Debt

The following table sets forth information regarding the Company’s debt as of December 31, 2011:



Property	Principal Balance (In thousands)		Interest Rate		Maturity Date	Amortization Provisions
Courtyard Manhattan / Midtown East		$42,303	8.81	%	October 2014	30 Years
Marriott Salt Lake City Downtown	30,210		5.50	%	January 2015	20 Years
Courtyard Manhattan / Fifth Avenue	50,708		6.48	%	June 2016	30 Years
Renaissance Worthington	55,540		5.40	%	July 2015	30 Years
Frenchman’s Reef & Morning Star Marriott Beach Resort	59,645		5.44	%	August 2015	30 Years
Marriott Los Angeles Airport	82,600		5.30	%	July 2015	Interest Only
Orlando Airport Marriott	58,334		5.68	%	January 2016	30 Years
Chicago Marriott Downtown Magnificent Mile	214,324		5.975	%	April 2016	30 Years
Hilton Minneapolis	98,950		5.464	%	April 2021	25 Years
JW Marriott Denver at Cherry Creek	41,845		6.47	%	July 2015	25 Years
Courtyard Denver Downtown (1)	27,034		6.26	%	August 2012	30 Years
Renaissance Austin (2)	83,000		5.507	%	December 2016	Interest Only
Renaissance Waverly (2)	97,000		5.503	%	December 2016	Interest Only
Debt premiums (3)	1,440
Total mortgage debt	942,933
Senior unsecured credit facility	100,000		LIBOR + 3.00% (3.29% at December 31, 2011)		August 2014	Interest Only
Total debt		$1,042,933
Weighted-Average Interest Rate			5.61%

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(1)	We prepaid the mortgage in full on February 7, 2012.


(2)	Classified as mortgage debt of assets held for sale on our consolidated balance sheet as of December 31, 2011.


(3)	Recorded upon our assumption of the JW Marriott Denver at Cherry Creek and Courtyard Denver Downtown mortgage debt in 2011.

The aggregate debt maturities as of December 31, 2011 are as follows (in thousands):



2012	$	37,745
2013	11,505
2014	153,298
2015	318,208
2016	432,451
Thereafter	88,286
	$	1,041,493

Mortgage Debt

We have incurred limited recourse, property specific mortgage debt in conjunction with certain of our hotels. In the event of default, the lender may only foreclose on the pledged assets; however, in the event of fraud, misapplication of funds or other customary recourse provisions, the lender may seek payment from us. As of December 31, 2011, 14 of our 26 hotel properties were secured by mortgage debt, including the $100 million mortgage secured by the Radisson Lexington Hotel New York that is held as security under our senior unsecured credit facility. Our mortgage debt contains certain property specific covenants and restrictions, including minimum debt service coverage ratios that trigger “cash trap” provisions as well as restrictions on incurring additional debt without lender consent. We are currently in compliance with the financial covenants of our mortgage debt.

On April 15, 2011, we closed on a $100 million loan secured by a mortgage on the Hilton Minneapolis. The loan has a 10-year term, bears interest at an annual fixed interest rate of 5.464%, amortizes on a 25-year schedule and is non-recourse, subject to standard recourse exceptions.

On May 19, 2011, in connection with our acquisition of the JW Marriott Denver at Cherry Creek, we assumed a $42.4 million loan secured by a mortgage on the hotel. The loan bears an annual fixed interest rate equal to 6.47%, amortizes on a 25-year schedule and matures on July 1, 2015. We reviewed the terms of the mortgage loan in conjunction with the hotel purchase accounting and concluded that the interest rate was above current market. Accordingly, we recorded a $1.5 million debt premium to record the debt at fair value as of the acquisition date. The debt premium will be amortized over the remaining life of the loan to interest expense.

On July 22, 2011, in connection with our acquisition of the Courtyard Denver Downtown, we assumed a $27.2 million loan secured by a mortgage on the hotel. The loan bears an annual fixed interest rate equal to 6.26%, amortizes on a 30-year schedule and matures on August 5, 2012. We reviewed the terms of the mortgage loan in conjunction with the hotel purchase accounting and concluded that the interest rate was above current market. Accordingly, we recorded a $0.3 million debt premium to record the debt at fair value as of the acquisition date. The debt premium will be amortized over the remaining life of the loan to interest expense. On February 7, 2012, we repaid the mortgage loan in full without a prepayment penalty.

In connection with the renovation and repositioning project at the Frenchman’s Reef & Morning Star Marriott Beach Resort, we received consent for the project from the lender of the mortgage loan secured by this hotel. In connection with receiving the consent, we were required to deposit $3.4 million into a reserve account for debt service during the renovation project and to establish a lender-held reserve for the project. In addition, we were required to deposit $24.5 million into lender and other escrow reserves for the funding of the renovation. As of December 31, 2011, the reserve funds for the renovation have been used and in January 2012 the remaining funds in the debt service reserve were returned to us.

Subsequent to December 31, 2011, we agreed to terms on a $170 million loan secured by a mortgage on the Radisson Lexington Hotel New York. The loan will have a term of three years and bear interest at a floating rate of one-month LIBOR plus 300 basis points. The loan may be extended for two additional one-year terms subject to the satisfaction of certain terms and conditions and the payment of an extension fee. In conjunction with the closing of the loan, we expect to enter into a three-year interest rate swap agreement. The financing also includes $25 million of corporate recourse, which will be eliminated when the hotel achieves a specified debt yield test, the planned capital renovation plan is completed and the branding requirements for the hotel are met. The closing of the loan is subject to the satisfaction of customary closing conditions, including final loan syndication.

Senior Unsecured Credit Facility

On June 2, 2011, we amended and restated our $200.0 million unsecured credit facility, which now expires in August 2014. The maturity date of the facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain other customary conditions. We also have the right to increase the amount of the facility up to $400 million with lender approval. Interest is paid on the periodic advances under the facility at varying rates, based upon LIBOR, plus an agreed upon additional margin amount. The applicable margin is based upon the Company’s ratio of net indebtedness to EBITDA, as follows:



Ratio of Net Indebtedness to EBITDA	Applicable Margin
Less than 4.00 to 1.00	2.25	%
Greater than or equal to 4.00 to 1.00 but less than 5.00 to 1.00	2.50	%
Greater than or equal to 5.00 to 1.00 but less than 5.50 to 1.00	2.75	%
Greater than or equal to 5.50 to 1.00 but less than 6.00 to 1.00	3.00	%
Greater than or equal to 6.00 to 1.00	3.25	%

In addition to the interest payable on amounts outstanding under the facility, we are required to pay an amount equal to 0.40% of the unused portion of the facility if the unused portion of the facility is greater than 50% or 0.30% if the unused portion of the facility is less than or equal to 50%.

The facility contains various corporate financial covenants. A summary of the most restrictive covenants is as follows:



		Actual at
	Covenant	December 31, 2011
Maximum leverage ratio(1)	60%	44.7%
Minimum fixed charge coverage ratio(2)	1.50x	2.07x
Minimum tangible net worth(3)	$1.8 billion	$2.0 billion

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(1)

Leverage ratio is total indebtedness, as defined in the credit agreement and which includes our commitment on the Times Square development hotel, divided by total asset value, which is defined in the credit agreement as a) total cash and cash equivalents plus b) the value of our owned hotels based on (i) until March 31, 2012, appraised values and (ii) after March 31, 2012, hotel net operating income divided by an 8.5% capitalization rate, and (c) the book value of the Allerton loan.


(2)	Fixed charge coverage ratio is Adjusted EBITDA, which is defined in the credit agreement as EBITDA less FF&E reserves, for the most recently ending 12 fiscal months, to fixed charges, which is defined in the credit agreement as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same most recently ending 12 fiscal month period.


(3)	Tangible net worth, as defined in the credit agreement, is (i) total gross book value of all assets, exclusive of depreciation and amortization, less intangible assets, total indebtedness, and all other liabilities, plus (ii) 85% of net proceeds from future equity issuances.

The facility requires us to maintain a specific pool of unencumbered borrowing base properties. The unencumbered borrowing base assets are subject, among other restrictions, to the following limitations and covenants:


•	A minimum of 5 properties with an unencumbered borrowing base value, as defined in the credit agreement, of not less than $250 million.


•	The unencumbered borrowing base must include the Westin Boston Waterfront, the Conrad Chicago and the Vail Marriott Mountain Resort and Spa. The Conrad Chicago and the Vail Marriott Mountain Resort and Spa may be released from the unencumbered borrowing base upon lender approval and the satisfaction of certain conditions.

In connection with the closing of the Hilton Minneapolis mortgage loan in April 2011, we received lender approval to release the Company’s subsidiaries owning the Hilton Minneapolis as guarantors under the facility.

As of December 31, 2011, we had $100.0 million in borrowings outstanding under the facility and the Company's ratio of net indebtedness to EBITDA was 5.8x. Accordingly, interest on our borrowings under the facility will continue to be based on LIBOR plus 300 basis points for the next fiscal quarter. We incurred interest and unused credit facility fees on the facility of $2.9 million, $0.7 million and $0.6 million for the years ended December 31, 2011, 2010 and 2009 respectively. Subsequent to December 31, 2011, we drew an additional $40 million under the facility.

In conjunction with our acquisition of the Radisson Lexington Hotel New York, the seller's $100.0 million mortgage secured by the hotel was assigned to us and we added the mortgage as security to the facility.