Debt

The following table sets forth information regarding the Company’s debt as of June 30, 2013, in thousands:



Property	Principal Balance		Interest Rate	Maturity Date

Courtyard Manhattan / Midtown East	$	41,736	8.81%	October 2014
Marriott Salt Lake City Downtown	27,817		5.50%	January 2015
Courtyard Manhattan / Fifth Avenue	49,882		6.48%	June 2016
Renaissance Worthington	54,254		5.40%	July 2015
Frenchman’s Reef & Morning Star Marriott Beach Resort	58,183		5.44%	August 2015
Marriott Los Angeles Airport	82,600		5.30%	July 2015
Orlando Airport Marriott	57,182		5.68%	January 2016
Chicago Marriott Downtown Magnificent Mile	209,953		5.975%	April 2016
Hilton Minneapolis	96,054		5.464%	May 2021
JW Marriott Denver at Cherry Creek	40,324		6.47%	July 2015
Lexington Hotel New York	170,368		LIBOR + 3.00% (3.19% at June 30, 2013)	March 2015 (1)
Westin Washington D.C. City Center	73,283		3.99%	January 2023
The Lodge at Sonoma, a Renaissance Resort & Spa	30,913		3.96%	April 2023
Westin San Diego	70,801		3.94%	April 2023
Debt premium (2)	724
Total mortgage debt	1,064,074

Senior unsecured credit facility	—		LIBOR + 1.90% (2.15% at June 30, 2013)	January 2017 (3)
Total debt	$	1,064,074
Weighted-Average Interest Rate			5.24%

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(1)	The loan may be extended for two additional one-year terms subject to the satisfaction of certain conditions and the payment of an extension fee.


(2)	Recorded upon our assumption of the JW Marriott Denver at Cherry Creek mortgage debt in 2011.


(3)	The credit facility may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain standard conditions.

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 June 30, 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 June 30, 2013, the cash trap provision was triggered on our Lexington Hotel New York mortgage as a result of the ongoing renovation at the hotel. As of June 30, 2013, we are in compliance with the covenants of our mortgage debt.

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	June 30, 2013
Maximum leverage ratio (1)	60%	40.8%
Minimum fixed charge coverage ratio (2)	1.50x	2.71x
Minimum tangible net worth (3)	$1.857 billion	$2.248 billion
Secured recourse indebtedness (4)	Less than 50% of Total Asset Value	37%

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(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 five properties with an unencumbered borrowing base value, as defined in the credit agreement, of not less than $250 million. As of June 30, 2013, the unencumbered borrowing base included six properties with a borrowing base value of $400.7 million.

As of June 30, 2013, we had no borrowings outstanding under the facility and the Company's ratio of net indebtedness to EBITDA was 4.3x. Accordingly, interest on any draws under the facility will 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 $0.2 million for both fiscal quarters ended June 30, 2013 and June 15, 2012, and $0.5 million and $1.0 million for the periods from January 1, 2013 to June 30, 2013 and January 1, 2012 to June 15, 2012, respectively.