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DEBT
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
DEBT DEBT
Mortgages
Mortgages payable at September 30, 2023 and December 31, 2022 consisted of the following:
September 30, 2023December 31, 2022
Mortgage Indebtedness$184,952 $208,880 
Net Unamortized Premium2 7 
Net Unamortized Deferred Financing Costs(224)(533)
Mortgages Payable$184,730 $208,354 

On May 1, 2023, we repaid in full the outstanding mortgage debt of $23,000 secured by the St. Gregory hotel, D.C., and incurred debt extinguishment expense of $52.

On June 7, 2023 we refinanced the outstanding mortgage debt with an original principal balance of $56,000 secured by the Hyatt Union Square, New York, NY, which extended the maturity date to June 7, 2024. Contemporaneous with the mortgage refinance, we entered into an interest rate swap that matures June 7, 2024 that fixes the interest rate at 7.39% until maturity.

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 4.02% to 8.09% as of September 30, 2023.

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, or require an additional principal payment to achieve the desired threshold. We have determined that all debt covenants contained in the loan agreements securing our consolidated hotel properties were met as of September 30, 2023.

As of September 30, 2023, the maturity dates for the outstanding mortgage loans ranged from December 2023 to July 2024. For mortgages with maturity dates within the next twelve months, we plan to refinance each mortgage before their maturities, or use available cash on hand or capacity under our revolving line of credit to pay the obligation.

Credit Facilities

On August 4, 2022, we entered into a credit agreement (the "Credit Agreement"), which provided for a secured term loan of $400,000 and secured revolving line of credit with capacity of $100,000, both of which mature on August 4, 2024. Borrowings under the Credit Agreement bear interest at a rate of Term Secured Overnight Financing Rate ("SOFR") plus a 250 basis point spread. The following table summarizes the secured term loan balances outstanding as of September 30, 2023 and December 31, 2022:

Outstanding Balance
September 30, 2023December 31, 2022
Principal$347,853 $372,853 
Deferred Loan Costs(1,167)(2,217)
Total Secured Term Loan$346,686 $370,636 

Immediately upon entering into the Credit Agreement, proceeds from the $400,000 new term loan, along with a portion of the proceeds from the dispositions discussed in Note 3 – Investment in Hotel Properties, were used to pay off and terminate
all borrowings under our previous credit facility agreement ("the Prior Facilities"), which consisted of three secured credit arrangements which had an aggregate principal balance of $497,481.

The Credit Agreement contains financial covenants, including a fixed charge coverage ratio of not less than 1.50 to 1.00; and a maximum leverage ratio of not more than 60%. We have determined that we are in compliance with all covenants contained in the Credit Agreement as of September 30, 2023.

The amount that we can borrow at any given time under the Credit Agreement is governed by certain operating metrics of designated hotel properties known as borrowing base assets. As of September 30, 2023, the following hotel properties secure the Credit Agreement: 
 - The Envoy Boston Seaport, Boston, MA  - Ritz-Carlton Georgetown, Washington, DC
 - The Boxer, Boston, MA - The Winter Haven Hotel Miami Beach, Miami, FL
 - Hampton Inn Seaport, Seaport, New York, NY - The Blue Moon Hotel Miami Beach, Miami, FL
 - Holiday Inn Express Chelsea, 29th Street, New York, NY - Cadillac Hotel & Beach Club, Miami, FL
 - NU Hotel, Brooklyn, New York, NY - The Parrot Key Hotel & Villas, Key West, FL
 - Hyatt House White Plains, White Plains, NY - The Ambrose Hotel, Santa Monica, CA
 - The Rittenhouse, Philadelphia, PA - Mystic Marriott Hotel & Spa, Groton, CT
 - Philadelphia Westin, Philadelphia, PA - Hilton Garden Inn JFK Airport, New York, NY




The weighted average interest rate on our credit facilities, including our Prior Facilities and including the effect of derivative instruments, was 4.42% and 3.90%, 4.46% and 3.47% for the three and nine months ended September 30, 2023 and 2022, respectively.

Notes Payable

Notes payable at September 30, 2023 and December 31, 2022 consisted of the following:

September 30, 2023December 31, 2022
Statutory Trust I and Statutory Trust II Notes Payable Indebtedness$51,548 $51,548 
Net Unamortized Deferred Financing Costs(613)(653)
Statutory Trust I and Statutory Trust II Notes Payable$50,935 $50,895 

We have two junior subordinated notes payable in the aggregate amount of $51,548 related 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 3.00% per annum, or SOFR plus 3% plus the spread adjustment of 0.26% after June 30, 2023. This rate resets 2 business days prior to each quarterly payment. The related 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 8.52% and 5.25%, and 8.14% and 4.16% for the three and nine months ended September 30, 2023 and 2022, respectively.
Interest Expense

The table below summarizes interest expense incurred by the Company during the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,
Nine Months Ended September 30,
2023
2022
2023
2022
Mortgage Loans Payable$3,683 $3,503 $11,192 $8,980 
Interest Rate Swap Contracts on Mortgages(480)(184)(1,850)739 
Unsecured Notes Payable1,123 2,222 3,192 11,217 
Credit Facility and Term Loans6,973 5,455 20,520 13,611 
Interest Rate Swap Contracts on Credit Facilities(3,044)(675)(8,388)1,378 
Deferred Financing Costs Amortization652 896 2,012 3,322 
Other93 116 276 353 
     Total Interest Expense$9,000 $11,333 $26,954 $39,600