Debt

Senior Unsecured Revolving Credit Facility

The Company is party to a $200.0 million senior unsecured revolving credit facility. The credit facility matures on June 3, 2014, and the Company has a one-year extension option. The Company has the ability to increase the credit facility borrowings up to $400.0 million with lender approval. Borrowings on the credit facility bear interest at LIBOR plus 2.5% to 3.5%, depending on the Company’s leverage ratio. Additionally, the Company is required to pay an unused commitment fee at an annual rate of 0.35% or 0.50% of the unused portion of the senior credit facility, depending on the amount of borrowings outstanding. The credit facility contains certain financial covenants including a maximum leverage ratio, a maximum debt service coverage ratio, a minimum fixed charge coverage ratio, and minimum net worth. As of March 31, 2012 and December 31, 2011, the Company had no outstanding borrowings under the credit facility. As of March 31, 2012, the Company was in compliance with the credit facility debt covenants. For both quarters ended March 31, 2012 and 2011, the Company incurred unused commitment fees of $0.2 million.

Mortgage Debt

Each of the Company’s mortgage loans is secured by a first mortgage lien or by leasehold interests under the ground lease on the underlying property. The mortgages are non-recourse to the Company except for fraud or misapplication of funds.

On January 11, 2012, the Company obtained a $46.0 million first mortgage loan secured by the Company's leasehold interest under the ground lease on the Monaco Washington DC hotel. A portion of the proceeds from this loan was used to repay the existing $35.0 million mortgage on this property. The loan has a term of five years, bears interest at 4.36% and requires monthly principal and interest payments of $0.2 million.

On January 11, 2012, the Company repaid the $42.0 million loan on the Argonaut hotel with cash on hand and borrowings from the Company's senior unsecured revolving credit facility. On February 15, 2012, the Company obtained a $47.0 million first-mortgage loan secured by the Company's leasehold interest under the ground lease on the Argonaut hotel. The loan has a term of five years, bears interest at 4.25% and requires monthly principal and interest payments of $0.3 million.

On February 1, 2012, the Company repaid the $56.1 million first mortgage loan on the Sofitel Philadelphia hotel.

Mortgage debt as of March 31, 2012 and December 31, 2011 consisted of the following (in thousands):



					Balance Outstanding as of
	Interest Rate			Maturity Date	March 31, 2012		December 31, 2011
Sofitel Philadelphia	Floating		⁽¹⁾	February 2012	$	—	$	56,070
InterContinental Buckhead	4.88	%		January 2016	51,609		51,805
Skamania Lodge	5.44	%		February 2016	30,561		30,664
DoubleTree by Hilton Bethesda-Washington DC	5.28	%		February 2016	35,954		36,000
Monaco Washington DC	4.36	%		February 2017	45,938		35,000
Argonaut Hotel	4.25	%		March 2017	47,000		42,000
					$	211,062	$	251,539


⁽¹⁾	Mortgage debt interest rate is LIBOR plus 1.3%. The interest rate as of December 31, 2011 was 1.57%.

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates, taking into consideration general market conditions and maturity of the debt with similar credit terms and is classified within level 2 of the fair value hierarchy. The estimated fair value of the Company’s debt as of March 31, 2012 and December 31, 2011 was $212.0 million and $251.2 million, respectively.

The Company was in compliance with all debt covenants as of March 31, 2012.