Fair Value Measurements and Interest Rate Derivatives (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Measurements and Interest Rate Derivatives

Schedule of assets measured at fair value on a recurring and non-recurring basis

The following table presents the Company’s assets measured at fair value on a recurring and non-recurring basis at December 31, 2016 and 2015 (in thousands):

			Fair Value Measurements at Reporting Date
	Total		Level 1		Level 2		Level 3
December 31, 2016:
Interest rate cap derivative	$	—	$	—	$	—	$	—
Interest rate swap derivatives		1,749		—		1,749		—
Life insurance policy (1)		861		—		861		—
Total assets measured at fair value at December 31, 2016	$	2,610	$	—	$	2,610	$	—
December 31, 2015:
Interest rate cap derivative	$	1	$	—	$	1	$	—
Interest rate swap derivative		759				759
Life insurance policy (1)		964		—		964		—
Total assets measured at fair value at December 31, 2015	$	1,724	$	—	$	1,724	$	—

(1) Includes the split life insurance policy for a former Company associate. These amounts are included in other assets, net on the accompanying consolidated balance sheets, and will be used to reimburse the Company for payments made to the former associate from the related retirement benefit agreement, which is included in accrued payroll and employee benefits on the accompanying consolidated balance sheets.

Schedule of liabilities measured at fair value on a recurring and non-recurring basis

The following table presents the Company’s liabilities measured at fair value on a recurring and non-recurring basis at December 31, 2016 and 2015 (in thousands):

			Fair Value Measurements at Reporting Date
	Total		Level 1		Level 2		Level 3
December 31, 2016:
Retirement benefit agreement (1)	$	861	$	—	$	861	$	—
Total liabilities measured at fair value at December 31, 2016	$	861	$	—	$	861	$	—
December 31, 2015:
Interest rate swap derivative	$	437	$	—	$	437	$	—
Retirement benefit agreement (1)		964		—		964		—
Total liabilities measured at fair value at December 31, 2015	$	1,401	$	—	$	1,401	$	—

(1) Includes the retirement benefit agreement for a former Company associate. The agreement calls for the balance of the retirement benefit agreement to be paid out to the former associate in ten annual installments, beginning in 2011. As such, the Company has paid the former associate a total of $1.2 million through December 31, 2016, which was reimbursed to the Company using funds from the related split life insurance policy noted above. These amounts are included in accrued payroll and employee benefits in the accompanying consolidated balance sheets.

Schedule of interest rate derivatives

The Company’s interest rate derivatives consisted of the following at December 31, 2016 and 2015 (dollars in thousands):

									Estimated Fair Value                     Asset (Liability)
		Strike / Capped			Effective	Maturity	Notional		December 31,
Hedged Debt	Type	Rate		Index	Date	Date	Amount		2016		2015
Hilton San Diego Bayfront (1)	Cap	4.250	%	1-Month LIBOR	April 15, 2015	May 1, 2017	$	111,301	$	—	$	1
$85.0 million term loan (2)	Swap	3.391	%	1-Month LIBOR	October 29, 2015	September 2, 2022	$	85,000	$	1,336	$	759
$100.0 million term loan (3)	Swap	3.653	%	1-Month LIBOR	January 29, 2016	January 31, 2023	$	100,000	$	413	$	(437)
									$	1,749	$	323

(1) The fair value of the Hilton San Diego Bayfront cap agreement is included in other assets, net on the accompanying consolidated balance sheets as of both December 31, 2016 and 2015.

(2) The fair value of the $85.0 million term loan swap agreement is included in other assets, net on the accompanying consolidated balance sheets as of both December 31, 2016 and 2015. The 1-month LIBOR rate was swapped to a fixed rate of 1.591%.

(3) The fair value of the $100.0 million term loan swap agreement is included in other assets, net and other liabilities on the accompanying consolidated balance sheets as of December 31, 2016 and 2015, respectively. The 1-month LIBOR rate was swapped to a fixed rate of 1.853%.

Schedule of changes in fair value of interest rate derivatives

Changes in the fair values of the Company’s interest rate derivatives resulted in decreases to interest expense for the years ended December 31, 2016, 2015 and 2014 as follows (in thousands):

	2016		2015		2014
Gain on derivatives, net	$	(1,426)	$	(309)	$	(529)