Debt

The Company’s mortgage loans and its secured revolving credit facility are collateralized by first-mortgage liens on certain of the Company’s properties. The mortgages are non-recourse except for instances of fraud or misapplication of funds. Mortgage debt consisted of the following (in thousands):



Collateral	Interest Rate		Maturity Date	06/30/13 Property Carrying Value		Balance Outstanding as of
Collateral	Interest Rate		Maturity Date	06/30/13 Property Carrying Value		June 30, 2013		December 31, 2012
Senior Secured Revolving Credit Facility (6)	2.96	%	November 5, 2015	$	190,659	$	30,500	$	79,500
Courtyard by Marriott Altoona, PA	5.96	%	April 1, 2016	11,024		6,476		6,572
SpringHill Suites by Marriott Washington, PA	5.84	%	April 1, 2015	12,050		5,021		5,104
Residence Inn by Marriott New Rochelle, NY	5.75	%	September 1, 2021	20,481		15,301		15,450
Residence Inn by Marriott Garden Grove, CA	5.98	%	November 1, 2016	44,341		32,417		32,417
Residence Inn by Marriott San Diego, CA (3)	4.66	%	February 6, 2023	48,898		30,778		39,557
Homewood Suites by Hilton San Antonio, TX (1)	4.59	%	February 6, 2023	30,901		17,588		18,184
Washington Guest Suites (2)	6.03	%	(2)	—		—		19,752
Residence Inn by Marriott Vienna, VA (1)	4.49	%	February 6, 2023	34,409		24,112		22,710
Courtyard by Marriott Houston, TX (4)	4.18	%	May 6, 2023	34,369		19,974		—
Hyatt Place Pittsburgh, PA (5)	4.65	%	July 6, 2023	39,955		24,175		—
				$	467,087	$	206,342	$	239,246


(1)	On January 18, 2013, the Company refinanced the mortgage loans for the Homewood Suites San Antonio hotel and the Residence Inn Tysons Corner hotel. Both new loans have a 10-year term and a 30-year amortization payment schedule.


(2)	On January 31, 2013, the Company paid off the mortgage loan for the Washington Guest Suites hotel. This hotel is in the process of being rebranded as a Residence Inn by Marriott.


(3)	On February 1, 2013, the Company refinanced the mortgage for the Residence Inn San Diego hotel. The new loan has a 10-year term and a 30-year amortization payment schedule.


(4)	On April 25, 2013, the Company issued debt secured by a first mortgage for the Courtyard Houston hotel. The loan has a 10-year term and a 30-year amortization payment schedule.


(5)	On June 17, 2013, the Company issued debt secured by a first mortgage for the Hyatt Place Pittsburgh hotel. The loan has a 10-year term and a 30-year amortization payment schedule.


(6)	Eleven properties in the borrowing base serve as collateral for borrowings under the credit facility at June 30, 2013.

The senior secured credit facility key terms are as follows:



Facility amount		$115 million
LIBOR floor		None
Interest rate applicable margin		200-300 basis points, based on leverage ratio
Unused fee		25 basis points if less than 50% unused, 35 basis points if more than 50% unused
Minimum fixed charge coverage ratio		1.5x

At June 30, 2013 and December 31, 2012, the Company had $30.5 million and $79.5 million, respectively, of outstanding borrowings under its secured revolving credit facility. 11 properties in the borrowing base serve as collateral for borrowings under the credit facility at June 30, 2013. At June 30, 2013, the maximum borrowing availability under the revolving credit facility was $115.0 million.

The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates. Rates take into consideration general market conditions, quality and estimated value of collateral and maturity of debt with similar credit terms and are classified within level 3 of the fair value hierarchy. Level 3 typically consists of mortgages because of the significance of the collateral value to the value of the loan. The estimated fair value of the Company’s fixed rate debt as of June 30, 2013 and December 31, 2012 was $177.9 million and $168.2 million, respectively.

The Company estimates the fair value of its variable rate debt by taking into account general market conditions and the estimated credit terms it could obtain for debt with similar maturity and is classified within level 3 of the fair value hierarchy. The Company’s only variable rate debt is under its senior secured revolving credit facility. The estimated fair value of the Company’s variable rate debt as of June 30, 2013 and December 31, 2012 was $30.5 million and $79.5 million, respectively.

As of June 30, 2013, the Company was in compliance with all of its financial covenants. At June 30, 2013, the Company’s consolidated fixed charge coverage ratio was 2.03. Future scheduled principal payments of debt obligations as of June 30, 2013, for each of the next five calendar years and thereafter are as follows (in thousands):



	Amount
2013 (remaining six months)	$	1,147
2014	2,547
2015	37,786
2016	40,731
2017	2,546
Thereafter	121,585
	$	206,342