Dispositions, Impairment Charges and Assets Held For Sale

3 Months Ended

Mar. 31, 2024

Discontinued Operations and Disposal Groups [Abstract]

Dispositions, Impairment Charges and Assets Held For Sale

Dispositions

On March 1, 2024, the Company received notice that the hotel properties securing the KEYS Pool A and KEYS Pool B loans have been transferred to a court-appointed receiver.

We derecognized the hotel properties securing the KEYS Pool A and KEYS Pool B loans from our consolidated balance sheet as of March 1, 2024, when the receiver took control of the hotels, and accordingly recognized a gain of $133.9 million which is included in “gain (loss) on derecognition of assets” in our consolidated statements of operations. See note 7.

On March 6, 2024, the Company sold the Residence Inn Salt Lake City in Salt Lake City, Utah for $19.2 million in cash. The sale resulted in a gain of approximately $7.0 million for the three months ended March 31, 2024, which was included in gain (loss) on disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

The results of operations for disposed hotel properties are included in net income (loss) through the date of disposition. See note 2 for the fiscal year 2023 and 2024 dispositions. The following table includes condensed financial information for the three months ended March 31, 2024 and 2023 from the Company’s dispositions (in thousands):


	Three Months Ended March 31,
		2024		2023
Total hotel revenue		$	15,753	$	44,565
Total hotel operating expenses		(11,380)		(32,028)
Property taxes, insurance and other		(1,093)		(2,383)
Depreciation and amortization		(1,970)		(7,151)

Total operating expenses		(14,443)		(41,562)
Gain (loss) on disposition of assets and hotel properties		6,956		—
Gain (loss) on derecognition of assets		133,909		—
Operating income (loss)		142,175		3,003
Interest income		43		29
Interest expense and amortization of discounts and loan costs		(120)		(4,849)
Interest expense associated with hotels in receivership		(12,098)		(7,147)
Write-off of premiums, loan costs and exit fees		12		—

Income (loss) before income taxes		130,012		(8,964)
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership		(1,625)		82
Net income (loss) attributable to the Company		$	128,387	$	(8,882)

Impairment Charges

For the three months ended March 31, 2024 and 2023, no impairment charges were recorded.

Assets Held For Sale

On January 29, 2024 and February 20, 2024, the Company entered into a purchase and sale agreement for the Hilton Boston Back Bay hotel in Boston, Massachusetts and the Hampton Inn Lawrenceville, in Lawrenceville, Georgia, respectively. As of March 31, 2024, the Hilton Boston Back Bay and the Hampton Inn Lawrenceville were classified as held for sale. Depreciation and amortization ceased as of the date the assets were deemed held for sale. Since the sale of these hotels does not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in the consolidated financial statements. The Hilton Boston Back Bay and Hampton Inn Lawrenceville sales closed on April 9, 2024 and April 23, 2024, respectively. See note 19.

The major classes of assets and liabilities related to assets held for sale included in the consolidated balance sheet at March 31, 2024 were as follows:


	March 31, 2024
Assets
Investments in hotel properties, net	$	169,583
Cash and cash equivalents	1,592
Restricted cash	2,799
Accounts receivable, net	1,387
Inventories	87
Deferred costs, net	10
Prepaid expenses	707


Other assets	13



Assets held for sale	$	176,178

Liabilities
Indebtedness, net	$	97,206
Accounts payable and accrued expenses	3,369
Accrued interest	780
Due to related party, net	292

Due to Ashford Inc., net	73




Liabilities related to assets held for sale	$	101,720