Investment in Unconsolidated Entity

Ashford Inc.

As of September 30, 2017 and December 31, 2016, we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share was $60.60 and $43.14 as of September 30, 2017 and December 31, 2016, respectively. This represented an approximate 9.6% ownership interest in Ashford Inc. for both September 30, 2017 and December 31, 2016. See notes 10 and 11.

As we exercise significant influence over Ashford Inc., this investment would typically be accounted for under the equity method of accounting, under ASC 323-10 - Investments - Equity Method and Joint Ventures. However, we have elected to record our investment in Ashford Inc. using the fair value option under ASC 825-10 - Fair Value Option - Financial Assets and Financial Liabilities as the fair value is readily available since Ashford Inc. common stock is traded on a national exchange. The fair value of our investment in Ashford Inc. is included in “investment in Ashford Inc., at fair value” on our condensed consolidated balance sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our condensed consolidated statements of operations.

The following tables summarize the condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, and the condensed consolidated statements of operations for the three and nine months ended September 30, 2017 and 2016, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets

(unaudited)



	September 30, 2017		December 31, 2016
Total assets	$	84,012	$	129,797
Total liabilities	49,754		38,168
Redeemable noncontrolling interests	1,936		1,480
Total stockholders’ equity of Ashford Inc.	31,862		37,377
Noncontrolling interests in consolidated entities	460		52,772
Total equity	32,322		90,149
Total liabilities and equity	$	84,012	$	129,797
Our investment in Ashford Inc., at fair value	$	11,810	$	8,407

Ashford Inc.

Condensed Consolidated Statements of Operations

(unaudited)



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Total revenue	$	19,255		$	16,538		$	51,907		$	48,099
Total operating expenses	(21,595		)	(16,673		)	(54,965		)	(50,938		)
Operating income (loss)	(2,340		)	(135		)	(3,058		)	(2,839		)
Realized and unrealized gain (loss) on investment in unconsolidated entity	—			—			—			(1,460		)
Realized and unrealized gain (loss) on investments	—			(441		)	(91		)	(5,889		)
Other	57			59			185			(21		)
Income tax (expense) benefit	25			(575		)	(9,248		)	(560		)
Net income (loss)	(2,258		)	(1,092		)	(12,212		)	(10,769		)
(Income) loss from consolidated entities attributable to noncontrolling interests	102			486			267			6,852
Net (income) loss attributable to redeemable noncontrolling interests	300			321			995			794
Net income (loss) attributable to Ashford Inc.	$	(1,856	)	$	(285	)	$	(10,950	)	$	(3,123	)
Our unrealized gain (loss) on investment in Ashford Inc.	$	1,875		$	(458	)	$	3,403		$	(1,091	)