Debt

The following table sets forth information regarding the Company’s debt as of December 31, 2018 (dollars in thousands):



				Principal Balance as of December 31,
Loan	Interest Rate		Maturity Date	2018			2017
Salt Lake City Marriott Downtown mortgage loan	4.25	%	November 2020	$	55,032		$	56,717
Westin Washington D.C. City Center mortgage loan	3.99	%	January 2023	62,734			64,833
The Lodge at Sonoma, a Renaissance Resort & Spa mortgage loan	3.96	%	April 2023	27,633			28,277
Westin San Diego mortgage loan	3.94	%	April 2023	63,385			64,859
Courtyard Manhattan / Midtown East mortgage loan	4.40	%	August 2024	82,620			84,067
Renaissance Worthington mortgage loan	3.66	%	May 2025	82,540			84,116
JW Marriott Denver at Cherry Creek mortgage loan	4.33	%	July 2025	62,411			63,519
Boston Westin mortgage loan	4.36	%	November 2025	194,466			198,046
New Market Tax Credit loan (1)	5.17	%	December 2020	2,943			—
Unamortized debt issuance costs				(4,017		)	(4,795		)
Total mortgage and other debt, net of unamortized debt issuance costs				629,747			639,639

Unsecured term loan	LIBOR + 1.45% (2)		May 2021	100,000			100,000
Unsecured term loan	LIBOR + 1.45% (2)		April 2022	200,000			200,000
Unsecured term loan	LIBOR + 1.45% (3)		October 2023	50,000			—
Unamortized debt issuance costs				(1,781		)	(1,847		)
Unsecured term loans, net of unamortized debt issuance costs				348,219			298,153

Senior unsecured credit facility	LIBOR + 1.50%		May 2020 (4)	—			—

Total debt, net of unamortized debt issuance costs				$	977,966		$	937,792
Weighted-Average Interest Rate	4.01%

_____________


(1)	Assumed in connection with the acquisition of the Hotel Palomar Phoenix on March 1, 2018.


(2)	The interest rate at December 31, 2018 was 3.80%.


(3)	The interest rate at December 31, 2018 was 3.78%. We entered into an interest rate swap agreement in January 2019 to fix LIBOR at 2.41% through October 2023.


(4)	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, 2018 are as follows (in thousands):



2019	14,195
2020	66,174
2021	116,461
2022	214,095
2023	194,649
Thereafter	378,190
	$	983,764

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, 2018, eight of our 31 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. As of December 31, 2018, we were in compliance with the financial covenants of our mortgage debt.

On March 1, 2018, in connection with our acquisition of the Hotel Palomar in Phoenix, Arizona, we assumed a $2.9 million loan originated under a qualified New Market Tax Credit program. The loan is interest-only and bears an annual fixed interest rate equal to 5.17%. The loan matures on December 6, 2020.

On April 26, 2017, we repaid the mortgage loan secured by the Lexington Hotel New York with proceeds from a new unsecured term loan, which is discussed further below. The mortgage loan had an outstanding balance of $170.4 million at repayment.

Senior Unsecured Credit Facility

We are party to a $300 million senior unsecured credit facility with a maturity date of May 2020. 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. The facility also includes an accordion feature to expand up to $600 million, subject to lender consent. The interest rate on the facility is based upon LIBOR, plus an applicable margin based upon the Company's leverage ratio, as follows:



Leverage Ratio		Applicable Margin
Less than or equal to 35%		1.50%
Greater than 35% but less than or equal to 45%		1.65%
Greater than 45% but less than or equal to 50%		1.80%
Greater than 50% but less than or equal to 55%		2.00%
Greater than 55%		2.25%

In addition to the interest payable on amounts outstanding under the facility, we are required to pay an amount equal to 0.20% of the unused portion of the facility if the average usage of the facility was greater than 50% or 0.30% of the unused portion of the facility if the average usage of the facility was less than or equal to 50%.

The facility also contains various corporate financial covenants. A summary of the most restrictive covenants is as follows:



		Actual at
	Covenant	December 31, 2018
Maximum leverage ratio (1)	60%	27.5%
Minimum fixed charge coverage ratio (2)	1.50x	4.17x
Minimum tangible net worth (3)	$1.98 billion	$2.72 billion
Secured recourse indebtedness	Less than 45% of Total Asset Value	18.9%

_____________________________


(1)	Leverage ratio is net indebtedness, as defined in the credit agreement, divided by total asset value, defined in the credit agreement as 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, generally 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.

As of December 31, 2018, we had no borrowings outstanding under the facility and the Company's leverage ratio was 27.5%. Accordingly, interest on our borrowings under the facility will be based on LIBOR plus 150 basis points for the following quarter. We incurred interest and unused credit facility fees on the facility of $1.2 million, $1.0 million and $1.3 million for the years ended December 31, 2018, 2017 and 2016, respectively. Subsequent to December 31, 2018, we borrowed $45 million under the facility.

Unsecured Term Loans

We are party to a five-year $100 million unsecured term loan, a five-year $200 million unsecured term loan, and a new five-year $50 million unsecured term loan, entered into on October 18, 2018. On December 5, 2018, in connection with the acquisition closing of Cavallo Point, we drew down the full balance of the new $50 million term loan. In January 2019, we entered into an interest rate swap agreement to economically hedge variability in LIBOR-indexed interest payments at 2.41% through October 2023 for the $50 million unsecured term loan.

The financial covenants of the three term loans are consistent with the covenants on our senior unsecured credit facility, which are described above. The interest rate on the term loans is based on a pricing grid ranging from 140 to 220 basis points over LIBOR, based on the Company’s leverage ratio, as follows:



	Applicable Margins
Leverage Ratio	$100 Million and $200 Million Term Loans	$50 Million Term Loan
Less than or equal to 25%	1.45%	1.40%
Greater than 25% but less than or equal to 35%	1.45%	1.45%
Greater than 35% but less than or equal to 45%	1.60%	1.55%
Greater than 45% but less than or equal to 50%	1.75%	1.75%
Greater than 50% but less than or equal to 55%	1.95%	1.95%
Greater than 55%	2.20%	2.20%

As of December 31, 2018, the Company's leverage ratio was 27.5%. We incurred interest on the term loans of $10.6 million, $6.2 million and $1.3 million for the years ended December 31, 2018, 2017 and 2016, respectively.