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 of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||||||||
(Address of principal executive offices, including zip code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page No. | ||||||||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | ||||||||
PART I. | FINANCIAL INFORMATION | |||||||
Item 1. | Financial Statements | |||||||
Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
Condensed Consolidated Statements of Operations (Unaudited) | ||||||||
Condensed Consolidated Statements of Equity (Unaudited) | ||||||||
Condensed Consolidated Statements of Cash Flows (Unaudited) | ||||||||
Notes to Condensed Consolidated Financial Statements (Unaudited) | ||||||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | |||||||
Item 4. | Controls and Procedures | |||||||
PART II. | OTHER INFORMATION | |||||||
Item 1. | Legal Proceedings | |||||||
Item 1A. | Risk Factors | |||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |||||||
Item 3. | Defaults Upon Senior Securities | |||||||
Item 4. | Mine Safety Disclosures | |||||||
Item 5. | Other Information | |||||||
Item 6. | Exhibits | |||||||
Signatures |
June 30, 2020 | December 31, 2019 | ||||||||||
Assets: | |||||||||||
Real estate: | |||||||||||
Land | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Furniture, fixtures, and other equipment | |||||||||||
Gross operating real estate | |||||||||||
Less accumulated depreciation | ( | ( | |||||||||
Net operating real estate | |||||||||||
Construction in progress | |||||||||||
Total real estate, net | |||||||||||
Right of use assets | |||||||||||
Cash and cash equivalents | |||||||||||
Accounts receivable | |||||||||||
Other assets | |||||||||||
Total Assets | $ | $ | |||||||||
Liabilities and Equity: | |||||||||||
Liabilities: | |||||||||||
Debt, net | $ | $ | |||||||||
Mandatorily redeemable preferred shares | |||||||||||
Accounts payable and accrued expenses | |||||||||||
Dividends payable | |||||||||||
Other liabilities | |||||||||||
Deferred tax liabilities | |||||||||||
Total Liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Equity: | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in-capital | |||||||||||
Retained earnings (deficit) | ( | ||||||||||
Noncontrolling interest | |||||||||||
Total Equity | |||||||||||
Total Liabilities and Equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Rooms | $ | $ | $ | $ | |||||||||||||||||||
Other | |||||||||||||||||||||||
Total Revenues | |||||||||||||||||||||||
Operating Expenses: | |||||||||||||||||||||||
Rooms | |||||||||||||||||||||||
Other departmental and support | |||||||||||||||||||||||
Property tax, insurance and other | |||||||||||||||||||||||
Management and royalty fees | |||||||||||||||||||||||
Corporate general and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Impairment loss | |||||||||||||||||||||||
Gain on sales of real estate | ( | ( | ( | ( | |||||||||||||||||||
Gain on casualty | ( | ( | ( | ( | |||||||||||||||||||
Total Operating Expenses | |||||||||||||||||||||||
Operating Loss | ( | ( | ( | ( | |||||||||||||||||||
Other Income (Expense): | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense), net | ( | ||||||||||||||||||||||
Total Other Expenses | ( | ( | ( | ( | |||||||||||||||||||
Loss before income taxes | ( | ( | ( | ( | |||||||||||||||||||
Income tax benefit (expense) | ( | ( | |||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Weighted average common shares outstanding - basic and diluted | |||||||||||||||||||||||
Basic and diluted loss per share | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Common Stock | Additional Paid-in- Capital | Retained Earnings (Deficit) | Noncontrolling Interest | Total Equity | |||||||||||||||||||||||||||||||
Shares | Par Value | ||||||||||||||||||||||||||||||||||
Balance as of January 1, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Cumulative effect of a change in accounting principle | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
Purchase of common stock | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balance as of March 31, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Purchase of common stock | ( | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Balance as of June 30, 2019 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Balance as of January 1, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Dividends on common stock ($ | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Equity-based compensation | — | — | — | ||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred costs and other assets | |||||||||||
Impairment loss | |||||||||||
Gain on casualty | ( | ( | |||||||||
Gain on sales of real estate | ( | ( | |||||||||
Equity-based compensation expense | |||||||||||
Changes in assets and liabilities: | |||||||||||
Accounts receivable | ( | ||||||||||
Other assets | |||||||||||
Accounts payable and accrued expenses | ( | ||||||||||
Other liabilities | |||||||||||
Net cash provided by (used in) operating activities | ( | ||||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures, primarily investments in existing real estate | ( | ( | |||||||||
Lender and other escrows | ( | ||||||||||
Insurance proceeds related to real estate casualties | |||||||||||
Proceeds from sales of real estate | |||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from debt | |||||||||||
Repayment of debt | ( | ( | |||||||||
Debt issuance costs | ( | ||||||||||
Payment of insurance financing | ( | ( | |||||||||
Dividends on common stock | ( | ( | |||||||||
Purchase of common stock | ( | ||||||||||
Net cash provided by (used in) financing activities | ( | ||||||||||
Increase (decrease) in cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents at the beginning of the period | |||||||||||
Cash and cash equivalents at the end of the period | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Hotels | Rooms | Hotels | Rooms | ||||||||||||||||||||
Owned | |||||||||||||||||||||||
Joint Venture | |||||||||||||||||||||||
Totals |
June 30, 2020 | June 30, 2019 | ||||||||||||||||||||||||||||||||||
Number of Hotels | Percentage of Total Hotels | Percentage of Total Revenue | Number of Hotels | Percentage of Total Hotels | Percentage of Total Revenue | ||||||||||||||||||||||||||||||
Texas | % | % | % | % | |||||||||||||||||||||||||||||||
Florida | % | % | % | % | |||||||||||||||||||||||||||||||
California | % | % | % | % | |||||||||||||||||||||||||||||||
Total | % | % | % | % |
June 30, 2020 | December 31, 2019 | ||||||||||
Lender and other escrows | $ | $ | |||||||||
Prepaid expenses | |||||||||||
Intangible assets, net | |||||||||||
Federal and state tax receivables | |||||||||||
Other assets | |||||||||||
Total other assets | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||
CMBS Facility | $ | $ | |||||||||
Revolving Facility | |||||||||||
Less deferred financing costs, net | ( | ||||||||||
Total debt, net | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||
Due to hotel manager | $ | $ | |||||||||
Real estate taxes | |||||||||||
Sales and occupancy taxes | |||||||||||
Interest | |||||||||||
Other accounts payable and accrued expenses | |||||||||||
Total accounts payable and accrued expenses | $ | $ | |||||||||
Operating lease liabilities | $ | $ | |||||||||
Insurance financing | |||||||||||
Below market leases, net | |||||||||||
Other liabilities | |||||||||||
Total other liabilities | $ | $ |
Year | Amount | ||||
2020 (remaining six months) | $ | ||||
2021 | |||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
Thereafter | |||||
$ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Operating lease revenues: | |||||||||||||||||||||||
Rooms | $ | $ | $ | $ | |||||||||||||||||||
Other | |||||||||||||||||||||||
Total lease revenues | |||||||||||||||||||||||
Customer revenues | |||||||||||||||||||||||
Total revenues | $ | $ | $ | $ |
RSAs | PSUs | RSUs | |||||||||||||||||||||||||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Outstanding at January 1, 2020 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted | $ | $ | $ | ||||||||||||||||||||||||||||||||
Converted | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Outstanding at June 30, 2020 (1) | $ | $ | $ |
RSAs | PSUs | RSUs | |||||||||||||||||||||||||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||||||||||||||||||||||
Outstanding at January 1, 2019 | $ | $ | $ | ||||||||||||||||||||||||||||||||
Granted | $ | $ | $ | ||||||||||||||||||||||||||||||||
Converted | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Forfeited | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||||
Outstanding at June 30, 2019 (1) | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Current tax benefit (expense) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Deferred tax benefit (expense) | ( | ||||||||||||||||||||||
Total income tax benefit (expense) | $ | $ | ( | $ | $ | ( |
Basis of Fair Value Measurements | ||||||||||||||||||||||||||||||||
Fair Value of Assets at Impairment | Quoted Prices in Active Market for Identical Items (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) (1) | Total
Losses | ||||||||||||||||||||||||||||
For the six months ended June 30, 2020 | ||||||||||||||||||||||||||||||||
Real estate (2) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
For the year ended December 31, 2019 | ||||||||||||||||||||||||||||||||
Real estate | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Right of use assets | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | ||||||||||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||||||||||
Debt - CMBS Facility(1)(2) | $ | $ | $ | $ | |||||||||||||||||||
Debt - Revolving Facility(1)(2) | $ | $ | $ | $ | |||||||||||||||||||
Mandatorily redeemable preferred shares(1) | $ | $ | $ | $ |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Interest paid during the period | $ | $ | |||||||||
Income taxes paid during the period, net of refunds | $ | $ | |||||||||
Non-cash investing and financing activities: | |||||||||||
Capital expenditures included in accounts payable and accrued expenses | $ | $ | |||||||||
Transfer of real estate from construction in progress to operating real estate | $ | $ | |||||||||
Dividends payable on common stock | $ | $ | |||||||||
Recognition of right of use operating lease assets and operating lease liabilities | $ | $ | |||||||||
Financing of insurance | $ | $ | |||||||||
Escrowed casualty insurance proceeds | $ | $ |
2020 | 2019 | ||||||||||||||||||||||||||||||||||
Comparable Occupancy | Comparable ADR | Comparable RevPAR | Comparable Occupancy | Comparable ADR | Comparable RevPAR | ||||||||||||||||||||||||||||||
April | 20.9% | $65.30 | $13.66 | 70.3% | $90.30 | $63.50 | |||||||||||||||||||||||||||||
May | 37.9% | $64.75 | $24.52 | 69.0% | $90.67 | $62.54 | |||||||||||||||||||||||||||||
June | 50.4% | $67.91 | $34.25 | 73.4% | $91.75 | $67.30 | |||||||||||||||||||||||||||||
July | 53.0% | $70.85 | $37.52 | 72.0% | $96.01 | $69.10 |
Amount (1) | Sales Metrics (1) | ||||||||||
Revenues (2) | $ | 48.8 | 2.7x | ||||||||
RevPAR (3) | $ | 38.49 | N/A | ||||||||
Hotel Adjusted EBITDAre (4) | $ | 4.8 | 27.1x | ||||||||
FFO (5) | $ | 2.7 | 4.6 | % | |||||||
Capital expenditures | $ | 2.7 | N/A | ||||||||
Number of Hotels | ADR | Occupancy | |||||||||||||||
Upper upscale | 2 | $ | 154.94 | 57.1 | % | ||||||||||||
Upscale | 12 | $ | 132.67 | 50.4 | % | ||||||||||||
Upper midscale | 48 | $ | 103.23 | 56.3 | % | ||||||||||||
Midscale | 128 | $ | 81.54 | 55.4 | % | ||||||||||||
Economy | 50 | $ | 62.53 | 52.7 | % | ||||||||||||
Total | 240 | $ | 86.46 | 54.8 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net loss | $ | (107) | $ | (19) | $ | (128) | $ | (46) | |||||||||||||||
Interest expense | 12 | 18 | 26 | 36 | |||||||||||||||||||
Income tax (benefit) expense | (1) | 1 | (3) | 6 | |||||||||||||||||||
Depreciation and amortization | 42 | 46 | 82 | 90 | |||||||||||||||||||
EBITDA | (54) | 46 | (23) | 86 | |||||||||||||||||||
Impairment loss | 52 | — | 54 | — | |||||||||||||||||||
Gain on sales of real estate | (9) | (2) | (32) | (2) | |||||||||||||||||||
Gain on casualty | (1) | (4) | (3) | (4) | |||||||||||||||||||
EBITDAre | (12) | 40 | (4) | 80 | |||||||||||||||||||
Equity-based compensation expense | 3 | 2 | 5 | 4 | |||||||||||||||||||
Severance expense, including related equity-based compensation expense | — | 6 | — | 6 | |||||||||||||||||||
Spin-Off and reorganization expenses | — | 1 | — | 2 | |||||||||||||||||||
Other, net | 1 | (3) | 1 | (3) | |||||||||||||||||||
Adjusted EBITDAre | (8) | 46 | 2 | 89 | |||||||||||||||||||
Corporate general and administrative expenses | 3 | 5 | 8 | 10 | |||||||||||||||||||
Hotel Adjusted EBITDAre | $ | (5) | $ | 51 | $ | 10 | $ | 99 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Net loss | $ | (107) | $ | (19) | $ | (128) | $ | (46) | |||||||||||||||
Depreciation and amortization | 42 | 46 | 82 | 90 | |||||||||||||||||||
Impairment loss | 52 | — | 54 | — | |||||||||||||||||||
Gain on sales of real estate | (9) | (2) | (32) | (2) | |||||||||||||||||||
Gain on casualty | (1) | (4) | (3) | (4) | |||||||||||||||||||
Nareit defined FFO attributable to common stockholders | (23) | 21 | (27) | 38 | |||||||||||||||||||
Equity-based compensation expense | 3 | 2 | 5 | 4 | |||||||||||||||||||
Non-cash income tax expense (benefit) | (1) | (1) | 1 | (1) | |||||||||||||||||||
Amortization expense of deferred financing costs | 2 | 3 | 6 | 7 | |||||||||||||||||||
Severance expense, including related equity-based compensation expense | — | 6 | — | 6 | |||||||||||||||||||
Spin-Off and reorganization expenses | — | 1 | — | 2 | |||||||||||||||||||
Other, net | 1 | (3) | 1 | (3) | |||||||||||||||||||
Adjusted FFO attributable to common stockholders | $ | (18) | $ | 29 | $ | (14) | $ | 53 | |||||||||||||||
Weighted average number of shares outstanding, diluted | 58.1 | 58.1 | 57.7 | 58.8 |
Comparable Hotels | Non-comparable Hotels (1) | Total | ||||||||||||||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||
Total Revenues | $ | 206 | $ | 356 | $ | 12 | $ | 71 | $ | 218 | $ | 427 | ||||||||||||||||||||||||||
Property-level expenses | (193) | (264) | (15) | (64) | (208) | (328) | ||||||||||||||||||||||||||||||||
Hotel Adjusted EBITDAre | $ | 13 | $ | 92 | $ | (3) | $ | 7 | $ | 10 | $ | 99 |
Three Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Occupancy | 36.4 | % | 70.9 | % | |||||||
ADR | $ | 66.30 | $ | 90.92 | |||||||
RevPAR | $ | 24.15 | $ | 64.42 |
Six Months Ended June 30, | |||||||||||
2020 | 2019 | ||||||||||
Occupancy | 45.2 | % | 68.5 | % | |||||||
ADR | $ | 80.68 | $ | 93.22 | |||||||
RevPAR | $ | 36.49 | $ | 63.82 |
Exhibit No. | Description | ||||
2.1 | |||||
10.1 | |||||
10.2 | |||||
10.3 | |||||
10.4 | |||||
10.5 | Second Amendment to Credit Agreement and Amendment to Guaranty and Security Agreement, dated as of May 19, 2020, by and among CorePoint Operating Partnership L.P., CorePoint Borrower L.L.C., CorePoint Lodging Inc., CorePoint OP GP L.L.C., the Subsidiary Guarantors party thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020 (File no. 001-38168)) | ||||
31.1 | |||||
31.2 | |||||
32.1 | |||||
32.2 | |||||
101 | The following materials from the Company’s Quarterly Report on Form 10-Q for the six months ended June 30, 2020 formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Balance Sheets, (iii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Equity and (v) related notes. | ||||
104 | Cover Page Interactive Data file (formatted as Inline XBRL and contained in Exhibit 101) |
COREPOINT LODGING INC. | |||||||||||
(Registrant) | |||||||||||
Date: | August 10, 2020 | By: | /s/ Keith A. Cline | ||||||||
Keith A. Cline | |||||||||||
President and Chief Executive Officer | |||||||||||
(Principal Executive Officer) | |||||||||||
Date: | August 10, 2020 | By: | /s/ Daniel E. Swanstrom II | ||||||||
Daniel E. Swanstrom II | |||||||||||
Executive Vice President and Chief Financial Officer | |||||||||||
(Principal Financial Officer) | |||||||||||
Date: | August 10, 2020 | By: | /s/ Howard Garfield | ||||||||
Howard Garfield | |||||||||||
Senior Vice President, Chief Accounting Officer and Treasurer | |||||||||||
(Principal Accounting Officer) |
Participant: | Keith A. Cline | ||||
Grant Date: | April 16, 2020 | ||||
Number of Shares of Restricted Stock: | 39,468 | ||||
Vesting Schedule: | Provided the Participant has not undergone a Termination at the time of the applicable vesting date (or event): | ||||
•One-third (1/3rd) of the shares of Restricted Stock will vest on the first anniversary of the Grant Date; | |||||
•One-third (1/3rd) of the shares of Restricted Stock will vest on the second anniversary of the Grant Date; and | |||||
•One-third (1/3rd) of the shares of Restricted Stock will vest on the third anniversary of the Grant Date; | |||||
provided, however, that in the event that (a) the Participant undergoes a Termination by the Service Recipient without Cause, by the Participant for Good Reason, or as a result of such Participant’s death or Disability, or (b) a Change in Control occurs, such Participant shall fully vest in such Participant’s Restricted Stock. | |||||
Additional Terms: | You must notify us immediately if you are making an Internal Revenue Code Section 83(b) Election, and you must send us a copy of the same. | ||||
For purposes hereof, prior to the finding of the existence of Cause under clauses (ii)(A), (B) and (D) of the definition thereof, the Company must provide (x) the Participant written notice setting forth the alleged Cause event and (y) such Participant not less than ten (10) days to fully cure such alleged Cause event. | |||||
•“Good Reason” shall have the meaning set forth in the CorePoint Lodging Inc. Executive Severance Plan, as in effect on the date hereof. |
•To the extent the Participant is party to an agreement between the Participant and the Company that contains language governing the treatment of equity in connection with a Change in Control, this Restricted Stock Grant Notice shall govern and control regarding the treatment of such Participant’s equity in connection with such Change in Control. |
August 10, 2020 | /s/ Keith A. Cline | |||||||
Keith A. Cline | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
August 10, 2020 | /s/ Daniel E. Swanstrom II | |||||||
Daniel E. Swanstrom II | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Date: August 10, 2020 | /s/ Keith A. Cline | |||||||
Keith A. Cline | ||||||||
President and Chief Executive Officer | ||||||||
(Principal Executive Officer) |
Date: August 10, 2020 | /s/ Daniel E. Swanstrom II | |||||||
Daniel E. Swanstrom II | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
(Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Real estate: | ||
Land | $ 553 | $ 604 |
Buildings and improvements | 1,936 | 2,162 |
Furniture, fixtures, and other equipment | 323 | 347 |
Gross operating real estate | 2,812 | 3,113 |
Less accumulated depreciation | (1,117) | (1,216) |
Net operating real estate | 1,695 | 1,897 |
Construction in progress | 8 | 14 |
Total real estate, net | 1,703 | 1,911 |
Right of use assets | 21 | 21 |
Cash and cash equivalents | 194 | 101 |
Accounts receivable | 20 | 33 |
Other assets | 60 | 43 |
Total Assets | 1,998 | 2,109 |
Liabilities: | ||
Debt, net | 961 | 915 |
Mandatorily redeemable preferred shares | 15 | 15 |
Accounts payable and accrued expenses | 66 | 82 |
Dividends payable | 0 | 11 |
Other liabilities | 46 | 43 |
Deferred tax liabilities | 7 | 6 |
Total Liabilities | 1,095 | 1,072 |
Equity: | ||
Common Stock, Value, Outstanding | 1 | 1 |
Additional paid-in-capital | 959 | 954 |
Retained earnings (deficit) | (59) | 80 |
Noncontrolling interest | 2 | 2 |
Total Equity | 903 | 1,037 |
Total Liabilities and Equity | $ 1,998 | $ 2,109 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Jun. 30, 2020 |
Dec. 31, 2019 |
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Statement of Financial Position [Abstract] | ||
Common Stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common Stock, shares authorized (in shares) | 1,000,000,000.0 | 1,000,000,000.0 |
Common Stock, shares issued (in shares) | 58,200,000 | 57,200,000 |
Common Stock, shares outstanding (in shares) | 58,200,000 | 57,200,000 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Millions |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Revenues: | ||||
Revenues | $ 72,000,000 | $ 219,000,000 | $ 218,000,000 | $ 427,000,000 |
Operating Expenses: | ||||
Property tax, insurance and other | 15,000,000 | 19,000,000 | 31,000,000 | 36,000,000 |
Management and royalty fees | 7,000,000 | 21,000,000 | 21,000,000 | 42,000,000 |
Corporate general and administrative | 6,000,000 | 14,000,000 | 14,000,000 | 22,000,000 |
Depreciation and amortization | 42,000,000 | 46,000,000 | 82,000,000 | 90,000,000 |
Impairment loss | 52,000,000 | 0 | 54,000,000 | 0 |
Gain on sales of real estate | (9,000,000) | (2,000,000) | (32,000,000) | (2,000,000) |
Gain on casualty | (1,000,000) | (4,000,000) | (3,000,000) | (4,000,000) |
Total Operating Expenses | 167,000,000 | 224,000,000 | 325,000,000 | 438,000,000 |
Operating Loss | (95,000,000) | (5,000,000) | (107,000,000) | (11,000,000) |
Other Income (Expense): | ||||
Interest expense | (12,000,000) | (18,000,000) | (26,000,000) | (36,000,000) |
Other income (expense), net | (1,000,000) | 5,000,000 | 2,000,000 | 7,000,000 |
Total Other Expenses | (13,000,000) | (13,000,000) | (24,000,000) | (29,000,000) |
Loss before income taxes | (108,000,000) | (18,000,000) | (131,000,000) | (40,000,000) |
Income tax benefit (expense) | 1,000,000 | (1,000,000) | 3,000,000 | (6,000,000) |
Net loss | $ (107,000,000) | $ (19,000,000) | $ (128,000,000) | $ (46,000,000) |
Weighted average number of shares outstanding, basic and diluted (in shares) | 56.6 | 57.0 | 56.6 | 57.8 |
Loss per share: | ||||
Basic and diluted earnings (loss) per share (in usd per share) | $ (1.89) | $ (0.32) | $ (2.26) | $ (0.80) |
Rooms | ||||
Revenues: | ||||
Revenues | $ 70,000,000 | $ 215,000,000 | $ 213,000,000 | $ 419,000,000 |
Operating Expenses: | ||||
Cost of goods and services | 40,000,000 | 102,000,000 | 119,000,000 | 195,000,000 |
Other | ||||
Revenues: | ||||
Revenues | 2,000,000 | 4,000,000 | 5,000,000 | 8,000,000 |
Operating Expenses: | ||||
Cost of goods and services | $ 15,000,000 | $ 28,000,000 | $ 39,000,000 | $ 59,000,000 |
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | ||
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Mar. 31, 2020 |
Jun. 30, 2019 |
Mar. 31, 2019 |
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Statement of Stockholders' Equity [Abstract] | |||
Dividends on common stock, per share (in usd per share) | $ 0.20 | $ 0.20 | $ 0.20 |
Organization and Basis of Presentation |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation Organization and Business CorePoint Lodging Inc., a Maryland corporation, is a publicly traded (NYSE: CPLG) self-administered lodging real estate investment trust (“REIT”) primarily serving the upper midscale and midscale lodging segments, with a portfolio of select-service hotels located in the United States (“U.S.”). As used herein, “CorePoint,” “we,” “us,” “our,” or the “Company” refer to CorePoint Lodging Inc. and its subsidiaries unless the context otherwise requires. The following table sets forth the number of owned and joint venture hotels and approximate number of rooms at such hotels as of June 30, 2020 and December 31, 2019, respectively:
For U.S. federal income tax purposes, we made an election to be taxed as a REIT, effective May 31, 2018, with the filing of our U.S. federal income tax return for the year ended December 31, 2018. We believe that we are organized and operate in a REIT-qualified manner, and we intend to continue to operate as such. As a REIT, we are generally not subject to federal corporate income tax on the portion of our net income that is currently distributed to our stockholders. To maintain our REIT status, we are required to meet several requirements as provided by the Internal Revenue Code of 1986, as amended (the “Code”). These include that the Company cannot operate or manage our hotels. Therefore, we lease the hotel properties to CorePoint TRS L.L.C., our wholly-owned taxable REIT subsidiary (“CorePoint TRS”), which engages third-party eligible independent contractors to manage the hotels. CorePoint TRS is subject to federal, state and local income taxes. To maintain our REIT status, we must distribute annually at least 90% of our “REIT taxable income,” as defined by the Code, to our stockholders. We intend to continue to meet our distribution and other requirements as required by the Code. Interim Unaudited Financial Information The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our condensed consolidated financial position as of June 30, 2020 and December 31, 2019, and our condensed consolidated results of operations and cash flows for the periods ended June 30, 2020 and 2019. The accompanying condensed consolidated financial statements include our accounts, as well as our wholly owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our stockholders. All intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items as: income taxes; impairment of long-lived assets; casualty losses; fair value evaluations; depreciation and amortization; equity-based compensation measurements; and going concern evaluations. Actual results could differ from those estimates.
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Significant Accounting Policies and Recently Issued Accounting Standards |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Significant Accounting Policies and Recently Issued Accounting Standards | Significant Accounting Policies and Recently Issued Accounting Standards Investment in Real Estate Property and equipment and other investments in real estate are stated at cost less accumulated depreciation computed using a straight-line method over the following estimated useful life of each asset. Buildings and improvements have an estimated useful life of to 40 years, furniture, fixtures and other equipment have an estimated useful life of to years, and leasehold improvements are depreciated over the shorter of the underlying lease term or the useful lives of the related assets, generally ranging from to 25 years. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third-party contract labor, materials, professional design and other direct costs, and, during the redevelopment and renovation period, interest, real estate taxes and insurance costs. The interest, real estate taxes and insurance capitalization period begins when the activities related to the development have begun and ceases when the project is substantially complete, and the assets are held available for use or occupancy. Once such a project is substantially complete and the associated assets are ready for intended use, interest, real estate taxes and insurance costs are no longer capitalized. Normal maintenance and repair costs are expensed as incurred. Impairment of Real Estate Related Assets For our investments in real estate, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. When such events or changes are present, we assess the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Any such impairment is treated for accounting purposes similar to an asset acquisition at the estimated fair value, which includes establishing a new cost basis and the elimination of the asset’s accumulated depreciation and amortization. In evaluating our investments for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses. Sales of Real Estate We classify hotels as held for sale when the criteria are met, in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. Upon the disposition of a property, we recognize a gain or loss at a point in time when we determine control of the underlying asset has been transferred to the buyer. Our performance obligation is generally satisfied at the closing of the transaction. Any continuing involvement is analyzed as a separate performance obligation in the contract, and a portion of the sales price is allocated to each performance obligation. There is significant judgment applied to estimate the amount of any variable consideration identified within the sales price and assess its probability of occurrence based on current market information, historical transactions, and forecasted information that is reasonably available. For sales of real estate (or assets classified as held for sale), we evaluate whether the disposition is a strategic shift that will have a major effect on our operations and financial results. When a disposition represents a strategic shift that will have a major effect on our operations and financial results, it will be classified as discontinued operations in our consolidated financial statements for all periods presented. Cash and Cash Equivalents We classify all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair market value. We classify cash and cash equivalents as restricted cash when contractual agreements or arrangements impose restrictions on our ability to freely access and utilize the cash and cash equivalent amounts. Accounts Receivable Accounts receivable primarily consists of receivables due from insurance settlements, our hotel manager, hotel guests, and credit card companies and are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on expected losses incurred over the life of the receivable, considering our historical experience, the length of time receivables are past due and the financial condition of the debtor. Accounts receivable are written off when collection is not probable. We record uncollectible operating lease receipts as a direct offset to room revenues. Our insurance settlement receivables are recorded based upon the terms of our insurance policies and our estimates of insurance losses. As of June 30, 2020 and December 31, 2019, we had $8 million and $12 million of insurance settlement receivables, respectively. As of June 30, 2020 and December 31, 2019, we had $5 million and $9 million of receivables, respectively, related to the 2019 settlement of disputes with our hotel manager (the “Wyndham Settlement”). Remaining payments on the Wyndham Settlement are required to be paid no later than June 2021. Debt and Deferred Debt Issuance Costs Deferred debt issuance costs include costs incurred in connection with issuance of debt, including costs associated with the entry into our loan agreements and revolving credit facility, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense on a straight-line basis over the term of the debt, which approximates the effective interest amortization method. This amortization expense is included as a component of interest expense. When debt is paid prior to its scheduled maturity date and the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on extinguishment of debt. Lessee Accounting We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for ground leases and our corporate office lease, where the asset is classified within “right of use assets” and the operating lease liability is classified within “other liabilities” in our condensed consolidated balance sheets. Right of use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Right of use assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of payments based on a rate or index established subsequent to the lease commencement date and non-lease services related to the ground lease, primarily real estate taxes. Variable lease payments are excluded from the right of use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate. Our incremental borrowing rate is based on information available at the commencement date using our actual borrowing rates commensurate with the lease terms and a fully levered borrowing. Extension options on our leases are included in our minimum lease terms when they are reasonably certain to be exercised. In our evaluation of the lease term, we consider other arrangements, primarily our debt and franchise agreements, which may have economic consequences related to failure to renew certain ground leases. For accounting purposes, such lease terms are not adjusted unless the contractual terms are modified. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term. Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, GAAP establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than actively quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort. Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered into, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“Cash Flow Hedge”), a hedge of the fair value of a recognized asset or liability (“Fair Value Hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Cash Flow Hedge are recorded in comprehensive income (loss) until they are reclassified into earnings when the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Fair Value Hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the consolidated statements of cash flows. Changes in fair value of undesignated hedge instruments are recorded in current period earnings. As of June 30, 2020 and December 31, 2019, we had interest rate caps, each of which are undesignated hedge instruments. Revenue Recognition Our revenues primarily consist of operating lease revenues from room rentals, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Other lease revenues primarily include lease revenue from restaurants, billboards and cell towers, all of which are operating leases. Such leases are recognized on a straight-line basis over the term of the lease when collections are considered probable and as earned and collected when collections are not considered probable. Uncollectible lease amounts are recorded as a direct offset to revenues. As a lessor, our operating leases do not contain purchase options or require significant assumptions or judgments. Some of our operating leases contain extension options. For those with extension options we assess the likelihood such options will be exercised in determining the lease term. Customer revenues include other hotel guest revenues generated by the incidental support of hotel operations and are recognized under the revenue accounting standard as the service obligation is completed. Purchase of Common Stock Purchases of common stock are recorded on the trade date at cost, including commissions and other costs, through a removal of the stated par value with the excess recorded as additional paid-in-capital. Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors, which primarily includes time-based and performance-based awards. We recognize the cost of services received in an equity-based payment transaction with an employee or director as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. Measurement for these equity awards is the estimated fair value at the grant date of the equity instruments. The equity-based compensation expense is recognized for awards earned or expected to be earned. Accordingly, the compensation expense for all equity awards is recognized straight-line over the vesting period of the last separately identified vesting portion of the award. Forfeitures for time-based and market-based performance awards are recognized as they occur. Performance awards with targets other than market-based are assessed at each balance sheet date with respect to the expected achievement of the target. Equity-based compensation expense is classified in corporate general and administrative expenses. Dividend equivalent cash payments related to unvested employee and director awards are charged to corporate general and administrative expenses. Dividends awarded as additional stock grants are included in equity-based compensation expense. Earnings Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of our common stock outstanding plus other potentially dilutive securities, except when the effect would be anti-dilutive. Dilutive securities include equity-based awards issued under long-term incentive plans, as discussed in Note 11 “Equity-Based Compensation.” Dilutive securities are excluded from the calculation of earnings per share for all periods presented because the effect would be anti-dilutive. The earnings per share amounts are calculated using unrounded amounts and shares which may result in differences in rounding of the presented per share amounts. Income Taxes We are organized in conformity with and operate in a manner that allows us to be taxed as a REIT for U.S. federal income tax purposes. To the extent we continue to qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income tax expense has been included in our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2020 or 2019 related to our REIT operations; however, CorePoint TRS, our wholly owned taxable REIT subsidiary, is subject to U.S. federal, state and local income taxes and our REIT may be subject to state and local taxes. We use the asset and liability method of accounting for income taxes. Under this method, current income tax expense represents the amounts expected to be reported on our income tax returns, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. In determining our tax expense or benefit for financial statement reporting purposes, we must evaluate our compliance with the Code, including the transfer pricing determinations used in establishing rental payments between the REIT and CorePoint TRS. Accounting for income taxes requires, among others, interpretation of the Code, estimated tax effects of transactions, and evaluation of probabilities of sustaining tax positions, including realization of tax benefits. We recognize tax positions only after determining that the relevant tax authority would more likely than not sustain the position following the audit. The final resolution of those assessments may subject us to additional taxes. In addition, we may incur expenses defending our positions during Internal Revenue Service (“IRS”) tax examinations, even if we are able to eventually sustain our position with the tax authorities. Concentrations of Credit Risk and Business Risk We have cash and cash equivalents deposited in certain financial institutions in excess of federally insured levels. As of June 30, 2020, approximately 75% of our total cash and cash equivalents were held in accounts fully covered by FDIC insurance or money market accounts collateralized by U.S. treasuries. For our remaining cash and cash equivalent accounts, we utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We have diversified our accounts with several banking institutions in an attempt to minimize exposure to any one of these institutions. We also monitor the creditworthiness of our customers and financial institutions before extending credit or making investments. Substantially all of our revenues are derived from our lodging operations at our hotels. Lodging operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the novel coronavirus (“COVID-19”) pandemic, which could adversely affect our business, financial condition and results of operations. We have a concentration of hotels operating in Texas, Florida and California. The number of hotels and percentages of total hotels as of June 30, 2020 and 2019, and the percentages of our total revenues from these states for the six months ended June 30, 2020 and 2019, is as follows:
The decrease in hotels from June 30, 2019 to June 30, 2020 is due to the sale or disposal of hotels. Segment Reporting Our hotel investments have similar economic characteristics and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker reviews our financial information on an aggregated basis. As a result, we have concluded that we have one operating and reportable business segment. Principal Components of Expenses As more fully explained in Note 8 “Commitments and Contingencies” our management company is responsible for the day to day operations of our hotels. For many expenses, the manager directly contracts for the services in the capacity as a principal, and we reimburse our manager in accordance with the agreements. We present the following expense components and only classify the fee portion of expense as management and royalty fees. We classify all amounts owed to our manager and franchisor in accounts payable and accrued expenses. Rooms — These expenses include hotel operating expenses of housekeeping, reservation systems (per our franchise agreements), room and breakfast supplies and front desk costs. Other departmental and support — These expenses include expenses that constitute non-room operating expenses, including parking, telecommunications, on-site administrative labor, sales and marketing, loyalty program, recurring repairs and maintenance and utility expenses. Property tax, insurance and other — These expenses consist primarily of real and personal property taxes, other local taxes, ground rent, equipment rent and insurance. Newly Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance enhances and simplifies various aspects of the current income tax guidance and reduces complexity by removing certain exceptions to the general framework. The guidance is effective for us January 1, 2021. We do not expect the adoption of this guidance to have a material impact on our consolidated financial position and results of operations. Recently Adopted Accounting Standards In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements for fair value measurements. While some disclosures have been removed or modified, new disclosures have been added. We adopted this guidance on January 1, 2020, and it did not have a material impact on our consolidated financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance primarily affects financial assets and net investment in leases that are not accounted for at fair value through net income but excludes operating lease receivables. The guidance primarily applies to our non-lease trade receivables, casualty insurance claim receivables, Wyndham Settlement receivable and any future financial assets that have the contractual right to receive cash that we may acquire in the future. We adopted this guidance on January 1, 2020, and it did not have a material impact on our consolidated financial position and results of operations.
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Investments In Real Estate |
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Jun. 30, 2020 | |
Real Estate Investments, Net [Abstract] | |
Investments In Real Estate | Investments in Real EstateDuring the six months ended June 30, 2020, 30 hotels were sold for gross proceeds of $129 million resulting in a gain on sale of $32 million. In addition, during the six months ended June 30, 2020, one hotel was disposed by returning the property to the ground lessor at the end of the lease term. For the three and six months ended June 30, 2020 we recorded an impairment loss of $52 million and $54 million, respectively, primarily due to lower valuation of certain of our properties related to the ongoing and updated impact of the COVID-19 pandemic on the lodging industry. We will continue to monitor events and changes in circumstances related to our real estate assets, including updated COVID-19 pandemic data and effects, analysis related to our operations, fair value, our holding periods and cash flow assumptions, that may indicate that the carrying amounts of our real estate assets may not be recoverable. Such changes in circumstances and analysis may result in impairment losses in future periods. We had no impairment loss for the three or six months ended June 30, 2019. We have experienced hurricane and fire related damages to certain of our hotels. We carry comprehensive property, casualty, flood and business interruption insurance that we anticipate will cover our losses at these hotels, subject to deductibles. For the three and six months ended June 30, 2020 we had no involuntary conversion write-off of net book value of damaged assets. Certain of our hotels had closures and disruptions to business primarily due to hurricanes and fires that occurred in previous years. We had no business interruption proceeds for the three months ended June 30, 2020. For the three months ended June 30, 2019, we recorded business interruption insurance proceeds of $6 million. For the six months ended June 30, 2020 and 2019, we recorded business interruption insurance proceeds of $2 million, and $7 million, respectively. These business interruption insurance proceeds are included in “other income (expense), net” on our condensed consolidated statements of operations. As of June 30, 2020, we have not recognized any potential insurance claims related to COVID-19 pandemic losses. Given the contractual uncertainty of those claims, we cannot provide any assessment of whether such claims are realizable. Construction in progress primarily includes capitalized costs for ongoing projects that have not yet been put into service. We have pledged substantially all of our investments in real estate as collateral for our CMBS Facility (as defined below).
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Other Assets |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets The following table presents other assets as of June 30, 2020 and December 31, 2019 (in millions):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The following table presents the carrying amount of our debt as of June 30, 2020 and December 31, 2019 (in millions):
CMBS Facility Certain indirect wholly-owned subsidiaries of CorePoint Lodging Inc. (collectively, the “CorePoint CMBS Borrower”), CorePoint TRS and CorePoint Operating Partnership L.P. (“CorePoint OP”) are parties to a loan agreement (the “CMBS Loan Agreement”) providing for a mortgage loan secured primarily by mortgages for substantially all of our wholly-owned and ground leased hotels, an excess cash flow pledge for five owned and ground leased hotels and other collateral customary for mortgage loans of this type (the “CMBS Facility”). The CMBS Facility currently matures on June 9, 2021, with four remaining -year extension options, exercisable at the CorePoint CMBS Borrower’s election, provided there is no event of default existing as of the commencement of the applicable extension period and the CorePoint CMBS Borrower either extends the current interest rate cap or purchases a new interest rate cap covering the extension period at a strike price as set forth in the CMBS Loan Agreement. No principal payments are due prior to the scheduled or extended maturity date. The CMBS Facility is pre-payable in whole or in part subject to payment of all accrued interest through the end of the applicable accrual period. The CMBS Facility bears interest at a rate equal to the sum of (i) one-month LIBOR and (ii) 2.75% per annum until June 2023, followed by 2.90% per annum until June 2024 and 3.00% per annum until June 2025. Interest is generally payable monthly. As of June 30, 2020, the CMBS Facility interest rate was 2.91%. Additional prepayments will be applied to lower interest bearing principal tranches, reducing total future interest expense but will have the effect of increasing the weighted average interest rate on the remaining outstanding principal balance. We may obtain the release of individual properties from the CMBS Facility provided that certain conditions of the CMBS Loan Agreement are satisfied. The most restrictive of these conditions provide that after giving effect to such release the debt yield for the CMBS Facility (generally defined as hotel property operating net income before interest, depreciation and a fixed amount of corporate general and administrative expenses divided by the outstanding principal balance of the CMBS Facility, “Debt Yield”) is not less than the greater of (x) 16.44% and (y) the lesser of (i) the Debt Yield in effect immediately prior to such release and (ii) 16.94% (such result the “Release Debt Yield”). However, if such release is in connection with the sale of a property to an unrelated third party, such sold property may be released if the CMBS Borrower prepays an amount equal to the greater of (x) the allocated portion of the outstanding CMBS Facility plus a premium ranging from 5% to 10%, as defined in the CMBS Loan Agreement, and (y) the lesser of (i) the full net proceeds from the sale of the property received by us and (ii) the amount necessary to satisfy the Release Debt Yield. Accordingly, such CMBS Loan Agreement release provisions could affect our ability to sell properties or restrict the use of sale proceeds only to (or substantially to) the required partial prepayment of the CMBS Facility. Since May 2020, all net sale proceeds have been required to be paid under the CMBS Loan Agreement to release the collateralized property under the CMBS Facility, and we believe that future hotel collateral releases will likely require the payment of all (or substantially all) net sale proceeds as well. During the six months ended June 30, 2020, primarily in connection with the sale of 30 secured hotel properties, $70 million of the net proceeds were used to pay down the principal of the CMBS Facility. The CMBS Facility includes customary non-recourse carve-out guarantees, affirmative and negative covenants and events of default, including, among other things, guarantees for certain losses arising out of customary “bad-boy” acts of CorePoint OP and its affiliates and environmental matters (which will be recourse for environmental matters only to the CorePoint CMBS Borrower provided that the required environmental insurance is delivered to the lender), a full recourse guaranty with respect to certain bankruptcy events, restrictions on the ability of the CorePoint CMBS Borrower to incur additional debt and transfer, pledge or assign certain equity interests or its assets, and covenants requiring the CorePoint CMBS Borrower to exist as “special purpose entities,” maintain certain ongoing reserve funds and comply with other customary obligations for commercial mortgage-backed securities loan financings. As of June 30, 2020, we believe we were in compliance with these covenants. At the origination of the CMBS Facility, the CorePoint CMBS Borrower deposited in the loan servicer’s account $15 million in upfront reserves for property improvement and environmental remediation, which funds may be periodically disbursed to the CorePoint CMBS Borrower throughout the term of the loan to cover such costs. In June 2020, the CorePoint CMBS Borrower deposited in the loan servicer’s account an additional $6 million in reserves related to property insurance coverage and higher property insurance deductibles, which funds may be periodically disbursed to the CorePoint CMBS Borrower throughout the term of the loan to cover such costs. In addition, the CMBS Facility lender has the right to control the disbursement of hotel operating cash receipts (commonly referred to as a “CMBS Facility cash trap”) during the continuation of an event of default under the loan or if and while the Debt Yield for the CMBS Facility falls below 12.33% through May 30, 2023 and 12.83% thereafter, in each case, for two consecutive quarters. As of the June 30, 2020 calculation date, we were below the CMBS Facility cash trap Debt Yield threshold, and if we are below the CMBS Facility cash trap Debt Yield threshold on the September 30, 2020 calculation date, we will be subject to a CMBS Facility cash trap beginning in the fourth quarter of 2020. As of June 30, 2020, we believe we were in compliance with these terms and covenants of the CMBS Facility. Revolving Facility CorePoint Lodging Inc., CorePoint Borrower L.L.C. (the “CorePoint Revolver Borrower”) CorePoint OP GP, L.L.C., and CorePoint OP are parties to a credit agreement (the “Revolver Credit Agreement”), as amended, providing for a $110 million Revolving Facility (“Revolving Facility”). The CorePoint Revolver Borrower is our indirect wholly-owned subsidiary and the direct wholly-owned subsidiary of CorePoint OP. Under the Revolver Credit Agreement, the CorePoint Revolver Borrower is required to make monthly principal payments of $5 million for a period of five months commencing in August 2020 through December 2020 (the “Scheduled Payments”). The Revolving Facility matures on May 31, 2021. As of June 30, 2020, $110 million was outstanding under the Revolving Facility and we had no additional borrowings available. In addition, as of June 30, 2020, there was a $2 million outstanding letter of credit issued under the Revolving Facility. Prior to the May 2020 amendment, the Revolving Facility had a loan commitment of $150 million. In May 2020, in connection with the amendment to the Revolver Credit Agreement, interest under the Revolving Facility increased, at the option of the CorePoint Revolver Borrower, to either a base rate plus a margin of 4.0% per annum or a LIBOR rate plus a margin of 5.0% per annum. With respect to base rate loans, interest will be payable at the end of each quarter. With respect to LIBOR loans, interest will be payable at the end of the selected interest period but no less frequently than quarterly. Additionally, there is a commitment fee payable at the end of each quarter equal to 0.75% per annum of unused commitments under the Revolving Facility and customary letter of credit fees. As of June 30, 2020, the Revolving Facility interest rate was 5.16%. The Revolving Facility contains customary representations and warranties. The obligations under the Revolving Facility are unconditionally and irrevocably guaranteed by CorePoint OP, CorePoint Lodging Inc. and CorePoint OP GP L.L.C. and, subject to certain exceptions, each of the CorePoint Revolver Borrower and its existing and future domestic subsidiaries that own equity interests in any CorePoint CMBS Borrower. Furthermore, CorePoint Lodging Inc., CorePoint OP GP L.L.C. and CorePoint OP each pledge certain equity interests in subsidiaries, representing substantially all of the Company’s hotel operations, as security for the obligations. The Revolver Credit Agreement, as amended, also requires that we maintain a minimum of $60 million of cash and cash equivalents liquidity, as defined, at all times. The minimum liquidity amount is reduced on a dollar-for-dollar basis in respect of 50% of any amounts utilized to repay our Revolving Facility and permanently reduce the commitments thereunder (other than in respect of the Scheduled Payments). Further, due to the disruptions in our operations from the COVID-19 pandemic, our Revolving Facility lenders have rights to control the disbursement of our hotel operating cash receipts (referred to as the “Revolving Facility cash trap”). As of June 30, 2020, the cash and cash equivalents subject to the Revolving Facility cash trap were approximately $35 million. Cash and cash equivalents subject to the cash trap are generally available for hotel operations, interest payments and certain corporate administrative expenses. Certain disbursements, primarily other corporate general and administrative expenditures, dividends to common stockholders and repurchases of our common stock, would require consent of our lenders. We will be subject to the Revolving Facility cash trap until we are in compliance with a debt yield threshold of not less than 13.8% under the Revolving Facility, which we may be unable to meet during the remainder of the term of the Revolving Facility. As of June 30, 2020, we believe we were in compliance with these terms and covenants of the Revolver Credit Agreement.
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Mandatorily Redeemable Preferred Shares |
6 Months Ended |
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Jun. 30, 2020 | |
Preferred Stock [Abstract] | |
Mandatorily Redeemable Preferred Shares | Mandatorily Redeemable Preferred Shares We have 15,000 shares of Cumulative Redeemable Series A Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), held by an unrelated third-party. The Series A Preferred Stock has an aggregate liquidation preference of $15 million, plus any accrued and unpaid dividends thereon. The Series A Preferred Stock is senior to our common stock with respect to dividends and with respect to dissolution, liquidation or winding up of the Company. For all periods the Series A Preferred Stock has been outstanding, we have paid a cash dividend equal to 13% per annum, paid quarterly. If our leverage ratio, as defined, exceeds 7.5 to 1.0 as of the last day of any fiscal quarter, or if an event of default occurs (or has occurred and has not been cured) with respect to the Series A Preferred Stock, we will be required to pay a cash dividend on the Series A Preferred Stock equal to 15% per annum. Our dividend rate on the Series A Preferred Stock will increase to 16.5% per annum if, at any time, we are both in breach of the leverage ratio covenant and an event of default occurs (or has occurred and has not been cured) with respect to the Series A Preferred Stock. As of June 30, 2020, we exceeded the 7.5 to 1.0 leverage ratio noted above, and accordingly, beginning July 1, 2020, the Series A Preferred Stock dividend rate will be 15% per annum. The Series A Preferred Stock dividend rate will not return to 13% per annum until our leverage ratio is equal to or less than the applicable leverage ratio and we are not in an uncured event of default as of the last day of a fiscal quarter. The COVID-19 pandemic has caused significant disruptions to our operations, and there can be no assurance that our future operating performance will be adequate for us to meet the requirements to achieve the lower dividend rate or to continue to pay dividends on the Series A Preferred Stock. The Series A Preferred Stock is mandatorily redeemable by us in 2028, upon the tenth anniversary of the date of issuance. Beginning in 2025, upon the seventh anniversary of the issuance of the Series A Preferred Stock, we may redeem the outstanding Series A Preferred Stock for an amount equal to its aggregate liquidation preference, plus any accrued but unpaid dividends. The holders of the Series A Preferred Stock may also require us to redeem the Series A Preferred Stock upon a change of control of the Company for an amount equal to its aggregate liquidation preference plus any accrued and unpaid dividends thereon (and a premium if the change of control occurs prior to the seventh anniversary of the issuance of the Series A Preferred Stock). Due to the fact that the Series A Preferred Stock is mandatorily redeemable, the preferred shares are classified as a liability on the accompanying condensed consolidated balance sheet, and dividends on these preferred shares are classified as interest expense in the accompanying condensed consolidated statements of operations. Holders of Series A Preferred Stock generally have no voting rights. However, without the prior consent of the holders of a majority of the outstanding shares of Series A Preferred Stock, we are prohibited from (i) authorizing or issuing any additional shares of Series A Preferred Stock, or (ii) amending our charter or entering into, amending or altering any other agreement in any manner that would adversely affect the Series A Preferred Stock. Holders of shares of the Series A Preferred Stock have certain preemptive rights over issuances by us of any class or series of our stock ranking on parity with the Series A Preferred Stock. If we are either (a) in arrears on the payment of dividends that were due on the Series A Preferred Stock on six or more quarterly dividend payment dates, whether or not such dates are consecutive, or (b) in default of our obligations to redeem the Series A Preferred Stock on the tenth anniversary of its issuance or following a change of control, the preferred stockholders may designate a representative to attend meetings of our board of directors as a non-voting observer until all unpaid Series A Preferred Stock dividends have either been paid or declared with an amount sufficient for payment set aside for payment, or the shares required to be redeemed have been redeemed, as applicable. As of June 30, 2020, neither event described above has occurred.
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Accounts Payable and Accrued Expenses and Other Liabilities |
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Accounts Payable and Accrued Expenses and Other Liabilities | Accounts Payable and Accrued Expenses and Other Liabilities Accounts payable, accrued expenses and other liabilities include the following as of June 30, 2020 and December 31, 2019 (in millions):
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Commitments and Contingencies |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Hotel Management and Franchise Agreements Management Fees On May 30, 2018, wholly owned subsidiaries of the Company entered into separate hotel management agreements for each of our hotels with LQ Management L.L.C. (“LQM”), whereby we pay a fee equal to 5% of total gross revenues, as defined. The term of the management agreements is 20 years subject to two renewals of five years each, at LQM’s option. There are penalties for early termination. LQM generally has sole responsibility for all activities necessary for the operation of the hotels, including establishing room rates, processing reservations and promoting and publicizing the hotels. LQM also provides all employees for the hotels, prepares reports, budgets and projections, and provides other administrative and accounting support services to the hotels. We have consultative and limited approval rights with respect to certain actions of LQM, including entering into long-term or high value contracts, engaging in certain actions relating to legal proceedings, approving the operating budget, making certain capital expenditures and the hiring of certain management personnel. We are also responsible for reimbursing LQM for certain costs incurred by LQM during the fulfillment of their duties, such as payroll costs for certain employees, general liability insurance and other costs that the manager incurs to operate the hotels. For the three months ended June 30, 2020 and 2019, our management fee expense was $3 million and $10 million, respectively. For the six months ended June 30, 2020 and 2019, our management fee expense was $10 million and $21 million, respectively. Royalty Fees On May 30, 2018, we entered into separate hotel franchise agreements for each of our hotels with La Quinta Franchising LLC (“LQ Franchising”). Pursuant to the franchise agreements, we were granted a limited, non-exclusive license to use our franchisor’s brand names, marks and system in the operation of our hotels. The franchisor also may provide us with a variety of services and benefits, including centralized reservation systems, participation in customer loyalty programs, national advertising, marketing programs and publicity designed to increase brand awareness, as well as training of personnel. In return, we are required to operate franchised hotels consistent with the applicable brand standards. Our franchise agreements require that we pay a 5% royalty fee on gross room revenue. The term of the franchise agreements is through 2038, subject to one renewal of ten years, at our option, subject to certain conditions. There are penalties for early termination. For the three months ended June 30, 2020 and 2019, our royalty fee expense was $4 million and $11 million, respectively. For the six months ended June 30, 2020 and 2019, our royalty fee expense was $11 million and $21 million, respectively. LQ Franchising has deferred the payment of the royalty and certain other franchise fees for March through May 2020 (interest-free) until September 1, 2020, due to the impact of the COVID-19 pandemic. In addition to the royalty fee, the franchise agreements include a reservation fee of 2% of gross room revenues, a marketing fee of 2.5% of gross room revenues, a loyalty program fee of 5% of eligible room night revenues, and other miscellaneous ancillary fees. Reservation fees are included within rooms expense and the marketing fee and loyalty program fees are included within other departmental and support in the accompanying consolidated statements of operations. Our requirement to meet certain brand standards imposed by our franchisor includes requirements that we incur certain capital expenditures, generally ranging from $1,500 to $7,500 per hotel room (with various specific amounts within this range being applicable to different groups of our hotels) during a prescribed period generally ranging from to eleven years. These amounts are over and above the capital expenditures we are required to make each year for recurring furniture, fixtures and equipment maintenance. However, these amounts that we are required to spend are subject to reduction, in varying degrees, by the amount of capital expenditures made for hotels in the applicable group over and above the capital expenditures required for the recurring maintenance in one or more years before receipt of the franchisor’s notice. The initial period during which the franchisor can notify us that we must make these capital expenditures is through 2028. At the franchisor’s discretion, subject to the franchise agreement provisions governing when such requirements may be imposed, the franchisor may provide a notice obligating us to meet those capital expenditure requirements generally within to nine years of the notice. We expect to meet these requirements primarily through our recurring capital expenditure program. As of June 30, 2020, $15 million was held in lender escrows that can be used to fund these requirements. As a result of the impact of the COVID-19 pandemic, our franchisor has waived any brand standards that requires capital investment (except for health and safety standards) until January 1, 2021. Litigation We are a party to a number of pending claims and lawsuits arising in the normal course of business. We do not consider our ultimate liability with respect to any such claims or lawsuits, or the aggregate of such claims and lawsuits, to be material in relation to our condensed consolidated financial condition, results of operations or our cash flows taken as a whole. We maintain general and other liability insurance; however, certain costs of defending lawsuits, such as those within the retention or insurance deductible amount, are not covered by or are only partially covered by insurance policies. We regularly evaluate our ultimate liability costs with respect to such claims and lawsuits. We accrue costs from litigation as they become probable and estimable. Tax Contingencies We are subject to regular audits by federal and state tax authorities, which may result in additional tax liabilities. In 2018, La Quinta Holdings Inc. completed the distribution to its stockholders of all the then-outstanding shares of common stock of CorePoint Lodging Inc. following which we became an independent, self-administered, publicly traded company (the “Spin-Off”). Subsequently, La Quinta Holdings Inc. merged with Wyndham Hotels & Resorts, Inc. (“Wyndham”). Entities in existence prior to the Spin-Off are currently under audit by the IRS for tax years ended December 31, 2010 to 2013. We have agreed to indemnify Wyndham for any obligations and expenses arising from these IRS audits, including the legal and accounting defense expenses. In 2014, the IRS commenced a tax audit, primarily related to transfer pricing for internal rents charged by our prior REIT. Subsequently, we have supplied information to the IRS supporting our position. In November 2019, the IRS issued notices of proposed adjustments (“NOPA”, also known as a 30 Day Letter) proposing a redetermined rent adjustment resulting in approximately $138 million of additional federal taxes, attributable to tax years 2010 and 2011, exclusive of penalties and interest. Additionally, the November 2019 NOPA proposed an adjustment resulting in the loss of tax operating loss carryforwards generated in tax years 2006 through 2009. The adjustment to the tax operating loss carryforwards, measured at the tax rates enacted during the year of utilization and exclusive of penalties and interest, is $31 million. We responded to the IRS in disagreement with its NOPA in January 2020. In April 2020, the IRS responded in disagreement to our response. Due to the COVID-19 pandemic and IRS offices being temporarily closed, the transfer of the audit to IRS Appeals office has been delayed, and no date has been established for when it will be transferred to the IRS Appeals office and the appeals process will commence. We believe the IRS transfer pricing methodologies applied in the audits contain flaws and that the IRS proposed tax and adjustments are inconsistent with the U.S. federal tax laws. We have concluded that the positions reported on our tax returns under audit by the IRS are, based on their technical merits, more-likely-than-not to be sustained upon conclusion of the examination. Accordingly, as of June 30, 2020, we have not established any reserves related to this proposed adjustment or any other issues reflected on the returns under examination. If, however, we are unsuccessful in challenging the IRS, an excise tax would be imposed on the REIT related to the excess rent and we would be responsible for additional income taxes, interest and penalties, which could adversely affect our financial condition, results of operations and cash flow and the trading price of our common stock. Such adjustments could also give rise to additional state income taxes. Purchase Commitments As of June 30, 2020, we had approximately $23 million of purchase commitments related to certain continuing redevelopment and renovation projects and other hotel service contracts in the ordinary course of business. Approximately $18 million of this amount relates to long-term hotel service contracts payable over approximately four years. Lease Commitments As a lessee, our arrangements are primarily ground leases for certain of our hotels. These ground leases generally include base rents, which may be reset based on inflation indexes or pre-established increases, contingent rents based upon the respective hotel’s revenues, and reimbursement or primary responsibility for related real estate taxes and insurance expenses. The initial base terms for the leases are generally in excess of 25 years, with initial term maturities occurring between 2022 and 2096. Many of these arrangements also contain renewal options at the conclusion of the initial lease term, generally at fair value or pre-set amounts. Our other operating leases primarily relate to our corporate office. The contractual maturity analysis of all of our operating lease liabilities on an undiscounted basis as of June 30, 2020 is as follows (in millions):
The difference between the undiscounted contractual payments of $74 million above and the June 30, 2020 operating lease liabilities of $24 million (included in our “other liabilities”) is the present value of imputed interest. Contractual payments include base rents that have been contractually reset based on inflation indexes as of June 30, 2020. We had no rent expense for the three months ended June 30, 2020 and $1 million of rent expense for the three months ended June 30, 2019. For the six months ended June 30, 2020, total rent expense was $1 million, as compared to $2 million for the six months ended June 30, 2019. Differences between amounts expensed and cash paid were not significant. Rent expense is included in property tax, insurance and other expenses in our condensed consolidated statement of operations. Post-employment Benefits We have entered into severance plans with all executives and other employees. New employees are added at their date of employment. The plans include salary continuation, severance benefits, continuation of health care coverage and other supplemental post-employment benefits, all which vary depending on the employee’s position and apply where there is termination without cause. We had no expenses related to these severance plans in the three or six months ended June 30, 2020. During the three and six months ended June 30, 2019, we incurred $6 million of corporate general and administrative expense related to these severance plans.
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Equity |
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Jun. 30, 2020 | |
Equity [Abstract] | |
Equity | Equity On March 21, 2019, our board of directors authorized a $50 million share repurchase program. Under the share repurchase program, we may purchase common stock in the open market, in privately negotiated transactions or in such other manner as determined by us, including through repurchase plans complying with the rules and regulations of the SEC. The share repurchase program does not obligate us to repurchase any dollar amount or number of shares of common stock and the program may be suspended or discontinued at any time. Effective with the May 2020 amendment to our Revolving Facility, our Revolver Credit Agreement restricts us from making any purchases at this time. Accordingly, we have temporarily suspended purchases under the share repurchase program and no shares have been acquired in 2020. During the six months ended June 30, 2019, we acquired 2.1 million shares at a weighted average cost per share of $11.70 under the share repurchase program. In April 2020, our board of directors suspended the common stock dividend for the second quarter of 2020 and for the remainder of the year. In addition, effective with the May 2020 amendment to our Revolving Facility, the Revolver Credit Agreement restricts our ability to pay cash dividends on our common stock unless required to meet REIT federal income tax requirements. Our board of directors will reassess at the end of the year any additional common dividend amount that may be declared and paid for 2020.
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Revenue |
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Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenues Revenues for the three and six months ended June 30, 2020 and 2019 are comprised of the following components (in millions):
Operating lease revenues other primarily include lease arrangements for restaurants, billboards and cell towers. Customer revenues, which are classified within other revenues, generally relate to amounts generated by the incidental support of the hotel operations, including service fees, parking and food. For both of the three and six month periods ended June 30, 2020 and 2019, we had an insignificant amount of variable lease revenue. During the three months ended June 30, 2020, up to 30 hotels with approximately 3,700 rooms were temporarily not accepting transient guests or most other reservations for a period of time in response to the COVID-19 pandemic and various travel restrictions. As of June 30, 2020, only one hotel remained effectively closed to reservations. As of the date of this filing, this hotel has resumed accepting transient guests and reservations. As we considered these suspensions temporary, these hotels were classified as operating for all periods presented.
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Equity-Based Compensation |
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Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | Equity-Based Compensation Our 2018 Omnibus Incentive Plan (the “Plan”), authorizes the grant of restricted stock awards (“RSAs”), restricted stock units (“RSUs”), Performance Stock Units (“PSUs”) non-qualified and incentive stock options, dividend equivalents, and other stock-based awards. A total of eight million shares of common stock has been authorized for issuance under the Plan and approximately five million shares of common stock were available for issuance as of June 30, 2020. The RSAs and RSUs are time-based and are not subject to future performance targets. The RSAs generally vest over to three years. The RSUs generally vest over sting immediately upon grant. RSAs and RSUs are initially recorded at the market price of our common stock at the time of the grant. The PSUs are subject to performance-based vesting, where the ultimate award is based on the achievement of established performance targets, generally over to two years, with certain RSUs ve to three years. As of June 30, 2020, these performance targets relate to relative and absolute total shareholder returns, as defined, which are treated as market-based conditions. Accordingly, these market-based PSUs are recorded at the fair value of the award using a Monte Carlo simulation valuation model. RSAs, RSUs and PSUs are subject to accelerated vesting in the event of certain defined events. For the three months ended June 30, 2020, and 2019, we recognized $3 million and $4 million of equity-based compensation expense, respectively. For the six month periods ended June 30, 2020, and 2019, we recognized $5 million and $6 million of equity-based compensation expense, respectively.The following table summarizes the activity of our RSAs, RSUs, and PSUs during the six months ended June 30, 2020 and 2019:
__________ (1) As of June 30, 2020, no outstanding RSAs and PSUs were vested. As of June 30, 2020, 36,523 outstanding RSUs were vested.
__________ (1) As of June 30, 2019, no outstanding RSAs, PSUs or RSUs were vested. RSAs are included in amounts for issued and outstanding common stock but are excluded in the computation of basic earnings (loss) per share.
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Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes The following table presents our income tax benefit (expense) for the six months ended June 30, 2020 and 2019 (in millions):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair value, as defined by GAAP, is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing an asset or liability. As a basis for considering market participant assumptions in fair value measurements, a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy) has been established. Assets and Liabilities Measured at Fair Value on a Recurring Basis We use interest rate cap arrangements with financial institutions to manage our exposure to interest rate changes for our loans that utilize floating interest rates. As of June 30, 2020, we had three interest rate caps with an aggregate notional value of $2 billion that terminate between July 2020 through June 2021. The fair value of these interest rate caps was less than $0.1 million. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We have recorded non-cash impairment losses related to the reduction in the fair value of certain of our real estate investment and long-lived assets. The impairment losses in 2020 related to lower valuation of certain of our properties due to the ongoing impact of the COVID-19 pandemic on the lodging industry and final disposal costs related to a property previously impaired in 2019. The impairment losses in 2019 related to changes in management’s estimate of the intended holding periods for certain of our hotels. Our process to estimate the fair value of an asset involves using the sales price of an executed sales agreement, which would be considered a Level 2 assumption within the fair value hierarchy. To the extent that this type of third-party information is unavailable, we estimated revenue multiples that we believe would be used by a third-party market participant in estimating the fair value of an asset. This is considered a Level 3 assumption within the fair value hierarchy. The following table summarizes the assets which were measured at fair value and impaired for the six months ended June 30, 2020 and the year ended December 31, 2019 (in millions):
____________________ (1) The Level 3 unobservable inputs consist of internally developed cash flow models and fair value estimates that included projections of revenues, expenses and capital expenditures and market valuations based on multiples of revenue generally ranging from 2.0x to 3.0x. These assumptions were based on trends and comparable transactions in the lodging industry; our historical data and experience; our budgets, including those prepared by our third-party hotel manager; lodging industry valuation trends; and micro- and macro-economic trends and projections. Our estimated fair values also considered factors related to our franchise and management agreements, requirements to meet certain brand standards and other potential costs to be incurred during our projected holding period. (2) Total losses exclude impairments on disposed assets because they are no longer held by us. Financial Instruments Not Reported at Fair Value For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows as of June 30, 2020 and December 31, 2019 (in millions):
____________________ (1)Classified as Level 3 under the fair value hierarchy. (2)Carrying amount excludes deferred financing costs, net of $6 million as of December 31, 2019. Deferred financing costs, net at June 30, 2020 are less than $1 million. We estimate the fair value of our debt and mandatorily redeemable preferred stock by using risk adjusted discounted cash flow analysis and current market inputs for similar types of arrangements. For the fair values as of June 30, 2020, we also included market inputs related to the COVID-19 pandemic, primarily higher required interest rates and decreased discounted cash flow projections. Fluctuations in these assumptions, including changes in market assessments related to the COVID-19 financial effects, will result in different estimates of fair value. We believe the carrying amounts of our cash and cash equivalents, accounts receivable and lender and other escrows, and other liabilities approximate fair value as of June 30, 2020 and December 31, 2019, due to their short-term nature.
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Supplemental Disclosures of Cash Flow Information |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Disclosures of Cash Flow Information | Supplemental Disclosures of Cash Flow Information The following table presents the supplemental cash flow information for the six months ended June 30, 2020 and 2019 (in millions):
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Related Party Transactions |
6 Months Ended |
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Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions As of June 30, 2020, affiliates of The Blackstone Group Inc. (“Blackstone”) beneficially owned approximately 30% of our outstanding shares of common stock and held horizontal risk retention certificates issued by the trust that holds our CMBS Facility indebtedness (“Class HRR Certificates”). As of June 30, 2020 and December 31, 2019, the portion of our CMBS Facility outstanding balance that correlates to the Class HRR Certificates was $81 million and $88 million, respectively. Total interest payments made to Blackstone as a holder of such Class HRR Certificates for the three months ended June 30, 2020 and 2019 were $1 million and $2 million, respectively. Total interest payments made to Blackstone as a holder of such Class HRR Certificates for the six months ended June 30, 2020 and 2019 were $2 million and $3 million, respectively. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to June 30, 2020, we sold, in separate transactions, ten operating hotels for gross sales price of $51 million, recognizing an estimated gain on sales of approximately $15 million. As of June 30, 2020, none of these hotels were classified as assets held for sale because they did not meet the accounting criteria established for such classification. We used $44 million of the net sales proceeds to pay down the principal of the CMBS Facility. |
Significant Accounting Policies and Recently Issued Accounting Standards (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Interim Unaudited Financial Information | Interim Unaudited Financial Information The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted from this Quarterly Report on Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our condensed consolidated financial position as of June 30, 2020 and December 31, 2019, and our condensed consolidated results of operations and cash flows for the periods ended June 30, 2020 and 2019. The accompanying condensed consolidated financial statements include our accounts, as well as our wholly owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our stockholders. All intercompany transactions have been eliminated.
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Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. These estimates include such items as: income taxes; impairment of long-lived assets; casualty losses; fair value evaluations; depreciation and amortization; equity-based compensation measurements; and going concern evaluations. Actual results could differ from those estimates. |
Investment in Real Estate | Investment in Real Estate Property and equipment and other investments in real estate are stated at cost less accumulated depreciation computed using a straight-line method over the following estimated useful life of each asset. Buildings and improvements have an estimated useful life of to 40 years, furniture, fixtures and other equipment have an estimated useful life of to years, and leasehold improvements are depreciated over the shorter of the underlying lease term or the useful lives of the related assets, generally ranging from to 25 years. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third-party contract labor, materials, professional design and other direct costs, and, during the redevelopment and renovation period, interest, real estate taxes and insurance costs. The interest, real estate taxes and insurance capitalization period begins when the activities related to the development have begun and ceases when the project is substantially complete, and the assets are held available for use or occupancy. Once such a project is substantially complete and the associated assets are ready for intended use, interest, real estate taxes and insurance costs are no longer capitalized. Normal maintenance and repair costs are expensed as incurred.
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Impairment of Real Estate Related Assets | Impairment of Real Estate Related Assets For our investments in real estate, we monitor events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. When such events or changes are present, we assess the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. Any such impairment is treated for accounting purposes similar to an asset acquisition at the estimated fair value, which includes establishing a new cost basis and the elimination of the asset’s accumulated depreciation and amortization. In evaluating our investments for impairment, we undergo continuous evaluations of property level performance and real estate trends, and management makes several estimates and assumptions, including, but not limited to, the projected date of disposition, estimated sales price and future cash flows of each property during our estimated holding period. If our analysis or assumptions regarding the projected cash flows expected to result from the use and eventual disposition of our properties change, we incur additional costs and expenses during the holding period, or our expected hold periods change, we may incur future impairment losses.
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Sales of Real Estate | Sales of Real Estate We classify hotels as held for sale when the criteria are met, in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. Upon the disposition of a property, we recognize a gain or loss at a point in time when we determine control of the underlying asset has been transferred to the buyer. Our performance obligation is generally satisfied at the closing of the transaction. Any continuing involvement is analyzed as a separate performance obligation in the contract, and a portion of the sales price is allocated to each performance obligation. There is significant judgment applied to estimate the amount of any variable consideration identified within the sales price and assess its probability of occurrence based on current market information, historical transactions, and forecasted information that is reasonably available. For sales of real estate (or assets classified as held for sale), we evaluate whether the disposition is a strategic shift that will have a major effect on our operations and financial results. When a disposition represents a strategic shift that will have a major effect on our operations and financial results, it will be classified as discontinued operations in our consolidated financial statements for all periods presented.
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Cash and Cash Equivalents | Cash and Cash Equivalents We classify all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair market value. We classify cash and cash equivalents as restricted cash when contractual agreements or arrangements impose restrictions on our ability to freely access and utilize the cash and cash equivalent amounts.
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Accounts Receivable | Accounts Receivable Accounts receivable primarily consists of receivables due from insurance settlements, our hotel manager, hotel guests, and credit card companies and are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on expected losses incurred over the life of the receivable, considering our historical experience, the length of time receivables are past due and the financial condition of the debtor. Accounts receivable are written off when collection is not probable. We record uncollectible operating lease receipts as a direct offset to room revenues. Our insurance settlement receivables are recorded based upon the terms of our insurance policies and our estimates of insurance losses. |
Debt and Deferred Debt Issuance Costs | Debt and Deferred Debt Issuance Costs Deferred debt issuance costs include costs incurred in connection with issuance of debt, including costs associated with the entry into our loan agreements and revolving credit facility, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense on a straight-line basis over the term of the debt, which approximates the effective interest amortization method. This amortization expense is included as a component of interest expense. When debt is paid prior to its scheduled maturity date and the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on extinguishment of debt. |
Lease Accounting | Lessee Accounting We determine if an arrangement is a lease at inception. Our operating lease agreements are primarily for ground leases and our corporate office lease, where the asset is classified within “right of use assets” and the operating lease liability is classified within “other liabilities” in our condensed consolidated balance sheets. Right of use assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Right of use assets and operating lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Our variable lease payments consist of payments based on a rate or index established subsequent to the lease commencement date and non-lease services related to the ground lease, primarily real estate taxes. Variable lease payments are excluded from the right of use assets and operating lease liabilities and are recognized in the period in which the obligation for those payments is incurred. As our leases do not provide an implicit rate, we use our incremental borrowing rate. Our incremental borrowing rate is based on information available at the commencement date using our actual borrowing rates commensurate with the lease terms and a fully levered borrowing. Extension options on our leases are included in our minimum lease terms when they are reasonably certain to be exercised. In our evaluation of the lease term, we consider other arrangements, primarily our debt and franchise agreements, which may have economic consequences related to failure to renew certain ground leases. For accounting purposes, such lease terms are not adjusted unless the contractual terms are modified. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.
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Fair Value Measurement | Fair Value Measurement Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, GAAP establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than actively quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort.
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Derivative Instruments | Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered into, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“Cash Flow Hedge”), a hedge of the fair value of a recognized asset or liability (“Fair Value Hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Cash Flow Hedge are recorded in comprehensive income (loss) until they are reclassified into earnings when the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a Fair Value Hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the consolidated statements of cash flows. Changes in fair value of undesignated hedge instruments are recorded in current period earnings. As of June 30, 2020 and December 31, 2019, we had interest rate caps, each of which are undesignated hedge instruments.
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Revenue Recognition | Revenue Recognition Our revenues primarily consist of operating lease revenues from room rentals, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Other lease revenues primarily include lease revenue from restaurants, billboards and cell towers, all of which are operating leases. Such leases are recognized on a straight-line basis over the term of the lease when collections are considered probable and as earned and collected when collections are not considered probable. Uncollectible lease amounts are recorded as a direct offset to revenues. As a lessor, our operating leases do not contain purchase options or require significant assumptions or judgments. Some of our operating leases contain extension options. For those with extension options we assess the likelihood such options will be exercised in determining the lease term. Customer revenues include other hotel guest revenues generated by the incidental support of hotel operations and are recognized under the revenue accounting standard as the service obligation is completed.
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Purchase of Common Stock | Purchase of Common Stock Purchases of common stock are recorded on the trade date at cost, including commissions and other costs, through a removal of the stated par value with the excess recorded as additional paid-in-capital. |
Equity-Based Compensation | Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors, which primarily includes time-based and performance-based awards. We recognize the cost of services received in an equity-based payment transaction with an employee or director as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. Measurement for these equity awards is the estimated fair value at the grant date of the equity instruments. The equity-based compensation expense is recognized for awards earned or expected to be earned. Accordingly, the compensation expense for all equity awards is recognized straight-line over the vesting period of the last separately identified vesting portion of the award. Forfeitures for time-based and market-based performance awards are recognized as they occur. Performance awards with targets other than market-based are assessed at each balance sheet date with respect to the expected achievement of the target. Equity-based compensation expense is classified in corporate general and administrative expenses. Dividend equivalent cash payments related to unvested employee and director awards are charged to corporate general and administrative expenses. Dividends awarded as additional stock grants are included in equity-based compensation expense.
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Earnings Per Share | Earnings Per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of our common stock outstanding plus other potentially dilutive securities, except when the effect would be anti-dilutive. Dilutive securities include equity-based awards issued under long-term incentive plans, as discussed in Note 11 “Equity-Based Compensation.” Dilutive securities are excluded from the calculation of earnings per share for all periods presented because the effect would be anti-dilutive. The earnings per share amounts are calculated using unrounded amounts and shares which may result in differences in rounding of the presented per share amounts.
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Income Taxes | Income Taxes We are organized in conformity with and operate in a manner that allows us to be taxed as a REIT for U.S. federal income tax purposes. To the extent we continue to qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income tax expense has been included in our accompanying condensed consolidated financial statements for the three and six months ended June 30, 2020 or 2019 related to our REIT operations; however, CorePoint TRS, our wholly owned taxable REIT subsidiary, is subject to U.S. federal, state and local income taxes and our REIT may be subject to state and local taxes. We use the asset and liability method of accounting for income taxes. Under this method, current income tax expense represents the amounts expected to be reported on our income tax returns, and deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The deferred tax assets and liabilities are measured using the enacted tax rates that are expected to be applied to taxable income in the years in which those temporary differences are expected to reverse. In determining our tax expense or benefit for financial statement reporting purposes, we must evaluate our compliance with the Code, including the transfer pricing determinations used in establishing rental payments between the REIT and CorePoint TRS. Accounting for income taxes requires, among others, interpretation of the Code, estimated tax effects of transactions, and evaluation of probabilities of sustaining tax positions, including realization of tax benefits. We recognize tax positions only after determining that the relevant tax authority would more likely than not sustain the position following the audit. The final resolution of those assessments may subject us to additional taxes. In addition, we may incur expenses defending our positions during Internal Revenue Service (“IRS”) tax examinations, even if we are able to eventually sustain our position with the tax authorities.
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Concentrations of Credit Risk and Business Risk | Concentrations of Credit Risk and Business Risk We have cash and cash equivalents deposited in certain financial institutions in excess of federally insured levels. As of June 30, 2020, approximately 75% of our total cash and cash equivalents were held in accounts fully covered by FDIC insurance or money market accounts collateralized by U.S. treasuries. For our remaining cash and cash equivalent accounts, we utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We have diversified our accounts with several banking institutions in an attempt to minimize exposure to any one of these institutions. We also monitor the creditworthiness of our customers and financial institutions before extending credit or making investments. Substantially all of our revenues are derived from our lodging operations at our hotels. Lodging operations are particularly sensitive to adverse economic, social and competitive conditions and trends, including the novel coronavirus (“COVID-19”) pandemic, which could adversely affect our business, financial condition and results of operations.
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Segment Reporting | Segment Reporting Our hotel investments have similar economic characteristics and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker reviews our financial information on an aggregated basis. As a result, we have concluded that we have one operating and reportable business segment.
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Principal Components of Expenses | Principal Components of Expenses As more fully explained in Note 8 “Commitments and Contingencies” our management company is responsible for the day to day operations of our hotels. For many expenses, the manager directly contracts for the services in the capacity as a principal, and we reimburse our manager in accordance with the agreements. We present the following expense components and only classify the fee portion of expense as management and royalty fees. We classify all amounts owed to our manager and franchisor in accounts payable and accrued expenses. Rooms — These expenses include hotel operating expenses of housekeeping, reservation systems (per our franchise agreements), room and breakfast supplies and front desk costs. Other departmental and support — These expenses include expenses that constitute non-room operating expenses, including parking, telecommunications, on-site administrative labor, sales and marketing, loyalty program, recurring repairs and maintenance and utility expenses. Property tax, insurance and other — These expenses consist primarily of real and personal property taxes, other local taxes, ground rent, equipment rent and insurance.
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Newly Issued and Recently Adopted Accounting Standards | Newly Issued Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The guidance enhances and simplifies various aspects of the current income tax guidance and reduces complexity by removing certain exceptions to the general framework. The guidance is effective for us January 1, 2021. We do not expect the adoption of this guidance to have a material impact on our consolidated financial position and results of operations. Recently Adopted Accounting Standards In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which modifies disclosure requirements for fair value measurements. While some disclosures have been removed or modified, new disclosures have been added. We adopted this guidance on January 1, 2020, and it did not have a material impact on our consolidated financial position and results of operations. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance primarily affects financial assets and net investment in leases that are not accounted for at fair value through net income but excludes operating lease receivables. The guidance primarily applies to our non-lease trade receivables, casualty insurance claim receivables, Wyndham Settlement receivable and any future financial assets that have the contractual right to receive cash that we may acquire in the future. We adopted this guidance on January 1, 2020, and it did not have a material impact on our consolidated financial position and results of operations.
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Organization and Basis of Presentation (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Owned and Joint Venture Hotels and Rooms | The following table sets forth the number of owned and joint venture hotels and approximate number of rooms at such hotels as of June 30, 2020 and December 31, 2019, respectively:
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Significant Accounting Policies and Recently Issued Accounting Standards (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Hotels, by Percentages of Total Hotels and Total Revenues | The number of hotels and percentages of total hotels as of June 30, 2020 and 2019, and the percentages of our total revenues from these states for the six months ended June 30, 2020 and 2019, is as follows:
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Other Assets (Tables) |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | The following table presents other assets as of June 30, 2020 and December 31, 2019 (in millions):
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Debt (Tables) |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Debt The following table presents the carrying amount of our debt as of June 30, 2020 and December 31, 2019 (in millions):
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Accounts Payable and Accrued Expenses and Other Liabilities (Tables) |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accounts Payable, Accrued Expenses and Other Liabilities | Accounts payable, accrued expenses and other liabilities include the following as of June 30, 2020 and December 31, 2019 (in millions):
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Commitments and Contingencies (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Contractual Maturity of All Operating Lease Liabilities on Undiscounted Basis | The contractual maturity analysis of all of our operating lease liabilities on an undiscounted basis as of June 30, 2020 is as follows (in millions):
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Revenue (Tables) |
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Revenues [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Components | Revenues for the three and six months ended June 30, 2020 and 2019 are comprised of the following components (in millions):
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Equity-Based Compensation (Tables) |
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Summary of Activity of RSAs, RSUs and PSUs | The following table summarizes the activity of our RSAs, RSUs, and PSUs during the six months ended June 30, 2020 and 2019:
__________ (1) As of June 30, 2020, no outstanding RSAs and PSUs were vested. As of June 30, 2020, 36,523 outstanding RSUs were vested.
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Income Tax Expense | The following table presents our income tax benefit (expense) for the six months ended June 30, 2020 and 2019 (in millions):
|
Fair Value Measurements (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring and Nonrecurring Basis | The following table summarizes the assets which were measured at fair value and impaired for the six months ended June 30, 2020 and the year ended December 31, 2019 (in millions):
____________________ (1) The Level 3 unobservable inputs consist of internally developed cash flow models and fair value estimates that included projections of revenues, expenses and capital expenditures and market valuations based on multiples of revenue generally ranging from 2.0x to 3.0x. These assumptions were based on trends and comparable transactions in the lodging industry; our historical data and experience; our budgets, including those prepared by our third-party hotel manager; lodging industry valuation trends; and micro- and macro-economic trends and projections. Our estimated fair values also considered factors related to our franchise and management agreements, requirements to meet certain brand standards and other potential costs to be incurred during our projected holding period. (2) Total losses exclude impairments on disposed assets because they are no longer held by us.
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Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities | For those financial instruments not carried at fair value, the carrying amount and estimated fair values of our financial assets and liabilities were as follows as of June 30, 2020 and December 31, 2019 (in millions):
____________________ (1)Classified as Level 3 under the fair value hierarchy. (2)Carrying amount excludes deferred financing costs, net of $6 million as of December 31, 2019. Deferred financing costs, net at June 30, 2020 are less than $1 million.
|
Supplemental Disclosures of Cash Flow Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Supplemental Cash Flow Information | The following table presents the supplemental cash flow information for the six months ended June 30, 2020 and 2019 (in millions):
|
Organization and Basis of Presentation - Summary of Number of Owned and Joint Venture Hotels and Number of Rooms at Such Hotels (Detail) |
Jun. 30, 2020
Room
Hotel
|
Dec. 31, 2019
Room
Hotel
|
---|---|---|
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 240 | 271 |
Number of rooms | Room | 31,400 | 35,000 |
Owned | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 239 | 270 |
Number of rooms | Room | 31,200 | 34,800 |
Joint Venture | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 1 | 1 |
Number of rooms | Room | 200 | 200 |
Significant Accounting Policies and Recently Issued Accounting Standards - Summary Of The Number of Hotels, Percentages of Total Hotels And Total Revenues, Excluding Revenue from Discontinued Operations (Detail) - Hotel |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Concentration Risk [Line Items] | ||
Number of Hotels | 111 | 138 |
Percentage of Total Hotels | 47.00% | 45.00% |
Percentage of Total Revenue | 52.00% | 49.00% |
Texas | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 45 | 68 |
Percentage of Total Hotels | 19.00% | 22.00% |
Percentage of Total Revenue | 18.00% | 21.00% |
Florida | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 45 | 49 |
Percentage of Total Hotels | 19.00% | 16.00% |
Percentage of Total Revenue | 22.00% | 18.00% |
California | ||
Concentration Risk [Line Items] | ||
Number of Hotels | 21 | 21 |
Percentage of Total Hotels | 9.00% | 7.00% |
Percentage of Total Revenue | 12.00% | 10.00% |
Investments In Real Estate - Additional Information (Detail) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
Hotel
|
Jun. 30, 2019
USD ($)
|
|
Real Estate Investments, Net [Abstract] | ||||
Hotels classified as investment in real estate sold | Hotel | 30 | |||
Proceeds from sale of hotel | $ 129,000,000 | |||
Gain (loss) on sales of hotels | $ 32,000,000 | |||
Number of hotels disposed by returning the property to the lessor | Hotel | 1 | |||
Impairment loss | $ 52,000,000 | $ 0 | $ 54,000,000 | $ 0 |
Write-off from damages | 0 | 0 | ||
Business interruption insurance proceeds | $ 0 | $ 6,000,000 | $ 2,000,000 | $ 7,000,000 |
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Other Assets [Abstract] | ||
Lender and other escrows | $ 31 | $ 20 |
Prepaid expenses | 15 | 10 |
Intangible assets, net | 4 | 4 |
Federal and state tax receivables | 4 | 0 |
Other assets | 6 | 9 |
Total other assets | $ 60 | $ 43 |
Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Carrying Amount | $ 961 | $ 921 |
Less deferred financing costs, net | 0 | (6) |
Total debt, net | 961 | 915 |
CMBS Facility | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 851 | 921 |
CMBS Facility | Secured Mortgage | ||
Debt Instrument [Line Items] | ||
Carrying Amount | 851 | 921 |
Term Facility | Revolving Facility | ||
Debt Instrument [Line Items] | ||
Carrying Amount | $ 110 | $ 0 |
Mandatorily Redeemable Preferred Shares - Additional Information (Detail) - Series A Preferred Stock - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Sep. 30, 2020 |
Jun. 30, 2020 |
|
Class of Stock [Line Items] | ||
Aggregate liquidation preference | $ 15 | |
Cash dividend on preferred stock | 13.00% | |
Preferred stock leverage ratio, increase | 750.00% | |
Percentage on preferred stock cash dividend | 15.00% | |
Percentage on preferred stock leverage ratio increase | 16.50% | |
Forecast | ||
Class of Stock [Line Items] | ||
Percentage on preferred stock cash dividend | 15.00% | |
Wholly Owned Subsidiary of LQH Parent | ||
Class of Stock [Line Items] | ||
Number of shares issued (in shares) | 15,000 | |
Preferred stock, par value (in usd per share) | $ 0.01 |
Accounts Payable and Accrued Expenses and Other Liabilities - Summary of Accounts Payable, Accrued Expenses and Other Liabilities (Detail) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Payables and Accruals [Abstract] | ||
Due to hotel manager | $ 21 | $ 26 |
Real estate taxes | 17 | 22 |
Sales and occupancy taxes | 4 | 7 |
Interest | 1 | 2 |
Other accounts payable and accrued expenses | 23 | 25 |
Total accounts payable and accrued expenses | 66 | 82 |
Operating lease liabilities | 24 | 25 |
Insurance financing | 8 | 2 |
Below market leases, net | 3 | 5 |
Other liabilities | 11 | 11 |
Total other liabilities | $ 46 | $ 43 |
Commitments and Contingencies - Schedule of Contractual Maturity of All Operating Lease Liabilities on Undiscounted Basis (Detail) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
2020 (remaining six months) | $ 2 |
2021 | 3 |
2022 | 3 |
2023 | 3 |
2024 | 3 |
2025 | 2 |
2025 | 58 |
Undiscounted contractual payments | $ 74 |
Equity - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Mar. 21, 2019 |
|
Equity [Abstract] | ||
Authorized amount, share repurchase program | $ 50,000,000 | |
Shares acquired (in shares) | 2.1 | |
Weighted average cost per share (in usd per share) | $ 11.70 |
Revenue - Schedule of Revenue Components (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenue [Line Items] | ||||
Total revenues | $ 72 | $ 219 | $ 218 | $ 427 |
Rooms | ||||
Revenue [Line Items] | ||||
Total revenues | 70 | 215 | 213 | 419 |
Other | ||||
Revenue [Line Items] | ||||
Total revenues | 1 | 2 | 2 | 3 |
Total lease revenues | ||||
Revenue [Line Items] | ||||
Total revenues | 71 | 217 | 215 | 422 |
Customer revenues | ||||
Revenue [Line Items] | ||||
Total revenues | $ 1 | $ 2 | $ 3 | $ 5 |
Revenue - Additional Information (Detail) |
3 Months Ended |
---|---|
Jun. 30, 2020
Hotel
Room
Extension
| |
Revenues [Abstract] | |
Number of hotels not accepting guests or reservations | Hotel | 30 |
Number of rooms in hotels not accepting guests or reservations | Room | 3,700 |
Number of hotels effectively closed to reservations | Extension | 1 |
Income Taxes - Components of Income Tax Expense (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Current tax benefit (expense) | $ 0 | $ (2) | $ 4 | $ (7) |
Deferred tax benefit (expense) | 1 | 1 | (1) | 1 |
Total income tax benefit (expense) | $ 1 | $ (1) | $ 3 | $ (6) |
Fair Value Measurements - Additional Information (Detail) - Interest Rate Cap $ in Millions |
Jun. 30, 2020
USD ($)
Extension
|
---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Number of instruments | Extension | 3 |
Notional amount | $ 2,000.0 |
Level 2 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |
Assets fair value | $ 0.1 |
Fair Value Measurements - Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying Amount | $ 961 | $ 921 |
Debt issuance costs | 0 | 6 |
Mandatorily Redeemable Preferred Shares | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying Amount | 15 | 15 |
Debt, fair value | 14 | 15 |
CMBS Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying Amount | 851 | 921 |
Debt, fair value | 814 | 921 |
CMBS Facility and Revolving Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Debt issuance costs | 1 | 6 |
Revolving Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Carrying Amount | 110 | 0 |
Debt, fair value | $ 104 | $ 0 |
Supplemental Disclosures of Cash Flow Information - Summary of Supplemental Cash Flow Information (Detail) - USD ($) $ in Millions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Supplemental disclosure of cash flow information: | |||
Interest paid during the period | $ 20 | $ 28 | |
Income taxes paid during the period, net of refunds | 0 | 1 | |
Non-cash investing and financing activities: | |||
Capital expenditures included in accounts payable and accrued expenses | 2 | 6 | |
Transfer of real estate from construction in progress to operating real estate | 0 | 9 | |
Dividends payable | 0 | 11 | $ 11 |
Recognition of right of use operating lease assets and operating lease liabilities | 0 | 28 | |
Financing of insurance | 11 | 14 | |
Escrowed casualty insurance proceeds | $ 0 | $ 4 |
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Related Party Transaction [Line Items] | |||||
Total interest payments | $ 20 | $ 28 | |||
CMBS Facility | Blackstone | |||||
Related Party Transaction [Line Items] | |||||
Outstanding amount, revolving facility | $ 81 | 81 | $ 88 | ||
Total interest payments | $ 1 | $ 2 | $ 2 | $ 3 | |
Blackstone | |||||
Related Party Transaction [Line Items] | |||||
Equity method investment ownership percentage | 30.00% | 30.00% |
Subsequent Events - Additional Information (Detail) $ in Millions |
1 Months Ended | 6 Months Ended |
---|---|---|
Aug. 10, 2020
USD ($)
Hotel
|
Jun. 30, 2020
USD ($)
Hotel
|
|
Subsequent Event [Line Items] | ||
Hotels classified as investment in real estate sold | Hotel | 30 | |
Gross proceeds from sales of hotels | $ 129 | |
Gain (loss) on sales of hotels | $ 32 | |
Subsequent Event | CMBS Facility | ||
Subsequent Event [Line Items] | ||
Principal repayment of debt | $ 44 | |
Building | ||
Subsequent Event [Line Items] | ||
Assets classified as held for sale | Hotel | 0 | |
Building | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Hotels classified as investment in real estate sold | Hotel | 10 | |
Gross proceeds from sales of hotels | $ 51 | |
Gain (loss) on sales of hotels | $ 15 |
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