7. Notes Payable

Notes payable consisted of the following at December 31 (in thousands):


	2014		2013
Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% and 5.95% at December 31, 2014, and 4.4% and 6.6% at December 31, 2013; maturing at dates ranging from May 2015 through January 2025. The notes are collateralized by first deeds of trust on 14 hotel properties at both December 31, 2014 and 2013.	$	1,023,780	$	993,164
Note payable requiring payments of interest and principal, bearing a blended rate of one-month LIBOR plus 225 basis points at December 31, 2014, and three-month LIBOR plus 325 basis points at December 31, 2013; maturing in August 2019. The note is collateralized by a first deed of trust on one hotel property.		228,296		231,451
Note payable requiring payments of interest only through October 2013, and interest and principal thereafter, with a blended interest rate of one-month LIBOR plus 325 basis points; maturing in October 2018. The note is collateralized by a first deed of trust on one hotel property.		177,216		179,460
Total notes payable		1,429,292		1,404,075
Less: current portion		(121,328)		(23,289)
Notes payable, less current portion	$	1,307,964	$	1,380,786

Notes Payable Transactions – 2014

In August 2014, the Company amended the mortgage secured by the Hilton San Diego Bayfront, which mortgage originally included the syndication of four lenders. In conjunction with the amendment and in accordance with the Debt Topic of the FASB ASC, the Company analyzed each of the four lenders to determine if their participation in the refinancing should be accounted for as a modification or as an extinguishment of their portion of the original loan. As a result of the Company’s assessments, three of the lenders’ participations were deemed to be modifications of the original loan, and the applicable amounts of unamortized deferred financing fees continue to be capitalized and amortized over the term of the refinanced debt. In conjunction with the amendment, the Company paid additional deferred financing fees of $1.3 million to these three lenders, which are also amortized over the term of the refinanced debt. During 2014, the Company paid $0.1 million in loan fees to third parties related to the modifications, which were recorded in the Company’s results of operations as a component of interest expense. The portion of the loan related to the lender who chose not to participate in the refinancing was determined to be an extinguishment of the original loan, and as a result, $0.5 million of the unamortized balance of the applicable deferred financing fees were expensed during 2014, and recorded in the Company’s results of operations as loss on extinguishment of debt. In addition, the Company paid the lender $25,000 in costs associated with the extinguishment of debt, which is also included in the Company’s results of operations as loss on extinguishment of debt. The amended loan extends the loan’s maturity from April 2016 to August 2019, and reduces the loan’s interest rate from three-month LIBOR plus 325 basis points to one-month LIBOR plus 225 basis points.

In December 2014, the Company repaid the $38.9 million mortgage secured by the JW Marriott New Orleans, using proceeds received from a new $90.0 million mortgage secured by the JW Marriott New Orleans. The new loan extends the maturity date from September 2015 to December 2024. The new loan is subject to a 30-year amortization schedule, and reduces the interest rate from 5.45% under a related interest rate swap agreement to a fixed rate of 4.15%. In conjunction with its repayment of the original mortgage, the Company wrote off $39,000 of unamortized deferred financing fees, which are included in loss on extinguishment of debt in the Company’s consolidated statements of operations, and paid a fee of $0.6 million to terminate the related interest rate swap agreement. In addition, the Company paid deferred financing fees of $0.6 million related to the new loan, which are amortized over the term of the new loan.

Also in December 2014, the Company extinguished the $67.1 million mortgage secured by the Embassy Suites La Jolla for a total cost of $71.1 million, and recorded a loss on extinguishment of debt of $4.0 million. The extinguishment was funded using proceeds received from a new $65.0 million mortgage secured by the Embassy Suites La Jolla, along with cash on hand. The new loan is subject to a 30-year amortization schedule, reduces the interest rate from a fixed rate of 6.6% to a fixed rate of 4.12%, and extends the maturity date from June 2019 to January 2025. In conjunction with its repayment of the original mortgage, the Company wrote off $43,000 of unamortized deferred financing fees, which are included in loss on extinguishment of debt in the Company’s consolidated statements of operations. In addition, the Company paid deferred financing fees of $0.4 million related to the new loan, which are amortized over the term of the new loan.

As of December 31, 2014, the Company has $150.0 million available for use under its senior unsecured revolving credit facility. An accordion option under the credit facility allows the Company to request additional lender commitments of up to $350.0 million. The credit facility’s interest rate is based on a pricing grid with a range of 175 to 350 basis points, depending on the Company’s leverage ratio, and it matures in November 2015 with an option to extend to November 2016.

Notes Payable Transactions – 2013

In January 2013, the Company repurchased $42.0 million of the Senior Notes, and redeemed the remaining $16.0 million of the Senior Notes. The Company funded the total $58.0 million in Senior Note repurchases and redemptions with available cash, leaving no future amounts outstanding related to the Senior Notes.

Concurrent with the Rochester Portfolio sale in January 2013, the Company extinguished the outstanding $26.7 million mortgage secured by the Kahler Grand for a total cost of $29.8 million, prepaid the $0.4 million loan secured by the commercial laundry facility, and recorded a loss on extinguishment of debt of $3.1 million which is included in discontinued operations.

In conjunction with the Company’s acquisition of the Boston Park Plaza in July 2013, the Company assumed a $119.2 million non-recourse mortgage secured by the hotel. The mortgage bears interest at a fixed rate of 4.4%, and matures in February 2018.

Total interest incurred and expensed on the notes payable is as follows (in thousands):


	2014		2013		2012
Interest expense on debt and capital lease obligations	$	70,067	$	69,806	$	71,664
(Gain) loss on derivatives, net		(529)		(525)		406
Accretion of Senior Notes		—		3		1,058
Amortization of deferred financing fees		2,777		2,955		3,690
Write-off of deferred financing fees		—		—		3
	$	72,315	$	72,239	$	76,821

Aggregate future principal maturities and amortization of notes payable at December 31, 2014, are as follows (in thousands):


2015	$	121,328
2016		205,802
2017		257,405
2018		290,852
2019		223,880
Thereafter		330,025
Total	$	1,429,292