NOTE 17. SUBSEQUENT EVENTS

Purchase of Atlanta Aloft

On February 14, 2020, the Company purchased our joint venture partner’s interest in the Atlanta JV for $7,300. The purchase price was funded with cash drawn from the credit facility.

Agreement and Plan of Merger

As previously disclosed, the Company Parties and the NHT Parties entered into the Merger Agreement on July 19, 2019 and, since then, have agreed to multiple extensions of the closing of the mergers pursuant to amendments to the Merger Agreement.

Modification of KeyBank Credit Facility

On March 30, 2020, the Company entered into a Sixth Amendment to Credit Agreement among the operating partnership, as borrower, the Company and the subsidiary guarantors party thereto, as guarantors, KeyBank National Association and the other lenders party thereto, as lenders, and KeyBank National Association, as administrative agent (the “Sixth Amendment”). The Sixth Amendment amends the Credit Agreement dated as of March 1, 2017, as amended by the First Amendment dated as of May 11, 2017, Second Amendment dated as of December 13, 2017, Third Amendment dated as of March 8, 2019, Fourth Amendment dated as of May 3, 2019 and Fifth Amendment dated as of August 9, 2019 (collectively, the “Credit Agreement”). The Credit Agreement is described in the Company’s Current Reports on Form 8-K dated March 1, 2017, May 11, 2017, December 13, 2017 and March 5, 2019 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2019 and June 30, 2019, and is incorporated herein by reference.

The Sixth Amendment, among other things, makes the following changes to the Credit Agreement:

Sets the size of the credit facility provided under the Credit Agreement at $102,000,000 and removes the ability to reborrow under the credit facility in the future (without lender approval).

Extends the maturity date of the credit facility to April 1, 2021, and provides for two extension options (six months and five months).

Provides for principal prepayments with certain proceeds and cash flows through a cash management system / cash flow waterfall.

Implements a collateral-specific minimum debt yield (ratio of adjusted net operating income for the borrowing base properties to indebtedness outstanding under the credit facility) of 10%. The covenant is first tested on September 30, 2020 and for purposes of calculating compliance with the covenant, annualized results are used until June 30, 2021 when the calculation is based on the most recently ended four fiscal quarters.

Maintains the maximum consolidated leverage ratio (ratio of consolidated total indebtedness to consolidated total asset value) of 60% but provides for updated appraisals to determine consolidated total asset value (if required by the lenders).

Modifies the fixed charge coverage ratio (ratio of adjusted consolidated EBITDA to consolidated fixed charges) to (a) 1.25 to 1 as of the end of the fiscal quarter ending September 30, 2020 and (b) 1.50 to 1 as of the end of the fiscal quarter ending December 31, 2020 and each fiscal quarter thereafter. For purposes of calculating compliance with the covenant, annualized results are used until June 30, 2021 when the calculation is based on the most recently ended four fiscal quarters.

Implements a maximum borrowing base leverage ratio (ratio of indebtedness outstanding under the credit facility to borrowing base asset value (based on updated appraisals required by the lenders) of 65%. The covenant is first tested on June 30, 2021.

Eliminates the financial covenants regarding secured leverage ratio, tangible net worth and variable rate debt.

Modifies the covenant on dividends and distributions to provide that no cash dividends or distributions may be made to common or preferred shareholders.

Modifies the covenants on recourse debt and investments to provide that no additional recourse debt or investments will be permitted.

Adds certain monthly reporting obligations.

Increases the interest rate for the credit facility to LIBOR plus 3.25% or a base rate plus 2.25%, and further increases the interest rate spreads by 0.25% at six month intervals. The LIBOR rate is subject to a floor of 0.25%.

Additionally, our mortgage loan with KeyBank which finances the Atlanta Aloft matures on May 8, 2020. The Company plans to refinance this loan prior to maturity with our KeyBank credit facility if approved by the lenders. In the event this refinancing is not completed prior to maturity, KeyBank has provided a binding commitment to extend the maturity of the loan to April 1, 2021.