Hospitality Investors Trust 8K/A Financial Statements and Exhibits | HPITQ 10 Nov 15

Exhibit 99.2

American Realty Capital Hospitality Trust, Inc.

Unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet as of June, 30 2014, Unaudited Pro Forma Condensed Consolidated/Combined Statement of Operations for the Six Months Ended June 30, 2015, and for the Year Ended December 31, 2014

Barceló Portfolio Acquisition:

On March 21, 2014, the Company acquired the fee simple, leasehold and joint venture interests in six hotels (the”Barcelo Portfolio”). The aggregate purchase price of the Barceló Portfolio was approximately $110.1 million, exclusive of closing costs.

The unaudited Pro Forma Condensed Consolidated Statements of Operations, and the related pro forma adjustments for the six months ended June 30, 2015, and for the year ended December 31, 2014, were prepared as if the acquisition of the Barceló Portfolio (the “Barceló Transaction”) had occurred on January 1, 2015, and January 1, 2014, respectively.

No pro forma adjustments were made to the unaudited Pro Forma Condensed Consolidated Balance Sheet for the Barceló Acquisition as it is already reflected in the historical Condensed Consolidated Balance Sheet of the Company as of June 30, 2015.

Grace Portfolio Acquisition:

On February 27, 2015, the Company acquired the fee simple or leasehold interests in 116 hotels (the”Grace Portfolio”) from certain subsidiaries of Whitehall Real Estate Funds, an investment arm controlled by The Goldman Sachs Group, Inc. The aggregate purchase price under the purchase agreement was $1.808 billion, exclusive of closing costs and subject to certain adjustments at closing.

The unaudited Pro Forma Condensed Consolidated Statements of Operations and the related pro forma adjustments for the six months ended June 30, 2015, and for the year ended December 31, 2014, were prepared as if the acquisition of the Grace Portfolio (the “Grace Transaction”) had occurred on January 1, 2015, and January 1, 2014, respectively. The unaudited Pro Forma Condensed Consolidated Statements of Operations excludes results related to hotels which were removed from the Grace Portfolio acquisition but reflected in the Grace Portfolio financials.

No pro forma adjustments were made to the unaudited Pro Forma Condensed Consolidated Balance Sheet for the Grace Acquisition as it is already reflected in the historical Condensed Consolidated Balance Sheet of the Company as of June 30, 2015.

Summit Portfolio Acquisition:

On June 2, 2015, the Company through a wholly owned subsidiary of its operating partnership, entered into two separate agreements to purchase the fee simple interests in an aggregate portfolio of 26 hotels containing an aggregate of 2,793 guest rooms (the”Summit Portfolio”), from affiliates of Summit Hotel OP, LP, the operating partnership of Summit Hotel Properties, Inc. for an aggregate purchase price of $347.4 million. On October 15, 2015, the Company completed the acquisition of 10 hotels and the Company anticipates completing the acquisitions of the remaining 16 hotels by March 31, 2016.

The unaudited Pro Forma Condensed Consolidated/Combined Statements of Operation and the related pro forma adjustments for the six months ended June 30, 2015, and for the year ended December 31, 2014, were prepared as if the acquisition of the Summit Portfolio had occurred on January 1, 2015, and January 1, 2014, respectively. The unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet and the related pro forma adjustments as of June 30, 2015, were prepared as if the acquisition of the Summit Portfolio had occurred on June 30, 2015.

The unaudited Pro Forma Condensed Consolidated/Combined Statements of Operation for the six months ended June 30, 2015, and for the year ended December 31, 2014, and the unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet as of June 30, 2015, should be read in conjunction with the Company’s historical Condensed Consolidated/Combined financial statements and notes thereto. The unaudited Pro Forma Condensed Consolidated/Combined Statements of Operation for the six months ended June 30, 2015, and for the year ended December 31, 2014, and the unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet as of June 30, 2015, are not necessarily indicative of what the actual results of operations would have been had the Company acquired the Summit Portfolio on January 1, 2015, January 1, 2014, or June 30, 2015, nor does it purport to present the future results of operations of the Company.

American Realty Capital Hospitality Trust, Inc.

Unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet

(In thousands)

	ARC Hospitality (A)			Summit (B)			Pro Forma Combined			Pro Forma Adjustments				ARC Hospitality Pro Forma
	June 30, 2015			June 30, 2015			June 30, 2015			June 30, 2015				June 30, 2015
Assets
Real estate investments:
Land	$	286,540		$	32,528		$	319,068			$ 19,136		C	$	338,204
Buildings and improvements		1,486,493			208,390			1,694,883			53,530		C		1,748,413
Furniture, fixtures and equipment		138,281			41,976			180,257			(8,121	)	C		172,136
Total real estate investments		1,911,314			282,894			2,194,208			64,545				2,258,753
Less: accumulated depreciation and amortization		(28,770	)		(71,976	)		(100,746	)		71,976		D		(28,770	)
Total real estate investments, net		1,882,544			210,918			2,093,462			136,521				2,229,983
Cash and cash equivalents		76,702			172			76,874			(172	)	E		76,702
Acquisition deposits		28,000			-			28,000			(10,000	)	F		18,000
Restricted cash		71,661			-			71,661			-				71,661
Investments in unconsolidated entities		3,303			-			3,303			-				3,303
Below-market lease obligations, net		10,425			-			10,425			-				10,425
Accounts receivable, net		-			2,519			2,519			(2,519	)	E		-
Prepaid expenses and other assets		38,926			584			39,510			2,561		E/G		42,071
Due from third party hotel management company		-			5,641			5,641			(5,641	)	E		-
Deferred financing fees, net		16,474			1,465			17,939			6,284		E/H		24,223
Deferred tax assets, net					88			88			(88	)	E		-
Total Assets	$	2,128,035		$	221,387		$	2,349,422		$	126,946			$	2,476,368

Liabilities, Non-controlling Interest and Equity

Mortgage notes payable	$	1,187,102		$	28,711		$	1,215,813			196,499		E/I	$	1,412,312
Promissory notes payable		-			-			-			-				-
Mandatorily redeemable preferred securities		408,810			-			408,810			-				408,810
Accounts payable and accrued expenses		53,558			8,157			61,715			(8,157	)	E		53,558
Derivative financials instruments		-			59			59			(59	)	E		-
Due to affiliate		3,159			-			3,159			-				3,159
Total liabilities		1,652,629			36,927			1,689,556			188,283				1,877,839
Preferred stock		-			-			-			-				-
Common stock		250			-			250			-				250
Additional paid-in capital		546,043			-			546,043			-				546,043
Accumulated earnings (deficit)		(73,655	)		184,460			110,805			(61,337	)	J		49,468
Non-controlling interest - consolidated variable interest entity		2,768			-			2,768			-				2,768
Total equity		475,406			184,460			659,866			(61,337	)			598,529
Total Liabilities, Non-controlling Interest and Equity	$	2,128,035		$	221,387		$	2,349,422		$	126,946			$	2,476,368

Notes to unaudited Pro Forma Condensed Consolidated/Combined Balance Sheet

Reflects the historical Consolidated Balance Sheet of the Company as of June 30, 2015.

Reflects the historical Consolidated Balance Sheet of Summit as of June 30, 2015.

Represents an adjustment to real estate investments as estimated by the Company's initial purchase price allocation, see table below.

(in thousands)	Summit Portfolio		Pro Forma Adjustment			Estimated Purchase Price Allocation
Land	$	32,528	$	19,136		$	51,664
Buildings and improvements		208,390		53,530			261,920
Furniture, fixtures and equipment		41,976		(8,121	)		33,855
Total real estate investments	$	282,894	$	64,545		$	347,439

Represents the removal of historical accumulated depreciation per Summit's consolidated financial statements as it is assumed the Summit Portfolio's real estate investments were acquired as of the balance sheet date presented.

Represents an adjustment to remove assets or liabilities of Summit that were not acquired in the transaction.

Represents an adjustment to reflect the use of Summit deposits in the transaction.

Represents an adjustment for deferred franchise fees estimated to be incurred at the time of closing in the amount of approximately $3.1 million.

Represents an adjustment for deferred financing fees estimated to be incurred at the time of closing in the amount of approximately $7.7 million.

Represents an adjustment for additional mortgage debt estimated to be incurred at the time of closing in the amount of approximately $225.2 million.

Represents an adjustment to eliminate Summit equity and for the impact of pro forma adjustments.

American Realty Capital Hospitality Trust, Inc.

Unaudited Pro Forma Condensed Consolidated/Combined Statement of Operations

Year Ended December 31, 2014

(In thousands, except for share and per share data)

	ARC Hospitality (A)						Barceló Portfolio Acquisition Pro							Grace Portfolio Acquisition Pro							Summit Portfolio Acquisition Pro Forma				ARC Hospitality Pro Forma for the Barceló Portfolio, Grace Portfolio, and Summit Portfolio
	Predecessor			Successor			Forma Adjustments				Grace (B)			Forma Adjustments				Summit (C)			Adjustments				Acquisitions
	For the Period from January 1 to March 20, 2014			For the Period from March 21 to December 31, 2014			Year Ended December 31, 2014				Year Ended December 31, 2014			Year Ended December 31, 2014				Year Ended December 31, 2014			Year Ended December 31, 2014				Year Ended December 31, 2014

Revenues
Rooms	$	6,026		$	26,163		$	-			$	442,901			$ (33,246	)	D	$	81,285		$	-			$	523,129
Food and beverage		1,543			5,612			-				8,669			-				1,489			-				17,313
Other		676			3,096			-				6,790			(354	)	D		1,419			-				11,627
Total revenue		8,245			34,871			-				458,360			(33,600	)			84,193			-				552,069
Operating expenses
Rooms		1,405			5,411			-				111,991			(9,135	)	D		21,690			-				131,362
Food and beverage		1,042			3,785			-				7,953			-				1,478			-				14,258
Asset management fees		-			-			-				5,646			(5,238	)	E		-			74		E		482
Other		-			-			-				4,482			-				-			-				4,482
Other property-level operating costs (non-departmental)		3,490			13,049			-				141,282			(12,135	)	D		9,642			-				155,328
Property tax, ground lease, insurance and property management fees		289			1,498			-				33,359			(2,800	)	D		22,181			842		M		55,369
Corporate overhead		-			-			-				12,579			(12,579	)	F		-			-				-
Depreciation and amortization		994			2,796			(699	)	G		82,503			(20,662	)	G		13,494			50		N		78,476
Rent		933			3,879			467		G		-			-				-			-				5,279
Impairment charges		-			-			-				62,295			(62,295	)	H		-			-				-
Total operating expenses		8,153			30,418			(232	)			462,090			(124,844	)			68,485			966				445,036
Income from Operations		92			4,453			232				(3,730	)		91,244				15,708			(966	)			107,033
Interest income		-			103			-				81			(81	)	D		-			-				103
Interest expense		(531	)		(5,958	)		(166	)	I		(63,315	)		(26,184	)	I		(4,299	)		(7,163	)	I		(107,616	)
Acquisition and transaction related costs		-			(10,884	)		10,884		J		-			-				-			-				-
Other income (expense)		-			-			-				159			-				(19	)		-				140
Equity in earnings (losses) of unconsolidated affiliates		(166	)		352			-				-			-				-			-				186
Unrealized loss on derivatives		-			-			-				(277	)		-				-			-				(277	)
Gain on sale of investment in real estate		-			-			-				221			-				-			-				221
General and administrative		-			(2,316	)		-				-			(12,339	)	F		(1,955	)		-				(16,610	)
Contingent loss on litigation settlement		-			-			-				(24,250	)		-				-			-				(24,250	)
Gain on extinguishment of debt		-			-			-				13,199			-				-			-				13,199
Total other expenses		(697	)		(18,703	)		10,718				(74,182	)		(38,604	)			(6,273	)		(7,163	)			(134,904	)
Net income (loss) from continuing operations before taxes		(605	)		(14,250	)		10,950				(77,912	)		52,640				9,435			(8,129	)			(27,871	)
Provision for income taxes		-			591			-				-			3,398		K		429			245		K		4,663
Net income (loss) from continuing operations and comprehensive loss from continuing operations	$	(605	)	$	(14,841	)	$	10,950			$	(77,912	)	$	49,242			$	9,006		$	(8,374	)		$	(32,534	)
Basic and diluted net loss per share		N/A		$	(5.25	)																			$	(6.42	)
Basic and diluted weighted average shares outstanding		N/A			2,826,352										2,242,455		L									5,068,807

N/A - not applicable

Notes to unaudited Pro Forma Condensed Consolidated/Combined Statement of Operations for the Year Ended December 31, 2014

Reflects the historical combined Statement of Operations for the Barceló Portfolio (Predecessor) for the period from January 1 to March 20, 2014 and the Consolidated Statement of Operations for the Company (Successor) for the period from March 21, 2014 to December 31, 2014.

Reflects the historical Combined Consolidated Statement of Operations of the Grace Portfolio for the year ended December 31, 2014.

Reflects the historical Consolidated Statement of Operations of the Summit for the year ended December 31, 2014.

Represents adjustments to remove the revenues and expenses of the hotels which were removed from the Grace Portfolio acquisition but reflected in the Grace financials.

Represents an adjustment to remove the current Grace asset management fees and include the pro forma management fees upon the acquisition of the Grace Portfolio and the Summit Portfolio, see table below.

(in thousands, except for unit data)

								Number of Units
								Issued perQuarter
Class B Units	Cost of Assets		Rate			Price per Unit		⁽²⁾		Distribution Rate			Dividend
Grace Distributions on Class B Units⁽¹⁾	$	1,920,420		0.1875	%	$	22.50		160,035		6.8	%	$	408
Summit Distributions on Class B Units⁽¹⁾	$	347,400		0.1875	%	$	22.50		28,950		6.8	%	$	74

(1) For its asset management services, the Company issues Class B Units to the Advisor on a quarterly basis in an amount equal the cost of the Company’s assets multiplied by 0.1875%. The Advisor is entitled to receive distributions on the vested and unvested Class B Units it receives in connection with its asset management subordinated participation at the same rate as distributions received on the Company’s common stock. The restricted Class B Units are not to be convertible into unrestricted Class B Units until such time as the adjusted market value of the Company’s assets plus applicable distributions equals the sum of the aggregate capital contributed by investors plus an amount equal to a 6.0% cumulative, pre-tax, non-compounded annual return to investors.

(2) Class B units are issued in arrears at the end of each quarter.

Grace corporate overhead is reclassified to general and administrative expenses to match the Company's presentation. This also represents an adjustment to remove the corporate overhead associated with the hotels which were removed from the Grace Portfolio acquisition, see table below.

(in thousands)	General and Administrative Expenses
Corporate overhead	$	(12,579	)
Corporate overhead related to ten excluded hotels		240
Corporate overhead reclassified to general and administrative expenses	$	(12,339	)

Represents an adjustment to record depreciation and amortization expense in accordance with the Company's estimated purchase price allocation and depreciation policies for the Barceló and Grace Portfolios, see table below.

Fee Simple and Leases

	Barceló Portfolio						Grace
	Pro Forma		Depreciable				Pro Forma		Depreciable				Total
(in thousands, except depreciable life)	Allocation		Life⁽²⁾		Depreciation		Allocation⁽¹⁾		Life⁽²⁾		Depreciation		Depreciation
Land	$	12,061		N/A	$	-	$	276,232		N/A	$	-	$	-
Buildings and improvements		81,176		40.00		2,029		1,400,395		40.00		35,010		37,039
Leases		-		N/A		-		2,621		26.86		98		98
Furniture, fixtures and equipment		5,308		5.00		1,062		128,752		5.00		25,750		26,812
Total	$	98,545			$	3,091	$	1,808,000			$	60,858	$	63,949
Lease⁽³⁾	$	8,400		18.00	$	467	$	-		N/A	$	-	$	467

(1) The aggregate contract purchase price for the Grace Portfolio is $1.808 billion, exclusive of closing costs. This purchase price includes 116 hotels in the Grace Portfolio. The purchase price allocation is an estimate; the final purchase price allocation will be completed within one year of closing.

(2) The useful lives are estimated to be 40 years for buildings, five years for furniture, fixtures and equipment and the shorter of the useful life or the remaining lease term for leases. The depreciable life shown above for leases represents the weighted average lives of various hotel properties subject to operating leases.

(3) The Barceló Portfolio lease is treated as a below market lease under GAAP and amortized to rent expense over the remaining lease term.

N/A - not applicable

Franchise Fees

Estimated Fees

Incurred at

Depreciable

(in thousands, except depreciable life)

Acquisition

Life⁽¹⁾

Depreciation

Franchise Fees

14,750

983

(1) The useful life is estimated to be 15 years for franchise fees.

Total
(in thousands)	Depreciation
Fee Simple and Grace Leases	$	63,949
Franchise Fees		983
	$	64,932
Barceló Lease	$	467

Represents the removal of impairment charges related to the book value of some hotels in the Grace Portfolio which were adjusted to the agreed upon sale price.

Represents an adjustment for the pro forma capital structure, see tables below.

Barceló Portfolio Debt

(in thousands)	Face Amount of Debt		Interest Rate			Interest
Mortgage financing arranged by ARC Hospitality at the closing of the Barceló Portfolio acquisition⁽¹⁾	$	45,500		4.30	%	$	(1,957	)
Promissory note financing arranged by ARC Hospitality at the closing of the Barceló Portfolio acquisition⁽²⁾		58,074		6.80	%		(3,949	)
Promissory note financing arranged by ARC Hospitality at the closing of the Barceló Portfolio acquisition⁽³⁾		5,000		6.80	%		(340	)
Promissory note financing arranged by ARC Hospitality at the closing of the Barceló Portfolio acquisition⁽⁴⁾		1,775		4.50	%		(80	)
Subtotal	$	110,349				$	(6,326	)
Amortization of deferred financing costs⁽⁵⁾							(329	)
Total cost of debt for period						$	(6,655	)

Grace Portfolio Debt

									Changes in Interest Expense
(in thousands)	Face Amount of Debt		Interest Rate			Interest			(-) 100 Basis Points			(+) 100 Basis Points
Mortgage debt assumed by ARC Hospitality at the closing of the Grace transaction⁽⁶⁾	$	801,100		3.26	%	$	(26,116	)	$	(8,011	)	$	8,011
Mortgage debt assumed by ARC Hospitality at the closing of the Grace transaction⁽⁶⁾		102,800		4.92	%		(5,058	)		(1,028	)		1,028
New mortgage debt arranged by ARC Hospitality at the closing of the Grace transaction⁽⁷⁾		227,000		6.25	%		(14,188	)		-			2,270
Class A Units⁽⁸⁾		447,100		7.50	%		(33,533	)		N/A			N/A
Subtotal	$	1,578,000				$	(78,895	)	$	(9,039	)	$	11,309
Amortization of deferred financing costs⁽⁵⁾							(10,604	)
Total cost of debt for period						$	(89,499	)

Summit Portfolio Debt

									Changes in Interest Expense
(in thousands)	Face Amount of Debt		Interest Rate			Interest			(-) 100 Basis Points			(+) 100 Basis Points
Term Loan⁽⁹⁾	$	225,210		3.95	%	$	(8,896	)	$	(2,252	)	$	2,252
Amortization of deferred financing costs⁽⁵⁾							(2,567	)
Total cost of debt for period						$	(11,462	)

(1) Mortgage financing obtained on two owned hotel properties in the Barceló Portfolio acquisition.

(2) Financing obtained on three owned hotel properties and one hotel property subject to an operating lease in the Barceló Portfolio acquisition.

(3) Financing obtained on two joint ventures that each own a hotel property in the Barceló Portfolio acquisition.

(4) Financing obtained to fund the property improvement reserves required for the assets obtained in the Barceló Portfolio acquisition.

(5) Deferred financing costs are amortized over the life of the instrument using the effective interest method.

(6) Financing on 96 hotels of the total 116 hotels included in the Grace Portfolio. The Company must have an interest rate cap in place with a principal amount of at least the outstanding balance due under these notes.

(7) The interest rate associated with this debt instrument is the greater of (i) a floating rate of interest equal to LIBOR plus a spread and (ii) 6.25%. The spread for this debt instrument is 6.00%. LIBOR was 0.16% as of December 31, 2014, thus a decrease in the interest rate would not have any impact on interest expense.

(8) The Sellers hold Class A Units which are entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing and 8.00% per annum thereafter. On liquidation, the Sellers, as holders of the Class A Units, will be entitled to receive its original value (as reduced by redemptions) prior to any distributions being made to the Company. Due to their characteristics, the Class A Units are treated as debt under GAAP.

(9) Mortgage financing obtained as part of Term Loan. Interest rate is equal to a base rate plus a spread of between 3.25% and 3.75%.

N/A - Interest rate is fixed and thus change in interest rate analysis is not applicable.

Represents an adjustment to remove the acquisition and transaction related expenses relating to the Barceló Portfolio acquisition and Grace Portfolio acquisition.

Represents an adjustment for pro forma income tax provision as each hotel will be operated through a taxable real estate investment trust subsidiary ("TRS"), see table below.

(in thousands)	Barceló Portfolio			Grace Portfolio			Summit
Taxable income⁽¹⁾	$	1,478		$	8,495		$	1,684
Income tax rate⁽²⁾		40	%		40	%		40	%
Provision for income tax	$	591		$	3,398		$	674

(1) Taxable income is based on arm's length rent between the Company and the TRS for each hotel.

(2) Estimated income tax rate.

Represents the pro forma adjusted number of shares to be added based on equity raise requirements for the Grace Portfolio acquisition. Share value used to calculate the additional share requirements is based on the Company’s offering price of $25 less fees charged by the Company's broker dealer and other offering related expenses.

Represents an adjustment to property management fees of $0.8 million.

	Summit Portfolio
	Pro Forma		Depreciable
(in thousands, except depreciable life)	Allocation⁽¹⁾		Life⁽²⁾		Depreciation
Land	$	51,664		N/A		N/A
Buildings and improvements		261,920		40.00		6,548
Furniture, fixtures and equipment		33,855		5.00		6,771
Total	$	347,439			$	13,319

(1) The aggregate contract purchase price for the Summit Portfolio is $347.4 million, exclusive of closing costs. The purchase price allocation is an estimate; the final purchase price allocation will be completed within one year of closing.

(2) The useful lives are estimated to be 40 years for buildings, and five years for furniture, fixtures and equipment.

N/A - not applicable

Franchise Fees

	Estimated Fees
	Incurred at		Depreciable
(in thousands, except depreciable life)	Acquisition⁽¹⁾		Life⁽²⁾	Depreciation
Franchise Fees	$	3,145	12-20 years	$	225

(1) See Note G to the unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2015 for additional discussion.

(2) The useful life is estimated to be 12-20 years for franchise fees.

Total
(in thousands)	Depreciation
Fee Simple	$	13,319
Franchise Fees		225
	$	13,544

American Realty Capital Hospitality Trust, Inc.

Unaudited Pro Forma Condensed Consolidated/Combined Statement of Operations

Six Months Ended June 30, 2015

(In thousands, except for share and per share data)

	ARC Hospitality (A)			Grace Portfolio Acquisition Pro Forma Adjustments				Summit (B)			Summit Portfolio Acquisition Pro Forma Adjustments				ARC Hospitality Pro Forma for the Grace Portfolio and Summit Portfolio Acquisitions
	Six Months Ended June 30, 2015			Six Months Ended June 30, 2015				Six Months Ended June 30, 2015			Six Months Ended June 30, 2015				Six Months Ended June 30, 2015

Revenues
Rooms	$	176,501		$	61,354		C	$	42,503		$	-			$	280,358
Food and beverage		7,161			1,368		C		962			-				9,491
Other		4,654			1,190		C		679			-				6,523
Total revenue		188,316			63,912				44,144			-				296,372
Operating expenses
Rooms		38,643			16,036		C		10,812			-				65,491
Food and beverage		5,523			1,213		C		899			-				7,635
Asset management fees		-			-				-			12		G		12
Other property-level operating costs (non-departmental)		69,528			22,198		C		5,387			-				97,113
Property tax, ground lease, insurance and property management fees		7,532			3,455		C		11,421			441		H		22,849
Depreciation and amortization		26,621			10,307		D		6,709			63		I		43,700
Rent		2,828			-				-			-				2,828
Total operating expenses		150,675			53,209				35,228			516				239,628
Income from Operations		37,641			10,703				8,916			(516	)			56,744
Interest expense		(33,643	)		(14,917	)	E		(2,115	)		(3,616	)	E		(54,291	)
Acquisition and transaction related costs		(38,431	)		38,431		F		-			-				-
Other income (expense)		2,201			-				(51	)		-				2,150
Equity in earnings (losses) of unconsolidated affiliates		8			-				-			-				8
General and administrative		(3,964	)		-				(886	)		-				(4,850	)
Total other expenses		(73,829	)		23,514				(3,052	)		(3,616	)			(56,983	)
Net income (loss) from continuing operations before taxes		(36,188	)		34,217				5,864			(4,132	)			(239	)
Provision for income taxes		3,356			-				151			202		J		3,709
Net income (loss) from continuing operations and comprehensive loss from continuing operations	$	(39,544	)	$	34,217			$	5,713		$	(4,334	)		$	(3,948	)
Basic and diluted net loss per share		(2.31	)												$	(0.23	)
Basic and diluted weighted average shares outstanding		17,083,902														17,083,902

Notes to unaudited Pro Forma Condensed Consolidated/Combined Statement of Operations for the Six Months Ended June 30, 2015

Reflects the historical Consolidated Statement of Operations for the Company, which includes the results of operations of the Grace Portfolio from February 27, 2015 through June 30, 2015.

Reflects the historical Consolidated Statement of Operations of Summit for the six months ended June 30, 2015.

Reflects adjustments for the Grace Portfolio to include results of operations from January 1, 2015 to February 26, 2015.

Represents an adjustment to record depreciation and amortization expense in accordance with the Company's estimated purchase price allocation and depreciation policies, see table below.

Fee Simple and Leases

	Grace
	Pro Forma		Depreciable		Annual		Adjusted
(in thousands, except depreciable life)	Allocation⁽¹⁾		Life⁽²⁾		Depreciation		Depreciation
Land	$	276,232		N/A	$	-	$	-
Buildings and improvements		1,400,395		40.00		35,010		5,835
Leases		2,621		26.86		98		16
Furniture, fixtures and equipment		128,752		5.00		25,750		4,292
Total	$	1,808,000			$	60,858	$	10,143

N/A - not applicable

Franchise Fees

(in thousands, except depreciable life)

Estimated Fees

Incurred at

Acquisition

Depreciable Life⁽¹⁾

Annual Depreciation

Adjusted

Depreciation

Franchise Fees

14,750

15 years

983

164

(1) The useful life is estimated to be 15 years for franchise fees.

Total

(in thousands)	Adjusted Depreciation
Depreciation	$	10,143
Franchise Fees		164
	$	10,307

Represents an adjustment for the pro forma capital structure, see tables below.

Grace Portfolio Debt

												Changes in Interest Expense
(in thousands)	Face Amount of Debt		Interest Rate			Annual Interest			Adjusted Interest			(-) 100 Basis Points			(-) 100 Basis Points
Mortgage debt assumed by ARC Hospitality at the closing of the Grace transaction⁽¹⁾	$	801,100		3.26	%	$	(26,116	)	$	(4,352	)	$	(8,011	)	$	8,011
Mortgage debt assumed by ARC Hospitality at the closing of the Grace transaction⁽¹⁾		102,800		4.92	%		(5,058	)	$	(843	)		(1,028	)		1,028
New mortgage debt arranged by ARC Hospitality at the closing of the Grace transaction⁽²⁾		227,000		6.25	%		(14,188	)	$	(2,365	)		-			2,270
Class A Units⁽³⁾		447,100		7.50	%		(33,533	)	$	(5,389	)		N/A			N/A
Subtotal	$	1,578,000				$	(78,895	)	$	(13,149	)	$	(9,039	)	$	11,309
Amortization of deferred financing costs⁽⁴⁾							(10,604	)		(1,767	)
Total cost of debt for period						$	(89,499	)	$	(14,917	)

Summit Portfolio Debt

												Changes in Interest Expense
(in thousands)	Face Amount of Debt		Interest Rate			Annual Interest			Adjusted Interest			(-) 100 Basis Points			(+) 100 Basis Points
Term Loan⁽⁵⁾	$	225,210		3.95	%	$	(8,896	)	$	(4,448	)	$	(2,252	)	$	2,252
Amortization of deferred financing costs⁽⁴⁾							(2,567	)		(1,283	)
Total cost of debt for period						$	(11,462	)	$	(5,731	)

(1) Financing on 96 hotels of the total 116 hotels included in the Grace Portfolio. The Company must have an interest rate cap in place with a principal amount of at least the outstanding balance due under these notes.

(2) The interest rate associated with this debt instrument is the greater of (i) a floating rate of interest equal to LIBOR plus a spread and (ii) 6.25%. The spread for this debt instrument is 6.00%. LIBOR was 0.19% as of June 30, 2015, thus a decrease in the interest rate would not have any impact on interest expense.

(3) The Sellers hold Class A Units which are entitled to monthly distributions at a rate of 7.50% per annum for the first 18 months following closing and 8.00% per annum thereafter. On liquidation, the Sellers, as holders of the Class A Units, will be entitled to receive its original value (as reduced by redemptions) prior to any distributions being made to the Company. Due to their characteristics, the Class A Units are treated as debt under GAAP.

(4) Deferred financing costs are amortized over the life of the instrument using the effective interest method.

(5) Mortgage financing obtained as part of Term Loan. Interest rate is equal to a base rate plus a spread of between 3.25% and 3.75%.

N/A - Interest rate is fixed and thus change in interest rate analysis is not applicable.

Represents an adjustment to remove the acquisition and transaction related expenses relating to the Grace Portfolio acquisition.

Represents an adjustment to management fees upon closing of the Summit Portfolio acquisition, see table below.

(in thousands, except for unit data)

Class B Units

Cost of Assets

Rate

Price per Unit

Number of Units

Issued per
Quarter⁽²⁾

Distribution Rate

Dividend

Summit Distributions on Class B Units⁽¹⁾

347,400

0.1875

22.50

28,950

6.8

(2) Class B units are issued in arrears at the end of each quarter.

Represents an adjustment to property management fees of $0.4 million.

	Summit
	Pro Forma		Depreciable		Annual		Adjusted
(in thousands, except depreciable life)	Allocation⁽¹⁾		Life⁽²⁾		Depreciation		Depreciation
Land	$	51,664		N/A	$	-	$	-
Buildings and improvements		261,920		40.00		6,548		3,274
Leases		-		N/A		-		-
Furniture, fixtures and equipment		33,855		5.00		6,771		3,386
Total	$	347,439			$	13,319	$	6,660

(2) The useful lives are estimated to be 40 years for buildings, and five years for furniture, fixtures and equipment.

N/A - not applicable

Franchise Fees

Estimated Fees

Incurred at

Depreciable

Annual

Adjusted

(in thousands, except depreciable life)

Acquisition⁽¹⁾

Life⁽²⁾

Depreciation

Franchise Fees

3,145

12-20 years

225

113

(1) See Note G to the unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2015 for additional discussion.

(2) The useful life is estimated to be 12-20 years for franchise fees.

Total
(in thousands)	Depreciation
Fee Simple	$	6,660
Franchise Fees		113
	$	6,772

Represents an adjustment for pro forma income tax provision as each hotel will be operated through a taxable real estate investment trust subsidiary ("TRS"), see table below.

(in thousands)	Summit Portfolio
Taxable income⁽¹⁾	$	883
Income tax rate⁽²⁾		40	%
Provision for income tax	$	353

(1) Taxable income is based on arm's length rent between the Company and the TRS for each hotel.

(2) Estimated income tax rate.

Hospitality Investors Trust (HPITQ) 8-K/AFinancial Statements and Exhibits