Investments in Hotel Properties, net

Investments in hotel properties, net consisted of the following (in thousands):



	December 31,
	2017			2016
Land	$	344,937		$	210,696
Buildings and improvements	962,478			972,412
Furniture, fixtures and equipment	87,796			70,922
Construction in progress	7,899			4,382
Total cost	1,403,110			1,258,412
Accumulated depreciation	(257,268		)	(243,880		)
Investments in hotel properties, net	$	1,145,842		$	1,014,532

The cost of land and depreciable property, net of accumulated depreciation, for federal income tax purposes was approximately $1.2 billion and $1.0 billion as of December 31, 2017 and 2016, respectively.

For the years ended December 31, 2017, 2016 and 2015, depreciation expense was $52.1 million, $45.7 million and $43.6 million, respectively.

Park Hyatt Beaver Creek

On March 31, 2017, we acquired a 100% interest in the Park Hyatt Beaver Creek in Beaver Creek, Colorado for total consideration of $145.5 million. Concurrent with the closing of the acquisition, we completed the financing of a $67.5 million mortgage loan. See note 9.

We prepared the purchase price allocation of the assets acquired and liabilities assumed. The final purchase price allocation was completed with the assistance of a third party appraisal firm during the three months ended June 30, 2017. The final purchase price allocation resulted in adjustments to land, buildings and improvements and furniture, fixtures and equipment. These adjustments did not result in any changes to depreciation expense as the acquisition closed on March 31, 2017. This valuation is considered a Level 3 valuation technique.

The following table summarizes the estimated fair value of the assets acquired in the acquisition (in thousands):



	Preliminary Allocations as of March 31, 2017		Adjustments			Final Allocations as of June 30, 2017
Land	$	92,470	$	(3,353	)	$	89,117
Buildings and improvements	47,724		3,545			51,269
Furniture, fixtures and equipment	5,306		(192		)	5,114
	$	145,500	$	—		$	145,500
Net other assets (liabilities)	$	4,528	$	(721	)	$	3,807

The results of operations of the hotel property have been included in our results of operations since the acquisition date. For the year ended December 31, 2017, we have included total revenue of $22.0 million and net loss of $2.5 million in our consolidated statements of operations. The unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2016 are included below under “Pro Forma Financial Results.”

Hotel Yountville

On May 11, 2017, we acquired a 100% interest in the Hotel Yountville in Yountville, California for total consideration of $96.5 million. Concurrent with the closing of the acquisition, we completed the financing of a $51.0 million mortgage loan. See note 9.

We prepared a purchase price allocation of the assets acquired and liabilities assumed. The final purchase price allocation was prepared with the assistance of a third-party appraisal firm during the three months ended September 30, 2017. The property level working capital balances amounted to a net liability of $2.1 million. This valuation is considered a Level 3 valuation technique.

The following table summarizes the estimated fair value of the assets acquired in the acquisition (in thousands):



	Final Allocations as of September 30, 2017
Land	$	47,849
Buildings and improvements	41,216
Furniture, fixtures and equipment	7,351
	96,416
Inventories	84
	$	96,500

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. For the year ended December 31, 2017, we have included total revenue of $9.6 million and net income of $803,000 in our consolidated statements of operations. The unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2016 are included below.

Pro Forma Financial Results

The following table reflects the unaudited pro forma results of operations for the years ended December 31, 2017 and 2016 as if the acquisitions had occurred and the applicable indebtedness was incurred on January 1, 2016, and the removal of $5.3 million of non-recurring transaction costs directly attributable to the acquisitions for the year ended December 31, 2017 (in thousands):



	Year Ended December 31,
	2017		2016
Total revenue	$	437,149	$	462,416
Net income (loss)	38,535		30,437
Net income (loss) attributable to common stockholders	25,132		20,823
Pro Forma income per share:
Basic	$	0.81	$	0.77
Diluted	$	0.81	$	0.74
Weighted average common shares outstanding (in thousands):
Basic	30,473		26,648
Diluted	34,706		31,195

Impairment Charges and Insurance Recoveries

In September 2017, the Ritz-Carlton, St. Thomas located in St. Thomas, USVI, Key West Pier House located in Key West, FL and Tampa Renaissance located in Tampa, FL were impacted by the effects of Hurricanes Irma and Maria. The Company holds insurance policies that provide coverage for property damage and business interruption after meeting certain deductibles at all of its hotel properties. During the year ended December 31, 2017, the Company recognized impairment charges, net of anticipated insurance recoveries of $1.1 million. Additionally, the Company recognized remediation and other costs, net of anticipated insurance recoveries of $3.8 million, included primarily in other hotel operating expenses. As of December 31, 2017, the Company has recorded an insurance receivable of $8.8 million, net of deductibles of $4.9 million, related to the anticipated insurance recoveries. During the year ended December 31, 2017, the Company received proceeds of $11.1 million for business interruption losses associated with lost profits, of which $4.1 million has been recorded as “other” hotel revenue in our consolidated statement of operations, $3.3 million represented reimbursement of incurred expenses in excess of the deductible of $1.1 million and $3.7 million was recorded as a reduction to insurance receivable. The Company will not record an insurance recovery receivable for business interruption losses associated with lost profits until the amount for such recoveries is known and the amount is realizable.