Dispositions and Impairment Charges

6 Months Ended

Jun. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

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. For the three months ended June 30, 2024, we recognized a gain of $11.7 million, which is included in “gain (loss) on derecognition of assets” in our consolidated statements of operations. The gain primarily represents the accrued interest expense associated with the default of the KEYS A and KEYS B loans, which results in a corresponding increase of the contract asset on our consolidated balance sheet as we expect to be released from this obligation upon final resolution with the lender. 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 $6.9 million for the six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

On April 9, 2024, the Company sold the Hilton Boston Back Bay in Boston, Massachusetts for $171 million in cash. The sale resulted in a gain of approximately $117,000 for the three and six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

On April 23, 2024, the Company sold the Hampton Inn Lawrenceville in Lawrenceville, Georgia for $8.1 million in cash. The sale resulted in a gain of approximately $4.8 million for the three and six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

On May 30, 2024, the Company sold the Courtyard Manchester in Manchester, Connecticut for $8.0 million in cash. The sale resulted in a gain of approximately $2.1 million for the three and six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

On June 10, 2024, the Company sold the SpringHill Suites Kennesaw and Fairfield Inn Kennesaw in Kennesaw, Georgia for $17.5 million in cash. The sales resulted in a gain of approximately $9.6 million for the three and six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

On June 27, 2024, the Company sold the One Ocean Resort and Spa in Atlantic Beach, Florida for $87.0 million in cash. The sale resulted in a gain of approximately $70.9 million for the three and six months ended June 30, 2024, which was included in “gain (loss) on consolidation of VIE and disposition of assets and hotel properties” in the consolidated statements of operations. See note 7.

The results of operations for disposed and derecognized 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 and six months ended June 30, 2024 and 2023 from the Company’s dispositions (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Total hotel revenue	$	8,577	$	71,497	$	39,921	$	132,696
Total hotel operating expenses	(6,673)		(46,160)		(29,453)		(89,413)
Property taxes, insurance and other	(616)		(3,692)		(3,022)		(7,262)
Depreciation and amortization	(418)		(8,995)		(3,770)		(18,452)

Total operating expenses	(7,707)		(58,847)		(36,245)		(115,127)
Gain (loss) on consolidation of VIE and disposition of assets and hotel properties	87,441		—		94,397		—
Gain (loss) on derecognition of assets	11,725		—		145,634		—
Operating income (loss)	100,036		12,650		243,707		17,569
Interest income	—		51		43		80
Interest expense and amortization of discounts and loan costs	(1,621)		(9,517)		(5,588)		(18,020)
Interest expense associated with hotels in receivership	(11,944)		(8,493)		(24,042)		(15,640)
Write-off of premiums, loan costs and exit fees	(850)		—		(838)		—
Gain (loss) on extinguishment of debt	—		—		45		—
Income (loss) before income taxes	85,621		(5,309)		213,327		(16,011)
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership	(1,079)		61		(2,677)		165
Net income (loss) attributable to the Company	$	84,542	$	(5,248)	$	210,650	$	(15,846)

Impairment Charges

For the three and six months ended June 30, 2024 and 2023, no impairment charges were recorded.