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Debt
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Debt Debt
 
The Company's debt consisted of the following (in thousands):
December 31, 2021December 31, 2020
Senior Notes, net$986,942 $495,759 
Revolver 200,000 400,000 
Term Loans, net815,004 1,168,304 
Mortgage loans, net407,492 523,668 
Debt, net$2,409,438 $2,587,731 

Senior Notes

The Company's senior notes consisted of the following (in thousands):
Outstanding Borrowings at
Interest Rate at December 31, 2021Maturity DateDecember 31, 2021December 31, 2020
2029 Senior Notes4.00%September 2029$500,000 $— 
2026 Senior Notes3.75%July 2026500,000 — 
2025 Senior Notes6.00%June 2025— 495,759 
1,000,000 495,759 
Deferred financing costs, net(13,058)— 
Total senior notes, net$986,942 $495,759 

In September 2021, the Company issued an aggregate principal amount of $500.0 million of its 4.00% senior secured notes due 2029 (the "2029 Senior Notes") under an indenture, dated as of September 13, 2021, among the Operating Partnership, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee. The 2029 Senior Notes will mature on September 15, 2029 and bear interest at a rate of 4.00% per annum, payable semi-annually in arrears. The Company used the net proceeds of the offering of the 2029 Senior Notes to redeem all of the outstanding 2025 Senior Notes (as defined below), as well as for any redemption premium, unpaid interest, costs and expenses related thereto. During the year ended December 31, 2021, the Company capitalized $6.1 million of deferred financing costs related to the issuance of the 2029 Senior Notes.
At any time prior to September 15, 2024, the Company may redeem the 2029 Senior Notes, in whole or in part, at a redemption price equal to 100.0% of the accrued principal amount thereof plus any unpaid interest earned through the redemption date plus a make-whole premium. At any time on or after September 15, 2024, the Company may redeem the 2029 Senior Notes, in whole or in part, at a redemption price of (i) 102.0% of the principal amount should such redemption occur before September 1, 2025, (ii) 101.0% of the principal amount should redemption occur before September 15, 2026, and (iii) 100.0% of the principal amount should such redemption occur on or after September 15, 2026, in each case plus accrued and unpaid interest, if any. At any time prior to September 15, 2024, the Company may redeem the 2029 Senior Notes with the net cash proceeds from any equity offering at a redemption price equal to 104.0% of the accrued principal amount thereof plus any unpaid interest, subject to certain conditions.

In June 2021, the Company issued an aggregate principal amount of $500.0 million of its 3.75% senior secured notes due 2026 (the "2026 Senior Notes") under an indenture, dated as of June 17, 2021, among the Operating Partnership, the Company, the subsidiary guarantors party thereto and U.S. Bank National Association, as trustee. The 2026 Senior Notes will mature on July 1, 2026 and bear interest at a rate of 3.75% per annum, payable semi-annually in arrears. The Company used the net proceeds of the offering of the 2026 Senior Notes to partially repay indebtedness under the Company's Term Loans (as defined below) and secured mortgage indebtedness, as well as for any costs and expenses related thereto. During the year ended December 31, 2021, the Company capitalized $8.1 million of deferred financing costs related to the issuance of the 2026 Senior Notes.

At any time prior to July 1, 2023, the Company may redeem the 2026 Senior Notes, in whole or in part, at a redemption price equal to 100.0% of the accrued principal amount thereof plus any unpaid interest earned through the redemption date plus a make-whole premium. At any time on or after July 1, 2023, the Company may redeem the 2026 Senior Notes, in whole or in part, at a redemption price of (i) 101.875% of the principal amount should such redemption occur before July 1, 2024, (ii) 100.938% of the principal amount should redemption occur before July 1, 2025, and (iii) 100.0% of the principal amount should such redemption occur on or after July 1, 2025, in each case plus accrued and unpaid interest, if any. At any time prior to July 1, 2023, the Company may redeem the 2026 Senior Notes with the net cash proceeds from any equity offering at a redemption price equal to 103.75% of the accrued principal amount thereof plus any unpaid interest, subject to certain conditions.

The 2029 Senior Notes and 2026 Senior Notes are each fully and unconditionally guaranteed, jointly and severally, by the Company and certain of the Operating Partnership’s subsidiaries that incur and guarantee any indebtedness under the Company’s credit facilities, and any additional first lien obligations or certain other bank indebtedness (each, a “Subsidiary Guarantor”). The 2029 Senior Notes and 2026 Senior Notes are each secured, subject to certain permitted liens, by a first priority security interest in all of the equity interests owned by the Operating Partnership and certain of the Subsidiary Guarantors (each, a “Secured Guarantor”) in certain of the other Subsidiary Guarantors (the “Collateral”), which Collateral also secures the obligations under the Company’s credit facilities on a first priority basis. The Collateral may be released in full prior to the maturity of either of the 2029 Senior Notes and 2026 Senior Notes if the Operating Partnership and the Company comply with certain requirements, after which the 2029 Senior Notes and 2026 Senior Notes will be unsecured.

The indenture governing the 2029 Senior Notes and the 2026 Senior Notes contains customary covenants that will limit the Company’s ability and, in certain instances, the ability of its subsidiaries, to incur additional debt, create liens on assets, make distributions and pay dividends, make certain types of investments, issue guarantees of indebtedness, and make certain restricted payments. These limitations are subject to a number of exceptions and qualifications set forth in the indenture.

A summary of the various restrictive covenants for the 2029 Senior Notes and 2026 Senior Notes are as follows:
Covenant
Maintenance Covenant
Unencumbered Asset to Unencumbered Debt Ratio> 150.0%
Incurrence Covenants
Consolidated Indebtedness less than Adjusted Total Assets< .65x
Consolidated Secured Indebtedness less than Adjusted Total Assets< .45x
Interest Coverage Ratio> 1.5x

As of December 31, 2021, the Company was in compliance with all covenants associated with the 2029 Senior Notes and 2026 Senior Notes. In addition, failure to meet an incurrence covenant does not, in and of itself, constitute an event of default under the indentures.
The Company's $475.0 million senior notes due 2025 are referred to as the "2025 Senior Notes". The 2025 Senior Notes include $20.9 million at December 31, 2020 resulting from an acquisition related fair value adjustment on the 2025 Senior Notes. In September 2021, the Company redeemed the 2025 Senior Notes and paid a redemption premium of $9.5 million using the net proceeds from the issuance of the 2029 Senior Notes. The redemption premium is included in the gain (loss) on extinguishment of indebtedness, net, in the accompany consolidated statements of operations and comprehensive (loss) income.

Revolver and Term Loans
 
The Company has the following unsecured credit agreements in place:

•$600.0 million revolving credit facility with a scheduled maturity date of May 18, 2024 and a one year extension option if certain conditions are satisfied (the "Revolver");

•$400.0 million term loan with a scheduled maturity date of January 25, 2023 (the "$400 Million Term Loan Maturing 2023");

•$225.0 million term loan with a scheduled maturity date of January 25, 2023 (the "$225 Million Term Loan Maturing 2023");

•$150.0 million term loan with a scheduled maturity date of June 10, 2023 (the "$150 Million Term Loan Maturing 2022"); and

•$400.0 million term loan with a scheduled maturity date of May 18, 2025 (the "$400 Million Term Loan Maturing 2025").

The $400 Million Term Loan Maturing 2023, the $225 Million Term Loan Maturing 2023, the $150 Million Term Loan Maturing 2022, and the $400 Million Term Loan Maturing 2025 are collectively the "Term Loans".  The credit agreements contain certain financial covenants relating to the Company’s maximum leverage ratio, minimum fixed charge coverage ratio, maximum secured indebtedness, maximum unencumbered leverage ratio and minimum unsecured interest coverage ratio.  If an event of default exists, the Company is not permitted to make distributions to shareholders, other than those required to qualify for and maintain REIT status.  As of December 31, 2021 and 2020, the Company was not required to comply with certain financial covenants, as described below.
 
The borrowings under the Revolver and Term Loans bear interest at variable rates equal to the London InterBank Offered Rate (“LIBOR”) (or equivalent successor rate index) plus an applicable margin.  The margin ranges from 1.35% to 2.50%, depending on the Company’s leverage ratio, as calculated under the terms of each facility.  The Company incurs an unused facility fee on the Revolver of between 0.20% and 0.25%, based on the amount by which the maximum borrowing amount exceeds the total principal balance of the outstanding borrowings.
 
 The Company's unsecured credit agreements consisted of the following (in thousands):
Outstanding Borrowings at
Interest Rate at December 31, 2021 (1)Maturity DateDecember 31, 2021December 31, 2020
Revolver (2)3.53%May 2024$200,000 $400,000 
$400 Million Term Loan Maturing 2023 (3)4.73%January 2023 (7)203,944 400,000 
$225 Million Term Loan Maturing 2023 (4)4.72%January 2023 (8)114,718 225,000 
$150 Million Term Loan Maturing 2023 (5)4.18%June 2023100,000 150,000 
$400 Million Term Loan Maturing 20254.45%May 2025400,000 400,000 
1,018,662 1,575,000 
Deferred financing costs, net (6)(3,658)(6,696)
Total Revolver and Term Loans, net$1,015,004 $1,568,304 

(1)Interest rate at December 31, 2021 gives effect to interest rate hedges.
(2)At December 31, 2021 and 2020, there was $400.0 million and $200.0 million of remaining capacity on the Revolver, respectively. The Company has the ability to further increase the total capacity on the Revolver to $750.0 million, subject to certain lender requirements. The Company also has the ability to extend the maturity date for an additional one year period ending May 2025 if certain conditions are satisfied. In February 2022, the Company paid off the outstanding balance on the Revolver.
(3)The Company utilized $196.1 million of the proceeds from the issuance of the 2026 Senior Notes to reduce the outstanding principal balance of this term loan.
(4)The Company utilized $110.3 million of the proceeds from the issuance of the 2026 Senior Notes to reduce the outstanding principal balance of this term loan.
(5)Pursuant to the terms under the Company's credit agreements, the Company utilized $20.8 million of the proceeds from hotel dispositions and $29.2 million of the proceeds from the issuance of the 2026 Senior Notes to reduce the outstanding principal balance of this term loan. In addition, the Company has the option to extend the maturity one additional year to June 2024.
(6)Excludes $2.9 million and $4.1 million as of December 31, 2021 and 2020, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets.
(7)In September 2021, the Company amended this term loan to include a one-year extension option for approximately $151.7 million of the principal balance. The exercise of the one-year extension option will be at the Company's discretion, subject to certain conditions.
(8)In September 2021, the Company amended this term loan to include a one-year extension option for approximately $73.0 million of the principal balance. The exercise of the one-year extension option will be at the Company's discretion, subject to certain conditions.

The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:
CovenantCompliance
Leverage ratio (1)≤ 7.0xN/A (3)
Fixed charge coverage ratio (2) ≥ 1.5xN/A (3)
Secured indebtedness ratio≤ 45.0%N/A (3)
Unencumbered indebtedness ratio≤ 60.0%N/A (3)
Unencumbered debt service coverage ratio ≥ 2.0xN/A (3)
Maintain minimum liquidity level ≥ $150.0 millionYes

(1)Leverage ratio is net indebtedness, as defined in the Revolver and Term Loan agreements, to corporate earnings before interest, taxes, depreciation, and amortization ("EBITDA"), as defined in the Revolver and Term Loan agreements.
(2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Revolver and Term Loan agreements as EBITDA less furniture, fixtures and equipment ("FF&E") reserves, to fixed charges, which is generally defined in the Revolver and Term Loan agreements as interest expense, all regularly scheduled principal payments, preferred dividends paid, and cash taxes paid.
(3)The Company is not currently required to comply with these covenants, as described below.

During the year ended December 31, 2021, the Company amended its Revolver and Term Loans. The amendments suspend the testing of all existing financial maintenance covenants under the Revolver and the Term Loan agreements for all periods through and including the fiscal quarter ending March 31, 2022 (the “Covenant Relief Period”). In addition, for periods following the Covenant Relief Period, the amendments modify the covenant thresholds, subject to certain conditions, for the leverage ratio, unencumbered debt service coverage ratio, and unencumbered indebtedness ratio as follows:

•Increasing the maximum leverage ratio to 8.5x for the first two quarters following the Covenant Relief Period, 8.0x for the third and fourth quarters following the Covenant Relief Period, 7.5x for the fifth quarter following the Covenant Relief Period (such period, the "Leverage Relief Period"), and then returning to 7.0x that was in effect prior to the Covenant Relief Period.

•Reducing the minimum unencumbered debt service coverage ratio to 1.5x for the first quarter following the Covenant Relief Period, 1.65x for the second quarter following the Covenant Relief Period, and then returning to 2.0x that was in effect prior to the Covenant Relief Period.

•Increasing the unencumbered indebtedness ratio to 65% for the first two quarters following the Covenant Relief Period, and then returning to the 60% level that was in effect prior to the Covenant Relief Period.

•The Company is required to maintain a minimum liquidity level of $150.0 million.

Pursuant to the amendments and through the date that the financial statements are delivered for the quarter ending June 30, 2022 (the "Restriction Period"), the Company is subject to the following restrictions:

•The net cash proceeds from asset sales, equity issuances and incurrences of indebtedness will, subject to various exceptions, be required to be applied as a mandatory prepayment of certain amounts outstanding under the Revolver and the Term Loans.
•Additional negative covenants that limit the ability of the Company and its subsidiaries to incur additional indebtedness, make prepayments of other indebtedness, make dividends and distributions (with certain exceptions, including for the payment of a quarterly cash dividend of $0.01 per common share, the payment of a quarterly cash dividend on the Company’s Series A Cumulative Convertible Preferred Shares and other payments for purposes of maintaining REIT status) and stock repurchases. In addition, there are limitations on capital expenditures exceeding $150.0 million in 2021 and 2022, and certain acquisitions exceeding $450.0 million or $300.0 million dependent upon the outstanding balance of the Company's Revolver. All of these limitations are subject to various exceptions.

•Requirement to pledge the equity interests in certain subsidiaries that own unencumbered properties to secure the Revolver and Term Loans. The equity pledge requirement is also required to be satisfied following the Restriction Period until such time as the leverage ratio is no greater than 6.5x for two consecutive fiscal quarters (the "Covenant Relief Pledged Collateral Period").

•Extension of (1) the mandatory prepayment requirement applicable to dispositions of unencumbered properties through the end of the Covenant Relief Pledged Collateral Period and (2) the requirement to maintain a minimum liquidity level of $150.0 million through the end of the Leverage Relief Period.

As part of the Revolver and Term Loans amendment in June 2021, the Company amended the $150 Million Term Loan Maturing 2023 to extend the maturity for $100.0 million of the original principal balance from January 2022 to June 2023 with an option to extend the maturity by one year to June 2024. The applicable margin on the interest rate will be 3.0% for LIBOR loans and 2.0% for base rate loans until the end of the Leverage Relief Period, as defined in the existing credit agreement. After the end of the Leverage Relief Period, the applicable margin will revert to the original leverage- or ratings-based pricing.

As part of the Revolver and Term Loans amendment in September 2021, the Company amended the $400 Million Term Loan Maturing 2023 and $225 Million Term Loan Maturing 2023 to include a one-year extension option for approximately $151.7 million and $73.0 million, respectively, of the principal balance. The exercise of the one-year extension option will be at the Company's discretion, subject to certain conditions.

At the Company's election, the Restriction Period and the Covenant Relief Period may be terminated early if the Company is at such time able to comply with the applicable financial covenants. If the Company assesses that it is unlikely to meet the financial covenant thresholds for periods following the Covenant Relief Period, then the Company will seek an extension of the Covenant Relief Period.

Mortgage Loans
 
The Company's mortgage loans consisted of the following (in thousands):
Principal balance at
Number of Assets EncumberedInterest Rate at December 31, 2021 (1)Maturity DateDecember 31, 2021December 31, 2020
Mortgage loan (2)73.30%April 2022(7)$200,000 $200,000 
Mortgage loan (2)32.53%April 2024(7)96,000 96,000 
Mortgage loan (2)42.84%April 2024(7)85,000 85,000 
Mortgage loan (3)15.06%January 202927,554 — 
Mortgage loan (4)1—%June 2022(8)— 30,332 
Mortgage loan (5)3—%October 2022(8)— 86,775 
Mortgage loan (6)1—%October 2022(9)— 27,972 
20408,554 526,079 
Deferred financing costs, net(1,062)(2,411)
Total mortgage loans, net$407,492 $523,668 
(1)Interest rate at December 31, 2021 gives effect to interest rate hedges.
(2)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity.
(3)Includes $2.6 million at December 31, 2021 related to a fair value adjustment on a mortgage loan that was assumed in connection with a hotel property acquisition in December 2021.
(4)Includes $0.3 million at December 31, 2020 related to a fair value adjustment on a mortgage loan.
(5)Includes $0.9 million at December 31, 2020 related to a fair value adjustments on the mortgage loans.
(6)Includes $0.3 million at December 31, 2020 related to a fair value adjustment on the mortgage loan.
(7)The mortgage loan provides two one year extension options.
(8)In June 2021, the Company paid off the mortgage loan(s) in full and paid approximately $5.7 million in prepayment premiums using the proceeds from the issuance of the 2026 Senior Notes.
(9)In July 2021, the Company paid off the mortgage loan in full and paid approximately a $1.3 million prepayment premium using the proceeds from the issuance of the 2026 Senior Notes.

Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. During the cash trap event, the lender or servicer of the mortgage loan controls cash outflows until the loan is covenant compliant and accordingly, such cash is restricted. In addition, certain mortgage loans have other requirements including continued operation and maintenance of the hotel property. At December 31, 2021, two mortgage loans failed the DSCR threshold and were in a cash trap event. In addition, the DSCR covenant for one mortgage loan has been waived through December 31, 2022.

At December 31, 2021, there was approximately $22.4 million of restricted cash held by lenders due to cash trap events. In February 2022, the restrictions on approximately $10.8 million of the $22.4 million of December 31, 2021 restricted cash were removed.

Interest Expense

The components of the Company's interest expense consisted of the following (in thousands):
For the year ended December 31,
202120202019
Senior Notes$34,079 $23,767 $23,793 
Revolver and Term Loans53,097 55,413 42,272 
Mortgage loans13,306 16,949 20,754 
Amortization of deferred financing costs5,884 4,416 4,100 
Undesignated interest rate swaps— (376)376 
Total interest expense$106,366 $100,169 $91,295 

Future Minimum Principal Payments

As of December 31, 2021, the future minimum principal payments were as follows (in thousands):
2022$200,000 
2023418,662 
2024381,000 
2025400,000 
2026500,000 
Thereafter525,000 
Total (1)$2,424,662 
(1)Excludes a $2.6 million fair value adjustment on debt.