Net Unamortized Deferred Financing Costs associated with entering into mortgage indebtedness are deferred and amortized over the life of the mortgages. Net Unamortized Premiums are also amortized over the remaining life of the loans. Mortgage indebtedness balances are subject to fixed and variable interest rates, which ranged from 2.15% to 6.30% as of September 30, 2020.

Our mortgage indebtedness contains various financial and non-financial covenants customarily found in secured, non-recourse financing arrangements. Our mortgage loans payable typically require that specified debt service coverage ratios be maintained with respect to the financed properties before we can exercise certain rights under the loan agreements relating to such properties. If the specified criteria are not satisfied, the lender may be able to escrow cash flow generated by the property securing the applicable mortgage loan. We have determined that all debt covenants contained in the loan agreements securing our consolidated hotel properties with the exception of three mortgage were met as of September 30, 2020. See the Liquidity Section of Note 1 for further discussion of these covenant violations.

We have two junior subordinated notes payable in the aggregate amount of $51,548 to the Hersha Statutory Trusts pursuant to indenture agreements which will mature on July 30, 2035, but may be redeemed at our option, in whole or in part, prior to maturity in accordance with the provisions of the indenture agreements. The $25,774 of notes issued to each of Hersha Statutory Trust I and Hersha Statutory Trust II bear interest at a variable rate of LIBOR plus 3% per annum. This rate resets 2 business days prior to each quarterly payment. The face value of the notes payable is offset by $772 and $812 as of September 30, 2020 and December 31, 2019, respectively, in net deferred financing costs incurred as a result of entering into these indentures. The deferred financing costs are amortized over the life of the notes payable. The weighted average interest rate on our two junior subordinated notes payable was 3.42% and 5.37%, and 4.11% and 5.56%, during the three and nine months ended September 30, 2020 and 2019, respectively.

We maintain three credit agreements which aggregate to $950,900 with Citigroup Global Markets Inc., Wells Fargo Bank, Inc. and various other lenders. Our credit agreement (the "Credit Agreement") provides for a $457,000 senior credit facility (“Credit Facility”). The Credit Facility consists of a $250,000 senior revolving line of credit (“Line of Credit”) and a $207,000 senior term loan ("First Term Loan"). The Credit Facility expires on August 10, 2022, and, provided no event of default has occurred, we may request that the lenders renew the Credit Facility for an additional one-year period. The Credit Facility is also expandable to $857,000 at our request, subject to the satisfaction of certain conditions.

A separate credit agreement provides for a $193,900 senior term loan agreement (“Third Term Loan” and collectively with the Credit Agreement and the Second Term Loan, the "Credit Agreements") and expires on August 2, 2021.

On April 2, 2020, the Company signed amendments to the Credit Agreements, which, among other things, changed each borrowing facility under the agreements from unsecured to secured. Additionally, the Company received $100,000 in available funds on its Line of Credit, of which $25,000 was drawn during April 2020. Since the amendment, the Company has drawn a total of $45,000 through September 30, 2020.

The amount that we can borrow at any given time under our Line of Credit, and the individual term loans (each a “Term Loan” and together the “Term Loans”) is governed by certain operating metrics of designated hotel properties known as borrowing base assets. As of September 30, 2020, the following hotel properties secured the amended facilities under the Credit Agreements:


- Courtyard, Brookline, MA			- Mystic Marriott Hotel & Spa, Groton, CT
- Holiday Inn Express, Cambridge, MA			- Hampton Inn, Washington, DC
- Envoy Hotel, Boston, MA			- Ritz Carlton, Washington, DC
- The Boxer, Boston, MA			- Hilton Garden Inn, M Street, Washington, DC
- Hampton Inn, Seaport, NY			- Residence Inn, Coconut Grove, FL
- The Duane Street Hotel, NY			- The Winter Haven, Miami, FL
- NU Hotel, Brooklyn, NY			- The Blue Moon, Miami, FL
- Holiday Inn Express, 29th Street, NY			- The Cadillac Hotel and Beach Club, Miami, FL
- The Gate JFK Airport, New York, NY			- The Parrot Key Hotel & Resort, Key West, FL
- Hilton Garden Inn, JFK Airport, New York, NY			- TownePlace Suites, Sunnyvale, CA
- Hyatt House White Plains, NY			- The Ambrose Hotel, Santa Monica, CA
- Sheraton, Wilmington South, DE			- Courtyard, San Diego, CA
- Hampton Inn, Philadelphia, PA			- The Pan Pacific Hotel, Seattle, WA
- The Rittenhouse, Philadelphia, PA			- The Westin, Philadelphia, PA

The interest rate for borrowings under the Line of Credit and Term Loans are based on a pricing grid with a range of one month U.S. LIBOR plus a spread. The following table summarizes the balances outstanding and interest rate spread for each borrowing:


		Outstanding Balance
Borrowing	Spread	September 30, 2020		December 31, 2019
Line of Credit	1.50% to 2.25%	$	115,000	$	48,000
Term Loan:
First Term Loan	1.45% to 2.20%	$	207,000	$	207,000
Second Term Loan	1.35% to 2.00%	300,000		300,000
Third Term Loan	1.45% to 2.20%	193,900		193,900
Deferred Loan Costs		(3,064)		(3,717)
Total Term Loan		$	697,836	$	697,183

The Company received a waiver of covenants within our Credit Agreements through March 31, 2021 in connection with the April 2, 2020 amendment to the Credit Agreement. Upon expiration of the covenant waiver in March 2021, the following covenant requirements will again become effective. The Credit Agreements include certain financial covenants and require that we maintain: (1) a minimum tangible net worth (calculated as total assets, plus accumulated depreciation, less total liabilities, intangibles and other defined adjustments) of $1,119,500, plus an amount equal to 75% of the net cash proceeds of all issuances and primary sales of equity interests of the parent guarantor or any of its subsidiaries consummated following the closing date; (2) annual distributions not to exceed 95% of adjusted funds from operations; and (3) certain financial ratios, including the following:

The weighted average interest rate, inclusive of the effect of derivative instruments, on the Credit Facility and Term Loans was 4.03% and 4.02%, and 4.15% and 4.11%, for the three and nine months ended September 30, 2020 and 2019, respectively.

As noted above, costs associated with entering into mortgages, notes payable and our Credit Agreements are deferred and amortized over the life of the debt instruments. The deferred costs related to mortgages and term loans and unsecured notes payable are presented as reductions in the respective debt balances.


	Three Months Ended September 30,					Nine Months Ended September 30,
	2020		2019			2020		2019
Mortgage Loans Payable	$	2,846	$	3,994		$	9,362	$	12,061
Interest Rate Swap Contracts on Mortgages	604		(207)		*	1,189		(404)		*
Unsecured Notes Payable	451		707			1,611		2,173
Credit Facility and Term Loans	4,736		8,517			17,139		26,057
Interest Rate Swap Contracts on Credit Facility and Term Loans	3,543		(804)		*	7,762		(2,899)		*
Deferred Financing Costs Amortization	1,104		547			2,299		1,681
Other	66		181			476		489
Total Interest Expense	$	13,350	$	12,935		$	39,838	$	39,158

On April 2, 2020, we amended our Credit Agreements, which covered the Credit Facility and borrowing base of assets on the Line of Credit, to access an additional $100,000. With these amendments, we received waivers on all financial covenants through March 31, 2021. The proceeds from the borrowings drawn will be used to fund the operating expenses of the business. See "Liquidity, Capital Resources and Equity Offerings".