Debt

9 Months Ended

Sep. 30, 2019

Debt Disclosure [Abstract]

Debt

Note 6: Debt

Debt balances and associated interest rates as of September 30, 2019 were:

			Principal balance as of
	Interest Rate at September 30, 2019	Maturity Date	September 30, 2019			December 31, 2018
			(in millions)
SF CMBS Loan	4.11%	November 2023	$	725		$	725
HHV CMBS Loan	4.20%	November 2026		1,275			1,275
Mortgage loans(1)	Average rate of 4.28%	2020 to 2026(3)		517			207
2016 Term Loan(2)	L + 1.45%	December 2021		750			750
2019 Term Facility	L + 1.40%	September 2024		850			—
Revolving credit facility(4)	L + 1.50%	December 2021(3)		—			—
Financing lease obligations	3.07%	2021 to 2022		1			1
				4,118			2,958
Add: unamortized premium				3			—
Less: unamortized deferred financing costs and    discount				(21	)		(10	)
			$	4,100		$	2,948

^{(1) Includes $310 million of mortgage loans assumed in connection with the Merger, all of which require payments of principal and interest on a      monthly basis.}

^{(2) The 2016 Term Loan was entered into in December 2016, with a maturity date of December 2021.}

^{(3) Assumes the exercise of all extensions that are exercisable solely at our option.}

^{(4) $1 billion available.}

New Term Facility

In advance of the Merger, in August 2019, the Company, our Operating Company and Domestic entered into a delayed draw term loan agreement (the “2019 Term Facility”) with Bank of America, N.A. as administrative agent, and certain other financial institutions party thereto as lenders. The 2019 Term Facility provided for $950 million unsecured delayed draw term loan commitments to fund the Merger. The 2019 Term Facility included a $100 million two-year delayed draw term loan tranche, which was unfunded and the commitments thereunder terminated on September 18, 2019, and a $850 million five-year delayed draw term loan tranche, which has a scheduled maturity date of August 2024. On September 18, 2019, the five-year tranche was fully drawn to fund the Merger. The 2019 Term Facility agreement includes the option to increase the size of the 2019 Term Facility and enter into additional incremental term loan credit facilities, subject to certain limitations and obtaining additional commitments, in an aggregate amount not to exceed $400 million for all such increases.

Borrowings from the 2019 Term Facility bear interest at variable rates at our option, based upon either a base rate or LIBOR rate, plus an applicable margin based on our leverage ratio. Beginning in August 2019, we accrued an unused commitment fee equal to 0.25% per annum of the undrawn portion of the 2019 Term Facility, which was paid on September 18, 2019 when the 2019 Term Facility was fully drawn. Additionally, we incurred upfront financing fees of $9 million associated with the 2019 Term Facility, of which $1 million was expensed in connection with the terminated commitments.

The 2019 Term Facility agreement contains certain financial covenants relating to our maximum leverage ratio, minimum fixed charge coverage ratio, maximum secured leverage ratio, maximum unsecured indebtedness to unencumbered asset value and minimum unencumbered adjusted net operating income to unsecured interest coverage. If an event of default exists, we generally are not permitted to make distributions to stockholders, other than those required to qualify for and maintain REIT status and certain other limited exceptions.

In connection with the Merger, we assumed Chesapeake’s interest rate swap, which is designated as a cash flow hedge, to hedge the interest rate risk on a portion of the 2019 Term Facility.  The interest rate swap requires us to pay fixed interest of 1.86% per annum maturing on April 21, 2022 on a notional amount of $225 million, in exchange for floating rate interest equal to one-month LIBOR.

CMBS and Mortgage Loans

We are required to deposit with lenders certain cash reserves for restricted uses. As of September 30, 2019 and December 31, 2018, our condensed consolidated balance sheets included $18 million and $15 million of restricted cash, respectively, related to our CMBS loans and mortgage loans.

Debt Maturities

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of September 30, 2019 were:

Year	(in millions)
2019	$	2
2020		20
2021		759
2022		97
2023		827
Thereafter(1)		2,413
	$	4,118

^{(1) Assumes the exercise of all extensions that are exercisable solely at our option.}