----

----

| [x] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----|-----------------------------------------------------------------------------------------|

|   | For the quarterly period ended June 30, 2011 |
|--------|----------------------------------------------|

| [  ] | 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)           | 27-2966616 (Summit Hotel OP, LP)           |
| (State or other jurisdiction             | (I.R.S. Employer Identification No.)       |
| of incorporation or organization)        |                                       |

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

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

----

| Summit Hotel Properties, Inc.                            |                                     |
|----------------------------------------------------------|------------------------------------------|
| Large accelerated filer  [ ]              | Accelerated filer  [ ]         |
|  Non-accelerated filer [x]                     | Smaller reporting company  [ ] |
|                                                     |                                     |
| Summit Hotel OP, LP                                      |                                     |
| Large accelerated filer  [ ]    | Accelerated filer  [ ]         |
| Non-accelerated filer [x]                           | Smaller reporting company  [ ] |

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

----

|   | · | “Summit REIT” mean Summit Hotel Properties, Inc., a Maryland corporation; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | “Summit OP” mean Summit Hotel OP, LP, a Delaware limited partnership, our operating partnership; |
|--------|--------|--------------------------------------------------------------------------------------------------------------|

|   | · | “our predecessor” mean Summit Hotel Properties, LLC, a South Dakota limited liability company that was merged into Summit OP on February 4, 2011 and is considered the acquiror for accounting purposes; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “we,” “our,” “us,” “our company” or “the company” mean Summit REIT, Summit OP and their consolidated subsidiaries taken together as one enterprise. 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 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. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | “our predecessor” include Summit Group of Scottsdale, Arizona, LLC (“Summit of Scottsdale”); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | “our TRSs” refer to Summit Hotel TRS, Inc., a Delaware corporation, and Summit Hotel TRS II, Inc., a Delaware corporation, 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 Summit OP or subsidiaries of Summit OP; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “The Summit Group” refer to The Summit Group, Inc., our predecessor’s hotel management company, Company Manager and Class C Member, which is wholly owned by our Executive Chairman, Kerry W. Boekelheide. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| PART I — FINANCIAL INFORMATION |                                                                                           |
|--------------------------------------|------------------------------------------------------------------------------------------------|
|                                 |                                                                                           |   |   |   |
| Item 1.                              | Financial Statements.                                                                          |   |   | 1 |   |
|                                 |                                                                                           |   |   |   |   |
|                                 | Summit Hotel Properties, Inc. and Summit Hotel Properties, LLC (Predecessor)                   |   |   |   |   |
|                                 | Condensed Consolidated Balance Sheets (unaudited) — June 30, 2011 and December 31, 2010  |   |   | 1 |   |
|                                 | Condensed Consolidated Statements of Operations (unaudited) — Three and Six Months Ended |   |   |   |   |
|                                 | June 30, 2011 and 2010                                                                         |   |   | 2 |   |
|                                 | Condensed Consolidated Statements of Changes in Equity (unaudited) — Six Months Ended    |   |   |   |   |
|                                 | June 30, 2011                                                                                  |   |   | 3 |   |
|                                 | Condensed Consolidated Statements of Cash Flows (unaudited) — Six Months Ended           |   |   |   |   |
|                                 | June 30, 2011 and 2010                                                                         |   |   | 4 |   |
|                                 |                                                                                           |   |   |   |   |
|                                 | Summit Hotel OP, LP and Summit Hotel Properties, LLC (Predecessor)                             |   |   |   |   |
|                                 | Condensed Consolidated Balance Sheets (unaudited) — June 30, 2011 and December 31, 2010  |   |   | 6 |   |
|                                 | Condensed Consolidated Statements of Operations (unaudited) — Three and Six Months Ended |   |   |   |   |
|                                 | June 30, 2011 and 2010                                                                         |   |   | 7 |   |
|                                 | Condensed Consolidated Statements of Changes in Equity (unaudited) — Six Months Ended    |   |   |   |   |
|                                 | June 30, 2011                                                                                  |   |   | 8 |   |
|                                 | Condensed Consolidated Statements of Cash Flows (unaudited) — Six Months Ended           |   |   |   |   |
|                                 | June 30, 2011 and 2010                                                                         |   |   | 9 |   |
|                                 |                                                                                           |   |   |   |   |
|                                 | Notes to Condensed Consolidated Financial Statements                                           |   |   | 11 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 2.                              | Management’s Discussion and Analysis of Financial Condition and Results of Operations.   |   |   | 22 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 3.                              | Quantitative and Qualitative Disclosures About Market Risk.                                    |   |   | 46 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 4.                              | Controls and Procedures.                                                                       |   |   | 46 |   |
|                                 |                                                                                           |
| PART II — OTHER INFORMATION    |                                                                                           |
|                                 |                                                                                           |   |   |   |   |
| Item 1.                              | Legal Proceedings.                                                                             |   |   | 47 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 1A.                             | Risk Factors.                                                                                  |   |   | 47 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 2.                              | Unregistered Sales of Equity Securities and Use of Proceeds.                                   |   |   | 47 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 3.                              | Defaults Upon Senior Securities.                                                               |   |   | 48 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 4.                              | [Removed and Reserved.]                                                                        |   |   | 48 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 5.                              | Other Information.                                                                             |   |   | 48 |   |
|                                 |                                                                                           |   |   |   |   |
| Item 6.                              | Exhibits.                                                                                      |   |   | 48 |   |

----

----

|                                                                                                                         |   | Summit Hotel Properties, Inc. |        | Summit Hotel Properties, LLC (Predecessor) |
|------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|--------------------------------------------|
|                                                                                                                         |   | 2011                          |        | 2010                                       |
| ASSETS                                                                                                                       |   |                          |        |                                       |   |   |
|                                                                                                                         |   |                          |        |                                       |   |   |
|                                                                                                                         |   |                          |        |                                       |   |   |
|   Cash and cash equivalents                                                                                        |   | $                             | 29,589,139  |                                       |   | $ | 7,977,418 |   |
|   Restricted cash                                                                                                  |   |                          | 1,024,109   |                                       |   |   | 1,933,268 |   |
|   Trade receivables                                                                                                |   |                          | 4,484,399   |                                       |   |   | 2,665,076 |   |
|   Receivable due from affiliate                                                                                    |   |                          | -           |                                       |   |   | 4,620,059 |   |
|   Prepaid expenses and other                                                                                       |   |                          | 3,118,765   |                                       |   |   | 1,738,645 |   |
|   Land held for development                                                                                        |   |                          | 20,294,973  |                                       |   |   | 20,294,973 |   |
|   Property and equipment, net                                                                                      |   |                          | 478,633,469 |                                       |   |   | 445,715,804 |   |
|   Deferred charges and other assets, net                                                                           |   |                          | 9,944,564   |                                       |   |   | 4,051,295 |   |
|   Other assets                                                                                                     |   |                          | 3,594,787   |                                       |   |   | 4,011,992 |   |
|           TOTAL ASSETS                                                     |   | $                             | 550,684,205 |                                       |   | $ | 493,008,530 |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
| LIABILITIES AND EQUITY                                                                                                       |   |                          |        |                                       |   |   |   |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
| LIABILITIES                                                                                                                  |   |                          |        |                                       |   |   |   |   |
|   Accounts payable                                                                                                 |   | $                             | 940,827     |                                       |   | $ | 864,560 |   |
|   Related party accounts payable                                                                                   |   |                          | -           |                                       |   |   | 771,066 |   |
|   Accrued expenses                                                                                                 |   |                          | 14,623,459  |                                       |   |   | 11,092,131 |   |
|   Mortgages and notes payable                                                                                      |   |                          | 251,720,675 |                                       |   |   | 420,437,207 |   |
|           TOTAL LIABILITIES                                                |   |                          | 267,284,961 |                                       |   |   | 433,164,964 |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                                                                |   |                          |        |                                       |   |   |   |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
| EQUITY                                                                                                                       |   |                          |        |                                       |   |   |   |   |
|   Members' equity                                                                                                  |   |                          | -           |                                       |   |   | 61,468,029 |   |
|   Common stock, $.01 par value per share,  450,000,000 shares authorized,                                |   |                          |        |                                       |   |   |   |   |
|             27,278,000 issued and oustanding as of June 30, 2011 |   |                          | 272,780     |                                       |   |   | - |   |
|   Additional paid-in capital                                                                                       |   |                          | 240,885,162 |                                       |   |   | - |   |
|   Accumulated deficit and distributions                                                                            |   |                          | (2,272,324  | )                                          |   |   | - |   |
|   Total stockholders' equity                                                                                       |   |                          | 238,885,618 |                                       |   |   | 61,468,029 |   |
|   Noncontrolling interest                                                                                          |   |                          | 44,513,626  |                                       |   |   | (1,624,463 | ) |
|           TOTAL EQUITY                                                     |   |                          | 283,399,244 |                                       |   |   | 59,843,566 |   |
|                                                                                                                         |   |                          |        |                                       |   |   |   |   |
|           TOTAL LIABILITIES AND EQUITY                                     |   | $                             | 550,684,205 |                                       |   | $ | 493,008,530 |   |

----

----

|                                                          |   | Summit Hotel Properties, Inc. |       | Summit Hotel Properties, LLC (Predecessor) |   | Summit Hotel Properties, Inc.  |       | Summit Hotel Properties, LLC (Predecessor) |
|---------------------------------------------------------------|--------|-------------------------------|------------|--------------------------------------------|--------|--------------------------------|------------|--------------------------------------------|
|                                                          |   | Three Months Ended 6/30/11    |       | Three Months Ended 6/30/10                 |   | Period 2/14/11 through 6/30/11 |       | Period 1/1/11 through 2/13/11              |   | Six Months Ended 6/30/10 |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |
| REVENUES                                                      |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |
|   Room revenues                                     |   | $                             | 37,824,945 |                                       |   | $                              | 35,258,817 |                                       |   | $ | 56,271,795 |   |   | $ | 14,268,042 |   |   | $ | 65,938,663 |   |
|   Other hotel operations revenues                   |   |                          | 763,619    |                                       |   |                           | 590,909    |                                       |   |   | 1,125,918 |   |   |   | 330,251 |   |   |   | 1,273,783 |   |
| Total Revenue                                                 |   |                          | 38,588,564 |                                       |   |                           | 35,849,726 |                                       |   |   | 57,397,713 |   |   |   | 14,598,293 |   |   |   | 67,212,446 |   |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel operating expenses                                      |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Rooms                                             |   |                          | 11,727,100 |                                       |   |                           | 10,505,996 |                                       |   |   | 16,643,700 |   |   |   | 4,960,450 |   |   |   | 20,048,040 |   |
|   Other direct                                      |   |                          | 5,031,210  |                                       |   |                           | 4,158,337  |                                       |   |   | 7,152,417 |   |   |   | 2,657,760 |   |   |   | 8,286,682 |   |
|   Other indirect                                    |   |                          | 9,179,041  |                                       |   |                           | 9,244,765  |                                       |   |   | 14,113,569 |   |   |   | 4,686,274 |   |   |   | 17,681,096 |   |
|   Other                                             |   |                          | 201,047    |                                       |   |                           | 152,108    |                                       |   |   | 274,085 |   |   |   | 73,038 |   |   |   | 302,361 |   |
| Total hotel operating expenses                                |   |                          | 26,138,398 |                                       |   |                           | 24,061,206 |                                       |   |   | 38,183,771 |   |   |   | 12,377,522 |   |   |   | 46,318,179 |   |
|   Depreciation and amortization                     |   |                          | 6,819,608  |                                       |   |                           | 6,671,258  |                                       |   |   | 10,248,823 |   |   |   | 3,429,216 |   |   |   | 13,521,822 |   |
|   Corporate general and administrative:             |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|      Salaries and other compensation |   |                          | 699,014    |                                       |   |                           | -          |                                       |   |   | 1,066,032 |   |   |   | - |   |   |   | - |   |
|      Other                           |   |                          | 774,459    |                                       |   |                           | -          |                                       |   |   | 1,549,811 |   |   |   | - |   |   |   | - |   |
|      Equity based compensation       |   |                          | 175,656    |                                       |   |                           | -          |                                       |   |   | 302,484 |   |   |   | - |   |   |   | - |   |
|   Hotel property acquisition costs                  |   |                          | -          |                                       |   |                           | (9,173     | )                                          |   |   | - |   |   |   | - |   |   |   | 56,519 |   |
| Total Expenses                                                |   |                          | 34,607,135 |                                       |   |                           | 30,723,291 |                                       |   |   | 51,350,921 |   |   |   | 15,806,738 |   |   |   | 59,896,520 |   |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) FROM OPERATIONS                                 |   |                          | 3,981,429  |                                       |   |                           | 5,126,435  |                                       |   |   | 6,046,792 |   |   |   | (1,208,445 | ) |   |   | 7,315,926 |   |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                        |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest income                                   |   |                          | 10,280     |                                       |   |                           | 11,474     |                                       |   |   | 14,227 |   |   |   | 7,139 |   |   |   | 23,559 |   |
|   Interest expense                                  |   |                          | (3,007,640 | )                                          |   |                           | (7,133,904 | )                                          |   |   | (6,518,769 | ) |   |   | (4,666,216 | ) |   |   | (12,701,101 | ) |
|   Gain (loss) on disposal of assets                 |   |                          | (36,031    | )                                          |   |                           | (1,938     | )                                          |   |   | (36,031 | ) |   |   | - |   |   |   | (39,389 | ) |
| Total Other Income (Expense)                                  |   |                          | (3,033,391 | )                                          |   |                           | (7,124,368 | )                                          |   |   | (6,540,573 | ) |   |   | (4,659,077 | ) |   |   | (12,716,931 | ) |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) FROM CONTINUING OPERATIONS                      |   |                          | 948,038    |                                       |   |                           | (1,997,933 | )                                          |   |   | (493,781 | ) |   |   | (5,867,522 | ) |   |   | (5,401,005 | ) |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX EXPENSE                                            |   |                          | (344,177   | )                                          |   |                           | (75,702    | )                                          |   |   | (516,479 | ) |   |   | (339,034 | ) |   |   | (228,185 | ) |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                             |   |                          | 603,861    |                                       |   |                           | (2,073,635 | )                                          |   |   | (1,010,260 | ) |   |   | (6,206,556 | ) |   |   | (5,629,190 | ) |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) ALLOCATED TO                                |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|     NONCONTROLLING INTEREST               |   |                          | 163,042    |                                       |   |                           | -          |                                       |   |   | (272,770 | ) |   |   | - |   |   |   | - |   |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS) ALLOCATED TO COMMON                         |   | $                             | 440,819    |                                       |   | $                              | (2,073,635 | )                                          |   | $ | (737,490 | ) |   | $ | (6,206,556 | ) |   | $ | (5,629,190 | ) |
|    STOCKHOLDERS                                |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per share:                                  |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Basic and diluted                                 |   | $                             | 0.02       |                                       |   |                           |       |                                       |   | $ | (0.03 | ) |   |   |   |   |   |   |   |   |
| Weighted-average common shares outstanding:                   |   |                          |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Basic and diluted                                 |   |                          | 27,278,000 |                                       |   |                           |       |                                       |   |   | 27,278,000 |   |   |   |   |   |   |   |   |   |

----

----

|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   | Total      |   |   |   |        |   |   |
|----------------------------------------|--------|-------------|--------|--------|--------|-----------------|--------|---------------|--------|-------------|--------|----------------|--------|------------|--------|--------|--------|-------------|--------|--------|
|                                   |   | # of Shares |   |   |   |            |   |          |   | Accumulated |   | Stockholders'/ |   |       |   |   |   |        |
|                                   |   | of Common   |   | Common |   | Additional      |   | Deficit and   |   | Members'    |   | Noncontrolling |   | Total      |
|                                   |   | Stock       |   | Stock  |   | Paid-In Capital |   | Distributions |   | Equity      |   | Interest       |   | Equity     |
| Predecessor                            |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |
| BALANCES, JANUARY 1, 2011              |   | -           |   |   | $      | -               |   |          | $      | -           |   |           | $      | -          |   |   | $      | 61,468,029  |   |   | $ | (1,624,463 | ) |   | $ | 59,843,566 |   |
|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| Net income (loss)                      |   | -           |   |   |   | -               |   |          |   | -           |   |           |   | -          |   |   |   | (6,206,556  | )      |   |   | - |   |   |   | (6,206,556 | ) |
|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| Distributions to members               |   | -           |   |   |   | -               |   |          |   | -           |   |           |   | -          |   |   |   | (8,282,935  | )      |   |   | - |   |   |   | (8,282,935 | ) |
|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| BALANCES, FEBRUARY 13, 2011            |   | -           |   |   | $      | -               |   |          | $      | -           |   |           | $      | -          |   |   | $      | 46,978,538  |   |   | $ | (1,624,463 | ) |   | $ | 45,354,075 |   |
|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| Summit Hotel Properties, Inc.          |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| Equity from Predecessor                |   | -           |   |   | $      | -               |   |          | $      | -           |   |           | $      | -          |   |   | $      | -           |   |   | $ | 45,354,075 |   |   | $ | 45,354,075 |   |
| Net proceeds from sale of common stock |   | 27,278,000  |   |   |   | 272,780         |   |          |   | 240,582,678 |   |           |   | -          |   |   |   | 240,855,458 |   |   |   | - |   |   |   | 240,855,458 |   |
| Dividends paid                         |   | -           |   |   |   | -               |   |          |   | -           |   |           |   | (1,534,834 | )      |   |   | (1,534,834  | )      |   |   | (567,679 | ) |   |   | (2,102,513 | ) |
| Equity-based compensation              |   | -           |   |   |   | -               |   |          |   | 302,484     |   |           |   | -          |   |   |   | 302,484     |   |   |   | - |   |   |   | 302,484 |   |
| Net income (loss)                      |   | -           |   |   |   | -               |   |          |   | -           |   |           |   | (737,490   | )      |   |   | (737,490    | )      |   |   | (272,770 | ) |   |   | (1,010,260 | ) |
|                                   |   |        |   |   |   |            |   |          |   |        |   |           |   |       |   |   |   |        |   |   |   |   |   |   |   |   |   |
| BALANCES, JUNE 30, 2011                |   | 27,278,000  |   |   | $      | 272,780         |   |          | $      | 240,885,162 |   |           | $      | (2,272,324 | )      |   | $      | 238,885,618 |   |   | $ | 44,513,626 |   |   | $ | 283,399,244 |   |

----

----

|                                                                        |   | 2011   |         | 2010   |
|-----------------------------------------------------------------------------|--------|--------|--------------|--------|
|                                                                        |   |   |         |   |   |   |
| OPERATING ACTIVITIES                                                        |   |   |         |   |   |   |
|   Net income (loss)                                               |   | $      | (7,216,816   | )      |   | $ | (5,629,190 | ) |
|   Adjustments to reconcile net income to                          |   |   |         |   |   |   |   |   |
|    net cash from operating activities:                       |   |   |         |   |   |   |   |   |
|     Depreciation and amortization                       |   |   | 13,678,039   |   |   |   | 13,521,822 |   |
|     Amortization of prepaid lease                       |   |   | 23,700       |   |   |   | 23,700 |   |
|     Equity-based compensation                           |   |   | 302,484      |   |   |   | - |   |
|     (Gain) loss on disposal of assets                   |   |   | 36,031       |   |   |   | 39,389 |   |
|   Changes in operating assets and liabilities:                    |   |   |         |   |   |   |   |   |
|     Trade receivables                                   |   |   | (1,819,323   | )      |   |   | (1,807,872 | ) |
|     Prepaid expenses and other                          |   |   | 3,239,939    |   |   |   | 341,479 |   |
|     Accounts payable and related party accounts payable |   |   | (694,799     | )      |   |   | (64,614 | ) |
|     Accrued expenses                                    |   |   | 3,531,328    |   |   |   | 1,277,181 |   |
|     Restricted cash released (funded)                   |   |   | 909,159      |   |   |   | 85,210 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | 11,989,742   |   |   |   | 7,787,105 |   |
|   OPERATING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| INVESTING ACTIVITIES                                                        |   |   |         |   |   |   |   |   |
|   Land and hotel acquisitions and construction in progress        |   |   | (37,700,000  | )      |   |   | (604,232 | ) |
|   Purchases of other property and equipment                       |   |   | (11,147,843  | )      |   |   | (1,018,274 | ) |
|   Proceeds from asset dispositions, net of closing costs          |   |   | 357,843      |   |   |   | 7,246 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | (48,490,000  | )      |   |   | (1,615,260 | ) |
|   INVESTING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| FINANCING ACTIVITIES                                                        |   |   |         |   |   |   |   |   |
|   Proceeds from issuance of debt                                  |   |   | 57,882,528   |   |   |   | 3,348,350 |   |
|   Principal payments on debt                                      |   |   | (226,599,060 | )      |   |   | (4,934,721 | ) |
|   Financing fees on debt                                          |   |   | (3,641,499   | )      |   |   | (963,060 | ) |
|   Proceeds from sale of common stock, net of offering costs       |   |   | 240,855,458  |   |   |   | - |   |
|   Distributions to members                                        |   |   | (10,385,448  | )      |   |   | (535,261 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | 58,111,979   |   |   |   | (3,084,692 | ) |
|   FINANCING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                     |   |   | 21,611,721   |   |   |   | 3,087,153 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                   |   |   |         |   |   |   |   |   |
|   BEGINNING OF PERIOD                                             |   |   | 7,977,418    |   |   |   | 8,239,225 |   |
|                                                                        |   |   |         |   |   |   |   |   |
|   END OF PERIOD                                                   |   | $      | 29,589,139   |   |   | $ | 11,326,378 |   |

----

----

|                                                         |   | 2011   |       | 2010   |
|--------------------------------------------------------------|--------|--------|------------|--------|
|                                                         |   |   |       |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF                                   |   |   |       |   |   |   |
|   CASH FLOW INFORMATION:                           |   |   |       |   |   |   |
|     Cash payments for interest           |   | $      | 12,122,358 |   |   | $ | 12,357,600 |   |
|                                                         |   |   |       |   |   |   |   |   |
|     Cash payments for state income taxes |   | $      | 568,967    |   |   | $ | 51,386 |   |

----

----

|                                                                                      |   | Summit HotelOP, LP |        | Summit Hotel Properties, LLC (Predecessor) |
|-------------------------------------------------------------------------------------------|--------|--------------------|-------------|--------------------------------------------|
|                                                                                      |   | 2011               |        | 2010                                       |
| ASSETS                                                                                    |   |               |        |                                       |   |   |
|                                                                                      |   |               |        |                                       |   |   |
|                                                                                      |   |               |        |                                       |   |   |
|   Cash and cash equivalents                                                     |   | $                  | 29,589,139  |                                       |   | $ | 7,977,418 |   |
|   Restricted cash                                                               |   |               | 1,024,109   |                                       |   |   | 1,933,268 |   |
|   Trade receivables                                                             |   |               | 4,484,399   |                                       |   |   | 2,665,076 |   |
|   Receivable due from affiliate                                                 |   |               | -           |                                       |   |   | 4,620,059 |   |
|   Prepaid expenses and other                                                    |   |               | 3,118,765   |                                       |   |   | 1,738,645 |   |
|   Land held for development                                                     |   |               | 20,294,973  |                                       |   |   | 20,294,973 |   |
|   Property and equipment, net                                                   |   |               | 478,633,469 |                                       |   |   | 445,715,804 |   |
|   Deferred charges and other assets, net                                        |   |               | 9,944,564   |                                       |   |   | 4,051,295 |   |
|   Other assets                                                                  |   |               | 3,594,787   |                                       |   |   | 4,011,992 |   |
|           TOTAL ASSETS                  |   | $                  | 550,684,205 |                                       |   | $ | 493,008,530 |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
| LIABILITIES AND EQUITY                                                                    |   |               |        |                                       |   |   |   |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
| LIABILITIES                                                                               |   |               |        |                                       |   |   |   |   |
|   Accounts payable                                                              |   | $                  | 940,827     |                                       |   | $ | 864,560 |   |
|   Related party accounts payable                                                |   |               | -           |                                       |   |   | 771,066 |   |
|   Accrued expenses                                                              |   |               | 14,623,459  |                                       |   |   | 11,092,131 |   |
|   Mortgages and notes payable                                                   |   |               | 251,720,675 |                                       |   |   | 420,437,207 |   |
|           TOTAL LIABILITIES             |   |               | 267,284,961 |                                       |   |   | 433,164,964 |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                             |   |               |        |                                       |   |   |   |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
| EQUITY                                                                                    |   |               |        |                                       |   |   |   |   |
|   Members' equity                                                               |   |               | -           |                                       |   |   | 61,468,029 |   |
|   Partners' equity:                                                             |   |               |        |                                       |   |   |   |   |
|      Summit Hotel Properties Inc., 27,278,000 units outstanding  |   |               | 238,885,618 |                                       |   |   | - |   |
|      Unaffiliated Limited partners, 10,100,000 units outstanding |   |               | 44,513,626  |                                       |   |   | - |   |
|   Total members'/partners' equity                                               |   |               | 283,399,244 |                                       |   |   | 61,468,029 |   |
|   Noncontrolling interest                                                       |   |               | -           |                                       |   |   | (1,624,463 | ) |
|           TOTAL EQUITY                  |   |               | 283,399,244 |                                       |   |   | 59,843,566 |   |
|                                                                                      |   |               |        |                                       |   |   |   |   |
|           TOTAL LIABILITIES AND EQUITY  |   | $                  | 550,684,205 |                                       |   | $ | 493,008,530 |   |

----

----

|                                                          |   | Summit Hotel OP, LP        |       | Summit Hotel Properties, LLC (Predecessor) |   | Summit Hotel OP, LP            |       | Summit Hotel Properties, LLC (Predecessor) |
|---------------------------------------------------------------|--------|----------------------------|------------|--------------------------------------------|--------|--------------------------------|------------|--------------------------------------------|
|                                                          |   | Three Months Ended 6/30/11 |       | Three Months Ended 6/30/10                 |   | Period 2/14/11 through 6/30/11 |       | Period 1/1/11 through 2/13/11              |   | Six Months Ended 6/30/10 |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |
| REVENUES                                                      |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |
|   Room revenues                                     |   | $                          | 37,824,945 |                                       |   | $                              | 35,258,817 |                                       |   | $ | 56,271,795 |   |   | $ | 14,268,042 |   |   | $ | 65,938,663 |   |
|   Other hotel operations revenues                   |   |                       | 763,619    |                                       |   |                           | 590,909    |                                       |   |   | 1,125,918 |   |   |   | 330,251 |   |   |   | 1,273,783 |   |
| Total Revenue                                                 |   |                       | 38,588,564 |                                       |   |                           | 35,849,726 |                                       |   |   | 57,397,713 |   |   |   | 14,598,293 |   |   |   | 67,212,446 |   |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSES                                                      |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Hotel operating expenses                                      |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Rooms                                             |   |                       | 11,727,100 |                                       |   |                           | 10,505,996 |                                       |   |   | 16,643,700 |   |   |   | 4,960,450 |   |   |   | 20,048,040 |   |
|   Other direct                                      |   |                       | 5,031,210  |                                       |   |                           | 4,158,337  |                                       |   |   | 7,152,417 |   |   |   | 2,657,760 |   |   |   | 8,286,682 |   |
|   Other indirect                                    |   |                       | 9,179,041  |                                       |   |                           | 9,244,765  |                                       |   |   | 14,113,569 |   |   |   | 4,686,274 |   |   |   | 17,681,096 |   |
|   Other                                             |   |                       | 201,047    |                                       |   |                           | 152,108    |                                       |   |   | 274,085 |   |   |   | 73,038 |   |   |   | 302,361 |   |
| Total hotel operating expenses                                |   |                       | 26,138,398 |                                       |   |                           | 24,061,206 |                                       |   |   | 38,183,771 |   |   |   | 12,377,522 |   |   |   | 46,318,179 |   |
|   Depreciation and amortization                     |   |                       | 6,819,608  |                                       |   |                           | 6,671,258  |                                       |   |   | 10,248,823 |   |   |   | 3,429,216 |   |   |   | 13,521,822 |   |
|   Corporate general and administrative:             |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|      Salaries and other compensation |   |                       | 699,014    |                                       |   |                           | -          |                                       |   |   | 1,066,032 |   |   |   | - |   |   |   | - |   |
|      Other                           |   |                       | 774,459    |                                       |   |                           | -          |                                       |   |   | 1,549,811 |   |   |   | - |   |   |   | - |   |
|      Equity based compensation       |   |                       | 175,656    |                                       |   |                           | -          |                                       |   |   | 302,484 |   |   |   | - |   |   |   | - |   |
|   Hotel property acquisition costs                  |   |                       | -          |                                       |   |                           | (9,173     | )                                          |   |   | - |   |   |   | - |   |   |   | 56,519 |   |
| Total Expenses                                                |   |                       | 34,607,135 |                                       |   |                           | 30,723,291 |                                       |   |   | 51,350,921 |   |   |   | 15,806,738 |   |   |   | 59,896,520 |   |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) FROM OPERATIONS                                 |   |                       | 3,981,429  |                                       |   |                           | 5,126,435  |                                       |   |   | 6,046,792 |   |   |   | (1,208,445 | ) |   |   | 7,315,926 |   |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                        |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Interest income                                   |   |                       | 10,280     |                                       |   |                           | 11,474     |                                       |   |   | 14,227 |   |   |   | 7,139 |   |   |   | 23,559 |   |
|   Interest expense                                  |   |                       | (3,007,640 | )                                          |   |                           | (7,133,904 | )                                          |   |   | (6,518,769 | ) |   |   | (4,666,216 | ) |   |   | (12,701,101 | ) |
|   Gain (loss) on disposal of assets                 |   |                       | (36,031    | )                                          |   |                           | (1,938     | )                                          |   |   | (36,031 | ) |   |   | - |   |   |   | (39,389 | ) |
| Total Other Income (Expense)                                  |   |                       | (3,033,391 | )                                          |   |                           | (7,124,368 | )                                          |   |   | (6,540,573 | ) |   |   | (4,659,077 | ) |   |   | (12,716,931 | ) |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME (LOSS) FROM CONTINUING OPERATIONS                      |   |                       | 948,038    |                                       |   |                           | (1,997,933 | )                                          |   |   | (493,781 | ) |   |   | (5,867,522 | ) |   |   | (5,401,005 | ) |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME TAX EXPENSE                                            |   |                       | (344,177   | )                                          |   |                           | (75,702    | )                                          |   |   | (516,479 | ) |   |   | (339,034 | ) |   |   | (228,185 | ) |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| NET INCOME (LOSS)                                             |   |                       | 603,861    |                                       |   |                           | (2,073,635 | )                                          |   |   | (1,010,260 | ) |   |   | (6,206,556 | ) |   |   | (5,629,190 | ) |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss) per unit:                                   |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Basic and diluted                                 |   | $                          | 0.02       |                                       |   |                           |       |                                       |   | $ | (0.03 | ) |   |   |   |   |   |   |   |   |
| Weighted-average units outstanding:                           |   |                       |       |                                       |   |                           |       |                                       |   |   |   |   |   |   |   |   |   |   |   |   |
|   Basic and diluted                                 |   |                       | 37,378,000 |                                       |   |                           |       |                                       |   |   | 37,378,000 |   |   |   |   |   |   |   |   |   |

----

----

|                                     |   |            |        |                         | Total  |           |       |   |   |   |       |
|------------------------------------------|--------|-----------------|-------------|------------------------------|--------|----------------|------------|--------|--------|--------|------------|
|                                     |   | Summit Hotel    |        | Members'/UnaffiliatedLimited |   | Noncontrolling |       | Total  |
|                                     |   | Properties Inc. |        | Partners' Equity             |   | Interest       |       | Equity |
| Predecessor                              |   |            |        |                         |   |           |       |   |   |   |       |   |
| BALANCES, JANUARY 1, 2011                |   | $               | -           |                         |   | $              | 61,468,029 |   |   | $      | (1,624,463 | ) |   | $ | 59,843,566 |   |
|                                     |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| Net income (loss)                        |   |            | -           |                         |   |           | (6,206,556 | )      |   |   | -          |   |   |   | (6,206,556 | ) |
|                                     |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| Distributions to members                 |   |            | -           |                         |   |           | (8,282,935 | )      |   |   | -          |   |   |   | (8,282,935 | ) |
|                                     |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| BALANCES, FEBRUARY 13, 2011              |   | $               | -           |                         |   | $              | 46,978,538 |   |   | $      | (1,624,463 | ) |   | $ | 45,354,075 |   |
|                                     |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| Summit Hotel OP, LP                      |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| Equity from predecessor/limited partners |   | $               | -           |                         |   | $              | 45,354,075 |   |   | $      | -          |   |   | $ | 45,354,075 |   |
| Contributions                            |   |            | 240,855,458 |                         |   |           | -          |   |   |   | -          |   |   |   | 240,855,458 |   |
| Dividends paid                           |   |            | (1,534,834  | )                            |   |           | (567,679   | )      |   |   | -          |   |   |   | (2,102,513 | ) |
| Equity-based compensation                |   |            | 302,484     |                         |   |           | -          |   |   |   | -          |   |   |   | 302,484 |   |
| Net income (loss)                        |   |            | (737,490    | )                            |   |           | (272,770   | )      |   |   | -          |   |   |   | (1,010,260 | ) |
|                                     |   |            |        |                         |   |           |       |   |   |   |       |   |   |   |   |   |
| BALANCES, JUNE 30, 2011                  |   | $               | 238,885,618 |                         |   | $              | 44,513,626 |   |   | $      | -          |   |   | $ | 283,399,244 |   |

----

----

|                                                                        |   | 2011   |         | 2010   |
|-----------------------------------------------------------------------------|--------|--------|--------------|--------|
|                                                                        |   |   |         |   |   |   |
| OPERATING ACTIVITIES                                                        |   |   |         |   |   |   |
|   Net income (loss)                                               |   | $      | (7,216,816   | )      |   | $ | (5,629,190 | ) |
|   Adjustments to reconcile net income to                          |   |   |         |   |   |   |   |   |
|    net cash from operating activities:                       |   |   |         |   |   |   |   |   |
|     Depreciation and amortization                       |   |   | 13,678,039   |   |   |   | 13,521,822 |   |
|     Amortization of prepaid lease                       |   |   | 23,700       |   |   |   | 23,700 |   |
|     Equity-based compensation                           |   |   | 302,484      |   |   |   | - |   |
|     (Gain) loss on disposal of assets                   |   |   | 36,031       |   |   |   | 39,389 |   |
|   Changes in operating assets and liabilities:                    |   |   |         |   |   |   |   |   |
|     Trade receivables                                   |   |   | (1,819,323   | )      |   |   | (1,807,872 | ) |
|     Prepaid expenses and other                          |   |   | 3,239,939    |   |   |   | 341,479 |   |
|     Accounts payable and related party accounts payable |   |   | (694,799     | )      |   |   | (64,614 | ) |
|     Accrued expenses                                    |   |   | 3,531,328    |   |   |   | 1,277,181 |   |
|     Restricted cash released (funded)                   |   |   | 909,159      |   |   |   | 85,210 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | 11,989,742   |   |   |   | 7,787,105 |   |
|   OPERATING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| INVESTING ACTIVITIES                                                        |   |   |         |   |   |   |   |   |
|   Land and hotel acquisitions and construction in progress        |   |   | (37,700,000  | )      |   |   | (604,232 | ) |
|   Purchases of other property and equipment                       |   |   | (11,147,843  | )      |   |   | (1,018,274 | ) |
|   Proceeds from asset dispositions, net of closing costs          |   |   | 357,843      |   |   |   | 7,246 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | (48,490,000  | )      |   |   | (1,615,260 | ) |
|   INVESTING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| FINANCING ACTIVITIES                                                        |   |   |         |   |   |   |   |   |
|   Proceeds from issuance of debt                                  |   |   | 57,882,528   |   |   |   | 3,348,350 |   |
|   Principal payments on debt                                      |   |   | (226,599,060 | )      |   |   | (4,934,721 | ) |
|   Financing fees on debt                                          |   |   | (3,641,499   | )      |   |   | (963,060 | ) |
|   Proceeds from sale of common stock, net of offering costs       |   |   | 240,855,458  |   |   |   | - |   |
|   Distributions to members                                        |   |   | (10,385,448  | )      |   |   | (535,261 | ) |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CASH PROVIDED BY (USED IN)                                              |   |   | 58,111,979   |   |   |   | (3,084,692 | ) |
|   FINANCING ACTIVITIES                                            |   |   |         |   |   |   |   |   |
|                                                                        |   |   |         |   |   |   |   |   |
| NET CHANGE IN CASH AND CASH EQUIVALENTS                                     |   |   | 21,611,721   |   |   |   | 3,087,153 |   |
|                                                                        |   |   |         |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                   |   |   |         |   |   |   |   |   |
|   BEGINNING OF PERIOD                                             |   |   | 7,977,418    |   |   |   | 8,239,225 |   |
|                                                                        |   |   |         |   |   |   |   |   |
|   END OF PERIOD                                                   |   | $      | 29,589,139   |   |   | $ | 11,326,378 |   |

----

----

|                                                         |   | 2011   |       | 2010   |
|--------------------------------------------------------------|--------|--------|------------|--------|
|                                                         |   |   |       |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF                                   |   |   |       |   |   |   |
|   CASH FLOW INFORMATION:                           |   |   |       |   |   |   |
|     Cash payments for interest           |   | $      | 12,122,358 |   |   | $ | 12,357,600 |   |
|                                                         |   |   |       |   |   |   |   |   |
|     Cash payments for state income taxes |   | $      | 568,967    |   |   | $ | 51,386 |   |

----

----

----

----

| ● | to reclassify (a) $20.0 million of direct hotel operations expense (wages, payroll taxes and benefits, linens, cleaning and guestroom supplies and complimentary breakfast) as rooms expense; and (b) $3.0 million of direct hotel operations expense (franchise royalties) as other indirect expense;                                                                                                                                                                                                                                          |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify (a) $4.1 million of other hotel operating expense (utilities and telephone) as other direct expense; and (b) $5.1 million of other hotel operating expense (property taxes, insurance and cable) as other indirect expense;                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify (a) $2.1 million of general, selling and administrative expense (office supplies, advertising, miscellaneous operating expenses and bad debt expense) as other direct expenses; (b) $9.7 million of general, selling and administrative expense (credit card/travel agent commissions, management company expense, management company legal and accounting fees and franchise fees) as other indirect expenses; and (c) $302,000 of general, selling and administrative expense (ground rent and other expense) as other expense; |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify $2.1 million of repairs and maintenance expense as other direct expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify $57,000 of other indirect expense (hotel startup costs) as hotel property acquisition costs.                                                                                                                                                                                                                                                                                                                                                                                                                                      |

----

----

| ● | to reclassify (a) $10.5 million of direct hotel operations expense (wages, payroll taxes and benefits, linens, cleaning and guestroom supplies and complimentary breakfast) as rooms expense; and (b) $1.6 million of direct hotel operations expense (franchise royalties) as other indirect expense;                                                                                                                                                                                                                                          |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify (a) $2.0 million of other hotel operating expense (utilities and telephone) as other direct expense; and (b) $2.6 million of other hotel operating expense (property taxes, insurance and cable) as other indirect expense;                                                                                                                                                                                                                                                                                                       |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify (a) $1.0 million of general, selling and administrative expense (office supplies, advertising, miscellaneous operating expenses and bad debt expense) as other direct expenses; (b) $5.1 million of general, selling and administrative expense (credit card/travel agent commissions, management company expense, management company legal and accounting fees and franchise fees) as other indirect expenses; and (c) $152,000 of general, selling and administrative expense (ground rent and other expense) as other expense; |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify $1.2 million of repairs and maintenance expense as other direct expenses; and                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ● | to reclassify ($9,000) of other indirect expense (hotel startup costs) as hotel property acquisition costs.                                                                                                                                                                                                                                                                                                                                                                                                                                     |

----

----

----

----

----

----

|                              |   | 2011   |
|-----------------------------------|--------|--------|
|                              |   |   |   |
|                              |   |   |   |
| Land                              |   |   | 5,614 |   |
| Hotel buildings and improvements  |   |   | 31,054 |   |
| Furniture, fixtures and equipment |   |   | 1,032 |   |
| Current assets                    |   |   | 310 |   |
| Total assets acquired             |   |   | 38,010 |   |
| Current liabilities               |   |   | 296 |   |
| Net assets acquired          |   |   | 37,714 |   |

----

----

|                         |   | 2011   |   | 2010   |
|------------------------------|--------|--------|--------|--------|
|                         |   |   |   |   |   |   |
| Fixed-rate mortgage loans    |   | $      | 112.1  |   |   | $ | 170.1 |   |
| Variable-rate mortgage loans |   |   | 139.6  |   |   |   | 250.3 |   |
|                         |   | $      | 251.7  |   |   | $ | 420.4 |   |

| ― | 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 from Marshall & Isley Bank; and                                                                                                      |
|    |                                                                                                                                                                                                      |
| ― | approximately $38.3 million to repay in full two loans from First National Bank of Omaha.                                                                                                            |

----

----

----

----

|   |                                     |   | 2011   |
|--------|------------------------------------------|--------|--------|
|   |                                     |   |   |   |
|   | Expected dividend yield at date of grant |   |   | 5.09 | % |
|   | Expected stock price volatility          |   |   | 56.6 | % |
|   | Risk-free interest rate                  |   |   | 2.57 | % |
|   | Expected life of options (in years)      |   |   | 6.5 |   |

----

----

|                             |   | Number of Options |    | Weighted Average Exercise Price |   | Weighted Average Remaining Contractual Terms (years) |   | Aggregate Intrinsic Value (in thousands) |
|----------------------------------|--------|-------------------|---------|---------------------------------|--------|------------------------------------------------------|--------|-----------------------------------------------|
|                             |   |              |    |                            |   |                                                 |   |                                          |   |   |   |   |
| Outstanding at December 31, 2010 |   |              | -       |                            |   | $                                                    | -      |                                          |   |   | - |   |   | $ | - |   |
| Granted                          |   |              | 940,000 |                            |   | $                                                    | 9.75   |                                          |   |   | - |   |   | $ | - |   |
| Exercised                        |   |              | -       |                            |   | $                                                    | -      |                                          |   |   | - |   |   | $ | - |   |
| Cancelled                        |   |              | -       |                            |   | $                                                    | -      |                                          |   |   | - |   |   | $ | - |   |
| Outstanding at June 30, 2011     |   |              | 940,000 |                            |   | $                                                    | 9.75   |                                          |   |   | 9.6 |   |   | $ | 1,504 |   |
| Exercisable at June 30, 2011     |   |              | -       |                            |   | $                                                    | -      |                                          |   |   | - |   |   | $ | - |   |

| ● | Cambria Suites, San Antonio, TX;          |
|---------|-------------------------------------------|
|    |                                      |
| ● | Cambria Suites, Baton Rouge, LA;          |
|    |                                      |
| ● | Cambria Suites, Boise, ID;                |
|    |                                      |
| ● | Comfort Inn, Ft. Smith, AR;               |
|    |                                      |
| ● | Comfort Inn, Salina, KS;                  |
|    |                                      |
| ● | Comfort Inn, Missoula, MT;                |
|    |                                      |
| ● | Comfort Suites, Golden, CO;               |
|    |                                      |
| ● | Comfort Inn & Suites, Twin Falls, ID; |
|    |                                      |
| ● | Comfort Suites, Charleston, WV; and       |
|    |                                      |
| ● | Comfort Suites, Ft. Worth, TX             |

----

----

----

| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
|---------|----------------------------------------------------------------------------------------------|

| ● | the state of the economy generally and in specific geographic regions in which our hotels are located and the effect of general economic conditions on the U.S. lodging industry; |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ● | 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, market trends, 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 ability to maintain our relationships with our franchisors and enter into new franchise agreements; |
|---------|---------------------------------------------------------------------------------------------------------|

| ● | the termination of franchise agreements and the payment of termination fees; |
|---------|------------------------------------------------------------------------------|

| ● | our dependence on third-party managers of our hotels, and 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 ability to satisfy the requirements for qualification as a REIT and the impact of changes in tax laws and government regulations 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 our combined Annual Report on Form 10-K for the year ended December 31, 2010, other filings we make from time to time with the Securities and Exchange Commission (the “SEC”) and elsewhere in this report. |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | ● | to reclassify (a) $10.5 million and $20.0 million of direct hotel operations expense (wages, payroll taxes and benefits, linens, cleaning and guestroom supplies and complimentary breakfast) as rooms expense for the three and six month periods ended June 30, 2011, respectively; and (b) $1.6 million and $3.0 million of direct hotel operations expense (franchise royalties) as other indirect expense for the three and six month periods ended June 30, 2011, respectively; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | to reclassify (a) $2.0 million and $4.1 million of other hotel operating expense (utilities and telephone) as other direct expense for the three and six month periods ended June 30, 2011, respectively; and (b) $2.6 million and $5.1 million of other hotel operating expense (property taxes, insurance and cable) as other indirect expense for the three and six month periods ended June 30, 2011, respectively; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | to reclassify (a) $1.0 million and $2.1 million of general, selling and administrative expense (office supplies, advertising, miscellaneous operating expenses and bad debt expense) as other direct expenses for the three and six month periods ended June 30, 2011, respectively; (b) $5.1 million and $9.7 million of general, selling and administrative expense (credit card/travel agent commissions, management company expense, management company legal and accounting fees and franchise fees) as other indirect expenses for the three and six month periods ended June 30, 2011, respectively; and (c) $152,000 and $302,000 of general, selling and administrative expense (ground rent and other expense) as other expense for the three and six month periods ended June 30, 2011, respectively; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | ● | to reclassify $1.2 million and $2.1 million of repairs and maintenance expense as other direct expenses for the three and six month periods ended June 30, 2011, respectively; and |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | to reclassify ($9,000) and $57,000 of other indirect expense (hotel startup costs) as hotel property acquisition costs for the three and six month periods ended June 30, 2011, respectively. |
|--------|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Occupancy rates (“occupancy”); |
|--------|---------|--------------------------------------------|

|   | ● | Average daily rates (“ADR”); and |
|--------|---------|----------------------------------------------|

|   | ● | Revenue per available room (“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(1)       |   |          | 8      |         |   |   | 784 |   |
| TownePlace Suites by Marriott          |   |          | 1      |         |   |   | 90 |   |
|                                   |   |          | 29     |         |   |   | 2,867 |   |
| Hilton                                 |   |          |   |         |   |   |   |   |
| Hampton Inn                            |   |          | 8      |         |   |   | 821 |   |
| Hampton Inn & Suites               |   |          | 3      |         |   |   | 390 |   |
| Hilton Garden Inn                 |   |          | 2      |         |   |   | 242 |   |
| Homestead Suites                       |   |          | 1      |         |   |   | 91 |   |
|                                   |   |          | 14     |         |   |   | 1,544 |   |
| IHG                                    |   |          |   |         |   |   |   |   |
| Holiday Inn Express                    |   |          | 2      |         |   |   | 182 |   |
| Holiday Inn Express & Suites       |   |          | 4      |         |   |   | 365 |   |
| Holiday Inn(2)                         |   |          | 2      |         |   |   | 262 |   |
| Staybridge Suites                      |   |          | 2      |         |   |   | 213 |   |
|                                   |   |          | 10     |         |   |   | 1,022 |   |
| Hyatt                                  |   |          |   |         |   |   |   |   |
| Hyatt Place                            |   |          | 4      |         |   |   | 556 |   |
|                                   |   |          |   |         |   |   |   |   |
| AmericInn International                |   |          |   |         |   |   |   |   |
| AmericInn Hotel & Suites(3)        |   |          | 4      |         |   |   | 285 |   |
| AmericInn(4)                           |   |          | 1      |         |   |   | 89 |   |
|                                   |   |          | 5      |         |   |   | 374 |   |
| Starwood                               |   |          |   |         |   |   |   |   |
| Aloft                                  |   |          | 1      |         |   |   | 136 |   |
|                                   |   |          |   |         |   |   |   |   |
| Carlson                                |   |          |   |         |   |   |   |   |
| Country Inn & Suites By Carlson    |   |          | 2      |         |   |   | 190 |   |
|                                   |   |          |   |         |   |   |   |   |
| Independent                            |   |          |   |         |   |   |   |   |
| Aspen Hotel & Suites               |   |          | 1      |         |   |   | 57 |   |
| Aspen Suites(5)                        |   |          | 3      |         |   |   | 264 |   |
|                                   |   |          | 4      |         |   |   | 321 |   |
|                                   |   |          |   |         |   |   |   |   |
| Total                                  |   |          | 69     |         |   |   | 7,010 |   |

----

| (1) | Includes our 113-room SpringHill Suites, Bloomington, Minnesota, which was rebranded during the second quarter of 2011 as a result of the termination by Choice Hotels International (“Choice”) of the prior franchise agreement on June 23, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | Includes our 119-room hotel located in Boise, Idaho, which was rebranded during the second quarter of 2011 as a result of the termination by Choice of the prior franchise agreement on March 23, 2011. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (3) | Includes our 60-room hotel located in Salina, Kansas, our 52-room hotel located in Missoula, Montana, our 62-room hotel located in Golden, Colorado and our 111-room hotel located in Twin Falls, Idaho, each of which was rebranded during the second quarter of 2011 as a result of the termination by Choice of the prior franchise agreements on March 23, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4) | Includes our 89-room hotel located in Fort Smith, Arkansas, which was rebranded during the second quarter of 2011 as a result of the termination by Choice of the prior franchise agreement on March 23, 2011. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5) | Includes our 67-room hotel located in Charleston, West Virginia, our 127-room hotel located Baton Rouge, Louisiana and our 70-room hotel located in Fort Worth, Texas, each of which was operated independently during the second quarter of 2011 following the termination by Choice of the prior franchise agreements on March 23, 2011. On August 5, 2011, we entered into a franchise agreement to operate the Baton Rouge, Louisiana hotel as a Double Tree Hotel. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                                        |   | Three Months EndedJune 30, |     |   | Percentage Change |   |     | Six Months EndedJune 30, |   |   | Percentage Change |    |
|-------------------------------------------------------------|--------|----------------------------|----------|--------|-------------------|--------|----------|--------------------------|--------|--------|-------------------|---------|
|                                                        |   | 2011                       |     |   | 2010              |   |     |                     |   |   | 2011              |    |   | 2010 |   |   |   |   |
| Number of hotels at end of period                           |   |                       | 65       |   |              |   | 65       |                     |   |   | -                 |    |   |   | 65 |   |   |   | 65 |   |   |   | - |   |
| Average number of rooms                                     |   |                       | 6,533    |   |              |   | 6,533    |                     |   |   | -                 |    |   |   | 6,533 |   |   |   | 6,533 |   |   |   | - |   |
| Revenue                                                |   | $                          | 36,371.1 |   |              | $      | 35,849.7 |                     |   |   | 1.5               | %  |   | $ | 69,779.2 |   |   | $ | 67,212.4 |   |   |   | 3.8 | %  |
| Hotel Operating Expense                                     |   | $                          | 24,701.7 |   |              | $      | 24,061.2 |                     |   |   | 2.7               | %       |   | $ | 49,101.7 |   |   | $ | 46,318.2 |   |   |   | 6.0 | % |
| Occupancy                                                   |   |                       | 68.2     | %      |              |   | 68.1     | %                        |   |   | 0.2               | %       |   |   | 64.4 | % |   |   | 63.9 | % |   |   | 0.8 | % |
| ADR                                                         |   | $                          | 88.08    |   |              | $      | 87.07    |                     |   |   | 1.2               | %       |   | $ | 89.90 |   |   | $ | 87.26 |   |   |   | 3.0 | % |
| RevPAR                                                      |   | $                          | 60.09    |   |              | $      | 59.31    |                     |   |   | 1.3               | %       |   | $ | 57.88 |   |   | $ | 55.76 |   |   |   | 3.8 | % |
|                                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Seasoned (46 hotels)                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                                   |   |                       | 67.8     | %      |              |   | 69.3     | %                        |   |   | (2.2              | )%      |   |   | 63.5 | % |   |   | 65.1 | % |   |   | (2.4 | )% |
| ADR                                                         |   | $                          | 87.10    |   |              | $      | 87.25    |                     |   |   | (0.2              | )%      |   | $ | 89.97 |   |   | $ | 87.70 |   |   |   | 2.6 | % |
| RevPAR                                                      |   | $                          | 59.08    |   |              | $      | 60.48    |                     |   |   | (2.3              | )%      |   | $ | 57.15 |   |   | $ | 57.08 |   |   |   | 0.1 | % |
|                                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Seasoned, excluding seven former Choice hotels (39 hotels)  |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                                   |   |                       | 70.9     | %      |              |   | 69.1     | %                        |   |   | 2.6               | %       |   |   | 65.7 | % |   |   | 65.4 | % |   |   | 0.5 | % |
| ADR                                                         |   | $                          | 88.26    |   |              | $      | 88.58    |                     |   |   | (0.4              | )%      |   | $ | 91.40 |   |   | $ | 89.27 |   |   |   | 2.4 | % |
| RevPAR                                                      |   | $                          | 62.59    |   |              | $      | 61.22    |                     |   |   | 2.2               | %       |   | $ | 60.04 |   |   | $ | 58.36 |   |   |   | 2.9 | % |
|                                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Unseasoned (19 hotels)                                      |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                                   |   |                       | 68.9     | %      |              |   | 66.0     | %                        |   |   | 4.4               | %       |   |   | 65.9 | % |   |   | 61.8 | % |   |   | 6.6 | % |
| ADR                                                         |   | $                          | 89.78    |   |              | $      | 86.72    |                     |   |   | 3.5               | %       |   | $ | 89.78 |   |   | $ | 86.44 |   |   |   | 3.9 | % |
| RevPAR                                                      |   | $                          | 61.88    |   |              | $      | 57.23    |                     |   |   | 8.1               | %       |   | $ | 59.16 |   |   | $ | 53.43 |   |   |   | 10.7 | % |
|                                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Unseasoned, excluding four former Choice hotels (15 hotels) |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                                   |   |                       | 72.4     | %      |              |   | 64.0     | %                        |   |   | 13.1              | %       |   |   | 67.4 | % |   |   | 60.2 | % |   |   | 12.1 | % |
| ADR                                                         |   | $                          | 91.76    |   |              | $      | 90.12    |                     |   |   | 1.8               | %       |   | $ | 92.00 |   |   | $ | 89.20 |   |   |   | 3.1 | % |
| RevPAR                                                      |   | $                          | 66.41    |   |              | $      | 57.69    |                     |   |   | 15.1              | %       |   | $ | 62.03 |   |   | $ | 53.66 |   |   |   | 15.6 | % |
|                                                        |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Former Choice Hotels (11 hotels)                            |   |                       |     |   |              |   |     |                     |   |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                                   |   |                       | 50.5     | %      |              |   | 72.2     | %                        |   |   | (30.0             | )%      |   |   | 53.8 | % |   |   | 65.6 | % |   |   | (17.9 | )% |
| ADR                                                         |   | $                          | 77.26    |   |              | $      | 76.64    |                     |   |   | 0.8               | %       |   | $ | 78.23 |   |   | $ | 76.55 |   |   |   | 2.2 | % |
| RevPAR                                                      |   | $                          | 39.02    |   |              | $      | 55.30    |                     |   |   | (29.4             | )%      |   | $ | 42.09 |   |   | $ | 50.19 |   |   |   | (16.2 | )% |

----

|                          |    | Company                         |   |   | Our Predecessor                |   |   | Quarter-over-Quarter |   |
|-------------------------------|---------|---------------------------------|--------|--------|--------------------------------|--------|--------|----------------------|--------|
|                          |    | Three Months EndedJune 30, 2011 |   |   | Three MonthsEndedJune 30, 2010 |   |   | Change               |   |
|                          |  $ |                            |   |   | %                              |   |
| Revenues:                     |    | $                               | 38,589 |   |                           | $      | 35,850 |                 |   | $ | 2,739 |   |   |   | 7.6 | % |
| Hotel operating expenses:     |    | $                               | 26,138 |   |                           | $      | 24,061 |                 |   | $ | 2,077 |   |   |   | 8.6 | % |
| Total expenses:               |    | $                               | 34,607 |   |                           | $      | 30,723 |                 |   | $ | 3,884 |   |   |   | 12.6 | % |
| Income from operations:       |    | $                               | 3,981  |   |                           | $      | 5,126  |                 |   | $ | (1,145 | ) |   |   | (22.3 | )% |
| Total other income (expense): |    | $                               | (3,033 | )      |                           | $      | (7,124 | )                    |   | $ | 4,091 |   |   |   | 57.4 | % |
| Net income (loss):            |    | $                               | 604    |   |                           | $      | (2,074 | )                    |   | $ | 2,678 |   |   |   | N/A |   |

----

|                          |   | Three Months Ended June 30, 2011 |     |
|-------------------------------|--------|----------------------------------|----------|
|                          |   | Total Revenue                    |     |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total Portfolio (69 hotels)*  |   | $                                | 38,588.6 |   |   |   | 68.5 | % |   | $ | 88.63 |   |   | $ | 60.70 |   |
| Initial Portfolio (65 hotels) |   | $                                | 36,371.1 |   |   |   | 68.2 | % |   | $ | 88.08 |   |   | $ | 60.09 |   |

|                                    |   | Three Months Ended June 30, 2010 |     |   |
|-----------------------------------------|--------|----------------------------------|----------|--------|
|                                    |   | Total Revenue                    |     |   | Occupancy |   |   | ADR |   | RevPAR |   |   |
| Total and Initial Portfolio (65 hotels) |   | $                                | 35,849.7 |   |   |   | 68.1 | % |   | $ | 87.07 |   |   | $ | 59.31 |   |

|              |   | Percentage Change from Three Months Ended June 30, 2010 to Three Months Ended June 30, 2011 |   |
|-------------------|--------|---------------------------------------------------------------------------------------------|--------|
|              |   | Total Revenue                                                                               |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |   |
| Total Portfolio   |   |                                                                                        | 7.6    | % |   |   | 0.5 | % |   |   | 1.8 | % |   |   | 2.3 | % |
| Initial Portfolio |   |                                                                                        | 1.5    | % |   |   | 0.2 | % |   |   | 1.2 | % |   |   | 1.3 | % |

----

|                          |   | Company                                        |   |   | Our Predecessor                                  |   |   | Combined                      |   |   | Our Predecessor              |   |   | Period-over-Period |    |
|-------------------------------|--------|------------------------------------------------|--------|--------|--------------------------------------------------|--------|--------|-------------------------------|--------|--------|------------------------------|--------|--------|--------------------|---------|
|                          |   | Period February 14, 2011 through June 30, 2011 |   |   | Period January 1, 2011 through February 13, 2011 |   |   | Six Months EndedJune 30, 2011 |   |   | Six MonthsEndedJune 30, 2010 |   |   | Change             |    |
|                          | $      |                                           |   |   | %                                                |   |
| Revenues:                     |   | $                                              | 57,398 |   |                                             | $      | 14,598 |                          |   | $      | 71,996                       |   |   | $                  | 67,212  |   |   | $ | 4,784 |   |   |   | 7.1 | % |
| Hotel operating expenses:     |   | $                                              | 38,184 |   |                                             | $      | 12,378 |                          |   | $      | 50,562                       |   |   | $                  | 46,318  |   |   | $ | 4,244 |   |   |   | 9.2 | % |
| Total expenses:               |   | $                                              | 51,351 |   |                                             | $      | 15,807 |                          |   | $      | 67,158                       |   |   | $                  | 59,897  |   |   | $ | 7,261 |   |   |   | 12.1 | % |
| Income from operations:       |   | $                                              | 6,047  |   |                                             | $      | (1,208 | )                             |   | $      | 4,839                        |   |   | $                  | 7,316   |   |   | $ | (2,477 | ) |   |   | (33.9 | )% |
| Total other income (expense): |   | $                                              | (6,541 | )      |                                             | $      | (4,659 | )                             |   | $      | (11,200                      | )      |   | $                  | (12,717 | ) |   | $ | 1,517 |   |   |   | 11.9 | % |
| Net income (loss):            |   | $                                              | (1,010 | )      |                                             | $      | (6,207 | )                             |   | $      | (7,217                       | )      |   | $                  | (5,629  | ) |   | $ | (1,588 | ) |   |   | (28.2 | )% |

|                          |   | Six Months Ended June 30, 2011 |     |
|-------------------------------|--------|--------------------------------|----------|
|                          |   | Total Revenue                  |     |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total Portfolio (69 hotels)*  |   | $                              | 71,996.0 |   |   |   | 64.6 | % |   | $ | 90.16 |   |   | $ | 58.24 |   |
| Initial Portfolio (65 hotels) |   | $                              | 69,779.2 |   |   |   | 64.4 | % |   | $ | 89.90 |   |   | $ | 57.88 |   |

|                                    |   | Six Months Ended June 30, 2010 |     |   |
|-----------------------------------------|--------|--------------------------------|----------|--------|
|                                    |   | Total Revenue                  |     |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total and Initial Portfolio (65 hotels) |   | $                              | 67,212.4 |   |   |   | 63.9 | % |   | $ | 87.26 |   |   | $ | 55.76 |   |

|              |   | Percentage Change from Six Months EndedJune 30, 2010 to Six Months Ended June 30, 2011 |   |
|-------------------|--------|----------------------------------------------------------------------------------------|--------|
|              |   | Total Revenue                                                                          |   |   | Occupancy |   |   | ADR |   |   | RevPAR |   |
| Total Portfolio   |   |                                                                                   | 7.1    | % |   |   | 1.1 | % |   |   | 3.3 | % |   |   | 4.4 | % |
| Initial Portfolio |   |                                                                                   | 3.8    | % |   |   | 0.8 | % |   |   | 3.0 | % |   |   | 3.8 | % |

----

----

----

----

| 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) as follows: |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Period                                    | LeverageRatio Requirement in Original Credit Facility |
|-------------------------------------------|-------------------------------------------------------|
| April 29, 2011 through April 29, 2012     | 6.25:1.00                                             |
| April 29, 2012 through April 29, 2013     | 6.00:1.00                                             |
| April 29, 2013 through April 29, 2014     | 5.75:1.00                                             |
| April 29, 2014 and thereafter             | 5.25:1.00                                             |
| Period                                    | LeverageRatio Requirement as Amended(1)               |
| Closing Date through June 30, 2011        | 6.25:1.00                                             |
| July 1, 2011 through September 30, 2011   | 6.75:1.00                                             |
| October 1, 2011 through December 31, 2011 | 7.25:1.00                                             |
| January 1, 2012 through March 31, 2012    | 6.75:1.00                                             |
| April 1, 2012 through September 30, 2012  | 6.50:1.00                                             |
| October 1, 2012 through December 31, 2012 | 6.25:1.00                                             |
| January 1, 2013 through March 31, 2013    | 6.00:1.00                                             |
| April 1, 2013  and thereafter   | 5.75:1.00                                             |

|   | (1) | The leverage ratio was amended as described in the above table pursuant to the First Letter Amendment entered into on August 15, 2011. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------|

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

| Period                                | Consolidated Fixed Charge Coverage Ratio |
|---------------------------------------|------------------------------------------|
| April 29, 2011 through April 29, 2013 | 1.50:1.00                                |
| April 29, 2013 through April 29, 2014 | 1.60:1.00                                |
| April 29, 2014 and thereafter         | 1.75:1.00                                |

----

|   | ● | a minimum consolidated tangible net worth (as defined in the loan documentation) of not less than $228,728,000 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. |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Initial 18 Borrowing Base Properties |
|--------------------------------------|
| Brand                                | City | State |
| Springhill Suites                    | Little Rock | AR |
| Fairfield Inn                        | Denver | CO |
| Hampton Inn                          | Fort Collins | CO |
| Fairfield Inn                        | Golden | CO |
| Hampton Inn                          | Boise | ID |
| Hampton Inn                          | Twin Falls | ID |
| Residence Inn                        | Fort Wayne | IN |
| Fairfield Inn                        | Emporia | KS |
| Holiday Inn Express                  | Emporia | KS |
| Fairfield Inn                        | Salina | KS |
| Fairfield Inn                        | Baton Rouge | LA |
| Springhill Suites                    | Baton Rouge | LA |
| TownePlace Suites                    | Baton Rouge | LA |
| Hampton Inn                          | Medford | OR |
| Springhill Suites                    | Nashville | TN |
| Hampton Inn                          | Provo | UT |
| Fairfield Inn                        | Bellevue | WA |
| Fairfield Inn                        | Spokane | WA |

----

| Brand             | City       | State |
|-------------------|------------|-------|
| AmericInn         | Lakewood   | CO    |
| Staybridge Suites | Glendale   | CO    |
| Hilton Garden Inn | Duluth     | GA    |
| Holiday Inn       | Duluth     | GA    |
| AmericInn         | Twin Falls | ID    |
| AmericInn         | Salina     | KS    |
| Homewood Suites   | Ridgeland  | MS    |

|   | ● | be franchised with a nationally recognized franchisor; |
|--------|---------|--------------------------------------------------------|

|   | ● | have been in operation a minimum of one year; |
|--------|---------|-----------------------------------------------|

|   | ● | satisfy certain ownership, management and operating lessee criteria; |
|--------|---------|----------------------------------------------------------------------|

|   | ● | not be subject to material defects, such as liens, title defects, environmental contamination; and |
|--------|---------|----------------------------------------------------------------------------------------------------|

|   | ● | other standard lender criteria. |
|--------|---------|---------------------------------|

----

| Lender                                                                  |   | Collateral                                                                                                                                                                                                                                                          |    | OutstandingPrincipalBalance as ofJune 30, 2011 |   |   | Interest Rateas ofJune 30, 2011(1) |                                              | Amortization(years) |   | MaturityDate |
|-------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------|------------------------------------------------|--------|--------|------------------------------------|---------------------------------------------------|---------------------|--------|--------------|
| Bank of the Cascades                                                    |   | Residence Inn by Marriott, Portland, OR                                                                                                                                                                                                                             |    | $                                              | 12,623 |   |                               | Prime rate, subject to a floor of 6.00%           |                | 25     |         | 09/30/11 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| ING Investment Management(2)(13)                                        |   | 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                                      |    | $                                              | 28,282 |   |                               | 5.60%                                             |                | 20     |         | 07/01/25 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| MetaBank                                                                |   | Holiday Inn, Boise, IDSpringHill Suites by Marriott, Lithia Springs, GA                                                                                                                                                                                             |    | $                                              | 7,172  |   |                               | Prime rate, subject to a floor of 5.00%           |                | 20     |         | 03/01/12 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| Chambers Bank                                                           |   | Aspen Hotel & Suites, Ft. Smith, AR                                                                                                                                                                                                                             |    | $                                              | 1,552  |   |                               | 6.50%                                             |                | 20     |         | 06/24/12 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| Bank of the Ozarks(3)                                                   |   | Hyatt Place, Portland, OR                                                                                                                                                                                                                                           |    | $                                              | 6,385  |   |                               | 90-day LIBOR + 4.00%, subject to a floor of 6.75% |                | 25     |         | 06/29/12 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| ING Investment Management(4)(8) (13)                                    |   | Hilton Garden Inn, Ft. Collins, CO                                                                                                                                                                                                                                  |    | $                                              | 7,778  |   |                               | 6.34%                                             |                | 20     |         | 07/01/12 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| ING Investment Management(4)(9) (13)                                    |   | AmericInn, 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, MTAmericInn Hotel & Suites, Missoula, MT |    | $                                              | 28,749 |   |                               | 6.10%                                             |                | 20     |         | 07/01/12 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| BNC National Bank(11)                                                   |   | Hampton Inn & Suites, Ft. Worth, TX                                                                                                                                                                                                                             |    | $                                              | 5,620  |   |                               | 5.01%                                             |                | 20     |         | 11/01/13 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| First National Bank of Omaha(5)                                         |   | Courtyard by Marriott, Germantown, TNCourtyard by Marriott, Jackson, MSHyatt Place, Atlanta, GA                                                                                                                                                                     |    | $                                              | 23,964 |   |                               | 90-day LIBOR + 4.00%, subject to a floor of 5.25% |                | 20     |         | 07/01/13 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| ING Investment Management(6)(10) (13)                                   |   | Residence Inn by Marriott, Ridgeland, MS                                                                                                                                                                                                                            |    | $                                              | 6,143  |   |                               | 6.61%                                             |                | 20     |         | 11/01/28 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| General Electric Capital Corp.(12)                                      |   | Country Inn & Suites, San Antonio, TX                                                                                                                                                                                                                           |    | $                                              | 11,013 |   |                               | 90-day LIBOR + 2.55%                              |                | 25     |         | 04/01/14 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| National Western Life Insurance(7)                                      |   | Courtyard by Marriott, Scottsdale, AZSpringHill Suites by Marriott, Scottsdale, AZ                                                                                                                                                                                  |    | $                                              | 13,418 |   |                               | 8.00%                                             |                | 17     |         | 01/01/15 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| BNC National Bank(11)                                                   |   | Holiday Inn Express & Suites, Twin Falls, ID                                                                                                                                                                                                                    |    | $                                              | 5,777  |   |                               | 4.81% (14)                                        |                | 20     |         | 04/01/16 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| Compass Bank                                                            |   | Courtyard by Marriott, Flagstaff, AZ                                                                                                                                                                                                                                |    | $                                              | 16,493 |   |                               | Prime rate - 0.25%, subject to a floor of 4.50%   |                | 20     |         | 05/17/18 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| General Electric Capital Corp.(12)                                      |   | SpringHill Suites by Marriott, Denver, CO                                                                                                                                                                                                                           |    | $                                              | 8,476  |   |                               | 90-day LIBOR + 1.75%                              |                | 20     |         | 04/01/18 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| General Electric Capital Corp. (12)                                     |   | Aspen Suites, Baton Rouge, LA                                                                                                                                                                                                                                       |    | $                                              | 10,849 |   |                               | 90-day LIBOR + 1.80%                              |                | 25     |         | 03/0/19 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
| Goldman Sachs                                                           |   | SpringHill Suites, Bloomington, MN, Hampton Inn & Suites, Bloomington, MN                                                                                                                                                                                       |    | $                                              | 14,750 |   |                               | 5.67%                                             |                | 25     |         | 07/06/16 |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
|                                                                    |   |                                                                                                                                                                                                                                                                |    |                                           |   |   |                               |                                              |                |   |         |   |
|            Total |   | $                                                                                                                                                                                                                                                                   | 209,044 |                                           |   |   |                               |                                              |                |   |

----

----

| (1) | As of June 30, 2011, the Prime rate was 3.25% and the 90-day LIBOR rate was 0.25%. |
|-----|------------------------------------------------------------------------------------|

| (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) | 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.  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. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8) | This loan is cross-collateralized with the ING Investment Management loan secured by the following hotel properties: AmericInn, 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; AmericInn Hotel & Suites, Missoula, MT. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (9) | This loan is secured by multiple hotel properties.  On July 27, 2011, we entered into a non-binding letter of intent with ING Investment Management pursuant to which the mortgages on the Fort Smith, AR AmericInn and Missoula, MT AmericInn will be released and mortgages will be placed on the Flagstaff, AZ SpringHill Suites and the Ridgeland, MS Staybridge Suites.  The collateral substitution is anticipated to occur September 2011.  This collateral substitution will also be reflected in the cross-collateralization described in footnote (8) above. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (10) | 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. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (11) | The two BNC loans are cross-defaulted. |
|------|----------------------------------------|

| (12) | The three General Electric Capital Corp. (“GECC”) loans are cross-defaulted. Effective July 1, 2011, the interest rate on all three loans increased 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.  On August 12, 2011, we entered into a Second Modification of Loan Agreement for each of the three loans pursuant to which GECC reduced the interest rate on all three loans to 90-day LIBOR + 3.50%, the fixed charge coverage ratios were modified to reflect the stabilization of revenues of two of the former Choice hotels which are collateral for the GECC loans after their conversion to other nationally-recognized brands, and mortgages will be placed on the Jacksonville, FL Aloft, Las Colinas, TX Hyatt Place and Boise, ID Fairfield Inn, each of which may be released upon realization of certain financial covenants. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (13) | 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. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (14) | Prior to April 1, 2011, the interest rate on this loan was the Prime Rate – 0.25%, but as of April 1, 2011, the interest rate on this loan was fixed at 4.81%. |
|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                          |   | Payments Due By Period |   |
|-------------------------------|--------|------------------------|--------|
|                          |   | Total                  |   |   | Less than One Year |   |   | One to Three Years |   |   | Four to Five Years |   |   | More than Five Years |   |
| Long-term debt obligations(1) |   | $                      | 269.3  |   |   | $ | 67.3 |   |   | $ | 146.0 |   |   | $ | 21.0 |   |   | $ | 35.0 |   |
| Operating Lease obligations   |   |                   | 32.1   |   |   |   | 0.4 |   |   |   | 0.8 |   |   |   | 0.8 |   |   |   | 30.1 |   |
| Total                         |   | $                      | 301.4  |   |   | $ | 67.7 |   |   | $ | 146.8 |   |   | $ | 21.8 |   |   | $ | 65.1 |   |

----

| (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 on our fixed-rate obligations.  Interest payments have been included based on the weighted-average interest rate. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                          |   | Company                         |    |   | Our Predecessor                |   |     | Quarter-over-Quarter |   |
|-------------------------------|--------|---------------------------------|---------|--------|--------------------------------|--------|----------|----------------------|--------|
|                          |   | Three Months EndedJune 30, 2011 |    |   | Three MonthsEndedJune 30, 2010 |   |     | Change               |   |
|                          |   |  $                         |    |   |                           | %      |     |
| Net Income (loss)             |   | $                               | 603.9   |   |                           | $      | (2,073.6 | )                    |   | $ | 2,677.5 |   |   |   | 129.1 | % |
| Depreciation and amortization |   |                            | 6,819.6 |   |                           |   | 6,671.3  |                 |   |   | 148.3 |   |   |   | 2.2 | % |
| Funds from Operations (FFO)   |   | $                               | 7,423.5 |   |                           | $      | 4,597.7  |                 |   | $ | 2,825.8 |   |   |   | 61.5 | % |

|                          |    | Company                                        |     |   | Our Predecessor                                  |   |     | Combined                      |   |   | Our Predecessor              |   |   | Period-over-Period |     |
|-------------------------------|---------|------------------------------------------------|----------|--------|--------------------------------------------------|--------|----------|-------------------------------|--------|--------|------------------------------|--------|--------|--------------------|----------|
|                          |    | Period February 14, 2011 through June 30, 2011 |     |   | Period January 1, 2011 through February 13, 2011 |   |     | Six Months EndedJune 30, 2011 |   |   | Six MonthsEndedJune 30, 2010 |   |   | Change             |     |
|                          |  $ |                                           |     |   | %                                                |   |
| Net income (loss)             |    | $                                              | (1,010.3 | )      |                                             | $      | (6,206.6 | )                             |   | $      | (7,216.9                     | )      |   | $                  | (5,629.2 | ) |   | $ | (1,587.7 | ) |   |   | (28.2 | )% |
| Depreciation and amortization |    |                                           | 10,248.8 |   |                                             |   | 3,429.2  |                          |   |   | 13,678.0                     |   |   |               | 13,521.8 |   |   |   | 156.2 |   |   |   | 1.2 | % |
| Funds from Operations (FFO)   |    | $                                              | 9,238.5  |   |                                             | $      | (2,777.4 | )                             |   | $      | 6,461.1                      |   |   | $                  | 7,892.6  |   |   | $ | (1,431.5 | ) |   |   | (18.1 | )% |

----

|                          |   |   | Company                        |   |   |   | Our Predecessor               |   |   |   | Quarter-over-QuarterChange |   |
|-------------------------------|--------|--------|--------------------------------|--------|--------|--------|-------------------------------|--------|--------|--------|----------------------------|--------|
|                          |   |   | Three MonthsEndedJune 30, 2011 |   |   |   | Three MonthsEndedJune 30,2010 |   |   |   | $                          |   |   |   | % |   |
| Net Income (loss)             |   | $      | 603.9                          |   |   | $      | (2,073.6                      | )      |   | $      | 2,677.5                    |   |   |   | 129.1 | % |
| Depreciation and amortization |   |   | 6,819.6                        |   |   |   | 6,671.3                       |   |   |   | 148.3                      |   |   |   | 2.2 | % |
| Interest expense              |   |   | 3,007.6                        |   |   |   | 7,133.9                       |   |   |   | (4,126.3                   | )      |   |   | 57.8 | % |
| Interest income               |   |   | (10.3                          | )      |   |   | (11.5                         | )      |   |   | 1.2                        |   |   |   | 10.4 | % |
| Income taxes                  |   |   | 344.2                          |   |   |   | 75.7                          |   |   |   | 268.5                      |   |   |   | 354.7 | % |
| EBITDA                        |   | $      | 10,765.0                       |   |   | $      | 11,795.8                      |   |   | $      | (1,030.8                   | )      |   |   | (8.7 | )% |

|                          |   |   | Company                                        |   |   |   | Our Predecessor                                  |   |   |   | Combined                      |   |   |   | Our Predecessor              |   |   |   | Period-over-PeriodChange |   |
|-------------------------------|--------|--------|------------------------------------------------|--------|--------|--------|--------------------------------------------------|--------|--------|--------|-------------------------------|--------|--------|--------|------------------------------|--------|--------|--------|--------------------------|--------|
|                          |   |   | Period February 14, 2011 through June 30, 2011 |   |   |   | Period January 1, 2011 through February 13, 2011 |   |   |   | Six Months EndedJune 30, 2011 |   |   |   | Six MonthsEndedJune 30, 2010 |   |   |   | $                        |   |   |   | % |   |
| Net income (loss)             |   | $      | (1,010.3                                       | )      |   | $      | (6,206.6                                         | )      |   | $      | (7,216.9                      | )      |   | $      | (5,629.2                     | )      |   | $      | (1,587.7                 | )      |   |   | (28.2 | )% |
| Depreciation and amortization |   |   | 10,248.8                                       |   |   |   | 3,429.2                                          |   |   |   | 13,678.0                      |   |   |   | 13,521.8                     |   |   |   | 156.2                    |   |   |   | 1.2 | % |
| Interest expense              |   |   | 6,518.8                                        |   |   |   | 4,666.2                                          |   |   |   | 11,185.0                      |   |   |   | 12,701.1                     |   |   |   | (1,516.1                 | )      |   |   | (11.9 | )% |
| Interest income               |   |   | (14.2                                          | )      |   |   | (7.1                                             | )      |   |   | (21.3                         | )      |   |   | (23.6                        | )      |   |   | 2.3                      |   |   |   | 9.7 | % |
| Income taxes                  |   |   | 516.5                                          |   |   |   | 339.0                                            |   |   |   | 855.5                         |   |   |   | 228.2                        |   |   |   | 627.3                    |   |   |   | 274.9 | % |
| EBITDA                        |   | $      | 16,259.6                                       |   |   | $      | 2,220.7                                          |   |   | $      | 18,480.3                      |   |   | $      | 20,798.3                     |   |   | $      | (2,318.0                 | )      |   |   | (11.1 | )% |

----

| Item 3. | Quantitative and Qualitative Disclosures about Market Risk. |
|---------|-------------------------------------------------------------|

| Item 4. | Controls and Procedures. |
|---------|--------------------------|

----

| Item 1. | Legal Proceedings. |
|---------|--------------------|

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

| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. |
|---------|--------------------------------------------------------------|

----

|   | ● | approximately $227.2 million to reduce outstanding mortgage indebtedness and pay associated costs, as described in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

|   | ● | approximately $5.8 million to fund capital expenditures at our hotels; and |
|--------|---------|----------------------------------------------------------------------------|

|   | ● | approximately $3.0 million for working capital reserves. |
|--------|---------|----------------------------------------------------------|

| Item 3. | Defaults Upon Senior Securities. |
|---------|----------------------------------|

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

| Item 5. | Other Information. |
|---------|--------------------|

| Item 6. | Exhibits. |
|---------|-----------|

| ExhibitNumber |  Description of Exhibit                                                                                                                                                                                                                                                         |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                 |
| 10.1          | Accession Agreement, dated May 13, 2011, among Summit Hotel OP, LP, Deutsche Bank AG New York Branch, and U.S. Bank National Association (incorporated herein by reference to Exhibit 10.17 to Quarterly Report on Form 10-Q filed by Summit Hotel Properties, Inc. on May 16, 2011) |
| 10.2†   | First Amendment to Amended and Restated Hotel Management Agreement, dated June 30, 2011, among Interstate Management Company, LLC and the subsidiaries of the Company party thereto                                                                                                  |
| 10.3†   | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.3 million)                                                                                                   |

----

| 10.4† | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $9.5 million)                             |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.5† | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP, Summit Hospitality V, LLC and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.4 million) |
| 10.6† | First Letter Amendment to Secured Credit Facility, dated August 15, 2011, among Deutsche Bank AG New York Branch, as Administrative Agent and Summit Hotel OP, LP                                             |
| 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.                                        |
| 101.INS     | XBRL Instance Document (1)                                                                                                                                                                                    |
| 101.SCH     | XBRL Taxonomy Extension Schema Document(1)                                                                                                                                                               |
| 101.CAL     | XBRL Taxonomy Extension Calculation Linkbase Document(1)                                                                                                                                                 |
| 101.DEF     | XBRL Taxonomy Extension Definition Linkbase Document(1)                                                                                                                                                  |
| 101.LAB     | XBRL Taxonomy Extension Labels Linkbase Document(1)                                                                                                                                                      |
| 101.PRE     | XBRL Taxonomy Presentation Linkbase Document(1)                                                                                                                                                          |

----

----

|   |            | SUMMIT HOTEL PROPERTIES, INC. (registrant) |
|--------|-----------------|--------------------------------------------|
|   |            |                                       |   |
| Date:  | August 15, 2011 | By:                                        | /s/ Stuart J. Becker |
|   |            |                                       | Stuart J. Becker |
|   |            |                                       | Chief Financial Officer |
|   |            |                                       |   |
|   |            | SUMMIT HOTEL OP, LP (registrant)           |
|   |            |                                       |   |
|   |            | By:                                        | Summit Hotel GP, LLC, its general partner |
|   |            |                                       |   |
|   |            | By:                                        | Summit Hotel Properties, Inc., its sole member |
|   |            |                                       |   |
| Date:  | August 15, 2011 | By:                                        | /s/ Stuart J. Becker |
|   |            |                                       | Stuart J. Becker |
|   |            |                                       | Chief Financial Officer |
|   |            |                                       |   |
|   |            |                                       |   |

----

| ExhibitNumber |  Description of Exhibit                                                                                                                                                                                                                                                         |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |                                                                                                                                                                                                                                                                                 |
| 10.1          | Accession Agreement, dated May 13, 2011, among Summit Hotel OP, LP, Deutsche Bank AG New York Branch, and U.S. Bank National Association (incorporated herein by reference to Exhibit 10.17 to Quarterly Report on Form 10-Q filed by Summit Hotel Properties, Inc. on May 16, 2011) |
| 10.2†   | First Amendment to Amended and Restated Hotel Management Agreement, dated June 30, 2011, among Interstate Management Company, LLC and the subsidiaries of the Company party thereto                                                                                                  |
| 10.3†   | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.3 million)                                                                                                   |
| 10.4†   | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP and GE Commercial Capital of Utah LLC (loan in the original principal amount of $9.5 million)                                                                                                    |
| 10.5†   | Second Loan Modification Agreement, dated August 12, 2011 among Summit Hotel OP, LP, Summit Hospitality V, LLC and GE Commercial Capital of Utah LLC (loan in the original principal amount of $11.4 million)                                                                        |
| 10.6†   | First Letter Amendment to Secured Credit Facility, dated August 15, 2011, among Deutsche Bank AG New York Branch, as Administrative Agent and Summit Hotel OP, LP                                                                                                                    |
| 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.                                                                                                               |
| 101.INS       | XBRL Instance Document (1)                                                                                                                                                                                                                                                      |
| 101.SCH       | XBRL Taxonomy Extension Schema Document(1)                                                                                                                                                                                                                                      |
| 101.CAL       | XBRL Taxonomy Extension Calculation Linkbase Document(1)                                                                                                                                                                                                                        |
| 101.DEF       | XBRL Taxonomy Extension Definition Linkbase Document(1)                                                                                                                                                                                                                         |
| 101.LAB       | XBRL Taxonomy Extension Labels Linkbase Document(1)                                                                                                                                                                                                                             |
| 101.PRE       | XBRL Taxonomy Presentation Linkbase Document(1)                                                                                                                                                                                                                                 |

----