Mortgage Notes Payable

The Company’s mortgage notes payable as of December 31, 2015 and December 31, 2014 consist of the following, respectively (in thousands):



	Outstanding Mortgage Note Payable
Encumbered Properties	December 31, 2015		December 31, 2014		Interest Rate	Payment	Maturity
Baltimore Courtyard & Providence Courtyard	$	45,500	$	45,500	4.30%	Interest Only, Principal paid at Maturity	April 2019
Hilton Garden Inn Blacksburg Joint Venture	$	10,500	$	—	4.31%	Interest Only, Principal paid at Maturity	June 2020
Assumed Grace Mortgage Loan - 96 properties in Grace Portfolio	$	801,430	$	—	LIBOR plus 3.29%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Assumed Grace Mezzanine Loan - 96 properties in Grace Portfolio	$	102,550	$	—	LIBOR plus 4.77%	Interest Only, Principal paid at Maturity	May 2017, subject to two, one year extension rights
Refinanced Additional Grace Mortgage Loan - 20 properties in Grace Portfolio and one additional property	$	232,000	$	—	4.96%	Interest Only, Principal paid at Maturity	October 2020
SN Term Loan -14 properties in Summit and Noble Portfolios	$	165,100	$	—	LIBOR plus between 3.25% and 3.75%	Interest Only, Principal paid at Maturity	August 2018, subject to two, one year extension rights
Total	$	1,357,080	$	45,500

Interest expense related to the Company's mortgage notes payable for the year ended December 31, 2015 was $43.1 million. Interest expense related to the Company's mortgage note payable for the period from March 21 to December 31, 2014 was $1.6 million. Interest expense attributable to the Predecessor, for the period from January 1 to March 20, 2014, was $0.5 million.

Baltimore Courtyard and Providence Courtyard

The Baltimore Courtyard and Providence Courtyard Loan matures on April 6, 2019. On May 6, 2014 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.30%. The entire principal amount is due at maturity.

Hilton Garden Inn Blacksburg Joint Venture

The Hilton Garden Inn Blacksburg Joint Venture Loan matures June 6, 2020. On July 6, 2015 and each month thereafter, the Company is required to make an interest only payment based on the outstanding principal and a fixed annual interest rate of 4.31%. The entire principal amount is due at maturity.

Assumed Grace Indebtedness

The Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan mature on May 1, 2017, subject to two (one-year) extension rights which, if both are exercised, would result in an outside maturity date of May 1, 2019. The extensions on the Assumed Grace Mortgage Loan and the Assumed Grace Mezzanine Loan can only occur if certain conditions are met, including a condition that a minimum ratio of net operating income to debt outstanding be satisfied. There can be no assurance that we will be able to meet these conditions and extend these loans pursuant to their terms. The Assumed Grace Mortgage Loan carries an interest rate of London Interbank Offered Rate ("LIBOR") plus 3.29%, and the Assumed Grace Mezzanine Loan carries an interest rate of LIBOR plus 4.77%, for a combined weighted average interest rate of LIBOR plus 3.46%. Pursuant to the Assumed Grace Indebtedness, the Company has agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Assumed Grace Indebtedness includes the following financial covenants: minimum consolidated net worth, and minimum consolidated liquidity. As of December 31, 2015, the Company was in compliance with these financial covenants.

Refinanced Additional Grace Mortgage Loan

The Original Additional Grace Mortgage Loan was for $227.0 million and was scheduled to mature on March 6, 2017, subject to a one-year extension right, and carried an interest rate equal to the greater of (i) a floating rate of interest equal to LIBOR plus 6.00% and (ii) 6.25%.

On October 6, 2015, the Company refinanced the Original Additional Grace Mortgage Loan. The Refinanced Additional Grace Mortgage Loan was for $232.0 million and carries a fixed annual interest rate of 4.96% per annum with a maturity date in October 2020. Pursuant to the Refinanced Additional Grace Mortgage Loan, the Company agreed to make periodic payments into an escrow account for the property improvement plans required by the franchisors. The Refinanced Additional Grace Mortgage Loan includes the following financial covenants: minimum consolidated net worth, and minimum consolidated liquidity. As of December 31, 2015, the Company was in compliance with these financial covenants.

SN Term Loan

On August 21, 2015, the Company entered into a Term Loan Agreement with Deutsche Bank AG New York Branch, as administrative agent and Deutsche Bank Securities Inc., as sole lead arranger and book-running manager (as amended, the "SN Term Loan"). On October 15, 2015, the Company amended and restated the SN Term Loan and made the initial draw down of borrowings of $96.9 million in connection with the First Summit Closing. On November 2, 2015, the Company drew down borrowings of $26.0 million in connection with the First Noble Closing. On December 2, 2015 the Company drew down borrowings of $42.3 million in connection with the Second Noble Closing.

The SN Term Loan provided for up to $450 million in financing (the “Loans”) at a rate equal to a base rate plus a spread of between 3.25% and 3.75% for Eurodollar rate Loans and between 2.25% and 2.75% for base rate Loans, depending on the aggregate debt yield and aggregate loan-to-value of the properties securing the Loans measured periodically. On February 11, 2016, the SN Term Loan was amended, pursuant to which the lenders total commitment was reduced from $450.0 million to $293.4 million. (See Note 15 - Subsequent Events). Prior to November 1, 2015, all spreads were 0.5% less than they will be during the rest of the term. The SN Term Loan has a term of three years, with two one-year extension options, and is secured by the fee interest in the hotels as and when they are acquired. The extensions on the SN Term Loan can only occur if certain conditions are met, including a condition that a minimum ratio of net operating income to debt outstanding be satisfied. There can be no assurance that we will be able to meet these conditions and extend this loan pursuant to its terms.

No advance may exceed the least of (i) 65% of the aggregate appraised value of the hotels pledged as collateral, (ii) 65% of the aggregate purchase price of the hotels pledged as collateral, and (iii) the adjusted net operating income for the hotels pledged as collateral divided by 11.5%, and no advances may be made after June 30, 2016.

Pursuant to the SN Term Loan, the Company agreed to make periodic payments into an escrow account account for the property improvement plans required by the franchisors. The SN Term Loan includes the following financial covenants: minimum debt service coverage ratio, minimum consolidated net worth and minimum consolidated liquidity. As of December 31, 2015, the Company was in compliance with these financial covenants.