale fee (percent)		15.00%
Subordinated participation in asset sale fee maximum (percent)		10.00%
Transaction termination or nonrenewal of advisory agreement fee (percent)		15.00%
Termination or nonrenewal of advisory agreement fee threshold (percent)		6.00%
ARC Realty Finance Advisors, LLC | Subordinated Performance Fee
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 0	$ 0
Due to related parties		$ 0	0
ARC Realty Finance Advisors, LLC | Brokerage Commission Fees
Related Party Transaction [Line Items]
Real estate commission earned by related party (percent)		2.00%
ARC Realty Finance Advisors, LLC | Brokerage Fee Commission for Third Party
Related Party Transaction [Line Items]
Real estate commission earned by related party (percent)		50.00%
ARC Realty Finance Advisors, LLC | Real Estate Commissions
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 300,000	$ 0	0
Due to related parties		$ 0	0
Real estate commission earned by related party (percent)		6.00%
ARC Realty Finance Advisors, LLC | Subordinated Incentive Listing Distribution
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 0	0
Due to related parties		0	0
ARC Realty Finance Advisors, LLC | OP Distribution
Related Party Transaction [Line Items]
Fees incurred with the offering		0	0
Due to related parties		$ 0	0
Special Limited Partner
Related Party Transaction [Line Items]
Subordinated incentive listing distribution (percent)		15.00%
Special Limited Partner | Subordinated Participation Fee
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 0	0
Due to related parties		$ 0	$ 0
Special Limited Partner | Annual Targeted Investor Return
Related Party Transaction [Line Items]
Cumulative capital investment return (percent)		6.00%

XML

Economic Dependency (Details)		3 Months Ended
	Mar. 31, 2017	Mar. 31, 2017
Economic Dependency [Abstract]
TSA period of automatic renewal	90 days	90 days

XML

Subsequent Events (Details)	Apr. 28, 2017 USD ($) property extension	Apr. 27, 2017 USD ($) extension	Apr. 27, 2017 hotel	Apr. 27, 2017 property	Mar. 31, 2017 hotel	Jul. 01, 2016 USD ($)	Feb. 11, 2016 USD ($)	Oct. 15, 2015 USD ($)
Subsequent Event [Line Items]
Number of encumbered properties (property) | hotel					141
Secured Debt | Deutsche Bank Term Loan
Subsequent Event [Line Items]
Amount of loan						$ 235,500,000.0	$ 293,400,000.0	$ 450,000,000
Subsequent Event
Subsequent Event [Line Items]
87-Pack PIP Reserve	$ 30,000,000
Minimum required net worth	250,000,000.0
Subsequent Event | Assumed Grace Indebtedness
Subsequent Event [Line Items]
Repayments of secured debt	895,400,000
Subsequent Event | Secured Debt | HIT REIT Term Loan
Subsequent Event [Line Items]
Amount of loan		$ 310,000,000.0
Number of encumbered properties (property) | property				28
Number of unencumbered properties (property) | property				1
Reserve deposits		$ 30,000,000
Number of extension rights | extension		3
Extension right (years)		1 year
Amount restricted from paydown		$ 99,073,180
Minimum required net worth		$ 250,000,000.0
Subsequent Event | Secured Debt | HIT REIT Term Loan | London Interbank Offered Rate (LIBOR)
Subsequent Event [Line Items]
Basis spread on variable rate		3.00%
Subsequent Event | Secured Debt | HIT REIT Term Loan | London Interbank Offered Rate (LIBOR) | Minimum
Subsequent Event [Line Items]
Basis spread on variable rate		3.00%
Subsequent Event | Secured Debt | HIT REIT Term Loan | London Interbank Offered Rate (LIBOR) | Maximum
Subsequent Event [Line Items]
Basis spread on variable rate		4.00%
Subsequent Event | Secured Debt | Deutsche Bank Term Loan
Subsequent Event [Line Items]
Repayments of secured debt		$ 235,500,000
Subsequent Event | Secured Debt | HIT REIT 87-Pack Loans
Subsequent Event [Line Items]
Amount of loan	915,000,000
Reserve deposits	$ 1,000,000
Number of extension rights | extension	3
Extension right (years)	1 year
Subsequent Event | Secured Debt | HIT REIT 87-Pack Loans | London Interbank Offered Rate (LIBOR) | Maximum
Subsequent Event [Line Items]
Basis spread on variable rate	4.00%
Subsequent Event | Secured Debt | HIT REIT 87-Pack Mortgage Loan
Subsequent Event [Line Items]
Amount of loan	$ 805,000,000.0
Number of encumbered properties (property) | property	87
Number of extension rights | extension	3
Extension right (years)	1 year
Subsequent Event | Secured Debt | HIT REIT 87-Pack Mortgage Loan | London Interbank Offered Rate (LIBOR)
Subsequent Event [Line Items]
Basis spread on variable rate	2.56%
Subsequent Event | Secured Debt | HIT REIT 87-Pack Mezzanine Loan
Subsequent Event [Line Items]
Amount of loan	$ 110,000,000.0
Number of extension rights | extension	3
Extension right (years)	1 year
Subsequent Event | Secured Debt | HIT REIT 87-Pack Mezzanine Loan | London Interbank Offered Rate (LIBOR)
Subsequent Event [Line Items]
Basis spread on variable rate	6.50%
Subsequent Event | April Acquisition
Subsequent Event [Line Items]
Business combination purchase price		66,800,000
Number of encumbered properties (property) | hotel			7
Subsequent Event | April Acquisition | Secured Debt | HIT REIT Term Loan
Subsequent Event [Line Items]
Business combination purchase price		33,400,000
Number of encumbered properties (property)			7	7
Subsequent Event | SWN Acquisitions | Secured Debt | HIT REIT Term Loan
Subsequent Event [Line Items]
Number of encumbered properties (property) | property				20
Subsequent Event | The Barcelo Acquisition | Secured Debt | HIT REIT Term Loan
Subsequent Event [Line Items]
Payment of contingent consideration payable		$ 4,600,000