Debt

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



Property	Principal Balance (In thousands)		Interest Rate		Maturity Date	Amortization Provisions
Courtyard Manhattan / Midtown East	$	41,530	8.81	%	October 2014	30 years
Salt Lake City Marriott Downtown	62,771		4.25	%	November 2020	25 years
Courtyard Manhattan / Fifth Avenue	49,591		6.48	%	June 2016	30 years
Renaissance Worthington	53,804		5.40	%	July 2015	30 years
Frenchman’s Reef & Morning Star Marriott Beach Resort	57,671		5.44	%	August 2015	30 Years
Los Angeles Airport Marriott	82,600		5.30	%	July 2015	Interest Only
Orlando Airport Marriott	56,778		5.68	%	January 2016	30 years
Chicago Marriott Downtown Magnificent Mile	208,417		5.975	%	April 2016	30 years
Hilton Minneapolis	94,874		5.464	%	May 2021	25 years
JW Marriott Denver at Cherry Creek	39,692		6.47	%	July 2015	25 years
Lexington Hotel New York	170,368		LIBOR + 3.00% (3.165% at December 31, 2013)		March 2015 (1)	Interest Only
The Lodge at Sonoma, a Renaissance Resort & Spa	30,607		3.96	%	April 2023	30 years
Westin San Diego	70,194		3.94	%	April 2023	30 years
Westin Washington D.C. City Center	72,421		3.99	%	January 2023	25 years
Debt premium (2)	543
Total mortgage debt	1,091,861
Senior unsecured credit facility	—		LIBOR + 1.90% (2.09% at December 31, 2013)		January 2017 (3)	Interest Only
Total debt		$1,091,861
Weighted-Average Interest Rate			5.17%

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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.

The aggregate debt maturities as of December 31, 2013 are as follows (in thousands):



2014	$	56,726
2015	243,832
2016	312,866
2017	178,681
2018	8,697
Thereafter	291,059
	$	1,091,861

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(1)	Assumes the Lexington Hotel New York mortgage loan is extended under the terms discussed above.

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 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, 2013, 14 of our 26 hotel properties 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.

The Lexington Hotel New York mortgage loan contains a quarterly financial covenant requiring a minimum debt service coverage ratio ("DSCR"), as defined in the loan agreement, of 1.1 times. As a result of the ongoing renovation of the hotel during most of 2013, the DSCR fell below the minimum requirement as of the quarters ended September 30, 2013 and December 31, 2013. Under the loan agreement, we have the ability to cure the default by depositing the amount of the DSCR shortfall into a reserve with the lender. If we do not fund the DSCR shortfall and cure the default, the loan becomes due and payable. We funded the DSCR shortfall of $2.0 million as of September 30, 2013 during the fourth quarter of 2013 and funded an additional $2.2 million during the first quarter of 2014. The reserve will be released back to us when the DSCR is above 1.1 times, which we expect to occur in the second quarter of 2014. In addition, the cash trap provision was triggered on the loan during 2013.

As of December 31, 2013, we were in compliance with the other financial covenants of our mortgage debt.

We raised $165 million through three separate secured financings during 2013. 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. On October 24, 2013, we entered into a new $63 million mortgage loan secured by the Salt Lake City Marriott Downtown. The new loan has a term of seven years and bears interest at a fixed rate of 4.25%. As part of the financing, we prepaid the $27.3 million mortgage loan previously secured by the hotel through defeasance, which had a maturity date of January 2015. The cost to defease the loan was approximately $1.5 million.

Senior Unsecured Credit Facility

We are party to a five-year, $200 million unsecured credit facility expiring 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	December 31, 2013
Maximum leverage ratio(1)	60%	42.9%
Minimum fixed charge coverage ratio(2)	1.50x	2.43x
Minimum tangible net worth(3)	$1.857 billion	$2.282 billion
Secured recourse indebtedness(4)	Less than 50% of Total Asset Value	39%

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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 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, 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-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 December 31, 2013, the unencumbered borrowing base included 5 properties with a borrowing base value of over $319 million.

As of December 31, 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 our borrowings 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 $0.9 million, $2.7 million and $2.9 million for the years ended December 31, 2013, 2012 and 2011, respectively.