Debt

The following table sets forth information regarding the Company’s debt as of March 31, 2013, in thousands:



Property	Principal Balance		Interest Rate

Courtyard Manhattan / Midtown East	$	41,836	8.81%
Marriott Salt Lake City Downtown	28,227		5.50%
Courtyard Manhattan / Fifth Avenue	50,020		6.48%
Renaissance Worthington	54,471		5.40%
Frenchman’s Reef & Morning Star Marriott Beach Resort	58,429		5.44%
Marriott Los Angeles Airport	82,600		5.30%
Orlando Airport Marriott	57,375		5.68%
Chicago Marriott Downtown Magnificent Mile	210,686		5.975%
Hilton Minneapolis	96,544		5.464%
JW Marriott Denver at Cherry Creek	40,588		6.47%
Lexington Hotel New York	170,368		LIBOR + 3.00% (3.20% at March 31, 2013)
Westin Washington D.C. City Center	73,703		3.99%
The Lodge at Sonoma, a Renaissance Resort & Spa	31,000		3.96%
Westin San Diego	71,000		3.94%
Debt premium	814
Total mortgage debt	1,067,661

Senior unsecured credit facility	10,000		LIBOR + 1.90% (2.15% at March 31, 2013)
Total debt	$	1,077,661
Weighted-Average Interest Rate			5.21%

Mortgage Debt

We have incurred limited recourse, property specific mortgage debt secured by certain of our hotels. In the event of default, the lender may only foreclose on the secured assets; however, in the event of fraud, misapplication of funds or other customary recourse provisions, the lender may seek payment from us. As of March 31, 2013, 14 of our 27 hotels were secured by mortgage debt. 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. As of March 31, 2013, we are in compliance with the financial covenants of our mortgage debt.

On March 21, 2013, we closed on a $31 million loan secured by The Lodge at Sonoma, a Renaissance Resort & Spa. The loan has a 10-year term, bears interest at an annual fixed interest rate of 3.96% and amortizes on a 30-year schedule. On March 29, 2013, we closed on a $71 million loan secured by the Westin San Diego. The loan has 10-year term, bears interest at an annual fixed interest rate of 3.94% and amortizes on a 30-year schedule.

Senior Unsecured Credit Facility

We are party to a $200.0 million unsecured credit facility, which expires in January 2017. 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	1.75	%
Greater than or equal to 4.00 to 1.00 but less than 5.00 to 1.00	1.90	%
Greater than or equal to 5.00 to 1.00 but less than 5.50 to 1.00	2.10	%
Greater than or equal to 5.50 to 1.00 but less than 6.00 to 1.00	2.20	%
Greater than or equal to 6.00 to 1.00 but less than 6.50 to 1.00	2.50	%
Greater than or equal to 6.50 to 1.00	2.75	%

In addition to the interest payable on amounts outstanding under the facility, we are required to pay an amount equal to 0.35% of the unused portion of the facility if the unused portion of the facility is greater than 50% or 0.25% 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	March 31, 2013
Maximum leverage ratio (1)	60%	42.4%
Minimum fixed charge coverage ratio (2)	1.50x	2.63x
Minimum tangible net worth (3)	$1.857 billion	$2.222 billion
Secured recourse indebtedness (4)	Less than 50% of Total Asset Value	38%

_____________________________

(1)

Leverage ratio is total indebtedness, as defined in the credit agreement which includes our commitment on the Times Square development hotel, divided by total asset value, defined in the credit agreement as a) total cash and cash equivalents plus b) the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate, and (c) the book value of the Allerton loan.


(2)	Fixed charge coverage ratio is Adjusted EBITDA, defined in the credit agreement as EBITDA less FF&E reserves, for the most recently ending 12 fiscal months, to fixed charges, 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) 75% of net proceeds from future equity issuances.


(4)	After December 31, 2013, the secured recourse indebtedness covenant threshold will decrease to 45% of Total Asset Value, as defined in the credit agreement.

The facility requires us to maintain a specific pool of unencumbered borrowing base properties. The unencumbered borrowing base assets must include a minimum of 5 properties with an unencumbered borrowing base value, as defined in the credit agreement, of not less than $250 million.

As of March 31, 2013, we had $10.0 million in borrowings outstanding under the facility and the Company's ratio of net indebtedness to EBITDA was 4.8x. Accordingly, interest on any draws under the facility will continue to be based on LIBOR plus 190 basis points for the next fiscal quarter. We incurred interest and unused credit facility fees on the facility of $0.3 million and $0.8 million for our fiscal quarters ended March 31, 2013 and March 23, 2012, respectively. Subsequent to March 31, 2013, we repaid the $10.0 million outstanding under the facility.