10
Distributions to Shareholders
If the Company’s properties do not generate sufficient revenue to meet operating expenses, the Company’s cash flow and the
Company’s ability to make distributions to shareholders may be adversely affected. The Company is subject to all operating risks
common to hotels. These risks might adversely affect occupancy or room rates. Increases in operating costs due to inflation and other
factors may not necessarily be offset by increased room rates. The local, regional and national hotel markets may limit the extent to
which room rates may be increased to meet increased operating expenses without decreasing occupancy rates. While the Company
intends to make monthly distributions to shareholders, there can be no assurance that the Company will be able to make distributions
at any particular time or rate, or at all. Further, there is no assurance that a distribution rate achieved for a particular period will be
maintained in the future. Also, while management may establish goals as to particular rates of distribution or have an intention to make
distributions at a particular rate, there can be no assurance that such goals or intentions will be realized.
While the Company continues to seek generally to make distributions from its operating revenues, distributions may be made
(although there is no obligation to do so) in certain circumstances in part from financing proceeds or other sources, such as proceeds
from the offering of Units. While distributions from such sources would result in the shareholder receiving cash, the consequences to
the shareholders would differ from a distribution out of the Company’s operating revenues. For example, if financing is the source of
a distribution, that financing would have to be repaid, and if proceeds from the offering of Units are distributed, those proceeds would
not then be available for other uses (such as property acquisitions or improvements).
Financing Risks
Although the Company anticipates maintaining low levels of debt, it may periodically use short-term financing to acquire
properties, perform renovations to its properties or make shareholder distributions in periods of fluctuating income from its properties.
Due to the recent economic events in the United States, there has been a contraction in available credit in the marketplace. As a result,
the Company may not be able to use debt to meet its cash requirements.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2008, the Company owned 21 hotels located in 11 states with an aggregate of 2,478 rooms, consisting of
the following: six Hilton Garden Inn hotels, two Homewood Suites hotels, six Hampton Inn hotels, three Courtyard hotels, three
Residence Inn hotels and one Fairfield Inn hotel. The following table includes the location of each hotel, the date of construction, the
date acquired, encumbrances (if any), initial acquisition cost, gross carrying value and the number of rooms of each hotel.