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Debt

9 Months Ended

Sep. 30, 2013

Note 8. Debt

The following table presents the non-recourse debt on our Consolidated Hotel investments (in thousands):


					Carrying Amount at
Consolidated Hotels	Interest Rate		Rate Type	Current Maturity Date	September 30, 2013		December 31, 2012
Hampton Inn Boston Braintree^{(a) (b)}		5.00%^(c)	Variable	5/2015	$	9,703	$	8,487
Lake Arrowhead Resort and Spa		4.34%	Fixed	7/2015		17,843		17,775
Courtyard Pittsburgh Shadyside^{(a) (d)}		4.09%^(c)	Variable	3/2017		19,975		-
Courtyard San Diego Mission Valley^(a)		4.60%^(c)	Variable	12/2017		51,500		51,500
Hilton Southeast Portfolio:
Hampton Inn Memphis Beale Street		4.07%	Fixed	3/2018		22,248		-
Hampton Inn Atlanta Downtown		4.12%	Fixed	3/2018		13,600		-
Hampton Inn Birmingham Colonnade		4.12%	Fixed	3/2018		9,400		-
Hampton Inn Frisco Legacy Park		4.12%	Fixed	3/2018		9,200		-
Hilton Garden Inn Baton Rouge Airport		4.12%	Fixed	3/2018		9,800		-
Fairmont Sonoma Mission Inn & Spa		4.13%^(c)	Variable	7/2018		44,000		-
Hilton Garden Inn New Orleans French Quarter/CBD		5.30%	Fixed	7/2019		10,978		11,000
Hutton Hotel Nashville		5.25%	Fixed	7/2020		44,000		-
Holiday Inn Manhattan 6^th Avenue Chelsea		4.49%	Fixed	6/2023		80,000		-
Marriott Raleigh City Center^(e)		4.61%	Fixed	9/2038		51,500		-
					$	393,747	$	88,762

__________

The mortgage loans secured by Hampton Inn Boston Braintree and Courtyard San Diego Mission Valley each have two, one-year extension options. The mortgage loan secured by Courtyard Pittsburgh Shadyside has a one-year extension option. All of the extensions are subject to certain conditions. The maturity dates in the table do not reflect extension options.
Total mortgage commitment is up to $9.8 million, with the difference between the commitment and the carrying amount available for renovation draws.
These mortgage loans have variable interest rates, which have been converted to effective fixed rates through the use of interest rate swaps (Note 7). The interest rates presented for these mortgage loans reflect interest rate swaps (Note 7) in effect at September 30, 2013.
Total mortgage commitment is up to $21.0 million, with the difference between the commitment and the carrying amount available for renovation draws.
The mortgage loan includes a call option by the lender with the earliest repayment date being September 1, 2018.

2013 Activity

See Note 4 for additional detail about our 2013 acquisitions. We amortize deferred financing costs over the term of the related mortgage loan using the straight-line method, which approximates the effective interest method.

Hilton Southeast Portfolio

We acquired the five hotels in the Hilton Southeast Portfolio through five wholly-owned subsidiaries and obtained five individual mortgage loans totaling $64.5 million, in the aggregate. The loans are each non-recourse, with annual interest rates fixed at approximately 4.1%, and do not contain cross-default provisions. All five loans mature on March 1, 2018. We capitalized $0.9 million of deferred financing costs related to these loans.

Courtyard Pittsburgh Shadyside

We acquired the Courtyard Pittsburgh Shadyside hotel through a wholly-owned subsidiary and obtained a non-recourse mortgage loan of up to $21.0 million, of which $19.1 million was funded at closing; the remaining $1.9 million will be available through renovation draws. As of September 30, 2013, $0.9 million had been drawn. The terms of the mortgage loan require monthly interest-only payments for 24 months, at which point the loan will amortize over a 25-year period with monthly interest and quarterly principal payments. The loan has an initial term of four years with a one-year extension option. The stated interest rate of one-month LIBOR with a floor of 0.5% plus 3.25% has effectively been fixed at approximately 4.1% through an interest rate swap agreement, maturing March 12, 2017. We capitalized $0.2 million of deferred financing costs related to this loan.

Hutton Hotel Nashville

In connection with our acquisition of the Hutton Hotel Nashville, we obtained a non-recourse mortgage loan of $44.0 million through a wholly-owned subsidiary. The terms of the mortgage loan require monthly interest-only payments for 36 months, at which point the loan will amortize over a 30-year period with monthly principal and interest payments. The interest rate is fixed at 5.25% and the loan matures on July 1, 2020. We capitalized $0.3 million of deferred financing costs related to this loan.

Holiday Inn Manhattan 6th Avenue Chelsea

We acquired the Holiday Inn Manhattan 6th Avenue Chelsea through a wholly-owned subsidiary and obtained a non-recourse mortgage loan of $80.0 million. The terms of the mortgage loan require monthly interest-only payments for 24 months, at which point the loan will amortize over a 30-year period with monthly principal and interest payments. The interest rate is fixed at 4.49% and the loan matures on June 6, 2023. We capitalized $1.1 million of deferred financing costs related to this loan.

Fairmont Sonoma Mission Inn & Spa

We acquired the Fairmont Sonoma Mission Inn & Spa through a wholly-owned subsidiary and obtained a non-recourse mortgage loan of $44.0 million. The terms of the mortgage loan require monthly interest-only payments for 36 months, at which point the loan will amortize over a 40-year period with monthly interest and quarterly principal payments. The stated interest rate of one-month LIBOR plus 2.5% has effectively been fixed at approximately 4.1% through an interest rate swap agreement, maturing on July 10, 2018, which is the maturity date of the loan. We capitalized $0.5 million of deferred financing costs related to this loan.

Marriott Raleigh City Center

We acquired the Marriott Raleigh City Center through a wholly-owned subsidiary and obtained a non-recourse mortgage loan of $51.5 million. The interest rate is fixed at 4.61% and the loan matures on September 1, 2038. The loan includes a call option by the lender, with the earliest such repayment date being September 1, 2018. We capitalized $0.4 million of deferred financing costs related to this loan.

Covenants

Pursuant to our mortgage loan agreements, we and our wholly-owned subsidiaries are subject to various operational and financial covenants. At September 30, 2013, we were in compliance with the applicable covenants for each of our mortgage loans.

Scheduled Debt Principal Payments

Scheduled debt principal payments for our Consolidated Hotels for the remainder of 2013, each of the next four calendar years following December 31, 2013, and thereafter are as follows (in thousands):


Years Ending December 31,		Total
2013 (remainder)		$	217
2014			2,670
2015^(a)			31,142
2016			4,961
2017			71,756
Thereafter through 2023			283,159
			393,905
Unamortized discount^(b)			(158)
	Total	$	393,747

_________

Includes $18.0 million due on the Lake Arrowhead Resort and Spa mortgage loan in June 2015 and $9.5 million due on the Hampton Inn Boston Braintree mortgage loan in May 2015.
Represents the fair market value adjustment recorded as of September 30, 2013 in connection with the assumption of the Lake Arrowhead Resort and Spa mortgage loan as part of the acquisition.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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