Debt

The following table sets forth information regarding the Company’s debt as of March 31, 2014, in thousands:



Property	Principal Balance		Interest Rate	Maturity Date

Courtyard Manhattan / Midtown East	$	41,424	8.81%	October 2014
Marriott Salt Lake City Downtown	62,525		4.25%	November 2020
Courtyard Manhattan / Fifth Avenue	49,429		6.48%	June 2016
Renaissance Worthington	53,563		5.40%	July 2015
Frenchman’s Reef & Morning Star Marriott Beach Resort	57,397		5.44%	August 2015
Marriott Los Angeles Airport	82,600		5.30%	July 2015
Orlando Airport Marriott	56,558		5.68%	January 2016
Chicago Marriott Downtown Magnificent Mile	207,580		5.975%	April 2016
Hilton Minneapolis	94,499		5.464%	May 2021
JW Marriott Denver at Cherry Creek	39,507		6.47%	July 2015
Lexington Hotel New York	170,368		LIBOR + 3.00% (3.155% at March 31, 2014)	March 2015 (1)
Westin Washington D.C. City Center	71,971		3.99%	January 2023
The Lodge at Sonoma, a Renaissance Resort & Spa	30,511		3.96%	April 2023
Westin San Diego	69,875		3.94%	April 2023
Debt premium (2)	452
Total mortgage debt	1,088,259

Senior unsecured credit facility	—		LIBOR + 1.90%	January 2017 (3)
Total debt	$	1,088,259
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 customary 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 March 31, 2014, 14 of our 26 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.

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. 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. As of March 31, 2014, the lender is holding $4.2 million in a reserve to cover the DSCR shortfall. The reserve will be released back to us when the DSCR is above 1.1 times, which we expect to occur as of the second quarter of 2014. In addition, the cash trap provision was triggered on the loan during 2013.

As of March 31, 2014, we are in compliance with the other financial covenants of our mortgage debt.

Senior Unsecured Credit Facility

We are party to a $200 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, 2014
Maximum leverage ratio (1)	60%	48.6%
Minimum fixed charge coverage ratio (2)	1.50x	2.43x
Minimum tangible net worth (3)	$1.857 billion	$2.290 billion
Secured recourse indebtedness	Less than 45% of Total Asset Value	44.5%

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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 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.

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 March 31, 2014, the unencumbered borrowing base included five properties with a borrowing base value of $329 million.

As of March 31, 2014, we had no borrowings outstanding under the facility and the Company's ratio of net indebtedness to EBITDA was 4.7x. Accordingly, interest on any draws under the facility will be based on LIBOR plus 190 basis points for the next quarter. We incurred interest and unused credit facility fees on the facility of $0.2 million and $0.3 million for the three months ended March 31, 2014 and March 31, 2013, respectively.