Notes Payable

3 Months Ended

Mar. 31, 2020

Notes Payable

Notes Payable

6. Notes Payable

Notes payable consisted of the following (in thousands):

	March 31,		December 31,
	2020		2019
	(unaudited)
Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 5.95%; maturing at dates ranging from November 2020 through January 2025. The notes are collateralized by first deeds of trust on four hotel properties at both March 31, 2020 and December 31, 2019.	$	327,965	$	329,863
Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points; initial maturity in December 2020 with three one-year extensions, which the Company intends to exercise. The note is collateralized by a first deed of trust on one hotel property.		220,000		220,000
Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR, depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.591%, resulting in an effective interest rate of 2.941%. Matures in September 2022.		85,000		85,000
Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR, depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.853%, resulting in an effective interest rate of 3.203%. Matures in January 2023.		100,000		100,000
Unsecured credit facility requiring payments of interest only, bearing a blended rate based on a pricing grid with a range of 140 to 225 basis points over one-month LIBOR, depending on the Company's leverage ratios. Matures in April 2023. The interests of 14 hotel subsidiaries are pledged to the credit facility.		300,000		—
Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.69%; maturing in January 2026.		120,000		120,000
Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.79%; maturing in January 2028.		120,000		120,000
Total notes payable	$	1,272,965	$	974,863
Current portion of notes payable	$	83,724	$	83,975
Less: current portion of deferred financing costs		(1,535)		(1,866)
Carrying value of current portion of notes payable	$	82,189	$	82,109
Notes payable, less current portion	$	1,189,241	$	890,888
Less: long-term portion of deferred financing costs		(1,773)		(1,934)
Carrying value of notes payable, less current portion	$	1,187,468	$	888,954

In March 2020, the Company drew $300.0 million under the revolving portion of its amended credit agreement as a precautionary measure to increase the Company’s cash position and preserve financial flexibility. Pursuant to the terms of the amended credit agreement, interest is based upon one-month LIBOR plus an applicable margin determined by the Company’s ratio of net indebtedness to EBITDA. At the time of the borrowing, the applicable margin was 1.40%, resulting in an effective rate of 2.32%. The revolving portion of the amended credit agreement matures in April 2023, but may be extended for two six-month periods to April 2024, upon the payment of applicable fees and satisfaction of certain customary conditions.

Following such borrowing, the Company has $200.0 million of capacity available for additional borrowing under the revolving portion of its amended credit agreement. In addition, the Company has the right to increase the revolving portion of the amended credit agreement, or to add term loans, in an amount up to $115.0 million, subject in each case, to a lender’s willingness to provide such increase or such term loans.

As of March 31, 2020, the Company was in compliance with all of its debt covenants (see Note 12).

Interest Expense

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

	Three Months Ended March 31,
	2020		2019
Interest expense on debt and finance lease obligations	$	10,728	$	11,509
Noncash interest on derivatives and finance lease obligations, net		6,080		2,119
Amortization of deferred financing costs		699		698
Total interest expense	$	17,507	$	14,326