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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________
FORM 10-Q
 _______________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For quarterly period ended March 31, 2023

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

COMMISSION FILE NO. 1-38012
 Playa Hotels & Resorts N.V.
(Exact name of registrant as specified in its charter)
TheNetherlands 98-1346104
       (State or other jurisdiction of incorporation or organization) (IRS Employer Identification Number)
Nieuwezijds Voorburgwal 104 
1012 SGAmsterdam,
theNetherlandsNot Applicable
 (Address of Principal Executive Offices) (Zip Code)
+31 6 82 55 84 30
(Registrant’s Telephone Number, Including Area Code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Ordinary Shares, €0.10 par valuePLYAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past ninety (90) days.    Yes    No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes        No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated 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.   

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No    

As of April 28, 2023, there were 152,255,818 shares of the registrant’s ordinary shares, €0.10 par value, outstanding.



Playa Hotels & Resorts N.V.
TABLE OF CONTENTS
   
Page
Item 1.
 
 
 
 
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Playa Hotels & Resorts N.V.
Condensed Consolidated Balance Sheets
($ in thousands, except share data)
(unaudited)
As of March 31,As of December 31,
20232022
ASSETS
Cash and cash equivalents$281,465 $283,945 
Trade and other receivables, net74,268 62,946 
Insurance recoverable20,586 34,191 
Accounts receivable from related parties11,408 8,806 
Inventories20,607 20,046 
Prepayments and other assets40,958 44,177 
Property and equipment, net1,527,188 1,536,567 
Derivative financial instruments 3,510 
Goodwill, net61,654 61,654 
Other intangible assets6,293 6,556 
Deferred tax assets7,334 7,422 
Total assets$2,051,761 $2,069,820 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Trade and other payables$200,694 $231,652 
Payables to related parties9,144 6,852 
Income tax payable 785 990 
Debt1,064,391 1,065,453 
Other liabilities31,149 30,685 
Deferred tax liabilities73,064 69,326 
Total liabilities1,379,227 1,404,958 
Commitments and contingencies (see Note 7)
Shareholders’ equity
Ordinary shares (par value €0.10; 500,000,000 shares authorized, 169,423,980 shares issued and 154,402,852 shares outstanding as of March 31, 2023 and 168,275,504 shares issued and 158,228,508 shares outstanding as of December 31, 2022)
18,822 18,700 
Treasury shares (at cost, 15,021,128 shares as of March 31, 2023 and 10,046,996 shares as of December 31, 2022)
(103,843)(62,953)
Paid-in capital1,192,134 1,189,090 
Accumulated other comprehensive loss(4,308)(6,985)
Accumulated deficit(430,271)(472,990)
Total shareholders’ equity 672,534 664,862 
Total liabilities and shareholders’ equity $2,051,761 $2,069,820 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
1

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Operations
($ in thousands, except share data)
(unaudited)
Three Months Ended March 31,
20232022
Revenue
Package$233,568 $186,815 
Non-package34,045 29,454 
The Playa Collection726 296 
Management fees1,929 1,057 
Cost reimbursements3,534 1,952 
Total revenue273,802 219,574 
Direct and selling, general and administrative expenses
Direct128,968 106,840 
Selling, general and administrative45,127 37,239 
Depreciation and amortization19,191 19,500 
Reimbursed costs3,534 1,952 
Loss on sale of assets13  
Direct and selling, general and administrative expenses196,833 165,531 
Operating income76,969 54,043 
Interest expense(29,666)(9,168)
Other income (expense)232 (514)
Net income before tax47,535 44,361 
Income tax provision(4,816)(1,614)
Net income$42,719 $42,747 
Earnings per share
Basic$0.27 $0.26 
Diluted$0.27 $0.26 
Weighted average number of shares outstanding during the period - Basic157,314,177 165,743,382 
Weighted average number of shares outstanding during the period - Diluted158,772,453 166,888,129 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
2

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Comprehensive Income
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
Net income$42,719 $42,747 
Other comprehensive income, net of taxes
Gain on interest rate swaps2,895 2,894 
Pension obligation loss(218)(234)
Total other comprehensive income2,677 2,660 
Comprehensive income$45,396 $45,407 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
3

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Shareholders’ Equity
($ in thousands, except share data)
(unaudited)
Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2021164,438,280 $18,518 2,208,004 $(16,697)$1,177,380 $(18,671)$(529,696)$630,834 
Net income— — — — — — 42,747 42,747 
Other comprehensive income— — — — — 2,660 — 2,660 
Share-based compensation1,339,787 152 — — 3,204 — — 3,356 
Balance at March 31, 2022165,778,067 $18,670 2,208,004 $(16,697)$1,180,584 $(16,011)$(486,949)$679,597 

Ordinary SharesTreasury SharesPaid-In CapitalAccumulated Other
Comprehensive Loss
Accumulated DeficitTotal
SharesAmountSharesAmount
Balance at December 31, 2022158,228,508 $18,700 10,046,996 $(62,953)$1,189,090 $(6,985)$(472,990)$664,862 
Net income— — — — — — 42,719 42,719 
Other comprehensive income— — — — — 2,677 — 2,677 
Share-based compensation1,148,476 122 — — 3,044 — — 3,166 
Repurchase of ordinary shares(4,974,132)— 4,974,132 (40,890)— — — (40,890)
Balance at March 31, 2023154,402,852 $18,822 15,021,128 $(103,843)$1,192,134 $(4,308)$(430,271)$672,534 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.

4

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net income$42,719 $42,747 
Adjustments to reconcile net income to net cash from operating activities
Depreciation and amortization19,191 19,500 
Amortization of debt discount and issuance costs1,795 1,019 
Share-based compensation3,166 3,356 
Loss (gain) on derivative financial instruments6,405 (11,134)
Deferred income taxes3,826 1,572 
Loss on sale of assets13  
Amortization of key money(193)(238)
Provision for (recovery of) doubtful accounts81 (483)
Other198 (69)
Changes in assets and liabilities:
Trade and other receivables, net(11,403)(15,735)
Insurance recoverable5,626  
Accounts receivable from related parties(2,602)(4,946)
Inventories(569)(725)
Prepayments and other assets3,159 (223)
Trade and other payables(28,743)281 
Payables to related parties 2,292 2,262 
Income tax payable(205)152 
Other liabilities531 312 
Net cash provided by operating activities45,287 37,648 
INVESTING ACTIVITIES
Capital expenditures(10,257)(4,430)
Purchase of intangibles(77)(30)
Proceeds from the sale of assets, net3 24 
Property damage insurance proceeds7,979  
Net cash used in investing activities(2,352)(4,436)
FINANCING ACTIVITIES
Repayments of debt(2,750)(2,525)
Repurchase of ordinary shares(42,558) 
Principal payments on finance lease obligations(107)(99)
Net cash used in financing activities(45,415)(2,624)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(2,480)30,588 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF THE PERIOD$283,945 $293,577 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF THE PERIOD$281,465 $324,165 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents$281,465 $299,802 
Restricted cash 24,363 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH$281,465 $324,165 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
5

Playa Hotels & Resorts N.V.
Condensed Consolidated Statements of Cash Flows (continued)
($ in thousands)
(unaudited)
Three Months Ended March 31,
20232022
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest$21,406 $18,221 
Cash paid for income taxes, net$1,427 $32 
SUPPLEMENTAL DISCLOSURES OF NON-CASH ACTIVITIES
Capital expenditures incurred but not yet paid$873 $696 
Intangible assets capitalized but not yet paid$ $45 
Par value of vested restricted share awards$122 $152 
The accompanying Notes form an integral part of the Condensed Consolidated Financial Statements.
6

Playa Hotels & Resorts N.V.
Notes to the Condensed Consolidated Financial Statements
(unaudited)
Note 1. Organization, operations and basis of presentation
Background
Playa Hotels & Resorts N.V. (“Playa” or the “Company”) is a leading owner, operator and developer of all-inclusive resorts in prime beachfront locations in popular vacation destinations. We own and/or manage a portfolio of 26 resorts located in Mexico, the Dominican Republic and Jamaica. Unless otherwise indicated or the context requires otherwise, references in our condensed consolidated financial statements (our “Condensed Consolidated Financial Statements”) to “we,” “our,” “us” and similar expressions refer to Playa and its subsidiaries.
Basis of preparation, presentation and measurement
Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these unaudited interim Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements as of and for the year ended December 31, 2022, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on February 23, 2023 (the “Annual Report”).
In our opinion, the unaudited interim Condensed Consolidated Financial Statements have been prepared on the same basis as the annual Consolidated Financial Statements and include all adjustments, consisting of only normal recurring adjustments, necessary for fair presentation. Results for the comparative prior periods have been reclassified to conform to the current period presentation.
The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results of operations to be expected for the full year ending December 31, 2023. All dollar amounts (other than per share amounts) in the following disclosures are in thousands of United States dollars, unless otherwise indicated.
Note 2. Significant accounting policies
New accounting pronouncements recently issued or effective were not applicable to the Company or are not expected to have a material impact on the Condensed Consolidated Financial Statements.
Note 3. Revenue

The following tables present our revenues disaggregated by geographic segment (refer to discussion of our reportable segments in Note 15) ($ in thousands):
Three Months Ended March 31, 2023
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue$81,287 $36,803 $59,602 $55,876 $ $233,568 
Non-package revenue9,700 4,747 9,167 9,867 564 34,045 
The Playa Collection    726 726 
Management fees38    1,891 1,929 
Cost reimbursements   1,337 2,197 3,534 
Total revenue$91,025 $41,550 $68,769 $67,080 $5,378 $273,802 
7

Three Months Ended March 31, 2022
Yucatán
Peninsula
Pacific
Coast
Dominican
Republic
JamaicaOtherTotal
Package revenue(1)
$61,537 $26,223 $60,863 $38,192 $ $186,815 
Non-package revenue(1)(2)
8,841 3,621 8,846 7,934 212 29,454 
The Playa Collection(2)
    296 296 
Management fees30    1,027 1,057 
Cost reimbursements   998 954 1,952 
Total revenue$70,408 $29,844 $69,709 $47,124 $2,489 $219,574 
________
(1)Includes $2.7 million of on-property room upgrade revenue that was reclassified from non-package revenue to package revenue to conform with current period presentation.
(2)Includes $0.3 million that was reclassified from non-package revenue to The Playa Collection to confirm with current period presentation.

Contract assets and liabilities

We do not have any material contract assets as of March 31, 2023 and December 31, 2022 other than trade and other receivables on our Condensed Consolidated Balance Sheet. Our receivables are primarily the result of contracts with customers, which are reduced by an allowance for doubtful accounts that reflects our estimate of amounts that will not be collected.

We record contract liabilities when cash payments are received or due in advance of guests staying at our resorts, which are presented as advance deposits (see Note 14) within trade and other payables on our Condensed Consolidated Balance Sheet. Our advanced deposits are generally recognized as revenue within one year.
Note 4. Property and equipment
The balance of property and equipment, net is as follows ($ in thousands):
As of March 31,As of December 31,
20232022
Property and equipment, gross
Land, buildings and improvements$1,766,926 $1,765,130 
Fixtures and machinery (1)
88,824 88,333 
Furniture and other fixed assets215,876 213,005 
Construction in progress14,315 10,293 
Total property and equipment, gross2,085,941 2,076,761 
Accumulated depreciation(558,753)(540,194)
Total property and equipment, net$1,527,188 $1,536,567 
________
(1) Includes the gross balance of our finance lease right-of-use assets, which was $6.3 million as of March 31, 2023 and December 31, 2022.
Depreciation expense for property and equipment was $18.8 million and $19.1 million for the three months ended March 31, 2023 and 2022, respectively.
Hurricane Fiona
On September 19, 2022, Hurricane Fiona, a Category 1 hurricane, made landfall on the eastern coast of the Dominican Republic and caused non-structural damage to several of our resorts. Our insurance policies provide coverage for business interruption, including lost profits, and reimbursement for costs related to the property damages and losses we have incurred.
We received property damage insurance proceeds of $8.0 million and business interruption proceeds of $5.6 million related to Hurricane Fiona during the three months ended March 31, 2023. We received an additional $2.2 million of property damage and business interruption proceeds in April 2023. We expect to receive the remaining proceeds in 2023.
The property we manage in the Dominican Republic, Sanctuary Cap Cana, also sustained damage from Hurricane Fiona and was temporarily closed in late September for necessary clean-up and repairs. The resort reopened on January 20, 2023.
8

Lessor contracts
We rent certain real estate to third parties for office and retail space within our resorts. Our lessor contracts are considered operating leases and generally have a contractual term of one to three years. The following table presents our rental income for the three months ended March 31, 2023 and 2022 ($ in thousands):
Three Months Ended March 31,
Leases20232022
Operating lease income (1)
$950 $1,226 
________
(1) Our operating lease income, which is recorded within non-package revenue in the Condensed Consolidated Statements of Operations, includes variable lease revenue which is typically calculated as a percentage of our tenant’s net sales.
Note 5. Income taxes
We file tax returns for our entities in key jurisdictions including Mexico, the Dominican Republic, Jamaica, the United States, and the Netherlands. We are domiciled in the Netherlands and our Dutch subsidiaries are subject to a Dutch general tax rate of 25.8%. Our other operating subsidiaries are subject to tax rates up to 30% in the jurisdictions in which they are domiciled.
All of our outstanding Advance Pricing Agreements (“APAs”) for our Dominican Republic entities expired as of December 31, 2021. We are currently in the process of finalizing the terms of our APAs, which we expect to complete before the end of 2023. Our estimated annual effective tax rate calculation reflects the terms of the APAs that are expected to apply for the year ending December 31, 2023.
We had no uncertain tax positions or unrecognized tax benefits as of March 31, 2023. We expect no significant changes in unrecognized tax benefits over the next twelve months.
We regularly assess the realizability of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. As of March 31, 2023, a valuation allowance has been maintained as a reserve on a portion of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. If our operating results continue to improve and our projections show continued utilization of tax attributes, we may consider that as significant positive evidence and our future reassessment may result in the determination that all or a portion of the valuation allowance is no longer required. The exact timing and amount of the valuation allowance releases are ultimately contingent upon the level of profitability achieved in future periods.
Note 6. Related party transactions
Relationship with Hyatt and AMResorts
Hyatt Hotels Corporation (“Hyatt”) is considered a related party due to its ownership of our ordinary shares by its affiliated entities. We pay Hyatt fees associated with the franchise agreements of our resorts operating under the all-ages Hyatt Ziva and adults-only Hyatt Zilara brands and receive reimbursements for guests that pay for their stay using the World of Hyatt® guest loyalty program.
Hyatt also owns Apple Leisure Group (“ALG”), the brand management platform AMResorts, and various tour operators and travel agencies. We previously paid AMResorts and its affiliates, as operators of the Jewel Punta Cana and Jewel Palm Beach through December 20, 2022 and January 6, 2023, respectively, management and marketing fees, and sold all-inclusive packages through ALG’s tour operators and travel agencies.
Relationship with Sagicor
Sagicor Financial Corporation Limited and its affiliated entities (collectively “Sagicor”) is considered a related party due to its ownership of our ordinary shares and representation on our Board of Directors. We pay Sagicor for employee insurance coverage at one of our Jamaica properties. Sagicor is also a part owner of the Jewel Grande Montego Bay Resort & Spa and compensates us as manager of the property.
9

Relationship with Davidson Kempner Capital Management L.P.
Davidson Kempner Capital Management L.P. (“DKCM”) is the investment manager of multiple affiliated funds and is considered a related party due to the DKCM funds’ ownership of our ordinary shares. An affiliate of DKCM was also a lender of $25.0 million in aggregate principal of our 2022 Term Loan (as defined in Note 11) as of December 31, 2022.
Relationship with HG Vora Capital Management, LLC
HG Vora Capital Management, LLC is considered a related party due to its ownership of our ordinary shares and was a lender of $13.5 million and $42.5 million in aggregate principal of the 2022 Term Loan as of March 31, 2023 and December 31, 2022, respectively.
Lease with our Chief Executive Officer
One of our offices is owned by our Chief Executive Officer and we sublease the space at that location from a third party.
Transactions with related parties
Transactions between us and related parties during the three months ended March 31, 2023 and 2022 were as follows ($ in thousands):
Three Months Ended March 31,
Related PartyTransaction20232022
Revenues
ALGPackage revenue$ $5,874 
Sagicor
Cost reimbursements(1)
$1,477 $1,103 
Expenses
Hyatt
Franchise fees(2)
$9,954 $7,413 
Sagicor
Insurance premiums(2)
$320 $279 
Chief Executive Officer
Lease expense(3)
$196 $188 
DKCM
Interest expense(4)
$ $5,405 
AMResorts
Management fees(2)
$41 $1,112 
AMResorts
Marketing fees(3)
$37 $1,083 
________
(1)Equivalent amount included as reimbursed costs in the Condensed Consolidated Statements of Operations.
(2)Included in direct expense in the Condensed Consolidated Statements of Operations with the exception of certain immaterial fees associated with the Hyatt franchise agreements, which are included in selling, general, and administrative expense.
(3)Included in selling, general, and administrative expense in the Condensed Consolidated Statements of Operations.
(4)Includes interest expense and amortization of deferred financing costs and discounts.
Note 7. Commitments and contingencies
We are involved in various claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, and workers’ compensation and other employee claims. Most occurrences involving liability and claims of negligence are covered by insurance with solvent insurance carriers. We recognize a liability when we believe the loss is probable and reasonably estimable. We currently believe that the ultimate outcome of such lawsuits and proceedings will not, individually or in the aggregate, have a material effect on our Condensed Consolidated Financial Statements.
The Dutch corporate income tax act provides the option of a fiscal unity, which is a consolidated tax regime wherein the profits and losses of group companies can be offset against each other. With the exception of Playa Hotels & Resorts N.V., our Dutch companies file as a fiscal unity. Playa Resorts Holding B.V. is the head of our Dutch fiscal unity and is jointly and severally liable for the tax liabilities of the fiscal unity as a whole.
10

Note 8. Ordinary shares
On February 9, 2023, our Board of Directors authorized a $200.0 million share repurchase program, pursuant to which we may repurchase our outstanding ordinary shares as market conditions and our liquidity warrant. The new program replaced our $100.0 million repurchase program announced in September 2022. The repurchase program is subject to certain limitations under Dutch law, including the existing repurchase authorization granted by our shareholders. Repurchases may be made from time to time in the open market, in privately negotiated transactions or by other means (including Rule 10b5-1 trading plans). Depending on market conditions and other factors, these repurchases may be commenced or suspended from time to time without prior notice. During the three months ended March 31, 2023, we repurchased 4,974,132 ordinary shares under the programs at an average price of $8.17 per share. As of March 31, 2023, we had approximately $169.2 million remaining under our $200.0 million share repurchase program.
As of March 31, 2023, our ordinary share capital consisted of 154,402,852 ordinary shares outstanding, which have a par value of €0.10 per share. In addition, 4,893,900 restricted shares and performance share awards and 32,658 restricted share units were outstanding under the 2017 Plan (as defined in Note 9). The holders of restricted shares and performance share awards are entitled to vote, but not dispose of, such shares until they vest. The holders of restricted share units are neither entitled to vote nor dispose of such shares until they vest.
Note 9. Share-based compensation
We adopted our 2017 Omnibus Incentive Plan (the “2017 Plan”) to attract and retain independent directors, executive officers and other key employees and service providers. As of March 31, 2023, there were 907,941 shares available for future grants under the 2017 Plan.
Restricted share awards consist of restricted shares and restricted share units that are granted to eligible employees, executives, and board members and consist of ordinary shares (or the right to receive ordinary shares).
A summary of our restricted share awards from January 1, 2023 to March 31, 2023 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20232,288,821 $6.94 
Granted1,744,579 6.77 
Vested(1,148,476)6.91 
Forfeited(6,716)6.95 
Unvested balance at March 31, 20232,878,208 $6.85 
Performance share awards consist of ordinary shares that may become earned and vested at the end of a three-year performance period based on the achievement of performance targets adopted by our Compensation Committee. Our performance shares have market conditions where 50% of the performance share awards will vest based on the total shareholder return (“TSR”) of our ordinary shares relative to those of our peer group and 50% will vest based on the compound annual growth rate of the price of our ordinary shares. The peer shareholder return component may vest between 0% and 150% of target, with the award capped at 100% of target should Playa’s TSR be negative. The growth rate component may vest up to 100% of target.
The table below summarizes the key inputs used in the Monte-Carlo simulation to determine the grant date fair value of our performance share awards ($ in thousands):
Performance Award Grant DatePercentage of Total AwardGrant Date Fair Value by Component
Volatility (1)
Interest
Rate (2)
Dividend Yield
January 18, 2023
Peer Shareholder Return50 %$2,751 71.82 %3.70 % %
Growth Rate50 %$2,194 71.82 %3.70 % %
________
(1) Expected volatility was determined based on our historical share prices.
(2) The risk-free rate was based on U.S. Treasury zero coupon issues with a remaining term equal to the remaining term of the measurement period.
11

A summary of our performance share awards from January 1, 2023 to March 31, 2023 is as follows:
Number of SharesWeighted-Average Grant Date Fair Value
Unvested balance at January 1, 20231,329,123 $6.05 
Granted719,227 6.88 
Unvested balance at March 31, 20232,048,350 $6.34 
Note 10. Earnings per share
Basic and diluted earnings or loss per share (“EPS”) are as follows ($ in thousands, except share data):
Three Months Ended March 31,
20232022
Numerator
Net income$42,719 $42,747 
Denominator
Denominator for basic EPS - weighted-average number of shares outstanding157,314,177 165,743,382 
Effect of dilutive securities
Unvested performance share awards952,494 401,903 
Unvested restricted share awards505,782 742,844 
Denominator for diluted EPS - adjusted weighted-average number of shares outstanding158,772,453 166,888,129 
EPS - Basic$0.27 $0.26 
EPS - Diluted$0.27 $0.26 

We had no anti-dilutive unvested performance share awards for the three months ended March 31, 2023. For the three months ended March 31, 2022, unvested performance share awards in the amount of 187,500 shares were not included in the computation of diluted EPS as their effect would have been anti-dilutive. The performance targets of our unvested performance share awards were partially achieved as of March 31, 2023 and 2022.

For the three months ended March 31, 2023 and 2022, we had no anti-dilutive unvested restricted share awards.

On March 12, 2022, all of our outstanding warrants expired and had no impact on diluted EPS for three months ended March 31, 2022.
12

Note 11. Debt
Our debt consists of the following ($ in thousands):
Outstanding Balance as of
Interest RateMaturity DateMarch 31, 2023December 31, 2022
Senior Secured Credit Facilities
Revolving Credit Facility (1)
    SOFR + 3.50% (1)
January 5, 2028$ $ 
2022 Term Loan (2)
SOFR + 4.25%
January 5, 20291,097,250 1,100,000 
Total Senior Secured Credit Facilities (at stated value)1,097,250 1,100,000 
Unamortized discount(30,955)(32,428)
Unamortized debt issuance costs(7,454)(7,776)
Total Senior Secured Credit Facilities, net$1,058,841 $1,059,796 
Financing lease obligations$5,550 $5,657 
Total debt, net$1,064,391 $1,065,453 
________
(1)Undrawn balances bear interest between 0.25% to 0.50% depending on certain leverage ratios. We had an available balance of $225.0 million as of March 31, 2023 and December 31, 2022. Interest is incurred on any outstanding balance based on the Secured Overnight Financing Rate (“SOFR”) plus a margin ranging from 3.25% to 3.75%, depending on our consolidated secured net leverage ratio.
(2)The effective interest rate for the 2022 Term Loan was 8.99% and 8.58% as of March 31, 2023 and December 31, 2022, respectively.
Second Restatement Agreement
On December 16, 2022, we entered into the Second Restatement Agreement to amend and restate our Senior Secured Credit Facility to consist of (i) a $225.0 million revolving line of credit with a maturity date of January 5, 2028 (the “Revolving Credit Facility”) and (ii) a $1.1 billion term loan with a maturity of January 5, 2029 (the “2022 Term Loan” and collectively with the Revolving Credit Facility, the “2022 Senior Secured Credit Facility”).
The 2022 Term Loan bears interest at SOFR plus a margin of 4.25% (where the applicable SOFR rate has a 0.50% floor). The Revolving Credit Facility bears interest at SOFR plus a margin ranging from 3.25% to 3.75%, in each case, depending on the level of our consolidated secured net leverage ratio in effect from time to time.
Financial maintenance covenants
We were in compliance with all applicable covenants as of March 31, 2023. A summary of our applicable covenants and restrictions is as follows:
DebtCovenant Terms
2022 Senior Secured Credit Facility
We are subject to a total net leverage ratio of 5.20x if we have more than 35% drawn on the Revolving Credit Facility.
Note 12. Derivative financial instruments
Our two interest rate swaps previously mitigated the interest rate risk inherent to our floating rate debt that was tied to the London Interbank Offered Rate (“LIBOR”). The interest rate swaps were not for trading purposes and had fixed notional values of $200.0 million and $600.0 million. The fixed rate paid by us was 2.85% and the variable rate received reset monthly to the one-month LIBOR rate. The interest rate swaps matured on March 31, 2023.

Our interest rate swaps were designated as cash flow hedges, but were deemed ineffective due to the decrease in interest rates. All changes in fair value were recognized through interest expense in the Condensed Consolidated Statements of Operations through maturity.

13

The following tables present the effect of our interest rate swaps, net of tax, in the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022 ($ in thousands):
20232022
AOCI from our cash flow hedges as of January 1$2,895 $14,632 
Change in fair value  
Reclassification from AOCI to interest expense(2,895)(2,894)
OCI related to our cash flow hedges for the three months ended March 31(2,895)(2,894)
AOCI from our cash flow hedges as of March 31$ $11,738 
Derivative Instruments for Ineffective HedgesFinancial Statement ClassificationThree Months Ended March 31,
20232022
Interest rate swaps (1)
Interest expense$3,013 $(5,715)
________
(1) Includes the loss or (gain) from the change in fair value of our interest rate swaps and the cash interest paid or received for the monthly settlements of the derivative.
The following tables present the effect of our interest rate swaps in the Condensed Consolidated Balance Sheet as of March 31, 2023 and December 31, 2022 ($ in thousands):
Derivative Assets for Ineffective HedgesFinancial Statement ClassificationAs of March 31,As of December 31,
20232022
Interest rate swapsDerivative financial instruments$ $3,510 

Derivative financial instruments expose us to credit risk in the event of non-performance by the counterparty under the terms of the interest rate swaps. We incorporate these counterparty credit risks in our fair value measurements (see Note 13) and believe we minimize this credit risk by transacting with major creditworthy financial institutions.
Note 13. Fair value of financial instruments
The objective of a fair value measurement is to estimate the price at which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement date under current market conditions. U.S. GAAP establishes a hierarchical disclosure framework, which prioritizes and ranks the level of observability of inputs used in measuring fair value as follows:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2: Unadjusted quoted prices for similar assets or liabilities in active markets, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability.
Level 3: Inputs are unobservable and reflect our judgments about assumptions that market participants would use in pricing an asset or liability.
We believe the carrying value of our financial instruments, excluding our debt, approximate their fair values as of March 31, 2023 and December 31, 2022. We did not have any Level 3 instruments during any of the periods presented in our Condensed Consolidated Financial Statements.
We did not have any financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023. The following table presents our fair value hierarchy for our financial assets and liabilities measured at fair value on a recurring basis as of and December 31, 2022 ($ in thousands):
Financial AssetsDecember 31, 2022Level 1Level 2Level 3
Fair value measurements on a recurring basis
Interest rate swap$3,510 $ $3,510 $ 
14

The following tables present our fair value hierarchy for our financial liabilities not measured at fair value as of March 31, 2023 and December 31, 2022 ($ in thousands):
Carrying Value
Fair Value
As of March 31, 2023Level 1
Level 2
Level 3
Financial liabilities not recorded at fair value
2022 Term Loan$1,058,841 $ $ $1,110,079 
Carrying ValueFair Value
As of December 31, 2022Level 1Level 2Level 3
Financial liabilities not recorded at fair value
2022 Term Loan$1,059,796 $ $ $1,114,860 
The following table summarizes the valuation techniques used to estimate the fair value of our financial instruments measured at fair value on a recurring basis and our financial instruments not measured at fair value:
Valuation Technique
Financial instruments recorded at fair value
Interest rate swaps
The fair value of the interest rate swaps is estimated based on the expected future cash flows by incorporating the notional amount of the swaps, the contractual period to maturity, and observable market-based inputs, including interest rate curves. The fair value also incorporates credit valuation adjustments to appropriately reflect nonperformance risk. The fair value of our interest rate swaps is largely dependent on forecasted LIBOR as of the measurement date. If, in subsequent periods, forecasted LIBOR exceeds 2.85% we will recognize a gain and future cash inflows. Conversely, if forecasted LIBOR falls below 2.85% in subsequent periods we will recognize a loss and future cash outflows.
Financial instruments not recorded at fair value
2022 Term LoanThe fair value of our 2022 Term Loan is estimated using cash flow projections over the remaining contractual period by applying market forward rates and discounting back at the appropriate discount rate.
Revolving Credit FacilityThe valuation technique of our Revolving Credit Facility is consistent with our 2022 Term Loan. The fair value of the Revolving Credit Facility generally approximates its carrying value as the expected term is significantly shorter in duration.
Note 14. Other balance sheet items
Trade and other receivables, net
The following summarizes the balances of trade and other receivables, net as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Gross trade and other receivables (1)
$74,620 $63,396 
Allowance for doubtful accounts(352)(450)
Total trade and other receivables, net$74,268 $62,946 
________
(1) The opening balance as of January 1, 2022 was $47.4 million.

We have not experienced any significant write-offs to our accounts receivable during the three months ended March 31, 2023 and 2022.
15

Prepayments and other assets
The following summarizes the balances of prepayments and other assets as of March 31, 2023 and December 31, 2022 ($ in thousands):
As of March 31,As of December 31,
20232022
Advances to suppliers$10,237 $12,683 
Prepaid income taxes10,735 11,809 
Prepaid other taxes (1)
4,465 4,539 
Operating lease right-of-use assets2,791 2,968 
Key money6,670 6,735 
Other assets6,060 5,443 
Total prepayments and other assets$40,958 $44,177 
________
(1) Includes recoverable value-added tax, general consumption tax, and other sales tax accumulated by our Mexico, Jamaica, Dutch and Dominican Republic entities.
Goodwill
We recognized no goodwill impairment losses on our reporting units nor any additions to goodwill during the three months ended March 31, 2023. The gross carrying values and accumulated impairment losses of goodwill by reportable segment (refer to discussion of our reportable segments in Note 15) as of March 31, 2023 and December 31, 2022 are as follows ($ in thousands):
Yucatán PeninsulaPacific CoastDominican RepublicJamaicaTotal
Gross carrying value$51,731 $ $ $35,879 $87,610 
Accumulated impairment losses(6,168)  (19,788)(25,956)
Net carrying value$45,563 $ $ $16,091