----

----

| x      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     |
|--------|------------------------------------------------------------------------------------------|
|   | For the fiscal year ended December 31, 2010                                         |
|   |                                                                                     |
|   | OR                                                                                       |
|   |                                                                                     |
| o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|   | For the transition period from _______________ to _______________                        |

| Maryland (Summit Hotel Properties, Inc.) | 27-2962512 (Summit Hotel Properties, Inc.)   |
|------------------------------------------|--------------------------------------------------------|
| Delaware (Summit Hotel OP, LP)           |                                                   |
| (State or other jurisdiction             | (I.R.S. Employer Identification No.)                   |
| of incorporation or organization)        |                                                   |

|                                    | Summit Hotel Properties, Inc. |                                      |
|-----------------------------------------|-------------------------------|-------------------------------------------|
|                                    |                          |                                      |
| Title of each class                     |                          | Name of each exchange on which registered |
| Common Stock, $0.01 par value per share |                          | New York Stock Exchange                   |
|                                    |                          |                                      |
|                                    | Summit Hotel OP, LP           |                                      |
|                                    |                          |                                      |
| Title of each class                     |                          | Name of each exchange on which registered |
| None                                    |                          | Not applicable                            |

----

| Summit Hotel Properties, Inc.  o Yes    x  No |   | Summit Hotel OP, LP  o Yes   x  No |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|

| Summit Hotel Properties, Inc.  o Yes    x  No |   | Summit Hotel OP, LP  o Yes   x  No |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|

| Summit Hotel Properties, Inc.  x Yes    o  No |   | Summit Hotel OP, LP  x Yes   o  No |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|

| Summit Hotel Properties, Inc.  o Yes    o  No |   | Summit Hotel OP, LP  o Yes   o  No |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|

| Summit Hotel Properties, Inc.                  x |   | Summit Hotel OP, LP                x |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------|

| Summit Hotel Properties, Inc.        |                                   |   |
|--------------------------------------|----------------------------------------|--------|
| Large accelerated filer  o | Accelerated filer  o         |   |
| Non-accelerated filer x              | Smaller reporting company  o |   |
|                                 |                                   |   |

| Summit Hotel OP, LP                  |                                   |   |
|--------------------------------------|----------------------------------------|--------|
| Large accelerated filer  o | Accelerated filer  o         |   |
| Non-accelerated filer x              | Smaller reporting company  o |   |
|                                 |                                   |   |

| Summit Hotel Properties, Inc.  o Yes    x  No |   | Summit Hotel OP, LP  o Yes   x  No |
|---------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|

| Summit Hotel Properties, Inc.:     Not applicable |   | Summit Hotel OP, LP:      Not applicable |
|----------------------------------------------------------------------------|--------|------------------------------------------------------------------------|

----

|   | ● | “Summit REIT” mean Summit Hotel Properties, Inc., a Maryland corporation;                                                                                                                                                                                                                                                                                                                                           |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | ● | “Summit OP” or “our operating partnership” mean Summit Hotel OP, LP, a Delaware limited partnership; and                                                                                                                                                                                                                                                                                                |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | ● | “we,” “our,” “us,” “our company” or “the company” mean Summit REIT, Summit OP and their consolidated subsidiaries taken together as one company. When this report discusses or refers to activities occurring prior to February 14, 2011, the date on which our operations commenced, these references refer to Summit Hotel Properties, LLC, our predecessor. |

|   | ● | it enhances investors’ understanding of Summit REIT and Summit OP by enabling investors to view the business as a whole in the same manner as management views and operates the business; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                            |
|   | ● | it eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Summit REIT and Summit OP; and     |
|   |    |                                                                                                                                                                                            |
|   | ● | it creates time and cost efficiencies for both companies through the preparation of one combined report instead of two separate reports.                                                        |

----

|   | ● | “the LLC” refer to Summit Hotel Properties, LLC and references to “our predecessor” refer to the LLC and its consolidated subsidiaries, including Summit Group of Scottsdale, Arizona, LLC (“Summit of Scottsdale”); Effective February 14, 2011, the LLC was merged with and into Summit OP with Summit OP surviving the merger and succeeding to the business and assets of the LLC; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | “Summit TRS” refer to Summit Hotel TRS, Inc., a Delaware corporation;                                                                                                                                                                                                                                                                                                                                          |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | “our TRSs” refer to Summit TRS and any other taxable REIT subsidiaries (“TRSs”) that we may form in the future;                                                                                                                                                                                                                                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | “our TRS lessees” refer to our TRSs and the wholly owned subsidiaries of our TRSs that lease our hotels from our operating partnership or subsidiaries of our operating partnership.                                                                                                                                                                                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | “The Summit Group” refer to The Summit Group, Inc., our predecessor’s hotel management company, Company Manager and Class C Member.                                                                                                                                                                                                                                                                      |

----

|                                        |                                                                                                                | Page   |
|---------------------------------------------|---------------------------------------------------------------------------------------------------------------------|--------|
| PART I                                      |
| Item 1.                                     | Business.                                                                                                           | 2      |
|                                        |                                                                                                                |   |
| Item 1A.                                    | Risk Factors.                                                                                                       | 8      |
|                                        |                                                                                                                |   |
| Item 2.                                     | Properties.                                                                                                         | 30     |
|                                        |                                                                                                                |   |
| Item 3.                                     | Legal Proceedings.                                                                                                  | 36     |
|                                        |                                                                                                                |   |
| Item 4.                                     | Removed and Reserved.                                                                                               | 36     |
|                                        |                                                                                                                |   |
| PART II                                     |
|                                        |                                                                                                                |   |
| Item 5.                                     | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 37     |
|                                        |                                                                                                                |   |
| Item 6.                                     | Selected Financial Data.                                                                                            | 39     |
|                                        |                                                                                                                |   |
| Item 7.                                     | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                        | 41     |
|                                        |                                                                                                                |   |
| Item 7A.                                    | Quantitative and Qualitative Disclosures about Market Risk.                                                         | 59     |
|                                        |                                                                                                                |   |
| Item 8.                                     | Financial Statements and Supplementary Data.                                                                        | 60     |
|                                        |                                                                                                                |   |
| Item 9.                                     | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.                               | 60     |
|                                        |                                                                                                                |   |
| Item 9A.                                    | Controls and Procedures.                                                                                            | 60     |
|                                        |                                                                                                                |   |
| Item 9B.                                    | Other Information.                                                                                                  | 61     |
|                                        |                                                                                                                |   |
| PART III                                    |
|                                        |                                                                                                                |   |
| Item 10.                                    | Directors, Executive Officers and Corporate Governance.                                                             | 62     |
|                                        |                                                                                                                |   |
| Item 11.                                    | Executive Compensation.                                                                                             | 70     |
|                                        |                                                                                                                |   |
| Item 12.                                    | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.                     | 79     |
|                                        |                                                                                                                |   |
| Item 13.                                    | Certain Relationships and Related Transactions, and Trustee Independence.                                           | 80     |
|                                        |                                                                                                                |   |
| Item 14.                                    | Principal Accountant Fees and Services.                                                                             | 82     |
|                                        |                                                                                                                |   |
| PART IV                                     |
|                                        |                                                                                                                |   |
| Item 15.                                    | Exhibits and Financial Statement Schedules.                                                                         | 84     |
|                                        |                                                                                                                |   |
| INDEX TO FINANCIAL STATEMENTS AND SCHEDULES | F-1                                                                                                                 |

----

|   | ● | the timing and availability of potential hotel acquisitions and our ability to identify and complete hotel acquisitions in accordance with our business strategy;                                                                                                                                                    |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | risks associated with the hotel industry, including competition, increases in employment costs, energy costs and other operating costs, or decreases in demand caused by actual or threatened terrorist attacks, any type of flu or disease-related pandemic, or downturns in general and local economic conditions; |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | the availability and terms of financing and capital and the general volatility of securities markets;                                                                                                                                                                                                                |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | our dependence on third-party managers of our hotels, including our inability to implement strategic business decisions directly;                                                                                                                                                                                    |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | risks associated with the real estate industry, including environmental contamination and costs of complying with the Americans with Disabilities Act and similar laws;                                                                                                                                              |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | interest rate increases;                                                                                                                                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | our possible failure to qualify as a REIT and the risk of changes in laws affecting REITs;                                                                                                                                                                                                                           |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | the possibility of uninsured losses;                                                                                                                                                                                                                                                                                 |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | risks associated with redevelopment and repositioning projects, including delays and cost overruns; and                                                                                                                                                                                                              |
|   |    |                                                                                                                                                                                                                                                                                                                 |
|   | ● | the other factors discussed under the heading “Risk Factors” in this report.                                                                                                                                                                                                                             |

----

PART I

| Item 1. | Business. |
|---------|-----------|

----

|   | ● | Disciplined Acquisitions of Hotel Properties.  We believe that the significant decline in lodging industry fundamentals from 2008 through early 2010 and the resultant declines in cash flows has created a difficult environment for hotel owners lacking ready access to financing or suffering from reduced cash flows. As a result, we believe that the significant number of hotel properties experiencing substantial declines in operating cash flow, coupled with tight credit markets, near-term debt maturities and, in some instances, covenant defaults relating to outstanding indebtedness, will present attractive investment opportunities to acquire hotel properties at prices significantly below replacement cost, with substantial appreciation potential as the U.S. economy recovers. We intend to grow through acquisitions of existing hotels using a disciplined approach while maintaining a prudent capital structure. We intend to target upscale and midscale without food and beverage hotels that meet one or more of the following acquisition criteria: |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   | ● | have potential for strong risk-adjusted returns located in the top 50 MSAs, with a secondary focus on the next 100 markets;                                                                                                                                                                                |
|--------|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |    |                                                                                                                                                                                                                                                                                                       |
|   |   | ● | operate under leading franchise brands, which may include but are not limited to brands owned by Marriott, Hilton, IHG and Hyatt;                                                                                                                                                                          |
|   |   |    |                                                                                                                                                                                                                                                                                                       |
|   |   | ● | are located in close proximity to multiple demand generators, including businesses and corporate headquarters, retail centers, airports, medical facilities, tourist attractions and convention centers, with a diverse source of potential guests, including corporate, government and leisure travelers; |
|   |   |    |                                                                                                                                                                                                                                                                                                       |
|   |   | ● | are located in markets exhibiting barriers to entry due to strong franchise areas of protection or other factors;                                                                                                                                                                                          |
|   |   |    |                                                                                                                                                                                                                                                                                                       |
|   |   | ● | can be acquired at a discount to replacement cost; and                                                                                                                                                                                                                                                     |
|   |   |    |                                                                                                                                                                                                                                                                                                       |
|   |   | ● | provide an opportunity to add value through operating efficiencies, repositioning, renovating or rebranding.                                                                                                                                                                                               |

----

|   | ● | Selective Hotel Development. We believe there will be attractive opportunities to partner on a selective basis with experienced hotel developers to acquire upon completion newly constructed hotels that meet our investment criteria.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | ● | Strategic Hotel Sales.  A primary part of our strategy is to acquire and own hotels. However, consistent with our strategy of maximizing the cash flow of our portfolio and our return on invested capital, we periodically review our hotels to determine if any significant changes to area markets or our hotels have occurred or are anticipated to occur that would warrant the sale of a particular hotel.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | ● | Capitalize on Investments in Our Hotels.  Since January 1, 2007, our predecessor made approximately $311.0 million of capital investments through development, strategic acquisitions and upgrades and improvements to our hotels in anticipation of improving general lodging fundamentals, including approximately $270.3 million of capital investment in our unseasoned portfolio. We believe these investments are paying off, as our unseasoned hotels have demonstrated significant revenue per available room (“RevPAR”) growth of 13.6% for the year ended December 31, 2010, surpassing the RevPAR growth rates of 5.7% and 4.3% reported by Smith Travel Research for the upscale and midscale without food and beverage segments nationally. Likewise, we believe that the investments since 2007 in our seasoned portfolio also will produce attractive returns. We expect the performance of our seasoned hotels, approximately 68.3% of which by room count as of December 31, 2010 are midscale without food and beverage properties and approximately 58.4% of which by room count as of December 31, 2010 are located outside the top 50 MSAs, generally to track the performance of these hotels during the prior lodging industry recovery when owned by The Summit Group and our predecessor. During that period, from June 2003 to November 2008, the performance of our seasoned hotels initially trailed the upper-upscale segment at the beginning of the growth cycle, but ultimately generated total RevPAR growth of 57.9%, significantly in excess of the 33.0% RevPAR growth produced by the upper-upscale segment during the same recovery period. We believe that our seasoned hotels are currently following, and expect that they will likely continue to follow, a similar RevPAR growth path during the current industry recovery. |

----

----

----

----

| Item 1A. | Risk Factors. |
|----------|---------------|

----

|   | ● | we may be unable to acquire or may be forced to acquire at significantly higher prices desired hotels because of competition from other real estate investors with more capital, including other real estate operating companies, REITs and investment funds; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | we may be unable to obtain the necessary debt or equity financing to consummate an acquisition or, if obtainable, financing may not be on satisfactory terms; and |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | agreements for the acquisition of hotels are typically subject to customary conditions to closing, including satisfactory completion of due diligence investigations, and we may spend significant time and money on potential acquisitions that we do not consummate. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in us paying too much for hotels in new markets; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | market conditions may result in lower than expected occupancy and room rates; |
|--------|---------|-------------------------------------------------------------------------------|

|   | ● | we may acquire hotels without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as clean-up of environmental contamination, claims by tenants, vendors or other persons against the former owners of the hotels and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the hotels; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | we may need to spend more than budgeted amounts to make necessary improvements or renovations to our newly acquired hotels; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of hotels, into our existing operations. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | ● | require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, capital expenditures and other general corporate purposes, including to pay dividends on our common stock as currently contemplated or necessary to satisfy the requirements for qualification as a REIT; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | increase our vulnerability to general adverse economic and industry conditions and limit our flexibility in planning for, or reacting to, changes in our business and our industry; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | limit our ability to borrow additional funds or refinance indebtedness on favorable terms or at all to expand our business or ease liquidity constraints; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | place us at a competitive disadvantage relative to competitors that have less indebtedness. |
|--------|---------|---------------------------------------------------------------------------------------------|

|   | ● | merge, consolidate or transfer all or substantially all of our or our subsidiaries’ assets; |
|--------|---------|---------------------------------------------------------------------------------------------------|

|   | ● | sell, transfer, pledge or encumber our stock or the ownership interests of our subsidiaries; |
|--------|---------|----------------------------------------------------------------------------------------------|

|   | ● | incur additional debt or issue preferred stock; |
|--------|---------|-------------------------------------------------|

|   | ● | enter into, terminate or modify leases for our hotels and hotel management and franchise agreements; |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | ● | make certain expenditures, including capital expenditures; |
|--------|---------|------------------------------------------------------------|

|   | ● | pay dividends on or repurchase our capital stock; and |
|--------|---------|-------------------------------------------------------|

|   | ● | enter into certain transactions with affiliates. |
|--------|---------|--------------------------------------------------|

----

|   | ● | prevent us from taking actions that are opposed by our joint venture partners; |
|--------|---------|--------------------------------------------------------------------------------|

|   | ● | create impasses on major decisions, such as acquisitions or sales; |
|--------|---------|--------------------------------------------------------------------|

|   | ● | prevent us from selling our interests in the joint venture without the consent of our joint venture partners; or |
|--------|---------|------------------------------------------------------------------------------------------------------------------|

|   | ● | subject us to liability for the actions of our joint venture partners. |
|--------|---------|------------------------------------------------------------------------|

----

----

|   | ● | over-building of hotels in our markets, which could adversely affect occupancy and revenue at the hotels we acquire; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | ● | adverse effects of international, national, regional and local economic and market conditions; and |
|--------|---------|----------------------------------------------------------------------------------------------------|

|   | ● | changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of  compliance with laws and regulations, fiscal policies and ordinances. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | dependence on business and commercial travelers and tourism; |
|--------|---------|--------------------------------------------------------------|

|   | ● | increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | increases in operating costs due to inflation and other factors that may not be offset by increased room rates; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------|

|   | ● | events beyond our control, such as terrorist attacks, travel related health concerns including pandemics and epidemics such as H1N1 influenza (swine flu), avian bird flu and severe acute respiratory syndrome (“SARS”), imposition of taxes or surcharges by regulatory authorities, travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes and environmental disasters such as the oil spill in the Gulf of Mexico; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | potential increases in labor costs at our hotels, including as a result of unionization of the labor force; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------|

|   | ● | adverse effects of a downturn in the lodging industry. |
|--------|---------|--------------------------------------------------------|

|   | ● | possible environmental problems; |
|--------|---------|----------------------------------|

|   | ● | construction cost overruns and delays; |
|--------|---------|----------------------------------------|

----

|   | ● | a possible shortage of available cash to fund capital improvements and replacements and, the related possibility that financing for these capital improvements may not be available to us on affordable terms; |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | these capital improvements and replacements may not prove to be accretive to funds from operations (“FFO”); and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------|

|   | ● | uncertainties as to market demand or a loss of market demand after capital improvements and replacements have begun. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------|

|   | ● | possible environmental problems; |
|--------|---------|----------------------------------|

|   | ● | construction delays or cost overruns that may increase project costs; |
|--------|---------|-----------------------------------------------------------------------|

|   | ● | receipt of zoning, occupancy and other required governmental permits and authorizations; |
|--------|---------|------------------------------------------------------------------------------------------|

|   | ● | development costs incurred for projects that are not pursued to completion; |
|--------|---------|-----------------------------------------------------------------------------|

|   | ● | acts of God such as earthquakes, hurricanes, floods or fires that could adversely impact a project; |
|--------|---------|-----------------------------------------------------------------------------------------------------|

|   | ● | inability to raise capital; and |
|--------|---------|---------------------------------|

|   | ● | governmental restrictions on the nature or size of a project. |
|--------|---------|---------------------------------------------------------------|

----

|   | ● | adverse changes in international, national, regional and local economic and market conditions; |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | ● | changes in interest rates and in the availability, cost and terms of debt financing; |
|--------|---------|--------------------------------------------------------------------------------------|

|   | ● | changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the ongoing need for capital improvements, particularly in older structures, that may require us to expend funds to correct defects or to make improvements before an asset can be sold; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | changes in operating expenses; and |
|--------|---------|------------------------------------|

|   | ● | civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism, including the consequences of the terrorist acts such as those that occurred on September 11, 2001. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|   | ● | “business combination” provisions that, subject to limitations, prohibit certain business combinations between us and an “interested stockholder” (defined generally as any person who beneficially owns 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of us who, at any time within the two-year period immediately prior to the date in question, was the beneficial owner of 10% or more of the voting power of our then outstanding stock) or an affiliate of any interested stockholder for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter imposes two supermajority stockholder voting requirements on these combinations, unless, among other conditions, our common stockholders receive a minimum price, as defined in the MGCL, for their stock and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares; and |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | “control share” provisions that provide that our “control shares” (defined as voting shares of stock which, when aggregated with all other shares of stock controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a “control share acquisition” (defined as the direct or indirect acquisition of ownership or control of issued and outstanding “control shares”) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding shares owned by the acquirer, by our officers or by our employees who are also directors of our company. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | actual receipt of an improper benefit or profit in money, property or services; or |
|--------|---------|------------------------------------------------------------------------------------|

|   | ● | active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | a limited availability of market quotations for our securities; |
|--------|---------|-----------------------------------------------------------------|

|   | ● | reduced liquidity with respect to our securities; |
|--------|---------|---------------------------------------------------|

|   | ● | a determination that our common stock is “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a limited amount of news and analyst coverage; and |
|--------|---------|----------------------------------------------------|

|   | ● | a decreased ability to issue additional securities or obtain additional financing in the future. |
|--------|---------|--------------------------------------------------------------------------------------------------|

----

----

|   | ● | actual or anticipated variations in our quarterly results of operations; |
|--------|---------|--------------------------------------------------------------------------|

|   | ● | changes in market valuations of companies in the lodging industry; |
|--------|---------|--------------------------------------------------------------------|

|   | ● | changes in expectations of future financial performance or changes in estimates of securities analysts; |
|--------|---------|---------------------------------------------------------------------------------------------------------|

|   | ● | fluctuations in stock market prices and volumes; |
|--------|---------|--------------------------------------------------|

|   | ● | our issuances of common stock or other securities in the future; |
|--------|---------|------------------------------------------------------------------|

|   | ● | the inclusion of our common stock in equity indices, which could induce additional purchases; |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | ● | the addition or departure of key personnel; |
|--------|---------|---------------------------------------------|

|   | ● | announcements by us or our competitors of acquisitions, investments or strategic alliances; and |
|--------|---------|-------------------------------------------------------------------------------------------------|

|   | ● | unforeseen events beyond our control, such as terrorist attacks, travel related health concerns including pandemics and epidemics such as H1N1 influenza (swine flu), avian bird flu and SARS, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related  accidents and unusual weather patterns, including natural disasters such as hurricanes. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | we could be subject to the federal alternative minimum tax and possibly increased state and local taxes; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

|   | ● | unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

----

| Item 1B. | Unresolved Staff Comments. |
|----------|----------------------------|

| Item 2. | Properties. |
|---------|-------------|

----

|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   | Year Ended December 31, 2010 |   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------|---------------------------------|--------|-----------------------------------|--------|--------|
|    Franchise/Brand                                                                                                                                                                                                                                                                                                                                               |    Location |  Year ofOpening/Conversion |   |  # Rooms                     |   |   |  Occupancy(1) |   |   |  ADR(2) |   |   |  RevPAR(3) |   |    Segment |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Marriott                                                                                                                                                                                                                                                                                                                                                                        |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |
| Courtyard by Marriott*(4)(5)                                                                                                                                                                                                                                                                                                                                                    | Flagstaff, AZ              | 2009                            |   |                              | 164    |   |   |   | 63.70 | % |   | $ | 89.61 |   |   | $ | 57.08 |   | Upscale |
| Courtyard by Marriott(4)(6)                                                                                                                                                                                                                                                                                                                                                     | Germantown, TN             | 2005                            |   |                              | 93     |   |   |   | 65.00 |   |   |   | 92.40 |   |   |   | 60.06 |   | Upscale |
| Courtyard by Marriott(4)(6)                                                                                                                                                                                                                                                                                                                                                     | Jackson, MS                | 2005                            |   |                              | 117    |   |   |   | 67.15 |   |   |   | 92.71 |   |   |   | 62.25 |   | Upscale |
| Courtyard by Marriott(4)(7)                                                                                                                                                                                                                                                                                                                                                     | Memphis, TN                | 2005                            |   |                              | 96     |   |   |   | 64.56 |   |   |   | 73.99 |   |   |   | 47.77 |   | Upscale |
| Courtyard by Marriott(4)(8)                                                                                                                                                                                                                                                                                                                                                     | Missoula, MT               | 2005                            |   |                              | 92     |   |   |   | 64.20 |   |   |   | 102.24 |   |   |   | 65.64 |   | Upscale |
| Courtyard by Marriott(4)(9)                                                                                                                                                                                                                                                                                                                                                     | Scottsdale, AZ             | 2003                            |   |                              | 153    |   |   |   | 57.24 |   |   |   | 105.86 |   |   |   | 60.59 |   | Upscale |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Baton Rouge, LA            | 2004                            |   |                              | 79     |   |   |   | 55.93 |   |   |   | 81.17 |   |   |   | 45.39 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Bellevue, WA               | 1997                            |   |                              | 144    |   |   |   | 60.63 |   |   |   | 106.31 |   |   |   | 64.46 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Boise, ID                  | 1995                            |   |                              | 63     |   |   |   | 63.61 |   |   |   | 68.96 |   |   |   | 43.86 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Denver, CO                 | 1997                            |   |                              | 161    |   |   |   | 69.62 |   |   |   | 83.99 |   |   |   | 58.47 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Emporia, KS                | 1994                            |   |                              | 57     |   |   |   | 61.04 |   |   |   | 75.51 |   |   |   | 46.10 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Lakewood, CO               | 1995                            |   |                              | 63     |   |   |   | 64.61 |   |   |   | 86.17 |   |   |   | 55.67 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott(4)(8)                                                                                                                                                                                                                                                                                                                                                 | Lewisville, TX             | 2000                            |   |                              | 71     |   |   |   | 53.27 |   |   |   | 73.43 |   |   |   | 39.12 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Salina, KS                 | 1994                            |   |                              | 63     |   |   |   | 70.78 |   |   |   | 72.32 |   |   |   | 51.19 |   | Midscale w/o F&B |
| Fairfield Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Spokane, WA                | 1995                            |   |                              | 86     |   |   |   | 66.64 |   |   |   | 106.40 |   |   |   | 70.90 |   | Midscale w/o F&B |
| Fairfield Inn & Suites by Marriott(4)(7)                                                                                                                                                                                                                                                                                                                                    | Germantown, TN             | 2005                            |   |                              | 80     |   |   |   | 54.30 |   |   |   | 75.64 |   |   |   | 41.07 |   | Midscale w/o F&B |
| Residence Inn by Marriott                                                                                                                                                                                                                                                                                                                                                       | Fort Wayne, IN             | 2006                            |   |                              | 109    |   |   |   | 66.20 |   |   |   | 93.82 |   |   |   | 62.11 |   | Upscale |
| Residence Inn by Marriott(4)(7)                                                                                                                                                                                                                                                                                                                                                 | Germantown, TN             | 2005                            |   |                              | 78     |   |   |   | 64.51 |   |   |   | 97.34 |   |   |   | 62.80 |   | Upscale |
| Residence Inn by Marriott*(4)(10)(11)                                                                                                                                                                                                                                                                                                                                           | Portland, OR               | 2009                            |   |                              | 124    |   |   |   | 74.10 |   |   |   | 97.74 |   |   |   | 72.42 |   | Upscale |
| Residence Inn by Marriott*(4)(12)                                                                                                                                                                                                                                                                                                                                               | Ridgeland, MS              | 2007                            |   |                              | 100    |   |   |   | 79.33 |   |   |   | 99.97 |   |   |   | 79.31 |   | Upscale |
| SpringHill Suites by Marriott                                                                                                                                                                                                                                                                                                                                                   | Baton Rouge, LA            | 2004                            |   |                              | 78     |   |   |   | 59.53 |   |   |   | 86.67 |   |   |   | 51.59 |   | Upscale |
| SpringHill Suites by Marriott*(4)(13)                                                                                                                                                                                                                                                                                                                                           | Denver, CO                 | 2007                            |   |                              | 124    |   |   |   | 63.31 |   |   |   | 96.22 |   |   |   | 60.91 |   | Upscale |
| SpringHill Suites by Marriott*                                                                                                                                                                                                                                                                                                                                                  | Flagstaff, AZ              | 2008                            |   |                              | 112    |   |   |   | 67.01 |   |   |   | 89.86 |   |   |   | 60.22 |   | Upscale |
| SpringHill Suites by Marriott(4)(14)                                                                                                                                                                                                                                                                                                                                            | Lithia Springs, GA         | 2004                            |   |                              | 78     |   |   |   | 47.44 |   |   |   | 74.79 |   |   |   | 35.48 |   | Upscale |
| SpringHill Suites by Marriott                                                                                                                                                                                                                                                                                                                                                   | Little Rock, AR            | 2004                            |   |                              | 78     |   |   |   | 60.24 |   |   |   | 87.34 |   |   |   | 52.62 |   | Upscale |
| SpringHill Suites by Marriott                                                                                                                                                                                                                                                                                                                                                   | Nashville, TN              | 2004                            |   |                              | 78     |   |   |   | 68.45 |   |   |   | 98.68 |   |   |   | 67.54 |   | Upscale |
| SpringHill Suites by Marriott(4)(9)                                                                                                                                                                                                                                                                                                                                             | Scottsdale, AZ             | 2003                            |   |                              | 123    |   |   |   | 55.41 |   |   |   | 95.97 |   |   |   | 53.17 |   | Upscale |
| TownePlace Suites by Marriott                                                                                                                                                                                                                                                                                                                                                   | Baton Rouge, LA            | 2004                            |   |                              | 90     |   |   |   | 69.21 |   |   |   | 74.82 |   |   |   | 51.78 |   | Midscale w/o F&B |
| Subtotal/Weighted Average                                                          |                       |                            |   | 2,754                             |   |   |   | 63.60 | % |   | $ | 89.64 |   |   | $ | 57.15 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hilton                                                                                                                                                                                                                                                                                                                                                                          |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hampton Inn(4)(8)                                                                                                                                                                      | Denver, CO                 | 2003                            |   |                              | 149    |   |   |   | 46.01 | % |   | $ | 80.37 |   |   | $ | 36.98 |   | Midscale w/o F&B |
| Hampton Inn                                                                                                                                                                            | Fort Collins, CO           | 1996                            |   |                              | 75     |   |   |   | 60.53 |   |   |   | 83.17 |   |   |   | 50.34 |   | Midscale w/o F&B |
| Hampton Inn(4)(7)(10)                                                                                                                                                                                                                                                                                                                                                           | Fort Smith, AR             | 2005                            |   |                              | 178    |   |   |   | 60.79 |   |   |   | 95.39 |   |   |   | 57.99 |   | Midscale w/o F&B |
| Hampton Inn(4)(8)                                                                                                                                                                      | Fort Wayne, IN             | 2006                            |   |                              | 119    |   |   |   | 60.55 |   |   |   | 91.31 |   |   |   | 55.28 |   | Midscale w/o F&B |
| Hampton Inn                                                                                                                                                                            | Medford, OR                | 2001                            |   |                              | 75     |   |   |   | 70.57 |   |   |   | 101.02 |   |   |   | 71.29 |   | Midscale w/o F&B |
| Hampton Inn                                                                                                                                                                            | Twin Falls, ID             | 2004                            |   |                              | 75     |   |   |   | 66.11 |   |   |   | 81.27 |   |   |   | 53.73 |   | Midscale w/o F&B |
| Hampton Inn                                                                                                                                                                            | Provo, UT                  | 1996                            |   |                              | 87     |   |   |   | 72.17 |   |   |   | 86.94 |   |   |   | 62.74 |   | Midscale w/o F&B |
| Hampton Inn                                                                                                                                                                            | Boise, ID                  | 1995                            |   |                              | 63     |   |   |   | 70.17 |   |   |   | 86.24 |   |   |   | 60.52 |   | Midscale w/o F&B |
| Hampton Inn & Suites*                                                                                                                                                                                                                                                                                                                                                       | Bloomington, MN            | 2007                            |   |                              | 146    |   |   |   | 71.81 |   |   |   | 114.89 |   |   |   | 82.50 |   | Midscale w/o F&B |
| Hampton Inn & Suites(4)(7)                                                                                                                                                                                                                                                                                                                                                  | El Paso, TX                | 2005                            |   |                              | 139    |   |   |   | 80.95 |   |   |   | 110.60 |   |   |   | 89.53 |   | Midscale w/o F&B |
| Hampton Inn & Suites*(4)(15)                                                                                                                                                                                                                                                                                                                                                | Fort Worth, TX             | 2007                            |   |                              | 105    |   |   |   | 67.05 |   |   |   | 110.83 |   |   |   | 74.31 |   | Midscale w/o F&B |
| Hilton Garden Inn*(4)(16)                                                                                                                                                                                                                                                                                                                                                       | Fort Collins, CO           | 2007                            |   |                              | 120    |   |   |   | 58.40 |   |   |   | 88.45 |   |   |   | 51.66 |   | Upscale |
| Subtotal/Weighted Average                                                                                                                                                                                                                                                                                                                                                  |                       |                            |   | 1,331                             |   |   |   | 64.70 | % |   | $ | 95.50 |   |   | $ | 62.53 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| IHG                                                                                                                                                                                                                                                                                                                                                                             |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Holiday Inn Express(4)(7)                                                                                                                                                                                                                                                                                                                                                       | Boise, ID                  | 2005                            |   |                              | 63     |   |   |   | 73.03 | % |   | $ | 77.46 |   |   | $ | 56.57 |   | Midscale w/o F&B |
| Holiday Inn Express*(4)(8)                                                                                                                                                                                                                                                                                                                                                      | Vernon Hills, IL           | 2008                            |   |                              | 119    |   |   |   | 56.35 |   |   |   | 79.75 |   |   |   | 44.94 |   | Midscale w/o F&B |
| Holiday Inn Express & Suites                                                                                                                                                                                                                                                                                                                                                | Emporia, KS                | 2000                            |   |                              | 58     |   |   |   | 75.71 |   |   |   | 87.48 |   |   |   | 66.23 |   | Midscale w/o F&B |
| Holiday Inn Express & Suites*                                                                                                                                                                                                                                                                                                                                               | Las Colinas, TX            | 2007                            |   |                              | 128    |   |   |   | 41.76 |   |   |   | 79.44 |   |   |   | 33.18 |   | Midscale w/o F&B |
| Holiday Inn Express & Suites(4)(8)                                                                                                                                                                                                                                                                                                                                          | Sandy, UT                  | 1998                            |   |                              | 88     |   |   |   | 73.60 |   |   |   | 88.60 |   |   |   | 65.21 |   | Midscale w/o F&B |
| Holiday Inn Express & Suites*(4)(17)                                                                                                                                                                                                                                                                                                                                        | Twin Falls, ID             | 2009                            |   |                              | 91     |   |   |   | 59.34 |   |   |   | 87.13 |   |   |   | 51.70 |   | Midscale w/o F&B |
| Staybridge Suites                                                                                                                                                                      | Jackson, MS                | 2007                            |   |                              | 92     |   |   |   | 64.35 |   |   |   | 86.89 |   |   |   | 55.91 |   | Midscale w/o F&B |
| Subtotal/Weighted Average                                                          |                       |                            |   | 639                               |   |   |   | 59.20 | % |   | $ | 83.48 |   |   | $ | 49.75 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hyatt                                                                                                                                                                                                                                                                                                                                                                           |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Hyatt Place(4)(6)                                                                                                                                                                      | Atlanta, GA                | 2006                            |   |                              | 150    |   |   |   | 79.04 | % |   | $ | 75.24 |   |   | $ | 59.47 |   | Upscale |
| Hyatt Place*                                                                                                                                                                           | Fort Myers, FL             | 2009                            |   |                              | 148    |   |   |   | 34.95 |   |   |   | 76.51 |   |   |   | 26.74 |   | Upscale |
| Hyatt Place*                                                                                                                                                                           | Las Colinas, TX            | 2007                            |   |                              | 122    |   |   |   | 59.35 |   |   |   | 87.55 |   |   |   | 51.96 |   | Upscale |
| Hyatt Place*(4)(10)(18)                                                                                                                                                                                                                                                                                                                                                         | Portland, OR               | 2009                            |   |                              | 136    |   |   |   | 69.78 |   |   |   | 79.01 |   |   |   | 55.13 |   | Upscale |
| Subtotal/Weighted Average                                                          |                       |                            |   | 556                               |   |   |   | 58.00 | % |   | $ | 79.08 |   |   | $ | 45.66 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Choice                                                                                                                                                                                                                                                                                                                                                                          |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cambria Suites*(4)(19)                                                                                                                                                                                                                                                                                                                                                          | Baton Rouge, LA            | 2008                            |   |                              | 127    |   |   |   | 70.55 | % |   | $ | 82.86 |   |   | $ | 58.46 |   | Upscale |
| Cambria Suites*                                                                                                                                                                        | Bloomington, MN            | 2007                            |   |                              | 113    |   |   |   | 74.92 |   |   |   | 75.40 |   |   |   | 56.49 |   | Upscale |
| Cambria Suites*(4)(14)                                                                                                                                                                                                                                                                                                                                                          | Boise, ID                  | 2007                            |   |                              | 119    |   |   |   | 64.83 |   |   |   | 72.54 |   |   |   | 47.03 |   | Upscale |
| Cambria Suites*(4)(20)                                                                                                                                                                                                                                                                                                                                                          | San Antonio, TX            | 2008                            |   |                              | 126    |   |   |   | 64.37 |   |   |   | 78.26 |   |   |   | 50.38 |   | Upscale |
| Comfort Inn(4)(8)(10)                                                                                                                                                                  | Fort Smith, AR             | 1995                            |   |                              | 89     |   |   |   | 52.80 |   |   |   | 70.54 |   |   |   | 37.24 |   | Midscale w/o F&B |
| Comfort Inn(4)(8)                                                                                                                                                                      | Missoula, MT               | 1996                            |   |                              | 52     |   |   |   | 64.26 |   |   |   | 86.50 |   |   |   | 55.59 |   | Midscale w/o F&B |
| Comfort Inn                                                                                                                                                                            | Salina, KS                 | 1992                            |   |                              | 60     |   |   |   | 68.10 |   |   |   | 70.83 |   |   |   | 48.23 |   | Midscale w/o F&B |
| Comfort Inn & Suites                                                                                                                                                               | Twin Falls, ID             | 1992                            |   |                              | 111    |   |   |   | 66.51 |   |   |   | 69.58 |   |   |   | 46.27 |   | Midscale w/o F&B |
| Comfort Suites                                                                                                                                                                         | Charleston, WV             | 2001                            |   |                              | 67     |   |   |   | 74.06 |   |   |   | 94.25 |   |   |   | 69.80 |   | Midscale w/o F&B |
| Comfort Suites                                                                                                                                                                         | Fort Worth, TX             | 1999                            |   |                              | 70     |   |   |   | 52.43 |   |   |   | 82.48 |   |   |   | 43.24 |   | Midscale w/o F&B |
| Comfort Suites                                                                                                                                                                         | Lakewood, CO               | 1995                            |   |                              | 62     |   |   |   | 65.11 |   |   |   | 82.77 |   |   |   | 53.89 |   | Midscale w/o F&B |
| Subtotal/Weighted Average                                                          |                       |                            |   | 996                               |   |   |   | 63.80 | % |   | $ | 78.40 |   |   | $ | 50.12 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Starwood                                                                                                                                                                                                                                                                                                                                                                        |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Aloft*                                                                                                                                                                                 | Jacksonville. FL           | 2009                            |   |                              | 136    |   |   |   | 64.72 |   |   |   | 62.33 |   |   |   | 40.34 |   | Upscale |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Carlson                                                                                                                                                                                                                                                                                                                                                                         |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Country Inn & Suites By Carlson                                                                                                                                                                                                                                                                                                                                             | Charleston, WV             | 2001                            |   |                              | 64     |   |   |   | 75.29 |   |   |   | 96.76 |   |   |   | 72.85 |   | Midscale w/o F&B |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Independent                                                                                                                                                                                                                                                                                                                                                                     |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Aspen Hotel & Suites(4)(22)                                                                                                                                                                                                                                                                                                                                                 | Fort Smith, AR             | 2003                            |   |                              | 57     |   |   |   | 49.70 |   |   |   | 64.66 |   |   |   | 32.13 |   | Midscale w/o F&B |
|                                                                                                                                                                                                                                                                                                                                                                            |                       |                            |   |                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total/Weighted Average                                                             |                       |                            |   | 6,533                             |   |   |   | 62.80 | % |   | $ | 86.91 |   |   | $ | 54.98 |   |   |
| Total/Weighted Average — Seasoned Portfolio                                                                                                                                                                                                                                                                                                                               |                       |                            |   | 4,173                             |   |   |   | 64.20 | % |   | $ | 87.09 |   |   | $ | 56.17 |   |   |
| Total/Weighted Average — Unseasoned Portfolio                                                                                                                                                                                                                                                                                                                             |                       |                            |   | 2,360                             |   |   |   | 60.30 | % |   | $ | 86.61 |   |   | $ | 52.88 |   |   |

----

| (1) | Occupancy represents the percentage of available rooms that were sold during a specified period of time and is calculated by dividing the number of rooms sold by the total number of rooms available, expressed as a percentage. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | ADR represents the average daily rate paid for rooms sold, calculated by dividing room revenue (i.e., excluding food and beverage revenue or other hotel operations revenue such as telephone, parking and other guest services) by rooms sold. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | RevPAR is the product of ADR and occupancy. RevPAR does not include food and beverage revenue or other hotel operations revenue such as telephone, parking and other guest services. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | This hotel is subject to mortgage debt at December 31, 2010.  For additional information concerning our debt and lenders, please see Item 7. “Management’s Discussion and Analysis of Financial Information and Results of Operations—Indebtedness” and Item 8. “Financial Statements and Supplementary Data—Note 11” to Consolidated Financial Statements. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | At 12/31/10, subject to approximately $16.5 million in mortgage debt maturing 5/17/18 loaned by Compass Bank. |
|-----|---------------------------------------------------------------------------------------------------------------|

| (6) | At 12/31/10, subject to approximately $24.2 million in mortgage debt maturing 7/01/13 loaned by First National Bank of Omaha. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (7) | At 12/31/10, subject to approximately $28.9 million in mortgage debt maturing 7/01/25 loaned by ING Investment Management. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (8) | At 12/31/10, subject to approximately $29.3 million in mortgage debt maturing 7/01/12 loaned by ING Investment Management. |
|-----|----------------------------------------------------------------------------------------------------------------------------|

| (9) | At 12/31/10, subject to approximately $13.6 million in mortgage debt maturing 1/01/15 loaned by National Western Life Insurance. |
|-----|----------------------------------------------------------------------------------------------------------------------------------|

| (10) | This hotel is subject to a ground lease. See “—Our Hotel Operating Agreements—Ground Leases” below. |
|------|-----------------------------------------------------------------------------------------------------------------------------|

| (11) | At 12/31/10, subject to approximately $12.6 million in mortgage debt maturing 9/30/11 loaned by Bank of the Cascades. |
|------|-----------------------------------------------------------------------------------------------------------------------|

| (12) | At 12/31/10, subject to approximately $6.2 million in mortgage debt maturing 11/01/28 loaned by ING Investment Management. |
|------|----------------------------------------------------------------------------------------------------------------------------|

| (13) | At 12/31/10, subject to approximately $8.7 million in mortgage debt maturing 4/01/18 loaned by General Electric Capital Corp. |
|------|-------------------------------------------------------------------------------------------------------------------------------|

| (14) | At 12/31/10, subject to approximately $7.3 million in mortgage debt maturing 3/01/12 loaned by MetaBank. |
|------|----------------------------------------------------------------------------------------------------------|

| (15) | At 12/31/10, subject to approximately $5.7 million in mortgage debt maturing 11/01/13 loaned by BNC National Bank. |
|------|--------------------------------------------------------------------------------------------------------------------|

| (16) | At 12/31/10, subject to approximately $7.9 million in mortgage debt maturing 7/01/12 loaned by ING Investment Management. |
|------|---------------------------------------------------------------------------------------------------------------------------|

| (17) | At 12/31/10, subject to approximately $5.8 million in mortgage debt maturing 4/01/16 loaned by BNC National Bank. |
|------|-------------------------------------------------------------------------------------------------------------------|

| (18) | At 12/31/10, subject to approximately $6.4 million in mortgage debt maturing 6/29/12 loaned by Bank of the Ozarks. |
|------|--------------------------------------------------------------------------------------------------------------------|

| (19) | At 12/31/10, subject to approximately $11.0 million in mortgage debt maturing 3/01/19 loaned by General Electric Capital Corp. |
|------|--------------------------------------------------------------------------------------------------------------------------------|

| (20) | At 12/31/10, subject to approximately $11.2 million in mortgage debt maturing 1/01/15 loaned by General Electric Capital Corp. |
|------|--------------------------------------------------------------------------------------------------------------------------------|

| (21) | At 12/31/10, subject to approximately $1.6 million in mortgage debt maturing 6/24/12 loaned by Chambers Bank. |
|------|---------------------------------------------------------------------------------------------------------------|

----

|   | ● | The Comfort Inn located in Fort Smith, Arkansas is subject to a ground lease with an initial lease termination date of August 31, 2022. The initial lease term may be extended for an additional 30 years. Annual ground rent currently is $44,088 per year. Annual ground rent is adjusted every fifth year with adjustments based on the Consumer Price Index for All Urban Consumers. The next scheduled ground rent adjustment is January 1, 2015. |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The Hampton Inn located in Fort Smith, Arkansas is subject to a ground lease with an initial lease termination date of May 31, 2030 with 11, five-year renewal options. Annual ground rent currently is $145,987 per year. Annual ground rent is adjusted on June 1 of each year, with adjustments based on increases in RevPAR calculated in accordance with the terms of the ground lease. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The Residence Inn by Marriott located in Portland, Oregon is subject to a ground lease with an initial lease termination date of June 30, 2084 with one option to extend for an additional 14 years. Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest. If the option to extend is exercised, monthly ground rent will be charged based on a formula established in the ground lease. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | The Hyatt Place located in Portland, Oregon is subject to a ground lease with a lease termination date of June 30, 2084 with one option to extend for an additional 14 years. Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest. If the option to extend is exercised, monthly ground rent will be charged based on a formula established in the ground lease. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

| Item 3. | Legal Proceedings. |
|---------|--------------------|

| Item 4. | Removed and Reserved. |
|---------|-----------------------|

----

PART II

| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
|---------|---------------------------------------------------------------------------------------------------------------------|

----

|   | ● | approximately $227.2 million to reduce outstanding mortgage indebtedness and pay associated costs, as follows: |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|   | ―approximately $89.3 million to repay in full a loan from Fortress Credit Corp., including approximately $2.1 million of exit fees, interest and legal fees; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ―approximately $78.2 million to repay in full a loan originally made by Lehman Brothers Bank, including approximately $1.4 million to pay an extinguishment premium and other transaction costs; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ―approximately $21.4 million to repay in full two loans with Marshall & Isley Bank; and |
|--------|-------------------------------------------------------------------------------------------------------------|

|   | ―approximately $38.3 million to repay in full two loans with First National Bank of Omaha; and |
|--------|-----------------------------------------------------------------------------------------------------------|

|   | ● | approximately $5.3 million to fund a capital expenditure reserve account under the hotel management agreement with Interstate. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 6. | Selected Financial Data. |
|---------|--------------------------|

|                                                           |   |                         |    |
|----------------------------------------------------------------|--------|------------------------------|---------|
| Statement of Operations Data (in thousands)                    |   | Year Ended December 31, |    |
|                                                           |   | 2010                         |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |   | 2006 |   |
| REVENUE                                                        |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |
|   Room revenue                                       |   | $                            | 133,069 |   |   | $ | 118,960 |   |   | $ | 132,797 |   |   | $ | 112,044 |   |   | $ | 99,009 |   |
|   Other hotel operations revenue                     |   |                         | 2,566   |   |   |   | 2,240 |   |   |   | 2,310 |   |   |   | 1,845 |   |   |   | 1,653 |   |
| Total Revenue                                                  |   |                         | 135,635 |   |   |   | 121,200 |   |   |   | 135,107 |   |   |   | 113,889 |   |   |   | 100,662 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| COSTS AND EXPENSES                                             |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Direct hotel operations                            |   |                         | 47,210  |   |   |   | 42,071 |   |   |   | 42,381 |   |   |   | 35,021 |   |   |   | 31,036 |   |
|   Other hotel operating expenses                     |   |                         | 18,961  |   |   |   | 16,987 |   |   |   | 15,186 |   |   |   | 11,980 |   |   |   | 10,589 |   |
|   General, selling and administrative                |   |                         | 25,380  |   |   |   | 24,017 |   |   |   | 25,993 |   |   |   | 22,009 |   |   |   | 18,038 |   |
|   Repairs and maintenance                            |   |                         | 4,718   |   |   |   | 6,152 |   |   |   | 8,009 |   |   |   | 10,405 |   |   |   | 8,157 |   |
|   Depreciation and amortization                      |   |                         | 27,251  |   |   |   | 23,971 |   |   |   | 22,307 |   |   |   | 16,136 |   |   |   | 13,649 |   |
|   Loss on impairment of assets                       |   |                         | 6,476   |   |   |   | 7,506 |   |   |   | — |   |   |   | — |   |   |   | — |   |
| Total Expenses                                                 |   |                         | 129,996 |   |   |   | 120,704 |   |   |   | 113,876 |   |   |   | 95,551 |   |   |   | 81,469 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                         |   |                         | 5,639   |   |   |   | 496 |   |   |   | 21,231 |   |   |   | 18,338 |   |   |   | 19,193 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                         |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest income                                    |   |                         | 47      |   |   |   | 50 |   |   |   | 195 |   |   |   | 446 |   |   |   | 605 |   |
|   Interest expense                                   |   |                         | (26,362 | ) |   |   | (18,321 | ) |   |   | (17,025 | ) |   |   | (14,214 | ) |   |   | (11,135 | ) |
|   Loss on disposal of assets                         |   |                         | (42     | ) |   |   | (4 | ) |   |   | (390 | ) |   |   | (652 | ) |   |   | (749 | ) |
| Total Other Expense                                            |   |                         | (26,357 | ) |   |   | (18,275 | ) |   |   | (17,220 | ) |   |   | (14,420 | ) |   |   | (11,279 | ) |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) FROMCONTINUING OPERATIONS                        |   |                         | (20,718 | ) |   |   | (17,779 | ) |   |   | 4,011 |   |   |   | 3,918 |   |   |   | 7,914 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME FROMDISCONTINUED OPERATIONS                             |   |                         | — |   |   |   | 1,465 |   |   |   | 10,278 |   |   |   | 11,587 |   |   |   | 2,728 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) BEFOREINCOME TAXES                           |   |                         | (20,718 | ) |   |   | (16,314 | ) |   |   | 14,289 |   |   |   | 15,505 |   |   |   | 10,642 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| STATE INCOME TAX EXPENSE                                       |   |                         | (202    | ) |   |   | — |   |   |   | (826 | ) |   |   | (715 | ) |   |   | (539 | ) |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                              |   |                         | (20,920 | ) |   |   | (16,314 | ) |   |   | 13,463 |   |   |   | 14,790 |   |   |   | 10,103 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTEREST      |   |                         | — |   |   |   | — |   |   |   | 384 |   |   |   | 778 |   |   |   | 661 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO SUMMIT HOTEL PROPERTIES, LLC |   | $                            | (20,920 | ) |   | $ | (16,314 | ) |   | $ | 13,079 |   |   | $ | 14,012 |   |   | $ | 9,442 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Funds from Operations(1):                                      |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                              |   | $                            | (20,920 | ) |   | $ | (16,314 | ) |   | $ | 13,463 |   |   | $ | 14,790 |   |   | $ | 10,103 |   |
| Depreciation and amortization                                  |   |                         | 27,251  |   |   |   | 24,125 |   |   |   | 23,028 |   |   |   | 18,887 |   |   |   | 16,648 |   |
| Gain on disposition of assets                                  |   |                         | — |   |   |   | (1,297 | ) |   |   | (8,605 | ) |   |   | (10,380 | ) |   |   | (1,240 | ) |
| Funds from Operations                                          |   | $                            | 6,331   |   |   | $ | 6,514 |   |   | $ | 27,886 |   |   | $ | 23,297 |   |   | $ | 25,511 |   |
|                                                           |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EBITDA(2):                                                     |   |                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                                              |   | $                            | (20,920 | ) |   | $ | (16,314 | ) |   | $ | 13,463 |   |   | $ | 14,790 |   |   | $ | 10,103 |   |
| Depreciation and amortization                                  |   |                         | 27,251  |   |   |   | 24,125 |   |   |   | 23,028 |   |   |   | 18,887 |   |   |   | 16,648 |   |
| Interest Expense                                               |   |                         | 26,362  |   |   |   | 18,321 |   |   |   | 17,025 |   |   |   | 14,214 |   |   |   | 11,135 |   |
| Interest Income                                                |   |                         | (47     | ) |   |   | (50 | ) |   |   | (195 | ) |   |   | (446 | ) |   |   | (605 | ) |
| Income taxes                                                   |   |                         | 202     |   |   |   | — |   |   |   | 826 |   |   |   | 715 |   |   |   | 539 |   |
| EBITDA                                                         |   | $                            | 32,848  |   |   | $ | 26,082 |   |   | $ | 54,147 |   |   | $ | 48,160 |   |   | $ | 37,820 |   |

----

|                             |   |                         |   |
|----------------------------------|--------|------------------------------|--------|
| Balance Sheet Data (in millions) |   | Year Ended December 31, |   |
|                             |   |                         | 2010   |   |   |   | 2009 |   |   |   | 2008 |   |   |   | 2007 |   |   |   | 2006 |   |
|                             |   |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Assets                     |   | $                            | 493.0  |   |   | $ | 518.2 |   |   | $ | 494.8 |   |   | $ | 448.0 |   |   | $ | 356.0 |   |
| Long Term Obligations            |   | $                            | 253.2  |   |   | $ | 270.4 |   |   | $ | 350.8 |   |   | $ | 261.5 |   |   | $ | 210.1 |   |

| (1) | As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), funds from operations (“FFO”) represents net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus real estate depreciation and amortization (excluding amortization of deferred financing costs). We present FFO because we consider it an important supplemental measure of our operational performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO when reporting their results. FFO is intended to exclude GAAP historical cost depreciation and amortization of real estate and related assets, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO excludes depreciation and amortization unique to real estate, gains and losses from property dispositions and extraordinary items, it provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy, room rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. We compute FFO in accordance with standards established by the Board of Governors of NAREIT in its March 1995 White Paper (as amended in November 1999 and April 2002), which may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs. Further, FFO does not represent amounts available for management’s discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Amounts presented in accordance with our definition of FFO may not be comparable to similar measures disclosed by other companies, since not all companies calculate this non-GAAP measure in the same manner. FFO should not be considered as an alternative measure of our net income (loss) or operating performance. FFO may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that FFO can enhance our stockholders’ understanding of our financial condition and results of operations, this non-GAAP financial measure is not  necessarily a better indicator of any trend as compared to a comparable GAAP measure such as net income (loss). |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | EBITDA represents net income or loss, excluding: (i) interest, (ii) income tax expense and (iii) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the impact of our asset base (primarily depreciation and amortization) from our operating results. Our management also uses EBITDA as one measure in determining the value of acquisitions and dispositions. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | Amounts presented in accordance with our definitions of EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate this non-GAAP measure in the same manner. EBITDA should not be considered as an alternative measure of our net income (loss) or operating performance. EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that EBITDA can enhance our stockholders’ understanding of our financial condition and results of operations, this non-GAAP financial measure is not necessarily a better indicator of any trend as compared to a comparable GAAP measure such as net income (loss). |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
|---------|----------------------------------------------------------------------------------------------|

----

----

|   | ● | Occupancy; |
|--------|---------|------------|

|   | ● | ADR; and |
|--------|---------|----------|

|   | ● | RevPAR. |
|--------|---------|---------|

----

| Franchisor/Brand                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | No. of Hotels |   |   | No. of Rooms |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------|--------|--------|--------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |   |
| Marriott                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |   |   |         |   |
| Courtyard by Marriott                                                                                             |   |          | 6      |   |         |   | 715 |   |
| Residence Inn by Marriott                                                                                         |   |          | 4      |   |         |   | 411 |   |
| Fairfield Inn by Marriott                                                                                         |   |          | 9      |   |         |   | 787 |   |
| Fairfield Inn & Suites by Marriott                                                                            |   |          | 1      |   |         |   | 80 |   |
| SpringHill Suites by Marriott                                                                                     |   |          | 7      |   |         |   | 671 |   |
| TownePlace Suites by Marriott                                                                                     |   |          | 1      |   |         |   | 90 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 28     |   |         |   | 2,754 |   |
| Hilton                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |          |   |   |         |   |   |   |
| Hampton Inn                                                                                                       |   |          | 8      |   |         |   | 821 |   |
| Hampton Inn & Suites                                                                                          |   |          | 3      |   |         |   | 390 |   |
| Hilton Garden Inn                                                                                                 |   |          | 1      |   |         |   | 120 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 12     |   |         |   | 1,331 |   |
| IHG                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |          |   |   |         |   |   |   |
| Holiday Inn Express                                                                                               |   |          | 2      |   |         |   | 182 |   |
| Holiday Inn Express & Suites                                                                                  |   |          | 4      |   |         |   | 365 |   |
| Staybridge Suites                                                                                                 |   |          | 1      |   |         |   | 92 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 7      |   |         |   | 639 |   |
| Hyatt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |          |   |   |         |   |   |   |
| Hyatt Place                                                                                                       |   |          | 4      |   |         |   | 556 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |   |   |   |
| Choice(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |          |   |   |         |   |   |   |
| Cambria Suites                                                                                                    |   |          | 4      |   |         |   | 485 |   |
| Comfort Inn                                                                                                       |   |          | 3      |   |         |   | 201 |   |
| Comfort Inn & Suites                                                                                          |   |          | 1      |   |         |   | 111 |   |
| Comfort Suites                                                                                                    |   |          | 3      |   |         |   | 199 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          | 11     |   |         |   | 996 |   |
| Starwood                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |          |   |   |         |   |   |   |
| Aloft                                                                                                             |   |          | 1      |   |         |   | 136 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |   |   |   |
| Carlson                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |          |   |   |         |   |   |   |
| Country Inn & Suites By Carlson                                                                               |   |          | 1      |   |         |   | 64 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |   |   |   |
| Independent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |          |   |   |         |   |   |   |
| Aspen Hotel & Suites                                                                                          |   |          | 1      |   |         |   | 57 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |          |   |   |         |   |   |   |
| Total                                                                                                             |   |          | 65     |   |         |   | 6,533 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Year Ended December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2010                         |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |
| Number of hotels at end of period                                                                 |   |                         | 46      |   |   |   | 46 |   |   |   | 46 |   |   |   | 45 |   |
| Average number of rooms                                                                           |   |                         | 4,173   |   |   |   | 4,173 |   |   |   | 4,173 |   |   |   | 4,093 |   |
| Undepreciated (gross) book value at end of period                                                                                                                                                                                                                                                                                                                                                                                 |   | $                            | 295,612 |   |   | $ | 283,985 |   |   | $ | 276,148 |   |   | $ | 268,974 |   |
| Revenue                                                                                           |   | $                            | 86,812  |   |   | $ | 87,542 |   |   | $ | 105,542 |   |   | $ | 103,871 |   |
| Occupancy                                                                                         |   |                         | 64.1    | % |   |   | 64.8 | % |   |   | 69.5 | % |   |   | 70.0 | % |
| ADR                                                                                               |   | $                            | 87.75   |   |   | $ | 87.42 |   |   | $ | 100.29 |   |   | $ | 99.78 |   |
| RevPAR                                                                                            |   | $                            | 56.22   |   |   | $ | 56.63 |   |   | $ | 69.70 |   |   | $ | 69.80 |   |

|                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Year Ended December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------|---------|
|                                                                                                                                                                                                                                                                                                                                                                                                                              |   | 2010                         |    |   | 2009 |   |   | 2008 |   |   | 2007 |   |
| Number of hotels at end of period                                                                 |   |                         | 19      |   |   |   | 19 |   |   |   | 14 |   |   |   | 11 |   |
| Average number of rooms                                                                           |   |                         | 2,360   |   |   |   | 2,360 |   |   |   | 1,324 |   |   |   | 625 |   |
| Undepreciated (gross) book value at end of period                                                                                                                                                                                                                                                                                                                                                                                 |   | $                            | 266,268 |   |   | $ | 265,333 |   |   | $ | 163,232 |   |   | $ | 125,529 |   |
| Revenue                                                                                           |   | $                            | 48,824  |   |   | $ | 33,658 |   |   | $ | 29,565 |   |   | $ | 10,018 |   |
| Occupancy                                                                                         |   |                         | 63.1    | % |   |   | 55.3 | % |   |   | 55.3 | % |   |   | 49.2 | % |
| ADR                                                                                               |   | $                            | 87.29   |   |   | $ | 87.58 |   |   | $ | 107.37 |   |   | $ | 87.58 |   |
| RevPAR                                                                                            |   | $                            | 55.06   |   |   | $ | 48.47 |   |   | $ | 59.33 |   |   | $ | 43.09 |   |

----

|                                                                                                                                                                                                                                                                                                    |   | Year Ended December 31, 2010 |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                    |   | Total Revenue                     |    |   | Total Expenses |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total (65 hotels)                                                      |   | $                                 | 135,635 |   |   | $ | 129,996 |   |   |   | 63.7 | % |   | $ | 87.59 |   |   | $ | 55.80 |   |
| Seasoned (46 hotels)(1)                                                |   | $                                 | 86.812  |   |   | $ | 71,196 |   |   |   | 64.1 | % |   | $ | 87.75 |   |   | $ | 56.22 |   |
| Unseasoned (19 hotels)                                                 |   | $                                 | 48,823  |   |   | $ | 58,800 |   |   |   | 63.1 | % |   | $ | 87.29 |   |   | $ | 55.06 |   |
| Same-store (60 hotels)(2)                                              |   | $                                 | 122,344 |   |   | $ | 106,855 |   |   |   | 64.1 | % |   | $ | 88.25 |   |   | $ | 56.53 |   |

| (1) | Excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|--------------------------------------------------------------------------------|

| (2) | Includes seasoned and unseasoned hotels that were owned during all of 2010 and 2009, but excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                    |   | Year Ended December 31, 2009 |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                    |   | Total Revenue                     |    |   | Total Expenses |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total (65 hotels)                                                      |   | $                                 | 121,200 |   |   | $ | 120,704 |   |   |   | 61.9 | % |   | $ | 87.40 |   |   | $ | 54.12 |   |
| Seasoned (46 hotels)(1)                                                |   | $                                 | 87,542  |   |   | $ | 73,553 |   |   |   | 64.8 | % |   | $ | 87.42 |   |   | $ | 56.63 |   |
| Unseasoned (19 hotels)                                                 |   | $                                 | 33,658  |   |   | $ | 47,151 |   |   |   | 55.3 | % |   | $ | 87.58 |   |   | $ | 48.47 |   |
| Same-store (60 hotels)(2)                                              |   | $                                 | 118,791 |   |   | $ | 102,590 |   |   |   | 62.8 | % |   | $ | 87.59 |   |   | $ | 54.97 |   |

| (1) | Excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|--------------------------------------------------------------------------------|

| (2) | Includes seasoned and unseasoned hotels that were owned during all of 2010 and 2009, but excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | Year EndedDecember 31, 2010 |    |   | Year EndedDecember 31, 2009 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|---------|--------|----------------------------------|--------|
| Seasoned Hotel Expenses (46 hotels):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                             |    |   |                             |   |
| Direct hotel operations                                                                                               |   | $                                | 29,717  |   |                             | $      | 29,272 |   |
| Other hotel operating expenses                                                                                        |   |                             | 11,204  |   |                             |   | 11,205 |   |
| General, selling and administrative                                                                                   |   |                             | 15,994  |   |                             |   | 15,870 |   |
| Repairs and maintenance                                                                                               |   |                             | 3,137   |   |                             |   | 4,083 |   |
| Depreciation and amortization                                                                                         |   |                             | 11,144  |   |                             |   | 11,950 |   |
| Loss on impairment of assets                                                                                          |   |                             | — |   |                             |   | 1,173 |   |
| Total Expenses                                                                                                        |   | $                                | 71,196  |   |                             | $      | 73,553 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                             |    |   |                             |   |   |   |
| Unseasoned Hotel Expenses (19 hotels):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   |                             |    |   |                             |   |   |   |
| Direct hotel operations                                                                                               |   | $                                | 17,493  |   |                             | $      | 12,799 |   |
| Other hotel operating expenses                                                                                        |   |                             | 7,757   |   |                             |   | 5,782 |   |
| General, selling and administrative                                                                                   |   |                             | 9,386   |   |                             |   | 8,147 |   |
| Repairs and maintenance                                                                                               |   |                             | 1,581   |   |                             |   | 2,069 |   |
| Depreciation and amortization                                                                                         |   |                             | 16,107  |   |                             |   | 12,021 |   |
| Loss on impairment of assets                                                                                          |   |                             | 6,476   |   |                             |   | 6,333 |   |
| Total Expenses                                                                                                        |   | $                                | 58,800  |   |                             | $      | 47,151 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |                             |    |   |                             |   |   |   |
| Same-Store Portfolio Expenses (60 hotels):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                             |    |   |                             |   |   |   |
| Direct hotel operations                                                                                               |   | $                                | 42,302  |   |                             | $      | 41,015 |   |
| Other hotel operating expenses                                                                                        |   |                             | 16,835  |   |                             |   | 16,646 |   |
| General, selling and administrative                                                                                   |   |                             | 22,762  |   |                             |   | 22,081 |   |
| Repairs and maintenance                                                                                               |   |                             | 4,374   |   |                             |   | 6,054 |   |
| Depreciation and amortization                                                                                         |   |                             | 20,582  |   |                             |   | 15,621 |   |
| Loss on impairment of assets                                                                                          |   |                             | — |   |                             |   | 1,173 |   |
| Total Expenses                                                                                                        |   | $                                | 106,855 |   |                             | $      | 102,590 |   |

|                                                                                                                                                                                                                                                                                                    |   | Year Ended December 31, 2009 |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                    |   | Total Revenue                     |    |   | Total Expenses |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total (65 hotels)                                                      |   | $                                 | 121,200 |   |   | $ | 120,704 |   |   |   | 61.9 | % |   | $ | 87.40 |   |   | $ | 54.12 |   |
| Seasoned (46 hotels)(1)                                                |   | $                                 | 87,542  |   |   | $ | 73,553 |   |   |   | 64.8 | % |   | $ | 87.42 |   |   | $ | 56.63 |   |
| Unseasoned (19 hotels)                                                 |   | $                                 | 33,658  |   |   | $ | 47,151 |   |   |   | 55.3 | % |   | $ | 87.58 |   |   | $ | 48.47 |   |
| Same-store (57 hotels)(2)                                              |   | $                                 | 112,129 |   |   | $ | 99,020 |   |   |   | 63.7 | % |   | $ | 88.13 |   |   | $ | 56.13 |   |

| (1) | Excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|--------------------------------------------------------------------------------|

| (2) | Includes seasoned and unseasoned hotels that were owned during all of 2009 and 2008, but excludes hotels that were reclassified to discontinued operations during 2009. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                    |   | Year Ended December 31, 2008 |    |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|
|                                                                                                                                                                                                                                                                                                    |   | Total Revenue                     |    |   | Total Expenses |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total (62 hotels)                                                      |   | $                                 | 135,107 |   |   | $ | 113,876 |   |   |   | 66.2 | % |   | $ | 100.95 |   |   | $ | 66.78 |   |
| Seasoned (46 hotels)(1)                                                |   | $                                 | 105,542 |   |   | $ | 79,540 |   |   |   | 69.5 | % |   | $ | 100.29 |   |   | $ | 69.70 |   |
| Unseasoned (19 hotels)                                                 |   | $                                 | 29,565  |   |   | $ | 34,336 |   |   |   | 55.3 | % |   | $ | 107.37 |   |   | $ | 59.33 |   |
| Same-store (57 hotels)(2)                                              |   | $                                 | 134,934 |   |   | $ | 110,898 |   |   |   | 66.3 | % |   | $ | 101.82 |   |   | $ | 67.47 |   |

| (1) | Excludes hotels that were reclassified to discontinued operations during 2009 and 2008. |
|-----|-----------------------------------------------------------------------------------------|

| (2) | Includes seasoned and unseasoned hotels that were owned during all of 2009 and 2008, but excludes hotels that were reclassified to discontinued operations during 2009 and 2008. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | Year EndedDecember 31, 2009 |   |   | Year EndedDecember 31, 2008 |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|--------|--------|----------------------------------|--------|
| Seasoned Hotel Expenses (46 and 45 hotels, respectively):                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |                             |   |   |                             |   |
| Direct hotel operations                                                                                          |   | $                                | 29,272 |   |                             | $      | 32,182 |   |
| Other hotel operating expenses                                                                                   |   |                             | 11,205 |   |                             |   | 11,002 |   |
| General, selling and administrative                                                                              |   |                             | 15,870 |   |                             |   | 19,091 |   |
| Repairs and maintenance                                                                                          |   |                             | 4,083  |   |                             |   | 4,342 |   |
| Depreciation and amortization                                                                                    |   |                             | 11,950 |   |                             |   | 12,923 |   |
| Loss on impairment of assets                                                                                     |   |                             | 1,173  |   |                             |   | — |   |
| Total Expenses                                                                                                   |   | $                                | 73,553 |   |                             | $      | 79,540 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                             |   |   |                             |   |   |   |
| Unseasoned Hotel Expenses (19 and 14 hotels, respectively):                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |                             |   |   |                             |   |   |   |
| Direct hotel operations                                                                                          |   | $                                | 12,799 |   |                             | $      | 10,199 |   |
| Other hotel operating expenses                                                                                   |   |                             | 5,782  |   |                             |   | 4,184 |   |
| General, selling and administrative                                                                              |   |                             | 8,147  |   |                             |   | 6,902 |   |
| Repairs and maintenance                                                                                          |   |                             | 2,069  |   |                             |   | 3,667 |   |
| Depreciation and amortization                                                                                    |   |                             | 12,021 |   |                             |   | 9,384 |   |
| Loss on impairment of assets                                                                                     |   |                             | 6,333  |   |                             |   | — |   |
| Total Expenses                                                                                                   |   | $                                | 47,151 |   |                             | $      | 34,336 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |                             |   |   |                             |   |   |   |
| Same-Store Portfolio Expenses (57 hotels):                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |                             |   |   |                             |   |   |   |
| Direct hotel operations                                                                                          |   | $                                | 37,867 |   |                             | $      | 42,136 |   |
| Other hotel operating expenses                                                                                   |   |                             | 15,359 |   |                             |   | 15,132 |   |
| General, selling and administrative                                                                              |   |                             | 20,414 |   |                             |   | 24,328 |   |
| Repairs and maintenance                                                                                          |   |                             | 4,849  |   |                             |   | 7,970 |   |
| Depreciation and amortization                                                                                    |   |                             | 19,358 |   |                             |   | 21,332 |   |
| Loss on impairment of assets                                                                                     |   |                             | 1,173  |   |                             |   | — |   |
| Total Expenses                                                                                                   |   | $                                | 99,020 |   |                             | $      | 110,898 |   |

|   | ● | a 216-room hotel located in downtown Minneapolis, Minnesota for a purchase price of $10.5 million, or approximately $48,600 per key. If we complete this acquisition, we expect to convert the brand of the hotel after completing significant capital improvements of approximately $12.0 million, or approximately $56,000 per key, for a combined aggregate purchase price and renovation cost of approximately $22.6 million, or approximately $105,000 per key; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | a 143-room hotel located in Duluth, Georgia and a 121-room hotel located in Glendale (Denver), Colorado for a combined purchase price of $17.0 million. If we complete the acquisitions of these hotels, we expect to perform standard renovations of approximately $2.5 million in the aggregate, for a combined aggregate purchase price and renovation cost of approximately $72,000 per key; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a 91-room hotel located in Ridgeland, Mississippi for a purchase price of $7.3 million, or approximately $80,219 per key.  If we complete the acquisition of this hotel, we expect to perform a standard renovation of approximately $820,000, for a combined aggregate purchase price and renovation cost of approximately $89,000 per key. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Total Debt to EBITDA Ratio                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | LIBOR Margin |   |   | Base Rate Margin |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|------------------|--------|
| <3.50x                                                                                                      |   |         | 2.50%  |   |             |   | 1.50% |   |
| ≥3.50x and <5.00x                                                                                     |   |         | 3.00%  |   |             |   | 2.00% |   |
| ≥5.00x                                                                                                   |   |         | 3.50%  |   |             |   | 2.50% |   |

----

|   | ● | a maximum ratio of consolidated indebtedness (as defined in the loan documentation) to consolidated EBITDA (as defined in the loan documentation); |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a minimum ratio of adjusted consolidated EBITDA (as defined in the loan documentation) to consolidated fixed charges (as defined in the loan documentation); |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a minimum consolidated tangible net worth (as defined in the loan documentation) of not less than 80% of our consolidated tangible net worth as of the facility’s closing date plus 80% of the net proceeds of subsequent common equity issuances; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | a maximum dividend payout ratio of 95% of FFO (as defined in the loan documentation) or an amount necessary to maintain REIT tax status and avoid corporate income and excise taxes. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Lender                                                                                                                                                                                                                                                          | Collateral                                                                                                                                                                                                                     | OutstandingPrincipalBalance as ofDecember 31, 2010 | Interest Rateas ofDecember 31, 2010(1)       | Amortization(years) | MaturityDate |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------|---------------------------------------------------|---------------------|--------------|
| Bank of the Cascades                                         | Residence Inn by Marriott, Portland, OR                                                                                                                                                                                        | $ 12,623,347                                            | Prime rate, subject to a floor of 6.00%           | 25                  | 09/30/11     |
|                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                           |                                                    |                                              |                |         |
| ING Investment Management(2)(15)                                                                                                                                                                                                                                | Fairfield Inn & Suites by Marriott, Germantown, TNResidence Inn by Marriott, Germantown, TNHoliday Inn Express, Boise, IDCourtyard by Marriott, Memphis, TNHampton Inn & Suites, El Paso, TXHampton Inn, Ft. Smith, AR | 28,901,411                                              | 5.60%                                             | 20                  | 07/01/25     |
|                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                           |                                                    |                                              |                |         |
| MetaBank                                                     | Cambria Suites, Boise, IDSpringHill Suites by Marriott, Lithia Springs, GA                                                                                                                                                     | 7,286,887                                               | Prime rate, subject to a floor of 5.00%           | 20                  | 03/01/12     |
|                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                           |                                                    |                                              |                |         |
| Chambers Bank                                                | Aspen Hotel & Suites, Ft. Smith, AR                                                                                                                                                                                        | 1,594,177                                               | 6.50%                                             | 20                  | 06/24/12     |
|                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                           |                                                    |                                              |                |         |
| Bank of the Ozarks(3)                                        | Hyatt Place, Portland, OR                                                                                                                                                                                                      |  6,435,774                                         | 90-day LIBOR + 4.00%, subject to a floor of 6.75% | 25                  | 06/29/12     |

----

| Lender                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |   Collateral                                                                                                                                                                                                                                    |   OutstandingPrincipalBalance as ofDecember 31, 2010 |   Interest Rateas ofDecember 31, 2010(1) |   Amortization(years) |   MaturityDate |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|----------------------------------------------------|----------------------------|---------------------|
| ING Investment Management(4)(10) (15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Hilton Garden Inn, Ft. Collins, CO                                                                                                                                                                                                                   | 7,896,366                                                      | 6.34%                                              | 20                         | 07/01/12            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| ING Investment Management(4)(11) (15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Comfort Inn, Ft. Smith, ARHoliday Inn Express, Sandy, UTFairfield Inn by Marriott, Lewisville, TXHampton Inn, Denver, COHoliday Inn Express, Vernon Hills, ILHampton Inn, Fort Wayne, INCourtyard by Marriott, Missoula, MTComfort Inn, Missoula, MT | 29,321,614                                                     | 6.10%                                              | 20                         | 07/01/12            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| BNC National Bank(13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Hampton Inn & Suites, Ft. Worth, TX                                                                                                                                                                                                              | 5,719,872                                                      | 5.01%                                              | 20                         | 11/01/13            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| First National Bank of Omaha(5)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Courtyard by Marriott, Germantown, TNCourtyard by Marriott, Jackson, MSHyatt Place, Atlanta, GA                                                                                                                                                      | 24,234,933                                                     | 90-day LIBOR + 4.00%, subject to a floor of 5.25%  | 20                         | 07/01/13            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| ING Investment Management(6)(12) (15)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Residence Inn by Marriott, Ridgeland, MS                                                                                                                                                                                                             | 6,235,813                                                      | 6.61%                                              | 20                         | 11/01/28            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| General Electric Capital Corp.(7)(14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Cambria Suites, San Antonio, TX                                                                                                                                                                                                                      | 11,182,794                                                     | 90-day LIBOR + 2.55%                               | 25                         | 04/01/14            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| National Western Life Insurance(8)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Courtyard by Marriott, Scottsdale, AZSpringHill Suites by Marriott, Scottsdale, AZ                                                                                                                                                                   | 13,631,222                                                     | 8.00%                                              | 17                         | 01/01/15            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| BNC National Bank(13)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Holiday Inn Express & Suites, Twin Falls, ID                                                                                                                                                                                                     | 5,814,136                                                      | Prime rate - 0.25%                                 | 20                         | 04/01/16            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| Compass Bank                                                                                                                                                                                                                                                                                                                                                 | Courtyard by Marriott, Flagstaff, AZ                                                                                                                                                                                                                 | 16,492,293                                                     | Prime rate - 0.25%, subject to a floor of 4.50%    | 20                         | 05/17/18            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| General Electric Capital Corp.(14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | SpringHill Suites by Marriott, Denver, CO                                                                                                                                                                                                            | 8,685,517                                                      | 90-day LIBOR + 1.75%                               | 20                         | 04/01/18            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| General Electric Capital Corp.(9)(14)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Cambria Suites, Baton Rouge, LA                                                                                                                                                                                                                      | 11,033,293                                      | 90-day LIBOR + 1.80%                               | 25                         | 03/01/19            |
|            Subtotal                                                                                | $197,089,449                                                                                                                                                                                                                                         |                                                           |                                               |                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| Loans outstanding at December 31, 2010 that were repaid with proceeds of IPO and concurrent private placement                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                 |                                                           |                                               |
| Fortress Credit Corp.(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | Land parcels                                                                                                                                                                                                                                         | 86,722,869                                                     | 30-day LIBOR + 8.75%                               |                       | 03/05/11            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| Lehman Brothers Bank(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 27 hotels                                                                                                                                                                                                                                            | 76,829,078                                                     | 5.4205%                                            |                       | 01/11/12            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| Marshall & Ilsley Bank(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Hampton Inn & Suites, Bloomington, MN                                                                                                                                                                                                            | 11,524,451                                                     | 30-day LIBOR + 3.90%                               |                       | 03/31/11            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| Marshall & Ilsley Bank(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Cambria Suites, Bloomington, MN                                                                                                                                                                                                                      | 9,895,727                                                      | 30-day LIBOR + 3.90%                               |                       | 06/30/11            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| First National Bank of Omaha(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Hyatt Place, Las Colinas, TXHoliday Inn Express  & Suites, Las Colinas, TXStayBridge Suites, Jackson, MS                                                                                                                               | 18,774,418                                                     | 90-day LIBOR + 4.00%                               |                       | 07/31/11            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
| First National Bank of Omaha(16)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | SpringHill Suites by Marriott, Flagstaff, AZAloft, Jacksonville, FL                                                                                                                                                                                  | 19,601,215                                                     | 90-day LIBOR + 4.00%                               |                       | 07/31/11            |
|            Subtotal                                                                                | $223,347,758                                                                                                                                                                                                                                         |                                                           |                                               |                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                 |                                                           |                                               |                       |                |
|            Total(17)                                                                               | $420,437,207                                                                                                                                                                                                                                         |                                                           |                                               |                       |

----

| (1) | As of December 31, 2010, the Prime rate was 3.25% and the 90-day LIBOR rate was 0.30%. |
|-----|---------------------------------------------------------------------------------------------|

| (2) | The lender has the right to call the loan, which is secured by multiple hotel properties, at January 1, 2012, January 1, 2017 and January 1, 2022. At January 1, 2012, the loan begins to amortize according to a 19.5 year amortization schedule. If this loan is repaid prior to maturity, there is a prepayment penalty equal to the greater of (i) 1% of the principal being repaid and (ii) the yield maintenance premium. There is no prepayment penalty if the loan is prepaid 60 days prior to any call date. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | The maturity date may be extended to June 20, 2014 based on the exercise of two, one-year extension options, subject to the satisfaction of certain conditions. If this loan is repaid prior to June 29, 2011, there is a prepayment penalty equal to 1% of the principal being repaid. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | If this loan is repaid prior to maturity, there is a prepayment penalty equal to the greater of (i) 1% of the principal being repaid and (ii) the yield maintenance premium. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Evidenced by three promissory notes, the loan secured by the Hyatt Place located in Atlanta, Georgia has a maturity date of February 1, 2014. The three promissory notes are cross-defaulted and cross-collateralized. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The lender has the right to call the loan at November 1, 2013, 2018 and 2023. If this loan is repaid prior to maturity, there is a prepayment penalty equal to the greater of (i) 1% of the principal being repaid and (ii) the yield maintenance premium. There is no prepayment penalty if the loan is prepaid 60 days prior to any call date. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (7) | If this loan is repaid prior to April 1, 2011, there is a prepayment penalty equal to 0.75% of the principal being repaid. After this date, there is no prepayment penalty. A portion of the loan can be prepaid without penalty at any time to bring the loan-to-value ratio to no less than 65%. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | On December 8, 2009, we entered into two cross-collateralized and cross-defaulted mortgage loans with National Western Life Insurance in the amounts of $8,650,000 and $5,350,000 to refinance the JP Morgan debt on the two Scottsdale, AZ hotels. Prior to February 1, 2011, these loans cannot be prepaid. If these loans are prepaid, there is a prepayment penalty ranging from 1% to 5% of the principal being prepaid. A one-time, ten-year extension of the maturity date is permitted, subject to the satisfaction of certain conditions. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | If this loan is repaid prior to February 27, 2011, there is a prepayment penalty equal to 0.75% of the principal being repaid. After this date, and until July 1, 2011, there is no prepayment penalty. A portion of the loan can be prepaid without penalty at any time to bring the loan-to-value ratio to no less than 65%. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | This loan is cross-collateralized with the ING Investment Management loan secured by the following hotel properties: Comfort Inn, Ft. Smith, AR; Holiday Inn Express, Sandy, UT; Fairfield Inn by Marriott, Lewisville, TX; Hampton Inn, Denver, CO; Holiday Inn Express, Vernon Hills, IL; Hampton Inn, Fort Wayne, IN; Courtyard by Marriott, Missoula, MT; Comfort Inn, Missoula, MT. |
|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | This loan is secured by multiple hotel properties. |
|------|----------------------------------------------------|

| (12) | This loan is cross-collateralized with the ING Investment Management loan secured by the following hotel properties: Fairfield Inn & Suites by Marriott, Germantown, TN; Residence Inn by Marriott, Germantown, TN; Holiday Inn Express, Boise, ID; Courtyard by Marriott, Memphis, TN; Hampton Inn & Suites, El Paso, TX; Hampton Inn, Ft. Smith, AR. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (13) | The two BNC loans are cross-defaulted. |
|------|----------------------------------------|

| (14) | The three General Electric Capital Corp. loans are cross-defaulted. Effective July 1, 2011, the interest rate on all three loans will increase to 90-day LIBOR + 4.00%. Effective August 1, 2011, all three loans will be subject to a prepayment penalty equal to 2% of the principal repaid prior to August 1, 2012, 1% of the principal repaid prior to August 1, 2013, and 0% of the principal repaid thereafter. |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (15) | The yield maintenance premium under each of the ING Investment Management loans is calculated as follows: (A) if the entire amount of the loan is being prepaid, the yield maintenance premium is equal to the sum of (i) the present value of the scheduled monthly installments from the date of prepayment to the maturity date, and (ii) the present value of the amount of principal and interest due on the maturity date (assuming all scheduled monthly installments due prior to the maturity date were made when due), less (iii) the outstanding principal balance as of the date of prepayment; and (B) if only a portion of the loan is being prepaid, the yield maintenance premium is equal to the sum of (i) the present value of the scheduled monthly installments on the pro rata portion of the loan being prepaid, or the release price, from the date of prepayment to the maturity date, and (ii) the present value of the pro rata amount of principal and interest due on the release price due on the maturity date (assuming all scheduled monthly installments due prior to the maturity date were made when due), less (iii) the outstanding amortized principal allocation, as defined in the loan agreement, as of the date of prepayment. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (16) | Loan paid in full in using proceeds of our IPO and the concurrent private placement.  See also Item 5 of this report. |
|------|--------------------------------------------------------------------------------------------------------------------------------------|

| (17) | Total amount includes approximately $223.3 million of indebtedness that was repaid using proceeds of our IPO and the concurrent private placement. See also Item 5 of this report. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          |   | Payments Due By Period |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | Total                  |   |   | Less thanOne Year |   |   | One to ThreeYears |   |   | Four toFive Years |   |   | More thanFive Years |   |
| Long-term debt obligations(1) |   | $                      | 417.5  |   |   | $ | 157.6 |   |   | $ | 185.8 |   |   | $ | 33.1 |   |   | $ | 41.0 |   |
| Operating Lease obligations   |   | $                      | 7.7    |   |   | $ | 0.2 |   |   | $ | 0.5 |   |   | $ | 0.5 |   |   | $ | 6.5 |   |
| Total                         |   | $                      | 425.2  |   |   | $ | 157.8 |   |   | $ | 186.3 |   |   | $ | 33.6 |   |   | $ | 47.5 |   |

| (1) | The amounts shown include amortization of principal on our fixed-rate and variable-rate obligations, debt maturities on our fixed-rate and variable-rate obligations and estimated interest payments of our fixed-rate obligations.  Interest payments have been included based on the weighted-average interest rate.  Amounts include approximately $223.6 million of long-term debt obligations that were repaid in the first quarter of 2011 with net proceeds from our IPO and the concurrent private placement. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                          |   | Payments Due By Period |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | Total                  |   |   | Less thanOne Year |   |   | One to ThreeYears |   |   | Four toFive Years |   |   | More thanFive Years |   |
| Long-term debt obligations(1) |   | $                      | 201.2  |   |   | $ | 18.1 |   |   | $ | 109.0 |   |   | $ | 33.1 |   |   | $ | 41.0 |   |
| Operating Lease obligations   |   | $                      | 7.7    |   |   | $ | 0.2 |   |   | $ | 0.5 |   |   | $ | 0.5 |   |   | $ | 6.5 |   |
| Total                         |   | $                      | 208.9  |   |   | $ | 18.3 |   |   | $ | 109.5 |   |   | $ | 33.6 |   |   | $ | 47.5 |   |

| (1) | The amounts shown include amortization of principal on our fixed-rate and variable-rate obligations, debt maturities on our fixed-rate and variable-rate obligations and estimated interest payments of our fixed-rate obligations.  Interest payments have been included based on the weighted-average interest rate. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | approximately $89.3 million to repay in full a loan with Fortress Credit Corp., including approximately $2.1 million of exit fees, interest and legal fees; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | approximately $78.2 million to repay in full a loan originally made by Lehman Brothers Bank, including approximately $1.4 million to pay an extinguishment premium and other transaction costs; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | approximately $21.4 million to repay in full two loans with Marshall & Isley Bank; and |
|--------|---------|------------------------------------------------------------------------------------------------------|

|   | ● | approximately $38.3 million to repay in full two loans with First National Bank of Omaha. |
|--------|---------|------------------------------------------------------------------------------------------------|

|   | ● | a 216-room hotel located in downtown Minneapolis, Minnesota for a purchase price of $10.5 million, or approximately $48,600 per key; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the 121-room Staybridge Suites Denver-Cherry Creek in Denver, Colorado for approximately $10.0 million, or approximately $82,645 per key; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | the 143-room Holiday Inn Atlanta-Gwinnett Place Area in Atlanta, Georgia for approximately $7.0 million, or approximately $48,950 per key; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | ● | the 91-room Homewood Suites by Hilton Jackson-Ridgeland in Ridgeland, Mississippi from an unaffiliated third party for an aggregate purchase price of approximately $7.3 million, or approximately $80,220 per key. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

Item 7A.

| Item 8. | Financial Statements and Supplementary Data. |
|---------|----------------------------------------------|

| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
|---------|---------------------------------------------------------------------------------------|

| Item 9A. | Controls and Procedures. |
|----------|--------------------------|

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| Item 9B. | Other Information. |
|----------|--------------------|

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PART III

| Item 10. | Directors, Executive Officers and Corporate Governance. |
|----------|---------------------------------------------------------|

| Name    | Age | Position                                                        |
|------------------------|-----|-----------------------------------------------------------------|
| Kerry W. Boekelheide   | 56  | Executive Chairman of the Board and Director                    |
| Daniel P. Hansen       | 41  | President and Chief Executive Officer and Director              |
| Craig J. Aniszewski    | 47  | Executive Vice President and Chief Operating Officer            |
| Stuart J. Becker       | 49  | Executive Vice President, Chief Financial Officer and Treasurer |
| Ryan A. Bertucci       | 38  | Vice President of Acquisitions                                  |
| Christopher R. Eng     | 39  | Vice President, General Counsel and Secretary                   |
| JoLynn M. Sorum        | 52  | Vice President, Controller and Chief Accounting Officer         |
| Bjorn R. L. Hanson     | 59  | Independent Director                                            |
| David S. Kay           | 44  | Independent Director                                            |
| Thomas W. Storey       | 54  | Independent Director                                            |
| Wayne W. Wielgus       | 56  | Independent Director                                            |

----

----

----

----

----

|   | ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | full, fair, accurate, timely and understandable disclosure in our SEC reports and other public communications; |
|--------|---------|----------------------------------------------------------------------------------------------------------------|

|   | ● | compliance with applicable governmental laws, rules and regulations; |
|--------|---------|----------------------------------------------------------------------|

|   | ● | prompt internal reporting of violations of the code to appropriate persons identified in the code; and |
|--------|---------|--------------------------------------------------------------------------------------------------------|

|   | ● | accountability for adherence to the code. |
|--------|---------|-------------------------------------------|

----

| Director           |   | AuditCommittee  |   | CompensationCommittee |   | Nominating and CorporateGovernance Committee |
|--------------------|--------|-----------------|--------|-----------------------|--------|----------------------------------------------|
| Bjorn R. L. Hanson |   | √         |   |                  |   | √                                      |
| David S. Kay       |   | √ (Chair) |   | √               |   |                                         |
| Thomas W. Storey   |   |            |   | √               |   | √ (Chair)                              |
| Wayne W. Wielgus   |   | √         |   | √ (Chair)       |   | √                                      |

|   | ● | monitoring our compliance with corporate governance requirements of state and federal law and the rules and regulations of the NYSE; |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | development and recommendation to Summit REIT’s board of directors of criteria for prospective members of Summit REIT’s board of directors; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | conducting board of director candidate searches and interviews; |
|--------|---------|-----------------------------------------------------------------|

|   | ● | oversight and evaluation of Summit REIT’s board of directors and management, and monitoring compliance with our code of business conduct and ethics and policies with respect to conflicts of interest; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | periodic evaluation of the appropriate size and composition of Summit REIT’s board of directors, recommendations, as appropriate, of increases, decreases and changes in the composition of Summit REIT’s board of directors; and |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | formally propose the slate of nominees for election as directors at each annual meeting of our stockholders. |
|--------|---------|--------------------------------------------------------------------------------------------------------------|

----

----

| Item 11. | Executive Compensation. |
|----------|-------------------------|

|   | ● | an annual cash retainer of $50,000; |
|--------|---------|-------------------------------------|

|   | ● | we granted 1,000 shares of our common stock to each of our independent directors on February 14, 2011; |
|--------|---------|-------------------------------------------------------------------------------------------------------------|

|   | ● | effective on the date of each annual meeting of stockholders, beginning with the 2012 annual meeting of stockholders, each independent director who will continue to serve on our board of directors will receive an annual grant of shares of our common stock having an aggregate value of $15,000 (based upon the volume-weighted average closing market price of our common stock on the NYSE for the ten trading days preceding the date of grant); |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | an additional annual cash retainer of $12,500 to the chair of our audit committee; |
|--------|---------|------------------------------------------------------------------------------------|

|   | ● | an additional annual cash retainer of $10,000 to the chair of our compensation committee; and |
|--------|---------|-----------------------------------------------------------------------------------------------|

|   | ● | an additional annual cash retainer of $7,500 to the chair of our nominating and corporate governance committee. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------|

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| Name and Principal Position                                                                                                | Year |   | BaseSalary(1) |    |   | Bonus(2) |   |    | OptionAwards(3) |   |   | Total     |   |
|----------------------------------------------------------------------------------------------------------------------------|------|--------|---------------|---------|--------|----------|--------|---------|-----------------|--------|--------|-----------|--------|
| Kerry W. Boekelheide        Executive Chairman of the Board                             | 2011 |   | $             | 380,000 |   |     |   | — |            |   | $      | 1,395,142 |   |   | $ | 1,775,142 |   |
| Daniel P. Hansen        President and Chief Executive Officer                           | 2011 |   |          | 350,000 |   |     |   | — |            |   |   | 871,964   |   |   |   | 1,221,964 |   |
| Craig J. Aniszewski        Executive Vice President and Chief Operating Officer         | 2011 |   |          | 300,000 |   |     |   | — |            |   |   | 871,964   |   |   |   | 1,171,964 |   |
| Stuart J. Becker        Executive Vice President, Chief Financial Officer and Treasurer | 2011 |   |          | 250,000 |   |     |   | — |            |   |   | 174,393   |   |   |   | 424,393 |   |
| Ryan A. Bertucci        Vice President of Acquisitions                                  | 2011 |   |          | 220,000 |   |     |   | — |            |   |   | 174,393   |   |   |   | 394,393 |   |

| (1) | Full-year amount. Each executive will receive a pro rata portion of his base salary for the period beginning February 14, 2011 through December 31, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Under their employment agreements, Messrs. Boekelheide, Hansen and Aniszewski will receive annual bonuses for 2011 equal to $380,000, $350,000 and $225,000, respectively, if the 2011 hotel-level earnings before interest, taxes, depreciation and amortization for the 65 properties in our initial portfolio is at least $52.5 million. Beginning in 2012, Messrs. Boekelheide, Hansen and Aniszewski will be eligible to earn an annual cash bonus to the extent that individual and corporate goals to be established by our compensation committee are achieved. Our compensation committee will determine the actual amount of the cash bonus payable in 2012 and subsequent years. For 2012 and subsequent years, each of Messrs. Boekelheide and Hansen has the opportunity to earn an annual cash bonus of up to 100% of his annual base salary and Mr. Aniszewski has the opportunity to earn an annual cash bonus of up to 75% of his annual base salary. Under their employment agreements, Messrs. Becker and Bertucci will be eligible to earn an annual cash bonus for 2011 and subsequent years to the extent that individual and corporate goals to be established by our compensation committee are achieved. Our compensation committee will determine the actual amount of the cash bonus payable in 2011 and subsequent years. Each of Messrs. Becker and Bertucci has the opportunity to earn an annual cash bonus of up to 50% of his annual base salary for 2011 and subsequent years. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Reflects option awards made to Mr. Boekelheide (376,000 shares), Mr. Hansen (235,000 shares), Mr. Aniszewski (235,000 shares), Mr. Becker (47,000 shares) and Mr. Bertucci (47,000 shares). These options were granted pursuant to the 2011 Equity Incentive Plan upon completion of our IPO, have an exercise price equal to the per-share IPO price, which is $9.75 per share, and will vest ratably on the first five anniversaries of the date of grant unless otherwise accelerated under certain circumstances. The compensation committee of our board of directors may make additional equity awards to our named executive officers in the future. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Name                 | Date of Grant     |   | All Other OptionAwards; Numberof SecuritiesUnderlyingOptions (#) |    |   | Exercise or BasePrice of OptionAwards($/share) |   |   | Grant Date FairValue of OptionAwards |   |
|----------------------|-------------------|--------|------------------------------------------------------------------|---------|--------|------------------------------------------------|--------|--------|--------------------------------------|--------|
| Kerry W. Boekelheide | February 14, 2011 |   |                                                             | 376,000 | (1)    |                                           | $      | 9.75   | (2)                                  |   | $ | 1,395,142 | (3) |
| Daniel P. Hansen     | February 14, 2011 |   |                                                             | 235,000 | (1)    |                                           |   | 9.75   | (2)                                  |   |   | 871,964 | (3) |
| Craig J. Aniszewski  | February 14, 2011 |   |                                                             | 235,000 | (1)    |                                           |   | 9.75   | (2)                                  |   |   | 871,964 | (3) |
| Stuart J. Becker     | February 14, 2011 |   |                                                             | 47,000  | (1)    |                                           |   | 9.75   | (2)                                  |   |   | 174,393 | (3) |
| Ryan A. Bertucci     | February 14, 2011 |   |                                                             | 47,000  | (1)    |                                           |   | 9.75   | (2)                                  |   |   | 174,393 | (3) |

| (1) | The awarded options will vest ratably on the first five anniversaries of the date of grant. |
|-----|---------------------------------------------------------------------------------------------|

| (2) | The exercise price of each option equals the per-share IPO price of the shares. |
|-----|---------------------------------------------------------------------------------|

| (3) | The amount is computed in accordance with FASB ASC Topic 718 and assumes exercise of the options within a five-year period. |
|-----|-----------------------------------------------------------------------------------------------------------------------------|

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----

----

----

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|                                                                           |   | CashSeverancePayment |      |   | Payment inLieu ofMedical/WelfareBenefits(present value)(4) |   |    | AccelerationandContinuationof EquityAwards(5) |   |   | Excise TaxGross-up(6) |   |   | TotalTerminationBenefits |    |
|--------------------------------------------------------------------------------|--------|----------------------|-----------|--------|------------------------------------------------------------|--------|---------|-----------------------------------------------|--------|--------|-----------------------|--------|--------|--------------------------|---------|
| Kerry W. Boekelheide(1)(2)                                                     |   |                 |      |   |                                                       |   |    |                                          |   |   |                  |   |   |                     |    |
| Involuntary termination without cause(3)                                       |   | $                    | 2,280,000 |   |                                                       | $      | 79,200  |                                          |   | $      | 1,395,142             |   |   |                     | — |   |   | $ | 3,754,342 |   |
| Voluntary termination or involuntary termination with cause                    |   |                 | —   |   |                                                       |   | — |                                          |   |   | —               |   |   |                     | — |   |   |   | — |   |
| Change in control (no termination)                                             |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 1,395,142             |   |   |                     | — |   |   | $ | 1,395,142 |   |
| Involuntary or good reason termination in connection with change in control(3) |   | $                    | 2,280,000 |   |                                                       | $      | 79,200  |                                          |   | $      | 1,395,142             |   |   |                     | — |   |   | $ | 3,754,342 |   |
| Death or disability                                                            |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 1,395,142             |   |   |                     | — |   |   | $ | 1,395,142 |   |
| Daniel P. Hansen(1)(2)                                                         |   |                 |      |   |                                                       |   |    |                                          |   |   |                  |   |   |                     |    |   |   |   |   |   |
| Involuntary termination without cause(3)                                       |   | $                    | 2,100,000 |   |                                                       | $      | 79,200  |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 3,051,164 |   |
| Voluntary termination or involuntary termination with cause                    |   |                 | —   |   |                                                       |   | — |                                          |   |   | —               |   |   |                     | — |   |   |   | — |   |
| Change in control (no termination)                                             |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 871,964 |   |
| Involuntary or good reason termination in connection with change in control(3) |   | $                    | 2,100,000 |   |                                                       | $      | 79,200  |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 3,051,164 |   |
| Death or disability                                                            |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 871,964 |   |
| Craig J. Aniszewski(1)(2)                                                      |   |                 |      |   |                                                       |   |    |                                          |   |   |                  |   |   |                     |    |   |   |   |   |   |
| Involuntary termination without cause(3)                                       |   | $                    | 787,500   |   |                                                       | $      | 39,600  |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 1,699,064 |   |
| Voluntary termination or involuntary termination with cause                    |   |                 | —   |   |                                                       |   | — |                                          |   |   | —               |   |   |                     | — |   |   |   | — |   |
| Change in control (no termination)                                             |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 871,964 |   |
| Involuntary or good reason termination in connection with change in control(3) |   | $                    | 1,050,000 |   |                                                       | $      | 52,800  |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 1,974,764 |   |
| Death or disability                                                            |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 871,964               |   |   |                     | — |   |   | $ | 871,964 |   |
| Stuart J. Becker(1)(2)                                                         |   |                 |      |   |                                                       |   |    |                                          |   |   |                  |   |   |                     |    |   |   |   |   |   |
| Involuntary termination without cause(3)                                       |   | $                    | 562,500   |   |                                                       | $      | 9,000   |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 745,893 |   |
| Voluntary termination or involuntary termination with cause                    |   |                 | —   |   |                                                       |   | — |                                          |   |   | —               |   |   |                     | — |   |   |   | — |   |
| Change in control (no termination)                                             |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 174,393 |   |
| Involuntary or good reason termination in connection with change in control(3) |   | $                    | 750,000   |   |                                                       | $      | 12,000  |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 936,393 |   |
| Death or disability                                                            |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 174,393 |   |
| Ryan A. Bertucci(1)(2)                                                         |   |                 |      |   |                                                       |   |    |                                          |   |   |                  |   |   |                     |    |   |   |   |   |   |
| Involuntary termination without cause(3)                                       |   | $                    | 330,000   |   |                                                       | $      | 26,400  |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 530,793 |   |
| Voluntary termination or involuntary termination with cause                    |   |                 | —   |   |                                                       |   | — |                                          |   |   | —               |   |   |                     | — |   |   |   | — |   |
| Change in control (no termination)                                             |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 174,393 |   |
| Involuntary or good reason termination in connection with change in control(3) |   | $                    | 660,000   |   |                                                       | $      | 52,800  |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 887,193 |   |
| Death or disability                                                            |   |                 | —   |   |                                                       |   | — |                                          |   | $      | 174,393               |   |   |                     | — |   |   | $ | 174,393 |   |

| (1) | The amounts shown in the table do not include accrued salary, earned but unpaid bonuses, accrued but unused vacation pay or the distribution of benefits from any tax-qualified retirement or 401(k) plan. Those amounts are payable to this executive officer upon any termination of his employment, including an involuntary termination with cause and a resignation without good reason. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (2) | A termination of this executive officer’s employment due to death or disability entitles this executive officer to benefits under our life insurance and disability insurance plans. In addition, outstanding options immediately vest upon this executive officer’s termination of employment due to death or disability. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Amounts in this row are calculated in accordance with provisions of the applicable employment agreement as disclosed in “—Employment Agreements.” |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | The amounts shown in this column are estimates of the cash payments to be made under the applicable employment agreement based on the annual premiums to be paid by us for health care, life and disability insurance and other benefits expected to be provided to each executive officer. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | The amounts shown in this column represent the value, on the date of grants of the options, on February 14, 2011. The values were computed in accordance with FASB ASC Topic 718 and assume exercise of the options within a five-year period. Amounts reflecting accelerated vesting of equity awards in the rows “Change in control (no termination)” and “Involuntary or good reason termination in connection with change in control” will be paid upon only one of the specified triggering events (not both) and will not be duplicated in the event that the executive incurs a qualifying termination following a change in control event that has previously resulted in acceleration. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | The employment agreements with our executive officers do not provide an indemnification or gross-up payment for the parachute payment excise tax under Sections 280G and 4999 of the Code. The employment agreements instead provide that the severance and any other payments or benefits that are treated as parachute payments under the Code will be reduced to the maximum amount that can be paid without an excise tax liability. The parachute payments will not be reduced, however, if the executive will receive greater after-tax benefits by receiving the total or unreduced benefits (after taking into account any excise tax liability payable by the executive). The amounts shown in the table assume that the executive officer will receive the total or unreduced benefits. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
|----------|-------------------------------------------------------------------------------------------------|

| Plan Category                                          |   | Number ofSecurities tobe IssuedUponExercise ofOutstandingOptions |    |   | WeightedAverageExercisePrice ofOutstandingOptions |   |    | Number ofSecuritiesRemainingAvailable forFutureIssuanceUnder EquityCompensationPlans(1) |   |
|--------------------------------------------------------|--------|------------------------------------------------------------------|---------|--------|---------------------------------------------------|--------|---------|-----------------------------------------------------------------------------------------|--------|
| Equity Compensation Plans Approved by Stockholders(2)  |   |                                                             | 940,000 |   |                                              | $      | 9.75    |                                                                                    |   |   | 1,374,290 |   |
| Equity Compensation Plans Not Approved by Stockholders |   |                                                             | — |   |                                              |   | — |                                                                                    |   |   | — |   |
| Total                                                  |   |                                                             | 940,000 |   |                                              | $      | 9.75    |                                                                                    |   |   | 1,374,290 |   |

| (1) | Excludes securities reflected in the column entitled “Number of Securities to be Issued Upon Exercise of Outstanding Options.” Our operating partnership has not adopted any equity compensation plans; however, long-term incentive plan units (“LTIP Units”), a special class of partnership units in our operating partnership, may be issued by our operating partnership pursuant to the company’s 2011 Equity Incentive Plan. Neither the company nor our operating partnership has any current plans to issue LTIP Units pursuant to the company’s 2011 Equity Incentive Plan. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Consists of the company’s 2011 Equity Incentive Plan, which was approved by the company’s board of directors and the company’s sole stockholder prior to completion of our IPO. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Name of Beneficial Owner                                                                                                                                                                                                                                                                                                                                                                                             |   | Number of Sharesand Common UnitsBeneficially Owned |      |   | Percentage ofAll Shares(1) |   |    | Percentage ofAll Shares andCommon UnitsBeneficiallyOwned(2) |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|-----------|--------|----------------------------|--------|---------|-------------------------------------------------------------|--------|
| Kerry W. Boekelheide                                                                 |   |                                               | 1,517,879 | (3)    |                       |   | 5.3     | %                                                           |   |   | 4.1 | % |
| Daniel P. Hansen                                                                     |   |                                               | 15,000    | (4)    |                       |   | *       |                                                        |   |   | * |   |
| Craig J. Aniszewski                                                                  |   |                                               | 4,105     | (5)    |                       |   | *       |                                                        |   |   | * |   |
| Stuart J. Becker                                                                     |   |                                               | 2,500     | (4)    |                       |   | *       |                                                        |   |   | * |   |
| Ryan A. Bertucci                                                                     |   |                                               | —   | (4)    |                       |   | — |                                                        |   |   | — |   |
| Bjorn R. L. Hanson                                                                   |   |                                               | 1,500     | (6)    |                       |   | *       |                                                        |   |   | * |   |
| David S. Kay                                                                         |   |                                               | 1,000     | (6)    |                       |   | *       |                                                        |   |   | * |   |
| Thomas W. Storey                                                                     |   |                                               | 5,100     | (6)    |                       |   | *       |                                                        |   |   | * |   |
| Wayne W. Wielgus                                                                     |   |                                               | 6,000     | (6)    |                       |   | *       |                                                        |   |   | * |   |
| All directors and executive officers as a group (11 persons)                                                                                                                                                                                                                                                                                                                                                         |   |                                               | 1,554,284 |   |                       |   | 5.3     | %                                                           |   |   | 4.2 | % |

| (1) | Assumes that all Common Units held by the person are redeemed for shares of our common stock, and amounts for all executive officers and directors as a group assume all Common Units held by them are exchanged for shares of our common stock. The total number of shares of common stock outstanding used in calculating this percentage assumes that none of the Common Units held by other persons are exchanged for shares of our common stock. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Assumes a total of 37,378,000 shares of our common stock and Common Units, which Common Units may redeemed for cash or, at our election, shares of our common stock on a one-for-one basis, are outstanding. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (3) | Represents (i) 17,000 Common Units issued to a revocable trust, the trustee and sole beneficiary of which is Mr. Boekelheide, in exchange for the trust’s membership interests in our predecessor; (ii) 1,109,164 Common Units issued to The Summit Group in the Merger in exchange for its membership interests in our predecessor; (iii) 74,829 Common Units issued to The Summit Group in exchange for its Class B membership interest in Summit of Scottsdale; and (iv) an aggregate of 316,886 Common Units issued to entities affiliated with Mr. Boekelheide other than The Summit Group, over which Mr. Boekelheide shares voting and investment power with individuals who are not affiliated with us. Excludes options to purchase 376,000 shares of our common stock at the per-share IPO price of $9.75, none of which has vested. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Excludes options granted to Messrs. Hansen, Becker and Bertucci to purchase 235,000, 47,000, and 47,000 shares, respectively, of our common stock at the per-share IPO price of $9.75, none of which has vested. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Represents 4,105 Common Units issued to Mr. Aniszewski in exchange for his Class B membership interests in our predecessor. Excludes options to purchase 235,000 shares of our common stock at the per-share IPO price of $9.75, none of which has vested. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (6) | Includes 1,000 shares of common stock granted to this independent director upon completion of our IPO. |
|-----|--------------------------------------------------------------------------------------------------------|

| Item 13. | Certain Relationships and Related Transactions, and Trustee Independence. |
|----------|---------------------------------------------------------------------------|

----

|   | ● | Mr. Boekelheide and The Summit Group received an aggregate of 1,200,993 Common Units, including: (1) 17,000 Common Units issued to a revocable trust, the trustee and sole beneficiary of which is Mr. Boekelheide, in exchange for the trust’s Class A membership interests in our predecessor pursuant to the Merger; (2) 1,109,164 Common Units issued to The Summit Group pursuant to the Merger; and (3) 74,829 Common Units issued to The Summit Group in exchange for its 36% Class B membership interest in Summit of Scottsdale. These Common Units represent approximately 3.2% of our combined outstanding common stock and Common Units and have an aggregate value of $11.7 million based on our IPO price of $9.75 per share. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Entities affiliated with Mr. Boekelheide, other than The Summit Group, received an aggregate of 316,886 Common Units. Mr. Boekelheide shares voting and investment power over these Common Units with individuals who are not affiliated with us. These Common Units represent approximately 0.9% of our combined outstanding common stock and Common Units and have an aggregate value of $3.1 million based on our IPO price of $9.75 per share. |
|--------|---------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | employment agreements that provide for salary, bonus and other benefits, including severance benefits in the event of a termination of employment in certain circumstances; |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | options to purchase an aggregate of 940,000 shares of our common stock granted to our named executive officers upon completion of the IPO pursuant to the 2011 Equity Incentive Plan; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | agreements providing for indemnification by us for certain liabilities and expenses incurred as a result of actions brought, or threatened to be brought, against them as an officer and/or director of our company; and |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | redemption and registration rights under our operating partnership’s partnership agreement with respect to Common Units to be issued in the formation transactions. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Item 14. | Principal Accountant Fees and Services. |
|----------|-----------------------------------------|

----

|               |   | Eide Bailly LLP                  |    |   | KPMG LLP                         |   |
|--------------------|--------|----------------------------------|---------|--------|----------------------------------|--------|
|               |   | Year EndedDecember 31, 2009 |    |   | Year EndedDecember 31, 2010 |   |   | June 28, 2010 throughDecember 31, 2010 |   |
| Audit Fees         |   | $                                | 106,974 |   |                             | $      | 85,877 |   |   | $ | 711,430 |   |
| Audit-Related Fees |   |                             | 28,412  |   |                             |   | 2,650 |   |   |   | — |   |
| Tax Fees           |   |                             | 52,423  |   |                             |   | 53,828 |   |   |   | 448,550 |   |
| All Other Fees     |   |                             | 9,275   |   |                             |   | 145,841 |   |   |   | — |   |
| Total              |   | $                                | 197,084 |   |                             | $      | 288,196 |   |   | $ | 1,159,980 |   |

----

PART IV

| Item 15. | Exhibits and Financial Statement Schedules. |
|----------|---------------------------------------------|

| 1.     | Financial Statements                                                                                                                                                                                                                                              |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                              |
|   | Included herein at pages F-1 through F-35                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                              |
| 2.     | Financial Statement Schedules                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                              |
|   | The following financial statement schedule is included herein at pages F-29 and F-30.                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                              |
|   | Schedule III — Real Estate and Accumulated Depreciation                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                              |
|   | All schedules for which provision is made in Regulation S-X are either not required to be included herein pursuant to the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement. |
|   |                                                                                                                                                                                                                                                              |
| 3.     | Exhibits                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                              |
|   | The following exhibits are filed as part of this report:                                                                                                                                                                                                          |

| ExhibitNumber |  Description of Exhibit                                                                                                                                                                                                                                                                                                                                      |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1†    | Articles of Amendment and Restatement of Summit Hotel Properties, Inc.                                                                                                                                                                                                                                                                                            |
| 3.2           | Certificate of Limited Partnership of Summit Hotel OP, LP, as amended (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to Registration Statement on Form 8-A filed by Summit Hotel OP, LP on February 11, 2011)                                                                                                                                  |
| 3.3           | Amended and Restated Bylaws of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                                                                                                 |
| 3.4           | First Amended and Restated Agreement of Limited Partnership of Summit Hotel OP, LP, dated February 14, 2011 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                                                                                                       |
| 4.1           | Specimen certificate of common stock of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 5 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on February 7, 2011)                                                                                                                        |
| 10.1          | Form of Transition Services Agreement between The Summit Group, Inc. and Summit Hotel OP, LP (incorporated by reference to Exhibit 10.27 to Amendment No. 4 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on January 28, 2011)*                                                                                              |
| 10.2          | Tax Protection Agreement, dated February 10, 2011, between Summit Hotel OP, LP and The Summit Group, Inc. (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                        |
| 10.3          | Transition Services Agreement, dated February 14, 2011, between Summit Hotel OP, LP and The Summit Group, Inc. (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                                                                                                    |
| 10.4          | Amended and Restated Hotel Management Agreement, dated February 14, 2011, among Interstate Management Company, LLC and the subsidiaries of Summit Hotel Properties, Inc. party thereto (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                            |
| 10.5          | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.4 million) (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011) |

----

| 10.6         | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $9.5 million) (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)  |
|--------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.7         | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.3 million) (incorporated by reference to Exhibit 10.7 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011) |
| 10.8         | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Kerry W. Boekelheide (incorporated by reference to Exhibit 10.8 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                    |
| 10.9         | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Daniel P. Hansen (incorporated by reference to Exhibit 10.9 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                        |
| 10.10        | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Craig J. Aniszewski (incorporated by reference to Exhibit 10.10 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                    |
| 10.11        | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Stuart J. Becker (incorporated by reference to Exhibit 10.11 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                       |
| 10.12        | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Ryan A. Bertucci (incorporated by reference to Exhibit 10.12 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                  |
| 10.13        | Summit Hotel Properties, Inc. 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                                                                             |
| 10.14        | Form of Indemnification Agreement between Summit Hotel Properties, Inc. and each of its Executive Officers and Directors (incorporated by reference to Exhibit 10.14 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                                   |
| 10.15        | Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company dated December 23, 2005 (incorporated by reference to Exhibit 10.15 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                                         |
| 10.16        | Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated June 15, 2006 (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                                            |
| 10.17        | First Modification of Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated April 24, 2007 (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                     |
| 10.18        | Modification of Promissory Note and Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated November 28, 2007 (incorporated by reference to Exhibit 10.18 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                    |
| 10.19        | Construction Loan Agreement between Summit Hotel Properties, LLC and Compass Bank, dated September 17, 2008 (loan in the original principal amount of $19.25 million) (incorporated by reference to Exhibit 10.23 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)     |
| 10.20† | Second Amended and Restated Loan Agreement (Credit Pool) between Summit Hotel Properties, LLC and First National Bank of Omaha entered into August 19, 2010                                                                                                                                                                                                       |
| 10.22        | Form of Option Award Agreement (incorporated by reference to Exhibit 10.6 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                                                                                                                                                      |

----

| 10.23       | Form of Lease Agreement between Summit Hotel OP, LP and TRS Lessee (incorporated by reference to Exhibit 10.4 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                             |
|-------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.24       | Sourcing Agreement between Six Continents Hotel, Inc., d/b/a InterContinental Hotels Group, and Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 10.26 to Amendment No. 3 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on December 3, 2010) |
| 10.25       | Form of Severance Agreement between Summit Hotel Properties, Inc. and Christopher R. Eng (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                              |
| 10.26       | Form of Severance Agreement between Summit Hotel Properties, Inc. and JoLynn M. Sorum (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                                 |
| 21.1        | List of Subsidiaries of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 21.1 to Amendment No. 4 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on January 28, 2011)                                                                          |
| 21.2        | List of Subsidiaries of Summit Hotel OP, LP (incorporated by reference to Exhibit 21.1 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel OP, LP on September 23, 2010)                                                                                       |
| 23.1† | Consent of KPMG LLP                                                                                                                                                                                                                                                                                  |
| 23.2† | Consent of Eide Bailly LLP                                                                                                                                                                                                                                                                           |
| 31.1† | Certification of Chief Executive Officer of Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                 |
| 31.2† | Certification of Chief Financial Officer Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                    |
| 31.3† | Certification of Chief Executive Officer of Summit Hotel OP, LP pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                           |
| 31.4† | Certification of Chief Financial Officer Summit Hotel OP, LP pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                              |
| 32.1† | Certification of Chief Executive Officer Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                      |
| 32.2† | Certification of Chief Financial Officer Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                      |
| 32.3† | Certification of Chief Executive Officer Summit Hotel OP, LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                |
| 32.4† | Certification of Chief Financial Officer Summit Hotel OP, LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                |

----

|   |                                                     |   | SUMMIT HOTEL PROPERTIES, INC. (registrant) |
|--------|----------------------------------------------------------|--------|--------------------------------------------|
|   |                                                     |   |                                       |   |   |
| Date:  |        March 31, 2011 |   | By:                                        | /s/ Kerry W. Boekelheide |
|   |                                                     |   |                                       | Kerry W. Boekelheide |
|   |                                                     |   |                                       | Executive Chairman of the Board |
|   |                                                     |   |                                       |   |   |
|   |                                                     |   | SUMMIT HOTEL OP, LP (registrant)           |
|   |                                                     |   |                                       |   |   |
|   |                                                     |   | By:                                        | Summit Hotel GP, LLC, its general partner |
|   |                                                     |   |                                       |   |   |
|   |                                                     |   | By:                                        | Summit Hotel Properties, Inc., its sole member |
|   |                                                     |   |                                       |   |   |
| Date:  |        March 31, 2011 |   | By:                                        | /s/ Kerry W. Boekelheide |
|   |                                                     |   |                                       | Kerry W. Boekelheide |
|   |                                                     |   |                                       | Executive Chairman of the Board |

| Signature                |   | Title                              |   | Date                 |
|--------------------------|--------|------------------------------------|--------|----------------------|
|                     |   |                               |   |                 |
| /s/ Kerry W. Boekelheide |   | Executive Chairman of the Board    |   | March 31, 2011       |
| Kerry W. Boekelheide     |   |                               |   |                 |
|                     |   |                               |   |                 |
|                     |   |                               |   |                 |
| /s/ Daniel P. Hansen     |   | President, Chief Executive Officer |   | March 31, 2011       |
| Daniel P. Hansen         |   | and Director                       |   |                 |
|                     |   | (principal executive officer)      |   |                 |
|                     |   |                               |   |                 |
| /s/ Stuart J. Becker     |   | Executive Vice President and       |   | March 31, 2011       |
| Stuart J. Becker         |   | Chief Financial Officer            |   |                 |
|                     |   | (principal financial officer)      |   |                 |
|                     |   |                               |   |                 |
| /s/ JoLynn M. Sorum      |   | Vice President, Controller and     |   | March 31, 2011       |
| JoLynn M. Sorum          |   | Chief Accounting Officer           |   |                 |
|                     |   | (principal accounting officer)     |   |                 |
|                     |   |                               |   |                 |
| /s/ Bjorn R. L. Hanson   |   | Director                           |   | March 31, 2011       |
| Bjorn R. L. Hanson       |   |                               |   |                 |
|                     |   |                               |   |                 |
| /s/ David S. Kay         |   | Director                           |   |  March 31, 2011 |
| David S. Kay             |   |                               |   |                 |
|                     |   |                               |   |                 |
| /s/ Thomas W. Storey     |   | Director                           |   | March 31, 2011       |
| Thomas W. Storey         |   |                               |   |                 |
|                     |   |                               |   |                 |
| /s/ Wayne W. Wielgus     |   | Director                           |   | March 31, 2011       |
| Wayne W. Wielgus         |   |                               |   |                 |

----

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

|                                                   |                                                                                   | Page   |
|--------------------------------------------------------|----------------------------------------------------------------------------------------|--------|
| Summit Hotel Properties, LLC:                          |                                                                                   |
|                                                   | Reports of Independent Registered Public Accounting Firms                              | F-2    |
|                                                   | Consolidated Balance Sheets as of December 31, 2010 and 2009                      | F-5    |
|                                                   | Consolidated Statements of Operations for the years ended December 31, 2010, 2009 |   |
|                                                   | and 2008                                                                               | F-6    |
|                                                   | Consolidated Statements of Changes in Members’ Equity for the years ended        |   |
|                                                   | December 31, 2010, 2009 and 2008                                                  | F-7    |
|                                                   | Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 |   |
|                                                   | and 2008                                                                               | F-8    |
|                                                   | Notes to Consolidated Financial Statements                                             | F-10   |
|                                                   | Schedule III - Real Estate and Accumulated Depreciation                                | F-29   |
|                                                   |                                                                                   |   |
| Summit Hotel Properties, Inc. and Summit Hotel OP, LP: |                                                                                   |
|                                                   | Reports of Independent Registered Public Accounting Firms                              | F-31   |
|                                                   | Consolidated Balance Sheets as of December 31, 2010                               | F-33   |
|                                                   | Notes to Consolidated Balance Sheets                                                   | F-35   |

----

----

----

----

----

|                                                      |   | 2010   |        |   | 2009   |   |
|-----------------------------------------------------------|--------|--------|-------------|--------|--------|--------|
| ASSETS                                                    |   |   |        |   |   |   |
|                                                      |   |   |        |   |   |   |
| CURRENT ASSETS                                            |   |   |        |   |   |   |
| Cash and cash equivalents                                 |   | $      | 7,977,418   |   |   | $      | 8,239,225 |   |
| Restricted cash                                           |   |   | 1,192,131   |   |   |   | 1,755,053 |   |
| Trade receivables                                         |   |   | 2,665,076   |   |   |   | 2,608,198 |   |
| Receivable due from affiliate                             |   |   | 4,620,059   |   |   |   | - |   |
| Prepaid expenses and other                                |   |   | 1,738,645   |   |   |   | 1,416,480 |   |
| Total current assets                                      |   |   | 18,193,329  |   |   |   | 14,018,956 |   |
|                                                      |   |   |        |   |   |   |   |   |
| PROPERTY AND EQUIPMENT, NET                               |   |   | 466,010,777 |   |   |   | 482,767,601 |   |
|                                                      |   |   |        |   |   |   |   |   |
| OTHER ASSETS                                              |   |   |        |   |   |   |   |   |
| Deferred charges and other assets, net                    |   |   | 4,051,295   |   |   |   | 4,828,185 |   |
| Land held for sale                                        |   |   | -           |   |   |   | 12,226,320 |   |
| Other noncurrent assets                                   |   |   | 4,011,992   |   |   |   | 4,074,179 |   |
| Restricted cash                                           |   |   | 741,137     |   |   |   | 331,190 |   |
| Total other assets                                        |   |   | 8,804,424   |   |   |   | 21,459,874 |   |
|                                                      |   |   |        |   |   |   |   |   |
| TOTAL ASSETS                                              |   | $      | 493,008,530 |   |   | $      | 518,246,431 |   |
|                                                      |   |   |        |   |   |   |   |   |
|                                                      |   |   |        |   |   |   |   |   |
| LIABILITIES AND MEMBERS' EQUITY                           |   |   |        |   |   |   |   |   |
|                                                      |   |   |        |   |   |   |   |   |
| CURRENT LIABILITIES                                       |   |   |        |   |   |   |   |   |
| Current portion of long-term debt                         |   | $      | 147,612,930 |   |   | $      | 134,370,900 |   |
| Lines of credit                                           |   |   | 19,601,215  |   |   |   | 21,457,943 |   |
| Accounts payable                                          |   |   | 864,560     |   |   |   | 1,088,265 |   |
| Related party accounts payable                            |   |   | 771,066     |   |   |   | 494,248 |   |
| Accrued expenses                                          |   |   | 11,092,131  |   |   |   | 9,182,013 |   |
| Total current liabilities                                 |   |   | 179,941,902 |   |   |   | 166,593,369 |   |
|                                                      |   |   |        |   |   |   |   |   |
| LONG-TERM DEBT, NET OF CURRENT PORTION                    |   |   | 253,223,062 |   |   |   | 270,353,750 |   |
|                                                      |   |   |        |   |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES (NOTE 16)                   |   |   |        |   |   |   |   |   |
|                                                      |   |   |        |   |   |   |   |   |
| MEMBERS' EQUITY                                           |   |   |        |   |   |   |   |   |
| Class A,  1,166.62 units issued and outstanding |   |   | 50,838,540  |   |   |   | 59,961,958 |   |
| Class A-1, 437.83 units issued and outstanding            |   |   | 32,554,188  |   |   |   | 34,244,056 |   |
| Class B,  81.36 units issued and outstanding    |   |   | 262,669     |   |   |   | 1,804,718 |   |
| Class C,  173.60 units issued and outstanding   |   |   | (22,187,368 | )      |   |   | (13,086,957 | ) |
| Total Summit Hotel Properties, LLC members' equity        |   |   | 61,468,029  |   |   |   | 82,923,775 |   |
| Noncontrolling interest                                   |   |   | (1,624,463  | )      |   |   | (1,624,463 | ) |
| Total equity                                              |   |   | 59,843,566  |   |   |   | 81,299,312 |   |
|                                                      |   |   |        |   |   |   |   |   |
| TOTAL LIABILITIES AND MEMBERS' EQUITY                     |   | $      | 493,008,530 |   |   | $      | 518,246,431 |   |

----

----

|                                        |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|---------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                        |   |   |        |   |   |   |        |   |   |
| REVENUES                                    |   |   |        |   |   |   |        |   |   |
| Room revenues                               |   | $      | 133,069,346 |   |   | $      | 118,959,822 |   |   | $ | 132,796,698 |   |
| Other hotel operations revenues             |   |   | 2,565,723   |   |   |   | 2,239,914   |   |   |   | 2,310,764 |   |
|                                        |   |   | 135,635,069 |   |   |   | 121,199,736 |   |   |   | 135,107,462 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| COSTS AND EXPENSES                          |   |   |        |   |   |   |        |   |   |   |   |   |
| Direct hotel operations                     |   |   | 47,210,056  |   |   |   | 42,070,893  |   |   |   | 42,380,950 |   |
| Other hotel operating expenses              |   |   | 18,960,775  |   |   |   | 16,986,818  |   |   |   | 15,186,138 |   |
| General, selling and administrative         |   |   | 25,379,942  |   |   |   | 24,017,471  |   |   |   | 25,993,091 |   |
| Repairs and maintenance                     |   |   | 4,718,561   |   |   |   | 6,151,474   |   |   |   | 8,008,854 |   |
| Depreciation and amortization               |   |   | 27,250,778  |   |   |   | 23,971,118  |   |   |   | 22,307,426 |   |
| Loss on impairment of assets                |   |   | 6,475,684   |   |   |   | 7,505,836   |   |   |   | - |   |
|                                        |   |   | 129,995,796 |   |   |   | 120,703,610 |   |   |   | 113,876,459 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| INCOME FROM OPERATIONS                      |   |   | 5,639,273   |   |   |   | 496,126     |   |   |   | 21,231,003 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                      |   |   |        |   |   |   |        |   |   |   |   |   |
| Interest income                             |   |   | 47,483      |   |   |   | 49,805      |   |   |   | 194,687 |   |
| Interest (expense)                          |   |   | (26,362,265 | )      |   |   | (18,320,736 | )      |   |   | (17,025,180 | ) |
| Gain (loss) on disposal of assets           |   |   | (42,813     | )      |   |   | (4,335      | )      |   |   | (389,820 | ) |
|                                        |   |   | (26,357,595 | )      |   |   | (18,275,266 | )      |   |   | (17,220,313 | ) |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| INCOME (LOSS) FROM CONTINUING OPERATIONS    |   |   | (20,718,322 | )      |   |   | (17,779,140 | )      |   |   | 4,010,690 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| INCOME (LOSS) FROM DISCONTINUED OPERATIONS  |   |   | -           |   |   |   | 1,464,808   |   |   |   | 10,278,595 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| NET INCOME (LOSS) BEFORE INCOME TAXES       |   |   | (20,718,322 | )      |   |   | (16,314,332 | )      |   |   | 14,289,285 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| STATE INCOME TAX (EXPENSE)                  |   |   | (202,163    | )      |   |   | -           |   |   |   | (826,300 | ) |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| NET INCOME (LOSS)                           |   |   | (20,920,485 | )      |   |   | (16,314,332 | )      |   |   | 13,462,985 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO           |   |   |        |   |   |   |        |   |   |   |   |   |
| NONCONTROLLING INTEREST                     |   |   | -           |   |   |   | -           |   |   |   | 384,269 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| NET INCOME (LOSS) ATTRIBUTABLE TO           |   |   |        |   |   |   |        |   |   |   |   |   |
| SUMMIT HOTEL PROPERTIES, LLC                |   | $      | (20,920,485 | )      |   | $      | (16,314,332 | )      |   | $ | 13,078,716 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| BASIC AND DILUTED EARNINGS PER              |   |   |        |   |   |   |        |   |   |   |   |   |
| $100,000 CAPITAL UNIT                       |   | $      | (11,251     | )      |   | $      | (9,392      | )      |   | $ | 8,412 |   |
|                                        |   |   |        |   |   |   |        |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF UNITS            |   |   |        |   |   |   |        |   |   |   |   |   |
| OUTSTANDING FOR CALCULATION OF              |   |   |        |   |   |   |        |   |   |   |   |   |
| BASIC AND DILUTED EARNINGS PER              |   |   |        |   |   |   |        |   |   |   |   |   |
| CAPITAL UNIT (based on $100,000 investment) |   |   | 1,859       |   |   |   | 1,737       |   |   |   | 1,555 |   |

----

----

|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        | Equity          |   |
|-----------------------------|--------|---------|----------|--------|---------|--------|-------------|-----------|--------|--------|------------|--------|--------|---------|------------|--------|--------|--------|-------------|-----------------|--------|
|                        |   | # of    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        | Attributable to |   |
|                        |   | Capital |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        | Noncontrolling  |   |
|                        |   | Units   |     |   | Class A |   |        | Class A-1 |   |   | Class B    |   |   | Class C |       |   | Total  |   |        | Interest        |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |
| BALANCES, JANUARY 1, 2008   |   |    | 1,554.83 |   |    | $      | 82,892,941  |      |   | $      | 10,672,761 |   |   | $       | 4,108,213  |   |   | $      | (279,026    | )               |   | $ | 97,394,889 |   |   | $ | (1,702,732 | ) |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Class A-1 units issued      |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| in private placement        |   |    | 63.25    |   |    |   | -           |      |   |   | 5,614,466  |   |   |    | -          |   |   |   | -           |            |   | $ | 5,614,466 |   |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Net Income (Loss)           |   |    | -        |   |    |   | 10,785,507  |      |   |   | 1,136,502  |   |   |    | 184,178    |   |   |   | 972,529     |            |   |   | 13,078,716 |   |   |   | 384,269 |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Distributions to members    |   |    | -        |   |    |   | (17,166,006 | )         |   |   | (1,567,973 | )      |   |    | (1,285,144 | )      |   |   | (6,683,725  | )               |   |   | (26,702,848 | ) |   |   | (306,000 | ) |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| BALANCES, DECEMBER 31, 2008 |   |    | 1,618.08 |   |    | $      | 76,512,442  |      |   | $      | 15,855,756 |   |   | $       | 3,007,247  |   |   | $      | (5,990,222  | )               |   | $ | 89,385,223 |   |   | $ | (1,624,463 | ) |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Class A-1 units issued      |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| in private placement        |   |    | 241.33   |   |    |   | -           |      |   |   | 22,123,951 |   |   |    | -          |   |   |   | -           |            |   | $ | 22,123,951 |   |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Net Income (Loss)           |   |    | -        |   |    |   | (6,807,644  | )         |   |   | (1,207,424 | )      |   |    | (1,202,529 | )      |   |   | (7,096,735  | )               |   |   | (16,314,332 | ) |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Distributions to members    |   |    | -        |   |    |   | (9,742,840  | )         |   |   | (2,528,227 | )      |   |    | -          |   |   |   | -           |            |   |   | (12,271,067 | ) |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| BALANCES, DECEMBER 31, 2009 |   |    | 1,859.41 |   |    | $      | 59,961,958  |      |   | $      | 34,244,056 |   |   | $       | 1,804,718  |   |   | $      | (13,086,957 | )               |   | $ | 82,923,775 |   |   | $ | (1,624,463 | ) |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Net Income (Loss)           |   |    | -        |   |    |   | (8,729,700  | )         |   |   | (1,548,325 | )      |   |    | (1,542,049 | )      |   |   | (9,100,411  | )               |   |   | (20,920,485 | ) |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| Distributions to members    |   |    | -        |   |    |   | (393,718    | )         |   |   | (141,543   | )      |   |    | -          |   |   |   | -           |            |   |   | (535,261 | ) |   |   | - |   |
|                        |   |    |     |   |    |   |        |      |   |   |       |   |   |    |       |   |   |   |        |            |   |   |   |   |   |   |   |   |
| BALANCES, DECEMBER 31, 2010 |   |    | 1,859.41 |   |    | $      | 50,838,540  |      |   | $      | 32,554,188 |   |   | $       | 262,669    |   |   | $      | (22,187,368 | )               |   | $ | 61,468,029 |   |   | $ | (1,624,463 | ) |

----

----

|                                                       |   | 2010   |        |   | 2009   |   |        | 2008   |   |
|------------------------------------------------------------|--------|--------|-------------|--------|--------|--------|-------------|--------|--------|
|                                                       |   |   |        |   |   |   |        |   |   |
| OPERATING ACTIVITIES                                       |   |   |        |   |   |   |        |   |   |
| Net income (loss)                                          |   | $      | (20,920,485 | )      |   | $      | (16,314,332 | )      |   | $ | 13,078,716 |   |
| Adjustments to reconcile net income to net cash provided   |   |   |        |   |   |   |        |   |   |   |   |   |
| by operating activities:                                   |   |   |        |   |   |   |        |   |   |   |   |   |
| Depreciation and amortization                              |   |   | 27,250,778  |   |   |   | 24,125,066  |   |   |   | 23,027,566 |   |
| Amortization of prepaid lease                              |   |   | 47,400      |   |   |   | 118,501     |   |   |   | - |   |
| Unsuccessful project costs                                 |   |   | -           |   |   |   | 1,262,219   |   |   |   | - |   |
| Noncontrolling interests in operations of consolidated LLC |   |   | -           |   |   |   | -           |   |   |   | 384,269 |   |
| (Gain) loss on disposal of assets                          |   |   | 42,813      |   |   |   | (1,297,488  | )      |   |   | (8,604,779 | ) |
| Loss on impairment of assets                               |   |   | 6,475,684   |   |   |   | 7,505,836   |   |   |   | - |   |
| Changes in assets and liabilities:                         |   |   |        |   |   |   |        |   |   |   |   |   |
| Trade receivables                                          |   |   | (56,878     | )      |   |   | 13,966      |   |   |   | 570,544 |   |
| Prepaid expenses and other assets                          |   |   | (4,942,224  | )      |   |   | 315,891     |   |   |   | (307,109 | ) |
| Accounts payable and related party accounts payable        |   |   | 53,113      |   |   |   | (5,847,835  | )      |   |   | (1,656,286 | ) |
| Accrued expenses                                           |   |   | 1,910,118   |   |   |   | (774,359    | )      |   |   | 316,909 |   |
| Restricted cash released (funded)                          |   |   | 562,922     |   |   |   | (76,026     | )      |   |   | 783,920 |   |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                             |   |   |        |   |   |   |        |   |   |   |   |   |
| OPERATING ACTIVITIES                                       |   |   | 10,423,241  |   |   |   | 9,031,439   |   |   |   | 27,593,750 |   |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| INVESTING ACTIVITIES                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| Land and hotel acquisitions and construction in progress   |   |   | (1,413,183  | )      |   |   | (14,810,896 | )      |   |   | (12,904,466 | ) |
| Purchases of other property and equipment                  |   |   | (1,356,696  | )      |   |   | (6,613,397  | )      |   |   | (6,628,779 | ) |
| Proceeds from asset dispositions, net of closing costs     |   |   | 14,787      |   |   |   | 207,814     |   |   |   | 23,584,638 |   |
| Restricted cash released (funded)                          |   |   | (409,947    | )      |   |   | 2,239,184   |   |   |   | (1,369,191 | ) |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                             |   |   |        |   |   |   |        |   |   |   |   |   |
| INVESTING ACTIVITIES                                       |   |   | (3,165,039  | )      |   |   | (18,977,295 | )      |   |   | 2,682,202 |   |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| FINANCING ACTIVITIES                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| Proceeds from issuance of long-term debt                   |   |   | 4,919,026   |   |   |   | 223,518     |   |   |   | 4,837,000 |   |
| Principal payments on long-term debt                       |   |   | (8,807,684  | )      |   |   | (6,890,949  | )      |   |   | (20,909,992 | ) |
| Financing fees on long-term debt                           |   |   | (1,239,362  | )      |   |   | (945,442    | )      |   |   | (942,405 | ) |
| Proceeds from issuance of notes payable and line of credit |   |   | -           |   |   |   | 4,860,000   |   |   |   | 18,510,867 |   |
| Principal payments on notes payable and line of credit     |   |   | (1,856,728  | )      |   |   | (19,865     | )      |   |   | - |   |
| Proceeds from equity contributions, net of commissions     |   |   | -           |   |   |   | 15,075,451  |   |   |   | 5,614,466 |   |
| Distributions to members                                   |   |   | (535,261    | )      |   |   | (12,271,067 | )      |   |   | (26,702,848 | ) |
| Distributions to noncontrolling interest                   |   |   | -           |   |   |   | -           |   |   |   | (306,000 | ) |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                             |   |   |        |   |   |   |        |   |   |   |   |   |
| FINANCING ACTIVITIES                                       |   |   | (7,520,009  | )      |   |   | 31,646      |   |   |   | (19,898,912 | ) |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                    |   |   | (261,807    | )      |   |   | (9,914,210  | )      |   |   | 10,377,040 |   |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT                               |   |   |        |   |   |   |        |   |   |   |   |   |
| BEGINNING OF YEAR                                          |   |   | 8,239,225   |   |   |   | 18,153,435  |   |   |   | 7,776,395 |   |
|                                                       |   |   |        |   |   |   |        |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS AT END OF YEAR                   |   | $      | 7,977,418   |   |   | $      | 8,239,225   |   |   | $ | 18,153,435 |   |

----

----

|                                                             |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                             |   |   |       |   |   |   |       |   |   |
| SUPPLEMENTAL DISCLOSURE OF                                       |   |   |       |   |   |   |       |   |   |
| CASH FLOW INFORMATION:                                           |   |   |       |   |   |   |       |   |   |
| Cash payments for interest, net of the amounts capitalized below |   | $      | 25,866,571 |   |   | $      | 17,810,544 |   |   | $ | 17,833,598 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Interest capitalized                                             |   | $      | -          |   |   | $      | 2,977,101  |   |   | $ | 3,829,267 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Cash payments (refunds) for state income taxes                   |   | $      | (21,807    | )      |   | $      | 728,514    |   |   | $ | 781,081 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| NON-CASH FINANCIAL INFORMATION:                                  |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Acquisitions of hotel properties and land through                |   |   |       |   |   |   |       |   |   |   |   |   |
| issuance of debt                                                 |   | $      | -          |   |   | $      | -          |   |   | $ | 16,447,237 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Construction in progress financed through accounts payable       |   | $      | -          |   |   | $      | 244,126    |   |   | $ | - |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Construction in progress financed through related                |   |   |       |   |   |   |       |   |   |   |   |   |
| party accounts payable                                           |   | $      | -          |   |   | $      | 242,135    |   |   | $ | 2,600,260 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Construction in progress financed through issuance of debt       |   | $      | -          |   |   | $      | 51,098,872 |   |   | $ | 38,765,692 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Conversion of construction in progress to other assets           |   | $      | -          |   |   | $      | 4,149,379  |   |   | $ | - |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Issuance of long-term debt for short-term debt                   |   | $      | -          |   |   | $      | 7,450,000  |   |   | $ | 12,772,819 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Issuance of long-term debt to refinance existing long-term debt  |   | $      | -          |   |   | $      | 22,215,852 |   |   | $ | 11,073,070 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Equity contributions used to pay down debt                       |   | $      | -          |   |   | $      | 7,048,500  |   |   | $ | - |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Financing costs funded through construction draws                |   | $      | -          |   |   | $      | -          |   |   | $ | 1,651,886 |   |
|                                                             |   |   |       |   |   |   |       |   |   |   |   |   |
| Sale proceeds used to pay down long-term debt                    |   | $      | -          |   |   | $      | 6,134,285  |   |   | $ | 4,215,362 |   |

----

----

| NOTE 1 - | PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES |
|----------|--------------------------------------------------------|

----

----

----

----

----

----

|      |   | 2010   |   |   | 2009   |   |   | 2008   |   |
|-----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|      |   |   |   |   |   |   |   |   |   |
| Class A   |   |   | 42     | %      |   |   | 42     | %      |   |   | 45 | % |
| Class A-1 |   |   | 7      |   |   |   | 7      |   |   |   | 4 |   |
| Class B   |   |   | 7      |   |   |   | 7      |   |   |   | 8 |   |
| Class C   |   |   | 44     |   |   |   | 44     |   |   |   | 43 |   |
|      |   |   |   |   |   |   |   |   |   |   |   |   |
|      |   |   | 100    | %      |   |   | 100    | %      |   |   | 100 | % |

----

----

----

----

|   | Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                         |
|   | Level 2 – Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. |

|   | Level 3 – Unobservable inputs reflecting the Predecessor’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonable available. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| NOTE 2 - | PREPAID EXPENSES AND OTHER |
|----------|----------------------------|

|                      |   | 2010   |      |   | 2009   |   |
|---------------------------|--------|--------|-----------|--------|--------|--------|
|                      |   |   |      |   |   |   |
| Prepaid insurance expense |   | $      | 511,169   |   |   | $      | 781,144 |   |
| Other prepaid expense     |   |   | 1,227,476 |   |   |   | 635,336 |   |
|                      |   |   |      |   |   |   |   |   |
|                      |   | $      | 1,738,645 |   |   | $      | 1,416,480 |   |

| NOTE 3 - | PROPERTY AND EQUIPMENT |
|----------|------------------------|

|                              |   | 2010   |        |   | 2009   |   |
|-----------------------------------|--------|--------|-------------|--------|--------|--------|
|                              |   |   |        |   |   |   |
| Land                              |   | $      | 89,887,265  |   |   | $      | 75,272,012 |   |
| Hotel buildings and improvements  |   |   | 392,138,987 |   |   |   | 390,909,814 |   |
| Furniture, fixtures and equipment |   |   | 88,781,027  |   |   |   | 87,642,374 |   |
| Construction in progress          |   |   | -           |   |   |   | 8,551,354 |   |
|                              |   |   | 570,807,279 |   |   |   | 562,375,554 |   |
| Less accumulated depreciation     |   |   | 104,796,502 |   |   |   | 79,607,953 |   |
|                              |   |   |        |   |   |   |   |   |
|                              |   | $      | 466,010,777 |   |   | $      | 482,767,601 |   |

----

----

| NOTE 4 - | ASSETS HELD FOR SALE |
|----------|----------------------|

|   |   | 2010   |   |   | 2009   |   |
|--------|--------|--------|--------|--------|--------|--------|
|   |   |   |   |   |   |   |
| Land   |   | $      | -      |   |   | $      | 12,226,320 |   |

| NOTE 5 - | OTHER NONCURRENT ASSETS |
|----------|-------------------------|

|                             |   | 2010   |      |   | 2009   |   |
|----------------------------------|--------|--------|-----------|--------|--------|--------|
|                             |   |   |      |   |   |   |
| Prepaid land lease               |   | $      | 3,588,195 |   |   | $      | 3,635,595 |   |
| Seller financed notes receivable |   |   | 423,797   |   |   |   | 438,584 |   |
|                             |   |   |      |   |   |   |   |   |
|                             |   | $      | 4,011,992 |   |   | $      | 4,074,179 |   |

| NOTE 6 - | DISCONTINUED OPERATIONS |
|----------|-------------------------|

----

----

|                                |   |   |      |   |   |   |
|-------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                |   | 2009   |      |   | 2008   |   |
|                                |   |   |      |   |   |   |
| REVENUES                            |   | $      | 1,133,690 |   |   | $      | 6,825,908 |   |
|                                |   |   |      |   |   |   |   |   |
| COSTS AND EXPENSES                  |   |   |      |   |   |   |   |   |
| Direct hotel operations             |   |   | 348,065   |   |   |   | 2,210,724 |   |
| Other hotel operating expenses      |   |   | 135,122   |   |   |   | 813,490 |   |
| General, selling and administrative |   |   | 258,495   |   |   |   | 1,058,716 |   |
| Repairs and maintenance             |   |   | 36,091    |   |   |   | 199,290 |   |
| Depreciation and amortization       |   |   | 153,948   |   |   |   | 720,140 |   |
|                                |   |   | 931,721   |   |   |   | 5,002,360 |   |
|                                |   |   |      |   |   |   |   |   |
| INCOME FROM OPERATIONS              |   |   | 201,969   |   |   |   | 1,823,548 |   |
|                                |   |   |      |   |   |   |   |   |
| OTHER INCOME (EXPENSE)              |   |   |      |   |   |   |   |   |
| Interest income                     |   |   | 116       |   |   |   | 16,790 |   |
| Interest (expense)                  |   |   | (39,100   | )      |   |   | (556,342 | ) |
| Gain (loss) on disposal of assets   |   |   | 1,301,823 |   |   |   | 8,994,599 |   |
|                                |   |   | 1,262,839 |   |   |   | 8,455,047 |   |
|                                |   |   |      |   |   |   |   |   |
| INCOME (LOSS) FROM                  |   |   |      |   |   |   |   |   |
| DISCONTINUED OPERATIONS             |   | $      | 1,464,808 |   |   | $      | 10,278,595 |   |
|                                |   |   |      |   |   |   |   |   |
| BASIC AND DILUTED EARNINGS     |   |   |      |   |   |   |   |   |
| PER $100,000 CAPITAL UNIT      |   | $      | 843       |   |   | $      | 6,611 |   |

| NOTE 7 - | ACQUISITIONS |
|----------|--------------|

----

----

| NOTE 8 - | DEFERRED CHARGES AND OTHER ASSETS |
|----------|-----------------------------------|

|                                                              |   | 2010   |       |   | 2009   |   |
|-------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|
|                                                              |   |   |       |   |   |   |
| Initial franchise fees                                            |   | $      | 2,596,042  |   |   | $      | 2,596,042 |   |
| Deferred financing costs                                          |   |   | 9,443,365  |   |   |   | 8,204,003 |   |
|                                                              |   |   | 12,039,407 |   |   |   | 10,800,045 |   |
| Less accumulated amortization                                     |   |   | 7,988,112  |   |   |   | 5,971,860 |   |
|                                                              |   |   |       |   |   |   |   |   |
|           Total |   | $      | 4,051,295  |   |   | $      | 4,828,185 |   |

| 2011       |   | $      | 1,518,373 |   |
|------------|--------|--------|-----------|--------|
| 2012       |   |   | 595,532   |   |
| 2013       |   |   | 357,032   |   |
| 2014       |   |   | 285,249   |   |
| 2015       |   |   | 221,142   |   |
| Thereafter |   |   | 1,073,967 |   |
|       |   |   |      |   |
|       |   | $      | 4,051,295 |   |

| NOTE 9 - | RESTRICTED CASH |
|----------|-----------------|

|                  |   |     |      |   |      |   |   |     |   |   |    |   |   |   |      |
|-----------------------|--------|----------|-----------|--------|-----------|--------|--------|----------|--------|--------|---------|--------|--------|--------|-----------|
|                  |   | Property |      |   |      |   |   | FF&E |   |   |    |   |   |   |      |
| Financing Lender      |   | Taxes    |      |   | Insurance |   |   | Reserves |   |   | 2010    |   |   | 2009   |      |
|                  |   |     |      |   |      |   |   |     |   |   |    |   |   |   |      |
| National Western Life |   | $        | -         |   |      | $      | -      |     |   | $      | -       |   |   | $      | -         |   |   | $ | 31,178 |   |
| Wells Fargo (Lehman)  |   |     | 459,723   |   |      |   | 92,155 |     |   |   | 733,035 |   |   |   | 1,284,913 |   |   |   | 1,598,286 |   |
| Bank of the Ozarks    |   |     | 11,000    |   |      |   | 2,800  |     |   |   | 8,102   |   |   |   | 21,902    |   |   |   | - |   |
| Capmark (ING)         |   |     | 139,245   |   |      |   | -      |     |   |   | -       |   |   |   | 139,245   |   |   |   | 128,504 |   |
| Capmark (ING)         |   |     | 235,576   |   |      |   | -      |     |   |   | -       |   |   |   | 235,576   |   |   |   | 145,061 |   |
| Capmark (ING)         |   |     | 165,810   |   |      |   | -      |     |   |   | -       |   |   |   | 165,810   |   |   |   | 83,473 |   |
| Capmark (ING)         |   |     | 85,822    |   |      |   | -      |     |   |   | -       |   |   |   | 85,822    |   |   |   | 99,741 |   |
|                  |   |     |      |   |      |   |   |     |   |   |    |   |   |   |      |   |   |   |   |   |
|                  |   | $        | 1,097,176 |   |      | $      | 94,955 |     |   | $      | 741,137 |   |   | $      | 1,933,268 |   |   | $ | 2,086,243 |   |

----

----

| NOTE 10 - | ACCRUED EXPENSES |
|-----------|------------------|

|                          |   | 2010   |       |   | 2009   |   |
|-------------------------------|--------|--------|------------|--------|--------|--------|
|                          |   |   |       |   |   |   |
| Accrued sales and other taxes |   | $      | 5,594,053  |   |   | $      | 5,238,690 |   |
| Accrued salaries and benefits |   |   | 1,834,861  |   |   |   | 1,400,729 |   |
| Accrued interest              |   |   | 1,799,693  |   |   |   | 1,303,999 |   |
| Other accrued expenses        |   |   | 1,863,524  |   |   |   | 1,238,595 |   |
|                          |   |   |       |   |   |   |   |   |
|                          |   | $      | 11,092,131 |   |   | $      | 9,182,013 |   |

----

----

| NOTE 11 - | DEBT OBLIGATIONS |
|-----------|------------------|

|                                         |   |                                                 |               | Maturity/     |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|----------------------------------------------|--------|------------------------------------------------------|--------------------|---------------|--------|------------------------------------------------------|-----------------------------------------------------------------|---------|--------|------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------|--------|
|                                         |   | Interest                                             |               | Earliest Call |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Payee                                        |   | Rate                                                 |               | Date          |   |                                                 | 2010                                                            |    |   |                                                                         | 2009                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Lehman Brothers Bank                         | a)     | Fixed (5.4025%)                                      |               | 1/11/2012     |   | $                                                    |      76,829,078                        |    |   | $                                                                       |          78,980,016                        |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| ING Investment Management                    | b)     | Fixed (5.60%)                                        |               | 1/1/2012      |   |                                                 |        28,901,411            |    |   |                                                                         |            30,088,766            |   |
|                                         | c)     | Fixed (6.10%)                                        |               | 7/1/2012      |   |                                                 |        29,321,614            |    |   |                                                                         |            30,416,427            |   |
|                                         | d)     | Fixed (6.61%)                                        |               | 11/1/2013     |   |                                                 |          6,235,813 |    |   |                                                                         |              6,412,683 |   |
|                                         | e)     | Fixed (6.34%)                                        |               | 7/1/2012      |   |                                                 |          7,896,366 |    |   |                                                                         |              8,122,717 |   |
|                                         |   |                                                 |               |          |   |                                                 |        72,355,204            |    |   |                                                                         |            75,040,593            |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| National Western Life Insurance              | f)     | Fixed (8.0%)                                         |               | 1/1/2015      |   |                                                 |        13,631,222            |    |   |                                                                         |            14,000,000            |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Chambers Bank                                | g)     | Fixed (6.5%)                                         |               | 6/24/2012     |   |                                                 |          1,594,177 |    |   |                                                                         |              1,669,020 |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Bank of the Ozarks                           | h)     | Variable (6.75% at 12/31/10                          |               | 6/29/2012     |   |                                                 |          6,435,774 |    |   |                                                                         |              5,794,427 |   |
|                                         |   |      and 6.75% at 12/31/09) |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| MetaBank                                     | i)     | Variable (5.0% at 12/31/10                           |               | 3/1/2012      |   |                                                 |          7,286,887 |    |   |                                                                         |              7,450,000 |   |
|                                         |   |      and 5.0% at 12/31/09)  |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| BNC National Bank                            | j)     | Fixed (5.01%)                                        |               | 11/1/2013     |   |                                                 |          5,719,872 |    |   |                                                                         |              5,910,962 |   |
|                                         | k)     | Variable (3.0% at 12/31/10                           |               | 4/1/2016      |   |                                                 |          5,814,136 |    |   |                                                                         |              5,755,882 |   |
|                                         |   |      and 3.0% at 12/31/09)  |               |          |   |                                                 |        11,534,008            |    |   |                                                                         |            11,666,844            |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Marshall & Ilsley Bank                   | l)     | Variable (5.0% at 12/31/10                           |               | 6/30/2011     |   |                                                 |          9,895,727 |    |   |                                                                         |              9,895,727 |   |
|                                         |   |      and 4.13% at 12/31/09) |               | 3/31/2011     |   |                                                 |        11,524,451            |    |   |                                                                         |            11,524,451            |   |
|                                         |   |                                                 |               |          |   |                                                 |        21,420,178            |    |   |                                                                         |            21,420,178            |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| General Electric Capital Corp.               | m)     | Variable (2.05% at 12/31/10                          |               | 4/1/2018      |   |                                                 |          8,685,517 |    |   |                                                                         |              9,122,315 |   |
|                                         |   |      and 2.0% at 12/31/09)  |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         | n)     | Variable (2.1% at 12/31/10                           |               | 3/1/2019      |   |                                                 |        11,033,293            |    |   |                                                                         |            11,300,000            |   |
|                                         |   |      and 2.05% at 12/31/09) |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         | o)     | Variable (2.85% at 12/31/10                          | 4/1/2014           |          |   |        11,182,794 |                                                            |    |   |            11,400,000 |                                                                                    |
|                                         |   |      and 2.8% at 12/31/09)  |               |          |   |                                                 |        30,901,604            |    |   |                                                                         |            31,822,315            |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Fortress Credit Corp.                        | p)     | Variable (10.75% at 12/31/10                         |               | 3/5/2011      |   |                                                 |        86,722,869            |    |   |                                                                         |            83,524,828            |   |
|                                         |   |      and 5.98% at 12/31/09) |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| First National Bank of Omaha                 | q)     | Variable (5.5% at 12/31/10                           |               | 7/31/2011     |   |                                                 |        18,774,418            |    |   |                                                                         |            20,400,000            |   |
|                                         |   |      and 5.5% at 12/31/09)  |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| First National Bank of Omaha                 | q)     | Variable (5.25% at 12/31/10                          |               | 7/1/2013      |   |                                                 |        15,588,572            |    |   |                                                                         |            16,081,630            |   |
|                                         |   |      and 5.25% at 12/31/09) |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| First National Bank of Omaha                 | q)     | Variable (5.25% at 12/31/10                          |               | 2/1/2014      |   |                                                 |          8,646,361 |    |   |                                                                         |              8,771,867 |   |
|                                         |   |      and 5.25% at 12/31/09) |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Bank of Cascades                             | r)     | Variable (6.0% at 12/31/10                           |               | 9/30/2011     |   |                                                 |        12,623,347            |    |   |                                                                         |            12,445,888            |   |
|                                         |   |      and 6.0% at 12/31/09)  |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Compass Bank                                 | s)     | Variable (4.5% at 12/31/10                           |               | 5/17/2018     |   |                                                 |        16,492,293            |    |   |                                                                         |            15,657,044            |   |
|                                         |   |      and 4.5% at 12/31/09)  |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |   |                                                                         |                                                                                    |   |
| Total long-term debt                         |   |                                                 |  400,835,992  |     |   |                                                 |  404,724,650                                               |    |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |
| Less current portion                         |   |                                                 |  (147,612,930 | )             |   |                                                 |  (134,370,900                                              | )  |
|                                         |   |                                                 |               |          |   |                                                 |                                                            |    |
| Total long-term debt, net of current portion |   | $                                                    |  253,223,062  |          |   | $                                                    |  270,353,750                                               |    |

----

----

----

----

----

----

|   | 2011       |   | $      | 147,612,930 |   |
|--------|------------|--------|--------|-------------|--------|
|   | 2012       |   |   | 154,587,497 |   |
|   | 2013       |   |   | 25,493,032  |   |
|   | 2014       |   |   | 18,998,648  |   |
|   | 2015       |   |   | 13,103,939  |   |
|   | Thereafter |   |   | 41,039,946  |   |
|   |       |   |   |        |   |
|   |       |   | $      | 400,835,992 |   |

----

----

|   | 2011       |   | $      | 233,351   |   |
|--------|------------|--------|--------|-----------|--------|
|   | 2012       |   |   | 237,426   |   |
|   | 2013       |   |   | 241,624   |   |
|   | 2014       |   |   | 245,948   |   |
|   | 2015       |   |   | 250,401   |   |
|   | Thereafter |   |   | 6,475,348 |   |
|   |       |   |   |      |   |
|   |       |   | $      | 7,684,098 |   |

----

----

----

----

|   | ● | approximately $227.2 million to reduce outstanding mortgage indebtedness and pay associated costs, as follows: |
|--------|---------|---------------------------------------------------------------------------------------------------------------------|

|   | o | approximately $89.3 million to repay in full a loan with Fortress Credit Corp., including approximately $2.1 million of exit fees, interest and legal fees; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | approximately $78.2 million to repay in full a loan originally made by Lehman Brothers Bank, including approximately $1.4 million to pay an extinguishment premium and other transaction costs; |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | o | approximately $21.4 million to repay in full two loans with Marshall & Isley Bank; and |
|--------|---|------------------------------------------------------------------------------------------------------|

|   | o | approximately $38.3 million to repay in full two loans with First National Bank of Omaha; and |
|--------|---|----------------------------------------------------------------------------------------------------|

|   | ● | approximately $5.3 million to fund a capital expenditure reserve account under the hotel management agreement with Interstate. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                       |   | Three Months Ended |   |   |   |   |
|--------------------------------------------|--------|--------------------|--------|--------|--------|--------|
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   | Year Ended |   |
|                                       |   |               | 3/31   |   |   |   | 6/30 |   |   |   | 9/30 |   |   |   | 12/31 |   |   | 12/31 |   |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2010:                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total revenue                              |   | $                  | 31,363 |   |   | $      | 35,849 |   |   | $ | 37,601 |   |   | $ | 30,822 |   |   | $ | 135,635 |   |
| Net income (loss) from continuing          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                                 |   |               | (3,404 | )      |   |   | (1,998 | ) |   |   | (1,251 | ) |   |   | (14,065 | ) |   |   | (20,718 | ) |
| Net income (loss) before income taxes      |   |               | (3,404 | )      |   |   | (1,998 | ) |   |   | (1,251 | ) |   |   | (14,065 | ) |   |   | (20,718 | ) |
| State income tax (expense) benefit         |   |               | (152   | )      |   |   | (76 | ) |   |   | (45 | ) |   |   | 71 |   |   |   | (202 | ) |
| Net income (loss) attributable to SHP LLC  |   | $                  | (3,556 | )      |   | $      | (2,074 | ) |   | $ | (1,296 | ) |   | $ | (13,994 | ) |   | $ | (20,920 | ) |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per unit:                |   | $                  | (1,913 | )      |   | $      | (1,115 | ) |   | $ | (697 | ) |   | $ | (7,526 | ) |   | $ | (11,251 | ) |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2009:                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total revenue                              |   | $                  | 29,301 |   |   | $      | 31,293 |   |   | $ | 32,211 |   |   | $ | 28,395 |   |   | $ | 121,200 |   |
| Net income (loss) from continuing          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                                 |   |               | (1,698 | )      |   |   | (1,619 | ) |   |   | (6,914 | ) |   |   | (7,548 | ) |   |   | (17,779 | ) |
| Income (loss) from discontinued operations |   |               | 104    |   |   |   | 1,697 |   |   |   | (336 | ) |   |   | - |   |   |   | 1,465 |   |
| Net income (loss) before income taxes      |   |               | (1,594 | )      |   |   | 78 |   |   |   | (7,250 | ) |   |   | (7,548 | ) |   |   | (16,314 | ) |
| State income tax (expense) benefit         |   |               | -      |   |   |   | - |   |   |   | 20 |   |   |   | (20 | ) |   |   | - |   |
| Net income (loss)                          |   |               | (1,594 | )      |   |   | 78 |   |   |   | (7,230 | ) |   |   | (7,568 | ) |   |   | (16,314 | ) |
| Net income (loss) attributable to          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interest                    |   |               | (123   | )      |   |   | (63 | ) |   |   | 393 |   |   |   | (207 | ) |   |   | - |   |
| Net income (loss) attributable to SHP LLC  |   | $                  | (1,471 | )      |   | $      | 141 |   |   | $ | (7,623 | ) |   | $ | (7,361 | ) |   | $ | (16,314 | ) |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per unit:                |   | $                  | (894   | )      |   | $      | 82 |   |   | $ | (4,422 | ) |   | $ | (4,158 | ) |   | $ | (9,392 | ) |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2008:                                      |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total revenue                              |   | $                  | 32,381 |   |   | $      | 35,556 |   |   | $ | 38,018 |   |   | $ | 29,152 |   |   | $ | 135,107 |   |
| Net income (loss) from continuing          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| operations                                 |   |               | 459    |   |   |   | 2,688 |   |   |   | 5,337 |   |   |   | (4,473 | ) |   |   | 4,011 |   |
| Income (loss) from discontinued operations |   |               | 290    |   |   |   | 1,751 |   |   |   | 8,048 |   |   |   | 189 |   |   |   | 10,278 |   |
| Net income (loss) before income taxes      |   |               | 749    |   |   |   | 4,439 |   |   |   | 13,385 |   |   |   | (4,284 | ) |   |   | 14,289 |   |
| State income tax (expense) benefit         |   |               | -      |   |   |   | (309 | ) |   |   | (895 | ) |   |   | 378 |   |   |   | (826 | ) |
| Net income (loss)                          |   |               | 749    |   |   |   | 4,130 |   |   |   | 12,490 |   |   |   | (3,906 | ) |   |   | 13,463 |   |
| Net income (loss) attributable to          |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| noncontrolling interest                    |   |               | 244    |   |   |   | 73 |   |   |   | (158 | ) |   |   | 225 |   |   |   | 384 |   |
| Net income (loss) attributable to SHP LLC  |   | $                  | 505    |   |   | $      | 4,057 |   |   | $ | 12,648 |   |   | $ | (4,131 | ) |   | $ | 13,079 |   |
|                                       |   |               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per unit:                |   | $                  | 325    |   |   | $      | 2,609 |   |   | $ | 8,135 |   |   | $ | (2,657 | ) |   | $ | 8,412 |   |

----

----

|               |                          |                     | Initial Cost                                                                          |                                                                                                                                        | Total Cost                                                                                                                |                                                                                  |                                                                                                                                              |
|--------------------|-------------------------------|--------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|
| Location           | Franchise                     | YearAcquired/Constructed | Land                                                                                  | Building & Improvements                                                                                                                 | Cost Capitalized Subsequent to Acquisition                                                                                | Land                                                                                  | Building & Improvements                                                                                                                       | Total | Accumulated Depreciation | Total CostNet of Accumulated Depreciation | Mortgage Debt Allocated |
| Atlanta, GA        | Hyatt Place                   | 2006                     |  $   1,154                                                        |  $             9,605                                                  |  $        2,938                                                              |  $   1,154                                                        |  $           12,543                                                                   |  $   13,697 |  $         (3,074) |  $         10,623 |  $   13,658 |
| Baton Rouge, LA    | Cambria Suites                | 2008                     |        1,100                                       |               14,063                                                  |                  38                  |        1,100                                       |               14,101                                                        |        15,201 |             (1,826) |             13,375 |        13,050 |
| Baton Rouge, LA    | Fairfield Inn by Marriott     | 2004                     |           345                       |                 3,057                                       |                355                             |           345                       |                  3,412                                       |          3,757 |             (1,122) |                2,635 |          1,851 |
| Baton Rouge, LA    | SpringHill Suites by Marriott | 2004                     |           448                       |                 3,729                                       |                574                             |           448                       |                  4,303                                       |          4,751 |             (1,382) |                3,369 |          2,147 |
| Baton Rouge, LA    | TownePlace Suites             | 2004                     |           259                       |                 3,743                                       |                587                             |           259                       |                  4,330                                       |          4,589 |             (1,446) |                3,143 |          2,746 |
| Bellevue, WA       | Fairfield Inn by Marriott     | 2004                     |        2,705                                       |               12,944                                                  |                417                             |        2,705                                       |               13,361                                                        |        16,066 |             (3,231) |             12,835 |          9,350 |
| Bloomington, MN    | Cambria Suites                | 2007                     |        1,658                                       |               14,071                                                  |                  15                  |        1,658                                       |               14,086                                                        |        15,744 |             (2,360) |             13,384 |        10,466 |
| Bloomington, MN    | Hampton Inn                   | 2007                     |        1,658                                       |               14,596                                                  |                  43                  |        1,658                                       |               14,639                                                        |        16,297 |             (2,454) |             13,843 |        13,179 |
| Boise, ID          | Fairfield Inn by Marriott     | 2004                     |           564                       |                 2,874                                       |                143                             |           564                       |                  3,017                                       |          3,581 |                 (892) |                2,689 |          2,685 |
| Boise, ID          | Hampton Inn                   | 2004                     |           597                       |                 3,295                                       |             1,344                                             |        1,335                                       |                  3,901                                       |          5,236 |             (1,050) |                4,186 |          2,924 |
| Boise, ID          | Holiday Inn Express           | 2005                     |        1,038                                       |                 2,422                                       |                     4 |           780                       |                  2,684                                       |          3,464 |                 (950) |                2,514 |          2,457 |
| Boise, ID          | Cambria Suites                | 2007                     |        1,934                                       |               10,968                                                  |              (336)                                       |        1,299                                       |               11,267                                                        |        12,566 |             (3,266) |                9,300 |        11,700 |
| Charleston, WV     | Country Inn & Suites      | 2004                     |        1,042                                       |                 3,489                                       |                388                             |        1,042                                       |                  3,877                                       |          4,919 |             (1,113) |                3,806 |          3,047 |
| Charleston, WV     | Comfort Suites                | 2004                     |           907                       |                 2,903                                       |                357                             |           907                       |                  3,260                                       |          4,167 |                 (983) |                3,184 |          2,685 |
| Denver, CO         | Fairfield Inn by Marriott     | 2004                     |        1,566                                       |                 6,783                                       |                263                             |        1,566                                       |                  7,046                                       |          8,612 |             (2,037) |                6,575 |          5,802 |
| Denver, CO         | SpringHill Suites by Marriott | 2007                     |        1,076                                       |               11,079                                                  |                  31                  |        1,076                                       |               11,110                                                        |        12,186 |             (1,867) |             10,319 |        10,367 |
| Denver, CO         | Hampton Inn                   | 2004                     |        1,125                                       |                 3,678                                       |                699                             |        1,125                                       |                  4,377                                       |          5,502 |             (1,755) |                3,747 |          5,062 |
| El Paso, TX        | Hampton Inn                   | 2005                     |        2,055                                       |               10,745                                                  |             1,111                                             |        2,055                                       |               11,856                                                        |        13,911 |             (3,671) |             10,240 |          7,656 |
| Emporia, KS        | Fairfield Inn by Marriott     | 2004                     |           320                       |                 2,436                                       |                100                             |           320                       |                  2,536                                       |          2,856 |                 (797) |                2,059 |          1,314 |
| Emporia, KS        | Holiday Inn Express           | 2004                     |           292                       |                 2,840                                       |                342                             |           292                       |                  3,182                                       |          3,474 |                 (915) |                2,559 |          1,733 |
| Flagstaff, AZ      | Courtyard by Marriott         | 2009                     |        3,353                                       |               20,785                                                  |                    -       |        3,353                                       |               20,785                                                        |        24,138 |             (1,362) |             22,776 |        22,171 |
| Flagstaff, AZ      | SpringHill Suites by Marriott | 2008                     |        1,398                                       |                 9,352                                       |             4,847                                             |        1,398                                       |               14,199                                                        |        15,597 |             (1,789) |             13,808 |          8,576 |
| Ft. Collins, CO    | Hampton Inn                   | 2004                     |           738                       |                 4,363                                       |                189                             |           738                       |                  4,552                                       |          5,290 |             (1,281) |                4,009 |          2,567 |
| Ft. Collins, CO    | Hilton Garden Inn             | 2007                     |        1,300                                       |               11,804                                                  |                  51                  |        1,300                                       |               11,855                                                        |        13,155 |             (2,659) |             10,496 |        10,830 |
| Ft. Myers, FL      | Hyatt Place                   | 2009                     |        3,608                                       |               16,583                                                  |                    -       |        3,608                                       |               16,583                                                        |        20,191 |             (1,418) |             18,773 |          5,048 |
| Ft. Smith, AR      | Comfort Inn                   | 2004                     |               - |                 3,718                                       |                239                             |               - |                  3,957                                       |          3,957 |             (1,105) |                2,852 |          2,860 |
| Ft. Smith, AR      | Aspen Hotel                   | 2004                     |           223                       |                 3,189                                       |                496                             |           223                       |                  3,685                                       |          3,908 |             (1,503) |                2,405 |          1,594 |
| Ft. Smith, AR      | Hampton Inn                   | 2005                     |               - |               12,401                                                  |                780                             |               - |               13,181                                                        |        13,181 |             (3,080) |             10,101 |          8,675 |
| Ft. Wayne, IN      | Hampton Inn                   | 2006                     |           786                       |                 6,564                                       |                655                             |           786                       |                  7,219                                       |          8,005 |             (1,758) |                6,247 |          4,864 |
| Ft. Wayne, IN      | Residence Inn by Marriott     | 2006                     |           914                       |                 6,736                                       |                604                             |           914                       |                  7,340                                       |          8,254 |             (1,690) |                6,564 |          6,534 |
| Ft. Worth, TX      | Hampton Inn                   | 2007                     |        1,500                                       |                 8,184                                       |                  35                  |        1,500                                       |                  8,219                                       |          9,719 |             (1,591) |                8,128 |          8,163 |
| Ft. Worth, TX      | Comfort Suites                | 2004                     |           553                       |                 2,698                                       |                424                             |           553                       |                  3,122                                       |          3,675 |                 (957) |                2,718 |          1,135 |
| Germantown, TN     | Courtyard by Marriott         | 2005                     |        1,860                                       |                 5,448                                       |                801                             |        1,860                                       |                  6,249                                       |          8,109 |             (1,783) |                6,326 |          6,756 |
| Germantown, TN     | Fairfield Inn by Marriott     | 2005                     |           767                       |                 2,700                                       |                354                             |           767                       |                  3,054                                       |          3,821 |                 (898) |                2,923 |          2,326 |
| Germantown, TN     | Residence Inn by Marriott     | 2005                     |        1,083                                       |                 5,200                                       |                560                             |        1,083                                       |                  5,760                                       |          6,843 |             (1,526) |                5,317 |          3,557 |
| Jackson, MS        | Courtyard by Marriott         | 2005                     |        1,301                                       |                 7,322                                       |                812                             |        1,301                                       |                  8,134                                       |          9,435 |             (2,381) |                7,054 |          8,832 |
| Jackson, MS        | Staybridge Suites             | 2007                     |           698                       |                 8,454                                       |                  99                  |           698                       |                  8,553                                       |          9,251 |             (1,330) |                7,921 |        10,025 |
| Jacksonville, FL   | Aloft                         | 2009                     |        1,700                                       |               15,775                                                  |                    -       |        1,700                                       |               15,775                                                        |        17,475 |             (1,249) |             16,226 |        16,704 |
| Lakewood, CO       | Fairfield Inn by Marriott     | 2004                     |           521                       |                 2,433                                       |                155                             |           521                       |                  2,588                                       |          3,109 |                 (835) |                2,274 |          1,052 |
| Lakewood, CO       | Comfort Suites                | 2004                     |           547                       |                 2,416                                       |                110                             |           547                       |                  2,526                                       |          3,073 |                 (752) |                2,321 |          1,065 |
| Las Colinas, TX    | Hyatt Place                   | 2007                     |           781                       |                 5,729                                       |             1,663                                             |           781                       |                  7,392                                       |          8,173 |             (2,101) |                6,072 |          7,778 |
| Las Colinas, TX    | Holiday Inn Express           | 2007                     |           912                       |                 6,689                                       |             1,587                                             |           898                       |                  8,290                                       |          9,188 |             (2,112) |                7,076 |        11,138 |
| Lewisville, TX     | Fairfield Inn by Marriott     | 2004                     |           465                       |                 2,954                                       |                400                             |           465                       |                  3,354                                       |          3,819 |             (1,034) |                2,785 |          2,241 |
| Lithia Springs, GA | SpringHill Suites by Marriott | 2004                     |           480                       |                 3,572                                       |                423                             |           480                       |                  3,995                                       |          4,475 |             (1,354) |                3,121 |                 - |
| Little Rock, AR    | SpringHill Suites by Marriott | 2004                     |           879                       |                 3,431                                       |                378                             |           879                       |                  3,809                                       |          4,688 |             (1,341) |                3,347 |          2,746 |
| Medford, OR        | Hampton Inn                   | 2004                     |        1,230                                       |                 4,788                                       |                458                             |        1,230                                       |                  5,246                                       |          6,476 |             (1,385) |                5,091 |          4,030 |
| Memphis, TN        | Courtyard by Marriott         | 2005                     |           686                       |                 5,814                                       |              (532)                                       |           546                       |                  5,422                                       |          5,968 |             (1,639) |                4,329 |          4,231 |
| Missoula, MT       | Comfort Inn                   | 2004                     |           690                       |                 2,672                                       |                103                             |           690                       |                  2,775                                       |          3,465 |                 (751) |                2,714 |          2,025 |
| Missoula, MT       | Courtyard by Marriott         | 2005                     |           650                       |                 5,785                                       |                  54                  |           650                       |                  5,839                                       |          6,489 |             (1,922) |                4,567 |          4,929 |
| Nashville, TN      | SpringHill Suites by Marriott | 2004                     |           777                       |                 3,576                                       |                434                             |           777                       |                  4,010                                       |          4,787 |             (1,385) |                3,402 |          2,449 |
| Portland, OR       | Hyatt Place                   | 2009                     |               - |               16,713                                                  |                    -       |               - |               16,713                                                        |        16,713 |             (1,190) |             15,523 |        11,889 |
| Portland, OR       | Residence Inn by Marriott     | 2009                     |               - |               16,409                                                  |                    -       |               - |               16,409                                                        |        16,409 |             (1,183) |             15,226 |        15,664 |
| Provo, UT          | Hampton Inn                   | 2004                     |           909                       |                 2,862                                       |                339                             |           909                       |                  3,201                                       |          4,110 |             (1,038) |                3,072 |          1,903 |
| Ridgeland, MS      | Residence Inn by Marriott     | 2007                     |        1,050                                       |               10,040                                                  |                     8 |        1,050                                       |               10,048                                                        |        11,098 |             (2,104) |                8,994 |          8,141 |
| Salina, KS         | Comfort Inn                   | 2004                     |           984                       |                 1,650                                       |                  77                  |           984                       |                  1,727                                       |          2,711 |                 (543) |                2,168 |          1,734 |
| Salina, KS         | Fairfield Inn by Marriott     | 2004                     |           499                       |                 1,744                                       |                110                             |           499                       |                  1,854                                       |          2,353 |                 (641) |                1,712 |          2,030 |
| San Antonio, TX    | Cambria Suites                | 2008                     |        2,497                                       |               12,833                                                  |                    -       |        2,497                                       |               12,833                                                        |        15,330 |             (1,711) |             13,619 |        15,535 |
| Sandy, UT          | Holiday Inn Express           | 2004                     |           720                       |                 1,768                                       |                951                             |           720                       |                  2,719                                       |          3,439 |             (1,022) |                2,417 |          2,499 |
| Scottsdale, AZ     | Courtyard by Marriott         | 2004                     |        3,225                                       |               10,152                                                  |                692                             |        3,225                                       |               10,844                                                        |        14,069 |             (3,445) |             10,624 |          8,422 |
| Scottsdale, AZ     | SpringHill Suites by Marriott | 2004                     |        2,195                                       |                 7,120                                       |                528                             |        2,195                                       |                  7,648                                       |          9,843 |             (2,408) |                7,435 |          5,209 |
| Spokane, WA        | Fairfield Inn by Marriott     | 2004                     |        1,637                                       |                 3,669                                       |                275                             |        1,637                                       |                  3,944                                       |          5,581 |             (1,222) |                4,359 |          3,292 |
| Twin Falls, ID     | Comfort Inn & Suites      | 2004                     |           822                       |                 7,473                                       |                925                             |           822                       |                  8,398                                       |          9,220 |             (2,231) |                6,989 |          6,268 |
| Twin Falls, ID     | Holiday Inn Express           | 2009                     |        1,212                                       |                 7,464                                       |                     4 |        1,212                                       |                  7,468                                       |          8,680 |                 (934) |                7,746 |          8,195 |
| Twin Falls, ID     | Hampton Inn                   | 2004                     |           710                       |                 3,482                                       |                  54                  |           710                       |                  3,536                                       |          4,246 |             (1,261) |                2,985 |          3,741 |
| Vernon Hills, IL   | Holiday Inn Express           | 2005                     |        1,198                                       |                 6,099                                       |             1,123                                             |        1,198                                       |                  7,222                                       |          8,420 |             (1,701) |                6,719 |          4,841 |
| Land Parcels       |                          |                     |     19,911                                                        |                        - |                384                             |     20,295                                                        |                         - |        20,295 |                      - |             20,295 |        22,294 |
|               |                          |                     |  $ 89,812                                                                        |  $        449,933                                                                              |  $      31,062                                                                         |  $ 89,887                                                                        |  $         480,920                                                                              |  $ 570,807 |  $    (104,796) |  $       466,011 |  $ 420,437 |

----

----

|              | ASSET BASIS                                                                                                                                                         |   | Total  |        |
|-------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|
|  ( a )       | Balance at January 1, 2008                                                                                                                                          |   | $      | 469,627,125 |   |
|              | Additions to land, buildings and improvements                                                                                                                       |   |   | 74,999,095  |   |
|              | Disposition of land, buildings and improvements                                                                                                                     |   |   | (23,370,890 | ) |
|              | Impairment loss                                                                                                                                                     |   |   | -           |   |
|              | Balance at December 31, 2008                                                                                                                                        |   | $      | 521,255,330 |   |
|              | Additions to land, buildings and improvements                                                                                                                       |   |   | 67,841,533  |   |
|              | Disposition of land, buildings and improvements                                                                                                                     |   |   | (6,989,153  | ) |
|              | Impairment loss                                                                                                                                                     |   |   | (7,505,836  | ) |
|              | Balance at December 31, 2009                                                                                                                                        |   | $      | 574,601,874 |   |
|              | Additions to land, buildings and improvements                                                                                                                       |   |   | 2,769,879   |   |
|              | Disposition of land, buildings and improvements                                                                                                                     |   |   | (88,790     | ) |
|              | Impairment loss                                                                                                                                                     |   |   | (6,475,684  | ) |
|              | Balance at December 31, 2010                                                                                                                                        |   | $      | 570,807,279 |   |
|              |                                                                                                                                                                |   |   |        |   |
|              | ACCUMULATED DEPRECIATION                                                                                                                                            |   | Total  |        |
|  ( b )       | Balance at January 1, 2008                                                                                                                                          |   | $      | 43,132,920  |   |
|              | Depreciation for the period ended December 31, 2008                                                                                                                 |   |   | 20,431,253  |   |
|              | Depreciation on assets sold or disposed                                                                                                                             |   |   | (4,203,113  | ) |
|              | Balance at December 31, 2008                                                                                                                                        |   | $      | 59,361,060  |   |
|              | Depreciation for the period ended December 31, 2009                                                                                                                 |   |   | 21,902,729  |   |
|              | Depreciation on assets sold or disposed                                                                                                                             |   |   | (1,655,836  | ) |
|              | Balance at December 31, 2009                                                                                                                                        |   | $      | 79,607,953  |   |
|              | Depreciation for the period ended December 31, 2010                                                                                                                 |   |   | 25,234,526  |   |
|              | Depreciation on assets sold or disposed                                                                                                                             |   |   | (45,977     | ) |
|              | Balance at December 31, 2010                                                                                                                                        |   | $      | 104,796,502 |   |
|              |                                                                                                                                                                |   |   |        |   |
|   ( c ) | The aggregrate cost of land, buildings, furniture and equipment for Federal income tax purposes is aproximately $557 million.                                       |   |
|              |                                                                                                                                                                |   |   |        |   |
|  ( d )       | Depreciation is computed based upon the following useful lives:                                                                                                     |   |   |        |   |
|              |                    Buildings and improvements  27-40 years |   |   |        |   |
|              |                    Furniture and equipment 2-15 years                |   |   |        |   |
|              |                                                                                                                                                                |   |   |        |   |
|  ( e )       | The Company has mortgages payable on the properties as noted. Additional mortgage information can be found in Note 11                                          |   |
|              | to the consoldiated financial statements.                                                                                                                           |   |   |        |   |

----

----

----

----

| Summit Hotel Properties, Inc.                         |   |
|-------------------------------------------------------|--------|
| Consolidated Balance Sheet                            |   |
| December 31, 2010                                     |   |
|                                                  |   |   |   |
|                                                  |   |   |   |
|                                                  |   |   |   |
| Assets                                                |   |
|                                                  |   |   |   |
| Cash and total assets                                 |   | $ | 1,000 |   |
|                                                  |   |   |   |   |
|                                                  |   |   |   |   |
| Liabilities and Stockholders' Equity                  |   |
|                                                  |   |   |   |   |
| Liabilities                                           |   | $ | — |   |
|                                                  |   |   |   |   |
| Stockholders' Equity                                  |   |   |   |   |
| Common Stock, par value $0.01 per share; 1,000 shares |   |   |   |   |
| authorized, issued and outstanding                    |   |   | 10 |   |
| Additional paid in capital                            |   |   | 990 |   |
| Retained Earnings                                     |   |   | — |   |
|                                                  |   |   |   |   |
| Total Stockholders' Equity                            |   |   |  1,000 |   |
|                                                  |   |   |   |   |
| Total Liabilities and Stockholders' Equity            |   | $ | 1,000 |   |

----

----

| Summit Hotel OP, LP                    |   |
|----------------------------------------|--------|
| Consolidated Balance Sheet             |   |
| December 31, 2010                      |   |
|                                   |   |   |   |
|                                   |   |   |   |
|                                   |   |   |   |
| Assets                                 |   |
|                                   |   |   |   |
| Cash and total assets                  |   | $ | 100 |   |
|                                   |   |   |   |   |
|                                   |   |   |   |   |
| Liabilities and Partners' Equity       |   |
|                                   |   |   |   |   |
| Liabilities                            |   | $ | — |   |
|                                   |   |   |   |   |
| Partners' Equity                       |   |   |   |   |
| General Partner's Equity               |   |   | 1 |   |
| Limited Partners' Equity               |   |   | 99 |   |
| Retained Earnings                      |   |   | — |   |
|                                   |   |   |   |   |
| Total Partners' Equity                 |   |   | 100 |   |
|                                   |   |   |   |   |
| Total Liabilities and Partners' Equity |   | $ | 100 |   |

----

----

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| ExhibitNumber |  Description of Exhibit                                                                                                                                                                                                                                                                                                                                      |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1†    | Articles of Amendment and Restatement of Summit Hotel Properties, Inc.                                                                                                                                                                                                                                                                                            |
| 3.2           | Certificate of Limited Partnership of Summit Hotel OP, LP, as amended (incorporated by reference to Exhibit 3.1 to Amendment No. 2 to Registration Statement on Form 8-A filed by Summit Hotel OP, LP on February 11, 2011)                                                                                                                                  |
| 3.3           | Amended and Restated Bylaws of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 3.2 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                                                                                                 |
| 3.4           | First Amended and Restated Agreement of Limited Partnership of Summit Hotel OP, LP, dated February 14, 2011 (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                                                                                                       |
| 4.1           | Specimen certificate of common stock of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 5 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on February 7, 2011)                                                                                                                        |
| 10.1          | Form of Transition Services Agreement between The Summit Group, Inc. and Summit Hotel OP, LP (incorporated by reference to Exhibit 10.27 to Amendment No. 4 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on January 28, 2011)*                                                                                              |
| 10.2          | Tax Protection Agreement, dated February 10, 2011, between Summit Hotel OP, LP and The Summit Group, Inc. (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                        |
| 10.3          | Transition Services Agreement, dated February 14, 2011, between Summit Hotel OP, LP and The Summit Group, Inc. (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                                                                                                    |
| 10.4          | Amended and Restated Hotel Management Agreement, dated February 14, 2011, among Interstate Management Company, LLC and the subsidiaries of Summit Hotel Properties, Inc. party thereto (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)                            |
| 10.5          | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.4 million) (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011) |
| 10.6          | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $9.5 million) (incorporated by reference to Exhibit 10.6 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)  |
| 10.7          | Loan Modification Agreement, dated February 14, 2011, among Summit Hotel Properties, LLC, Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.3 million) (incorporated by reference to Exhibit 10.7 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011) |
| 10.8          | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Kerry W. Boekelheide (incorporated by reference to Exhibit 10.8 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                    |
| 10.9          | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Daniel P. Hansen (incorporated by reference to Exhibit 10.9 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                        |
| 10.10         | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Craig J. Aniszewski (incorporated by reference to Exhibit 10.10 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                    |
| 10.11         | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Stuart J. Becker (incorporated by reference to Exhibit 10.11 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                       |
| 10.12         | Employment Agreement, dated February 14, 2011, between Summit Hotel Properties, Inc. and Ryan A. Bertucci (incorporated by reference to Exhibit 10.12 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                       |

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| 10.13        | Summit Hotel Properties, Inc. 2011 Equity Incentive Plan (incorporated by reference to Exhibit 10.13 to Current Report on Form 8-K filed by Summit Hotel Properties, Inc. on February 18, 2011)*                                                                                                                                                         |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.14        | Form of Indemnification Agreement between Summit Hotel Properties, Inc. and each of its Executive Officers and Directors (incorporated by reference to Exhibit 10.14 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                               |
| 10.15        | Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company dated December 23, 2005 (incorporated by reference to Exhibit 10.15 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                                     |
| 10.16        | Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated June 15, 2006 (incorporated by reference to Exhibit 10.16 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                                        |
| 10.17        | First Modification of Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated April 24, 2007 (incorporated by reference to Exhibit 10.17 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                                 |
| 10.18        | Modification of Promissory Note and Loan Agreement between Summit Hotel Properties, LLC and ING Life Insurance and Annuity Company, dated November 28, 2007 (incorporated by reference to Exhibit 10.18 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)                |
| 10.19        | Construction Loan Agreement between Summit Hotel Properties, LLC and Compass Bank, dated September 17, 2008 (loan in the original principal amount of $19.25 million) (incorporated by reference to Exhibit 10.23 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010) |
| 10.20† | Second Amended and Restated Loan Agreement (Credit Pool) between Summit Hotel Properties, LLC and First National Bank of Omaha entered into August 19, 2010                                                                                                                                                                                                   |
| 10.21        | Form of Option Award Agreement (incorporated by reference to Exhibit 10.6 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                                                                                                                                                  |
| 10.22        | Form of Lease Agreement between Summit Hotel OP, LP and TRS Lessee (incorporated by reference to Exhibit 10.4 to Amendment No. 2 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on November 1, 2010)                                                                                                                      |
| 10.23        | Sourcing Agreement between Six Continents Hotel, Inc., d/b/a InterContinental Hotels Group, and Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 10.26 to Amendment No. 3 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on December 3, 2010)                                                          |
| 10.24        | Form of Severance Agreement between Summit Hotel Properties, Inc. and Christopher R. Eng (incorporated by reference to Exhibit 10.12 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                                                                                       |
| 10.25        | Form of Severance Agreement between Summit Hotel Properties, Inc. and JoLynn M. Sorum (incorporated by reference to Exhibit 10.13 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on September 23, 2010)*                                                                                          |
| 21.1         | List of Subsidiaries of Summit Hotel Properties, Inc. (incorporated by reference to Exhibit 21.1 to Amendment No. 4 to Registration Statement on Form S-11 filed by Summit Hotel Properties, Inc. on January 28, 2011)                                                                                                                                   |
| 21.2         | List of Subsidiaries of Summit Hotel OP, LP (incorporated by reference to Exhibit 21.1 to Amendment No. 1 to Registration Statement on Form S-11 filed by Summit Hotel OP, LP on September 23, 2010)                                                                                                                                                |
| 23.1†  | Consent of KPMG LLP                                                                                                                                                                                                                                                                                                                                           |
| 23.2†  | Consent of Eide Bailly LLP                                                                                                                                                                                                                                                                                                                                    |
| 31.1†  | Certification of Chief Executive Officer of Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                          |

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| 31.2† | Certification of Chief Financial Officer Summit Hotel Properties, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|-------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.3† | Certification of Chief Executive Officer of Summit Hotel OP, LP pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002        |
| 31.4† | Certification of Chief Financial Officer Summit Hotel OP, LP pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002           |
| 32.1† | Certification of Chief Executive Officer Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   |
| 32.2† | Certification of Chief Financial Officer Summit Hotel Properties, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002   |
| 32.3† | Certification of Chief Executive Officer Summit Hotel OP, LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002             |
| 32.4† | Certification of Chief Financial Officer Summit Hotel OP, LP pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002             |

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