Debt

3 Months Ended

Mar. 31, 2020

Note 7: Debt

Debt balances and associated interest rates as of March 31, 2020 were:

			Principal balance as of
	Interest Rate at March 31, 2020	Maturity Date	March 31, 2020			December 31, 2019
			(in millions)
SF CMBS Loan⁽¹⁾	4.11%	November 2023	$	725		$	725
HHV CMBS Loan⁽¹⁾	4.20%	November 2026		1,275			1,275
Mortgage loans	Average rate of 4.22%	2020 to 2026⁽²⁾		513			515
2016 Term Loan⁽³⁾	L + 1.55%	December 2021		700			700
2019 Term Facility	L + 1.50%	September 2024		670			670
Revolver	L + 1.60%	December 2021⁽²⁾		1,000			—
Finance lease obligations	3.07%	2021 to 2022		1			1
				4,884			3,886
Add: unamortized premium				3			3
Less: unamortized deferred financing costs and discount				(17	)		(18	)
			$	4,870		$	3,871

⁽¹⁾	In October 2016, we entered into a $725 million CMBS loan secured by the Hilton San Francisco Union Square and the Parc 55 Hotel San Francisco (“SF CMBS Loan”) and a $1.275 billion CMBS loan secured by the Hilton Hawaiian Village Waikiki Beach Resort (“HHV CMBS Loan”).

⁽²⁾	Assumes the exercise of all extensions that are exercisable solely at our option. The only 2020 debt maturity is the $12 million Doubletree Spokane JV mortgage loan which matures in October.

⁽³⁾	The 2016 Term Loan was entered into in December 2016, with a maturity date of December 2021.

CMBS and Mortgage Loans

We are required to deposit with lenders certain cash reserves for restricted uses. As of March 31, 2020 and December 31, 2019, our condensed consolidated balance sheets included $12 million and $13 million of restricted cash, respectively, related to our CMBS loans and mortgage loans.

Credit Facilities

2019 Term Facility

In advance of the Merger, in August 2019, the Company, our Operating Company and PK Domestic entered into a delayed draw term loan agreement (the “2019 Term Facility”). In September 2019, the 2019 Term Facility was fully drawn to fund the Merger, which was partially repaid in December 2019. To hedge the interest rate risk on a portion of the 2019 Term Facility, we assumed an interest rate swap from Chesapeake in connection with the Merger, which is designated as a cash flow hedge. 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.

Revolver

In March 2020, we fully drew on our $1 billion Revolver as a precautionary measure to increase liquidity and preserve financial flexibility in connection with the economic effect of COVID-19.

In May 2020, in order to maintain compliance under our credit and term loan facilities in future quarters, we have amended our facilities to suspend compliance with all existing financial covenants tested through and including March 31, 2021 and to adjust the levels of particular financial covenants after such period. As part of the amendment process, we (i) agreed to comply with a monthly minimum liquidity covenant, to pledge equity in certain subsidiaries to secure the facilities, and for certain subsidiaries to become guarantors under the facilities, and (ii) exercised our two six-month extension options on our Revolver to extend its maturity to December 24, 2021. The amendment also added additional covenants that restrict our ability to make dividend and distribution payments (except to the extent required to maintain REIT status) and stock repurchases, make prepayments of other indebtedness, make capital expenditures, conduct asset dispositions or transfers and make investments, including acquisitions or mergers, in each case subject to various exceptions.

Debt Maturities

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of March 31, 2020 were:

Year	(in millions)
2020	$	19
2021		1,709
2022		97
2023		827
2024		676
Thereafter⁽¹⁾		1,556
	$	4,884

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