Investments in Hotel Properties, net

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



	September 30, 2018			December 31, 2017
Land	$	428,567		$	344,937
Buildings and improvements	984,285			962,478
Furniture, fixtures and equipment	99,101			87,796
Construction in progress	24,125			7,899
Total cost	1,536,078			1,403,110
Accumulated depreciation	(252,686		)	(257,268		)
Investments in hotel properties, net	$	1,283,392		$	1,145,842

Impairment Charges and Insurance Recoveries

In September 2017, the Ritz-Carlton, St. Thomas located in St. Thomas, USVI, the Key West Pier House located in Key West, FL and the 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 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 was 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.

For the three and nine months ended September 30, 2018, the Company recorded revenue from business interruption losses associated with lost profits from the hurricanes of $3.8 million and $13.9 million, respectively, which are included in “other” hotel revenue in our condensed consolidated statements of operations. The Company received proceeds of $0 and $34.0 million from our insurance carriers for property damage and business interruption from the hurricanes during the three and nine months ended September 30, 2018. Additionally, during the three and nine months ended September 30, 2018, the Company recorded revenue of $0 and $1.9 million, net of deductibles of $500,000, for business interruption losses associated with lost profits at the Bardessono Hotel and Hotel Yountville as a result of the Napa wildfires, which is included in “other” hotel revenue in our condensed consolidated statements of operations. During the three and nine months ended September 30, 2018, we recorded impairment charges of $0 and $71,000 as a result of a change in estimate of property damage as a result of the hurricanes. As of September 30, 2018, the Company had a net liability of $5.4 million, included in “other liabilities” on the condensed consolidated balance sheet, as it has received insurance proceeds in excess of the sum of its impairment, remediation expenses and business interruption revenue recorded through September 30, 2018. The Company will not record revenue for business interruption losses associated with lost profits or gains from property damage recoveries until the amount for such recoveries is known and the amount is realizable.

Ritz-Carlton, Sarasota

On April 4, 2018, the Company acquired a 100% interest in the 266-room Ritz-Carlton, Sarasota in Sarasota, Florida for $171.4 million and a 22-acre plot of vacant land for $9.7 million. Concurrent with the closing of the acquisition, we completed the financing of a $100.0 million mortgage loan. See note 8.

The acquisition of the Ritz-Carlton, Sarasota included the hotel, a golf club, a beach club and a plot of vacant land, which are considered to be a group of dissimilar assets per ASU 2017-01. As such, we have accounted for this acquisition as a business combination. We have allocated the purchase price to the assets acquired and liabilities assumed on a preliminary basis using estimated fair value information currently available. We are in the process of evaluating the values assigned to investment in hotel property, property level working capital balances and intangibles. This valuation is considered a Level 3 valuation technique. Thus, the balances reflected below are subject to change, and any such changes could result in adjustments to the allocation. Any change to the amounts recorded within the investments in hotel properties or intangibles will also impact depreciation and amortization expense.

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



Land ⁽¹⁾	$	83,630
Buildings and improvements	86,042
Furniture, fixtures and equipment	13,740
Customer relationships	5,682
Refundable membership club deposits ⁽²⁾	(9,960		)
Income guarantee ⁽³⁾	2,000
	$	181,134
Net other assets (liabilities)	$	(3,260	)

________


⁽¹⁾	Amount includes the $9.7 million, 22-acre plot of vacant land.


⁽²⁾	Recorded within “other liabilities” on our condensed consolidated balance sheet.


⁽³⁾	Recorded within “other assets” on our condensed consolidated balance sheet.

The results of operations of the hotel property have been included in our results of operations as of the acquisition date. The table below summarizes the total revenue and net income (loss) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2018:



	Three Months Ended September 30, 2018		Nine Months Ended September 30, 2018
Total revenue	11,233		26,360
Net income (loss)	(3,506	)	(4,225	)

The unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2017 are included below under “Pro Forma Financial Results.”

Pro Forma Financial Results

The following table reflects the unaudited pro forma results of operations as if the acquisitions had occurred and the applicable indebtedness was incurred on January 1, 2017, and the removal of $949,000 of non-recurring transaction costs directly attributable to the acquisitions for the nine months ended September 30, 2018 (in thousands):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018		2017
Total revenue	$	108,846		$	119,438		$	352,526	$	367,566
Net income (loss)	(626		)	(2,760		)	20,216		(723		)
Net income (loss) attributable to common stockholders	(3,576		)	(6,267		)	11,861		(9,562		)
Pro Forma income per share:
Basic	$	(0.12	)	$	(0.20	)	$	0.36	$	(0.33	)
Diluted	$	(0.12	)	$	(0.20	)	$	0.36	$	(0.33	)
Weighted average common shares outstanding (in thousands):
Basic	32,023			31,483			31,905		30,089
Diluted	32,023			31,483			31,922		30,089