Investment in Unconsolidated Entity

Ashford Inc.

As of December 31, 2018 and 2017, we held approximately 195,000 shares of Ashford Inc. common stock. The closing price per share of Ashford Inc. common stock on the NYSE American LLC was $51.90 and $93.00 as of December 31, 2018 and 2017, respectively. This represented an approximate 8.1% and 9.7% ownership interest in the outstanding common stock, respectively. See notes 11 and 12.

We have elected to use the fair value option, under the applicable accounting guidance, to account for our investment in Ashford Inc. 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 consolidated balance sheets, and changes in market value are included in “unrealized gain (loss) on investment in Ashford Inc.” on our consolidated statements of operations.

The following tables summarize the condensed consolidated balance sheets as of December 31, 2018 and 2017, and the condensed consolidated statements of operations for the years ended December 31, 2018, 2017 and 2016, of Ashford Inc. (in thousands):

Ashford Inc.

Condensed Consolidated Balance Sheets



	December 31, 2018		December 31, 2017
Total assets	$	379,005	$	114,810
Total liabilities	108,726		78,742
Series B cumulative convertible preferred stock	200,847		—
Redeemable noncontrolling interests	3,531		5,111
Total stockholders’ equity of Ashford Inc.	65,443		30,185
Noncontrolling interests in consolidated entities	458		772
Total equity	65,901		30,957
Total liabilities and equity	$	379,005	$	114,810
Our investment in Ashford Inc., at fair value	$	10,114	$	18,124

Ashford Inc.

Condensed Consolidated Statements of Operations



	Year Ended December 31,
	2018			2017			2016
Total revenue	$	195,520		$	81,573		$	67,607
Total operating expenses	(196,359		)	(92,095		)	(70,064		)
Operating income (loss)	(839		)	(10,522		)	(2,457		)
Realized and unrealized gain (loss) on investment in unconsolidated entity	—			—			(1,460		)
Realized and unrealized gain (loss) on investments, net	—			(91		)	(7,787		)
Interest expense and loan amortization cost	(1,200		)	(122		)	—
Other income (expense)	(505		)	264			81
Income tax (expense) benefit	10,364			(9,723		)	(780		)
Net income (loss)	7,820			(20,194		)	(12,403		)
(Income) loss from consolidated entities attributable to noncontrolling interests	924			358			8,860
Net (income) loss attributable to redeemable noncontrolling interests	1,438			1,484			1,147
Net income (loss) attributable to Ashford Inc.	$	10,182		$	(18,352	)	$	(2,396	)
Preferred dividends	(4,466		)	—			—
Amortization of preferred stock discount	(730		)	—			—
Net income attributable to common stockholders	$	4,986		$	(18,352	)	$	(2,396	)
Our unrealized gain (loss) on investment in Ashford Inc.	$	(8,010	)	$	9,717		$	(1,970	)

OpenKey

On March 28, 2018, the Company made a $2.0 million investment in OpenKey, which is controlled and consolidated by Ashford Inc., for an 8.2% ownership interest, which investment was approved by our Related Party Transactions Committee or the independent members of our board of directors. OpenKey is a hospitality-focused mobile key platform that provides a universal smart phone app for keyless entry into hotel guest rooms. Our investment is recorded as a component of “investment in unconsolidated entity” in our consolidated balance sheet and is accounted for under the equity method of accounting as we have been deemed to have significant influence over the entity under the applicable accounting guidance.

The following table summarizes our carrying value and ownership interest in OpenKey:



	December 31, 2018			December 31, 2017
Carrying value of the investment in OpenKey (in thousands)	$	1,766		$	—
Ownership interest in OpenKey	8.2		%	—

The following table summarizes our equity in earnings (loss) in OpenKey (in thousands):



	Year Ended December 31,
Line Item	2018		2017	2016
Equity in earnings (loss) of unconsolidated entity	(234	)	—	—