QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction | (I.R.S. Employer Identification No.) | |||||||
of incorporation or organization) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company | |||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ |
Page | ||||||||
Condensed Consolidated Balance Sheets — September 30, 2023 (Unaudited) and December 31, 2022 | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) — Three and Nine Months Ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) — Three and Nine Months Ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Changes in Equity and Redeemable Non-controlling Interests (Unaudited) — Three and Nine Months Ended September 30, 2023 and 2022 | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) — Nine Months Ended September 30, 2023 and 2022 | ||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Investments in lodging property, net | $ | $ | ||||||||||||
Assets held for sale, net | ||||||||||||||
Cash and cash equivalents | ||||||||||||||
Restricted cash | ||||||||||||||
Right-of-use assets, net | ||||||||||||||
Trade receivables, net | ||||||||||||||
Prepaid expenses and other | ||||||||||||||
Deferred charges, net | ||||||||||||||
Other assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY | ||||||||||||||
Liabilities: | ||||||||||||||
Debt, net of debt issuance costs | $ | $ | ||||||||||||
Lease liabilities, net | ||||||||||||||
Accounts payable | ||||||||||||||
Accrued expenses and other | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and contingencies (Note 11) | ||||||||||||||
Redeemable non-controlling interests | ||||||||||||||
Equity: | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
Accumulated other comprehensive income | ||||||||||||||
Accumulated deficit and distributions in excess of retained earnings | ( | ( | ||||||||||||
Total stockholders’ equity | ||||||||||||||
Non-controlling interests | ||||||||||||||
Total equity | ||||||||||||||
Total liabilities, redeemable non-controlling interests and equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||
Room | $ | $ | $ | $ | ||||||||||||||||||||||
Food and beverage | ||||||||||||||||||||||||||
Other | ||||||||||||||||||||||||||
Total revenues | ||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||
Room | ||||||||||||||||||||||||||
Food and beverage | ||||||||||||||||||||||||||
Other lodging property operating expenses | ||||||||||||||||||||||||||
Property taxes, insurance and other | ||||||||||||||||||||||||||
Management fees | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Corporate general and administrative | ||||||||||||||||||||||||||
Transaction costs | ||||||||||||||||||||||||||
Recoveries of credit losses | ( | ( | ( | ( | ||||||||||||||||||||||
Total expenses | ||||||||||||||||||||||||||
(Loss) gain on disposal of assets, net | ( | ( | ( | |||||||||||||||||||||||
Operating income | ||||||||||||||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | ||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||
Other income (loss), net | ( | |||||||||||||||||||||||||
Total other expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
(Loss) income from continuing operations before income taxes | ( | ( | ( | |||||||||||||||||||||||
Income tax expense (Note 13) | ( | ( | ( | ( | ||||||||||||||||||||||
Net (loss) income | ( | ( | ( | |||||||||||||||||||||||
Loss (income) attributable to non-controlling interests | ( | |||||||||||||||||||||||||
Net (loss) income attributable to Summit Hotel Properties, Inc. before preferred dividends and distributions | ( | |||||||||||||||||||||||||
Distributions to and accretion of redeemable non-controlling interests | ( | ( | ( | ( | ||||||||||||||||||||||
Preferred dividends | ( | ( | ( | ( | ||||||||||||||||||||||
Net loss attributable to common stockholders | $ | ( | $ | ( | $ | ( | $ | ( | ||||||||||||||||||
Loss per share: | ||||||||||||||||||||||||||
Basic and Diluted | $ | ( | $ | $ | ( | $ | ( | |||||||||||||||||||
Weighted-average common shares outstanding: | ||||||||||||||||||||||||||
Basic and Diluted | ||||||||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net (loss) income | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||
Other comprehensive income, net of tax: | ||||||||||||||||||||||||||
Changes in fair value of derivative financial instruments | ||||||||||||||||||||||||||
Comprehensive (loss) income | ( | |||||||||||||||||||||||||
Comprehensive loss (income) attributable to non-controlling interests | ( | |||||||||||||||||||||||||
Comprehensive income attributable to Summit Hotel Properties, Inc. | ||||||||||||||||||||||||||
Distributions to and accretion of redeemable non-controlling interests | ( | ( | ( | ( | ||||||||||||||||||||||
Preferred dividends | ( | ( | ( | ( | ||||||||||||||||||||||
Comprehensive (loss) income attributable to common stockholders | $ | ( | $ | $ | ( | $ |
Redeemable Non-controlling Interests | Shares of Preferred Stock | Preferred Stock | Shares of Common Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit and Distributions in Excess of Retained Earnings | Total Shareholders’ Equity | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock redemption of common units | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends and distributions on common stock and common units | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividends and distributions | ( | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint venture partner distributions | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock acquired for employee withholding requirements | — | — | — | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions by non-controlling interest in joint venture | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock redemption of common units | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends and distributions | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividends and distributions | ( | — | — | — | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint venture partner distributions | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | ( | ( | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ |
Redeemable Non-controlling Interests | Shares of Preferred Stock | Preferred Stock | Shares of Common Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit and Distributions in Excess of Retained Earnings | Total Shareholders’ Equity | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of non-controlling interests in joint venture | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions by non-controlling interest in joint venture | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock redemption of common units | — | — | — | 7,000 | — | 68 | — | — | ( | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends and distributions | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividends and distributions | ( | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint venture partner distributions | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock acquired for employee withholding requirements | — | — | — | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable non-controlling interests in operating partnership issued for the acquisition of a portfolio of lodging properties | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Adjustment of redeemable non-controlling interests to redemption value | — | — | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Non-controlling interests in operating partnership issued for the acquisition of a portfolio of lodging properties | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of non-controlling interests in joint venture | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions by non-controlling interest in joint venture | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common stock redemption of common units | — | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common dividends and distributions | — | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred dividends and distributions | ( | — | — | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint venture partner distributions | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares of common stock acquired for employee withholding requirements | — | — | — | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | $ | $ | ( | $ | $ | $ |
Summit Hotel Properties, Inc. Condensed Consolidated Statements of Cash Flows | ||||||||||||||
(Unaudited) | ||||||||||||||
(In thousands) | ||||||||||||||
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
OPERATING ACTIVITIES | ||||||||||||||
Net (loss) income | $ | ( | $ | |||||||||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Recoveries of credit losses | ( | ( | ||||||||||||
Equity-based compensation | ||||||||||||||
Deferred tax asset, net | ||||||||||||||
Loss (gain) on disposal of assets, net | ( | |||||||||||||
Non-cash interest income | ( | ( | ||||||||||||
Debt transaction costs | ||||||||||||||
Other | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Trade receivables, net | ( | ( | ||||||||||||
Prepaid expenses and other | ( | |||||||||||||
Accounts payable | ( | |||||||||||||
Accrued expenses and other | ||||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||
INVESTING ACTIVITIES | ||||||||||||||
Acquisitions of lodging properties | ( | ( | ||||||||||||
Improvements to lodging properties | ( | ( | ||||||||||||
Proceeds from asset dispositions, net | ||||||||||||||
Funding of real estate loans | ( | ( | ||||||||||||
Repayments of real estate loans | ||||||||||||||
NET CASH USED IN INVESTING ACTIVITIES | ( | ( | ||||||||||||
FINANCING ACTIVITIES | ||||||||||||||
Proceeds from borrowings on revolving line of credit | ||||||||||||||
Repayments of line of credit borrowings | ( | ( | ||||||||||||
Principal payments on debt | ( | ( | ||||||||||||
Proceeds from the sale of non-controlling interests | ||||||||||||||
Financing fees, debt transaction costs and other issuance costs | ( | ( | ||||||||||||
Common dividends and distributions paid | ( | ( | ||||||||||||
Preferred dividends and distributions paid | ( | ( | ||||||||||||
Proceeds from contributions by non-controlling interests in joint venture | ||||||||||||||
Distributions to joint venture partners | ( | ( | ||||||||||||
Repurchase of shares of common stock for withholding requirements | ( | ( | ||||||||||||
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | ( | |||||||||||||
Net change in cash, cash equivalents and restricted cash | ( | |||||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ||||||||||||||
Beginning of period | ||||||||||||||
End of period | $ | $ | ||||||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH WITHIN THE CONSOLIDATED BALANCE SHEET TO THE AMOUNTS SHOWN IN THE STATEMENT OF CASH FLOWS ABOVE: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Lodging buildings and improvements | $ | $ | ||||||||||||
Land | ||||||||||||||
Furniture, fixtures and equipment | ||||||||||||||
Construction in progress | ||||||||||||||
Intangible assets | ||||||||||||||
Real estate development loan, net | ||||||||||||||
Less accumulated depreciation and amortization | ( | ( | ||||||||||||
$ | $ |
Date Acquired | Franchise/Brand | Location | Guestrooms | Purchase Price | ||||||||||||||||||||||
2023 Acquisitions: | ||||||||||||||||||||||||||
June 1, 2023 | Residence Inn by Marriott | Scottsdale, AZ | $ | |||||||||||||||||||||||
June 23, 2023 | Nordic Lodge | Steamboat Springs, CO | ||||||||||||||||||||||||
$ | ||||||||||||||||||||||||||
2022 Acquisitions: | ||||||||||||||||||||||||||
January 13, 2022 | Portfolio of properties - twenty-six lodging properties and two parking garages (1) | Various | $ | |||||||||||||||||||||||
March 23, 2022 | Canopy Hotel by Hilton (1) | New Orleans, LA | ||||||||||||||||||||||||
June 10, 2022 | AC/Element Hotel (2) | Miami, FL | ||||||||||||||||||||||||
October 26, 2022 | Onera (3) | Fredericksburg, TX | ||||||||||||||||||||||||
$ |
For the Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Land | $ | $ | ||||||||||||
Lodging buildings and improvements | ||||||||||||||
Furniture, fixtures and equipment | ||||||||||||||
Incentives and other intangibles | ||||||||||||||
Other assets | ||||||||||||||
Total assets acquired (1) (2) | ||||||||||||||
Less debt assumed | ( | |||||||||||||
Less lease liabilities assumed | ( | |||||||||||||
Less other liabilities | ( | |||||||||||||
Net assets acquired | $ | $ |
Franchise/Brand | Location | Guestrooms | ||||||||||||
Hilton Garden Inn | Minneapolis (Eden Prairie), MN | |||||||||||||
Holiday Inn Express & Suites | Minneapolis (Minnetonka), MN | |||||||||||||
Hyatt Place | Chicago (Hoffman Estates), IL | |||||||||||||
Hyatt Place | Chicago (Lombard/Oak Brook), IL | |||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||
Air rights | $ | $ | ||||||||||||
Other | ||||||||||||||
Finite-lived intangible assets: | ||||||||||||||
Tax incentives | ||||||||||||||
Key money | ||||||||||||||
Intangible assets | ||||||||||||||
Less accumulated amortization | ( | ( | ||||||||||||
Intangible assets, net | $ | $ |
For the Year Ending December 31, | Amount | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
$ |
Net Carrying Amount | ||||||||||||||
September 30, 2023 | December 31, 2022 | |||||||||||||
Under Contract for Sale: | ||||||||||||||
Portfolio of | $ | $ | ||||||||||||
Parcel of undeveloped land - San Antonio, TX | ||||||||||||||
Marketed for Sale: | ||||||||||||||
Parcel of undeveloped land - Flagstaff, AZ | ||||||||||||||
$ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Real estate loan | $ | $ | ||||||||||||
Allowance for credit losses | ( | ( | ||||||||||||
$ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Revolving debt | $ | $ | ||||||||||||
Term loans | ||||||||||||||
Convertible notes | ||||||||||||||
Mortgage loans | ||||||||||||||
Unamortized debt issuance costs | ( | ( | ||||||||||||
Debt, net of debt issuance costs | $ | $ |
September 30, 2023 | Percentage | December 31, 2022 | Percentage | |||||||||||||||||||||||
Fixed-rate debt (1) | $ | $ | ||||||||||||||||||||||||
Variable-rate debt | ||||||||||||||||||||||||||
$ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | Valuation Technique | ||||||||||||||||||||||||||||
Convertible notes | $ | $ | $ | $ | Level 1 - Market approach | |||||||||||||||||||||||||||
Mortgage loans | Level 2 - Market approach | |||||||||||||||||||||||||||||||
$ | $ | $ | $ |
Principal Balance Outstanding | ||||||||||||||||||||||||||||||||
Lender | Interest Rate | Maturity Date | Number of Encumbered Properties | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||
OPERATING PARTNERSHIP DEBT: | ||||||||||||||||||||||||||||||||
2018 Senior Credit Facility | ||||||||||||||||||||||||||||||||
Bank of America, N.A. | ||||||||||||||||||||||||||||||||
$ | June 21, 2027 | n/a | $ | $ | ||||||||||||||||||||||||||||
$ | June 21, 2026 | n/a | ||||||||||||||||||||||||||||||
Total Senior Credit and Term Loan Facility | ||||||||||||||||||||||||||||||||
Term Loans | ||||||||||||||||||||||||||||||||
KeyBank National Association Term Loan (1) | February 14, 2025 | n/a | ||||||||||||||||||||||||||||||
Convertible Notes | February 15, 2026 | n/a | ||||||||||||||||||||||||||||||
Secured Mortgage Indebtedness | ||||||||||||||||||||||||||||||||
MetaBank | July 1, 2027 | |||||||||||||||||||||||||||||||
Bank of the Cascades (3) | December 19, 2024 | |||||||||||||||||||||||||||||||
December 19, 2024 | ||||||||||||||||||||||||||||||||
Total Mortgage Loans | ||||||||||||||||||||||||||||||||
Total Operating Partnership Debt | ||||||||||||||||||||||||||||||||
JOINT VENTURE DEBT: | ||||||||||||||||||||||||||||||||
Brickell Joint Venture Mortgage Loan | ||||||||||||||||||||||||||||||||
City National Bank of Florida | June 9, 2025 | |||||||||||||||||||||||||||||||
GIC Joint Venture Credit Facility and Term Loans | ||||||||||||||||||||||||||||||||
Bank of America, N.A. | ||||||||||||||||||||||||||||||||
$ | September 15, 2027 | n/a | ||||||||||||||||||||||||||||||
$ | September 15, 2027 | n/a | ||||||||||||||||||||||||||||||
Bank of America, N.A. (5) | January 13, 2026 | n/a | ||||||||||||||||||||||||||||||
Wells Fargo | June 6, 2028 | |||||||||||||||||||||||||||||||
PACE loan | July 31, 2040 | |||||||||||||||||||||||||||||||
Total GIC Joint Venture Credit Facility and Term Loans | ||||||||||||||||||||||||||||||||
Total Joint Venture Debt | ||||||||||||||||||||||||||||||||
Total Debt | $ | $ |
For the Year Ending December 31, | Amount | |||||||
2023 | $ | |||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total lease payments (1) | ||||||||
Less: Imputed interest | ( | |||||||
Total | $ |
Notional Amount | Fair Value | |||||||||||||||||||||||||||||||||||||||||||
Contract date | Effective Date | Expiration Date | Average Annual Effective Fixed Rate | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Operating Partnership: | ||||||||||||||||||||||||||||||||||||||||||||
October 2, 2017 | January 29, 2018 | January 31, 2023 | % | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
October 2, 2017 | January 29, 2018 | January 31, 2023 | % | |||||||||||||||||||||||||||||||||||||||||
June 11, 2018 | September 28, 2018 | September 30, 2024 | % | |||||||||||||||||||||||||||||||||||||||||
June 11, 2018 | December 31, 2018 | December 31, 2025 | % | |||||||||||||||||||||||||||||||||||||||||
July 26, 2022 | January 31, 2023 | January 31, 2027 | % | (1) | ||||||||||||||||||||||||||||||||||||||||
July 26, 2022 | January 31, 2023 | January 31, 2029 | % | (1) | ||||||||||||||||||||||||||||||||||||||||
Total Operating Partnership | ||||||||||||||||||||||||||||||||||||||||||||
GIC Joint Venture: | ||||||||||||||||||||||||||||||||||||||||||||
March 24, 2023 | July 1, 2023(2) | January 13, 2026 | % | |||||||||||||||||||||||||||||||||||||||||
March 24, 2023 | July 1, 2023(2) | January 13, 2026 | % | |||||||||||||||||||||||||||||||||||||||||
Total GIC Joint Venture | ||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Gain recognized in Accumulated other comprehensive loss on derivative financial instruments | $ | $ | $ | $ | ||||||||||||||||||||||
Gain (loss) reclassified from Accumulated other comprehensive loss to Interest expense | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||
Total interest expense and other finance expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded | $ | $ | $ | $ | ||||||||||||||||||||||
For the Nine Months Ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Beginning shares of Common Stock outstanding | |||||||||||
Common Unit redemptions | |||||||||||
Grants under the Equity Plan | |||||||||||
Annual grants to independent directors | |||||||||||
Performance share and other forfeitures | ( | ( | |||||||||
Shares retained for employee tax withholding requirements | ( | ( | |||||||||
Ending shares of Common Stock outstanding |
Fair Value Measurements at September 30, 2023 using | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
Purchase option related to real estate loans (Onera Purchase Option) | ||||||||||||||||||||||||||
Fair Value Measurements at December 31, 2022 using | ||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||
Interest rate swaps | $ | $ | $ | $ | ||||||||||||||||||||||
Exercise price | $ | |||||||
First option exercise date (1) | 10/1/2024 | |||||||
Expected volatility | % | |||||||
Risk free rate | % | |||||||
Expected annualized equity dividend yield | % |
Number of Shares | Weighted-Average Grant Date Fair Value | Aggregate Current Value | ||||||||||||||||||
(per share) | (in thousands) | |||||||||||||||||||
Non-vested at December 31, 2022 | $ | $ | ||||||||||||||||||
Granted | ||||||||||||||||||||
Vested | ( | |||||||||||||||||||
Forfeited | ( | |||||||||||||||||||
Non-vested at September 30, 2023 | $ | $ |
Number of Shares | Weighted-Average Grant Date Fair Value (1) | Aggregate Current Value | ||||||||||||||||||
(per share) | (in thousands) | |||||||||||||||||||
Non-vested at December 31, 2022 | $ | $ | ||||||||||||||||||
Granted | ||||||||||||||||||||
Vested | ( | |||||||||||||||||||
Forfeited | ( | |||||||||||||||||||
Non-vested at September 30, 2023 | $ | $ |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Time-based restricted stock | $ | $ | $ | $ | ||||||||||||||||||||||
Performance-based restricted stock | ||||||||||||||||||||||||||
Director stock | ||||||||||||||||||||||||||
$ | $ | $ | $ |
Total | 2023 | 2024 | 2025 | 2026 | ||||||||||||||||||||||||||||
Time-based restricted stock | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Performance-based restricted stock | ||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ |
Nine Months Ended September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Cash payments for interest | $ | $ | ||||||||||||
Insurance premium financing | $ | $ | ||||||||||||
Accrued acquisitions and improvements to lodging properties | $ | $ | ||||||||||||
Increase in carrying amount of lodging property related to contingent consideration | $ | $ | ||||||||||||
Cash payments for income taxes, net of refunds | $ | $ | ||||||||||||
Accrued and unpaid dividends | $ | $ | ||||||||||||
Debt assumed to complete acquisition of properties | $ | $ | ||||||||||||
Assumption of leases and other assets and liabilities in connection with the acquisition of a portfolio of properties | $ | $ | ||||||||||||
Conversion of a mezzanine financing loan to complete acquisition of lodging properties | $ | $ | ||||||||||||
Exercise of purchase option to complete acquisition of lodging properties | $ | $ | ||||||||||||
Non-controlling interests in joint venture issued to complete acquisition of lodging properties | $ | $ | ||||||||||||
Non-controlling interests in operating partnership issued to complete acquisition of a portfolio of properties | $ | $ | ||||||||||||
Redeemable non-controlling interests in operating partnership issued to complete acquisition of a portfolio of properties | $ | $ |
Management Company | Number of Properties | Number of Guestrooms | ||||||||||||
Affiliates of Aimbridge Hospitality, including Interstate Management Company, LLC | 61 | 9,096 | ||||||||||||
OTO Development, LLC | 13 | 1,888 | ||||||||||||
Stonebridge Realty Advisors, Inc. and affiliates | 8 | 1,143 | ||||||||||||
Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc. | 6 | 973 | ||||||||||||
Crestline Hotels & Resorts, LLC | 5 | 617 | ||||||||||||
White Lodging Services Corporation | 2 | 453 | ||||||||||||
Hersha Hospitality Management | 2 | 338 | ||||||||||||
Concord Hospitality Enterprises | 2 | 264 | ||||||||||||
InterContinental Hotel Group Resources, Inc., an affiliate of IHG | 1 | 252 | ||||||||||||
Blink Data Services, LLC | 1 | 11 | ||||||||||||
Total | 101 | 15,035 |
Franchise/Brand | Number of Lodging Properties | Number of Guestrooms | ||||||||||||
Marriott | ||||||||||||||
Courtyard by Marriott | 17 | 3,049 | ||||||||||||
Residence Inn by Marriott | 16 | 2,256 | ||||||||||||
AC Hotel by Marriott | 6 | 1,026 | ||||||||||||
SpringHill Suites by Marriott | 7 | 983 | ||||||||||||
TownePlace Suites | 2 | 225 | ||||||||||||
Marriott | 1 | 165 | ||||||||||||
Fairfield Inn & Suites by Marriott | 1 | 140 | ||||||||||||
Element by Marriott | 1 | 108 | ||||||||||||
Four Points by Sheraton | 1 | 101 | ||||||||||||
Total Marriott | 52 | 8,053 | ||||||||||||
Hilton | ||||||||||||||
Hilton Garden Inn | 8 | 1,194 | ||||||||||||
Hampton Inn & Suites | 8 | 1,162 | ||||||||||||
Homewood Suites | 3 | 369 | ||||||||||||
Embassy Suites | 2 | 346 | ||||||||||||
Canopy Hotel | 2 | 326 | ||||||||||||
DoubleTree by Hilton | 1 | 210 | ||||||||||||
Total Hilton | 24 | 3,607 | ||||||||||||
Hyatt | ||||||||||||||
Hyatt Place | 15 | 2,143 | ||||||||||||
Hyatt House | 3 | 466 | ||||||||||||
Total Hyatt | 18 | 2,609 | ||||||||||||
IHG | ||||||||||||||
Holiday Inn Express & Suites | 3 | 471 | ||||||||||||
Staybridge Suites | 1 | 121 | ||||||||||||
Hotel Indigo | 1 | 116 | ||||||||||||
Total IHG | 5 | 708 | ||||||||||||
Independent | ||||||||||||||
Nordic Lodge | 1 | 47 | ||||||||||||
Onera | 1 | 11 | ||||||||||||
Total Independent | 2 | 58 | ||||||||||||
Total | 101 | 15,035 |
For the Three Months Ended September 30, | Quarter-over-Quarter | Quarter-over-Quarter | ||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | |||||||||||||||||||||||||||||||||||||||||||||||
Total Portfolio (101 properties) | Same-Store Portfolio (95 properties) | Total Portfolio (102 properties) | Same-Store Portfolio (95 properties) | Total Portfolio (101/102 properties) | Same-Store Portfolio (95 properties) | Total Portfolio (101/102 properties) | Same-Store Portfolio (95 properties) | |||||||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Room | $ | 161,712 | $ | 156,307 | $ | 160,133 | $ | 152,701 | $ | 1,579 | $ | 3,606 | 1.0 | % | 2.4 | % | ||||||||||||||||||||||||||||||||||
Food and beverage | 9,949 | 7,789 | 8,854 | 6,899 | 1,095 | 890 | 12.4 | % | 12.9 | % | ||||||||||||||||||||||||||||||||||||||||
Other | 10,155 | 9,454 | 9,265 | 8,701 | 890 | 753 | 9.6 | % | 8.7 | % | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 181,816 | $ | 173,550 | $ | 178,252 | $ | 168,301 | $ | 3,564 | $ | 5,249 | 2.0 | % | 3.1 | % | ||||||||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Room | $ | 37,510 | $ | 35,813 | $ | 37,525 | $ | 35,204 | $ | (15) | $ | 609 | — | % | 1.7 | % | ||||||||||||||||||||||||||||||||||
Food and beverage | 7,684 | 6,168 | 7,060 | 5,591 | 624 | 577 | 8.8 | % | 10.3 | % | ||||||||||||||||||||||||||||||||||||||||
Other lodging property operating expenses | 55,826 | 53,113 | 54,883 | 51,596 | 943 | 1,517 | 1.7 | % | 2.9 | % | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 101,020 | $ | 95,094 | $ | 99,468 | $ | 92,391 | $ | 1,552 | $ | 2,703 | 1.6 | % | 2.9 | % | ||||||||||||||||||||||||||||||||||
Operational Statistics: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Occupancy | 73.4 | % | 73.7 | % | 71.7 | % | 72.1 | % | n/a | n/a | 2.4 | % | 2.2 | % | ||||||||||||||||||||||||||||||||||||
ADR | $ | 159.35 | $ | 159.83 | $ | 158.39 | $ | 159.75 | $ | 0.96 | $ | 0.08 | 0.6 | % | 0.1 | % | ||||||||||||||||||||||||||||||||||
RevPAR | $ | 116.91 | $ | 117.85 | $ | 113.59 | $ | 115.14 | $ | 3.32 | $ | 2.71 | 2.9 | % | 2.4 | % |
For the Three Months Ended September 30, | ||||||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | |||||||||||||||||||||||
Property taxes, insurance and other | $ | 14,369 | $ | 13,373 | $ | 996 | 7.4 | % | ||||||||||||||||||
Management fees | 4,177 | 4,308 | (131) | (3.0) | % | |||||||||||||||||||||
Depreciation and amortization | 37,882 | 38,130 | (248) | (0.7) | % | |||||||||||||||||||||
Corporate general and administrative | 8,126 | 6,532 | 1,594 | 24.4 | % | |||||||||||||||||||||
Transaction costs | — | 56 | (56) | (100.0) | % | |||||||||||||||||||||
Recoveries of credit losses | (250) | (850) | 600 | (70.6) | % | |||||||||||||||||||||
Gain on disposal of assets, net | (16) | (5) | (11) | 220.0 | % | |||||||||||||||||||||
Interest expense | 22,020 | 17,645 | 4,375 | 24.8 | % | |||||||||||||||||||||
Interest income | 474 | 65 | 409 | 629.2 | % | |||||||||||||||||||||
Other income (loss), net | 661 | (481) | 1,142 | nm¹ | ||||||||||||||||||||||
Income tax expense | 1,360 | 210 | 1,150 | 547.6 | % |
For the Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | |||||||||||||||||||||||||||||||||||||||||||||||
Total Portfolio (101 properties) | Same-Store Portfolio (95 properties) | Total Portfolio (102 properties) | Same-Store Portfolio¹ (95 properties) | Total Portfolio (101/102 properties) | Same-Store Portfolio (95 properties) | Total Portfolio (101/102 properties) | Same-Store Portfolio (95 properties) | |||||||||||||||||||||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Room | $ | 498,982 | $ | 476,182 | $ | 455,747 | $ | 441,929 | $ | 43,235 | $ | 34,253 | 9.5 | % | 7.8 | % | ||||||||||||||||||||||||||||||||||
Food and beverage | 30,848 | 23,975 | 22,180 | 19,725 | 8,668 | 4,250 | 39.1 | % | 21.5 | % | ||||||||||||||||||||||||||||||||||||||||
Other | 28,862 | 26,797 | 25,442 | 24,732 | 3,420 | 2,065 | 13.4 | % | 8.3 | % | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 558,692 | $ | 526,954 | $ | 503,369 | $ | 486,386 | $ | 55,323 | $ | 40,568 | 11.0 | % | 8.3 | % | ||||||||||||||||||||||||||||||||||
Expenses: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Room | $ | 112,207 | $ | 105,900 | $ | 101,718 | $ | 97,356 | $ | 10,489 | $ | 8,544 | 10.3 | % | 8.8 | % | ||||||||||||||||||||||||||||||||||
Food and beverage | 23,679 | 18,833 | 17,187 | 15,595 | 6,492 | 3,238 | 37.8 | % | 20.8 | % | ||||||||||||||||||||||||||||||||||||||||
Other lodging property operating expenses | 169,780 | 159,877 | 154,871 | 148,095 | 14,909 | 11,782 | 9.6 | % | 8.0 | % | ||||||||||||||||||||||||||||||||||||||||
Total | $ | 305,666 | $ | 284,610 | $ | 273,776 | $ | 261,046 | $ | 31,890 | $ | 23,564 | 11.6 | % | 9.0 | % | ||||||||||||||||||||||||||||||||||
Operational Statistics: | ||||||||||||||||||||||||||||||||||||||||||||||||||
Occupancy | 72.6 | % | 72.9 | % | 70.1 | % | 70.4 | % | n/a | n/a | 3.6 | % | 3.6 | % | ||||||||||||||||||||||||||||||||||||
ADR | $ | 166.10 | $ | 166.01 | $ | 158.28 | $ | 159.50 | $ | 7.82 | $ | 6.51 | 4.9 | % | 4.1 | % | ||||||||||||||||||||||||||||||||||
RevPAR | $ | 120.53 | $ | 120.99 | $ | 110.99 | $ | 112.29 | $ | 9.54 | $ | 8.70 | 8.6 | % | 7.7 | % |
For the Nine Months Ended September 30, | ||||||||||||||||||||||||||
2023 | 2022 | Dollar Change | Percentage Change | |||||||||||||||||||||||
Property taxes, insurance and other | $ | 43,308 | $ | 40,036 | $ | 3,272 | 8.2 | % | ||||||||||||||||||
Management fees | 13,974 | 13,145 | 829 | 6.3 | % | |||||||||||||||||||||
Depreciation and amortization | 112,300 | 112,462 | (162) | (0.1) | % | |||||||||||||||||||||
Corporate general and administrative | 25,225 | 23,743 | 1,482 | 6.2 | % | |||||||||||||||||||||
Transaction costs | 24 | 737 | (713) | (96.7) | % | |||||||||||||||||||||
Recoveries of credit losses | (500) | (1,100) | 600 | (54.5) | % | |||||||||||||||||||||
(Loss) gain on disposal of assets, net | (336) | 20,479 | (20,815) | nm1 | ||||||||||||||||||||||
Interest expense | 65,177 | 46,202 | 18,975 | 41.1 | % | |||||||||||||||||||||
Interest income | 1,190 | 1,461 | (271) | (18.5) | % | |||||||||||||||||||||
Other income (loss), net | 458 | 1,638 | (1,180) | (72.0) | % | |||||||||||||||||||||
Income tax expense | 1,679 | 4,647 | (2,968) | (63.9) | % |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net (loss) income | $ | (5,769) | $ | (1,041) | $ | (6,849) | $ | 13,299 | ||||||||||||||||||
Preferred dividends | (3,968) | (3,968) | (11,906) | (11,906) | ||||||||||||||||||||||
Distributions to and accretion of redeemable non-controlling interests | (656) | (656) | (1,970) | (1,866) | ||||||||||||||||||||||
Loss (income) related to non-controlling interests in consolidated joint ventures | 4,442 | 3,730 | 8,093 | (5,219) | ||||||||||||||||||||||
Net loss applicable to Common Stock and Common Units | (5,951) | (1,935) | (12,632) | (5,692) | ||||||||||||||||||||||
Real estate-related depreciation | 36,697 | 36,804 | 108,751 | 108,959 | ||||||||||||||||||||||
Loss (gain) on disposal of assets and other dispositions, net | 16 | 5 | 384 | (20,479) | ||||||||||||||||||||||
Adjustments related to non-controlling interests in consolidated joint ventures | (8,093) | (6,789) | (23,911) | (13,077) | ||||||||||||||||||||||
FFO applicable to Common Stock and Common Units | 22,669 | 28,085 | 72,592 | 69,711 | ||||||||||||||||||||||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | ||||||||||||||||||||||
Amortization of debt issuance costs | 1,594 | 1,413 | 4,379 | 4,238 | ||||||||||||||||||||||
Amortization of franchise fees | 153 | 167 | 439 | 504 | ||||||||||||||||||||||
Amortization of intangible assets, net | 911 | 892 | 2,733 | 2,732 | ||||||||||||||||||||||
Equity-based compensation | 1,867 | 1,231 | 5,913 | 7,070 | ||||||||||||||||||||||
Transaction costs and other | — | 56 | 24 | 737 | ||||||||||||||||||||||
Debt transaction costs | 90 | 1,131 | 352 | 1,166 | ||||||||||||||||||||||
Non-cash interest income, net | (134) | — | (397) | (113) | ||||||||||||||||||||||
Non-cash lease expense, net | 106 | 115 | 368 | 374 | ||||||||||||||||||||||
Casualty losses, net | 380 | 750 | 1,851 | 1,054 | ||||||||||||||||||||||
Other non-cash items, net | — | — | 768 | — | ||||||||||||||||||||||
Adjustments related to non-controlling interests in consolidated joint ventures | (840) | (2,123) | (2,631) | (2,743) | ||||||||||||||||||||||
AFFO applicable to Common Stock and Common Units | $ | 26,546 | $ | 30,867 | $ | 85,891 | $ | 83,630 | ||||||||||||||||||
FFO per share of Common Stock and Common Units | $ | 0.19 | $ | 0.23 | $ | 0.59 | $ | 0.57 | ||||||||||||||||||
AFFO per share of Common Stock and Common Units | $ | 0.22 | $ | 0.25 | $ | 0.70 | $ | 0.69 | ||||||||||||||||||
Weighted-average diluted shares of Common Stock and Common Units: | ||||||||||||||||||||||||||
FFO(1) and AFFO (1) (2) | 122,513 | 121,265 | 122,312 | 121,289 | ||||||||||||||||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Weighted-average shares of Common Stock outstanding | 105,650 | 105,232 | 105,510 | 105,110 | ||||||||||||||||||||||
Dilutive effect of unvested restricted stock awards | 44 | 49 | 187 | 195 | ||||||||||||||||||||||
Dilutive effect of Common Units of Operating Partnership | 15,970 | 15,984 | 15,974 | 15,984 | ||||||||||||||||||||||
Dilutive effect of shares of Common Stock issuable upon conversion of convertible debt | 24,801 | 24,086 | 24,557 | 24,086 | ||||||||||||||||||||||
Adjusted weighted diluted shares of Common Stock | 146,465 | 145,351 | 146,228 | 145,375 | ||||||||||||||||||||||
Non-GAAP adjustment for dilutive effects of restricted stock awards | 849 | — | 641 | — | ||||||||||||||||||||||
Non-GAAP adjustment for dilutive effect of shares of Common Stock issuable upon conversion of convertible debt | (24,801) | (24,086) | (24,557) | (24,086) | ||||||||||||||||||||||
Non-GAAP weighted diluted share of Common Stock and Common Units | 122,513 | 121,265 | 122,312 | 121,289 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net (loss) income | $ | (5,769) | $ | (1,041) | $ | (6,849) | $ | 13,299 | ||||||||||||||||||
Depreciation and amortization | 37,882 | 38,130 | 112,300 | 112,462 | ||||||||||||||||||||||
Interest expense | 22,020 | 17,645 | 65,177 | 46,202 | ||||||||||||||||||||||
Interest income | (150) | (14) | (390) | (20) | ||||||||||||||||||||||
Income tax expense | 1,360 | 210 | 1,679 | 4,647 | ||||||||||||||||||||||
EBITDA | 55,343 | 54,930 | 171,917 | 176,590 | ||||||||||||||||||||||
Loss (gain) on disposal of assets and other dispositions, net | 16 | 5 | 384 | (20,479) | ||||||||||||||||||||||
EBITDAre | 55,359 | 54,935 | 172,301 | 156,111 | ||||||||||||||||||||||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | ||||||||||||||||||||||
Amortization of key money liabilities | (121) | (144) | (378) | (267) | ||||||||||||||||||||||
Equity-based compensation | 1,867 | 1,231 | 5,913 | 7,070 | ||||||||||||||||||||||
Transaction costs and other | — | 56 | 24 | 737 | ||||||||||||||||||||||
Debt transaction costs | 90 | 1,131 | 352 | 1,166 | ||||||||||||||||||||||
Non-cash interest income, net | (134) | — | (397) | (113) | ||||||||||||||||||||||
Non-cash lease expense, net | 106 | 115 | 368 | 374 | ||||||||||||||||||||||
Casualty losses, net | 380 | 750 | 1,851 | 1,054 | ||||||||||||||||||||||
Loss (income) related to non-controlling interests in consolidated joint ventures | 4,442 | 3,730 | 8,093 | (5,219) | ||||||||||||||||||||||
Other non-cash items, net | — | — | 713 | — | ||||||||||||||||||||||
Adjustments related to non-controlling interests in consolidated joint ventures | (15,424) | (13,736) | (44,760) | (25,082) | ||||||||||||||||||||||
Adjusted EBITDAre | $ | 46,315 | $ | 47,218 | $ | 143,580 | $ | 134,731 |
Lender | Interest Rate | Maturity Date | Number of Encumbered Properties | Principal Amount Outstanding | ||||||||||||||||||||||
OPERATING PARTNERSHIP DEBT: | ||||||||||||||||||||||||||
2018 Senior Credit Facility | ||||||||||||||||||||||||||
Bank of America, NA | ||||||||||||||||||||||||||
$400 Million Revolver (1)(2) | 7.37% Variable | June 21, 2027 | n/a | $ | 15,000 | |||||||||||||||||||||
$200 Million Term Loan (1)(2) | 7.32% Variable | June 21, 2026 | n/a | 200,000 | ||||||||||||||||||||||
Total Senior Credit and Term Loan Facility | 215,000 | |||||||||||||||||||||||||
Term Loans | ||||||||||||||||||||||||||
KeyBank National Association Term Loan (1) | 7.16% Variable | February 14, 2025 | n/a | 225,000 | ||||||||||||||||||||||
Convertible Notes | 1.50% Fixed | February 15, 2026 | n/a | 287,500 | ||||||||||||||||||||||
Secured Mortgage Indebtedness | ||||||||||||||||||||||||||
MetaBank | 4.44% Fixed | July 1, 2027 | 3 | 42,915 | ||||||||||||||||||||||
Bank of the Cascades(3) | 7.31% Variable | December 19, 2024 | 1 | 7,491 | ||||||||||||||||||||||
4.30% Fixed | December 19, 2024 | 7,491 | ||||||||||||||||||||||||
Total Mortgage Loans | 4 | 57,897 | ||||||||||||||||||||||||
785,397 | ||||||||||||||||||||||||||
JOINT VENTURE DEBT: | ||||||||||||||||||||||||||
Brickell Joint Venture Mortgage Loan | ||||||||||||||||||||||||||
City National Bank of Florida | 8.33% Variable | June 9, 2025 | 2 | 47,000 | ||||||||||||||||||||||
GIC Joint Venture Credit Facility and Term Loans | ||||||||||||||||||||||||||
Bank of America, N.A. | ||||||||||||||||||||||||||
$125 Million Revolver (4) | 7.58% Variable | September 15, 2027 | n/a | 125,000 | ||||||||||||||||||||||
$75 Million Term Loan (4) | 7.53% Variable | September 15, 2027 | n/a | 75,000 | ||||||||||||||||||||||
Bank of America, N.A. (5) | 8.18% Variable | January 13, 2026 | n/a | 410,000 | ||||||||||||||||||||||
Wells Fargo | 4.99% Fixed | June 6, 2028 | 1 | 12,848 | ||||||||||||||||||||||
PACE loan | 6.10% Fixed | July 31, 2040 | 1 | 6,095 | ||||||||||||||||||||||
Total GIC Joint Venture Credit Facility and Term Loans | 2 | 628,943 | ||||||||||||||||||||||||
Total Joint Venture Debt | 4 | 675,943 | ||||||||||||||||||||||||
Total Debt | 8 | $ | 1,461,340 |
Nine Months Ended September 30, | ||||||||||||||||||||
2023 | 2022 | Change | ||||||||||||||||||
Net cash provided by operating activities | $ | 123,167 | $ | 135,681 | $ | (12,514) | ||||||||||||||
Net cash used in investing activities | (84,335) | (257,405) | 173,070 | |||||||||||||||||
Net cash (used in) provided by financing activities | (34,065) | 116,025 | (150,090) | |||||||||||||||||
Net change in cash, cash equivalents and restricted cash | $ | 4,767 | $ | (5,699) | $ | 10,466 |
Contract date | Effective Date | Expiration Date | Average Annual Effective Fixed Rate | Notional Amount | ||||||||||||||||||||||
Operating Partnership: | ||||||||||||||||||||||||||
June 11, 2018 | September 28, 2018 | September 30, 2024 | 2.86 | % | $ | 75,000 | ||||||||||||||||||||
June 11, 2018 | December 31, 2018 | December 31, 2025 | 2.92 | % | 125,000 | |||||||||||||||||||||
July 26, 2022 | January 31, 2023 | January 31, 2027 | 2.60 | % | 100,000 | |||||||||||||||||||||
July 26, 2022 | January 31, 2023 | January 31, 2029 | 2.56 | % | 100,000 | |||||||||||||||||||||
Total Operating Partnership | 400,000 | |||||||||||||||||||||||||
GIC Joint Venture: | ||||||||||||||||||||||||||
March 24, 2023 | July 1, 2023(2) | January 13, 2026 | 3.35 | % | 100,000 | |||||||||||||||||||||
March 24, 2023 | July 1, 2023(2) | January 13, 2026 | 3.35 | % | 100,000 | |||||||||||||||||||||
Total GIC Joint Venture | 200,000 | |||||||||||||||||||||||||
$ | 600,000 |
Exhibit | ||||||||
Number | Description of Exhibit | |||||||
101.INS | The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document (1) | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (1) | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (1) | |||||||
101.LAB | Inline XBRL Taxonomy Extension Labels Linkbase Document (1) | |||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document (1) | |||||||
104 | Cover Page Interactive Data File (the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
SUMMIT HOTEL PROPERTIES, INC. (registrant) | ||||||||
Date: November 1, 2023 | By: | /s/ William H. Conkling | ||||||
William H. Conkling Executive Vice President and Chief Financial Officer (principal financial officer) |
Date: November 1, 2023 | /s/ Jonathan P. Stanner | |||||||
Jonathan P. Stanner | ||||||||
President, Chief Executive Officer and Director | ||||||||
(principal executive officer) | ||||||||
Date: November 1, 2023 | /s/ William H. Conkling | ||||||||||
William H. Conkling | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(principal financial officer) | |||||||||||
Date: November 1, 2023 | /s/ Jonathan P. Stanner | ||||||||||
Jonathan P. Stanner President, Chief Executive Officer and Director (principal executive officer) | |||||||||||
Date: November 1, 2023 | /s/ William H. Conkling | ||||||||||
William H. Conkling Executive Vice President and Chief Financial Officer (principal financial officer) | |||||||||||
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net (loss) income | $ (5,769) | $ (1,041) | $ (6,849) | $ 13,299 |
Other comprehensive income, net of tax: | ||||
Changes in fair value of derivative financial instruments | 3,640 | 16,707 | 10,225 | 33,716 |
Comprehensive (loss) income | (2,129) | 15,666 | 3,376 | 47,015 |
Comprehensive loss (income) attributable to non-controlling interests | 4,140 | 2,974 | 5,375 | (7,025) |
Comprehensive income attributable to Summit Hotel Properties, Inc. | 2,011 | 18,640 | 8,751 | 39,990 |
Distributions to and accretion of redeemable non-controlling interests | (656) | (656) | (1,970) | (1,866) |
Preferred dividends | (3,968) | (3,968) | (11,906) | (11,906) |
Comprehensive (loss) income attributable to common stockholders | $ (2,613) | $ 14,016 | $ (5,125) | $ 26,218 |
DESCRIPTION OF BUSINESS |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS General Summit Hotel Properties, Inc. (the “Company”) is a self-managed lodging property investment company that was organized on June 30, 2010 as a Maryland corporation. The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized on June 30, 2010. Unless the context otherwise requires, “we,” “us,” and “our” refer to the Company and its consolidated subsidiaries. We primarily focus on owning lodging properties with efficient operating models that generate strong margins and investment returns. At September 30, 2023, our portfolio consisted of 101 lodging properties with a total of 15,035 guestrooms located in 24 states. As of September 30, 2023, we own 100% of the outstanding equity interests in 57 of our 101 lodging properties. We own a 51% controlling interest in 41 lodging properties through a joint venture (the “GIC Joint Venture”) that was formed in July 2019 with Singapore’s sovereign wealth fund ("GIC"). We also own 90% equity interests in two separate joint ventures (the "Brickell Joint Venture" and the "Onera Joint Venture"). The Brickell Joint Venture owns two lodging properties, and the Onera Joint Venture owns one lodging property. As of September 30, 2023, 86% of our guestrooms were located in the top 50 metropolitan statistical areas (“MSAs”), 90% were located within the top 100 MSAs and over 98% of our guestrooms operated under premium franchise brands owned by Marriott® International, Inc. (“Marriott”), Hilton® Worldwide (“Hilton”), Hyatt® Hotels Corporation (“Hyatt”), and InterContinental® Hotels Group (“IHG”). Substantially all of our assets are held by, and all of our operations are conducted through, the Operating Partnership. Through a wholly-owned subsidiary, we are the sole general partner of the Operating Partnership. At September 30, 2023, we owned, directly and indirectly, approximately 87% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding 6.25% Series E and 5.875% Series F preferred units of limited partnership interest. NewcrestImage Holdings, LLC owns all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units (liquidation preference $25 per unit) of the Operating Partnership ("Series Z Preferred Units"), which was issued as part of the NCI Transaction (described below in "Note 3 - Investments in Lodging Property, net"). We collectively refer to preferred units of limited partnership interests of our Operating Partnership as "Preferred Units." Pursuant to the Operating Partnership’s partnership agreement, we have full, exclusive and complete responsibility and discretion in the management and control of the Operating Partnership, including the ability to cause the Operating Partnership to enter into certain major transactions including acquisitions, dispositions and refinancings, to make distributions to partners and to cause changes in the Operating Partnership’s business activities. We have elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes. To qualify as a REIT, we cannot operate or manage our lodging properties. Accordingly, all of our lodging properties are leased to our taxable REIT subsidiaries (“TRS Lessees”) and managed by professional third-party management companies.
|
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation We prepare our Condensed Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and reported amounts of revenues and expenses in the reporting period. Actual results could differ from those estimates. As interim statements, the Condensed Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation in accordance with GAAP have been included. Results for the three and nine months ended September 30, 2023 may not be indicative of the results that may be expected for the full year of 2023. For further information, please read the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The accompanying Condensed Consolidated Financial Statements consolidate the accounts of all entities in which we have a controlling financial interest, as well as variable interest entities, if any, for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements. We evaluate joint venture partnerships to determine if they should be consolidated based on whether the partners exercise joint control. For a joint venture where we exercise primary control and we also own a majority of the equity interests, we consolidate the joint venture partnership. We have consolidated the accounts of all of our joint venture partnerships in our accompanying Condensed Consolidated Financial Statements. Real Estate Development Loans We selectively provide mezzanine financing to developers where we also have the opportunity to acquire the lodging property at or after the completion of the development project. We classify mezzanine financing loans as Investments in lodging property, net or Investments in real estate loans, net based on the terms of the mezzanine financing loan agreements and criteria for classifying an arrangement as a loan or an investment in real estate under Accounting Standards Codification ("ASC") No. 310, Receivables. At September 30, 2023, we have one mezzanine financing loan that we have classified in Investments in lodging property, net on our Condensed Consolidated Balance Sheet. Trade Receivables and Current Estimate of Credit Losses Financial assets (or a group of financial assets) such as real estate development loans and other notes receivable are measured at amortized cost and presented at the net amount expected to be collected in accordance with ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). We record an allowance for credit losses as a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We routinely evaluate our real estate development loans, notes receivable and interest receivable for collectability. Probable losses on loans are recognized in a valuation account that is deducted from the amortized cost basis of the loans and recorded as a provision for credit losses in our condensed Consolidated Statements of Operations. When we place a loan on non-accrual status, we suspend the recognition of interest income until cash interest payments are received. Generally, we return loans to accrual status when all delinquent interest becomes current, and collectability is reasonably assured. We do not measure an allowance for credit losses for accrued interest receivable. Accrued interest receivable is written-off to bad debt expense when collection is not reasonably assured. We grant credit to qualified guests, generally without collateral, in the form of trade accounts receivable. Trade receivables result from the rental of guestrooms and the sales of food, beverage, and banquet services and are payable under normal trade terms. Trade receivables also include credit and debit card transactions that are in the process of being settled. Trade receivables are stated at the amount billed to the guest and do not accrue interest. We regularly review the collectability of our trade receivables. A provision for losses is determined on the basis of previous loss experience and current economic conditions. Our allowance for doubtful accounts was $0.2 million at September 30, 2023 and $0.1 million at December 31, 2022. Bad debt expense was $0.2 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.3 million and $0.2 million for the nine months ended September 30, 2023 and 2022, respectively. Purchase Option When we provide mezzanine financing to a developer, we will generally receive a purchase option to acquire a majority interest in the property upon completion of construction. For purchase options with fixed exercise prices at inception, we record the purchase options at their estimated fair values on the transaction date in accordance with ASC No. 820, Fair Value Measurement, under a closed-form model such as the Black-Scholes model or a binomial lattice model such as the Monte Carlo simulation model. Purchase options received in connection with a mezzanine financing loan are recorded as a discount on the note receivable or a contra-asset, depending on the classification of the financial instrument, and amortized over the term of the mezzanine financing loan using the straight-line method, which approximates the interest method, as non-cash interest income on our Condensed Consolidated Statements of Operations. We elected to account for purchase options using the measurement alternative, which is cost less impairment, if any. If the fair value of the financial instrument can be determined from observable transactions for identical or similar investments of the same issuer, then we will record the financial instrument at fair value and adjust the carrying amount for changes in fair value in each period. Exchange or Modification of Debt We consider modifications or exchanges of debt as extinguishments in accordance with ASC No. 470, Debt, with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different. If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss. Under an exchange or modification accounted for as a debt extinguishment, fees paid to the lenders are included in the gain or loss on extinguishment of debt. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification are capitalized as deferred financing costs and amortized over the initial term of the new debt. Previously deferred fees and costs for existing debt are included in the calculation of gain or loss. Under an exchange or modification not accounted for as a debt extinguishment, fees paid to the lenders are reflected as additional debt discount and amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. Furthermore, costs incurred with third parties, such as legal fees, directly related to the exchange or modification are expensed as incurred. Additionally, previously deferred fees and costs are amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. Financial Guarantee On occasion, we may provide a financial guarantee on behalf of a mezzanine borrower. We record the non-contingent portion of financial guarantees made on behalf of third-parties as a liability at an amount equal to the premium receivable for the guarantee payable to us by the borrower under the practical expedient provided by ASC No. 460, Guarantees. We periodically evaluate the contingent component of a financial guarantee based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that may require us to record a liability related to the contingent component of a guarantee. We will record a liability for the contingent component of the guarantee when a payment by us under the guarantee is probable and reasonably estimable in accordance with ASC No. 326, Financial Instruments - Credit Losses. Redeemable Non-controlling Interests Redeemable non-controlling interests represent redeemable preferred units issued by our Operating Partnership ("Redeemable Preferred Units"). The Redeemable Preferred Units are presented as temporary equity related to our Operating Partnership on our Condensed Consolidated Balance Sheets under the caption of "Redeemable Non-controlling Interests." See "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests" for further information. We record redeemable non-controlling interests at fair value on the issuance date of the securities. When the carrying value (the acquisition date fair value adjusted for the non-controlling interest’s share of net income (loss) and dividends) is less than the redemption value, we adjust the redeemable non-controlling interest to equal the redemption value with changes recognized as an adjustment to Accumulated deficit and distributions in excess of retained earnings. Any such adjustment, when necessary, is recorded as of the applicable balance sheet date. Non-controlling Interests Non-controlling interests represent the portion of equity in a consolidated entity held by owners other than the consolidating parent. Non-controlling interests are reported in the Condensed Consolidated Balance Sheets within equity, separately from stockholders’ equity. Revenues, expenses and net income attributable to both the Company and the non-controlling interests are reported in the Condensed Consolidated Statements of Operations. Our Condensed Consolidated Financial Statements include non-controlling interests related to Common Units held by unaffiliated third parties and third-party minority ownership interests in our joint ventures. Earnings Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. We apply the two-class method of computing EPS, which requires the calculation of separate EPS amounts for participating securities. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. Any anti-dilutive securities are excluded from the basic per-share calculation. Diluted EPS is computed by dividing net income (loss) available to common stockholders, as adjusted for dilutive securities, by the weighted-average number of shares of common stock outstanding plus dilutive securities. Any anti-dilutive securities are excluded from the diluted per-share calculation. Potentially dilutive shares include unvested restricted share grants, unvested performance share grants, shares of common stock issuable upon conversion of convertible debt and shares of common stock issuable upon conversion of Common Units of our Operating Partnership. Basic and diluted loss per share for the three and nine months ended September 30, 2023 and 2022 are calculated as Net loss attributable to common stockholders for each respective period divided by weighted average common shares outstanding for each respective period as all other securities are antidilutive. Potentially dilutive shares include unvested restricted share grants, unvested performance share grants, common shares issuable upon conversion of convertible debt and common shares issuable upon conversion of Common Units of our Operating Partnership. Use of Estimates Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP, which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions that affect reported amounts and related disclosures in our Condensed Consolidated Financial Statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could materially differ from our expectations, which could materially affect our consolidated financial position and results of operations. Reclassifications A portfolio of two lodging properties with an aggregate carrying amount of approximately $49.9 million that were classified as Assets Held for Sale at December 31, 2022 have been reclassified to Investments in Lodging Property, net as the proposed sale of the properties was terminated during the nine months ended September 30, 2023.
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INVESTMENTS IN LODGING PROPERTY, NET |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS IN LODGING PROPERTY, NET | INVESTMENTS IN LODGING PROPERTY, NET Investments in Lodging Property, net Investments in lodging property, net is as follows (in thousands):
Depreciation and amortization expense related to our lodging properties was $37.7 million and $37.3 million for the three months ended September 30, 2023 and 2022, respectively, and $111.9 million, and $111.3 million for the nine months ended September 30, 2023 and 2022, respectively. Real Estate Development Loans Onera Mezzanine Financing Loan In January 2023, we entered into an agreement with affiliates of Onera Opportunity Fund I, LP ("Onera") to provide a mezzanine financing loan to fund up to $4.6 million (the "Onera Mezzanine Loan") for the development of a glamping property. The Onera Mezzanine Loan is secured by a second mortgage on the property and is subordinate to the senior lender for the development project. The loan matures 24 months from the closing date of the transaction and may be extended for an additional 12 months at the borrower's option. Additionally, we issued a $3.0 million letter of credit to the senior lender of the project as additional support for Onera's construction loan. We also have an option to purchase 90% of the equity of the entity that owns the development property upon completion of construction or upon the one-year anniversary of such completion at a pre-determined price (the "Onera Purchase Option"). The development is expected to be completed in the second half of 2024. As of September 30, 2023, we have funded our entire $4.6 million commitment under the mezzanine financing loan. The balance of the Onera Mezzanine Loan is recorded net of the unamortized discount related to the carrying amount of the Onera Purchase Option of $0.5 million at September 30, 2023, and is classified as Investments in lodging property, net in our Condensed Consolidated Balance Sheets at September 30, 2023. We recorded the Onera Purchase Option related to the Onera Mezzanine Loan at its estimated fair value of $0.9 million on the transaction date using the Black-Scholes model in Other assets and as a contra-asset to Investments in lodging property, net. The recorded amount of the Onera Purchase Option is being amortized over the term of the Onera Mezzanine Loan using the straight-line method, which approximates the interest method, as non-cash interest income. For the three months ended September 30, 2023, and nine months ended September 30, 2023, we amortized $0.1 million and $0.4 million, respectively, of the carrying amount of the Onera Purchase Option as non-cash interest income. Our estimate of the fair value of the Onera Purchase Option under the Black-Scholes model requires judgment and estimates primarily related to the volatility of our stock price and expected levels of future dividends on our common stock. Although our estimate contemplates current and expected future conditions, as applicable, it is reasonably possible that actual conditions could materially differ from our expectations. Brickell Mezzanine Financing Loan During the year ended December 31, 2019, we executed a mezzanine financing loan to a developer, as amended (the "Brickell Mezzanine Loan"), to fund up to $29.9 million for a mixed-use development project that included the AC Hotel by Marriott and Element Miami Brickell Hotel in Miami, FL (together the "AC/Element Hotel"), retail space, and parking. During the second quarter of 2022, we exercised our option (the “Initial Purchase Option”) to purchase a 90% interest in the AC Hotel by Marriott and Element Miami Brickell Hotel in Miami, FL (together the "AC/Element Hotel"), retail space, and parking that was granted in connection with the Brickell Mezzanine Loan, which resulted in payment in full of the Brickell Mezzanine Loan. We also have the right to purchase the remaining interest in the property five years after the completion of construction. The Brickell Mezzanine Loan was classified as Investments in lodging property, net in our Condensed Consolidated Balance Sheets. Lodging Property Acquisitions Acquisition of Residence Inn by Marriott - Scottsdale, AZ On June 1, 2023, the GIC Joint Venture acquired the Residence Inn by Marriott located in Scottsdale, AZ containing 120 guestrooms for a purchase price of approximately $29.0 million. GIC made a capital contribution of $13.7 million, or 49% of the purchase price, to the GIC Joint Venture, and the Operating Partnership made a capital contribution of $14.3 million, or 51% of the purchase price, to the GIC Joint Venture to fund the purchase price. The Operating Partnership made its capital contribution to the GIC Joint Venture with available cash on hand and borrowings on our revolving line of credit. Acquisition of Nordic Lodge - Steamboat Springs, CO On June 23, 2023, the GIC Joint Venture acquired the Nordic Lodge containing 47 guestrooms located in Steamboat Springs, CO for a purchase price of approximately $13.7 million. GIC made a capital contribution of $6.7 million, or 49% of the purchase price, to the GIC Joint Venture and the Operating Partnership made a capital contribution of $7.0 million, or 51% of the purchase price, to the GIC Joint Venture to fund the purchase price. The Operating Partnership made its capital contribution to the GIC Joint Venture with available cash on hand and borrowings on our revolving line of credit. Onera Transaction On October 26, 2022 we formed the Onera Joint Venture (see "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests") to facilitate the acquisition of a 90% equity interest in Onera for $5.2 million in cash, plus additional contingent consideration of $1.8 million, which was paid in September 2023. The Onera Joint Venture has a 100% fee simple interest in real property and improvements consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site in the future. Brickell Transaction On June 10, 2022, we formed the Brickell Joint Venture (see "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests") to facilitate the exercise of our Initial Purchase Option to acquire a 90% equity interest in the AC/Element Hotel. The exercise price of the Initial Purchase Option was $89.0 million and was primarily funded with the conversion of the mezzanine financing loan of $29.9 million and $7.9 million in cash. The acquisition of the AC/Element Hotel was recorded as an asset acquisition. NCI Transaction During the quarter ended March 31, 2022, the Operating Partnership and the GIC Joint Venture closed on a transaction (the "NCI Transaction") with NewcrestImage Holdings, LLC and NewcrestImage Holdings II, LLC (together, "NewcrestImage"), to purchase from NewcrestImage a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces, and various financial incentives for an aggregate purchase price of $822.0 million, paid in the form of 15,864,674 Common Units (deemed value of $10.0853 per unit), 2,000,000 Series Z Preferred Units, cash draws totaling $410.0 million from a term loan entered into by subsidiaries of the GIC Joint Venture, the assumption by a subsidiary of the GIC Joint Venture of approximately $6.5 million in PACE loan debt, $5.9 million of cash contributed to escrow in the prior year by GIC, as a limited partner in the GIC Joint Venture, and approximately $185.2 million cash contributed by GIC at closing. GIC also contributed to the GIC Joint Venture an additional $18.5 million in cash for estimated pre-acquisition costs related to the NCI Transaction, a portion of which was distributed to the Operating Partnership as reimbursement for transaction costs paid by the Operating Partnership. We valued the Common Units and Series Z Preferred Units at fair market value on the closing dates of the NCI Transaction, which resulted in the recording of the issued Common Units and Series Z Preferred Units at $157.5 million and $50.0 million, respectively. The Common Units were recorded at the closing prices of our common stock on the closing dates since the Common Units are redeemable for shares of our common stock on a 1:1 basis. We estimated the fair value of the Series Z Preferred Units based on the features and stated dividend coupon of the Series Z Preferred Units relative to similar securities with more readily determinable market values. We recorded the Series Z Preferred Units at their redemption value of $50.0 million, which approximates fair value on the closing dates. The GIC Joint Venture assumed $335.2 million of debt in connection with the NCI Transaction and immediately repaid $328.7 million of the assumed debt on the closing date using proceeds from borrowings on the GIC Joint Venture Term Loan (as described in "Note 5 - Debt"). We recorded debt assumed in connection with the NCI Transaction at its face amount, which approximated fair market value on the closing date. Incentives and other intangibles include tax incentives totaling approximately $19.8 million associated with certain of the acquired properties and are being amortized over a weighted-average amortization period of approximately 9.1 years, which is the period that we expect to meet the requirements to receive payment of the tax incentives. Other intangible assets totaling approximately $3.9 million are related to key money associated with certain of the lodging properties acquired in the NCI Transaction and are being amortized over a weighted-average amortization period of approximately 19.7 years, which was the remaining key money contract period with the franchisor. A summary of the lodging properties acquired since January 1, 2022 is as follows (in thousands):
(1) On January 13, 2022, we acquired a portfolio of twenty-six lodging properties and two parking garages for an aggregate purchase price of $766.0 million. The lodging properties acquired included 21 hotels and two parking garages in Texas, two hotels in Louisiana and three hotels in Oklahoma under the following brands: Marriott (13), Hilton (7), Hyatt (4), and IHG (2). On March 23, 2022, we acquired the Canopy Hotel by Hilton in New Orleans upon completion of its construction for a purchase price of $56.0 million. (2) We acquired a 90% equity interest in the AC/Element Hotel for $80.1 million based on the exercise price of the Initial Purchase Option of $89.0 million. The transaction included the assumption of $47.0 million of debt resulting in a net consideration payment requirement of $42.0 million. We paid 90% of the required net consideration with the conversion of our $29.9 million mezzanine financing loan into equity and a cash payment of $7.9 million. The carrying amount of our Initial Purchase Option of $2.8 million is also included in the total amount allocated to the assets acquired. The Brickell Joint Venture partner’s non-controlling interest of $6.9 million represents 10% of the fair value of the net assets on the transaction date, determined by a third-party valuation expert based on discounted forecasted future cash flows of the net assets acquired. We also incurred $0.6 million of transaction costs. The result is a total amount allocated to the assets acquired of $95.1 million plus an intangible asset totaling $2.0 million related to the assumption of the franchises for the hotel properties and a related key money liability. (3) On October 26, 2022, we completed the acquisition of a 90% equity interest in Onera Joint Venture which owns a high-end glamping property for $5.2 million based on aggregate purchase price of $5.8 million. We paid for our 90% in cash, plus $0.5 million of transaction costs. Additionally, the transaction includes additional contingent consideration (based on performance of the property for the 12-month period ending July 31, 2023) that was paid in September 2023 of $1.8 million, payable to the seller. The Onera Joint Venture has a 100% fee simple interest in real property and improvements consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site in the future. All of the acquisitions completed during the nine months ended September 30, 2023 and 2022 were recorded as asset acquisitions. As such, we allocated the aggregate purchase price paid for each transaction to the net assets acquired based on their relative fair values. In determining relative fair values, we made significant estimates regarding replacement costs for the buildings and furniture, fixtures and equipment, and judgments related to certain market assumptions. Acquisition costs related to the transactions have been capitalized as part of the recorded amounts of the acquired net assets. The allocation of the aggregate purchase prices and contingent consideration to the fair value of assets and liabilities acquired for the above acquisitions is as follows (in thousands):
(1) Total assets acquired during the nine months ended September 30, 2023 is based on an aggregate purchase price of $42.7 million plus transaction costs of $0.1 million and $2.0 million related to contingent consideration paid to the seller in September 2023. See "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests" for details related to the Onera Joint Venture. Total assets acquired during the nine months ended September 30, 2022 is based on an aggregate purchase price of $909.1 million adjusted for the following items: •NCI Transaction: interest swap breakage fees and debt defeasance costs of $3.5 million, a reduction to the value of the Common Units issued on the closing date of $2.5 million, plus transaction costs of $3.0 million, and intangible assets totaling $9.1 million acquired outside of escrow, and •Brickell Transaction: Brickell Joint Venture partner’s non-controlling interest of $6.9 million; Brickell Joint Venture partner’s non-controlling interest share of the debt assumed as part of the transaction of $4.7 million, the assumption of intangible assets totaling $2.0 million, the carrying amount of our Initial Purchase Option of $2.9 million, and transactions costs of $0.6 million. (2) Excludes the acquisition of the 11-unit Onera - Fredericksburg, TX property which was acquired in October 2022. Lodging Property Sales Sale of a Portfolio of Four Lodging Properties On May 19, 2023, we completed the sale of four lodging properties (the "Sale Portfolio") for an aggregate gross selling price of $28.1 million as follows:
At December 31, 2022, we classified the Sale Portfolio as Assets Held for Sale and recorded a write-down of $2.9 million to reduce the carrying amount of the net assets to the selling price less estimated costs to sell. As such, the net selling proceeds approximated the net carrying amount of the Sale Portfolio at closing. Sale of the Hilton Garden Inn San Francisco North In May 2022, the GIC Joint Venture completed the sale of a 169-guestroom Hilton Garden Inn San Francisco Airport North in San Francisco, CA for a gross selling price of $75.0 million. The sale of this property resulted in a net gain of $20.5 million to the GIC Joint Venture during the nine months ended September 30, 2022. Intangible Assets Intangible assets, net is as follows (in thousands):
We recorded amortization expense related to intangible assets of approximately $1.0 million for both the three months ended September 30, 2023 and 2022, and $3.1 million and $3.0 million for the nine months ended September 30, 2023 and 2022, respectively. Future amortization expense related to intangible assets is as follows (in thousands):
Assets Held for Sale Assets Held for Sale at September 30, 2023 included two parcels of undeveloped land and a 123-guestroom hotel property as follows:
The San Antonio, TX parcel of undeveloped land is currently under contract to sell and is expected to close in the first quarter of 2024. On September 27, 2023, we entered into an agreement to sell a 123-guestroom hotel property for a gross selling price of $8.3 million, which approximates its current carrying amount. We have received $0.5 million of non-refundable earnest money from the buyer, and we expect the transaction to close during the fourth quarter of 2023.
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REAL ESTATE LOANS, NET | REAL ESTATE LOANS, NET Investment in real estate loans, net is as follows (in thousands):
On June 29, 2018, we sold two hotels for an aggregate selling price of $24.9 million. We provided seller financing totaling $3.6 million on the sale of these properties under two, 3.5-year second mortgage notes with a blended interest rate of 7.38% that were further collateralized by a personal guarantee from the principal of the borrower. During the year ended December 31, 2020, we recorded an allowance for credit losses in an amount equal to the outstanding principal balance of the loans due to a borrower default caused by the negative effects of the COVID-19 pandemic. On June 1, 2021, we amended the terms and extended the maturity dates of each loan to December 31, 2022. Under the modified loan terms, interest accrues monthly at a rate of 9.00% per annum, including 5.00% payable in cash and 4.00% paid-in-kind. On September 15, 2022, we received a $0.6 million payment to repay one of the two loans in full. We also extended the maturity date of the remaining loan to December 31, 2023. During the year ended December 31, 2022, the remaining loan and underlying collateral were transferred to the control of the estate of the principal borrower. The outstanding principal balance of the remaining seller-financing loan continues to be fully reserved pending repayment by the borrower's estate. In April 2023 and October 2023, we received scheduled principal payments of $0.3 million each on the loan from the borrower's estate. The seller-financing loan, net is included in Prepaid expenses and other in our Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022.
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DEBT | DEBT Debt, net of debt issuance costs, is as follows (in thousands):
The weighted-average interest rate, after giving effect to our interest rate derivatives, for all borrowings was 5.32% at September 30, 2023 and 5.04% at December 31, 2022. There are currently no defaults under any of the Company's loan agreements. We have entered into interest rate swaps to fix the interest rates on a portion of our variable interest rate indebtedness. In March 2023, subsidiaries of the GIC Joint Venture that are the borrowers under the GIC Joint Venture Term Loan entered into two $100.0 million interest rate swaps to fix one-month term SOFR until January 2026. The interest rate swaps became effective on July 1, 2023 and have a termination date of January 13, 2026. See "Note 7 - Derivative Financial Instruments and Hedging" to the Condensed Consolidated Financial Statements for additional information. Our total fixed-rate and variable-rate debt, after consideration of our interest rate derivative agreements that are currently effective, is as follows (in thousands):
(1) At September 30, 2023, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 74% of our total pro rata indebtedness when taking into consideration interest rate swaps. Information about the fair value of our fixed-rate debt that is not recorded at fair value is as follows (in thousands):
Detailed information about our gross debt at September 30, 2023 and December 31, 2022 is as follows (dollars in thousands):
(1) The 2018 Senior Credit Facility and Term Loans are supported by a borrowing base of 53 unencumbered hotel properties and a pledge of the equity securities of the entities that own and operate the 53 unencumbered hotels. (2) The maturity dates for the $400 million Revolver and the $200 Million Term Loan each individually can be extended to June 21, 2028 at the Company’s option, subject to certain conditions. (3) The Bank of Cascades mortgage loan is comprised of two promissory notes that are secured by the same collateral and have cross-default provisions. (4) The $125 Million Revolver and the $75 Million Term Loan are secured by pledges of the equity in the entities and affiliated entities that own 11 lodging properties. Each individually can be extended for a single consecutive 12-month period through September 2028 at the option of the GIC Joint Venture, subject to certain conditions. (5) The GIC Joint Venture's $410 million term loan with Bank of America, N.A. is secured by pledges of the equity in the entities and affiliated entities that own 27 lodging properties. 2018 Senior Credit Facility On December 6, 2018, the Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the loan documentation as a subsidiary guarantor, entered into a $600.0 million senior credit facility (the “2018 Senior Credit Facility”) with a syndicate of lenders. The 2018 Senior Credit Facility is comprised of a $400.0 million revolver (the "$400 Million Revolver") and a $200.0 million term loan facility (the “$200 Million Term Loan”). The 2018 Senior Credit Facility has a $50.0 million sub-limit for the issuance of letters of credit and an accordion feature which allows the Company to increase the total commitments by an aggregate of up to $300.0 million, subject to certain conditions. On July 21, 2022, the interest rate on the 2018 Senior Credit Facility was transitioned from LIBOR to the Secured Overnight Financing Rate (“SOFR”). At September 30, 2023, our $200 Million Term Loan was fully funded, and our $400 Million Revolver had $15.0 million in outstanding borrowings. Borrowings under the 2018 Senior Credit Facility are limited by the value of the Unencumbered Assets, detailed below. Amendment to the 2018 Senior Credit Facility In June 2023, the Company entered into an amendment to the 2018 Senior Credit Facility (the “Credit Facility Amendment”). The Credit Facility Amendment extends the maturity date of the $400 Million Revolver to June 2027, which may be extended by the Company for up to two consecutive six-month periods, subject to certain conditions. The Credit Facility Amendment extends the maturity date of the $200 Term Loan to June 2026, which may be extended by the Company for up to two consecutive twelve-month periods, subject to certain conditions. The interest rate on the $400 Million Revolver is unchanged and is based on the higher of the following: i. a pricing grid ranging from 140 basis points to 240 basis points plus Adjusted Daily SOFR or Adjusted Term SOFR, depending on the Company's leverage ratio (as defined in the loan documents); and ii. a pricing grid ranging from 40 basis points to 140 basis points over the Base Rate, depending on the Company's leverage ratio (as defined in the loan documents). The interest rate on the $200 Million Term Loan pursuant to the Credit Facility Amendment is unchanged and is based on the higher of the following: i. a pricing grid ranging from 135 basis points to 235 basis points plus Adjusted Daily SOFR or Adjusted Term SOFR, depending on the Company's leverage ratio (as defined in the loan documents); and ii. a pricing grid ranging from 35 basis points to 135 basis points over the Base Rate, depending on the Company's leverage ratio (as defined in the loan documents). Term SOFR will be available for one, three and six-month interest periods. The Base Rate is a fluctuating rate of interest per annum equal to the highest of (a) the Federal Funds Rate plus 0.50%, (b) the rate of interest in effect for such day as publicly announced by Bank of America as its “prime rate,” (c) SOFR published on such day on the Federal Reserve Bank of New York’s website (or any successor source) plus 1.00% and (d) 1.00%. For purposes of the 2018 Senior Credit Facility, SOFR is subject to a floor of zero basis points. We are also required to pay an unused fee (“Unused Fee”) on the undrawn portion of the $400 Million Revolver. The Unused Fee shall be calculated on a daily basis on the unused amount of the $400 Million Revolver multiplied by (i) 0.25% per annum in the event that Revolver usage is greater than 50%, and (ii) 0.20% per annum in the event that Revolver usage is equal to or less than 50%. The Unused Fee is payable quarterly in arrears and on the final maturity date of the $400 Million Revolver. The Credit Facility Amendment requires the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own all 53 properties included in the unencumbered asset pool supporting the facility (“Unencumbered Properties”), as well as the equity interests in the TRS Lessees related to such Unencumbered Properties until the borrower meets certain conditions for their release. 2018 Term Loan On February 15, 2018, our Operating Partnership, as borrower, the Company, as parent guarantor, and each party executing the term loan documentation as a subsidiary guarantor, entered into a $225.0 million term loan (the “2018 Term Loan”), as amended, with a syndicate of lenders listed in the loan documents, which is fully drawn as of September 30, 2023. The 2018 Term Loan has an accordion feature that allows us to increase the total commitments by $150.0 million prior to the amended and extended maturity date of February 14, 2025, subject to certain conditions. We pay interest on advances at varying rates, based upon, at our option, either (i) daily, 1-, 3-, or 6-month SOFR (subject to a floor of 25 basis points), plus a SOFR adjustment equal to 10 basis points and an applicable margin between 135 and 215 basis points, depending upon our leverage ratio (as defined in the loan documents). We are required to pay other fees, including arrangement and administrative fees. Financial and Other Covenants. We are required to comply with various financial and other covenants to draw and maintain borrowings under the 2018 Term Loan. At September 30, 2023, we were in compliance with all financial covenants. Unencumbered Assets. Amendments to the 2018 Term Loan entered into between May 2020 and July 2022 require the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own the Unencumbered Properties, as well as the equity interests in the TRS Lessees related to such Unencumbered Properties until the borrower meets certain conditions for the release of such pledges. During the period that the pledges are in place, as well as at all other times during the term of the facility, borrowings under the 2018 Term Loan are limited by the value of the Unencumbered Assets. Convertible Senior Notes and Capped Call Options On January 7, 2021, we entered into an underwriting agreement (the “Convertible Notes Offering”) pursuant to which the Company agreed to offer and sell $287.5 million aggregate principal amount of 1.50% convertible senior notes due in 2026 (the “Convertible Notes"). The net proceeds from the Convertible Notes Offering, after deducting underwriting discounts and commissions and offering expenses payable by the Company (including net proceeds from the full exercise by the underwriters of their over-allotment option to purchase additional Convertible Notes), were approximately $280.0 million before consideration of the Capped Call Transactions (as described below). These proceeds were used to pay the cost of the Capped Call Transactions and to partially repay outstanding obligations under the 2018 Senior Credit Facility and another term loan. The Convertible Notes bear interest at a rate of 1.50% per year, payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2021. The Convertible Notes will mature on February 15, 2026 (the “Maturity Date”), unless earlier converted, purchased, or redeemed. Prior to August 15, 2025, the Convertible Notes will be convertible only upon certain circumstances and during certain periods. On or after August 15, 2025 and through the Maturity Date, holders may convert any of their Convertible Notes into shares of the Company’s common stock, at the applicable conversion rate, unless the Convertible Notes have been previously purchased or redeemed by the Company. The Company recorded coupon interest expense of $1.1 million for each of the three months ended September 30, 2023 and 2022 and $3.2 million for each of the nine months ended September 30, 2023 and 2022. The Company incurred debt issuance costs related to the Convertible Notes Offering of $7.6 million of which $0.4 million was amortized for each of the three months ended September 30, 2023 and 2022 and $1.1 million was amortized for each of the nine months ended September 30, 2023 and 2022. Including the amortization of the debt issuance costs, the effective interest rate on the Convertible Notes was approximately 2.00% for the three and nine months ended September 30, 2023 and 2022. The unamortized discount related to the Convertible Notes was $3.6 million and $4.7 million at September 30, 2023 and December 31, 2022, respectively. The initial conversion rate of the Convertible Notes is 83.4028 shares of common stock per $1,000 principal amount of Convertible Notes, which is equivalent to an initial conversion price of $11.99 per share of common stock based on the 37.5% base conversion premium on the reference price of $8.72 per share. In no event will the conversion rate exceed 114.6788 shares of common stock per $1,000 principal amount of Convertible Notes, subject to certain adjustments defined in the Convertible Notes Offering. Commensurate with the declaration of dividends on our common stock and Common Units on July 27, 2023, the conversion rate of the Convertible Notes was adjusted to 86.2627 shares of common stock per $1,000 principal amount of Convertible Notes. On January 7, 2021, in connection with the pricing of the Convertible Notes, and on January 8, 2021, in connection with the full exercise by the Underwriters of their option to purchase additional Convertible Notes pursuant to the Underwriting Agreement, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the underwriters or their respective affiliates and another financial institution (the “Capped Call Counterparties”). The Capped Call Transactions initially cover, subject to anti-dilution adjustments substantially similar to those applicable to the Convertible Notes, the number of shares of common stock underlying the Convertible Notes. The Capped Call Transactions are generally expected to reduce the potential dilution to holders of shares of common stock upon conversion of the Convertible Notes or offset the potential cash payments that the Company could be required to make in excess of the principal amount of any converted Convertible Notes upon conversion thereof, with such reduction or offset subject to a cap. The effective strike price of the Capped Call Transactions was initially $15.26, which represented a premium of 75.0% over the last reported sale price of our common stock on the New York Stock Exchange on January 7, 2021 and is subject to certain adjustments under the terms of the Capped Call transactions. The current strike price is $14.75 due to the adjustments related to the dividends paid during the nine months ended September 30, 2023 and the year ended December 31, 2022. Mortgage Loans At September 30, 2023 and December 31, 2022, we had mortgage loans totaling $123.8 million and $125.6 million, respectively, that are secured primarily by first mortgage liens on eight lodging properties. Metabank Loan On June 30, 2017, Summit Meta 2017, LLC (“SM-17”), a subsidiary of our Operating Partnership, entered into a $47.6 million secured, non-recourse loan with MetaBank (the "MetaBank Loan"). The MetaBank Loan provides for a fixed interest rate of 4.44%, amortizes over 25 years, and matures on July 1, 2027. The MetaBank Loan is secured by three lodging properties and is subject to a prepayment penalty if prepaid prior to April 1, 2027. In or around December 2021, MetaBank sold the MetaBank Loan to Bayside MB CRE Loans, LLC (“Bayside”). On October 25, 2022, SM-17 received a letter from Bayside’s counsel alleging various events of default under the MetaBank Loan, primarily related to certain non-monetary covenants. SM-17 engaged legal counsel which sent a written response to Bayside disputing that any events of default have occurred. On April 18, 2023 and September 15, 2023, SM-17 received additional letters from Bayside's counsel reasserting their allegations of default. SM-17 continues to dispute that any events of default have occurred. Commercial Mortgage-backed Securities Mortgage Loans In August 2022 and December 2022, we entered into agreements to fully defease four commercial mortgage-backed securities ("CMBS") mortgage loans. The aggregate outstanding balances of the loans at the defeasance dates totaled $87.3 million. The loans were defeased by placing into trust an amount sufficient to cover future principal and interest payments. The defeasance resulted in the 11 lodging properties that collateralized the CMBS mortgage loans becoming unencumbered. We incurred transaction costs of $0.6 million that were recorded as Other (loss) income, net in our Statement of Operations for the three months ended September 30, 2022. We also expensed $0.1 million of unamortized deferred financing costs related to the defeased CMBS mortgage loans as debt transaction costs during the three months ended September 30, 2022. GIC Joint Venture Credit Facility On October 8, 2019, Summit JV MR 1, LLC (the “Borrower”), as borrower, and Summit Hospitality JV, LP (the “Parent” or "GIC Joint Venture"), as parent of the Borrower, and each party executing the credit facility documentation as a subsidiary guarantor, entered into a $200.0 million credit facility (the “GIC Joint Venture Credit Facility”) with Bank of America, N.A., as administrative agent and sole initial lender, and BofA Securities, Inc., as sole lead arranger and sole bookrunner. The Operating Partnership and the Company are not borrowers or guarantors of the GIC Joint Venture Credit Facility. The GIC Joint Venture Credit Facility is guaranteed by all of the Borrower’s existing and future subsidiaries, subject to certain exceptions. The GIC Joint Venture Credit Facility is comprised of a $125.0 million revolving credit facility (the “$125 Million Revolver”) and a $75.0 million term loan (the “$75 Million Term Loan”). The GIC Joint Venture Credit Facility has an accordion feature which allows us to increase the total commitments by up to $300.0 million, for aggregate potential borrowings of up to $500.0 million. At September 30, 2023, we had $125.0 million outstanding under the $125 Million Revolver. Amendments to the $200 million GIC Joint Venture Credit Facility On February 15, 2023, the Borrower entered into the Fifth Amendment to Credit Agreement to, among other things, convert the reference rate used in interest rate calculations from LIBOR to adjusted term or daily SOFR (using a 10-basis point credit spread adjustment), with Borrower's option to borrow base rate advances, term SOFR advances or daily SOFR advances. On September 15, 2023, the Company entered into an amendment to the GIC Joint Venture Credit Facility (the "GIC Joint Venture Credit Amendment"). The GIC Joint Venture Credit Amendment extends the maturity of the $125 Million Revolver and the $75 Million Term Loan to September 2027, which may be extended by the Company for a single twelve-month period, subject to certain conditions. The interest rate on the $125 Million Revolver is unchanged and is based on the higher of the following: i.Daily SOFR or Term SOFR (1-month or 3-month), plus a SOFR adjustment of 0.10%, plus a margin of 2.15%, or, ii.the applicable base rate, which is the greatest of the administrative agent’s prime rate, the federal funds rate plus 0.50%, and 1-month Term SOFR plus 1.00%, plus a base rate margin of 1.15%. The interest rate on the $75 Million Term Loan is five basis points less than the interest rate on the $125 Million Revolver referenced above. In addition, on a quarterly basis, we will be required to pay a fee on the unused portion of the Credit Facility equal to the unused amount multiplied by an annual rate of 0.25% of the average unused amount of the Credit Facility. We will also be required to pay other fees, including customary arrangement and administrative fees. The GIC Joint Venture Credit Amendment requires the borrower and certain subsidiaries to pledge to the secured parties all of the equity interests in the entities that own the 11 properties included in the borrowing base assets, the related TRS entities that lease each of the borrowing base assets, and all other subsidiaries of the borrower and the subsidiary guarantors, subject to certain exceptions. GIC Joint Venture Term Loan In connection with the NCI Transaction, on January 13, 2022, Summit JV MR 2, LLC, Summit JV MR 3, LLC and Summit NCI NOLA BR 184, LLC (each of which is a subsidiary of the GIC Joint Venture, and are collectively, the “Term Loan Borrower”), the GIC Joint Venture, as parent guarantor, and each party executing the credit facility documentation as a subsidiary guarantor, entered into a $410.0 million senior secured term loan facility (the “GIC Joint Venture Term Loan”) with Bank of America, N.A., as administrative agent and initial lender, Wells Fargo Bank, National Association, as syndication agent and an initial lender, and BofA Securities, Inc. and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners. Neither the Operating Partnership nor the Company are borrowers or guarantors of the GIC Joint Venture Term Loan. The GIC Joint Venture Term Loan is guaranteed by the GIC Joint Venture and all of the Term Loan Borrower's existing and future subsidiaries, subject to certain exceptions. The GIC Joint Venture Term Loan provides for a $410.0 million term loan and has an accordion feature which permits an increase in the total commitments by up to $190.0 million, for aggregate potential borrowings of up to $600.0 million. The GIC Joint Venture Term Loan will mature on January 13, 2026 and can be extended for one twelve-month period at the option of the GIC Joint Venture, subject to certain conditions. As of September 30, 2023, we had $410.0 million outstanding on the GIC Joint Venture Term Loan bearing interest at a floating rate of SOFR plus 2.75%. The GIC Joint Venture Term Loan is secured primarily by a first priority pledge of the Term Loan Borrower's equity interests in the subsidiaries that hold a direct or indirect interest in the 27 lodging properties and two parking facilities purchased in the NCI Transaction that constitute borrowing base assets. The GIC Joint Venture Term Loan contains terms, conditions, and covenants typical for similar credit facilities. PACE Loan As part of the NCI Transaction, a subsidiary of the GIC Joint Venture assumed a Property Assessed Clean Energy ("PACE") loan of approximately $6.5 million. The loan bears fixed interest at 6.10%, has an amortization period of 20 years, and matures on July 31, 2040. The PACE loan is secured by an assessment lien imposed by the County of Tarrant, TX for the benefit of the lender. As of September 30, 2023, the outstanding balance of the PACE loan was $6.1 million. Brickell Mortgage Loan In June 2022, the Company entered into a joint venture (the "Brickell Joint Venture") with C-F Brickell, LLC, a Delaware limited liability company ("C-F Brickell") that was the developer of the AC/Element Hotel, to facilitate the exercise of the Initial Purchase Option to acquire a 90% equity interest in the Brickell Joint Venture, which owned a 100% interest in the AC/Element Hotel. On June 10, 2022, the Brickell Joint Venture entered into a $47.0 million mortgage loan and non-recourse guaranty with City National Bank of Florida (the "City National Bank Loan") to finance the AC/Element Hotel. The City National Bank Loan provided for an interest rate equal to one-month LIBOR plus 300 basis points through June 30, 2023. Effective July 1, 2023, the interest rate for the City National Bank Loan was converted to one-month SOFR plus 300 basis points. Payment terms include an interest-only period through June 30, 2024 and the loan will amortize based on a 25-year schedule from July 1, 2024 through the maturity date of June 30, 2025. The City National Bank Loan is prepayable at any time without penalty. Financial Guarantee During the nine months ended September 30, 2023, we issued a $3.0 million letter of credit to the senior lender of a glamping project for which we provided the Onera Mezzanine Loan as additional support on behalf of the developer. We recorded the non-contingent portion of financial guarantee as a liability of $0.2 million on the transaction date, which is the premium receivable for the guarantee payable to us by the borrower. The liability is being amortized using the straight-line method into interest income over the term of the letter of credit and is recorded in Accrued expenses and other in our Condensed Consolidated Balance Sheet at September 30, 2023. Currently, payment under the contingent portion of the guarantee is not probable nor reasonably estimable. Therefore, no liability for the contingent portion of the guarantee is recorded at September 30, 2023. Property and Casualty Insurance Premium Financing During the nine months ended September 30, 2023, we financed our property and casualty insurance premium totaling $10.9 million through our insurance broker. The financing arrangement requires monthly payments of $1.0 million over an 11-month period ending in January, 2024 at an annual fixed financing rate of 4.89%. The outstanding principal amount of the financing may be prepaid at any time prior to the end of the financing period. The balance of the financing is $3.1 million at September 30, 2023 and is recorded in Accrued expenses and other in our Condensed Consolidated Balance Sheet.
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | LEASES The Company has operating leases related to the land under certain lodging properties, conference centers, parking spaces, automobiles, our corporate office, and other miscellaneous office equipment. These leases have remaining terms of one year to 74.8 years, some of which include options to extend the leases for additional years. The exercise of lease renewal options is at our sole discretion. As of September 30, 2023 and December 31, 2022, the weighted-average operating lease term was approximately 32.3 years and 34.0, respectively. Certain leases also include options to purchase the leased property. As of September 30, 2023 and December 31, 2022, our weighted-average incremental borrowing rate for leases was 4.8%. Certain of our lease agreements include rental payments based on a percentage of revenue over contractual levels and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or restrictive covenants that materially affect our business. In addition, we lease certain owned real estate to third parties. We recorded gross third-party tenant income of $0.6 million and $0.7 million during the three months ended September 30, 2023 and 2022, respectively, and $2.0 million and $1.8 million during the nine months ended September 30, 2023 and 2022, respectively, which were recorded in Other income (loss), net in our Condensed Consolidated Statement of Operations. During the three months ended September 30, 2023 and 2022, the Company's total operating lease cost was $1.1 million and $1.0 million, respectively, and the operating cash payments on operating leases were $1.0 million for the three months ended September 30, 2023 and 2022. During the nine months ended September 30, 2023 and 2022, the Company's total operating lease cost was $3.4 million and $3.0 million, respectively, and the operating cash payments on operating leases were $3.0 million and $2.8 million, respectively. Operating lease maturities as of September 30, 2023 are as follows (in thousands):
(1)Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING | DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING Information about our derivative financial instruments at September 30, 2023 and December 31, 2022 is as follows (dollars in thousands):
(1) At December 31, 2022, we had interest rate swaps that were in effect with a notional amount totaling $400 million. On July 26, 2022, we executed two additional interest rate swaps with a notional amount totaling $200 million that become effective on January 31, 2023 upon the expiration of two interest rate swaps entered into on October 2, 2017 with a notional amount totaling $200 million. (2) At September 30, 2023, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 74% of our total pro rata indebtedness when taking into consideration interest rate swaps. At September 30, 2023 and December 31, 2022, we had $600.0 million of debt with variable interest rates that had been converted to fixed interest rates through derivative financial instruments which are carried at fair value. Differences between carrying value and fair value of our fixed-rate debt are primarily due to changes in interest rates. Inherently, fixed-rate debt is subject to fluctuations in fair value as a result of changes in the current market rate of interest on the valuation date. On March 24, 2023, subsidiaries of the GIC Joint Venture that are the borrowers under the GIC Joint Venture Term Loan entered into two $100.0 million interest rate swaps to fix one-month term SOFR until January 2026. The interest rate swaps became effective on July 1, 2023 and have a termination date of January 13, 2026. Pursuant to the interest rate swaps, we will pay a fixed rate of 3.35% and receive the one-month term SOFR floating rate index. Our interest rate swaps have been designated as cash flow hedges and are valued using a market approach, which is a Level 2 valuation technique. At September 30, 2023 and December 31, 2022, our interest rate swaps were in an asset position. Derivative assets related to our interest rate swaps are recorded in Other assets in our Condensed Consolidated Balance Sheets. We are not required to post any collateral related to these agreements and are not in breach of any financial provisions of the agreements. Changes in the fair value of the hedging instruments are deferred in Other comprehensive income and are reclassified as Interest expense in our Condensed Consolidated Statements of Operations in the period in which the hedged item affects earnings. In the next twelve months, we estimate that $14.1 million will be reclassified from Other comprehensive income and recorded as a decrease to interest expense. We characterize the realized and unrealized gain or loss related to derivative financial instruments designated as cash flow hedges as follows (in thousands):
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EQUITY |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY | EQUITY Common Stock The Company is authorized to issue up to 500,000,000 shares of common stock, $0.01 par value per share ("Common Stock"). Each outstanding share of our Common Stock entitles the holder to one vote on all matters submitted to a vote of stockholders, including the election of directors and, except as may be provided with respect to any other class or series of stock, the holders of such shares possess the exclusive voting power. On May 9, 2022, the Company and the Operating Partnership entered into an equity distribution agreement (the “Equity Distribution Agreement”) with a group of underwriters as sales agents for the Company, principals and with certain exceptions, forward sellers (collectively the “Managers”) and certain banks as forward purchasers, providing for the offer and sale of shares of the Company’s Common Stock, having a maximum aggregate offering price of up to $200,000,000 through or to the Managers, as the Company’s sales agents or, if applicable, as forward sellers, or directly to the Managers, as principals (the “2022 ATM Program”). To date, we have not sold any shares of our Common Stock under the 2022 ATM Program. Changes in Common Stock during the nine months ended September 30, 2023 and 2022 were as follows:
Preferred Stock The Company is authorized to issue up to 100,000,000 shares of preferred stock, $0.01 par value per share, of which 89,600,000 is currently undesignated, 6,400,000 shares have been designated as 6.25% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") and 4,000,000 shares have been designated as 5.875% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock"). The Company's outstanding shares of preferred stock (collectively, “Preferred Shares”) rank senior to our Common Stock and on parity with each other with respect to the payment of dividends and distributions of assets in the event of a liquidation, dissolution, or winding up. The Preferred Shares do not have maturity dates and are not subject to mandatory redemption or sinking fund requirements. The Series E Preferred Stock is redeemable by the Company at its election. The Company may not redeem the Series F Preferred Stock prior to August 12, 2026, except in limited circumstances relating to the Company’s continuing qualification as a REIT or in connection with certain changes in control. When redeemable, the Company may, at its option, redeem the applicable Preferred Shares, in whole or from time to time in part, by payment of $25 per share, plus any accumulated, accrued and unpaid distributions up to, but not including the date of redemption. If the Company does not exercise its rights to redeem the Preferred Shares upon certain changes in control, the holders of the Preferred Shares have the right to convert some or all of their shares into a number of the Company’s Common Stock based on a defined formula, subject to a share cap, or alternative consideration. The share cap on each share of Series E Preferred Stock is 3.1686 shares of Common Stock and each share of Series F Preferred Stock is 5.875 shares of Common Stock, all subject to certain adjustments. The Company pays dividends at an annual rate of $1.5625 for each Series E Preferred Stock and $1.46875 for each share of Series F Preferred Stock. Dividend payments are made quarterly in arrears on or about the last day of February, May, August, and November of each year.
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NON-CONTROLLING INTERESTS AND REDEEMABLE NON-CONTROLLING INTERESTS |
9 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
NON-CONTROLLING INTERESTS AND REDEEMABLE NON-CONTROLLING INTERESTS | NON-CONTROLLING INTERESTS AND REDEEMABLE NON-CONTROLLING INTERESTS Non-controlling Interests in Operating Partnership Pursuant to the limited partnership agreement of our Operating Partnership, the unaffiliated third parties who hold Common Units have the right to cause us to request that we redeem their Common Units in exchange for cash based upon the fair value of an equivalent number of our shares of Common Stock at the time of redemption; however, the Company has the option to redeem Common Units with shares of our Common Stock on a one-for-one basis. The number of shares of our Common Stock issuable upon redemption of Common Units may be adjusted upon the occurrence of certain events such as share dividend payments, share subdivisions or combinations. On January 13, 2022 and March 23, 2022, in connection with the NCI Transaction, the Operating Partnership issued an aggregate of 15,864,674 Common Units as partial consideration for the purchase. NewcrestImage and other unaffiliated third parties collectively owned 15,969,807 and 15,976,807 of Common Units at September 30, 2023 and December 31, 2022, respectively, which represents approximately 13% of the outstanding Common Units. We classify outstanding Common Units held by unaffiliated third parties as non-controlling interests, a component of equity in our Condensed Consolidated Balance Sheets. The portion of net income (loss) allocated to these Common Units is included on the Company’s Condensed Consolidated Statements of Operations as Net income (loss) attributable to non-controlling interests. Non-controlling Interests in Consolidated Joint Ventures At September 30, 2023, the Company is a partner with a majority equity interest in three joint ventures as described below. We classify the non-controlling interests in our joint ventures as a component of equity in the Company’s Condensed Consolidated Balance Sheets. The portion of net income (loss) allocated to these non-controlling interests is included on the Company’s Condensed Consolidated Statements of Operations as Net income (loss) attributable to non-controlling interests. GIC Joint Venture In July 2019, the Company entered into the GIC Joint Venture to acquire assets that align with the Company’s current investment strategy and criteria. The Company serves as general partner and asset manager of the GIC Joint Venture and has historically and in the future intends to invest 51% of the equity capitalization of the limited partnership, with GIC investing the remaining 49%. The Company earns fees for providing services to the GIC Joint Venture and has the potential to earn incentive fees based on the GIC Joint Venture achieving certain return thresholds. As of September 30, 2023, the GIC Joint Venture owns 41 lodging properties containing 5,581 guestrooms in nine states. The GIC Joint Venture owns the lodging properties through master REITs (“Master REIT”) and subsidiary REITs (“Subsidiary REIT”). All of the lodging properties owned by the GIC Joint Venture are leased to taxable REIT subsidiaries of the Subsidiary REITs (“Subsidiary REIT TRSs”). To qualify as a REIT, the Master REIT and each Subsidiary REIT must meet all of the REIT requirements provided in the Internal Revenue Code. Taxable income related to the Subsidiary REIT TRSs is subject to federal, state and local income taxes at applicable tax rates. Brickell Joint Venture In June 2022, the Company entered into the Brickell Joint Venture to facilitate the exercise of the Initial Purchase Option to acquire a 90% equity interest in the AC/Element Hotel. Our joint venture partner, C-F Brickell, owns the remaining 10% equity interest in the Brickell Joint Venture. The Company has an option to purchase the remaining 10% equity interest in the Brickell Joint Venture from C-F Brickell in December 2026 with the exercise of a second purchase option at its market value on the exercise date. The Company serves as the managing member of the Brickell Joint Venture. Onera Joint Venture In October 2022, the Company entered into a joint venture with Onera (the "Onera Joint Venture"), developers of alternative accommodation properties, with the acquisition of a 90% equity interest in the Onera Joint Venture for $5.2 million in cash, plus additional contingent consideration of $1.8 million paid in September 2023. The $1.8 million contingent consideration paid represents our 90% pro rata share of the maximum increase in value of the property of $2.0 million as a result of the property outperforming a pre-established threshold over a twelve-month period after the closing of the transaction. The Onera Joint Venture owns a 100% fee simple interest in real property and improvements located in Fredericksburg, Texas (the "Onera Property") consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site. The Company serves as the managing member of the Onera Joint Venture. Redeemable Non-controlling Interests In connection with the NCI Transaction, Summit Hotel GP, LLC, a wholly-owned subsidiary of the Company and the sole general partner of the Operating Partnership, on its own behalf as general partner of the Operating Partnership and on behalf of the limited partners of the Operating Partnership, on January 13, 2022, entered into the Tenth Amendment (the “Tenth Amendment”) to the First Amended and Restated Agreement of Limited Partnership of the Operating Partnership, to provide for the issuance of up to 2,000,000 Series Z Preferred Units. The Series Z Preferred Units rank on a parity with the Operating Partnership’s 6.25% Series E and 5.875% Series F Preferred Units and holders will receive quarterly distributions at a rate of 5.250% per year. From issuance until the tenth anniversary of their issuance, the Series Z Preferred Units will be redeemable at the holder’s request at any time, or in connection with a change of control of the Company, for, at the Company’s election, cash or shares of the Company’s 5.250% Series Z Cumulative Perpetual Preferred Stock (which will be designated and authorized following notice of redemption by holder of the Series Z Preferred Units) on a one-for-one basis. After the fifth anniversary of their issuance, the Company may redeem the Series Z Preferred Units for cash at a redemption amount of $25 per unit. For a 90-day period immediately following both the tenth and the eleventh anniversaries of their issuance or in connection with a change of control of the Company, the Series Z Preferred Units will be redeemable at the holder’s request for cash at a redemption amount of $25 per unit. On January 13, 2022 and March 23, 2022, in connection with the NCI Transaction, the Operating Partnership issued an aggregate of 2,000,000 Series Z Preferred Units as partial consideration for the purchase. At September 30, 2023, the redeemable Series Z Preferred Units issued in connection with the NCI Transaction are recorded as temporary equity and reflected as Redeemable non-controlling interests on our Consolidated Condensed Balance Sheets.
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FAIR VALUE MEASUREMENT |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE MEASUREMENT | FAIR VALUE MEASUREMENT The following table presents information about our financial instruments measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022. In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, we classify assets and liabilities based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Disclosures concerning financial instruments measured at fair value are as follows (in thousands):
The Onera Purchase Option does not have a readily determinable fair value. The fair value was estimated using the Black-Scholes model and was based on unobservable inputs for which there is little or no market information available. As such, we were required to develop assumptions to determine the fair value of the Onera Purchase Option as follows (dollar amounts in thousands):
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COMMITMENTS AND CONTINGENCIES |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Franchise Agreements All of our lodging properties (with the exception of the Onera Joint Venture property and recently acquired Nordic Lodge property) operate under franchise agreements with major hotel franchisors. The terms of our franchise agreements generally range from 10 to 20 years with various extension provisions. Each franchisor receives franchise fees ranging from 2% to 6% of each lodging property’s gross revenue, and some agreements require that we pay marketing fees of up to 4% of gross revenue. In addition, some of these franchise agreements require that we deposit a percentage of the hotel property’s gross revenue, generally not more than 5%, into a reserve fund for capital expenditures. We also pay fees to our franchisors for services related to reservation and information systems. We expensed fees related to our franchise agreements of $13.0 million and $12.7 million for the three months ended September 30, 2023 and 2022, respectively, and $40.0 million and $35.7 million for the nine months ended September 30, 2023 and 2022, respectively. Management Agreements Our lodging properties operate pursuant to management agreements with various professional third-party management companies. The terms of our management agreements range from month-to-month to twenty-five years with various extension provisions. Each management company receives a base management fee, which is a percentage of total lodging property revenues. In some cases, there are also monthly fees for certain services, such as accounting and shared services, based on the number of guestrooms. Generally, there are also incentive fees based on attaining certain financial thresholds. Management fee expenses were $4.2 million and $4.3 million for the three months ended September 30, 2023 and 2022, respectively, and $14.0 million and $13.1 million for the nine months ended September 30, 2023 and 2022, respectively. Litigation We are involved from time to time in litigation arising in the ordinary course of business. There are currently no pending legal actions that we believe would have a material effect on our financial position or results of operations.
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EQUITY-BASED COMPENSATION |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EQUITY-BASED COMPENSATION | EQUITY-BASED COMPENSATION Our currently outstanding equity-based awards were issued under the Summit Hotel Properties, Inc. 2011 Equity Incentive Plan, as amended and restated effective May 13, 2021 (the "Equity Plan"), which provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based awards or incentive awards. Stock options granted may be either incentive stock options or non-qualified stock options. Vesting terms may vary with each grant. At September 30, 2023, we only have outstanding restricted stock awards. All of our outstanding equity-based awards are classified as equity awards. Time-Based Restricted Stock Awards Made Pursuant to Our Equity Plan The following table summarizes time-based restricted stock award activity under our Equity Plan for the nine months ended September 30, 2023:
The awards granted to our non-executive employees prior to 2022 vest over a four-year period based on continuous service (20% on the first, second and third anniversary of the grant date and 40% on the fourth anniversary of the grant date). The awards granted to our non-executive employees in 2022 and thereafter vest over a three-year period based on continuous service (25% on the first and second anniversary of the grant date and 50% on the third anniversary of the grant date). The awards granted to our executive officers generally vest over a three-year period based on continuous service (25% on the first and second anniversary of the grant date and 50% on the third anniversary of the grant date) or in certain circumstances upon a change in control. The holders of these awards have the right to vote their unvested restricted shares of Common Stock and receive all dividends declared and paid whether or not vested. The fair value of time-based restricted stock awards granted is calculated based on the market value of our Common Stock on the date of grant. Performance-Based Restricted Stock Awards Made Pursuant to Our Equity Plan The following table summarizes performance-based restricted stock activity under the Equity Plan for the nine months ended September 30, 2023:
(1) The amounts included in this column represent the expected future value of the performance-based restricted stock awards calculated using the Monte Carlo simulation valuation model. Our performance-based restricted stock awards are market-based awards and are accounted for based on the fair value of our Common Stock on the grant date. The fair value of the performance-based restricted stock awards granted was estimated using a Monte Carlo simulation valuation model. These awards cliff vest on the third anniversary of the grants based on our total shareholder return relative to the total shareholder return of companies within the Dow Jones U.S. Hotels Index at the end of the period or upon a change in control. The awards generally require continuous service during the measurement period and are subject to the other conditions described in the Equity Plan or award document. The number of shares the executive officers may earn under these awards range from zero shares to twice the number of shares granted based on our percentile ranking within the index at the end of the measurement period. In addition, a portion of the performance-based shares may be earned based on the Company's absolute total shareholder return calculated during the performance period. The holders of these awards have the right to vote their unvested restricted shares of Common Stock and any dividends declared accrue and will be subject to the same vesting conditions as the awards. Further, if additional shares are earned based on our percentile ranking within the index, dividend payments will be issued as if the additional shares had been held throughout the measurement period. Equity-Based Compensation Expense Equity-based compensation expense included in Corporate general and administrative expenses in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):
During the nine months ended September 30, 2022, we granted a new member of our Board of Directors 3,234 shares of fully vested shares of our Common Stock at $9.94 per share. We recognize equity-based compensation expense ratably over the vesting periods. The amount of expense may be subject to adjustment in future periods due to a change in the forfeiture assumptions. Unrecognized equity-based compensation expense for all non-vested awards pursuant to our Equity Plan was $10.7 million at September 30, 2023 and will be recorded as follows (in thousands):
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INCOME TAXES |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES We have elected to be taxed as a REIT. As a REIT, we are generally not subject to corporate-level income taxes on taxable income we distribute to our shareholders. Income related to our TRS Lessees is subject to federal, state and local taxes at applicable corporate tax rates. Our consolidated tax provision includes the income tax provision related to the operations of the TRS Lessees as well as state and local income taxes related to the Operating Partnership. Where required, we account for federal and state income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for: i) the future tax consequences attributable to differences between carrying amounts of existing assets and liabilities based on GAAP and the respective carrying amounts for tax purposes, and ii) operating losses and tax-credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date of the change in tax rates. However, deferred tax assets are recognized only to the extent that it is more likely than not they will be realized based on consideration of available evidence. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. We consider all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. Certain of our TRS Lessees have incurred operating losses in the past and the realizability of our deferred tax assets as of September 30, 2023 is not reasonably assured. Therefore, we have recorded a valuation allowance against substantially all our deferred tax assets at September 30, 2023. The Company recorded an income tax expense of $1.4 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively, and $1.7 million and $4.6 million for the nine months ended September 30, 2023 and 2022, respectively. We file U.S. and state income tax returns in jurisdictions with varying statutes of limitations. In general, we are not subject to tax examinations by tax authorities for years before 2018. In the normal course of business, we are subject to examination by federal, state, and local jurisdictions where applicable. We had no unrecognized tax benefits at September 30, 2023. We expect no significant increase or decrease in unrecognized tax benefits due to changes in tax positions within the next year.
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SUPPLEMENTAL CASH FLOW INFORMATION |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUPPLEMENTAL CASH FLOW INFORMATION | SUPPLEMENTAL CASH FLOW INFORMATION We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Restricted cash consists of certain funds maintained in escrow for property taxes, insurance, and certain capital expenditures. Funds may be disbursed from the account upon proof of expenditures and approval from the lender or other party requiring the restricted cash reserves. Supplemental cash flow information for the nine months ended September 30, 2023 and 2022 is as follows:
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SUBSEQUENT EVENTS |
9 Months Ended |
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Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Dividends On October 26, 2023, our Board of Directors declared quarterly cash dividends and distributions of $0.06 per share on our Common Stock and per Common Unit of the Operating Partnership and cash dividends of $0.390625 per share of 6.25% Series E Cumulative Redeemable Preferred Stock and $0.3671875 per share of 5.875% Series F Cumulative Redeemable Preferred Stock. The Board of Directors also declared on behalf of the Operating Partnership, a cash distribution of $0.328125 per share of the Operating Partnership's unregistered 5.25% Series Z Cumulative Perpetual Preferred Units. The dividends and distributions are payable on November 30, 2023 to holders of record as of November 16, 2023.
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Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation We prepare our Condensed Consolidated Financial Statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Condensed Consolidated Financial Statements and reported amounts of revenues and expenses in the reporting period. Actual results could differ from those estimates. As interim statements, the Condensed Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for a fair presentation in accordance with GAAP have been included. Results for the three and nine months ended September 30, 2023 may not be indicative of the results that may be expected for the full year of 2023. For further information, please read the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2022. The accompanying Condensed Consolidated Financial Statements consolidate the accounts of all entities in which we have a controlling financial interest, as well as variable interest entities, if any, for which the Company is the primary beneficiary. All significant intercompany balances and transactions have been eliminated in the Condensed Consolidated Financial Statements. We evaluate joint venture partnerships to determine if they should be consolidated based on whether the partners exercise joint control. For a joint venture where we exercise primary control and we also own a majority of the equity interests, we consolidate the joint venture partnership. We have consolidated the accounts of all of our joint venture partnerships in our accompanying Condensed Consolidated Financial Statements.
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Real Estate Development Loans | Real Estate Development Loans We selectively provide mezzanine financing to developers where we also have the opportunity to acquire the lodging property at or after the completion of the development project. We classify mezzanine financing loans as Investments in lodging property, net or Investments in real estate loans, net based on the terms of the mezzanine financing loan agreements and criteria for classifying an arrangement as a loan or an investment in real estate under Accounting Standards Codification ("ASC") No. 310, Receivables. At September 30, 2023, we have one mezzanine financing loan that we have classified in Investments in lodging property, net on our Condensed Consolidated Balance Sheet.
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Current Estimate of Credit Losses | Trade Receivables and Current Estimate of Credit Losses Financial assets (or a group of financial assets) such as real estate development loans and other notes receivable are measured at amortized cost and presented at the net amount expected to be collected in accordance with ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). We record an allowance for credit losses as a valuation account that is deducted from the amortized cost basis of the financial asset to present the net carrying value at the amount expected to be collected on the financial asset. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. We routinely evaluate our real estate development loans, notes receivable and interest receivable for collectability. Probable losses on loans are recognized in a valuation account that is deducted from the amortized cost basis of the loans and recorded as a provision for credit losses in our condensed Consolidated Statements of Operations. When we place a loan on non-accrual status, we suspend the recognition of interest income until cash interest payments are received. Generally, we return loans to accrual status when all delinquent interest becomes current, and collectability is reasonably assured. We do not measure an allowance for credit losses for accrued interest receivable. Accrued interest receivable is written-off to bad debt expense when collection is not reasonably assured.
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Trade Receivables and Credit Policies | We grant credit to qualified guests, generally without collateral, in the form of trade accounts receivable. Trade receivables result from the rental of guestrooms and the sales of food, beverage, and banquet services and are payable under normal trade terms. Trade receivables also include credit and debit card transactions that are in the process of being settled. Trade receivables are stated at the amount billed to the guest and do not accrue interest. We regularly review the collectability of our trade receivables. A provision for losses is determined on the basis of previous loss experience and current economic conditions. |
Purchase Option | Purchase OptionWhen we provide mezzanine financing to a developer, we will generally receive a purchase option to acquire a majority interest in the property upon completion of construction. For purchase options with fixed exercise prices at inception, we record the purchase options at their estimated fair values on the transaction date in accordance with ASC No. 820, Fair Value Measurement, under a closed-form model such as the Black-Scholes model or a binomial lattice model such as the Monte Carlo simulation model. Purchase options received in connection with a mezzanine financing loan are recorded as a discount on the note receivable or a contra-asset, depending on the classification of the financial instrument, and amortized over the term of the mezzanine financing loan using the straight-line method, which approximates the interest method, as non-cash interest income on our Condensed Consolidated Statements of Operations. We elected to account for purchase options using the measurement alternative, which is cost less impairment, if any. If the fair value of the financial instrument can be determined from observable transactions for identical or similar investments of the same issuer, then we will record the financial instrument at fair value and adjust the carrying amount for changes in fair value in each period. |
Exchange or Modification of Debt | Exchange or Modification of DebtWe consider modifications or exchanges of debt as extinguishments in accordance with ASC No. 470, Debt, with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different. If the original and new debt instruments are substantially different, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss. Under an exchange or modification accounted for as a debt extinguishment, fees paid to the lenders are included in the gain or loss on extinguishment of debt. Costs incurred with third parties, such as legal fees, directly related to the exchange or modification are capitalized as deferred financing costs and amortized over the initial term of the new debt. Previously deferred fees and costs for existing debt are included in the calculation of gain or loss. Under an exchange or modification not accounted for as a debt extinguishment, fees paid to the lenders are reflected as additional debt discount and amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. Furthermore, costs incurred with third parties, such as legal fees, directly related to the exchange or modification are expensed as incurred. Additionally, previously deferred fees and costs are amortized as non-cash interest expense over the remaining initial term of the exchanged or modified debt. |
Financial Guarantee | Financial Guarantee On occasion, we may provide a financial guarantee on behalf of a mezzanine borrower. We record the non-contingent portion of financial guarantees made on behalf of third-parties as a liability at an amount equal to the premium receivable for the guarantee payable to us by the borrower under the practical expedient provided by ASC No. 460, Guarantees. We periodically evaluate the contingent component of a financial guarantee based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that may require us to record a liability related to the contingent component of a guarantee. We will record a liability for the contingent component of the guarantee when a payment by us under the guarantee is probable and reasonably estimable in accordance with ASC No. 326, Financial Instruments - Credit Losses.
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Redeemable Non-controlling Interests and Non-controlling Interests | Redeemable Non-controlling Interests Redeemable non-controlling interests represent redeemable preferred units issued by our Operating Partnership ("Redeemable Preferred Units"). The Redeemable Preferred Units are presented as temporary equity related to our Operating Partnership on our Condensed Consolidated Balance Sheets under the caption of "Redeemable Non-controlling Interests." See "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests" for further information. We record redeemable non-controlling interests at fair value on the issuance date of the securities. When the carrying value (the acquisition date fair value adjusted for the non-controlling interest’s share of net income (loss) and dividends) is less than the redemption value, we adjust the redeemable non-controlling interest to equal the redemption value with changes recognized as an adjustment to Accumulated deficit and distributions in excess of retained earnings. Any such adjustment, when necessary, is recorded as of the applicable balance sheet date. Non-controlling Interests Non-controlling interests represent the portion of equity in a consolidated entity held by owners other than the consolidating parent. Non-controlling interests are reported in the Condensed Consolidated Balance Sheets within equity, separately from stockholders’ equity. Revenues, expenses and net income attributable to both the Company and the non-controlling interests are reported in the Condensed Consolidated Statements of Operations. Our Condensed Consolidated Financial Statements include non-controlling interests related to Common Units held by unaffiliated third parties and third-party minority ownership interests in our joint ventures.
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Earnings Per Share | Earnings Per Share Basic earnings (loss) per share (“EPS”) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of shares of common stock outstanding for the period. We apply the two-class method of computing EPS, which requires the calculation of separate EPS amounts for participating securities. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. Any anti-dilutive securities are excluded from the basic per-share calculation. Diluted EPS is computed by dividing net income (loss) available to common stockholders, as adjusted for dilutive securities, by the weighted-average number of shares of common stock outstanding plus dilutive securities. Any anti-dilutive securities are excluded from the diluted per-share calculation. Potentially dilutive shares include unvested restricted share grants, unvested performance share grants, shares of common stock issuable upon conversion of convertible debt and shares of common stock issuable upon conversion of Common Units of our Operating Partnership. Basic and diluted loss per share for the three and nine months ended September 30, 2023 and 2022 are calculated as Net loss attributable to common stockholders for each respective period divided by weighted average common shares outstanding for each respective period as all other securities are antidilutive. Potentially dilutive shares include unvested restricted share grants, unvested performance share grants, common shares issuable upon conversion of convertible debt and common shares issuable upon conversion of Common Units of our Operating Partnership.
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Use of Estimates | Use of Estimates Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP, which requires us to make estimates based on assumptions about current and, for some estimates, future economic and market conditions that affect reported amounts and related disclosures in our Condensed Consolidated Financial Statements. Although our current estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could materially differ from our expectations, which could materially affect our consolidated financial position and results of operations.
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Reclassifications | Reclassifications A portfolio of two lodging properties with an aggregate carrying amount of approximately $49.9 million that were classified as Assets Held for Sale at December 31, 2022 have been reclassified to Investments in Lodging Property, net as the proposed sale of the properties was terminated during the nine months ended September 30, 2023.
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INVESTMENTS IN LODGING PROPERTY, NET (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment in Lodging Properties, Net | Investments in lodging property, net is as follows (in thousands):
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Schedule of Lodging Property Acquisitions | A summary of the lodging properties acquired since January 1, 2022 is as follows (in thousands):
(1) On January 13, 2022, we acquired a portfolio of twenty-six lodging properties and two parking garages for an aggregate purchase price of $766.0 million. The lodging properties acquired included 21 hotels and two parking garages in Texas, two hotels in Louisiana and three hotels in Oklahoma under the following brands: Marriott (13), Hilton (7), Hyatt (4), and IHG (2). On March 23, 2022, we acquired the Canopy Hotel by Hilton in New Orleans upon completion of its construction for a purchase price of $56.0 million. (2) We acquired a 90% equity interest in the AC/Element Hotel for $80.1 million based on the exercise price of the Initial Purchase Option of $89.0 million. The transaction included the assumption of $47.0 million of debt resulting in a net consideration payment requirement of $42.0 million. We paid 90% of the required net consideration with the conversion of our $29.9 million mezzanine financing loan into equity and a cash payment of $7.9 million. The carrying amount of our Initial Purchase Option of $2.8 million is also included in the total amount allocated to the assets acquired. The Brickell Joint Venture partner’s non-controlling interest of $6.9 million represents 10% of the fair value of the net assets on the transaction date, determined by a third-party valuation expert based on discounted forecasted future cash flows of the net assets acquired. We also incurred $0.6 million of transaction costs. The result is a total amount allocated to the assets acquired of $95.1 million plus an intangible asset totaling $2.0 million related to the assumption of the franchises for the hotel properties and a related key money liability. (3) On October 26, 2022, we completed the acquisition of a 90% equity interest in Onera Joint Venture which owns a high-end glamping property for $5.2 million based on aggregate purchase price of $5.8 million. We paid for our 90% in cash, plus $0.5 million of transaction costs. Additionally, the transaction includes additional contingent consideration (based on performance of the property for the 12-month period ending July 31, 2023) that was paid in September 2023 of $1.8 million, payable to the seller. The Onera Joint Venture has a 100% fee simple interest in real property and improvements consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site in the future.The allocation of the aggregate purchase prices and contingent consideration to the fair value of assets and liabilities acquired for the above acquisitions is as follows (in thousands):
(1) Total assets acquired during the nine months ended September 30, 2023 is based on an aggregate purchase price of $42.7 million plus transaction costs of $0.1 million and $2.0 million related to contingent consideration paid to the seller in September 2023. See "Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests" for details related to the Onera Joint Venture. Total assets acquired during the nine months ended September 30, 2022 is based on an aggregate purchase price of $909.1 million adjusted for the following items: •NCI Transaction: interest swap breakage fees and debt defeasance costs of $3.5 million, a reduction to the value of the Common Units issued on the closing date of $2.5 million, plus transaction costs of $3.0 million, and intangible assets totaling $9.1 million acquired outside of escrow, and •Brickell Transaction: Brickell Joint Venture partner’s non-controlling interest of $6.9 million; Brickell Joint Venture partner’s non-controlling interest share of the debt assumed as part of the transaction of $4.7 million, the assumption of intangible assets totaling $2.0 million, the carrying amount of our Initial Purchase Option of $2.9 million, and transactions costs of $0.6 million. (2) Excludes the acquisition of the 11-unit Onera - Fredericksburg, TX property which was acquired in October 2022. On May 19, 2023, we completed the sale of four lodging properties (the "Sale Portfolio") for an aggregate gross selling price of $28.1 million as follows:
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Schedule of Indefinite-Lived Intangible Assets | Intangible assets, net is as follows (in thousands):
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Schedule of Finite-Lived Intangible Assets | Intangible assets, net is as follows (in thousands):
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Schedule of Future Amortization Expenses | Future amortization expense related to intangible assets is as follows (in thousands):
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Schedule of Asset Held for Sale | Assets Held for Sale at September 30, 2023 included two parcels of undeveloped land and a 123-guestroom hotel property as follows:
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REAL ESTATE LOANS, NET (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment in Real Estate Loans | Investment in real estate loans, net is as follows (in thousands):
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DEBT (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Outstanding Indebtedness | Debt, net of debt issuance costs, is as follows (in thousands):
Detailed information about our gross debt at September 30, 2023 and December 31, 2022 is as follows (dollars in thousands):
(1) The 2018 Senior Credit Facility and Term Loans are supported by a borrowing base of 53 unencumbered hotel properties and a pledge of the equity securities of the entities that own and operate the 53 unencumbered hotels. (2) The maturity dates for the $400 million Revolver and the $200 Million Term Loan each individually can be extended to June 21, 2028 at the Company’s option, subject to certain conditions. (3) The Bank of Cascades mortgage loan is comprised of two promissory notes that are secured by the same collateral and have cross-default provisions. (4) The $125 Million Revolver and the $75 Million Term Loan are secured by pledges of the equity in the entities and affiliated entities that own 11 lodging properties. Each individually can be extended for a single consecutive 12-month period through September 2028 at the option of the GIC Joint Venture, subject to certain conditions. (5) The GIC Joint Venture's $410 million term loan with Bank of America, N.A. is secured by pledges of the equity in the entities and affiliated entities that own 27 lodging properties.
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Schedule of Fixed-rate and Variable-rate Debt, after Giving Effect to Interest Rate Derivative | Our total fixed-rate and variable-rate debt, after consideration of our interest rate derivative agreements that are currently effective, is as follows (in thousands):
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Schedule of Fair Value of Fixed-rate that is Debt Not Recorded at Fair Value | Information about the fair value of our fixed-rate debt that is not recorded at fair value is as follows (in thousands):
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LEASES (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Operating Lease Maturity | Operating lease maturities as of September 30, 2023 are as follows (in thousands):
(1)Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.
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DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Financial Instruments | Information about our derivative financial instruments at September 30, 2023 and December 31, 2022 is as follows (dollars in thousands):
(1) At December 31, 2022, we had interest rate swaps that were in effect with a notional amount totaling $400 million. On July 26, 2022, we executed two additional interest rate swaps with a notional amount totaling $200 million that become effective on January 31, 2023 upon the expiration of two interest rate swaps entered into on October 2, 2017 with a notional amount totaling $200 million. (2) At September 30, 2023, debt related to our wholly-owned properties and our pro rata share of joint venture debt has a fixed-rate debt ratio of approximately 74% of our total pro rata indebtedness when taking into consideration interest rate swaps.
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Schedule of Location in Financial Statements of Gain or Loss Recognized on Derivative Financial Instruments Designated as Cash Flow Hedges | We characterize the realized and unrealized gain or loss related to derivative financial instruments designated as cash flow hedges as follows (in thousands):
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EQUITY (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Activity | Changes in Common Stock during the nine months ended September 30, 2023 and 2022 were as follows:
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FAIR VALUE MEASUREMENT (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disclosures Concerning Financial Instruments Measured at Fair Value | Disclosures concerning financial instruments measured at fair value are as follows (in thousands):
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Schedule of Unobservable Inputs for Fair Values of Purchase Options | As such, we were required to develop assumptions to determine the fair value of the Onera Purchase Option as follows (dollar amounts in thousands):
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EQUITY-BASED COMPENSATION (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Awards | The following table summarizes time-based restricted stock award activity under our Equity Plan for the nine months ended September 30, 2023:
The following table summarizes performance-based restricted stock activity under the Equity Plan for the nine months ended September 30, 2023:
(1) The amounts included in this column represent the expected future value of the performance-based restricted stock awards calculated using the Monte Carlo simulation valuation model.
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Schedule of Equity-based Compensation Expense | Equity-based compensation expense included in Corporate general and administrative expenses in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022 was as follows (in thousands):
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Schedule of Unrecognized Equity-based Compensation Expense for all Non-vested Awards | Unrecognized equity-based compensation expense for all non-vested awards pursuant to our Equity Plan was $10.7 million at September 30, 2023 and will be recorded as follows (in thousands):
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SUPPLEMENTAL CASH FLOW INFORMATION (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Cash Flow Information | Supplemental cash flow information for the nine months ended September 30, 2023 and 2022 is as follows:
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BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
hotel
|
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Allowance for doubtful accounts | $ 200 | $ 200 | $ 100 | ||
Provision for credit losses | 200 | $ 100 | 300 | $ 200 | |
Accumulated amortization | $ 803,921 | $ 803,921 | $ 704,198 | ||
Revision of Prior Period, Adjustment | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Guestrooms | hotel | 2 | ||||
Accumulated amortization | $ 49,900 |
INVESTMENTS IN LODGING PROPERTY, NET - Schedule of Lodging Property Acquisitions (Details) |
Sep. 30, 2023
room
hotel
|
Sep. 27, 2023
room
|
May 19, 2023
room
hotel
|
---|---|---|---|
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of guestrooms | 123 | 467 | |
Hotels | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of hotel properties | hotel | 101 | 4 | |
Number of guestrooms | 15,035 | ||
Hotels | Hilton Garden Inn | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of guestrooms | 97 | ||
Hotels | Holiday Inn Express & Suites | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of guestrooms | 93 | ||
Hotels | Hyatt Place | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of guestrooms | 126 | ||
Hotels | Hyatt Place | |||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||
Number of guestrooms | 151 |
INVESTMENTS IN LODGING PROPERTY, NET - Schedule of Intangible Assets, Net (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 10,834 | $ 10,834 |
Finite-lived intangible assets | 29,120 | 29,120 |
Intangible assets | 39,954 | 39,954 |
Less accumulated amortization | (8,220) | (5,110) |
Intangible assets, net | 31,734 | 34,844 |
Tax incentives | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 19,750 | 19,750 |
Key money | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets | 9,370 | 9,370 |
Air rights | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | 10,754 | 10,754 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets | $ 80 | $ 80 |
INVESTMENTS IN LODGING PROPERTY, NET - Schedule of Future Amortization Expense Related to Intangible Assets (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Real Estate [Abstract] | |
2023 | $ 1,037 |
2024 | 4,147 |
2025 | 1,584 |
2026 | 1,584 |
2027 | 1,530 |
Thereafter | 11,018 |
Finite-lived intangible assets, net | $ 20,900 |
REAL ESTATE LOANS, NET - Schedule of Investment in Real Estate Loans, net (Details) - Real Estate Loan - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Real estate loan | $ 1,000 | $ 1,250 |
Allowance for credit losses | (750) | (1,250) |
Financing Receivable, after Allowance for Credit Loss, Total | $ 250 | $ 0 |
DEBT - Schedule of Debt (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Principal Balance Outstanding | $ 1,461,340 | $ 1,463,124 |
Unamortized debt issuance costs | (16,703) | (11,328) |
Debt, net of debt issuance costs | 1,444,637 | 1,451,796 |
Convertible notes | ||
Debt Instrument [Line Items] | ||
Principal Balance Outstanding | 287,500 | 287,500 |
Mortgage loans | ||
Debt Instrument [Line Items] | ||
Principal Balance Outstanding | 123,840 | 125,624 |
Revolving debt | Unsecured debt | ||
Debt Instrument [Line Items] | ||
Principal Balance Outstanding | 140,000 | 140,000 |
Term loans | Unsecured debt | ||
Debt Instrument [Line Items] | ||
Principal Balance Outstanding | $ 910,000 | $ 910,000 |
DEBT - Additional Information (Details) $ in Millions |
Sep. 30, 2023 |
Mar. 24, 2023
USD ($)
interest_rate_swap
|
Dec. 31, 2022 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Weighted average interest rate for all borrowings | 5.32% | 5.04% | |
Joint Venture Term Loan | SOFR | Interest rate swaps | |||
Debt Instrument [Line Items] | |||
Number of interest swap rates | 2 | ||
Joint Venture Term Loan | SOFR | CIG Joint Ventures | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ | $ 100.0 | ||
Joint Venture Term Loan | SOFR | CIG Joint Ventures | Interest rate swaps | |||
Debt Instrument [Line Items] | |||
Number of interest swap rates | 2 |
DEBT - Fixed-Rate and Variable-Rate Debt, after Giving Effect to Interest Rate Derivatives (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Fixed rate debt | $ 956,849 | $ 758,433 |
Fixed rate debt, percentage | 65.00% | 52.00% |
Variable-rate debt | $ 504,491 | $ 704,691 |
Variable-rate debt, percentage | 35.00% | 48.00% |
Debt, gross | $ 1,461,340 | $ 1,463,124 |
Wholly Owned Properties and Joint Venture Debt | ||
Debt Instrument [Line Items] | ||
Variable-rate debt, percentage | 74.00% |
DEBT - Fair Value of Fixed-Rate Debt not Recorded at Fair Value (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Carrying Value | ||
Debt | ||
Debt | $ 356,848 | $ 358,433 |
Carrying Value | Level 1 | Convertible notes | ||
Debt | ||
Debt | 287,500 | 287,500 |
Carrying Value | Level 2 | Mortgage loans | ||
Debt | ||
Debt | 69,348 | 70,933 |
Fair Value | ||
Debt | ||
Debt | 302,625 | 308,573 |
Fair Value | Level 1 | Convertible notes | ||
Debt | ||
Debt | 242,407 | 247,126 |
Fair Value | Level 2 | Mortgage loans | ||
Debt | ||
Debt | $ 60,218 | $ 61,447 |
DEBT - 2018 Term Loans (Details) - 2018 Term Loan - Unsecured debt |
Feb. 15, 2018
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ 225,000,000 |
Additional borrowing capacity | $ 150,000,000 |
SOFR | |
Debt Instrument [Line Items] | |
Debt basis spread on variable rate | 0.10% |
Minimum | SOFR | |
Debt Instrument [Line Items] | |
Debt basis spread on variable rate | 0.25% |
Interest Rate | 1.35% |
Maximum | SOFR | |
Debt Instrument [Line Items] | |
Interest Rate | 2.15% |
DEBT - Mortgage Loans (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
property
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
property
security
|
|
Debt Instrument [Line Items] | ||||
Principal Balance Outstanding | $ 1,461,340 | $ 1,463,124 | ||
Number of Encumbered Properties | property | 8 | |||
Debt transaction costs | $ 352 | $ 1,166 | ||
Mortgage loans | ||||
Debt Instrument [Line Items] | ||||
Principal Balance Outstanding | $ 123,840 | $ 125,624 | ||
Number of security defeased | security | 4 | |||
Extinguishment of debt | $ 87,300 | |||
Number of unencumbered properties | property | 11 | |||
Debt transaction costs | $ 600 | |||
Write off of deferred debt issuance cost | $ 100 |
DEBT - MetaBank and Other Mortgage Loans (Details) - Non-recourse Loan - Metabank - Secured debt |
Jun. 30, 2017
USD ($)
hotel
|
---|---|
Debt Instrument [Line Items] | |
Debt instrument, face amount | $ | $ 47,600,000 |
Interest Rate | 4.44% |
Debt instrument, amortization period after interest only payments period | 25 years |
Number of properties that served as collateral for loans | hotel | 3 |
DEBT - GIC Joint Venture Term Loan (Details) $ in Thousands |
9 Months Ended | |||||
---|---|---|---|---|---|---|
Jan. 13, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
hotel
room
|
Sep. 27, 2023
room
|
May 19, 2023
hotel
room
|
Dec. 31, 2022
USD ($)
|
Nov. 02, 2021
hotel
parkingStructure
|
|
Debt Instrument [Line Items] | ||||||
Principal Balance Outstanding | $ 1,461,340 | $ 1,463,124 | ||||
Number of guestrooms | room | 123 | 467 | ||||
Hotels | ||||||
Debt Instrument [Line Items] | ||||||
Guestrooms | hotel | 101 | 4 | ||||
Number of guestrooms | room | 15,035 | |||||
Joint Venture with GIC | Hotels | Portfolio Purchase Through Contribution And Purchase Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Guestrooms | hotel | 27 | |||||
Number of guestrooms | parkingStructure | 2 | |||||
Joint Venture Term Loan | Secured debt | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 410,000 | |||||
Debt, increase of commitments amount | 190,000 | |||||
Credit facility, maximum borrowing capacity | $ 600,000 | |||||
Debt extension period | 12 months | |||||
Joint Venture Term Loan | Secured debt | SOFR | ||||||
Debt Instrument [Line Items] | ||||||
Debt basis spread on variable rate | 2.75% |
DEBT - PACE Loan (Details) - USD ($) $ in Thousands |
Mar. 23, 2022 |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Debt, net of debt issuance costs | $ 1,444,637 | $ 1,451,796 | |
PACE Loan | NCI Transaction | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 6,500 | ||
Interest Rate | 6.10% | ||
Debt instrument, amortization period | 20 years | ||
Debt, net of debt issuance costs | $ 6,100 |
DEBT - Financial Guarantee (Details) - Construction Loans - Affiliated Entity - Letter of Credit $ in Millions |
Sep. 30, 2023
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Letter of credit | $ 3.0 |
Financial guarantee as liability | $ 0.2 |
DEBT - Property and Casualty Insurance Premium Financing (Details) - Property and Casualty Insurance Premium Financing $ in Millions |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Debt Instrument [Line Items] | |
Property and casualty insurance premiums | $ 10.9 |
Debt instrument, periodic payment | $ 1.0 |
Debt instrument, term | 11 months |
Debt basis spread on variable rate | 4.89% |
Sale of property borrowings | $ 3.1 |
LEASES - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Lessee, Lease, Description [Line Items] | |||||
Operating lease weighted average remaining lease term | 32 years 3 months 18 days | 32 years 3 months 18 days | 34 years | ||
Operating lease weighted average discount rate | 4.80% | 4.80% | 4.80% | ||
Tenant income | $ 0.6 | $ 0.7 | $ 2.0 | $ 1.8 | |
Operating lease cost | 1.1 | $ 1.0 | 3.4 | 3.0 | |
Operating cash outflows from operating leases | $ 1.0 | $ 3.0 | $ 2.8 | ||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease remaining term | 1 year | ||||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease remaining term | 74 years 9 months 18 days |
LEASES - Operating Lease Maturities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Leases [Abstract] | ||
2023 | $ 565 | |
2024 | 2,264 | |
2025 | 2,285 | |
2026 | 2,239 | |
2027 | 2,282 | |
Thereafter | 37,955 | |
Total lease payments | 47,590 | |
Less: Imputed interest | (21,488) | |
Total | $ 26,102 | $ 25,484 |
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING - Narrative (Details) $ in Millions |
Sep. 30, 2023
USD ($)
|
Mar. 24, 2023
USD ($)
interest_rate_swap
|
Dec. 31, 2022
USD ($)
|
---|---|---|---|
SOFR | CIG Joint Ventures | |||
Derivative [Line Items] | |||
Fixed interest rate | 3.35% | ||
Joint Venture Term Loan | SOFR | CIG Joint Ventures | |||
Derivative [Line Items] | |||
Debt instrument, face amount | $ 100.0 | ||
Interest rate swaps | |||
Derivative [Line Items] | |||
Reclassification from other comprehensive income in next 12 months | $ 14.1 | ||
Interest rate swaps | Joint Venture Term Loan | |||
Derivative [Line Items] | |||
Debt instrument, variable interest rates | $ 600.0 | $ 600.0 | |
Interest rate swaps | Joint Venture Term Loan | SOFR | |||
Derivative [Line Items] | |||
Number of interest swap rates | interest_rate_swap | 2 | ||
Interest rate swaps | Joint Venture Term Loan | SOFR | CIG Joint Ventures | |||
Derivative [Line Items] | |||
Number of interest swap rates | interest_rate_swap | 2 |
EQUITY - Changes in Common Stock (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Changes in Common Stock [Roll Forward] | ||
Beginning shares of Common Stock outstanding (in shares) | 106,901,576 | 106,337,724 |
Common Unit redemptions (in shares) | 7,000 | 5,000 |
Grants (in shares) | 875,055 | 735,371 |
Performance share and other forfeitures (in shares) | (139,254) | (8,272) |
Shares retained for employee withholding requirements (in shares) | (184,029) | (260,800) |
Ending shares of Common Stock outstanding (in shares) | 107,573,489 | 106,893,912 |
Annual grants to independent directors | ||
Changes in Common Stock [Roll Forward] | ||
Grants (in shares) | 113,141 | 84,889 |
FAIR VALUE MEASUREMENT - Schedule of Disclosures Concerning Financial Instruments Measured at Fair Value (Details) - Recurring basis - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Assets: | ||
Purchase option related to real estate loans (Onera Purchase Option) | $ 931 | |
Level 1 | ||
Assets: | ||
Purchase option related to real estate loans (Onera Purchase Option) | 0 | |
Level 2 | ||
Assets: | ||
Purchase option related to real estate loans (Onera Purchase Option) | 0 | |
Level 3 | ||
Assets: | ||
Purchase option related to real estate loans (Onera Purchase Option) | 931 | |
Interest rate swaps | ||
Assets: | ||
Interest rate swaps | 27,066 | $ 16,841 |
Interest rate swaps | Level 1 | ||
Assets: | ||
Interest rate swaps | 0 | 0 |
Interest rate swaps | Level 2 | ||
Assets: | ||
Interest rate swaps | 27,066 | 16,841 |
Interest rate swaps | Level 3 | ||
Assets: | ||
Interest rate swaps | $ 0 | $ 0 |
FAIR VALUE MEASUREMENT - Schedule of Unobservable Inputs for Fair Values of Purchase Options (Details) - Recurring basis - Level 3 $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Exercise price | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Purchase options, exercise price | $ 8,206 |
Expected volatility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Purchase options, measurement input | 0.5220 |
Risk free rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Purchase options, measurement input | 0.0415 |
Expected annualized equity dividend yield | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Purchase options, measurement input | 0 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 1,360,000 | $ 210,000 | $ 1,679,000 | $ 4,647,000 |
Unrecognized tax benefits | $ 0 | $ 0 |
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