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 September 30, 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 November 1, 2017 was 39,618,833.

TABLE OF CONTENTS

	Page
PART I
Item 1. Financial Statements	1
Consolidated Balance Sheets as of September 30, 2017 (Unaudited) and December 31, 2016	1
Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three Months Ended September 30, 2017 and the Three Months Ended September 30, 2016 and for the Nine Months Ended September 30, 2017 and the Nine Months Ended September 30, 2016	3
Consolidated Statement of Changes in Equity (Unaudited) for the Nine Months Ended September 30, 2017	4
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2017 and for the Nine Months Ended September 30, 2016	5
Notes to Consolidated Financial Statements (Unaudited)	7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	40
Item 3. Quantitative and Qualitative Disclosures About Market Risk	59
Item 4. Controls and Procedures	59
PART II
Item 1. Legal Proceedings	60
Item 1A. Risk Factors	60
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3. Defaults Upon Senior Securities	60
Item 4. Mine Safety Disclosures	60
Item 5. Other Information	60
Item 6. Exhibits	61
Signatures	62

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)

	September 30, 2017			December 31, 2016
	(unaudited)
ASSETS
Real estate investments:
Land	$	344,365		$	339,819
Buildings and improvements	1,906,168			1,838,594
Furniture, fixtures and equipment	221,553			212,994
Total real estate investments	2,472,086			2,391,407
Less: accumulated depreciation and amortization	(234,131		)	(169,486		)
Total real estate investments, net	2,237,955			2,221,921
Cash and cash equivalents	70,310			42,787
Assets held for sale	17,030			—
Acquisition deposits	—			7,500
Restricted cash	68,090			35,050
Investments in unconsolidated entities	3,628			3,490
Below-market lease asset, net	9,528			9,827
Prepaid expenses and other assets	35,255			32,836
Goodwill	15,282			—
Total Assets	$	2,457,078		$	2,353,411
LIABILITIES, NON-CONTROLLING INTEREST AND EQUITY
Mortgage notes payable, net	1,492,866			1,410,925
Promissory notes payable, net	2,000			23,380
Mandatorily redeemable preferred securities, net	241,620			288,265
Accounts payable and accrued expenses	70,311			68,519
Due to related parties	—			2,879
Total Liabilities	$	1,806,797		$	1,793,968
Commitments and Contingencies
Contingently Redeemable Class C Units in operating partnership; 9,387,935 units issued and outstanding ($138,472 liquidation preference)	$	125,704		$	—
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, 39,618,833 and 38,493,430 shares issued and outstanding, respectively	396			385
Additional paid-in capital	872,400			843,149
Deficit	(350,858		)	(286,852		)
Total equity of Hospitality Investors Trust, Inc. stockholders	521,938			556,682
Non-controlling interest - consolidated variable interest entity	2,639			2,761
Total Stockholders' Equity	$	524,577		$	559,443
Total Liabilities, Contingently Redeemable Class C Units, Non-controlling Interest and Equity	$	2,457,078		$	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 September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Revenues
Rooms	$	159,423		$	153,182		$	453,073		$	434,455
Food and beverage	4,607			4,850			15,174			15,422
Other	3,211			3,426			9,709			9,964
Total revenue	167,241			161,458			477,956			459,841
Operating expenses
Rooms	39,385			36,958			112,218			104,984
Food and beverage	3,981			4,089			12,206			12,226
Management fees	4,606			11,030			19,649			32,061
Other property-level operating expenses	64,787			58,768			185,210			175,492
Acquisition and transaction related costs	—			(7		)	498			25,270
General and administrative	4,389			5,128			14,230			12,623
Depreciation and amortization	26,464			25,788			78,519			74,912
Impairment of goodwill and long-lived assets	5,396			—			22,838			2,399
Rent	1,625			1,945			4,906			4,993
Total operating expenses	150,633			143,699			450,274			444,960
Operating income	$	16,608		$	17,759		$	27,682		$	14,881
Interest expense	(24,728		)	(23,087		)	(74,019		)	(69,033		)
Other income (expense)	15			(542		)	52			(1,396		)
Equity in earnings of unconsolidated entities	231			286			381			407
Total other expenses, net	(24,482		)	(23,343		)	(73,586		)	(70,022		)
Net loss before taxes	$	(7,874	)	$	(5,584	)	$	(45,904	)	$	(55,141	)
Income taxes	1,105			948			1,538			2,246
Net loss and comprehensive loss	$	(8,979	)	$	(6,532	)	$	(47,442	)	$	(57,387	)
Less: Net income attributable to non-controlling interest	154			152			237			278
Net loss before dividends and accretion	$	(9,133	)	$	(6,684	)	$	(47,679	)	$	(57,665	)
Deemed dividend related to beneficial conversion feature of Class C Units	—			—			(4,535		)	—
Dividends on Class C Units (cash and PIK)	(4,369		)	—			(8,681		)	—
Accretion of Class C Units	(556		)	—			(1,097		)	—
Net loss attributable to common stockholders	$	(14,058	)	$	(6,684	)	$	(61,992	)	$	(57,665	)
Basic and Diluted net loss attributable to common stockholders per common share	$	(0.35	)	$	(0.17	)	$	(1.58	)	$	(1.49	)
Basic and Diluted weighted average common shares outstanding	39,611,261			38,788,041			39,346,904			38,712,378

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	809,799	8		11,978		—			11,986			—			11,986
Net loss before dividends and accretion	—	—		—		(47,679		)	(47,679		)	—			(47,679		)
Net income attributable to non-controlling interest	—	—		—		—			—			237			237
Dividends paid or declared	315,604	3		6,776		(2,014		)	4,765			(359		)	4,406
Deemed dividend related to beneficial conversion feature of Class C Units	—	—		4,535		(4,535		)	—			—			—
Cash distributions on Class C Units	—	—		—		(5,208		)	(5,208		)	—			(5,208		)
Accretion on Class C Units	—	—		—		(1,097		)	(1,097		)	—			(1,097		)
PIK distributions on Class C Units	—	—		—		(3,473		)	(3,473		)	—			(3,473		)
Share-based payments	—	—		140		—			140			—			140
Waiver of obligation from Former Advisor	—	—		5,822		—			5,822			—			5,822
Balance, September 30, 2017	39,618,833	$	396	$	872,400	$	(350,858	)	$	521,938		$	2,639		$	524,577

The accompanying notes are an integral part of these statements.

4

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Cash flows from operating activities:
Net loss	$	(47,442	)	$	(57,387	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	78,519			74,912
Impairment of goodwill and long-lived assets	22,838			2,399
Amortization and write-off of deferred financing costs	8,194			8,152
Change in fair value of contingent consideration	—			1,454
Loss of acquisition deposits	—			22,000
Other adjustments, net	284			249
Changes in assets and liabilities:
Prepaid expenses and other assets	(2,751		)	(4,285		)
Restricted cash	(3,836		)	(6,890		)
Due to related parties	(2,879		)	2,479
Accounts payable and accrued expenses	17,401			8,406
Net cash provided by operating activities	$	70,328		$	51,489
Cash flows from investing activities:
Acquisition of hotel assets, net of cash received	(60,028		)	(69,892		)
Real estate investment improvements and purchases of property and equipment	(56,995		)	(69,828		)
Fees related to Property Management Transactions	(12,000		)	—
Change in restricted cash related to real estate improvements	(29,241		)	40,602
Other adjustments, net	1,044			—
Net cash used in investing activities	$	(157,220	)	$	(99,118	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	—			678
Proceeds from Class C Units	135,000			—
Payment of Class C Units issuance costs	(13,866		)	—
Payment of offering costs	—			(73		)
Dividends/Distributions paid	(5,567		)	(11,500		)
Mandatorily redeemable preferred securities redemptions	(47,275		)	(2,270		)
Proceeds from mortgage notes payable	1,101,000			70,384
Repayment of Contingent Consideration	(4,620		)	—
Deferred financing fees	(19,672		)	(721		)
Repayments of promissory and mortgage notes payable	(1,030,622		)	(5,000		)
Restricted cash for debt service	37			37
Net cash provided by financing activities	$	114,415		$	51,535
Net change in cash and cash equivalents	27,523			3,906
Cash and cash equivalents, beginning of period	42,787			46,829
Cash and cash equivalents, end of period	$	70,310		$	50,735
Supplemental disclosure of cash flow information:
Interest paid	$	66,550		$	62,854
Income tax paid	$	1,301		$	1,163
Non-cash investing and financing activities:
Deemed dividend related to beneficial conversion feature of Class C Units	$	(4,535	)	$	—

5

HOSPITALITY INVESTORS TRUST, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
Accretion of Class C Units	$	(1,097	)	$	—
PIK Accrual on Class C Units	$	(3,473	)	$	—
Waiver of obligation from Former Advisor	$	(5,822	)	$	—
Real estate investment improvements and purchases of property and equipment in accounts payable and accrued expenses	$	6,571		$	8,950
Class B Units in operating partnership converted and redeemed for Common Stock	$	7,659		$	—
Note payable to Former Property Manager	$	2,000		$	—
Common stock issued to Former Property Manager	$	4,076		$	—
Seller financed acquisition deposit	$	—		$	7,500
Seller financed acquisition	$	—		$	20,000
Dividends declared but not paid	$	—		$	4,533
Common stock issued through distribution reinvestment plan	$	—		$	9,468

The accompanying notes are an integral part of these statements.

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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 September 30, 2017, the Company had acquired or had an interest in a total of 148 hotels, including four hotels that were classified as held for sale (See Note 17 - Assets Held For Sale) with a total of 17,846 guest rooms located in 33 states. As of September 30, 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.

As of September 30, 2017, 80 of the hotel assets the Company has acquired were managed by Crestline and 68 of the hotel assets the Company has acquired were managed by other property managers. As of September 30, 2017, the Company’s other property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), InnVentures IVI, LP (2 hotels), McKibbon Hotel Management, Inc. (21 hotels) and Larry Blumberg & Associates, Inc. (4 hotels).

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 initial 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 its liabilities, divided by 36,636,016 shares of common stock outstanding on a fully diluted basis as of March 31, 2016. On June 19, 2017, the Company's board of directors approved an updated Estimated Per-Share NAV (the "2017 NAV") equal to $13.20 based on an estimated fair value of the Company’s assets less the estimated fair value of the Company’s liabilities, divided by 39,617,676 shares of common stock outstanding on a fully diluted basis as of March 31, 2017. 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.

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 the OP 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.

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"). As of September 30, 2017, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $138.5 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”), an affiliate of the Brookfield Investor, is the special general partner of the OP, with certain non-economic rights that apply if the OP fails to redeem the Class C Units when required to do so, including the ability to commence selling the OP's assets until the Class C Units have been fully redeemed.

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 the foregoing 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.

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, prior to the Initial Closing, 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,

8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 the Company's third-party hotel managers. The Company now conducts its operations independently of the Former Advisor and its affiliates.

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, as well as the Redeemable Preferred Share and the Class C Units, including conversion rights, distribution rights, approval rights and redemption rights associated therewith.

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 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

9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 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 amount 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 amount of a property, an impairment loss will be recorded to the extent that the carrying amount exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income. An aggregate impairment loss on long-lived assets of $1.4 million was recorded on two hotels during the quarter endedJune 30, 2017 and an impairment loss of $2.4 million was recorded on one other hotel during the quarter endedJune 30, 2016 (See Note 16 - Impairments). The Company also recognized an impairment loss on the sale of three of the four hotels classified as assets held for sale as of September 30, 2017, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

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 and the Company's board of directors have 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. Any such adjustment to the carrying amount is recorded as an impairment loss. The Company had four hotels that qualified to be treated as an asset held for sale as of September 30, 2017. The Company recognized an impairment loss on the sale of three of the four hotels, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

10

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Goodwill

The Company allocates goodwill to each reporting unit. For the Company’s purposes, each of its wholly-owned hotels is considered a reporting unit. The Company tests goodwill for impairment at least annually, or upon the occurrence of any "triggering events" if sooner, and has elected to test for goodwill impairment during the quarter ended June 30 of each year. During the second quarter endedJune 30, 2017, the Company adopted ASU 2017-04, Intangibles – Goodwill and Other, which simplified the measurement of goodwill by eliminating Step 2 from the goodwill impairment test in the event that there is evidence of an impairment based on any "triggering events." The Company chose to adopt ASU 2017-04 in the second quarter endedJune 30, 2017, as this was the first time it was required to test goodwill for impairment.

Upon the occurrence of any "triggering events," the Company is required to compare the fair value of each reporting unit to which goodwill has been allocated, to the carrying amount of such reporting unit including the allocation of goodwill. As required by Accounting Standards Codification section 350 - Intangibles - Goodwill and Other (ASC 350), as amended by ASU 2017-04, if the carrying amount of a reporting unit exceeds its fair value, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of the reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

During the three months endedMarch 31, 2017, the Company recognized $31.6 million as goodwill (See Note 4 - Business Combinations). During the three months endedJune 30, 2017, the Company recorded an impairment of its goodwill of $16.1 million (See Note 16 - Impairments).

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.

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 elected and 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 taxes and federal income and excise taxes

11

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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, unvested restricted shares of common stock ("restricted shares") and unvested restricted share units in respect of shares of common stock ("RSUs"), except when doing so would be anti-dilutive. For distributions payable with respect to April 1, 2016 through January 13, 2017 (the date distributions to stockholders were suspended), the Company has paid cumulative distributions of 2,047,877 shares of common stock and has adjusted at each reporting date, retroactively for all periods presented its computation of loss per share in order to reflect this as a change in capital structure (See Note 10 - Common Stock).

The Company currently has outstanding restricted shares whose holders are entitled to participate in dividends when and if paid on shares of common stock. Holders of RSUs are credited with dividend or other distribution equivalents when and if paid on shares of common stock. These dividends or other distribution equivalents will be regarded as having been reinvested in RSUs. Holders of RSUs are not deemed to be entitled to participate in dividends for accounting purposes. To the extent the Company were to have distributions in the future, it would be required to calculate earnings per share using the two-class method, whereby earnings or losses are reduced by distributed earnings as well as any available undistributed earnings allocable to holders of restricted shares.

Fair Value Measurements

In accordance with Accounting Standards Codification section 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.

12

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

• 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.

Class C Units

The Company initially measured the Class C Units at fair value net of issuance costs. The Company is required to accrete the carrying value of the Class C Units to the liquidation preference using the effective interest method over the five year period prior to the holder's redemption option becoming exercisable. However, if it becomes probable that the Class C Units will become redeemable prior to such date, the Company will adjust the carrying value of the Class C Units to the maximum liquidation preference.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

Advertising Costs

The Company expenses advertising costs for hotel operations as incurred. These costs were $5.0 million for the three months ended September 30, 2017, and $4.6 million for the three months ended September 30, 2016. Advertising costs were $14.2 million for the nine months ended September 30, 2017 and $13.2 million for the nine months ended September 30, 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):

	September 30, 2017			December 31, 2016
Trade receivables	$	7,609		$	6,238
Allowance for doubtful accounts	(377		)	(434		)
Trade receivables, net of allowance	$	7,232		$	5,804

Reportable Segments

13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 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, and therefore each property is considered a reporting unit. Each of the Company's reporting units are also considered to be operating segments, but none of these individual operating segments represents a reportable segment as they meet the criteria in GAAP to aggregate all properties into one 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 September 30, 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 and nine months ended September 30, 2017, was immaterial to the consolidated financial statements.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

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. Based on the Company's assessment of this standard, it will not materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales; however, it may allow for earlier gain recognition for future asset sale transactions pursuant to which the Company has continuing involvement with the asset. The Company anticipates adopting this standard on January 1, 2018 and is evaluating new disclosure requirements. Upon adoption, the Company expects to implement these standards using a modified retrospective approach with a cumulative effect recognized with no restatements of prior period amounts.

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.

14

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 Company adopted ASU 2016-15 in the quarter ended June 30, 2017. The adoption of this ASU did not 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 May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments to this update are effective for the Company for fiscal years beginning after December 15, 2017, and early adoption is permitted. ASU 2017-09 is required to be adopted prospectively to an award modified on or after the adoption date. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

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 on the Consolidated Balance Sheets, and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company measured the Class C Units issued 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 as of March 31, 2017 (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

15

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Class C Units issued) is less than the fair value of the Company’s common stock of $14.59 on such date (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.

As of September 30, 2017, the Class C Units are reflected on the Consolidated Balance Sheets at $125.7 million. The value of the Class C Units as of September 30, 2017, is derived by reducing the $135.0 million in gross proceeds by the $13.8 million in costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield at the Initial Closing in the form of expense reimbursements and a commitment fee, and increased by $3.5 million in distributions payable to holders of Class C Units in the form of additional Class C Units ("PIK Distributions") and $1.1 million in the accretion of the carrying value to the liquidation preference through September 30, 2017.

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 (as defined in Note 8 below) 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 Company's board of directors for election by the 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

16

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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.

If the OP fails to redeem Class C Units when required to do so, beginning three months after such failure and 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 (as defined in the Company's charter).

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 with respect to the Redeemable Preferred Share (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 amendment and restatement of the OP's existing agreement of limited partnership ( 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 the A&R LPA, 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 if one were to occur, 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 ("PIK Distributions"). If the Company fails 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.

17

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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

If the OP consummates any 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”) prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units will be 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

In the event of 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 REIT 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.

18

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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

If the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure 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, if the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure and until all Class C Units requested to be redeemed have been redeemed:

• 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 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.

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);

19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 to 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 then 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") were 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%;

20

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

• 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 was 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 delivered 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 continued to do so through June 30, 2017. Effective as of July 1, 2017, the Company and Crestline entered into a new annually renewable joint occupancy agreement which replaces the Facilities Use Agreement contemplated pursuant to the Framework Agreement and the Company continued its occupancy of the space.

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 would receive their assistance

21

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 no later than June 29, 2017. As compensation for the foregoing services, the Former Advisor received a one-time fee of $225,000 (which was paid $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline received a fee of $25,000 per month through and including June 2017. The Former Advisor and Crestline were also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with the Former Advisor has expired. Effective as of July 1, 2017, the transition services agreement with Crestline was terminated and the Company entered into a new annually renewable shared services agreement with Crestline pursuant to which Crestline provides the Company with accounting, tax related, treasury, information technology and other administrative services.

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.

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 had 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. For any hotel sold in this manner, the Reinstatement Agreement terminated with respect to such hotel and the purchase price was reduced by the amount allocated to such hotel. 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

22

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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. Concurrent with the Company’s entry into the Summit Amendment, the Company entered into an amendment to the Summit Loan (the “Loan Amendment”) and the Summit Sellers 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, through the OP, completed the acquisition of seven hotels in the Second Summit Closing from the Summit Sellers ( the "April Acquisition") pursuant to the Reinstatement Agreement for an aggregate purchase price of $66.8 million. The acquisition was immaterial to the consolidated financial statements. Additionally, during the quarter endedJune 30, 2017, the Summit Sellers informed the Company that the eighth hotel was sold by the Summit Sellers to a third party, in connection with which Company’s right and obligation to purchase this hotel was terminated in accordance with the terms of the Reinstatement Agreement.

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 Accounting Standard Codifications 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. During the three months endedJune 30, 2017, the Company recorded an impairment of its goodwill of $16.1 million (See Note 16 - Impairments).

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):

23

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

	Minimum Rental Commitments		Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the three months ending December 31, 2017	$	1,303	$	100
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	$	104,026	$	9,528

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 and nine months ended September 30, 2017 and September 30, 2016, amortization of below-market lease intangibles, net, to rent expense was $0.1 million and $0.1 million, and $0.3 million and $0.3 million respectively. Rent expense for the three months endedSeptember 30, 2017 and September 30, 2016 and the nine months ended September 30, 2017 and September 30, 2016, was $1.5 million and $1.8 million and $4.6 million and $4.7 million, respectively.

Note 6 - Mortgage Notes Payable

The Company’s mortgage notes payable as of September 30, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

	Outstanding Mortgage Notes Payable
Encumbered Properties	September 30, 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
87-Pack Mortgage Loan - 87 properties in Grace Portfolio	805,000		793,647		(1	)	One-month LIBOR plus 2.56%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
87-Pack Mezzanine Loan - 87 properties in Grace Portfolio	110,000		101,794		(1	)	One-month LIBOR plus 6.50%	Interest Only, Principal paid at Maturity	May 2019, subject to three, 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
Refinanced Term Loan - 27 properties in Summit and Noble Portfolios and one additional property	310,000		235,484		(1	)	One-month LIBOR plus 3.00%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
Total Mortgage Notes Payable	$	1,513,000	$	1,418,925
Less: Deferred Financing Fees, Net	$	20,134	$	8,000
Total Mortgage Notes Payable, Net	$	1,492,866	$	1,410,925

(1) These loans were refinanced in April 2017 on different terms with respect to interest rate, principal amount and maturity.

24

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Interest expense related to the Company's mortgage notes payable for the three months ended September 30, 2017 and for the three months ended September 30, 2016, was $16.8 million and $15.2 million, respectively. Interest expense related to the Company's mortgage notes payable for the nine months ended September 30, 2017 and the nine months ended September 30, 2016, was $49.8 million and $44.7 million.

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.

87-Pack Loans

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 carried an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.31%, and the Assumed Grace Mezzanine Loan carried an interest rate of LIBOR plus 4.77%, for a combined weighted average interest rate of LIBOR plus 3.47%.

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 a fully extended 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%, for a combined weighted average interest rate of LIBOR plus 3.03%. 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 Mortgage Loan borrowers 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 (as defined below). 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”).

25

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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). As of September 30, 2017, the Company was in compliance with this financial covenant.

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 September 30, 2017, the Company was in compliance with these financial covenants.

Refinanced 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"). Draws under the SN Term Loan were used to finance approximately $235.5 million of the approximately $366 million purchase price with respect to a total of 20 of the Company’s hotels, including the hotels acquired in the First Summit Closing and the Third Summit Closing. On February 11, 2016, the SN Term Loan was amended 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. Upon such expiration, no additional amounts were 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.

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; 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 $99.1 million pay-down 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, and 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.

26

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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). As of September 30, 2017, the Company was in compliance with this financial covenant.

Note 7 - Promissory Notes Payable

The Company’s promissory notes payable as of September 30, 2017 and December 31, 2016 were as follows (in thousands):

	Outstanding Promissory Notes Payable
Notes Payable	September 30, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	—	$	23,405	14.0	%
Note Payable to Former Property Manager	$	2,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	2,000	$	23,380

Interest expense related to the Company's promissory notes payable for the three months ended September 30, 2017 was zero and for the three months ended September 30, 2016 was $0.8 million. Interest expense related to the Company's notes payable for the nine months ended September 30, 2017 and the nine months ended September 30, 2016, was $0.9 million and $2.2 million, respectively.

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 was 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 would become 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 the Summit Sellers entered into the Additional Loan Agreement pursuant to which the Summit Sellers agreed to loan the Company an additional $3.0 million as consideration for the Summit Amendment described in Note 4. The maturity date of the Additional Loan under the Additional Loan Agreement was July 31, 2017, however, if the sale of the seven hotels to be sold pursuant to the Reinstatement Agreement on April 27, 2017 was completed on that date, the entire principal amount of the Additional Loan would be deemed paid in full and the interest accrued thereon would 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

27

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

under the Reinstatement Agreement, and as a result, the Additional Loan was deemed paid in full (See Note 4 - Business Combinations).

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).

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 87-Pack Loan (plus eight additional otherwise unencumbered hotels) and the pool of hotels encumbered by the Refinanced Additional Grace Mortgage 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 are entitled to 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 September 30, 2017, 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):

	September 30, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,553	$	55,489
Contingent consideration from Barceló Portfolio (See Note 13 - Commitments and Contingencies)	—		4,619
Hotel accrued salaries and related liabilities	13,758		8,411
Total	$	70,311	$	68,519

Note 10 - Common Stock

28

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

The Company had 39,618,833 shares and 38,493,430 shares of common stock outstanding as of September 30, 2017 and December 31, 2016, respectively. The shares of common stock outstanding include shares issued as distributions through March 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.

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 and terminated in accordance with its terms in January 2017.

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 any distributions for subsequent periods were 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 initial 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 initial 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 the Estimated Per-Share NAV at that time. 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

The Company’s board of directors adopted a share repurchase program (“SRP”) in connection with the IPO 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. 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.

29

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Commencing with distributions paid with respect to April 2016, the Company 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.

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

30

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Note 11 - Share-Based Payments

The Company has adopted an employee and director incentive restricted share plan (as amended and/or restated, the “RSP”), which provides it with the ability to grant awards of restricted shares and, following an amendment and restatement in connection with the Initial Closing, RSUs to the Company’s directors, officers and employees, as well as the directors and employees of entities that provide services to the Company. The total number of shares of common stock that may be granted under the RSP may not exceed 5% of the authorized shares of common stock at any time and in any event may not exceed 4,000,000 shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).

Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient’s employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash or stock distributions when and if paid prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares. The fair value of the restricted shares is expensed over the applicable vesting period. The Company recognizes the impact of forfeited restricted share awards as they occur.

RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and/or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of common stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are credited with dividend or other distribution equivalents that are regarded as having been reinvested in RSUs which are subject to the same restrictions as the underlying RSUs. The fair value of the RSUs is expensed over the applicable vesting period. The Company recognizes the impact of forfeited RSUs as they occur.

Restricted Share Awards

A summary of the Company's restricted share awards for the nine months ended September 30, 2017 is presented below.

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	11,387	$	22.12	$	252
Granted	7,576	$	14.59	$	111
Vested	4,862	$	22.21	$	108
Forfeitures	6,525	$	22.06	$	144
Non-vested September 30, 2017	7,576	$	14.59	$	111

Prior to the Initial Closing, the Company made annual restricted share awards to its independent directors that vested annually over a five-year period following the date of grant, subject to continued service. In connection with the Initial Closing, the Company implemented a new director compensation program. Following the Initial Closing, restricted share awards are generally made to an affiliate of the Brookfield Investor in respect of the Redeemable Preferred Directors’ service on the board of directors and vest no later than the date of the next annual meeting of the board of directors following the date of grant, subject to the continued service of the applicable Redeemable Preferred Director. As of September 30, 2017, the Company anticipates that all unvested restricted share awards will vest in accordance with their terms.

The compensation expense related to restricted shares for the three months ended September 30, 2017 was less than $0.1 million, and compensation expense related to the nine months ended September 30, 2017 was $0.1 million. As of September 30, 2017, there was less than $0.1 million of unrecognized compensation expense remaining.

RSU Awards

A summary of the Company's RSU awards for the nine months ended September 30, 2017 is presented below:

31

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	—	$	—	$	—
Granted	100,398	$	15.08	$	1,514
Vested	—	$	—	$	—
Forfeited	—	$	—	$	—
Non-vested September 30, 2017	100,398	$	15.08	$	1,514

RSU awards to the Company’s executive officers and other employees generally vest annually over a four-year vesting period following the date of grant, subject to continued service. RSU awards to directors other than Redeemable Preferred Directors vest no later than the date of the next annual meeting of the board of directors following the date of grant, subject to the continued service of the applicable director. In addition, during the three months ended September 30, 2017, certain RSU awards to directors other than Redeemable Preferred Directors were issued in connection with the simultaneous forfeiture of an equal number of restricted shares. These RSU awards have the same vesting terms as the restricted shares which were forfeited (i.e., annually over a five-year period following the date of grant). Vested RSUs may only be settled in shares of common stock and such settlement generally will be on the earliest of (i) in the calendar year in which the third anniversary of each applicable vesting date occurs, (ii) termination of the recipient’s services to the Company and (iii) a change in control event. As of September 30, 2017, the Company anticipates that all unvested RSUs will vest in accordance with their terms.

The compensation expense related to RSUs for the three and nine months ended September 30, 2017 was approximately $0.2 million. As of September 30, 2017 there was $1.3 million of unrecognized compensation expense remaining.

Note 12 - 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 amounts and the fair values of material liabilities, excluding deferred financing fees, that qualify as financial instruments (in thousands):

	September 30, 2017
	Carrying Amount		Fair Value
Mortgage notes payable	$	1,513,000	$	1,512,280
Mandatorily redeemable preferred securities	242,912		223,686
Total	$	1,755,912	$	1,735,966

The fair value of the mortgage notes payable and mandatorily redeemable preferred securities were determined using the discounted cash flow method and applying current market rates and is classified as level 3 under the fair value hierarchy. Market rates take into consideration general market conditions and maturity.

The Company is subject to a contingent forward contract which was recognized at zero as of September 30, 2017 (See Note 3 - Brookfield Investment and Related Transactions).

The Company recognized an impairment loss of $5.4 million on three hotels during the three months ended September 30, 2017. The aggregate fair value of these hotels as of September 30, 2017, was $15.0 million. The fair value was determined using level two measurements, which were agreed upon sales prices with third party buyers (See Note 16 - Impairments of Long-Lived Assets and Note 17 - Assets Held for Sale).

Note 13 - 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

32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 Company's March 2014 acquisition of interests in six hotels through fee simple, leasehold and joint venture interests (the "Barceló Portfolio") was a contingent consideration payable to the seller based on the future operating results of three of the six hotels: 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 was 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 would not be less than $4.1 million or exceed $4.6 million. The Company paid the contingent consideration of $4.6 million in April 2017 with proceeds used from the Refinanced Term Loan (See Note 6 - Mortgage Notes Payable).

Note 14 - Related Party Transactions and Arrangements

Relationships with the Brookfield Investor and its Affiliates

As described in Note 3 - Brookfield Investment and Related Transactions, on January 12, 2017, the Company and the OP entered into the SPA and the Framework Agreement. On March 31, 2017, the Initial Closing occurred and a variety of transactions contemplated by the SPA and the Framework Agreement were consummated, including the issuance and sale of the Redeemable Preferred Share and 9,152,542.37 Class C Units and the execution or taking of various agreements and actions required to effectuate the Company's transition to self-management. 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. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, fixed, quarterly, cumulative PIK Distributions payable in Class C Units at a rate of 5% per annum. For the three months ended September 30, 2017, the Company paid cash distributions of $2.6 million and PIK Distributions of 118,443.50 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units. For the nine months ended September 30, 2017, the Company paid cash distributions of $5.2 million and PIK Distributions of 235,392.65 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units.

Two of the Company’s directors, Bruce G. Wiles, who also serves as Chairman of the Board, and Lowell G. Baron, have been elected to the Company’s board of directors as the Redeemable Preferred Directors pursuant to the Brookfield Investor’s rights as the holder of the Redeemable Preferred Share and pursuant to the SPA. Messrs. Wiles and Baron are Managing Partners of Brookfield Asset Management, Inc., an affiliate of the Brookfield Investor.

Relationships with AR Capital, AR Global and their Affiliates

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, including those described in more detail below.

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 then

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

current 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.

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 transition 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 to the Former Advisor and its Affiliates in Connection with the Offering

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services, in addition to selling commissions and dealer manager fees paid to 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).

Fees Paid to the Former Advisor in Connection with the Operations of the Company

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 have paid 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 have been 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 limitations 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 have been 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%.

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

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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. Through the Initial Closing on 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 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Asset management fees	$	—	$	4,469	$	4,581	$	13,446	$	—	$	8
Acquisition fees	$	—	$	—	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	—	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	—	$	—	$	206	$	—	$	—
	$	—	$	4,469	$	4,581	$	15,384	$	—	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to certain limitations. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company did not reimburse 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	—	$	574	$	869	$	1,702	$	—	$	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).

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Following the Initial Closing, certain other fees, participations and distributions to which the Former Advisor or the Former Special Limited Partner would have been entitled to prior to the Initial Closing were terminated or forfeited, with no amounts ever having becoming payable with respect to such fees, participations and distributions. The Former Advisor’s right to receive certain brokerage commissions under certain conditions with respect to sales of the Company’s properties was also terminated, with only $0.3 million having been paid in connection with one hotel sold during the three months ended September 30, 2016.

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 pursuant to property management agreements between the Company and 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 pursuant to the property management agreements. 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 by the Former Property Manager 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 pursuant to property management agreements with the Former Property Manager. There were no incentive fees incurred by the Company for the three months endedSeptember 30, 2017 and $0.1 million for the nine months endedSeptember 30, 2017.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company pursuant to the property management agreements (and not payable to a third party sub-property manager) during three months endedSeptember 30, 2017 and 2016, respectively, and the associated payable as of September 30, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	—	$	4,134	$	4,291	$	12,305	$	—	$	1,306
Total management fees incurred from Former Property Manager	$	—	$	2,262	$	2,035	$	6,501	$	—	$	532
Total	$	—	$	6,396	$	6,326	$	18,806	$	—	$	1,838

Following the Initial Closing, the Company no longer has any property management 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 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). Further, 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.

Note 15 - 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.

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

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 then current 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 would 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 not later than June 29, 2017. Following sale of AR Global's membership interest in Crestline and the expiration of the transition services agreement with the Former Advisor, the transition services agreement with Crestline was terminated effective as of July 1, 2017, and the Company entered into a new annually renewable shared services agreement with Crestline pursuant to which Crestline now provides the Company with accounting, tax related, treasury, information technology and other administrative services.

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.

The Company expects to generate additional liquidity through the sale of Class C Units to the Brookfield Investor at Subsequent Closings (See Note 3 - Brookfield Investment and Related Transactions).

Note 16 - Impairments

Impairments of Long-Lived Assets

On June 19, 2017, the Company's board of directors approved the 2017 NAV, which was included in a Current Report on Form 8-K filed on the same day. The 2017 NAV was determined based in part on appraisals of each of the Company’s hotels as performed by an independent valuation firm. As a result of this process, certain reporting units (i.e. individual wholly-owned hotels) exhibited indicators of impairment as the carrying amount (inclusive of the allocation of goodwill) was greater than the appraised value used in connection with the 2017 NAV. 

Upon identification of this impairment "triggering event," the Company performed a recoverability test in accordance with the provisions of Accounting Standards Codification section 360 - Property, Plant and Equipment. Based on the probability weighted undiscounted cash flows anticipated to be generated from each reporting unit from its operation and ultimate disposition over the intended holding periods, the Company determined that the carrying amount of all but two reporting units were recoverable.

The Company determined the aggregate fair values of these two hotels using market and discounted cash flow based methods to be $17.0 million, approximately $1.4 million less than the aggregate carrying amount of the hotels at June 30, 2017, of $18.4 million and recorded the impairment loss in the Consolidated Statements of Operations and Comprehensive Income (Loss). In connection with the Company’s publishing of its initial Estimated Per-Share NAV during 2016, which was also a “triggering event,” the Company recorded an impairment in the second quarter ended June 30, 2016, of $2.4 million at one of its other hotels.

In August and September 2017, hurricanes Harvey and Irma made landfall in the United States, primarily impacting Texas and Florida, where 22 of the Company’s hotels are located. The Company evaluated the effects of these hurricanes on the Company’s hotels to determine if indicators of impairment were present in accordance with the provisions of Accounting Standards Codification section 360 - Property, Plant and Equipment, and did not identify any indicators of impairment. The Company recognized an expense of $1.8 million in other property-level operating expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss) for repair costs during the three months ended September 30, 2017, net of $0.5 million recorded as a receivable for anticipated insurance recoveries in excess of the deductible. 

The Company also recognized an impairment loss on the sale of three of the four hotels classified as assets held for sale as of September 30, 2017, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

Impairment of Goodwill

As described in Note 4 - Business Combinations, the Company determined that the consummation of the transactions contemplated by the Framework Agreement on March 31, 2017 represented a business combination as defined by Accounting Standards Codification section 805 - Business Combinations. In applying the acquisition method of accounting, the Company recognized $31.6 million of goodwill as a result of the transaction. The Company allocated the goodwill recognized to each of its wholly-owned hotels based on its determination that each hotel is a reporting unit as defined in US GAAP.

Management determined that the performance of the recoverability test of the Company's reporting units (as described above in Impairments of Long-Lived Assets) represented a "triggering event" under ASC 350. As a result, an evaluation of impairment of the goodwill allocated to each reporting unit for which a fair value was less than the carrying amount was necessary. The Company determined the fair values of each reporting unit using market and discounted cash flow based methods. The assumptions utilized in the income approach include, but are not limited to, revenue growth rates, future cash flows and a discount rate. The assumptions utilized in the market approach include, but are not limited to, future cash flows, the selection of comparable companies and measures of operating results and pricing multiples. In performing this evaluation, the Company compared the fair value of the reporting unit to the carrying amount of such reporting unit including the allocation of goodwill. As required by ASC 350, as amended by ASU 2017-04, if the carrying amount of the reporting unit exceeds its fair value, the Company will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

As a result of the process described above, the Company has determined that approximately $16.1 million of goodwill allocated to 70 reporting units for which the fair value was less than the carrying amount is impaired. The range of goodwill impairment recorded by each reporting unit was from less than $0.1 million to $1.3 million, with an average impairment of $0.2 million. The Company has recorded a charge as a component of impairment of goodwill and long-lived assets in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three-months ended June 30, 2017.

Note 17 - Assets Held for Sale

During the quarter ended September 30, 2017, the Company entered into purchase and sale agreements to sell four non-core hotels. If completed, these sales will allow the Company to avoid re-flagging certain of the hotels and generate proceeds that will be used to redeem Grace Preferred Equity Interests in accordance with their terms and meet liquidityrequirements. These sales also generate additional liquidity through the elimination of any future PIP obligations associated with the hotels sold. As of September 30, 2017, the Company classified these four hotels as held for sale. During the period ended September 30, 2017, the Company recognized an impairment loss on the sale of three of the four hotels, totaling $5.4 million, which includes the costs to sell those assets. These sales are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all. The aggregate contract purchase price of these sales is $17.4 million, which are expected to generate net proceeds of approximately $5.0 million to the Company after the redemption of the amount of Grace Preferred Equity Interests required in accordance with their terms and payment of transaction costs.

The sale of these hotels does not represent a strategic shift that has, or will have, a major effect on the Company’s operations and financial results, and therefore the operating results for the period of ownership of these properties are included in income from continuing operations for the three months ended and nine months ended September 30, 2017.

Assets held for sale as of September 30, 2017 consisted of the following (in thousands):

	September 30, 2017
Property, Plant & Equipment, less accumulated depreciation	17,311
Less: Costs to Sell	(281		)
Assets Held for Sale	$	17,030

Note 18 - 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 consolidated financial statements.

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2017

(Unaudited)

On October 25, 2017, the Company commenced a self-tender offer (the “Company Offer”) for up to 1,000,000 shares of common stock at a price of $6.50 per share. Shares purchased in the Company Offer will be paid for in cash, less the withholding of any applicable taxes and without interest, as further described in the Offer to Purchase, the Letter of Transmittal and other related materials that were filed with the SEC as exhibits to an issuer tender offer statement on Schedule TO on October 25, 2017. Unless extended or withdrawn, the Company Offer will expire at 5:00 p.m., New York City time, on December 11, 2017.

39

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.

• Increases in labor costs could adversely affect the profitability of our hotels.

• 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.

40

• 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.

• 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.

41

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 September 30, 2017, we had acquired or had an interest in a total of 148 hotels, including four hotels that were classified as held for sale (See Note 17 - Assets Held for Sale to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q), with a total of 17,846 guest rooms located in 33 states. As of September 30, 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.

As of September 30, 2017, following the Initial Closing, 80 of the hotel assets we have acquired were managed by Crestline and 68 of the hotel assets we have acquired were managed by other property managers. As of September 30, 2017, our other property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), InnVentures IVI, LP (2 hotels), McKibbon Hotel Management, Inc. (21 hotels) and Larry Blumberg & Associates, Inc. (4 hotels).

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 initial 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. On June 19, 2017, our board of directors approved an updated Estimated Per-Share NAV (the "2017 NAV") equal to $13.20 based on an estimated fair value of our assets less the estimated fair value of our liabilities, divided by 39,617,676 shares of common stock outstanding on a fully diluted basis as of March 31, 2017. 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:

42

• 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.

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"). As of September 30, 2017, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $138.5 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”), an affiliate of the Brookfield Investor, is the special general partner of the OP, with certain non-economic rights that apply if we fail to redeem the Class C Units when required to do so, including the ability to commence selling the OP's assets until the Class C Units have been fully redeemed.

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 the foregoing 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.

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, prior to the Initial Closing, 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. We now conduct our operations independently of the Former Advisor and its affiliates.

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

43

Agreement and the other transactions and agreements contemplated thereby, as well as the Redeemable Preferred Share and the Class C Units, including conversion rights, distribution rights, approval rights and redemption rights associated therewith.

Significant Accounting Estimates and Critical Accounting Policies

Principles of Consolidation and Basis of Presentation

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 United States 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 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).

44

Impairment of Long-Lived Assets and Investment in Unconsolidated Entities

When circumstances indicate the carrying amount 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 amount of a property, an impairment loss will be recorded to the extent that the carrying amount exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income (See Note 16 - Impairments of Long-Lived Assets and Note 17 - Assets Held for Sale to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q).

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 and our board of directors have 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. Any such adjustment to the carrying amount is recorded as an impairment loss (See Note 17 - Assets Held for Sale to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q).

Goodwill

We allocate goodwill to each reporting unit. For our purposes, each of our wholly-owned hotels is considered a reporting unit. We test goodwill for impairment at least annually, or upon the occurrence of any "triggering events" if sooner, and we have elected to test for goodwill impairment during the quarter ended June 30 of each year. During the second quarter ended June 30, 2017, the we adopted ASU 2017-04, Intangibles - Goodwill and Other, which simplified the measurement of goodwill by eliminating Step 2 from the goodwill impairment test in the event that there is evidence of an impairment based on any "triggering events." We chose to adopt ASU 2017-04 in the second quarter ended June 30, 2017, as this was the first time we were required to test goodwill for impairment.

Upon the occurrence of any "triggering events," we are required to compare the fair value of each reporting unit to which goodwill has been allocated, to the carrying amount of such reporting unit including the allocation of goodwill. As required by Accounting Standards Codification section 350 - Intangibles - Goodwill and Other (ASC 350), as amended by ASU 2017-04, if the carrying amount of a reporting unit exceeds its fair value, we apply a one-step quantitative test and record the amount of goodwill impairment as the excess of the reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

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). During the three months ended June 30, 2017, we recorded an impairment of our goodwill of $16.1 million (See Note 16 - Impairments to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q).

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

45

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 taxes 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.

Fair Value Measurements

In accordance with Accounting Standards Codification section 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.

Class C Units

46

We initially measured the Class C Units at fair value net of issuance costs. We are required to accrete the carrying value of the Class C Units to the liquidation preference using the effective interest method over the five year period prior to the holder's redemption option becoming exercisable. However, if it becomes probable that the Class C Units will become redeemable prior to such date, we will adjust the carrying value of the Class C Units to the maximum liquidation preference.

Pursuant to the SPA with the Brookfield Investor, we may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. We have determined the value has not changed from the issuance date of March 31, 2017. We will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

Derivative Transactions

We at certain times enter into derivative instruments to hedge exposure to changes in interest rates. Our derivatives as of September 30, 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 for accounting purposes. The impact of the interest rate caps for the three and nine months ended September 30, 2017, to the consolidated financial statements was immaterial.

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 are now 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,

47

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 the remainder of 2017 and in future years which will also adversely impact our operating results while renovation work is ongoing. Completed PIPs are expected to be accretive to our cash flow in subsequent periods. The 2017 NAV calculation includes estimates of future PIP costs and the impact of taking guest rooms out of service while PIP work is ongoing, reflecting greater certainty as to the timing, scope and cost of PIP work due to our negotiations with the brands and expected availability of cash from the obligation of the Brookfield Investor to purchase additional Class C Units at Subsequent Closings pursuant to the SPA. The impact of the PIP estimates on our calculation of Estimated Per-Share NAV in future years is expected to diminish or be eliminated as our PIP work is completed.

We believe that the continued execution of our hotel reinvestment program, primarily through the brand-mandated PIPs,

which we anticipate substantially completing over the next two to three years, will maximize long-term value for our stockholders, position us for future success, and position us for a potential liquidity event for our investors. While it is our intention to achieve a liquidity event, there can be no assurance as to when or if we will ultimately be able to do so and as to the terms of any such liquidity event.

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 additional proceeds from the Summit Loan (the "Reinstatement Agreement"). Under the Reinstatement Agreement, Summit had 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 Reinstatement 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 Reinstatement 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 (and October 24, 2017 in the case of the eighth 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”).

48

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. Subsequently, Summit informed us that they have sold the eighth hotel to a third party, in connection with which our right and obligation to purchase this hotel was terminated in accordance with the terms of the Reinstatement Agreement.

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 September 30, 2017 to the Three Months Ended September 30, 2016

Room revenues for the portfolio were $159.4 million for the three months ended September 30, 2017, compared to room revenues of $153.2 million for the three months ended September 30, 2016. The increase in room revenues was primarily driven by the impact of the April Acquisition of seven hotels from Summit and increased ADR.

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	September 30, 2017			September 30, 2016
Number of rooms	17,846			17,351
Occ	79.6		%	79.9		%
ADR	$	124.41		$	122.67
RevPAR	$	99.02		$	97.98

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 September 30, 2017, for the full periods presented.

	Three Months Ended
Pro forma (148 hotels)	September 30, 2017			September 30, 2016
Number of rooms	17,846			17,846
Occ	79.6		%	79.6		%
ADR	$	124.41		$	122.17
RevPAR	$	99.02		$	97.25
RevPAR change	1.8		%

The information in the table below presents pro-forma operating information for only the hotels that we classify as not under renovation as of September 30, 2017. 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.

49

	Three Months Ended
Pro forma hotels not under renovation (130 hotels)	September 30, 2017			September 30, 2016
Number of rooms	15,889			15,889
Occ	80.2		%	80.1		%
ADR	$	123.49		$	121.62
RevPAR	$	99.04		$	97.41
RevPAR change	1.7		%

The pro-forma RevPAR growth rate for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, increased by 1.8% due to an increase in ADR. Pro-forma RevPAR for our hotels not under renovation increased 1.7% in the current period as compared to the prior year period, 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 September 30, 2017, and the three months ended September 30, 2016, decreased 7.1% over the prior year period driven primarily by lower food and beverage 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 were 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 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 September 30, 2017, and the three months ended September 30, 2016, decreased approximately 1.4% over the prior year period primarily due to the reduction in base property management fees and the elimination of asset management fees effective as of the Initial Closing, partially offset by an increase in rooms expense and other property-level operating costs.

There were no acquisition and transaction related costs for the three months ended September 30, 2017.

General and administrative decreased approximately $0.7 million for the three months ended September 30, 2017, compared to the prior year period, primarily due to lower professional fees partially offset by the commencement of payment of employee salaries and benefits following our transition to a self-managed company.

Depreciation and amortization increased approximately $0.7 million for the three months ended September 30, 2017, compared to the prior year period, due to completed PIPs and acquisitions.

Impairment of goodwill and long-lived assets increased $5.4 million for the three months ended September 30, 2017 compared to the prior year period, due to the loss on assets held for sale as a result of the purchase and sale agreements we entered into to sell four non-core hotels during the three months ended September 30, 2017. See Note 17 - Assets Held for Sale to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

50

Interest expense increased $1.6 million for the three months ended September 30, 2017, compared to the prior year period, primarily driven by increased debt balances and higher total deferred financing costs on the new loans from the April 2017 refinancing transactions.

Other income (expense) changed by approximately $0.6 million for the three months ended September 30, 2017, compared to the prior year period.

Comparison of the Nine Months Ended September 30, 2017 to the Nine Months Ended September 30, 2016

Room revenues were $453.1 million for the nine months ended September 30, 2017, compared to room revenues of $434.5 million for the nine months ended September 30, 2016. The increase in room revenues was primarily due to our acquisitions of the hotels from Summit that were completed during the first quarter of 2016 (six hotels) and the second quarter of 2017 (seven hotels), and increased occupancy and ADR.

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

	Nine Months Ended
Total Portfolio	September 30, 2017			September 30, 2016
Number of rooms	17,846			17,351
Occ	77.6		%	76.8		%
ADR	$	123.84		$	121.90
RevPAR	$	96.13		$	93.60

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 September 30, 2017, for the full periods presented. The information in the table includes the hotels that were under renovation within the nine months ended September 30, 2017.

	Nine Months Ended
Pro forma (148 hotels)	September 30, 2017			September 30, 2016
Number of rooms	17,846			17,846
Occ	77.5		%	76.7		%
ADR	$	123.51		$	121.31
RevPAR	$	95.77		$	93.09
RevPAR change	2.9		%

The information in the table below presents pro-forma operating information for only the hotels that we classify as not under renovation as of September 30, 2017. In accordance with how we classify hotels to be under renovation as described above, a total of 28 hotels were classified as not under renovation during the three months ended September 30, 2017 and September 30, 2016, but were classified as under renovation during the six months ended June 30, 2017 and June 30, 2016.

	Nine Months Ended
Pro forma hotels not under renovation (130 hotels)	September 30, 2017			September 30, 2016
Number of rooms	15,889			15,889
Occ	77.6		%	77.8		%
ADR	$	121.73		$	120.07
RevPAR	$	94.51		$	93.46
RevPAR change	1.1		%

Pro-forma RevPAR for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, increased by 2.9% due to an increase in ADR and occupancy. Pro-forma RevPAR for our hotels not under renovation increased 1.1% in the current period as compared to the prior year period, driven by an increase in ADR, partially offset by a decrease in occupancy.

51

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 nine months ended September 30, 2017, and the nine months ended September 30, 2016, decreased approximately 3.1% over the prior year period primarily driven by lower food and beverage revenue.

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 nine months ended September 30, 2017, and the nine months ended September 30, 2016, decreased approximately 0.9% over the prior year period primarily due to the reduction in base property management fees and the elimination of asset management fees effective as of the Initial Closing, partially offset by an increase in rooms expense and other property-level operating costs.

Acquisition and transaction related costs decreased approximately $24.8 million for the nine months ended September 30, 2017, compared to the prior year period. Acquisition and transaction related costs for the nine months ended September 30, 2017 were due to costs associated with the April Acquisition of seven hotels from Summit. Acquisition and transaction related costs for the nine months ended September 30, 2016, were attributable to costs associated with the acquisition of the Third Summit Portfolio and forfeited deposits related to terminated acquisitions of approximately $22.0 million.

General and administrative increased approximately $1.6 million for the nine months ended September 30, 2017, compared to the prior year period, primarily due to certain one-time costs associated with our transition to self-management and the April 2017 refinancing transactions, and the commencement of payment of employee salaries and benefits following our transition to a self-managed company.

Depreciation and amortization increased approximately $3.6 million for the nine months ended September 30, 2017, compared to the prior year period, due to completed PIPs and acquisitions.

Impairment of goodwill and long-lived assets increased approximately $20.4 million for the nine months ended September 30, 2017, compared to the prior year period. For the nine months ended September 30, 2017, a $16.1 million impairment was recorded related to goodwill, a $1.4 million impairment was recorded related to long-lived assets of two hotels, and a $5.4 million impairment was recorded due to the loss on assets held for sale as a result of the purchase and sale agreements we entered into to sell four non-core hotels during the three months ended September 30, 2017. For the nine months ended September 30, 2016, a $2.4 million impairment was recorded related to long-lived assets of one other hotel. See Note 16 - Impairments and Note 17 - Assets Held for Sale to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q for further details.

Interest expense increased approximately $5.0 million for the nine months ended September 30, 2017, compared to the prior year period, primarily driven by the write-off of deferred financing costs associated with the SN Term Loan that was refinanced in April 2017 and higher amortization of deferred financing costs as a result of higher total deferred financing costs on the new loans from the April 2017 refinancing transactions.

Other income (expense) changed by approximately $1.4 million for the nine months ended September 30, 2017, compared to the prior year period.

Hotel EBITDA

This section includes disclosures with respect to hotel earnings before interest, taxes and depreciation and amortization ("Hotel EBITDA"), which is a non-GAAP financial measure. A description of Hotel EBITDA and a reconciliation to the most directly comparable GAAP measure, which is net income (loss) attributable to common stockholders, is provided below.

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 expenses not related to operating hotels 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 and general and administrative expenses are 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

52

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 attributable to common stockholders in accordance with GAAP to Hotel EBITDA for the three and nine months ended September 30, 2017, and for the three and nine months ended September 30, 2016:

	For the Three Months Ended September 30, 2017			For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2017			For the Nine Months Ended September 30, 2016
Net loss attributable to common stockholders	$	(14,058	)	$	(6,684	)	$	(61,992	)	$	(57,665	)
Deemed dividend related to beneficial conversion feature of Class C Units	—			—			4,535			—
Dividends on Class C Units	4,369			—			8,681			—
Accretion of Class C Units	556			—			1,097			—
Net loss before dividends and accretion (in accordance with GAAP)	(9,133		)	(6,684		)	(47,679		)	(57,665		)
Less: Net income attributable to non-controlling interest	154			152			237			278
Net loss and comprehensive loss (in accordance with GAAP)	$	(8,979	)	$	(6,532	)	$	(47,442	)	$	(57,387	)
Depreciation and amortization	26,464			25,788			78,519			74,912
Impairment of goodwill and long-lived assets	5,396			—			22,838			2,399
Interest expense	24,728			23,087			74,019			69,033
Acquisition and transaction related costs	—			(7		)	498			25,270
Other income (expense)	(15		)	542			(52		)	1,396
Equity in earnings of unconsolidated entities	(231		)	(286		)	(381		)	(407		)
General and administrative	4,389			5,128			14,230			12,623
Income taxes	1,105			948			1,538			2,246
Hotel EBITDA	$	52,857		$	48,668		$	143,767		$	130,085

Cash Flows

Net cash provided by operating activities was $70.3 million for the nine months ended September 30, 2017. Cash provided by operating activities was positively impacted primarily by increases in accounts payable and accrued expenses, partially offset by increases in prepaid expenses and other assets and restricted cash.

Net cash used in investing activities was $157.2 million for the nine months ended September 30, 2017, primarily attributable to the Summit acquisition of seven hotels, capital investments in our properties, an increase in restricted cash and payment of cash consideration related to the Property Management Transactions (as defined in Note 3 - Brookfield Investment and Related Transactions to our accompanying consolidated financial statements included in this Quarterly Report on Form 10-Q).

Net cash flow provided by financing activities was $114.4 million for the nine months ended September 30, 2017. Cash provided by financing activities was primarily impacted by the net proceeds from the sale of Class C Units at the Initial Closing as well as the refinancing of the Assumed Grace Indebtedness and the SN Term Loan, partially offset by the use of a portion of those net proceeds to partially redeem the 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

53

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 September 30, 2017, we had cash on hand of $70.3 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.

As of September 30, 2017, we had principal outstanding of $1.5 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 September 30, 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.

In addition, on October 25, 2017, we commenced a self-tender offer (the “Company Offer”) for up to 1,000,000 shares of common stock at a price of $6.50 per share. Shares purchased in the Company Offer will be paid for in cash, less the withholding of any applicable taxes and without interest, as further described in the Offer to Purchase, the Letter of Transmittal and other related materials that were filed with the SEC as exhibits to an issuer tender offer statement on Schedule TO on October 25, 2017. Unless extended or withdrawn, the Company Offer will expire at 5:00 p.m., New York City time, on December 11, 2017.

Assuming that the Company Offer is fully subscribed, the value of shares we purchase in the Company Offer will be $6.5 million, subject to our ability to increase the number of shares purchased in accordance with SEC rules. Assuming that we do not increase the number of shares accepted for payment, we expect that the maximum aggregate cost of these purchases, including all fees and expenses applicable, will be approximately $7.0 million. We intend to fund the purchase of shares in the Company Offer and pay related costs by using cash on hand.

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 are now incurred directly by us as a self-managed company).

In April 2017, we refinanced $895.4 million principal amount then outstanding under the Assumed Grace 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 in April 2017, we refinanced $235.5 million principal amount then outstanding under the SN Term Loan 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

54

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 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 were used to fund PIPs and related lender reserves.

During the quarter ended September 30, 2017, we entered into purchase and sale agreements to sell four non-core hotels. If completed, these sales will allow us to avoid re-flagging certain of the hotels and generate proceeds that will be used to redeem Grace Preferred Equity Interests in accordance with their terms and meet liquidity requirements. These sales also generate additional liquidity through the elimination of any future PIP obligations associated with the hotels sold. As of September 30, 2017, we classified these four assets as held for sale. During the three months ended September 30, 2017, we recognized a loss on the sale of three of the four hotels, totaling $5.4 million, which includes the costs to sell those assets. These sales are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all. The aggregate contract purchase price of these sales is $17.4 million, which are expected to generate net proceeds of approximately $5.0 million to us after the redemption of the amount of Grace Preferred Equity Interests required in accordance with their terms and payment of transaction costs.

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. Additionally, during the quarter ended June 30, 2017, Summit informed us that they sold the eighth hotel that we had been obligated to purchase to a third party, and our right and obligation to purchase this hotel was terminated in accordance with the terms of the Reinstatement Agreement.

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 million 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.

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 September 30, 2017, our loan-to-value ratio was 70.2% 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 60.5%.

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

55

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 September 30, 2017, our total portfolio leverage was 196%.

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

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 resume paying distributions in shares of common stock or in cash at any time 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.

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.

For the period from our inception in July 2013 through May 2016 when we commenced paying distributions in common

stock, we paid cash distributions, all of which were funded with proceeds from our IPO and proceeds realized from the sale of common stock issued pursuant to our DRIP.

Our IPO 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.

In March 2016, our 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, we paid a cash distribution to stockholders of record each day during the quarter ended March 31, 2016, but any distributions for subsequent periods were 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 initial 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 at that time. 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.

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.

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 ("PIK Distributions"). If we fail 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 is equal to the number obtained by dividing the amount of PIK Distribution by $14.75.

56

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.

For the three months ended September 30, 2017, we paid cash distributions of $2.6 million on the Class C Units, and PIK Distributions of 118,443.50 to the Brookfield Investor, as the sole holder of the Class C Units. For the nine months ended September 30, 2017, we paid cash distributions of $5.2 million and PIK Distributions of 235,392.65 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units. The cash distributions were funded from cash flow from operations.

Contractual Obligations

We have the following contractual obligations as of September 30, 2017:

Debt Obligations:

The following is a summary of our mortgage notes payable obligations as of September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Principal payments due on mortgage notes payable	$	1,513,000	$	—	$	288,000	$	—	$	1,225,000
Interest payments due on mortgage notes payable	282,701		12,353		195,613		52,865		21,870
Total	$	1,795,701	$	12,353	$	483,613	$	52,865	$	1,246,870

Mortgage notes payable due dates assume exercise of all borrower extension options.

The following is a summary of our promissory notes payable obligations as of September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Principal payments due on promissory notes payable	$	2,000	$	1,000	$	1,000	$	—	$	—
Total	$	2,000	$	1,000	$	1,000	$	—	$	—

The following is a summary of the Grace Preferred Equity Interests, our mandatorily redeemable preferred securities, as of September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Mandatory redemptions due on mandatorily redeemable preferred securities	$	242,912	$	—	$	242,912	$	—	$	—
Monthly distributions due on mandatorily redeemable preferred securities	26,044		3,607		22,437		—		—
Total	$	268,956	$	3,607	$	265,349	$	—	$	—

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 September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Distributions on Class C Units	$	52,832	$	2,654	$	34,353	$	12,644	$	3,181

The foregoing summary includes PIK Distributions associated with Class C Units issued at the Initial Closing but does not include the impact of Class C Units that may be issued at Subsequent Closings or their associated PIK Distributions.

Lease Obligations:

57

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 September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
Lease payments due	$	103,958	$	1,235	$	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 September 30, 2017 (in thousands):

	Total		2017		2018-2020		2021		Thereafter
PIP reserve deposits due	$	55,726	$	9,287	$	46,439	$	—	$	—

Related Party Transactions and Agreements

See Note 14 - 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, 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 cap agreements, 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 September 30, 2017, we had not fixed the interest rate for $1.2 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 all $1.2 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 or decrease annual interest expense by approximately $12.4 million. The estimated impact assumes no changes in our capital structure. As the information presented above includes only those exposures that exist as of September 30, 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 our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by 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.

Management took a number of steps to remediate the underlying causes of the material weakness described above, including the following:

• Evaluated the processes surrounding the monitoring and oversight of the compliance of financial covenants and determined that new and improved processes were warranted and implemented these processes;

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

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

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

As a result of the completion and implementation of the remedial measures described above, management determined that the material weakness was remediated as of September 30, 2017.

59

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.

On July 3, 2017, the following awards were made under our amended and restated employee and director incentive restricted share plan: (i) 7,576 restricted shares of common stock ("restricted shares') to a wholly owned subsidiary of the Brookfield Investor in respect of the Redeemable Preferred Directors’ service on our board of directors; (ii) 29,252.646 restricted stock units in respect of shares of common stock ("RSUs") to our other directors (including 6,524.646 RSUs which were issued in connection with the simultaneous forfeiture of an equal number of restricted shares); (iii) 52,500 RSUs to our executive officers pursuant to their employment agreements; and (iv) 18,645 RSUs to certain of our other employees. These awards were exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Amended and Restated Code of Business Conduct and Ethics

On November 9, 2017, our board of directors adopted an amended and restated Code of Business Conduct and Ethics (the

“Code of Ethics”). The Code of Ethics reflects updates to improve language, appearance and style and to remove language that

we considered to be dated or duplicative and unnecessary. The Code of Ethics took effect upon adoption by our board of

directors and did not result in any waiver, explicit or implicit, of any provision of our previous Code of Ethics and Business

Conduct.

The Code of Ethics will be made available on our website at www.HITREIT.com in the “Corporate Governance” section as soon as practicable.

The foregoing description of the amendments reflected in the Code of Ethics does not purport to be complete and is

qualified in its entirety by reference to Code of Ethics, attached as Exhibit 14.1 hereto and incorporated herein by reference.

60

Item 6. Exhibits.

EXHIBIT INDEX

The following exhibits are included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.	Description
10.1(1)	First Amendment to Amended and Restated Agreement of Limited Partnership of Hospitality Investors Trust Operating Partnership, L.P. dated as of July 10, 2017, by Hospitality Investors Trust, Inc., as general partner
10.2(2)	Second Amendment to Amended and Restated Agreement of Limited Partnership of Hospitality Investors Trust Operating Partnership, L.P. dated as of September 29, 2017, by Hospitality Investors Trust, Inc., as general partner
10.3(2)	Amendment to Employment Agreement, dated as of August 10, 2017, by and between Jonathan P. Mehlman and Hospitality Investors Trust, Inc.
10.4(2)	Amendment to Employment Agreement, dated as of August 10, 2017, by and between Edward T. Hoganson and Hospitality Investors Trust, Inc.
10.5(2)	Amendment to Employment Agreement, dated as of August 10, 2017, by and between Paul C. Hughes and Hospitality Investors Trust, Inc.
10.6*	Form of Restricted Share Unit Award Agreement (officers)
14.1*	Amended and Restated Code of Business Conduct and Ethics
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 September 30, 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 filed with the

SEC on August 10, 2017.

(2) Filed as an Exhibit to the Company’s Schedule TO filed with the SEC on October 25, 2017.

61

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: November 13, 2017	By: /s/ Jonathan P. Mehlman Name: Jonathan P. Mehlman Title: Chief Executive Officer and President (Principal Executive Officer)
Dated: November 13, 2017	By: /s/ Edward T. Hoganson Name: Edward T. Hoganson Title: Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)

62

EX-10.6

Exhibit 10.6

Executive Form (2018)

FORM OF RESTRICTED SHARE UNIT AWARD AGREEMENTPURSUANT TO THEAMENDED AND RESTATED EMPLOYEE AND DIRECTORINCENTIVE RESTRICTED SHARE PLAN OFHOSPITALITY INVESTORS TRUST, INC.

THIS AGREEMENT (this “Agreement”) is made as of [________] (the “Grant Date”), by and between Hospitality Investors Trust, Inc., a Maryland corporation with its principal office at 3950 University Drive, Fairfax, Virginia 22030 (the “Company”), and [___________](the “Participant”).

WHEREAS, the Board of Directors of the Company (the “Board”) adopted the Employee and Director Incentive Restricted Share Plan of Hospitality Investors Trust, Inc. (as amended and/or restated from time to time, the “Plan”);

WHEREAS, the Plan provides that the Company, through the Committee, has the ability to grant awards of restricted share units to directors, officers, employees and certain consultants or entities, in each case, that are employed by or provide services to the Company or any Affiliate of the Company; and

WHEREAS, subject to the terms and conditions of this Agreement and the Plan, the Committee has determined that the Participant shall be awarded restricted share units in the amount set forth below.

NOW, THEREFORE, the Company and the Participant agree as follows:    

1.Award of Restricted Share Units. Subject to the terms, conditions and restrictions of the Plan and this Agreement, the Company hereby grants to the Participant an award consisting of [________] restricted share units (the “Restricted Share Units”) in respect of shares of common stock of the Company, $0.01 par value per share (“Shares”).

2.Vesting. Subject to the terms of the Plan and this Agreement, except as provided in Section 4 of this Agreement, the Restricted Share Units shall vest as follows:

(a)The Restricted Share Units shall vest in equal annual installments on each of the first four (4) anniversaries of the Grant Date (each of the first through fourth anniversaries, a “Vesting Date”); provided that the Participant has not experienced a Termination prior to each applicable Vesting Date.

(b)There shall be no proportionate or partial vesting in the periods prior to each Vesting Date.

93996992v3

Exhibit 10.6

3.Settlement. Subject to Section 6 hereof, to the extent vested, the Restricted Share Units shall be settled in Shares on the earliest of: (a) the date of the Participant’s Termination; (b) a Section 409A Change in Control Event (as defined below); or (c) the calendar year in which the third (3^rd) anniversary of each applicable Vesting Date occurs. For purposes of this Agreement, a “409A Change in Control Event” shall mean a “change in the ownership of the corporation,” a “change in effective control of the corporation” or a “change in the ownership of a substantial portion of the assets of the corporation,” within the meaning of Section 409A(a)(2)(A)(v) of the Code.

4.Termination. In the event of the Participant’s Termination, the following shall apply to the Restricted Share Units:

(a)Termination by the Company without Cause; Termination by the Participant for Good Reason; Termination Upon Expiration Following Non-Renewal of the Employment Agreement by the Company. If the Participant experiences a Termination (i) by the Company without Cause (as defined in the Participant’s employment agreement with the Company dated as of March 31, 2017 (as amended and/or restated, the “Employment Agreement”)), (ii) by the Participant for Good Reason (as defined in the Employment Agreement) or (iii) upon expiration of the Employment Term (as defined in the Employment Agreement) following non-renewal by the Company, any unvested Restricted Share Units shall immediately vest and no longer be subject to forfeiture as of the date of the Termination.

(b)Termination as a result of the Participant’s Death or Disability. If the Participant experiences a Termination as a result of the Participant’s death or Disability (as defined in the Employment Agreement), any unvested Restricted Share Units that would have become vested within the one-year period beginning on the date of Termination and ending on the first anniversary of the date of Termination if the Participant had continued to be employed by the Company during such period shall immediately vest and no longer be subject to forfeiture as of the date of the Termination. Any outstanding Restricted Share Units that do not become vested pursuant to the preceding sentence shall be immediately forfeited and cancelled as of the date of Termination, without any further action on the part of the Company or the Participant.

(c)All Other Terminations. If the Participant experiences a Termination for any reason other than those set forth in Section 4(a) and (b), any Restricted Share Units that have not yet vested shall be immediately forfeited and cancelled as of the date of Termination, without any further action on the part of the Company or the Participant.

2

93996992v3

Exhibit 10.6

5.Rights as a Holder of Restricted Share Units. The Company shall record in its books and records the number of Restricted Share Units granted to the Participant. No Shares shall be issued to the Participant at the time the grant is made and, except as set forth in this Section 5, the Participant shall not be, nor have any of the rights or privileges of, a stockholder of the Company with respect to any Restricted Share Units, unless and until paid in Shares; provided, however, that, to the extent the Company issues a dividend in the form of Shares or other property, the Participant shall have the rights to dividend equivalents as provided in Section 5.3(c) of the Plan. The Participant shall not have any interest in any fund or specific assets of the Company by reason of this Agreement.

6.Tax Withholding. To the extent applicable, the Participant shall be subject to the provisions of Section 12 of the Plan with respect to any withholding or other tax obligations in connection with the grant, vesting or settlement of the Restricted Share Units or otherwise in connection with this Agreement. In the event that any tax withholding or other tax obligations in respect of the Restricted Share Units (whether in connection with vesting, settlement or otherwise) are triggered prior to (a) a Change in Control, (b) a public listing of the Shares on a national securities exchange or (c) Brookfield’s ceasing to be an Affiliate of the Company, then the Participant may elect for such tax withholding or other tax obligations to be effectuated by the Company withholding a number of Shares otherwise deliverable to the Participant with respect to the settlement of the Restricted Share Units having a Fair Market Value equal to the amount of such tax withholding obligations. The Company’s obligation to deliver Shares to the Participant upon settlement of the Restricted Share Units is subject to the satisfaction of any and all applicable federal, state and local income and employment tax withholding requirements.

7.No Obligation to Continue Employment. This Agreement is not an agreement of employment or service. Neither the execution of this Agreement nor the issuance of the Restricted Share Units hereunder constitute an agreement by the Company to continue to engage the Participant as an employee during the entire, or any portion of the, term of this Agreement, including but not limited to any period during which any Restricted Share Units are outstanding, nor does it modify in any respect the Company’s right to terminate or modify the Participant’s service or compensation.

8.Restrictions on Transfer. Except as provided in this Agreement or the Plan, the Participant may not sell, transfer, hypothecate, pledge, or assign any Restricted Share Units or any rights or interest therein, including without limitation any rights under this Agreement or, prior to settlement under Section 3, any Shares payable in respect of any Restricted Share Units. In addition, the Participant may not sell, transfer, hypothecate, pledge or assign any Restricted Share Units or any Shares delivered in connection with settlement of the Restricted Share Units during the time that Brookfield remains an Affiliate of the Company. Any attempted sale, assignment, transfer, pledge, exchange, encumbrance, hypothecation or other disposition of the Restricted Share Units or any Shares paid or payable in respect of any Restricted Share Units in violation of the Plan or this Agreement will be void and of no effect and the Company will have the right to disregard the same on its books and records.

9.Power of Attorney. The Company, its successors and assigns, is hereby appointed the attorney-in-fact, with full power of substitution, of the Participant for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instruments which

3

93996992v3

Exhibit 10.6

such attorney-in-fact may deem necessary or advisable to accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and coupled with an interest. The Company, as attorney-in-fact for the Participant, may in the name and stead of the Participant, make and execute all conveyances, assignments and transfers of any Shares provided for herein, and the Participant hereby ratifies and confirms that which the Company, as said attorney-in-fact, will do by virtue hereof. Nevertheless, the Participant will, if so requested by the Company, execute and deliver to the Company all such instruments as may, in the judgment of the Company, be advisable for this purpose.

10.Miscellaneous.

(a)This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, personal legal representatives, successors, trustees, administrators, distributees, devisees and legatees. The Company may assign to, and require, any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree in writing to perform this Agreement. Notwithstanding the foregoing, the Participant may not assign this Agreement or any of the Participant’s rights, interests or obligations hereunder.

(b)This award of Restricted Share Units shall not affect in any way the right or power of the Board or stockholders of the Company to make or authorize an adjustment, recapitalization or other change in the capital structure or the business of the Company, any merger or consolidation of the Company or subsidiaries, any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Restricted Share Units, the dissolution or liquidation of the Company, any sale or transfer of all or part of its assets or business or any other corporate act or proceeding.

(c)No modification or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the party against whom it is sought to be enforced.

(d)This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one contract. One or more counterparts of this Agreement may be delivered by facsimile or scanned electronic transmission, with the intention that they shall have the same effect as an original counterpart hereof.

(e)The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.

(f)The headings of the sections of this Agreement have been inserted for convenience of reference only and shall in no way restrict or modify any of the terms or provisions hereof.

4

93996992v3

Exhibit 10.6

(g)All notices, consents, requests, approvals, instructions and other communications provided for herein will be in writing and validly given or made when delivered, or on the second succeeding business day after being mailed by registered or certified mail, whichever is earlier, to the persons entitled or required to receive the same, addressed, in the case of the Company to the Chief Financial Officer of the Company at the principal office of the Company and, in the case of the Participant, at the address most recently on file with the Company, or to such other address as either party may designate by like notice. Notices to the Company shall be addressed to Hospitality Investors Trust, Inc. at 3950 University Drive, Fairfax, Virginia 22030, Attn: Chief Financial Officer.

(h)This Agreement shall be construed, interpreted and governed and the legal relationships of the parties determined in accordance with the internal laws of the State of Maryland without reference to rules relating to conflicts of law.

11.Provisions of Plan Control. This Agreement is subject to all the terms, conditions and provisions of the Plan, including, without limitation, the amendment provisions thereof, and to such rules, regulations and interpretations relating to the Plan as may be adopted thereunder and as may be in effect from time to time. The Plan is incorporated herein by reference. A copy of the Plan has been delivered to the Participant. If and to the extent that this Agreement conflicts or is inconsistent with the terms, conditions and provisions of the Plan, the Plan shall control, and this Agreement shall be deemed to be modified accordingly. Unless otherwise indicated, any capitalized term used but not defined herein shall have the meaning ascribed to such term in the Plan. This Agreement contains the entire understanding of the parties with respect to the subject matter hereof (other than any other documents expressly contemplated herein or in the Plan) and supersedes any prior agreements between the Company and the Participant.

12.Section 409A. This Agreement and the Restricted Share Units granted hereunder are intended to comply with or be exempt from Section 409A of the Code and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A of the Code. Notwithstanding the foregoing, the Company makes no representations that the Restricted Share Units provided under this Agreement comply with Section 409A of the Code and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A of the Code. Whenever a payment under this Agreement specifies a payment period with reference to a number of days, the actual date of payment within the specified period shall be within the sole discretion of the Company.To the extent any payments provided for under this Agreement are treated as “nonqualified deferred compensation” subject to Section 409A of the Code, (a) if on the date of the Participant’s separation from service (as defined in Treasury Regulation §1.409A-1(h)) with the Company, the Participant is a specified employee (as defined in Section 409A of the Code and Treasury Regulation §1.409A-1(i)), no payment constituting the “deferral of compensation” within the meaning of Treasury Regulation §1.409A-1(b) and after application of the exemptions provided in Treasury Regulation §§1.409A-1(b)(4) and 1.409A-1(b)(9)(iii) shall be made to the Participant at any time prior to the earlier of (i) the expiration of the six (6) month period following the Participant’s separation from service or (ii) the Participant’s death, and any such amounts deferred during such applicable period

5

93996992v3

Exhibit 10.6

shall instead be paid in a lump sum to the Participant (or, if applicable, to the Participant’s estate) on the first payroll payment date following expiration of such six (6) month period or, if applicable, the Participant’s death, and (b) for purposes of conforming this Agreement to Section 409A of the Code, any reference to termination of employment, severance from employment, resignation from employment or similar terms shall mean and be interpreted as a “separation from service” as defined in Treasury Regulation §1.409A-1(h).

[signature page(s) follow]

6

93996992v3

Exhibit 10.6

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

HOSPITALITY INVESTORS TRUST, INC.

By: __________________________________    Name: Title:

Participant

____________________________________    

(Signature)

7

93996992v3

EX-14.1

Exhibit 14.1

HOSPITALITY INVESTORS TRUST, INC.

AMENDED AND RESTATED CODE OF BUSINESS CONDUCT AND ETHICS

As Adopted on November 9, 2017

OVERVIEW

This Code of Business Conduct and Ethics (this “Code”) sets forth the guiding principles by which we operate our company and conduct our daily business with our stockholders, customers, vendors and with each other. These principles apply to all of the directors, officers and employees of Hospitality Investors Trust, Inc. and its subsidiaries (referred to in this Code as the “Company”).

The Board of Directors of the Company has adopted this Code in order to promote:

• honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

• full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the Company;

• compliance with applicable governmental rules and regulations; and

• accountability for adherence to this Code.

Each director, officer and employee of the Company is responsible for complying – and encouraging others to comply – with the Code. Directors and officers have the additional responsibility of maintaining a work environment that fosters the principles described in this document. Please read the Code carefully. You will be asked to acknowledge that you have read it and that you will abide by its terms.

PRINCIPLES

Complying with Laws, Regulations, Policies and Procedures

All directors, officers and employees of the Company are expected to understand, respect and comply with all of the laws, regulations, policies and procedures that apply to them in their positions with the Company. Employees are responsible for talking to their supervisors to determine which laws, regulations and Company policies apply to their position and what training is necessary to understand and comply with them. Employees should seek advice from the General Counsel whenever they have a question concerning the application of the law.

Insider Trading

No director, officer or employee who has access to confidential information may use or share that information for stock trading purposes or for any other purpose except the conduct of our business. All non-public information about the Company should be considered confidential information. To use non-public information for personal financial benefit or to “tip” others who might make an investment decision on the basis of this information is not only unethical but also illegal. You must always have any sales or acquisitions of the Company’s securities pre-approved by the Company’s General Counsel. If you have any questions, please consult the Company’s Chief Executive Officer, Chief Financial Officer or General Counsel.

Conflicts of Interest

All directors, officers and employees of the Company should be scrupulous in avoiding any action or interest that conflicts with, or gives the appearance of a conflict with, the Company’s interests. A “conflict of interest” exists whenever an individual’s private interests interfere or conflict in any way (or even appear to interfere or conflict) with the interests of the Company. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest may also arise when a director, officer or employee or a member of his or her family receives improper personal benefits as a result of his or her position with the Company, whether from a third party or from the Company.

Sometimes, conflicts of interest will develop accidentally or unexpectedly, and the appearance of a conflict of interest can also easily arise. If an employee, officer or director has a conflict, actual or potential, the employee, officer or director should report such conflict to higher levels of management, the board of directors or the Chief Executive Officer. Conflicts of interest may not always be clear-cut, so if a question arises, employees, officers or directors should consult with higher levels of management, the board of directors or the Chief Executive Officer.

Any employee, officer or director that becomes aware of a conflict or potential conflict should bring it to the attention of higher levels of management, the board of directors or the Chief Executive Officer. Such communications will be kept confidential to the extent feasible.

Corporate Opportunity

Directors, officers and employees are prohibited from (a) taking for themselves corporate opportunities that properly belong to the Company or are discovered through the use of corporate property, information or position; (b) using corporate property, information or position for personal gain; and (c) competing with the Company. Directors, officers and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

Confidentiality

Employees, officers and directors of the Company must maintain the confidentiality of information entrusted to them by the Company, our suppliers, our business partners and prospective business partners, except when disclosure is either expressly authorized by the Company or required by law. Confidential information includes all non-public information, including information that might be of use to competitors, or harmful to the Company or its suppliers, business partners and prospective business partners, if disclosed. It also includes information that suppliers, business partners and prospective business partners have entrusted to us. The Company expects that each employee, officer and director will preserve all such confidential information even after his or her employment or relationship with the Company ends. In some cases, disclosure of any such confidential information, even after termination of

employment or other relationship, may result in civil liability to the individual. All employees, officers and directors must, upon termination of employment or relationship with the Company, return all confidential information to the Company, including originals and copies, whether in electronic or hard copy.

Fair Dealing

The Company seeks to outperform its competition fairly and honestly. The Company seeks competitive advantages through superior performance, never through unethical or illegal business practices. Stealing proprietary information, possessing or utilizing trade secret information that was obtained without the owner’s consent or inducing such disclosures by past or present employees of other companies is prohibited.

Each director, officer and employee is expected to deal fairly with the Company’s customers, suppliers, tenants, brokers, competitors, officers and employees. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing.

See the Company’s Employee Handbook for more information.

Protection and Proper Use of the Company Assets

All employees should endeavor to protect the Company’s assets and ensure their efficient use. Theft, carelessness, and waste have a direct impact on the Company’s profitability. Any suspected incident of fraud or theft should be immediately reported for investigation. Company equipment should not be used for non-Company business, though incidental personal use may be permitted.

The obligation of employees to protect the Company’s assets includes its proprietary information. Proprietary information includes intellectual property such as trademarks and copyrights, as well as business, marketing and service plans, databases, records, salary information and any unpublished financial data and reports. Unauthorized use or distribution of this information would violate Company policy. It could also be illegal and result in civil or even criminal penalties.

Payments to Government Personnel

The U.S. Foreign Corrupt Practices Act prohibits giving anything of value, directly or indirectly, to officials of foreign governments or foreign political candidates in order to obtain or retain business. It is strictly prohibited to make illegal payments to government officials of any country.

In addition, the U.S. government has a number of laws and regulations regarding business gratuities which may be accepted by U.S. government personnel. The promise, offer or delivery to an official or employee of the U.S. government of a gift, favor or other gratuity in violation of these rules would not only violate Company policy but could also be a criminal offense. State and local governments, as well as foreign governments, may have similar rules. The Company’s Chief Executive Officer can provide guidance to you in this area.

Public Company Reporting

As a public company, it is of critical importance that the Company’s filings with the Securities and Exchange Commission (the “SEC”) be accurate, timely and in accordance with all applicable laws and regulations. Depending on their position with the Company, an employee, officer or director may be called upon to provide necessary information to assure that the Company’s public reports are complete, fair and understandable. The Company expects employees, officers and directors to take this responsibility very seriously and to provide prompt accurate answers to inquiries related to the Company’s public disclosure requirements. However, no employee, officer or director of the Company should respond to inquiries regarding, or otherwise communicate to any outside party, results, forecasts or trends without the prior approval of the Chief Executive Officer or the Chief Financial Officer.

Each director, officer and employee who is involved in the Company’s periodic reports and other documents filed with the SEC, including all financial statements and other financial information, must comply with applicable federal securities laws and SEC regulations. Each director, officer and employee who is involved in the Company’s public disclosure process must: (a) be familiar with and comply with the Company’s disclosure controls and procedures and its internal control over financial reporting; and (b) take all necessary steps to ensure that all filings with the SEC and all other public communications about the financial and business condition of the Company provide full, fair, accurate, timely and understandable disclosure. Financial Statements and Other Records

All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must both conform to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained.

Records should always be retained or destroyed according to the Company’s record retention policies. In accordance with those policies, in the event of litigation or governmental investigation, please consult with the General Counsel.

Discrimination and Harassment

The diversity of the Company’s employees is a tremendous asset. We are firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any discrimination or harassment of any kind. The anti-discrimination and anti-harassment policies set forth in the Company’s Employee Handbook are incorporated herein by reference.

Health and Safety

The Company strives to provide each employee, officer and director with a safe and healthful work environment. Each employee, officer and director has responsibility for maintaining a safe and healthy workplace by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Each employee, officer and director should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs in the workplace will not be tolerated.

See the Company’s Employee Handbook for more information.

REPORTING ILLEGAL OR UNETHICAL BEHAVIOR

Asking Questions and Voicing Concerns

    This Code provides an overview of the legal and ethical responsibilities applicable to employees, officers and directors. Each employee, officer and director is responsible for upholding these responsibilities.

The standards and expectations outlined here are intended to guide such individuals in making the right choices. If any aspect of the Code is unclear, or if any individual has any questions or faces a situation that is not addressed herein, they should bring them to the Company’s attention. The Company recognizes that in some situations it is difficult to know right from wrong. Since this Code cannot anticipate every situation that will arise, it is important that the Company have a way to approach a new question or problem. Each employee, officer and director should keep the following steps and questions to keep in mind:

• Make sure you have all the facts. To reach the right solutions, we must be as fully informed as possible.

• Ask yourself: What specifically am I being asked to do? Does it seem unethical or improper? This will enable you to focus on the specific question you are faced with, and the alternatives you have. Use your judgment and common sense; if something seems unethical or improper, it probably is.

• Clarify your responsibility and role. In most situations, there is shared responsibility. Are your colleagues informed? It may help to get others involved and discuss the problem.

• Discuss the problem with your supervisor. This is the basic guidance for all situations. In many cases, your supervisor will be more knowledgeable about the question, and will appreciate being brought into the decision-making process. Remember that it is your supervisor’s responsibility to help solve problems.

• Seek help from Company resources. In the rare case where it may not be appropriate to discuss an issue with your supervisor, or where you do not feel comfortable approaching your supervisor with your question, discuss it with your superior or the Chief Executive Officer.

• Always ask first, act later. If you are unsure of what to do in any situation, seek guidance before you act.

Duty to Report

Employees, officers and directors who suspect or know of violations of this Code or illegal or unethical business or workplace conduct by employees, officers or directors have a duty to report it immediately. Each person is encouraged to report such conduct to a supervisor or superior, but if the individuals to whom such information is conveyed are not responsive, or if there is reason to believe that reporting to such individuals is inappropriate in particular cases, then the employee, officer or director may contact the Chief Executive Officer, the Chief Financial Officer or the General Counsel of the Company. Such communications will be kept in confidence to the extent appropriate or permitted by law. If the employee is still not satisfied with the response, the employee may contact the Chairman of the board of directors or any of the Company’s directors. While employees, officers and directors are encouraged to use the Company’s internal reporting system outlined, above, in all cases, employees, directors and officers may directly report such violations outside the Company to appropriate authorities in accordance with law.

The Company’s policy is to comply with all applicable financial reporting and accounting regulations. If any director, officer or employee of the Company has unresolved concerns or complaints regarding questionable accounting or auditing matters of the Company, then he or she is encouraged to submit those concerns or complaints (anonymously, confidentially or otherwise) to the Chief Executive Officer, the Chief Financial Officer or the General Counsel of the Company, or any member of the Company’s audit committee. Subject to its legal duties, the applicable officer or member of the audit committee will treat such submissions confidentially. Such submissions may be directed to the attention of the applicable officer or the Company’s audit committee (or any individual member of the Company’s audit committee).

The Company will make an e-mail address available for reporting illegal or unethical behavior as well as questionable accounting or auditing matters and other accounting, internal accounting controls or auditing matters on a confidential, anonymous basis. Any concerns regarding accounting or auditing matters reported via e-mail will be communicated directly to the Company’s audit committee.

When reporting a concern, an individual should supply sufficient information so that the matter may be investigated properly. As the ultimate objective of any investigation is to uncover the truth, any employee, officer or director who is found to have lied during an internal investigation will be subject to appropriate discipline, which could include immediate termination without compensation for that act of dishonesty. Full cooperation is expected both from anyone who is suspected or accused of improper conduct and from anyone who makes accusations against somebody else. Any information provided by an employee, officer or director will be handled in a confidential manner to the greatest extent possible. Moreover, as described below, the Company prohibits retaliation for reporting illegal or unethical behavior.     Any person involved in any investigation in any capacity of a possible misconduct must not discuss or disclose any information to anyone outside of the investigation unless required or permitted by law or when seeking his or her own legal advice, and is expected to cooperate fully in any investigation.     Any use of these reporting procedures in bad faith or in a false or frivolous manner will be considered a violation of this Code. Further, these reporting methods should not be used for personal grievances not involving this Code.

Non-Retaliation

The Company prohibits retaliation of any kind against individuals who have made good faith reports or complaints of violations of this Code or other known or suspected illegal or unethical conduct. Specifically, the Company will not discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee for lawfully reporting internally or to appropriate authorities, or providing information or assistance in an investigation regarding misconduct. Any employee, officer or director who retaliates against another employee, officer or director for reporting known or suspected violations of legal or ethical obligations will be in violation of this Code and subject to disciplinary action, up to and including dismissal. Such retaliation may also be a violation of the law, and as such, could subject both the individual offender and the Company to legal liability.

AMENDMENT, MODIFICATION AND WAIVER

This Code may be amended or modified by the board of directors of the Company, after receiving appropriate recommendation from any relevant committee, as appropriate. Only the board of directors or a committee of the board of directors with specific delegated authority may grant waivers of this Code. Any waivers will be promptly disclosed as required by law or stock exchange regulation.

VIOLATIONS

Violation of this Code is grounds for disciplinary action up to and including termination of employment. Such action is in addition to any civil or criminal liability which might be imposed by any court or regulatory agency.

ACKNOWLEDGMENT OF CODE OF BUSINESS CONDUCT AND ETHICS

The Code is not an expressed or implied contract of employment and does not create any contractual rights of any kind between Hospitality Investors Trust and its employees. In addition, all employees should understand that the Code does not modify their employment relationship, whether at will or governed by contract. Hospitality Investors Trust reserves the right to amend, alter, or terminate the Code or the policies underlying it at any time for any reason.

By signing below, I acknowledge receipt of Hospitality Investors Trust’s Code of Business Conduct and Ethics and have read it or have had it read to me, have become familiar with its contents, and will comply with its terms. I agree to comply with the policies and procedures described therein.

Moreover, except to the extent set forth below, I am not aware of any violation or potential violation of the Code.

Name (please print)__________________________________________

Signature___________________________________________________

Date_______________________________________________________

Please describe below any violations, potential violations, or comments relating to the Code:

1

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:	November 13, 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:	November 13, 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:	November 13, 2017	/s/ Jonathan P. Mehlman
		Jonathan P. Mehlman Chief Executive Officer and President (Principal Executive Officer)
Date:	November 13, 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	9 Months Ended
	Sep. 30, 2017	Nov. 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	Sep. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		39,618,833

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Real estate investments:
Land	$ 344,365	$ 339,819
Buildings and improvements	1,906,168	1,838,594
Furniture, fixtures and equipment	221,553	212,994
Total real estate investments	2,472,086	2,391,407
Less: accumulated depreciation and amortization	(234,131)	(169,486)
Total real estate investments, net	2,237,955	2,221,921
Cash and cash equivalents	70,310	42,787
Assets held for sale	17,030	0
Acquisition deposits	0	7,500
Restricted cash	68,090	35,050
Investments in unconsolidated entities	3,628	3,490
Below-market lease asset, net	9,528	9,827
Prepaid expenses and other assets	35,255	32,836
Goodwill	15,282	0
Total Assets	2,457,078	2,353,411
LIABILITIES, NON-CONTROLLING INTEREST AND EQUITY
Mortgage notes payable, net	1,492,866	1,410,925
Promissory notes payable, net	2,000	23,380
Mandatorily redeemable preferred securities, net	241,620	288,265
Accounts payable and accrued expenses	70,311	68,519
Due to related parties	0	2,879
Total Liabilities	1,806,797	1,793,968
Commitments and Contingencies
Contingently Redeemable Class C Units in operating partnership; 9,387,935 units issued and outstanding ($138,472 liquidation preference)	125,704	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, 39,618,833 and 38,493,430 shares issued and outstanding, respectively	396	385
Additional paid-in capital	872,400	843,149
Deficit	(350,858)	(286,852)
Total equity of Hospitality Investors Trust, Inc. stockholders	521,938	556,682
Non-controlling interest - consolidated variable interest entity	2,639	2,761
Total Stockholders' Equity	524,577	559,443
Total Liabilities, Contingently Redeemable Class C Units, Non-controlling Interest and Equity	$ 2,457,078	$ 2,353,411

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Contingently redeemable class c units in operating partnership, shares issued (in shares)	9,387,935	9,387,935
Contingently redeemable class c units in operating partnership, shares outstanding (in shares)	9,387,935	9,387,935
Contingently redeemable class c units in operating partnership, liquidation preference	$ 138,472	$ 138,472
Preferred stock, par value (in dollars 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 (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	300,000,000	300,000,000
Common stock, issued (in shares)	39,618,833	38,493,430
Common stock, outstanding (in shares)	39,618,833	38,493,430

XML

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Revenues
Rooms	$ 159,423	$ 153,182	$ 453,073	$ 434,455
Food and beverage	4,607	4,850	15,174	15,422
Other	3,211	3,426	9,709	9,964
Total revenue	167,241	161,458	477,956	459,841
Operating expenses
Rooms	39,385	36,958	112,218	104,984
Food and beverage	3,981	4,089	12,206	12,226
Management fees	4,606	11,030	19,649	32,061
Other property-level operating expenses	64,787	58,768	185,210	175,492
Acquisition and transaction related costs	0	(7)	498	25,270
General and administrative	4,389	5,128	14,230	12,623
Depreciation and amortization	26,464	25,788	78,519	74,912
Impairment of goodwill and long-lived assets	5,396	0	22,838	2,399
Rent	1,625	1,945	4,906	4,993
Total operating expenses	150,633	143,699	450,274	444,960
Operating income	16,608	17,759	27,682	14,881
Interest expense	(24,728)	(23,087)	(74,019)	(69,033)
Other income (expense)	15	(542)	52	(1,396)
Equity in earnings of unconsolidated entities	231	286	381	407
Total other expenses, net	(24,482)	(23,343)	(73,586)	(70,022)
Net loss before taxes	(7,874)	(5,584)	(45,904)	(55,141)
Income taxes	1,105	948	1,538	2,246
Net loss and comprehensive loss	(8,979)	(6,532)	(47,442)	(57,387)
Less: Net income attributable to non-controlling interest	154	152	237	278
Net loss before dividends and accretion	(9,133)	(6,684)	(47,679)	(57,665)
Deemed dividend related to beneficial conversion feature of Class C Units	0	0	(4,535)	0
Dividends on Class C Units (cash and PIK)	(4,369)	0	(8,681)	0
Accretion of Class C Units	(556)	0	(1,097)	0
Net loss attributable to common stockholders	$ (14,058)	$ (6,684)	$ (61,992)	$ (57,665)
Basic and Diluted net loss attributable to common stockholders per common share (in dollars per share)	$ (0.35)	$ (0.17)	$ (1.58)	$ (1.49)
Basic and Diluted weighted average common shares outstanding (in shares)	39,611,261	38,788,041	39,346,904	38,712,378

XML

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited) - 9 months ended Sep. 30, 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)		809,799
Issuance of common stock, net	11,986	$ 8	11,978		11,986
Net loss before dividends and accretion	(47,679)			(47,679)	(47,679)
Net income attributable to non-controlling interest	237					237
Dividends paid or declared (in shares)		315,604
Dividends paid or declared	4,406	$ 3	6,776	(2,014)	4,765	(359)
Deemed dividend related to beneficial conversion feature of Class C Units	0		4,535	(4,535)
Cash distributions on Class C Units	(5,208)			(5,208)	(5,208)
Accretion on Class C Units	(1,097)			(1,097)	(1,097)
PIK distributions on Class C Units	(3,473)			(3,473)	(3,473)
Share-based payments	140		140		140
Waiver of obligation from Former Advisor	$ 5,822		5,822		5,822
Ending balance (in shares) at Sep. 30, 2017	39,618,833	39,618,833
Ending balance at Sep. 30, 2017	$ 524,577	$ 396	$ 872,400	$ (350,858)	$ 521,938	$ 2,639

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Cash flows from operating activities:
Net loss	$ (47,442)	$ (57,387)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	78,519	74,912
Impairment of goodwill and long-lived assets	22,838	2,399
Amortization and write-off of deferred financing costs	8,194	8,152
Change in fair value of contingent consideration	0	1,454
Loss of acquisition deposits	0	22,000
Other adjustments, net	284	249
Changes in assets and liabilities:
Prepaid expenses and other assets	(2,751)	(4,285)
Restricted cash	(3,836)	(6,890)
Due to related parties	(2,879)	2,479
Accounts payable and accrued expenses	17,401	8,406
Net cash provided by operating activities	70,328	51,489
Cash flows from investing activities:
Acquisition of hotel assets, net of cash received	(60,028)	(69,892)
Real estate investment improvements and purchases of property and equipment	(56,995)	(69,828)
Fees related to Property Management Transactions	(12,000)	0
Change in restricted cash related to real estate improvements	(29,241)	40,602
Other adjustments, net	1,044	0
Net cash used in investing activities	(157,220)	(99,118)
Cash flows from financing activities:
Proceeds from issuance of common stock, net	0	678
Proceeds from Class C Units	135,000	0
Payment of Class C Units issuance costs	(13,866)	0
Payment of offering costs	0	(73)
Dividends/Distributions paid	(5,567)	(11,500)
Mandatorily redeemable preferred securities redemptions	(47,275)	(2,270)
Proceeds from mortgage notes payable	1,101,000	70,384
Repayment of Contingent Consideration	(4,620)	0
Deferred financing fees	(19,672)	(721)
Repayments of promissory and mortgage notes payable	(1,030,622)	(5,000)
Restricted cash for debt service	37	37
Net cash provided by financing activities	114,415	51,535
Net change in cash and cash equivalents	27,523	3,906
Cash and cash equivalents, beginning of period	42,787	46,829
Cash and cash equivalents, end of period	70,310	50,735
Supplemental disclosure of cash flow information:
Interest paid	66,550	62,854
Taxes paid	1,301	1,163
Non-cash investing and financing activities:
Deemed dividend related to beneficial conversion feature of Class C Units	(4,535)	0
Accretion of Class C Units	(1,097)	0
PIK Accrual on Class C Units	(3,473)	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	6,571	8,950
Class B Units in operating partnership converted and redeemed for Common Stock	7,659	0
Note payable to Former Property Manager	2,000	0
Common stock issued to Former Property Manager	4,076	0
Seller financed acquisition deposit	0	7,500
Seller financed acquisition	0	20,000
Dividends declared but not paid	0	4,533
Common stock issued through distribution reinvestment plan	$ 0	$ 9,468

XML

Organization

9 Months Ended

Sep. 30, 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 September 30, 2017, the Company had acquired or had an interest in a total of 148 hotels, including four hotels that were classified as held for sale (See Note 17 - Assets Held For Sale) with a total of 17,846 guest rooms located in 33 states. As of September 30, 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.

As of September 30, 2017, 80 of the hotel assets the Company has acquired were managed by Crestline and 68 of the hotel assets the Company has acquired were managed by other property managers. As of September 30, 2017, the Company’s other property managers were Hampton Inns Management LLC and Homewood Suites Management LLC, affiliates of Hilton Worldwide Holdings Inc. (41 hotels), InnVentures IVI, LP (2 hotels), McKibbon Hotel Management, Inc. (21 hotels) and Larry Blumberg & Associates, Inc. (4 hotels).

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 initial 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 its liabilities, divided by 36,636,016 shares of common stock outstanding on a fully diluted basis as of March 31, 2016. On June 19, 2017, the Company's board of directors approved an updated Estimated Per-Share NAV (the "2017 NAV") equal to $13.20 based on an estimated fair value of the Company’s assets less the estimated fair value of the Company’s liabilities, divided by 39,617,676 shares of common stock outstanding on a fully diluted basis as of March 31, 2017. 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 the OP 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.

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"). As of September 30, 2017, the Brookfield Investor holds all the issued and outstanding Class C Units, representing $138.5 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”), an affiliate of the Brookfield Investor, is the special general partner of the OP, with certain non-economic rights that apply if the OP fails to redeem the Class C Units when required to do so, including the ability to commence selling the OP's assets until the Class C Units have been fully redeemed.

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 the foregoing 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.

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, prior to the Initial Closing, 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 the Company's third-party hotel managers. The Company now conducts its operations independently of the Former Advisor and its affiliates.

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, as well as the Redeemable Preferred Share and the Class C Units, including conversion rights, distribution rights, approval rights and redemption rights associated therewith.

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 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 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 amount 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 amount of a property, an impairment loss will be recorded to the extent that the carrying amount exceeds the estimated fair value of the property. An impairment loss results in an immediate negative adjustment reflected in net income. An aggregate impairment loss on long-lived assets of $1.4 million was recorded on two hotels during the quarter endedJune 30, 2017 and an impairment loss of $2.4 million was recorded on one other hotel during the quarter endedJune 30, 2016 (See Note 16 - Impairments). The Company also recognized an impairment loss on the sale of three of the four hotels classified as assets held for sale as of September 30, 2017, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

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 and the Company's board of directors have 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. Any such adjustment to the carrying amount is recorded as an impairment loss. The Company had four hotels that qualified to be treated as an asset held for sale as of September 30, 2017. The Company recognized an impairment loss on the sale of three of the four hotels, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

Goodwill

The Company allocates goodwill to each reporting unit. For the Company’s purposes, each of its wholly-owned hotels is considered a reporting unit. The Company tests goodwill for impairment at least annually, or upon the occurrence of any "triggering events" if sooner, and has elected to test for goodwill impairment during the quarter ended June 30 of each year. During the second quarter endedJune 30, 2017, the Company adopted ASU 2017-04, Intangibles – Goodwill and Other, which simplified the measurement of goodwill by eliminating Step 2 from the goodwill impairment test in the event that there is evidence of an impairment based on any "triggering events." The Company chose to adopt ASU 2017-04 in the second quarter endedJune 30, 2017, as this was the first time it was required to test goodwill for impairment.

Upon the occurrence of any "triggering events," the Company is required to compare the fair value of each reporting unit to which goodwill has been allocated, to the carrying amount of such reporting unit including the allocation of goodwill. As required by Accounting Standards Codification section 350 - Intangibles - Goodwill and Other (ASC 350), as amended by ASU 2017-04, if the carrying amount of a reporting unit exceeds its fair value, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of the reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

During the three months endedMarch 31, 2017, the Company recognized $31.6 million as goodwill (See Note 4 - Business Combinations). During the three months endedJune 30, 2017, the Company recorded an impairment of its goodwill of $16.1 million (See Note 16 - Impairments).

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.

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 elected and 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 taxes 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, unvested restricted shares of common stock ("restricted shares") and unvested restricted share units in respect of shares of common stock ("RSUs"), except when doing so would be anti-dilutive. For distributions payable with respect to April 1, 2016 through January 13, 2017 (the date distributions to stockholders were suspended), the Company has paid cumulative distributions of 2,047,877 shares of common stock and has adjusted at each reporting date, retroactively for all periods presented its computation of loss per share in order to reflect this as a change in capital structure (See Note 10 - Common Stock).

The Company currently has outstanding restricted shares whose holders are entitled to participate in dividends when and if paid on shares of common stock. Holders of RSUs are credited with dividend or other distribution equivalents when and if paid on shares of common stock. These dividends or other distribution equivalents will be regarded as having been reinvested in RSUs. Holders of RSUs are not deemed to be entitled to participate in dividends for accounting purposes. To the extent the Company were to have distributions in the future, it would be required to calculate earnings per share using the two-class method, whereby earnings or losses are reduced by distributed earnings as well as any available undistributed earnings allocable to holders of restricted shares.

Fair Value Measurements

In accordance with Accounting Standards Codification section 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.

Class C Units

The Company initially measured the Class C Units at fair value net of issuance costs. The Company is required to accrete the carrying value of the Class C Units to the liquidation preference using the effective interest method over the five year period prior to the holder's redemption option becoming exercisable. However, if it becomes probable that the Class C Units will become redeemable prior to such date, the Company will adjust the carrying value of the Class C Units to the maximum liquidation preference.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

Advertising Costs

The Company expenses advertising costs for hotel operations as incurred. These costs were $5.0 million for the three months ended September 30, 2017, and $4.6 million for the three months ended September 30, 2016. Advertising costs were $14.2 million for the nine months ended September 30, 2017 and $13.2 million for the nine months ended September 30, 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):

	September 30, 2017			December 31, 2016
Trade receivables	$	7,609		$	6,238
Allowance for doubtful accounts	(377		)	(434		)
Trade receivables, net of allowance	$	7,232		$	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, and therefore each property is considered a reporting unit. Each of the Company's reporting units are also considered to be operating segments, but none of these individual operating segments represents a reportable segment as they meet the criteria in GAAP to aggregate all properties into one 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 September 30, 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 and nine months ended September 30, 2017, was immaterial to the consolidated financial statements.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

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. Based on the Company's assessment of this standard, it will not materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales; however, it may allow for earlier gain recognition for future asset sale transactions pursuant to which the Company has continuing involvement with the asset. The Company anticipates adopting this standard on January 1, 2018 and is evaluating new disclosure requirements. Upon adoption, the Company expects to implement these standards using a modified retrospective approach with a cumulative effect recognized with no restatements of prior period amounts.

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 Company adopted ASU 2016-15 in the quarter ended June 30, 2017. The adoption of this ASU did not 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 May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments to this update are effective for the Company for fiscal years beginning after December 15, 2017, and early adoption is permitted. ASU 2017-09 is required to be adopted prospectively to an award modified on or after the adoption date. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

XML

Brookfield Investment and Related Transactions

9 Months Ended

Sep. 30, 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 on the Consolidated Balance Sheets, and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company measured the Class C Units issued 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 as of March 31, 2017 (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 on such date (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.

As of September 30, 2017, the Class C Units are reflected on the Consolidated Balance Sheets at $125.7 million. The value of the Class C Units as of September 30, 2017, is derived by reducing the $135.0 million in gross proceeds by the $13.8 million in costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield at the Initial Closing in the form of expense reimbursements and a commitment fee, and increased by $3.5 million in distributions payable to holders of Class C Units in the form of additional Class C Units ("PIK Distributions") and $1.1 million in the accretion of the carrying value to the liquidation preference through September 30, 2017.

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 (as defined in Note 8 below) 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 Company's board of directors for election by the 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.

If the OP fails to redeem Class C Units when required to do so, beginning three months after such failure and 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 (as defined in the Company's charter).

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 with respect to the Redeemable Preferred Share (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 amendment and restatement of the OP's existing agreement of limited partnership ( 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 the A&R LPA, 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 if one were to occur, 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 ("PIK Distributions"). If the Company fails 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

If the OP consummates any 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”) prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units will be 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

In the event of 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 REIT 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

If the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure 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, if the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure and until all Class C Units requested to be redeemed have been redeemed:

• 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 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.

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 to 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 then 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") were 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 was 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 delivered 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 continued to do so through June 30, 2017. Effective as of July 1, 2017, the Company and Crestline entered into a new annually renewable joint occupancy agreement which replaces the Facilities Use Agreement contemplated pursuant to the Framework Agreement and the Company continued its occupancy of the space.

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 would 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 no later than June 29, 2017. As compensation for the foregoing services, the Former Advisor received a one-time fee of $225,000 (which was paid $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline received a fee of $25,000 per month through and including June 2017. The Former Advisor and Crestline were also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with the Former Advisor has expired. Effective as of July 1, 2017, the transition services agreement with Crestline was terminated and the Company entered into a new annually renewable shared services agreement with Crestline pursuant to which Crestline provides the Company with accounting, tax related, treasury, information technology and other administrative services.

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

Relationships with the Brookfield Investor and its Affiliates

As described in Note 3 - Brookfield Investment and Related Transactions, on January 12, 2017, the Company and the OP entered into the SPA and the Framework Agreement. On March 31, 2017, the Initial Closing occurred and a variety of transactions contemplated by the SPA and the Framework Agreement were consummated, including the issuance and sale of the Redeemable Preferred Share and 9,152,542.37 Class C Units and the execution or taking of various agreements and actions required to effectuate the Company's transition to self-management. 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. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, fixed, quarterly, cumulative PIK Distributions payable in Class C Units at a rate of 5% per annum. For the three months ended September 30, 2017, the Company paid cash distributions of $2.6 million and PIK Distributions of 118,443.50 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units. For the nine months ended September 30, 2017, the Company paid cash distributions of $5.2 million and PIK Distributions of 235,392.65 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units.

Two of the Company’s directors, Bruce G. Wiles, who also serves as Chairman of the Board, and Lowell G. Baron, have been elected to the Company’s board of directors as the Redeemable Preferred Directors pursuant to the Brookfield Investor’s rights as the holder of the Redeemable Preferred Share and pursuant to the SPA. Messrs. Wiles and Baron are Managing Partners of Brookfield Asset Management, Inc., an affiliate of the Brookfield Investor.

Relationships with AR Capital, AR Global and their Affiliates

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, including those described in more detail below.

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 then current 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.

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 transition 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 to the Former Advisor and its Affiliates in Connection with the Offering

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services, in addition to selling commissions and dealer manager fees paid to 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).

Fees Paid to the Former Advisor in Connection with the Operations of the Company

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 have paid 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 have been 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 limitations 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 have been 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%.

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. Through the Initial Closing on 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 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Asset management fees	$	—	$	4,469	$	4,581	$	13,446	$	—	$	8
Acquisition fees	$	—	$	—	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	—	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	—	$	—	$	206	$	—	$	—
	$	—	$	4,469	$	4,581	$	15,384	$	—	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to certain limitations. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company did not reimburse 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	—	$	574	$	869	$	1,702	$	—	$	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).

Following the Initial Closing, certain other fees, participations and distributions to which the Former Advisor or the Former Special Limited Partner would have been entitled to prior to the Initial Closing were terminated or forfeited, with no amounts ever having becoming payable with respect to such fees, participations and distributions. The Former Advisor’s right to receive certain brokerage commissions under certain conditions with respect to sales of the Company’s properties was also terminated, with only $0.3 million having been paid in connection with one hotel sold during the three months ended September 30, 2016.

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 pursuant to property management agreements between the Company and 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 pursuant to the property management agreements. 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 by the Former Property Manager 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 pursuant to property management agreements with the Former Property Manager. There were no incentive fees incurred by the Company for the three months endedSeptember 30, 2017 and $0.1 million for the nine months endedSeptember 30, 2017.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company pursuant to the property management agreements (and not payable to a third party sub-property manager) during three months endedSeptember 30, 2017 and 2016, respectively, and the associated payable as of September 30, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	—	$	4,134	$	4,291	$	12,305	$	—	$	1,306
Total management fees incurred from Former Property Manager	$	—	$	2,262	$	2,035	$	6,501	$	—	$	532
Total	$	—	$	6,396	$	6,326	$	18,806	$	—	$	1,838

Following the Initial Closing, the Company no longer has any property management 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 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). Further, 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.

XML

Business Combinations

9 Months Ended

Sep. 30, 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 had 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. For any hotel sold in this manner, the Reinstatement Agreement terminated with respect to such hotel and the purchase price was reduced by the amount allocated to such hotel. 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. Concurrent with the Company’s entry into the Summit Amendment, the Company entered into an amendment to the Summit Loan (the “Loan Amendment”) and the Summit Sellers 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, through the OP, completed the acquisition of seven hotels in the Second Summit Closing from the Summit Sellers ( the "April Acquisition") pursuant to the Reinstatement Agreement for an aggregate purchase price of $66.8 million. The acquisition was immaterial to the consolidated financial statements. Additionally, during the quarter endedJune 30, 2017, the Summit Sellers informed the Company that the eighth hotel was sold by the Summit Sellers to a third party, in connection with which Company’s right and obligation to purchase this hotel was terminated in accordance with the terms of the Reinstatement Agreement.

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 Accounting Standard Codifications 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. During the three months endedJune 30, 2017, the Company recorded an impairment of its goodwill of $16.1 million (See Note 16 - Impairments).

XML

Leases

9 Months Ended

Sep. 30, 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 three months ending December 31, 2017	$	1,303	$	100
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	$	104,026	$	9,528

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 and nine months ended September 30, 2017 and September 30, 2016, amortization of below-market lease intangibles, net, to rent expense was $0.1 million and $0.1 million, and $0.3 million and $0.3 million respectively. Rent expense for the three months endedSeptember 30, 2017 and September 30, 2016 and the nine months ended September 30, 2017 and September 30, 2016, was $1.5 million and $1.8 million and $4.6 million and $4.7 million, respectively.

XML

Mortgage Notes Payable

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Mortgage Notes Payable

Mortgage Notes Payable

The Company’s mortgage notes payable as of September 30, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

	Outstanding Mortgage Notes Payable
Encumbered Properties	September 30, 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
87-Pack Mortgage Loan - 87 properties in Grace Portfolio	805,000		793,647		(1	)	One-month LIBOR plus 2.56%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
87-Pack Mezzanine Loan - 87 properties in Grace Portfolio	110,000		101,794		(1	)	One-month LIBOR plus 6.50%	Interest Only, Principal paid at Maturity	May 2019, subject to three, 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
Refinanced Term Loan - 27 properties in Summit and Noble Portfolios and one additional property	310,000		235,484		(1	)	One-month LIBOR plus 3.00%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
Total Mortgage Notes Payable	$	1,513,000	$	1,418,925
Less: Deferred Financing Fees, Net	$	20,134	$	8,000
Total Mortgage Notes Payable, Net	$	1,492,866	$	1,410,925

(1) These loans were refinanced in April 2017 on different terms with respect to interest rate, principal amount and maturity.

Interest expense related to the Company's mortgage notes payable for the three months ended September 30, 2017 and for the three months ended September 30, 2016, was $16.8 million and $15.2 million, respectively. Interest expense related to the Company's mortgage notes payable for the nine months ended September 30, 2017 and the nine months ended September 30, 2016, was $49.8 million and $44.7 million.

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.

87-Pack Loans

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 carried an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.31%, and the Assumed Grace Mezzanine Loan carried an interest rate of LIBOR plus 4.77%, for a combined weighted average interest rate of LIBOR plus 3.47%.

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 a fully extended 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%, for a combined weighted average interest rate of LIBOR plus 3.03%. 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 Mortgage Loan borrowers 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 (as defined below). 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). As of September 30, 2017, the Company was in compliance with this financial covenant.

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 September 30, 2017, the Company was in compliance with these financial covenants.

Refinanced 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"). Draws under the SN Term Loan were used to finance approximately $235.5 million of the approximately $366 million purchase price with respect to a total of 20 of the Company’s hotels, including the hotels acquired in the First Summit Closing and the Third Summit Closing. On February 11, 2016, the SN Term Loan was amended 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. Upon such expiration, no additional amounts were 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.

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; 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 $99.1 million pay-down 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, and 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). As of September 30, 2017, the Company was in compliance with this financial covenant.

XML

Promissory Notes Payable

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Promissory Notes Payable

Promissory Notes Payable

The Company’s promissory notes payable as of September 30, 2017 and December 31, 2016 were as follows (in thousands):

	Outstanding Promissory Notes Payable
Notes Payable	September 30, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	—	$	23,405	14.0	%
Note Payable to Former Property Manager	$	2,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	2,000	$	23,380

Interest expense related to the Company's promissory notes payable for the three months ended September 30, 2017 was zero and for the three months ended September 30, 2016 was $0.8 million. Interest expense related to the Company's notes payable for the nine months ended September 30, 2017 and the nine months ended September 30, 2016, was $0.9 million and $2.2 million, respectively.

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 was 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 would become 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 the Summit Sellers entered into the Additional Loan Agreement pursuant to which the Summit Sellers agreed to loan the Company an additional $3.0 million as consideration for the Summit Amendment described in Note 4. The maturity date of the Additional Loan under the Additional Loan Agreement was July 31, 2017, however, if the sale of the seven hotels to be sold pursuant to the Reinstatement Agreement on April 27, 2017 was completed on that date, the entire principal amount of the Additional Loan would be deemed paid in full and the interest accrued thereon would 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 4 - Business Combinations).

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).

XML

Mandatorily Redeemable Preferred Securities

9 Months Ended

Sep. 30, 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 87-Pack Loan (plus eight additional otherwise unencumbered hotels) and the pool of hotels encumbered by the Refinanced Additional Grace Mortgage 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 are entitled to 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 September 30, 2017, 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.

XML

Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 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):

	September 30, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,553	$	55,489
Contingent consideration from Barceló Portfolio (See Note 13 - Commitments and Contingencies)	—		4,619
Hotel accrued salaries and related liabilities	13,758		8,411
Total	$	70,311	$	68,519

XML

Common Stock

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Common Stock

Common Stock

The Company had 39,618,833 shares and 38,493,430 shares of common stock outstanding as of September 30, 2017 and December 31, 2016, respectively. The shares of common stock outstanding include shares issued as distributions through March 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.

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 and terminated in accordance with its terms in January 2017.

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 any distributions for subsequent periods were 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 initial 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 initial 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 the Estimated Per-Share NAV at that time. 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

The Company’s board of directors adopted a share repurchase program (“SRP”) in connection with the IPO 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. 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.

Commencing with distributions paid with respect to April 2016, the Company 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.

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

XML

Equity-Based Compensation

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Payments

Share-Based Payments

The Company has adopted an employee and director incentive restricted share plan (as amended and/or restated, the “RSP”), which provides it with the ability to grant awards of restricted shares and, following an amendment and restatement in connection with the Initial Closing, RSUs to the Company’s directors, officers and employees, as well as the directors and employees of entities that provide services to the Company. The total number of shares of common stock that may be granted under the RSP may not exceed 5% of the authorized shares of common stock at any time and in any event may not exceed 4,000,000 shares (as such number may be adjusted for stock splits, stock dividends, combinations and similar events).

Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient’s employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash or stock distributions when and if paid prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares. The fair value of the restricted shares is expensed over the applicable vesting period. The Company recognizes the impact of forfeited restricted share awards as they occur.

RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and/or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of common stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are credited with dividend or other distribution equivalents that are regarded as having been reinvested in RSUs which are subject to the same restrictions as the underlying RSUs. The fair value of the RSUs is expensed over the applicable vesting period. The Company recognizes the impact of forfeited RSUs as they occur.

Restricted Share Awards

A summary of the Company's restricted share awards for the nine months ended September 30, 2017 is presented below.

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	11,387	$	22.12	$	252
Granted	7,576	$	14.59	$	111
Vested	4,862	$	22.21	$	108
Forfeitures	6,525	$	22.06	$	144
Non-vested September 30, 2017	7,576	$	14.59	$	111

Prior to the Initial Closing, the Company made annual restricted share awards to its independent directors that vested annually over a five-year period following the date of grant, subject to continued service. In connection with the Initial Closing, the Company implemented a new director compensation program. Following the Initial Closing, restricted share awards are generally made to an affiliate of the Brookfield Investor in respect of the Redeemable Preferred Directors’ service on the board of directors and vest no later than the date of the next annual meeting of the board of directors following the date of grant, subject to the continued service of the applicable Redeemable Preferred Director. As of September 30, 2017, the Company anticipates that all unvested restricted share awards will vest in accordance with their terms.

The compensation expense related to restricted shares for the three months ended September 30, 2017 was less than $0.1 million, and compensation expense related to the nine months ended September 30, 2017 was $0.1 million. As of September 30, 2017, there was less than $0.1 million of unrecognized compensation expense remaining.

RSU Awards

A summary of the Company's RSU awards for the nine months ended September 30, 2017 is presented below:

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	—	$	—	$	—
Granted	100,398	$	15.08	$	1,514
Vested	—	$	—	$	—
Forfeited	—	$	—	$	—
Non-vested September 30, 2017	100,398	$	15.08	$	1,514

RSU awards to the Company’s executive officers and other employees generally vest annually over a four-year vesting period following the date of grant, subject to continued service. RSU awards to directors other than Redeemable Preferred Directors vest no later than the date of the next annual meeting of the board of directors following the date of grant, subject to the continued service of the applicable director. In addition, during the three months ended September 30, 2017, certain RSU awards to directors other than Redeemable Preferred Directors were issued in connection with the simultaneous forfeiture of an equal number of restricted shares. These RSU awards have the same vesting terms as the restricted shares which were forfeited (i.e., annually over a five-year period following the date of grant). Vested RSUs may only be settled in shares of common stock and such settlement generally will be on the earliest of (i) in the calendar year in which the third anniversary of each applicable vesting date occurs, (ii) termination of the recipient’s services to the Company and (iii) a change in control event. As of September 30, 2017, the Company anticipates that all unvested RSUs will vest in accordance with their terms.

The compensation expense related to RSUs for the three and nine months ended September 30, 2017 was approximately $0.2 million. As of September 30, 2017 there was $1.3 million of unrecognized compensation expense remaining.

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 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 amounts and the fair values of material liabilities, excluding deferred financing fees, that qualify as financial instruments (in thousands):

	September 30, 2017
	Carrying Amount		Fair Value
Mortgage notes payable	$	1,513,000	$	1,512,280
Mandatorily redeemable preferred securities	242,912		223,686
Total	$	1,755,912	$	1,735,966

The fair value of the mortgage notes payable and mandatorily redeemable preferred securities were determined using the discounted cash flow method and applying current market rates and is classified as level 3 under the fair value hierarchy. Market rates take into consideration general market conditions and maturity.

The Company is subject to a contingent forward contract which was recognized at zero as of September 30, 2017 (See Note 3 - Brookfield Investment and Related Transactions).

The Company recognized an impairment loss of $5.4 million on three hotels during the three months ended September 30, 2017. The aggregate fair value of these hotels as of September 30, 2017, was $15.0 million. The fair value was determined using level two measurements, which were agreed upon sales prices with third party buyers (See Note 16 - Impairments of Long-Lived Assets and Note 17 - Assets Held for Sale).

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 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 Company's March 2014 acquisition of interests in six hotels through fee simple, leasehold and joint venture interests (the "Barceló Portfolio") was a contingent consideration payable to the seller based on the future operating results of three of the six hotels: 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 was 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 would not be less than $4.1 million or exceed $4.6 million. The Company paid the contingent consideration of $4.6 million in April 2017 with proceeds used from the Refinanced Term Loan (See Note 6 - Mortgage Notes Payable).

XML

Economic Dependency

9 Months Ended

Sep. 30, 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 then current 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 would 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 not later than June 29, 2017. Following sale of AR Global's membership interest in Crestline and the expiration of the transition services agreement with the Former Advisor, the transition services agreement with Crestline was terminated effective as of July 1, 2017, and the Company entered into a new annually renewable shared services agreement with Crestline pursuant to which Crestline now provides the Company with accounting, tax related, treasury, information technology and other administrative services.

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.

The Company expects to generate additional liquidity through the sale of Class C Units to the Brookfield Investor at Subsequent Closings (See Note 3 - Brookfield Investment and Related Transactions).

XML

Related Party Transactions and Arrangements

9 Months Ended

Sep. 30, 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 on the Consolidated Balance Sheets, and the Class C Units have been classified as temporary equity due to the contingent redemption features described in more detail below. The Company measured the Class C Units issued 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 as of March 31, 2017 (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 on such date (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.

As of September 30, 2017, the Class C Units are reflected on the Consolidated Balance Sheets at $125.7 million. The value of the Class C Units as of September 30, 2017, is derived by reducing the $135.0 million in gross proceeds by the $13.8 million in costs directly attributable to the issuance of Class C Units at the Initial Closing, including $6.0 million paid directly to Brookfield at the Initial Closing in the form of expense reimbursements and a commitment fee, and increased by $3.5 million in distributions payable to holders of Class C Units in the form of additional Class C Units ("PIK Distributions") and $1.1 million in the accretion of the carrying value to the liquidation preference through September 30, 2017.

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 (as defined in Note 8 below) 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 Company's board of directors for election by the 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.

If the OP fails to redeem Class C Units when required to do so, beginning three months after such failure and 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 (as defined in the Company's charter).

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 with respect to the Redeemable Preferred Share (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 amendment and restatement of the OP's existing agreement of limited partnership ( 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 the A&R LPA, 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 if one were to occur, 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 ("PIK Distributions"). If the Company fails 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

If the OP consummates any 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”) prior to March 31, 2022, the fifth anniversary of the Initial Closing, the holders of Class C Units will be 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

In the event of 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 REIT 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

If the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure 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, if the OP fails to redeem Class C Units when required to do so pursuant to the terms of the A&R LPA, beginning three months after such failure and until all Class C Units requested to be redeemed have been redeemed:

• 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 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.

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 to 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 then 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") were 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 was 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 delivered 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 continued to do so through June 30, 2017. Effective as of July 1, 2017, the Company and Crestline entered into a new annually renewable joint occupancy agreement which replaces the Facilities Use Agreement contemplated pursuant to the Framework Agreement and the Company continued its occupancy of the space.

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 would 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 no later than June 29, 2017. As compensation for the foregoing services, the Former Advisor received a one-time fee of $225,000 (which was paid $150,000 at the Initial Closing and $75,000 on May 15, 2017) and Crestline received a fee of $25,000 per month through and including June 2017. The Former Advisor and Crestline were also entitled to reimbursement of out-of-pocket fees, costs and expenses. The transition services agreement with the Former Advisor has expired. Effective as of July 1, 2017, the transition services agreement with Crestline was terminated and the Company entered into a new annually renewable shared services agreement with Crestline pursuant to which Crestline provides the Company with accounting, tax related, treasury, information technology and other administrative services.

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

Relationships with the Brookfield Investor and its Affiliates

As described in Note 3 - Brookfield Investment and Related Transactions, on January 12, 2017, the Company and the OP entered into the SPA and the Framework Agreement. On March 31, 2017, the Initial Closing occurred and a variety of transactions contemplated by the SPA and the Framework Agreement were consummated, including the issuance and sale of the Redeemable Preferred Share and 9,152,542.37 Class C Units and the execution or taking of various agreements and actions required to effectuate the Company's transition to self-management. 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. Holders of Class C Units are also entitled to receive, with respect to each Class C Unit, fixed, quarterly, cumulative PIK Distributions payable in Class C Units at a rate of 5% per annum. For the three months ended September 30, 2017, the Company paid cash distributions of $2.6 million and PIK Distributions of 118,443.50 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units. For the nine months ended September 30, 2017, the Company paid cash distributions of $5.2 million and PIK Distributions of 235,392.65 Class C Units to the Brookfield Investor, as the sole holder of the Class C Units.

Two of the Company’s directors, Bruce G. Wiles, who also serves as Chairman of the Board, and Lowell G. Baron, have been elected to the Company’s board of directors as the Redeemable Preferred Directors pursuant to the Brookfield Investor’s rights as the holder of the Redeemable Preferred Share and pursuant to the SPA. Messrs. Wiles and Baron are Managing Partners of Brookfield Asset Management, Inc., an affiliate of the Brookfield Investor.

Relationships with AR Capital, AR Global and their Affiliates

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, including those described in more detail below.

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 then current 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.

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 transition 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 to the Former Advisor and its Affiliates in Connection with the Offering

The Former Advisor and its affiliates were paid compensation and/or received reimbursement for services relating to the Offering, including transfer agency services, in addition to selling commissions and dealer manager fees paid to 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).

Fees Paid to the Former Advisor in Connection with the Operations of the Company

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 have paid 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 have been 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 limitations 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 have been 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%.

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. Through the Initial Closing on 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 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Asset management fees	$	—	$	4,469	$	4,581	$	13,446	$	—	$	8
Acquisition fees	$	—	$	—	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	—	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	—	$	—	$	206	$	—	$	—
	$	—	$	4,469	$	4,581	$	15,384	$	—	$	8

Prior to the Initial Closing, the Company reimbursed the Former Advisor’s costs for providing administrative services, subject to certain limitations. Additionally, the Company reimbursed the Former Advisor for personnel costs in connection with other services; however, the Company did not reimburse 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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	—	$	574	$	869	$	1,702	$	—	$	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).

Following the Initial Closing, certain other fees, participations and distributions to which the Former Advisor or the Former Special Limited Partner would have been entitled to prior to the Initial Closing were terminated or forfeited, with no amounts ever having becoming payable with respect to such fees, participations and distributions. The Former Advisor’s right to receive certain brokerage commissions under certain conditions with respect to sales of the Company’s properties was also terminated, with only $0.3 million having been paid in connection with one hotel sold during the three months ended September 30, 2016.

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 pursuant to property management agreements between the Company and 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 pursuant to the property management agreements. 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 by the Former Property Manager 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 pursuant to property management agreements with the Former Property Manager. There were no incentive fees incurred by the Company for the three months endedSeptember 30, 2017 and $0.1 million for the nine months endedSeptember 30, 2017.

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company pursuant to the property management agreements (and not payable to a third party sub-property manager) during three months endedSeptember 30, 2017 and 2016, respectively, and the associated payable as of September 30, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	—	$	4,134	$	4,291	$	12,305	$	—	$	1,306
Total management fees incurred from Former Property Manager	$	—	$	2,262	$	2,035	$	6,501	$	—	$	532
Total	$	—	$	6,396	$	6,326	$	18,806	$	—	$	1,838

Following the Initial Closing, the Company no longer has any property management 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 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). Further, 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.

XML

Impairments

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Impairments

Impairments

Impairments of Long-Lived Assets

On June 19, 2017, the Company's board of directors approved the 2017 NAV, which was included in a Current Report on Form 8-K filed on the same day. The 2017 NAV was determined based in part on appraisals of each of the Company’s hotels as performed by an independent valuation firm. As a result of this process, certain reporting units (i.e. individual wholly-owned hotels) exhibited indicators of impairment as the carrying amount (inclusive of the allocation of goodwill) was greater than the appraised value used in connection with the 2017 NAV. 

Upon identification of this impairment "triggering event," the Company performed a recoverability test in accordance with the provisions of Accounting Standards Codification section 360 - Property, Plant and Equipment. Based on the probability weighted undiscounted cash flows anticipated to be generated from each reporting unit from its operation and ultimate disposition over the intended holding periods, the Company determined that the carrying amount of all but two reporting units were recoverable.

The Company determined the aggregate fair values of these two hotels using market and discounted cash flow based methods to be $17.0 million, approximately $1.4 million less than the aggregate carrying amount of the hotels at June 30, 2017, of $18.4 million and recorded the impairment loss in the Consolidated Statements of Operations and Comprehensive Income (Loss). In connection with the Company’s publishing of its initial Estimated Per-Share NAV during 2016, which was also a “triggering event,” the Company recorded an impairment in the second quarter ended June 30, 2016, of $2.4 million at one of its other hotels.

In August and September 2017, hurricanes Harvey and Irma made landfall in the United States, primarily impacting Texas and Florida, where 22 of the Company’s hotels are located. The Company evaluated the effects of these hurricanes on the Company’s hotels to determine if indicators of impairment were present in accordance with the provisions of Accounting Standards Codification section 360 - Property, Plant and Equipment, and did not identify any indicators of impairment. The Company recognized an expense of $1.8 million in other property-level operating expenses on the Consolidated Statements of Operations and Comprehensive Income (Loss) for repair costs during the three months ended September 30, 2017, net of $0.5 million recorded as a receivable for anticipated insurance recoveries in excess of the deductible. 

The Company also recognized an impairment loss on the sale of three of the four hotels classified as assets held for sale as of September 30, 2017, totaling $5.4 million, which includes the costs to sell those assets (See Note 17 - Assets Held for Sale).

Impairment of Goodwill

As described in Note 4 - Business Combinations, the Company determined that the consummation of the transactions contemplated by the Framework Agreement on March 31, 2017 represented a business combination as defined by Accounting Standards Codification section 805 - Business Combinations. In applying the acquisition method of accounting, the Company recognized $31.6 million of goodwill as a result of the transaction. The Company allocated the goodwill recognized to each of its wholly-owned hotels based on its determination that each hotel is a reporting unit as defined in US GAAP.

Management determined that the performance of the recoverability test of the Company's reporting units (as described above in Impairments of Long-Lived Assets) represented a "triggering event" under ASC 350. As a result, an evaluation of impairment of the goodwill allocated to each reporting unit for which a fair value was less than the carrying amount was necessary. The Company determined the fair values of each reporting unit using market and discounted cash flow based methods. The assumptions utilized in the income approach include, but are not limited to, revenue growth rates, future cash flows and a discount rate. The assumptions utilized in the market approach include, but are not limited to, future cash flows, the selection of comparable companies and measures of operating results and pricing multiples. In performing this evaluation, the Company compared the fair value of the reporting unit to the carrying amount of such reporting unit including the allocation of goodwill. As required by ASC 350, as amended by ASU 2017-04, if the carrying amount of the reporting unit exceeds its fair value, the Company will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

As a result of the process described above, the Company has determined that approximately $16.1 million of goodwill allocated to 70 reporting units for which the fair value was less than the carrying amount is impaired. The range of goodwill impairment recorded by each reporting unit was from less than $0.1 million to $1.3 million, with an average impairment of $0.2 million. The Company has recorded a charge as a component of impairment of goodwill and long-lived assets in the Consolidated Statement of Operations and Comprehensive Income (Loss) for the three-months ended June 30, 2017.

XML

Assets Held for Sale

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Assets Held for Sale

Assets Held for Sale

During the quarter ended September 30, 2017, the Company entered into purchase and sale agreements to sell four non-core hotels. If completed, these sales will allow the Company to avoid re-flagging certain of the hotels and generate proceeds that will be used to redeem Grace Preferred Equity Interests in accordance with their terms and meet liquidityrequirements. These sales also generate additional liquidity through the elimination of any future PIP obligations associated with the hotels sold. As of September 30, 2017, the Company classified these four hotels as held for sale. During the period ended September 30, 2017, the Company recognized an impairment loss on the sale of three of the four hotels, totaling $5.4 million, which includes the costs to sell those assets. These sales are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all. The aggregate contract purchase price of these sales is $17.4 million, which are expected to generate net proceeds of approximately $5.0 million to the Company after the redemption of the amount of Grace Preferred Equity Interests required in accordance with their terms and payment of transaction costs.

The sale of these hotels does not represent a strategic shift that has, or will have, a major effect on the Company’s operations and financial results, and therefore the operating results for the period of ownership of these properties are included in income from continuing operations for the three months ended and nine months ended September 30, 2017.

Assets held for sale as of September 30, 2017 consisted of the following (in thousands):

	September 30, 2017
Property, Plant & Equipment, less accumulated depreciation	17,311
Less: Costs to Sell	(281		)
Assets Held for Sale	$	17,030

XML

Subsequent Events

9 Months Ended

Sep. 30, 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 consolidated financial statements.

On October 25, 2017, the Company commenced a self-tender offer (the “Company Offer”) for up to 1,000,000 shares of common stock at a price of $6.50 per share. Shares purchased in the Company Offer will be paid for in cash, less the withholding of any applicable taxes and without interest, as further described in the Offer to Purchase, the Letter of Transmittal and other related materials that were filed with the SEC as exhibits to an issuer tender offer statement on Schedule TO on October 25, 2017. Unless extended or withdrawn, the Company Offer will expire at 5:00 p.m., New York City time, on December 11, 2017.

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 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 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 amount 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 amount of a property, an impairment loss will be recorded to the extent that the carrying amount 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 and the Company's board of directors have 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

Goodwill

The Company allocates goodwill to each reporting unit. For the Company’s purposes, each of its wholly-owned hotels is considered a reporting unit. The Company tests goodwill for impairment at least annually, or upon the occurrence of any "triggering events" if sooner, and has elected to test for goodwill impairment during the quarter ended June 30 of each year. During the second quarter endedJune 30, 2017, the Company adopted ASU 2017-04, Intangibles – Goodwill and Other, which simplified the measurement of goodwill by eliminating Step 2 from the goodwill impairment test in the event that there is evidence of an impairment based on any "triggering events." The Company chose to adopt ASU 2017-04 in the second quarter endedJune 30, 2017, as this was the first time it was required to test goodwill for impairment.

Upon the occurrence of any "triggering events," the Company is required to compare the fair value of each reporting unit to which goodwill has been allocated, to the carrying amount of such reporting unit including the allocation of goodwill. As required by Accounting Standards Codification section 350 - Intangibles - Goodwill and Other (ASC 350), as amended by ASU 2017-04, if the carrying amount of a reporting unit exceeds its fair value, the Company applies a one-step quantitative test and records the amount of goodwill impairment as the excess of the reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

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.

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 elected and 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 taxes 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, unvested restricted shares of common stock ("restricted shares") and unvested restricted share units in respect of shares of common stock ("RSUs"), except when doing so would be anti-dilutive. For distributions payable with respect to April 1, 2016 through January 13, 2017 (the date distributions to stockholders were suspended), the Company has paid cumulative distributions of 2,047,877 shares of common stock and has adjusted at each reporting date, retroactively for all periods presented its computation of loss per share in order to reflect this as a change in capital structure (See Note 10 - Common Stock).

The Company currently has outstanding restricted shares whose holders are entitled to participate in dividends when and if paid on shares of common stock. Holders of RSUs are credited with dividend or other distribution equivalents when and if paid on shares of common stock. These dividends or other distribution equivalents will be regarded as having been reinvested in RSUs. Holders of RSUs are not deemed to be entitled to participate in dividends for accounting purposes. To the extent the Company were to have distributions in the future, it would be required to calculate earnings per share using the two-class method, whereby earnings or losses are reduced by distributed earnings as well as any available undistributed earnings allocable to holders of restricted shares.

Fair Value Measurements

Fair Value Measurements

In accordance with Accounting Standards Codification section 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.

Class C Units

Class C Units

The Company initially measured the Class C Units at fair value net of issuance costs. The Company is required to accrete the carrying value of the Class C Units to the liquidation preference using the effective interest method over the five year period prior to the holder's redemption option becoming exercisable. However, if it becomes probable that the Class C Units will become redeemable prior to such date, the Company will adjust the carrying value of the Class C Units to the maximum liquidation preference.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

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, and therefore each property is considered a reporting unit. Each of the Company's reporting units are also considered to be operating segments, but none of these individual operating segments represents a reportable segment as they meet the criteria in GAAP to aggregate all properties into one 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 September 30, 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 and nine months ended September 30, 2017, was immaterial to the consolidated financial statements.

Pursuant to the SPA with the Brookfield Investor, the Company may become obligated to issue additional Class C Units to the Brookfield Investor and this obligation is considered a contingent forward contract under Accounting Standards Codification section 480 - Distinguishing Liabilities from Equity, and accounted for as a liability. The fair value of the contingent forward liability was initially recognized at zero since the contingent forward contract was executed at fair market value. The Company has determined the value has not changed from the issuance date of March 31, 2017. The Company will measure the contingent forward liability on a recurring basis until the underlying Class C Units are issued and any changes in fair value will be recognized through earnings. At the time that the underlying Class C Units are issued, the corresponding liability will be extinguished.

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. Based on the Company's assessment of this standard, it will not materially affect the amount or timing of revenue recognition for revenues from room, food and beverage, and other hotel level sales; however, it may allow for earlier gain recognition for future asset sale transactions pursuant to which the Company has continuing involvement with the asset. The Company anticipates adopting this standard on January 1, 2018 and is evaluating new disclosure requirements. Upon adoption, the Company expects to implement these standards using a modified retrospective approach with a cumulative effect recognized with no restatements of prior period amounts.

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 Company adopted ASU 2016-15 in the quarter ended June 30, 2017. The adoption of this ASU did not 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 May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718), which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. An entity should account for the effects of a modification unless all the following are met: the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified, the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The amendments to this update are effective for the Company for fiscal years beginning after December 15, 2017, and early adoption is permitted. ASU 2017-09 is required to be adopted prospectively to an award modified on or after the adoption date. The adoption of this ASU is not expected to have a material effect on the Company's consolidated financial statements.

Share-based Payments

Restricted share awards entitle the recipient to receive shares of common stock from the Company under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient’s employment or other relationship with the Company. Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash or stock distributions when and if paid prior to the time that the restrictions on the restricted shares have lapsed. Any distributions payable in shares of common stock shall be subject to the same restrictions as the underlying restricted shares. The fair value of the restricted shares is expensed over the applicable vesting period. The Company recognizes the impact of forfeited restricted share awards as they occur.

RSUs represent a contingent right to receive shares of common stock at a future settlement date, subject to satisfaction of applicable vesting conditions and/or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of common stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are credited with dividend or other distribution equivalents that are regarded as having been reinvested in RSUs which are subject to the same restrictions as the underlying RSUs. The fair value of the RSUs is expensed over the applicable vesting period. The Company recognizes the impact of forfeited RSUs as they occur.

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 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):

	September 30, 2017			December 31, 2016
Trade receivables	$	7,609		$	6,238
Allowance for doubtful accounts	(377		)	(434		)
Trade receivables, net of allowance	$	7,232		$	5,804

XML

Leases (Tables)

9 Months Ended

Sep. 30, 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 three months ending December 31, 2017	$	1,303	$	100
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	$	104,026	$	9,528

XML

Mortgage Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

The Company’s mortgage notes payable as of September 30, 2017 and December 31, 2016 consist of the following, respectively (in thousands):

	Outstanding Mortgage Notes Payable
Encumbered Properties	September 30, 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
87-Pack Mortgage Loan - 87 properties in Grace Portfolio	805,000		793,647		(1	)	One-month LIBOR plus 2.56%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
87-Pack Mezzanine Loan - 87 properties in Grace Portfolio	110,000		101,794		(1	)	One-month LIBOR plus 6.50%	Interest Only, Principal paid at Maturity	May 2019, subject to three, 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
Refinanced Term Loan - 27 properties in Summit and Noble Portfolios and one additional property	310,000		235,484		(1	)	One-month LIBOR plus 3.00%	Interest Only, Principal paid at Maturity	May 2019, subject to three, one year extension rights
Total Mortgage Notes Payable	$	1,513,000	$	1,418,925
Less: Deferred Financing Fees, Net	$	20,134	$	8,000
Total Mortgage Notes Payable, Net	$	1,492,866	$	1,410,925

(1) These loans were refinanced in April 2017 on different terms with respect to interest rate, principal amount and maturity.

XML

Promissory Notes Payable (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Schedule of Promissory Notes

The Company’s promissory notes payable as of September 30, 2017 and December 31, 2016 were as follows (in thousands):

	Outstanding Promissory Notes Payable
Notes Payable	September 30, 2017		December 31, 2016		Interest Rate
Summit Loan Promissory Note	$	—	$	23,405	14.0	%
Note Payable to Former Property Manager	$	2,000	$	—	—	%
Less: Deferred Financing Fees, Net	—		$	25
Promissory Notes Payable, Net	$	2,000	$	23,380

XML

Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 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):

	September 30, 2017		December 31, 2016
Trade accounts payable and accrued expenses	$	56,553	$	55,489
Contingent consideration from Barceló Portfolio (See Note 13 - Commitments and Contingencies)	—		4,619
Hotel accrued salaries and related liabilities	13,758		8,411
Total	$	70,311	$	68,519

XML

Equity-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2017

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Restricted Shares and Units Awards

RSU Awards

A summary of the Company's RSU awards for the nine months ended September 30, 2017 is presented below:

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	—	$	—	$	—
Granted	100,398	$	15.08	$	1,514
Vested	—	$	—	$	—
Forfeited	—	$	—	$	—
Non-vested September 30, 2017	100,398	$	15.08	$	1,514

A summary of the Company's restricted share awards for the nine months ended September 30, 2017 is presented below.

	Number of Shares	Weighted Average Grant Date Fair Value (per share)		Aggregate Intrinsic Value (in thousands)
Non-vested December 31, 2016	11,387	$	22.12	$	252
Granted	7,576	$	14.59	$	111
Vested	4,862	$	22.21	$	108
Forfeitures	6,525	$	22.06	$	144
Non-vested September 30, 2017	7,576	$	14.59	$	111

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Fair Value, by Balance Sheet Grouping

The following table shows the carrying amounts and the fair values of material liabilities, excluding deferred financing fees, that qualify as financial instruments (in thousands):

	September 30, 2017
	Carrying Amount		Fair Value
Mortgage notes payable	$	1,513,000	$	1,512,280
Mandatorily redeemable preferred securities	242,912		223,686
Total	$	1,755,912	$	1,735,966

XML

Related Party Transactions and Arrangements (Tables)

9 Months Ended

Sep. 30, 2017

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The table below shows the management fees (including incentive fees described above) and reimbursable expenses incurred by the Company pursuant to the property management agreements (and not payable to a third party sub-property manager) during three months endedSeptember 30, 2017 and 2016, respectively, and the associated payable as of September 30, 2017 and December 31, 2016 (in thousands):

	Three Months Ended   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total management fees and reimbursable expenses incurred from Crestline	$	—	$	4,134	$	4,291	$	12,305	$	—	$	1,306
Total management fees incurred from Former Property Manager	$	—	$	2,262	$	2,035	$	6,501	$	—	$	532
Total	$	—	$	6,396	$	6,326	$	18,806	$	—	$	1,838

The table below represents reimbursements to the Former Advisor for the three months endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Total general and administrative expense reimbursement for services provided by the Former Advisor	$	—	$	574	$	869	$	1,702	$	—	$	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 endedSeptember 30, 2017 and 2016, the nine months endedSeptember 30, 2017 and 2016 and the associated payable as of September 30, 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   September 30,				Nine Months Ended   September 30,				Payable as of
	2017		2016		2017		2016		September 30, 2017		December 31, 2016
Asset management fees	$	—	$	4,469	$	4,581	$	13,446	$	—	$	8
Acquisition fees	$	—	$	—	$	—	$	1,624	$	—	$	—
Acquisition cost reimbursements	$	—	$	—	$	—	$	108	$	—	$	—
Financing coordination fees	$	—	$	—	$	—	$	206	$	—	$	—
	$	—	$	4,469	$	4,581	$	15,384	$	—	$	8

XML

Assets Held for Sale (Tables)

9 Months Ended

Sep. 30, 2017

Property, Plant and Equipment [Abstract]

Summary of Assets Held for Sale

Assets held for sale as of September 30, 2017 consisted of the following (in thousands):

	September 30, 2017
Property, Plant & Equipment, less accumulated depreciation	17,311
Less: Costs to Sell	(281		)
Assets Held for Sale	$	17,030

XML

Organization - Narrative (Details)				6 Months Ended	9 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares	Jan. 13, 2017 $ / shares	Jan. 12, 2017 USD ($) $ / shares shares	Jun. 30, 2017 USD ($)	Sep. 30, 2017 director hotel state hotel_room $ / shares shares	Jun. 19, 2017 $ / shares	Apr. 30, 2017 employee	Mar. 30, 2017 employee	Dec. 31, 2016 $ / 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 (hotel)					148
Number of real estate properties held for sale (hotel)					4
Number of guest rooms (hotel room) | hotel_room					17,846
Number of states in which entity operates (state) | state					33
Shares authorized (in shares) | shares					300,000,000				300,000,000					80,000,000
Par value (in dollars per share) | $ / shares					$ 0.01				$ 0.01
Denominator for common stock equivalent of dividends declared (in dollars per share) | $ / shares						$ 13.20				$ 21.48	$ 21.48	$ 23.75
Common stock, outstanding (in shares) | shares	39,617,676				39,618,833				38,493,430				36,636,016
Preferred stock, par value (in dollars per share) | $ / shares					$ 0.01				$ 0.01
Number of directors with approval rights (director) | director					1
Number of full time employees (employee) | employee							25	0
Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC
Class of Stock [Line Items]
Number of directors eligible for election by investors (director) | director					2
Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Cash dividends per share declared (in dollars per share) | $ / shares		$ 0.525	$ 0.525
Securities Purchase, Voting and Standstill Agreement | Class C Units | Initial Closing
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) | $ / shares	$ 14.75		$ 14.75
Consideration received from sale of stock | $	$ 135,000,000		$ 135,000,000	$ 138,500,000
Securities Purchase, Voting and Standstill Agreement | Class C Units | Follow-On Funding
Class of Stock [Line Items]
Consideration received from sale of stock | $	$ 265,000,000.0		$ 265,000,000.0
Common Stock
Class of Stock [Line Items]
Par value (in dollars per share) | $ / shares														$ 0.01
Share price (in dollars per share) | $ / shares	$ 14.59													$ 25
Distribution Reinvestment Plan
Class of Stock [Line Items]
Shares authorized (in shares) | shares														21,052,631
Redeemable Preferred Stock | Securities Purchase, Voting and Standstill Agreement
Class of Stock [Line Items]
Number of shares sold (in shares) | shares			1
Preferred stock, par value (in dollars per share) | $ / shares			$ 0.01
Affiliated Entity | Crestline Hotels and Resorts, LLC | United States
Class of Stock [Line Items]
Number of hotels managed by related party (hotel)					80
Sub-Property Managers | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel)					68
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)					41
Sub-Property Managers | InnVentures IVI, LP | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel)					2
Sub-Property Managers | McKibbon Hotel Management, Inc. | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel)					21
Sub-Property Managers | Interstate Management Company, LLC | United States
Class of Stock [Line Items]
Number of hotels managed by third-party (hotel)					4
Disposal Group, Held-for-sale, Not Discontinued Operations
Class of Stock [Line Items]
Number of real estate properties held for sale (hotel)					4

XML

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended				6 Months Ended	9 Months Ended
	Sep. 30, 2017 USD ($) hotel lease	Jun. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Jun. 30, 2016 USD ($) hotel	Jun. 30, 2017 USD ($) hotel	Sep. 30, 2017 USD ($) segment hotel lease property	Jan. 13, 2017 shares	Sep. 30, 2016 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Summary of Significant Accounting Policies [Line Items]
Number of real estate properties held for sale (hotel) | hotel	4					4
Impairment of long-lived assets		$ 1,400,000		$ 2,400,000	$ 1,400,000
Number of impaired hotels (hotel) | hotel		2		1	2
Goodwill	$ 15,282,000					$ 15,282,000				$ 0
Impairment of goodwill				$ 16,100,000
Advertising expense	$ 5,000,000		$ 4,600,000			$ 14,200,000		$ 13,200,000
Number of reportable segments (segment) | segment						1
Number of operating leases (lease) | lease	1					1
Number of ground leases (lease) | lease	9					9
Forward Contracts
Summary of Significant Accounting Policies [Line Items]
Derivative liability	$ 0					$ 0
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						30 days
Maximum
Summary of Significant Accounting Policies [Line Items]
Period after which receivables are due						90 days
Class C Units
Summary of Significant Accounting Policies [Line Items]
Required period to accrete carrying value of Class C Units						5 years
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
Series of Individually Immaterial Business Acquisitions
Summary of Significant Accounting Policies [Line Items]
Goodwill	$ 31,600,000					$ 31,600,000			$ 31,600,000
Impairment of goodwill		$ 16,100,000
Disposal Group, Held-for-sale, Not Discontinued Operations
Summary of Significant Accounting Policies [Line Items]
Number of real estate properties held for sale (hotel) | hotel	4					4
Number of impaired hotels (hotel) | property						3
Number of impaired hotels (hotel) | hotel	3					3
Impairment loss on the sale real estate properties	$ 5,400,000
Building
Summary of Significant Accounting Policies [Line Items]
Useful life						40 years
Land Improvements
Summary of Significant Accounting Policies [Line Items]
Useful life						15 years
Furniture, Fixtures and Equipment
Summary of Significant Accounting Policies [Line Items]
Useful life						5 years

XML

Summary of Significant Accounting Policies - Schedule of Accounts, Notes, Loans and Financing Receivable (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Accounting Policies [Abstract]
Trade receivables	$ 7,609	$ 6,238
Allowance for doubtful accounts	(377)	(434)
Trade receivables, net of allowance	$ 7,232	$ 5,804

XML

Brookfield Investment and Related Transactions - Securities Purchase, Voting and Standstill Agreement (Details) - USD ($)			3 Months Ended			6 Months Ended	9 Months Ended
	Mar. 31, 2017	Jan. 12, 2017	Sep. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Jun. 30, 2017	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Jan. 07, 2014
Related Party Transaction [Line Items]
Deemed dividend			$ 4,369,000		$ 0		$ 8,681,000	$ 0
Class C Units carrying value			125,704,000				125,704,000		$ 0
Class C Units issuance costs							0	73,000
Increase in PIK distributions							3,473,000	$ 0
Accretion of the carrying value to the liquidation preference							1,097,000
Common Stock
Related Party Transaction [Line Items]
Share price (in dollars per share)	$ 14.59			$ 14.59						$ 25
Class C Units
Related Party Transaction [Line Items]
Increase in PIK distributions	$ 0
Securities Purchase, Voting and Standstill Agreement | Follow-On Funding | Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC
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
Related Party Transaction [Line Items]
Increase in PIK distributions							3,500,000
Accretion of the carrying value to the liquidation preference							1,100,000
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		14.75
Consideration received from sale of stock	$ 135,000,000	$ 135,000,000				$ 138,500,000
Class C Units fair value						135,000,000
Conversion price (in dollars 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			$ 125,700,000				$ 125,700,000
Class C Units issuance costs						$ 13,800,000
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	$ 265,000,000.0	$ 265,000,000.0
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) $ in Millions		9 Months Ended
	Mar. 31, 2017 USD ($) shares	Sep. 30, 2017 director
Related Party Transaction [Line Items]
Number of directors with approval rights (director)		1
Class C Units
Related Party Transaction [Line Items]
Period after which holders of redeemable stock has right to increase number of board of directors		3 months
Number of units remaining outstanding to allow redemption (in shares) | shares	0
Liquidation preference | $	$ 100.0
Brookfield Strategic Real Estate Partners II Hospitality REIT II LLC
Related Party Transaction [Line Items]
Number of directors eligible for election by investors (director)		2
Number of additional directors eligible for election by investors (director)		2

XML

Brookfield Investment and Related Transactions - Class C Units (Details)			9 Months Ended
	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($) period $ / shares	Sep. 30, 2017 USD ($) $ / shares	Sep. 30, 2016 USD ($)
Related Party Transaction [Line Items]
Cash dividend			$ 5,208,000
PIK distributions on Class C Units			$ 3,473,000	$ 0
Amount excluded from rights to redeem issued and outstanding shares (in dollars per share) | $ / shares			$ 0.10
Minimum percent of Class C Units to outstanding common stock to trigger preemptive rights		5.00%
Class C Units
Related Party Transaction [Line Items]
Cash distribution per annum	7.50%
Cash distribution potential increased rate	10.00%
Cash dividend	$ 0
PIK distribution per annum		5.00%
PIK distribution potential increased rate		7.50%
PIK distribution potential additional increased rate		1.25%
PIK distribution, number of quarterly periods (period) | period		4
PIK maximum percent per year		12.50%
Denominator for PIK distribution (in dollars per share) | $ / shares		$ 14.75
Distribution base amount		$ 800,000,000
Distribution amount subtracted from base		400,000,000
PIK distributions on Class C Units		$ 0
Consummation period after initial closing		57 months 1 day
Distribution multiple		2
Distribution discount rate assumption		5.00%
Payment amount (less than)		$ 15,000,000
Liquidation preference for right to redeem outstanding units (less than)		35,000,000
Class C Units | Investor
Related Party Transaction [Line Items]
Minimum amount of assets for transfer without consent		$ 100,000,000
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%

XML

Brookfield Investment and Related Transactions - Brookfield Approval Rights (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Liquidation preference	$ 138,472	$ 138,472
Class C Units | Investor
Related Party Transaction [Line Items]
Liquidation preference	$ 100,000

XML

Brookfield Investment and Related Transactions - Property Management Transactions (Details)			3 Months Ended		9 Months Ended
	Mar. 31, 2017 USD ($) term hotel $ / shares shares	Mar. 30, 2017	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) shares	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) shares
Related Party Transaction [Line Items]
Automatic renewal period	5 years
Common stock, issued (in shares)			39,618,833		39,618,833		38,493,430
Goodwill | $			$ 15,282,000		$ 15,282,000		$ 0
Series of Individually Immaterial Business Acquisitions
Related Party Transaction [Line Items]
Goodwill | $	$ 31,600,000		31,600,000		31,600,000
Common Stock
Related Party Transaction [Line Items]
Common stock, fair value (in dollars per share) | $ / shares	$ 14.59
Property Manager
Related Party Transaction [Line Items]
Property management fee		4.00%
Fees incurred with the offering | $			0	$ 6,396,000	6,326,000	$ 18,806,000
Common stock, issued (in shares)	279,329
Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering | $			$ 0	$ 4,469,000	$ 4,581,000	$ 15,384,000
Common stock, issued (in shares)	524,956
Advisor | Class B Units
Related Party Transaction [Line Items]
Conversion of stock (in shares)	524,956
Advisor | OP Units
Related Party Transaction [Line Items]
Conversion of stock (in shares)	524,956
Shares issued in conversion (in shares)	524,956
Advisor | Common Stock
Related Party Transaction [Line Items]
Shares issued in conversion (in 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	3.00%	4.00%
Number of automatic renewal periods (term) | 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
Aggregate cash payments | $	$ 4,000,000
Period of monthly cash payments	12 months
Common stock, issued (in shares)	279,329
Property Management Transactions | Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering | $	$ 5,821,988
Property Management Transactions | Advisor | Class B Units
Related Party Transaction [Line Items]
Conversion of stock (in shares)	524,956
Property Management Transactions | Advisor | OP Units
Related Party Transaction [Line Items]
Conversion of stock (in shares)	524,956
Shares issued in conversion (in shares)	524,956
Property Management Transactions | Advisor | Common Stock
Related Party Transaction [Line Items]
Shares issued in conversion (in shares)	524,956
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

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		9 Months Ended
	May 15, 2017	Mar. 31, 2017	May 15, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering				$ 0	$ 4,469	$ 4,581	$ 15,384
Transition Services Agreement
Related Party Transaction [Line Items]
Fees incurred with the offering		$ 25
Transition Services Agreement | Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 75	$ 150	$ 225

XML

Brookfield Investment and Related Transactions - Registration Rights Agreement (Details) - shares	Sep. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Common stock, issued (in shares)	39,618,833		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	9 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 ($) hotel	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)
Business Acquisition [Line Items]
Number of properties owned (hotel) | hotel								148
Proceeds from issuance of common stock, net								$ 0	$ 678
Acquisition deposits								0		$ 7,500
Additional Summit Loan Agreement | Loan
Business Acquisition [Line Items]
Proceeds from loan		$ 3,000
Secured Debt | Deutsche Bank Term Loan
Business Acquisition [Line Items]
Proceeds from issuance of long term debt								$ 235,500
Summit Portfolio
Business Acquisition [Line Items]
Number of real estate properties expected to be acquired (hotel) | hotel						26
Number of closing transactions (closing transaction) | closing_transaction						3
Business combination purchase price					$ 150,100	$ 347,400
Number of properties owned (hotel) | 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					$ 96,900
Summit Portfolio, Second Closing
Business Acquisition [Line Items]
Number of real estate properties expected to be acquired (hotel) | 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) | 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
Business Acquisition [Line Items]
Business combination purchase price	$ 66,800
Number of properties owned (hotel) | hotel	7

XML

Business Combinations - Framework Agreement (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Mar. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016	Jan. 07, 2014
Business Acquisition [Line Items]
Purchase price settled in cash				$ 12,000	$ 0
Goodwill				15,282		$ 0
Impairment of goodwill			$ 16,100
Common Stock
Business Acquisition [Line Items]
Share price (in dollars per share)	$ 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
Impairment of goodwill		$ 16,100
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
Series of Individually Immaterial Business Acquisitions | Common Stock | Conversion and Redemption of Class B Units to Common Stock
Business Acquisition [Line Items]
Value of common stock	$ 7,700

XML

Leases - Narrative (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) lease	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) lease	Sep. 30, 2016 USD ($)
Leases [Abstract]
Number of operating leases (lease) | lease	1		1
Number of ground leases (lease) | lease	9		9
Amortization of below-market lease intangibles, net, to rent expense | $	$ 0.1	$ 0.3	$ 0.1	$ 0.3
Rent expense | $	$ 1.5	$ 1.8	$ 4.6	$ 4.7

XML

Leases - Schedule of Future Minimum Lease Payments for Operating Leases (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Minimum Rental Commitments
For the three months ending December 31, 2017	$ 1,303
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	104,026
Amortization of Above and Below Market Lease Intangibles to Rent Expense
For the three months ending December 31, 2017	100
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	$ 9,528

XML

Mortgage Notes Payable - Schedule of Long-term Debt Instruments (Details) $ in Thousands		9 Months Ended
	Feb. 27, 2015 hotel	Sep. 30, 2017 USD ($) hotel extension property	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 1,513,000	$ 1,418,925
Less: Deferred Financing Fees, Net		20,134	8,000
Mortgage notes payable, net		$ 1,492,866	1,410,925
Number of encumbered properties (property) | hotel		148
The Grace Acquisition
Debt Instrument [Line Items]
Number of encumbered properties (property) | hotel	116	115
The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate	3.47%
Mortgage notes payable | HIT REIT 87-Pack Mortgage Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 805,000	793,647
Number of extension rights (extension) | extension		3
Extension right		1 year
Number of encumbered properties (property) | property		87
Mortgage notes payable | HIT REIT 87-Pack Mortgage Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate		2.56%
Mortgage notes payable | HIT REIT 87-Pack Mezzanine Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 110,000	101,794
Number of extension rights (extension) | extension		3
Extension right		1 year
Number of encumbered properties (property) | property		87
Mortgage notes payable | HIT REIT 87-Pack Mezzanine Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate		6.50%
Mortgage notes payable | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 232,000	232,000
Interest Rate		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 | HIT REIT Term Loan
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 310,000	235,484
Number of extension rights (extension) | extension		3
Extension right		1 year
Number of encumbered properties (property) | property		1
Mortgage notes payable | HIT REIT Term Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Mortgage notes payable | HIT REIT Term Loan | Summit And Nobel Portfolios
Debt Instrument [Line Items]
Number of encumbered properties (property) | property		27
Mortgage notes payable | Baltimore Courtyard & Providence Courtyard
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 45,500	45,500
Interest Rate		4.30%
Mortgage notes payable | Hilton Garden Inn Blacksburg Joint Venture
Debt Instrument [Line Items]
Outstanding mortgage notes payable		$ 10,500	$ 10,500
Interest Rate		4.31%

XML

Mortgage Notes Payable - Narrative (Details)					3 Months Ended		9 Months Ended
	Apr. 28, 2017 USD ($) extension property	Apr. 27, 2017 USD ($) hotel extension property	Feb. 11, 2016 USD ($)	Feb. 27, 2015 hotel	Sep. 30, 2017 USD ($) hotel property	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) hotel extension property	Sep. 30, 2016 USD ($)	Jul. 01, 2016 USD ($)	Oct. 31, 2015	Oct. 15, 2015 USD ($)	Mar. 31, 2014 hotel
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel					148		148
Payments to acquire real estate							$ 366,000,000
Number of hotels financed with term loan (hotel) | hotel							20
General and administrative					$ 4,389,000	$ 5,128,000	$ 14,230,000	$ 12,623,000
HIT REIT 87-Pack Loans
Debt Instrument [Line Items]
Deposit to fund a reserve	$ 30,000,000
Minimum required net worth	250,000,000.0
Assumed Grace Indebtedness
Debt Instrument [Line Items]
Repayments of secured debt	895,400,000
The Grace Acquisition
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel				116	115		115
The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				3.47%
April Acquisition
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel		7
Reserve deposits		$ 66,800,000
The Barcelo Acquisition
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel												6
Mortgage notes payable
Debt Instrument [Line Items]
Interest expense					$ 16,800,000	$ 15,200,000	$ 49,800,000	$ 44,700,000
Mortgage notes payable | HIT REIT 87-Pack Mortgage Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property					87		87
Number of extension rights (extension) | extension							3
Extension right							1 year
Mortgage notes payable | HIT REIT 87-Pack Mezzanine Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property					87		87
Number of extension rights (extension) | extension							3
Extension right							1 year
Mortgage notes payable | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Interest Rate					4.96%		4.96%
Number of properties owned (hotel) | property					1		1
Mortgage notes payable | HIT REIT Term Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property					1		1
Number of extension rights (extension) | extension							3
Extension right							1 year
Mortgage notes payable | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Mortgage Loan
Debt Instrument [Line Items]
Basis spread on variable rate							2.56%
Mortgage notes payable | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Mezzanine Loan
Debt Instrument [Line Items]
Basis spread on variable rate							6.50%
Mortgage notes payable | London Interbank Offered Rate (LIBOR) | HIT REIT Term Loan
Debt Instrument [Line Items]
Basis spread on variable rate							3.00%
Mortgage notes payable | The Grace Acquisition | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property					20		20
Mortgage notes payable | Baltimore Courtyard & Providence Courtyard
Debt Instrument [Line Items]
Interest Rate					4.30%		4.30%
Mortgage notes payable | Hilton Garden Inn Blacksburg Joint Venture
Debt Instrument [Line Items]
Interest Rate					4.31%		4.31%
Secured Debt | HIT REIT 87-Pack Loans
Debt Instrument [Line Items]
Amount of loan	915,000,000.0
Reserve deposits	$ 1,000,000
Number of extension rights (extension) | extension	3
Extension right	1 year
Secured Debt | HIT REIT 87-Pack Mortgage Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property	87
Amount of loan	$ 805,000,000.0
Secured Debt | HIT REIT 87-Pack Mezzanine Loan
Debt Instrument [Line Items]
Amount of loan	$ 110,000,000.0
Secured Debt | New Additional Grace Mortgage Loan
Debt Instrument [Line Items]
Interest Rate										4.96%
Secured Debt | Deutsche Bank Term Loan
Debt Instrument [Line Items]
Amount of loan			$ 293,400,000.0						$ 235,500,000.0		$ 450,000,000.0
Repayments of secured debt		$ 235,500,000
Draws under SN Term Loan							$ 235,500,000
Additional amounts available to be drawn									$ 0
General and administrative			$ 3,000,000
Secured Debt | HIT REIT Term Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property		28
Amount of loan		$ 310,000,000.0
Reserve deposits		$ 30,000,000
Number of extension rights (extension) | extension		3
Extension right		1 year
Minimum required net worth		$ 250,000,000.0
Number of unencumbered properties (property) | property		1
Pay down of loan balance		$ 99,100,000
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Loans
Debt Instrument [Line Items]
Basis spread on variable rate	3.03%
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Loans | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate	4.00%
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Mortgage Loan
Debt Instrument [Line Items]
Basis spread on variable rate	2.56%
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT 87-Pack Mezzanine Loan
Debt Instrument [Line Items]
Basis spread on variable rate	6.50%
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT Term Loan | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate		4.00%
Secured Debt | London Interbank Offered Rate (LIBOR) | HIT REIT Term Loan | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate		3.00%
Secured Debt | Eurodollar | Deutsche Bank Term Loan | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate							3.75%
Secured Debt | Eurodollar | Deutsche Bank Term Loan | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate							3.25%
Secured Debt | Base Rate | Deutsche Bank Term Loan | Maximum
Debt Instrument [Line Items]
Basis spread on variable rate							2.75%
Secured Debt | Base Rate | Deutsche Bank Term Loan | Minimum
Debt Instrument [Line Items]
Basis spread on variable rate							2.25%
Secured Debt | The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				3.31%
Secured Debt | SWN Acquisitions | HIT REIT Term Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property		20
Secured Debt | April Acquisition | HIT REIT Term Loan
Debt Instrument [Line Items]
Number of properties owned (hotel) | property		7
Reserve deposits		$ 33,400,000
Secured Debt | The Barcelo Acquisition | HIT REIT Term Loan
Debt Instrument [Line Items]
Payment of contingent consideration payable		$ 4,600,000
Mezzanine Mortgage | The Grace Acquisition | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable rate				4.77%

XML

Promissory Notes Payable - Schedule of Promissory Notes (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Notes Payable	$ 1,513,000	$ 1,418,925
Less: Deferred Financing Fees, Net	20,134	8,000
Loan
Debt Instrument [Line Items]
Less: Deferred Financing Fees, Net	0	25
Promissory Notes Payable, Net	2,000	23,380
Loan | Summit Loan Promissory Note
Debt Instrument [Line Items]
Notes Payable	$ 0	23,405
Interest Rate	14.00%
Loan | Note Payable to Former Property Manager
Debt Instrument [Line Items]
Notes Payable	$ 2,000	$ 0
Interest Rate	0.00%

XML

Promissory Notes Payable - Narrative (Details)			3 Months Ended		9 Months Ended
	Jan. 12, 2017 USD ($) hotel	Feb. 11, 2016 USD ($) hotel	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Apr. 27, 2017 hotel	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Oct. 15, 2015 hotel
Debt Instrument [Line Items]
Acquisition deposits			$ 0		$ 0				$ 7,500,000
Number of properties owned (hotel) | hotel			148		148
Property Management Transactions | Property Manager
Debt Instrument [Line Items]
Cash payment per month								$ 333,333.33
Summit Portfolio
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel		6								10
April Acquisition
Debt Instrument [Line Items]
Number of properties owned (hotel) | hotel							7
Additional Summit Loan Agreement
Debt Instrument [Line Items]
Interest rate, percent paid in cash	9.00%
Additional interest rate	4.00%
Number of real estate properties expected to be sold (hotel) | hotel	7
Loan
Debt Instrument [Line Items]
Interest expense			$ 0	$ 800,000	$ 900,000	$ 2,200,000
Loan | Summit Loan Promissory Note
Debt Instrument [Line Items]
Amount of loan		$ 27,500,000.0
Loan | Summit Loan Promissory Note | Summit Portfolio
Debt Instrument [Line Items]
Proceeds from loan		20,000,000
Acquisition deposits		$ 7,500,000
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		$ 333,333.33

XML

Mandatorily Redeemable Preferred Securities - Narrative (Details)	1 Months Ended		9 Months Ended
	Apr. 30, 2015 USD ($)	Feb. 28, 2015 USD ($) company	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Feb. 27, 2015 hotel
Business Acquisition [Line Items]
Number of properties owned (hotel) | hotel			148
Mandatorily redeemable preferred securities redemptions			$ 47,275,000	$ 2,270,000
Mandatorily redeemable preferred securities, net			$ 241,620,000		$ 288,265,000
The Grace Acquisition
Business Acquisition [Line Items]
Number of newly formed LLCs (company) | company		2
Number of properties owned (hotel) | hotel			115			116
Number of additional unencumbered real estate properties (hotel) | hotel			8
The Grace Acquisition | Redeemable Preferred Stock
Business Acquisition [Line Items]
Proceeds from issuance of preferred limited partner units		$ 447,100,000
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	$ 350,000,000
Period for maximum equity offering proceeds used to redeem preferred equity interests at par	12 months
Mandatorily redeemable preferred securities redemptions			$ 204,200,000
Mandatorily redeemable preferred securities, net			$ 242,900,000
Percentage of preferred equity interests required to be redeemed by 2018		50.00%
Amount of preferred equity interests required to be redeemed by 2018		$ 19,400,000
Percentage of preferred equity interests required to be redeemed by 2019		$ 223,500,000
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	Sep. 30, 2017	Dec. 31, 2016
Payables and Accruals [Abstract]
Trade accounts payable and accrued expenses	$ 56,553	$ 55,489
Contingent consideration from Barceló Portfolio (See Note 13 - Commitments and Contingencies)	0	4,619
Hotel accrued salaries and related liabilities	13,758	8,411
Total	$ 70,311	$ 68,519

XML

Common Stock - Narrative (Details) - $ / shares						1 Months Ended	3 Months Ended	4 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2017	Jan. 13, 2017	Jan. 12, 2017	Jul. 01, 2016	Feb. 03, 2014	Jul. 31, 2016	Jun. 30, 2016	Apr. 30, 2017	Sep. 30, 2017	Dec. 31, 2016	Jun. 19, 2017	Mar. 31, 2016
Class of Stock [Line Items]
Common stock, outstanding (in shares)	39,617,676								39,618,833	38,493,430		36,636,016
Common stock, issued (in shares)									39,618,833	38,493,430
Dividends declared per day (in dollars per share)					$ 0.00465753425	$ 0.000185792
Dividends declared per day if leap year (in dollars per share)					0.00464480874
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				$ 13.20
Annual distribution rate				6.80%
Period shares have been held before a repurchase request can be made									1 year
Share Repurchase Program
Class of Stock [Line Items]
Repurchase of common stock (in shares)								0		0
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
Advisor
Class of Stock [Line Items]
Common stock, issued (in shares)	524,956
Advisor | Class B Units
Class of Stock [Line Items]
Conversion of stock (in shares)	524,956
Advisor | OP Units
Class of Stock [Line Items]
Conversion of stock (in shares)	524,956
Shares issued in conversion (in shares)	524,956
Property Management Transactions | Property Manager
Class of Stock [Line Items]
Common stock, issued (in shares)	279,329
Property Management Transactions | Advisor | Class B Units
Class of Stock [Line Items]
Conversion of stock (in shares)	524,956
Property Management Transactions | Advisor | OP Units
Class of Stock [Line Items]
Conversion of stock (in shares)	524,956
Shares issued in conversion (in shares)	524,956
Common Stock
Class of Stock [Line Items]
Common stock, fair value (in dollars per share)	$ 14.59
Common Stock | Advisor
Class of Stock [Line Items]
Shares issued in conversion (in shares)	524,956
Common Stock | Property Management Transactions | Advisor
Class of Stock [Line Items]
Shares issued in conversion (in shares)	524,956
Common Stock
Class of Stock [Line Items]
Common stock, outstanding (in shares)									39,618,833	38,493,430

XML

Equity-Based Compensation - Narrative (Details) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2017 USD ($) shares	Sep. 30, 2017 USD ($) shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of granted shares allowed		5.00%
Number of shares authorized (in shares) | shares	4,000,000	4,000,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vesting period		5 years
Compensation expense	$ 0.1	$ 0.1
Unrecognized compensation expense remaining	0.1	$ 0.1
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards vesting period		4 years
Compensation expense		$ 0.2
Unrecognized compensation expense remaining	$ 1.3	$ 1.3

XML

Equity-Based Compensation - Summary of Restricted Shares Awards (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Number of Shares
Non-vested, beginning of period (in shares) | shares	11,387
Granted (in shares) | shares	7,576
Vested (in shares) | shares	4,862
Forfeitures (in shares) | shares	6,525
Non-vested, end of period (in shares) | shares	7,576
Weighted Average Grant Date Fair Value (per share)
Non-vested, beginning of period (in dollars per share)	$ 22.12
Granted (in dollars per share)	14.59
Vested (in dollars per share)	22.21
Forfeitures (in dollars per share)	22.06
Non-vested, end of period (in dollars per share)	14.59
Aggregate Intrinsic Value (in thousands)
Non-vested, beginning of period	252,000
Granted	111,000
Vested	108,000
Forfeitures	144,000
Non-vested, end of period	$ 111,000

XML

Equity-Based Compensation - Summary of Restricted Units Awards (Details) - Restricted Stock Units (RSUs)	9 Months Ended
	Sep. 30, 2017 $ / shares shares
Number of Shares
Non-vested, beginning of period (in shares) | shares	0
Granted (in shares) | shares	100,398
Vested (in shares) | shares	0
Forfeitures (in shares) | shares	0
Non-vested, end of period (in shares) | shares	100,398
Weighted Average Grant Date Fair Value (per share)
Non-vested, beginning of period (in dollars per share)	$ 0.00
Granted (in dollars per share)	15.08
Vested (in dollars per share)	0.00
Forfeitures (in dollars per share)	0.00
Non-vested, end of period (in dollars per share)	15.08
Aggregate Intrinsic Value (in thousands)
Non-vested, beginning of period	0
Granted	1,514,000
Vested	0
Forfeitures	0
Non-vested, end of period	$ 1,514,000

XML

Fair Value Measurements - Fair Value, by Balance Sheet Grouping (Details) - Level 3 $ in Thousands	Sep. 30, 2017 USD ($)
Carrying Amount
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Mortgage notes payable	$ 1,513,000
Mandatorily redeemable preferred securities	242,912
Total	1,755,912
Fair Value
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Mortgage notes payable	1,512,280
Mandatorily redeemable preferred securities	223,686
Total	$ 1,735,966

XML

Fair Value Measurements - Narrative (Details)	3 Months Ended
	Sep. 30, 2017 USD ($) hotel	Jun. 30, 2017 hotel	Jun. 30, 2016 hotel
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of impaired hotels (hotel) | hotel		2	1
Forward Contracts
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability	$ 0
Disposal Group, Held-for-sale, Not Discontinued Operations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment loss on the sale real estate properties	$ 5,400,000
Number of impaired hotels (hotel) | hotel	3
Fair Value, Inputs, Level 2 [Member] | Hotel
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Aggregate fair value of assets held for sale	$ 15,000,000

XML

Commitments and Contingencies - Narrative (Details)	1 Months Ended	9 Months Ended
	Apr. 30, 2017 USD ($)	Sep. 30, 2017 USD ($) hotel	Sep. 30, 2016 USD ($)	Aug. 31, 2016 USD ($)	Mar. 31, 2014 hotel
Other Commitments [Line Items]
Number of properties owned (hotel) | hotel		148
Payments for contingent consideration		$ 4,620,000	$ 0
The Barcelo Acquisition
Other Commitments [Line Items]
Number of properties owned (hotel) | hotel					6
Business combination, contingent consideration arrangements, minimum				$ 4,100,000.0
Business combination, contingent consideration arrangements, maximum				$ 4,600,000.00
Payments for contingent consideration	$ 4,600,000
Baltimore Courtyard, Providence Courtyard And Stratford Homewood Suites
Other Commitments [Line Items]
Number of real estate properties with contingent consideration payable based on future operating results (hotel) | hotel					3

XML

Related Party Transactions and Arrangements - Relationships with the Brookfield Investor and its Affiliates (Details) - USD ($) $ in Thousands			3 Months Ended	9 Months Ended
	Mar. 31, 2017	Jan. 12, 2017	Sep. 30, 2017	Sep. 30, 2017	Sep. 30, 2016
Related Party Transaction [Line Items]
Cash paid for dividends				$ 5,567	$ 11,500
Securities Purchase, Voting and Standstill Agreement | Class C Units
Related Party Transaction [Line Items]
Cash paid for dividends			$ 2,600	$ 5,200
Paid in kind distributions (in shares)			118,443.50	235,392.65
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
Cumulative cash distributions	7.50%
Paid in king distributions payable	5.00%

XML

Related Party Transactions and Arrangements - Fees Paid in Connection with the Offering (Details) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Related Party Transactions [Abstract]
Liability for initial public offering costs (percent)	2.00%
Offering and related costs in excess of gross proceeds form the offering limit	$ 5.8

XML

Related Party Transactions and Arrangements - Fees Paid in Connection With the Operations of the Company (Details)			3 Months Ended		9 Months Ended
	Mar. 31, 2017 shares	Mar. 30, 2017	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($) hotel	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($)	Nov. 11, 2015
Related Party Transaction [Line Items]
Quarterly asset management fee earned by related party, percent of benchmark								0.0625%
Number of real estate properties sold (hotel) | hotel				1
Due to related parties			$ 0		$ 0		$ 2,879,000
ARC Realty Finance Advisors, LLC
Related Party Transaction [Line Items]
Real estate acquisition fee		1.50%
Real estate acquisition fee reimbursement maximum		0.10%
Annual asset management fee lower of cost of assets or net asset value		0.75%
ARC Realty Finance Advisors, LLC | Real Estate Commissions
Related Party Transaction [Line Items]
Fees incurred with the offering				$ 300,000
Advisor
Related Party Transaction [Line Items]
Fees incurred with the offering			0	4,469,000	4,581,000	$ 15,384,000
Due to related parties			0		0		8,000
Advisor | Asset management fees
Related Party Transaction [Line Items]
Fees incurred with the offering			0	4,469,000	4,581,000	13,446,000
Due to related parties			0		0		8,000
Advisor | Acquisition fees
Related Party Transaction [Line Items]
Fees incurred with the offering			0	0	0	1,624,000
Due to related parties			0		0		0
Advisor | Acquisition cost reimbursements
Related Party Transaction [Line Items]
Fees incurred with the offering			0	0	0	108,000
Due to related parties			0		0		0
Advisor | Financing coordination fees
Related Party Transaction [Line Items]
Fees incurred with the offering			0	0	0	206,000
Due to related parties			0		0		0
Advisor | Reimbursement for Administrative Services and Personnel Costs
Related Party Transaction [Line Items]
Fees incurred with the offering			0	574,000	869,000	1,702,000
Due to related parties			0		0		522,000
Advisor | Common Stock
Related Party Transaction [Line Items]
Stock issued for service (in shares) | shares	25,454
Shares issued in conversion (in shares) | shares	524,956
Advisor | Class B Units
Related Party Transaction [Line Items]
Stock issued for service (in shares) | shares	524,956
Conversion of stock (in shares) | shares	524,956
Advisor | OP Units
Related Party Transaction [Line Items]
Conversion of stock (in shares) | shares	524,956
Shares issued in conversion (in shares) | shares	524,956
Property Manager
Related Party Transaction [Line Items]
Cumulative capital investment return		8.50%
Fees incurred with the offering			0	6,396,000	6,326,000	18,806,000
Due to related parties			0		0		1,838,000
Property management fee		4.00%
Annual incentive fee		15.00%
Property Manager | Incentive Fees
Related Party Transaction [Line Items]
Fees incurred with the offering			0		100,000
Property Manager | Total management fees and reimbursable expenses incurred from Crestline
Related Party Transaction [Line Items]
Fees incurred with the offering			0	4,134,000	4,291,000	12,305,000
Due to related parties			0		0		1,306,000
Property Manager | Total management fees incurred from Former Property Manager
Related Party Transaction [Line Items]
Fees incurred with the offering			0	$ 2,262,000	2,035,000	$ 6,501,000
Due to related parties			$ 0		$ 0		$ 532,000

XML

Related Party Transactions and Arrangements - Fees Paid in Connection with the Liquidation or Listing (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016
Related Party Transaction [Line Items]
Due to related parties		$ 0	$ 2,879
ARC Realty Finance Advisors, LLC | Real Estate Commissions
Related Party Transaction [Line Items]
Fees incurred with the offering	$ 300

XML

Impairments (Details) $ in Thousands		3 Months Ended			6 Months Ended	9 Months Ended
	Jun. 19, 2017 hotel	Sep. 30, 2017 USD ($) hotel	Jun. 30, 2017 USD ($)	Jun. 30, 2016 USD ($) hotel	Jun. 30, 2017 USD ($)	Sep. 30, 2017 USD ($) hotel property	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Property, Plant and Equipment [Line Items]
Number of hotels identified for impairment (hotel) | hotel	2			70
Impairment of long-lived assets			$ 1,400	$ 2,400	$ 1,400
Number of properties owned (hotel) | hotel		148				148
Receivable for insurance recoveries		$ 500				$ 500
Number of real estate properties held for sale (hotel) | hotel		4				4
Goodwill		$ 15,282				$ 15,282		$ 0
Implied fair value of the goodwill reporting unit				16,100
Minimum
Property, Plant and Equipment [Line Items]
Goodwill impairment loss				100
Maximum
Property, Plant and Equipment [Line Items]
Goodwill impairment loss				1,300
Weighted Average
Property, Plant and Equipment [Line Items]
Goodwill impairment loss				$ 200
Series of Individually Immaterial Business Acquisitions
Property, Plant and Equipment [Line Items]
Goodwill		$ 31,600				$ 31,600	$ 31,600
Implied fair value of the goodwill reporting unit			$ 16,100
Disposal Group, Held-for-sale, Not Discontinued Operations
Property, Plant and Equipment [Line Items]
Number of impaired hotels (hotel) | property						3
Number of real estate properties held for sale (hotel) | hotel		4				4
Impairment loss on the sale real estate properties		$ 5,400
Texas and Florida
Property, Plant and Equipment [Line Items]
Number of properties owned (hotel) | hotel		22				22
Other property-level operating expenses		$ 1,800
Hotel
Property, Plant and Equipment [Line Items]
Aggregate fair value of real estate property		17,000				$ 17,000
Net book value or real estate property		$ 18,400				$ 18,400

XML

Assets Held for Sale - Narrative (Details) $ in Millions	3 Months Ended
	Sep. 30, 2017 USD ($) hotel	Jun. 30, 2017 hotel	Jun. 30, 2016 hotel
Long Lived Assets Held-for-sale [Line Items]
Number of real estate properties held for sale (hotel)	4
Number of impaired hotels (hotel)		2	1
Disposal Group, Held-for-sale, Not Discontinued Operations
Long Lived Assets Held-for-sale [Line Items]
Number of real estate properties held for sale (hotel)	4
Number of impaired hotels (hotel)	3
Impairment loss on the sale real estate properties | $	$ 5.4
Purchase price for sale of real estate properties | $	17.4
Proceeds from sale of real estate properties | $	$ 5.0

XML

Assets Held for Sale - Summary of Assets Held for Sale (Details) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Long Lived Assets Held-for-sale [Line Items]
Assets Held for Sale	$ 17,030	$ 0
Disposal Group, Held-for-sale, Not Discontinued Operations
Long Lived Assets Held-for-sale [Line Items]
Assets held for sale, gross	17,311
Less: Costs to Sell	(281)
Assets Held for Sale	$ 17,030

XML

Subsequent Events - Narrative (Details) - Company Offer - Subsequent Event	Oct. 25, 2017 $ / shares shares
Subsequent Event [Line Items]
Number of shares sold (in shares) | shares	1,000,000
Share price (in dollars per share) | $ / shares	$ 6.5