Debt

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



Property	Principal Balance (In thousands)		Interest Rate		Maturity Date	Amortization Provisions
JW Marriott Denver at Cherry Creek	$	38,552	6.47	%	July 2015	25 years
Renaissance Worthington	52,859		5.40	%	July 2015	30 years
Frenchman’s Reef & Morning Star Marriott Beach Resort	56,595		5.44	%	August 2015	30 years
Orlando Airport Marriott	55,925		5.68	%	January 2016	30 years
Chicago Marriott Downtown Magnificent Mile	205,166		5.975	%	April 2016	30 years
Courtyard Manhattan / Fifth Avenue	48,970		6.48	%	June 2016	30 years
Lexington Hotel New York	170,368		LIBOR + 2.50% (2.656% at December 31, 2014)		October 2017 (1)	Interest Only
Salt Lake City Marriott Downtown	61,352		4.25	%	November 2020	25 years
Hilton Minneapolis	92,732		5.464	%	May 2021	25 years
Westin Washington D.C. City Center	70,635		3.99	%	January 2023	25 years
The Lodge at Sonoma, a Renaissance Resort & Spa	30,058		3.96	%	April 2023	30 years
Westin San Diego	68,937		3.94	%	April 2023	30 years
Courtyard Manhattan / Midtown East	86,000		4.40	%	August 2024	30 years
Debt premium (2)	181
Total mortgage debt	1,038,330
Senior unsecured credit facility	—		LIBOR + 1.90% (2.09% at December 31, 2014)		January 2017 (3)	Interest Only
Total debt		$1,038,330
Weighted-Average Interest Rate			4.95%

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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. We amended the loan on October 8, 2014, which is discussed further below.


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


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

The aggregate debt maturities as of December 31, 2014 are as follows (in thousands):



2015	$	160,860
2016	313,501
2017	9,751
2018	10,199
2019 (1)	181,037
Thereafter	362,982
	$	1,038,330

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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, 2014, 13 of our 27 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. We were able to cure the default by depositing the amount of the DSCR shortfall into a reserve with the lender. The DSCR is currently above the financial covenant and the reserve was released by the lender in August 2014. In addition, the cash trap provision was triggered on the loan during 2013. As of December 31, 2014, the lender held approximately $6.2 million in the cash trap. As of December 31, 2014, the hotel DSCR was above the minimum threshold and the cash trap was released in January 2015.

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

On December 10, 2014, we prepaid the $82.6 million loan secured by the Los Angeles Airport Marriott through defeasance, which was scheduled to mature in July 2015. The cost to defease the loan was approximately $1.6 million. We prepaid the loan in advance of our sale of the Los Angeles Airport Marriott on December 18, 2014.

On October 8, 2014, we amended the Lexington Hotel New York mortgage loan. The amended loan bears interest at a floating rate of LIBOR plus a spread that ranges from 175 basis points to 275 basis points based upon the achievement of certain hotel cash flow hurdles. The amendment extends the term of the loan by approximately 30 months to October 2017. The loan may be extended for two additional one-year terms subject to the satisfaction of certain financial and other conditions and the payment of an extension fee. During 2014, we paid approximately $1.3 million in fees to amend the loan, which are recorded in deferred financing costs on the accompanying consolidated balance sheet.

On July 18, 2014, we entered into a new $86 million mortgage loan secured by the Courtyard Manhattan/Midtown East. The new loan matures in 2024 and bears interest at a fixed rate of 4.40%. The new loan is interest-only for the first two years after which principal will amortize over 30 years. The hotel was previously encumbered by a $41.3 million mortgage loan bearing interest at 8.81%, which was prepaid in full on July 1, 2014.

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	December 31, 2014
Maximum leverage ratio (1)	60%	34.8%
Minimum fixed charge coverage ratio (2)	1.50x	2.85x
Minimum tangible net worth (3)	$1.904 billion	$2.454 billion
Secured recourse indebtedness	Less than 45% of Total Asset Value	34.8%

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(1)	Leverage ratio is total indebtedness, as defined in the credit agreement, divided by total asset value, defined in the credit agreement as a) total cash and cash equivalents and b) the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate.


(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.

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 December 31, 2014, the unencumbered borrowing base included five properties with a borrowing base value of $343.6 million.

As of December 31, 2014, we had no borrowings outstanding under the facility and the Company's ratio of net indebtedness to EBITDA was 3.6x. Accordingly, interest on our borrowings under the facility will be based on LIBOR plus 175 basis points for the next fiscal quarter. We incurred interest and unused credit facility fees on the facility of $0.9 million, $0.9 million and $2.7 million for the years ended December 31, 2014, 2013 and 2012, respectively.