Note 1 1 - Commitments and Contingencies Litigation In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company at the date of this filing, other than as set forth below. A special litigation committee (the SLC) of the Companys board of directors (the Board) has been empowered to investigate claims asserted in shareholder demand letters sent to the Board by counsel for two of the Companys stockholders, Tom Milliken and Stuart Wollman, as well as the allegations contained in a complaint filed by Mr. Milliken on behalf of the Company and against the Company, as well as the Company's former external advisor, American Realty Capital Hospitality Advisors, LLC (the "Former Advisor"), and various affiliates of the Former Advisor, including the Companys former property managers (together, the Former Advisor Defendants), and certain current and former directors and officers of the Company (the Director and Officer Defendants). The complaint was filed in the United States District Court for the Southern District of New York on February 26, 2018 and amended on May 25, 2018 ( the Milliken Court Action). The amended complaint alleges, among other things, that the Former Advisor and the Director and Officer Defendants breached their fiduciary duties to the Company by putting their own interests above the Companys interests, which breach was aided and abetted by certain of the Former Advisor Defendants. The amended complaint also asserts a claim for corporate waste against the Former Advisor and Director and Officer Defendants, which was aided and abetted by certain of the Former Advisor Defendants, breach of contract against the Director and Officer Defendants, and unjust enrichment against certain of the Director and Officer Defendants and Former Advisor Defendants. In May 2018, the Company filed a motion to stay the complaint pending the outcome of the investigation, and, in August 2018, the District Court granted the Companys motion. The SLC, which is represented by independent counsel, completed its investigation of the claims contained in the demand letters and the Milliken Court Action, and, on October 11, 2019, the SLC submitted to the District Court its report with respect to its investigation (the Report). In November 2019, the District Court lifted the stay. The SLC also has been empowered to determine whether it is in the Companys best interest for the claims against the defendants in the Milliken Court Action to proceed. The Report includes the SLCs previously disclosed determination that some but not all of the claims should proceed. The Report also indicates that, as previously disclosed, the SLC has reached an agreement-in-principle with one of the Director and Officer Defendants, the Companys current Chief Executive Officer, Jonathan P. Mehlman, to resolve the claims against Mr. Mehlman with prejudice whereby he will pay back to the Company a portion of certain fees and stock he received. In the Report, the SLC concluded that: ( 1 ) the claims against the Companys current directors, Stanley Perla and Abby Wenzel, the Companys former director, Robert Burns, and the Companys former Chief Financial Officer, Edward Hoganson should be dismissed with prejudice, and it is not, therefore, in the best interest of the Company for any claims to proceed against them; and ( 2 ) it is in the best interest of the Company for certain claims to proceed against the remaining defendants. On December 27, 2019, following extensive settlement discussions, the Company, the Former Advisor Defendants and the Director and Officer Defendants reached an agreement-in-principle concerning the proposed settlement of the Milliken Court Action. The agreements-in-principle with Mr. Mehlman and the other defendants, subject to signing a definitive settlement agreement and receiving District Court approval, contemplated an aggregate cash payment to the Company of $15,181,108.47, which will primarily be paid by the Companys director and officer insurers, and the tendering by certain defendants of an aggregate of 83,504 shares of the Companys common stock to the Company. If finally approved by the District Court, the settlement will fully and completely release the claims of the Companys stockholders asserted in the stockholder derivation action, and the cash payment to the Company will be reduced by any District Court-approved attorneys fees and expenses to plaintiffs counsel and contribution award to plaintiff in recognition of the substantial benefit the plaintiff conferred on the Company in achieving the settlement. On January 29, 2020, two days before the District Court deadline for the filing of a stipulation comprising the settlement agreement among the Company and the various defendants in the Milliken Court Action reflecting the agreements-in-principle described above (the Stipulation of Settlement), Stuart Wollman filed a separate complaint with the District Court against the Company and all of the defendants in the Milliken Court Action except for certain of the Former Advisor Defendants and Mr. Hoganson (the Wollman Court Action), alleging common law fraud on behalf of himself and a putative class of the Companys stockholders related to their purchases of Companys common stock, and seeks rescission or compensatory damages, punitive damages, and attorneys fees and costs. The Wollman Court Action is based on facts that comprise part of the factual basis for and that gave rise to the Milliken Court Action, focusing in particular on disclosures related to the Companys property management agreements with certain of the Former Advisor Defendants. The Company and the other defendants named in the Wollman Court Action intend to seek an expedited judicial determination dismissing the Wollman Court Action with prejudice and other appropriate relief. On March 18, 2020, the Company and the other defendants named in the Wollman Court Action filed motions to dismiss the litigation with prejudice. On February 3, 2020, the Company and the defendants in the Milliken Court Action filed the Stipulation of Settlement with the District Court. Dismissal with prejudice of the Wollman Court Action is a condition precedent to the effectiveness of the settlement of the Milliken Court Action. On February 5, 2020, the District Court issued an order preliminarily approving the proposed settlement of the Milliken Court Action contemplated by the Stipulation of Settlement. On March 25, 2020, Stuart Wollman filed a motion to intervene in the Milliken Court Action and vacate the District Courts preliminary approval of the proposed settlement on the alleged basis that the settlement is impermissibly broad. On June 9, 2020, the District Court will hold a settlement hearing to determine whether the proposed settlement and plaintiffs counsels proposed fee application for an award of attorneys fees, reimbursement of expenses, and payment of a case contribution award in the aggregate of $2,250,000, which will serve to reduce the cash payments the Company would otherwise receive, are fair, reasonable and adequate, and should therefore be granted final approval. Any current stockholder of the Company may make an objection to the proposed settlement and/or proposed fee award and appear at the settlement hearing, at the stockholders own expense, individually or through counsel of the stockholders own choice. Although the Company believes that the Stipulation of Settlement represents a fair and reasonable compromise of the matters in dispute in the litigation, there can be no assurance the settlement will become effective on the proposed terms, or at all. The claims in the Milliken Court Action do not seek recovery of losses from or damages against the Company, but instead allege that the Company has sustained damages as a result of actions by the defendants. Further, the Company believes that the claims in the Wollman Court Action fail to allege any distinct injury separate from any harm suffered by the Company and constitute an improper attempt to convert derivative claims into direct or individual claims. Therefore, the Company has determined that no accrual of any potential liability was necessary as of December 31, 2019, other than for incurred out-of-pocket legal fees and expenses. Environmental Matters In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations. Contingent Forward Liability Until the Final Closing, the Company could have become obligated pursuant to the SPA with the Brookfield Investor to issue additional Class C Units. This obligation was considered a contingent forward contract under ASC section 480 - Distinguishing Liabilities from Equity, and the Company accounted for it as a liability. On February 27, 2019, the Company used the proceeds from the concurrent sale of Class C Units to the Brookfield Investor at the Final Closing to redeem the remaining $219.7 million in liquidation value of Grace Preferred Equity Interests, and the Brookfield Investor no longer has any obligations or rights to purchase additional Class C Units. The contingent forward liability was extinguished upon the Final Closing, and, accordingly, the Company will not have any such obligations in the future. At December 31, 2018 and 2017, the fair value of the contingent forward liability was zero and $1.4 million, respectively, and changes in fair value were recognized as income through current earnings.