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Debt | 12 Months Ended
--- | ---
Dec. 31, 2023
Debt Disclosure [Abstract] |
Debt | Debt The Company's debt consisted of the following (in thousands):
| December 31, 2023 |  | December 31, 2022
Senior Notes, net | $ | 991,672 |  |  | $ | 989,307 |
Revolver | — |  |  | — |
Term Loans, net | 821,443 |  |  | 820,536 |
Mortgage loans, net | 407,663 |  |  | 407,712 |
Debt, net | $ | 2,220,778 |  |  | $ | 2,217,555 |
Senior Notes The Company's senior notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
|  |  |  |  |  | Carrying Value at
|  | Interest Rate at December 31, 2023 |  | Maturity Date |  | December 31, 2023 |  | December 31, 2022
2029 Senior Notes (1)(2) |  | 4.00% |  | September 2029 |  | $ | 500,000 |  |  | $ | 500,000 |
2026 Senior Notes (1)(3) |  | 3.75% |  | July 2026 |  | 500,000 |  |  | 500,000 |
|  |  |  |  |  | 1,000,000 |  |  | 1,000,000 |
Deferred financing costs, net |  |  |  |  |  | (8,328) |  |  | (10,693) |
Total senior notes, net |  |  |  |  |  | $ | 991,672 |  |  | $ | 989,307 |
(1)Requires payments of interest only through maturity. (2)The Company has the option to redeem its 4.00% senior notes due 2029 (the "2029 Senior Notes") at any time prior to September 15, 2024 at a price equal to 100.0% of the principal amount plus a make-whole premium. At any time on or after September 15, 2024, the Company may redeem the 2029 Senior Notes at a redemption price of (i) 102.0% of the principal amount should such redemption occur before September 15, 2025, (ii) 101.0% of the principal amount should such redemption occur before September 15, 2026 and (iii) 100.0% of the principal amount thereafter, 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 principal amount plus accrued and unpaid interest, if any, subject to certain conditions. (3)The Company has the option to redeem its 3.75% senior notes due 2026 (the "2026 Senior Notes") 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 such redemption occur before July 1, 2025 and (iii) 100.0% of the principal amount thereafter, in each case plus accrued and unpaid interest, if any. The 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 indebtedness under the Company’s credit facilities and certain other indebtedness. The indentures governing the Senior Notes contain customary covenants that limit the Operating Partnership’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 indentures. A summary of the various restrictive covenants for the Senior Notes are as follows:
|  | Covenant |  | Compliance |  |
Maintenance Covenant |  |  |  |  |  |
Unencumbered Asset to Unencumbered Debt Ratio |  | > 150.0% |  | Yes |  |
Incurrence Covenants |  |  |  |  |  |
Consolidated Indebtedness less than Adjusted Total Assets |  | < .65x |  | Yes |  |
Consolidated Secured Indebtedness less than Adjusted Total Assets |  | < .45x |  | Yes |  |
Interest Coverage Ratio |  | > 1.5x |  | Yes |  |
As of December 31, 2023 and 2022, the Company was in compliance with all covenants associated with the Senior Notes. 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 10, 2027 and either a one-year extension option or up to two six-month extension options if certain conditions are satisfied (the "Revolver"); •$400.0 million term loan with a scheduled maturity date of May 18, 2025 (the "$400 Million Term Loan Maturing 2025"); •$200.0 million term loan with a scheduled maturity date of January 31, 2026 and two one-year extension options if certain conditions are satisfied (the "$200 Million Term Loan Maturing 2026"); and •$225.0 million term loan with a scheduled maturity date of May 10, 2026 and two one-year extension options if certain conditions are satisfied (the "$225 Million Term Loan Maturing 2026"). The $400 Million Term Loan Maturing 2025, the $200 Million Term Loan Maturing 2026, and the $225 Million Term Loan Maturing 2026 are collectively referred to as 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 ratio, maximum unencumbered leverage ratio and minimum unencumbered debt service 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. The borrowings under the Revolver and Term Loans bear interest at variable rates equal to (i) the Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of ten basis points ("Adjusted SOFR") and a margin ranging from 1.35% to 2.20% or (ii) a base rate plus a margin ranging from 0.35% to 1.20%. In all cases, the actual margin used is determined based 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. In May 2023, the Company amended its Revolver. The amendment extends the maturity date of the Revolver to May 10, 2027, which may be extended by the exercise of either a one-year extension option or up to two six-month extension options, subject to the satisfaction of certain conditions. The borrowings under the Revolver bear interest at a variable rate equal to (i) Adjusted SOFR plus a margin ranging from 1.40% to 1.95% or (ii) a base rate plus a margin ranging from 0.40% to 0.95%. In May 2023, the Company entered into the $225 Million Term Loan Maturing 2026, the proceeds of which were used to fully repay the outstanding principal balance of a $151.7 million term loan with a scheduled maturity date of January 25, 2024 (the "$400 Million Term Loan Maturing 2024") and a $73.0 million term loan with a scheduled maturity date of January 25, 2024 (the "$225 Million Term Loan Maturing 2024"). The $225 Million Term Loan Maturing 2026 matures on May 10, 2026, with two one-year extension options to May 2027 and May 2028, respectively. Borrowings under the $225 Million Term Loan Maturing 2026 bear interest at a variable rate equal to (i) Adjusted SOFR plus a margin ranging from 1.45% to 2.20% or (ii) a base rate plus a margin ranging from 0.45% to 1.20%. In May 2023, the Company also amended the $400 Million Term Loan Maturing 2025 to replace LIBOR with Adjusted SOFR as the benchmark rate used to determine the applicable interest rate. In addition, during the May 2023 amendments, all of the Company's unsecured credit agreements were amended to, among other things, (i) modify the calculation of certain financial covenants, including increasing the leverage ratio limit to 7.25x, (ii) modify the calculation of the unencumbered leverage ratio, (iii) remove the requirement to provide equity pledges if a certain leverage ratio is exceeded and (iv) reduce the interest floor to zero. The Company paid approximately $7.5 million in lender fees and legal costs related to the refinancing. The Company's unsecured credit agreements consisted of the following (in thousands):
|  |  |  |  |  | Carrying Value at
|  | Interest Rate at December 31, 2023 (1) |  | Maturity Date |  | December 31, 2023 |  | December 31, 2022
Revolver (2) |  | —% |  | May 2027 |  | $ | — |  |  | $ | — |
$400 Million Term Loan Maturing 2023 (3) |  | —% |  | — |  | — |  |  | 52,261 |
$400 Million Term Loan Maturing 2024 (4) |  | —% |  | — |  | — |  |  | 151,683 |
$225 Million Term Loan Maturing 2023 (3) |  | —% |  | — |  | — |  |  | 41,745 |
$225 Million Term Loan Maturing 2024 (4) |  | —% |  | — |  | — |  |  | 72,973 |
$400 Million Term Loan Maturing 2025 |  | 3.44% |  | May 2025 |  | 400,000 |  |  | 400,000 |
$200 Million Term Loan Maturing 2026 (5) |  | 4.88% |  | January 2026 (6) |  | 200,000 |  |  | 105,000 |
$225 Million Term Loan Maturing 2026 |  | 3.03% |  | May 2026 (6) |  | 225,000 |  |  | — |
|  |  |  |  |  | 825,000 |  |  | 823,662 |
Deferred financing costs, net (7) |  |  |  |  |  | (3,557) |  |  | (3,126) |
Total Revolver and Term Loans, net |  |  |  |  |  | $ | 821,443 |  |  | $ | 820,536 |
(1)Interest rate at December 31, 2023 gives effect to interest rate hedges. (2)There was $600.0 million of capacity on the Revolver at both December 31, 2023 and 2022. 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 or up to two six-month periods ending May 2028 if certain conditions are satisfied. (3)In January 2023, the Company received the remaining $95.0 million in proceeds on the $200 Million Term Loan Maturing 2026 and utilized these proceeds to pay off these Term Loans. (4)In May 2023, the Company entered into the $225 Million Term Loan Maturing 2026 and utilized the proceeds to pay off these Term Loans. (5)In January 2023, the Company received the remaining $95.0 million in proceeds on this Term Loan. (6)This Term Loan includes two one-year extension options. The exercise of the extension options will be at the Company's discretion, subject to certain conditions. (7)Excludes $5.6 million and $1.7 million as of December 31, 2023 and 2022, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets. The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:
|  | Covenant |  | Compliance
Leverage ratio (1) |  | <= 7.25x |  | Yes
Fixed charge coverage ratio (2) |  | >= 1.50x |  | Yes
Secured indebtedness ratio |  | <= 45.0% |  | Yes
Unencumbered indebtedness ratio |  | <= 60.0% |  | Yes
Unencumbered debt service coverage ratio |  | >= 2.00x |  | Yes
(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 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. Mortgage Loans The Company's mortgage loans consisted of the following (in thousands):
|  |  |  |  |  |  |  | Carrying Value at
|  | Number of Assets Encumbered |  | Interest Rate at December 31, 2023 |  | Maturity Date |  | December 31, 2023 |  | December 31, 2022
Mortgage loan (1) |  | 7 |  | 5.94% | (3) | April 2024 |  | $ | 200,000 |  |  | $ | 200,000 |
Mortgage loan (1) |  | 3 |  | 5.10% | (3) | April 2024 | (4) | 96,000 |  |  | 96,000 |
Mortgage loan (1) |  | 4 |  | 5.67% | (3) | April 2024 | (4) | 85,000 |  |  | 85,000 |
Mortgage loan (2) |  | 1 |  | 5.06% |  | January 2029 |  | 26,833 |  |  | 27,193 |
|  | 15 |  |  |  |  |  | 407,833 |  |  | 408,193 |
Deferred financing costs, net |  |  |  |  |  |  |  | (170) |  |  | (481) |
Total mortgage loans, net |  |  |  |  |  |  |  | $ | 407,663 |  |  | $ | 407,712 |
(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity. (2)Includes $1.8 million and $2.2 million at December 31, 2023 and 2022, respectively, related to a fair value adjustment on this mortgage loan from purchase price allocation at hotel property acquisition. This mortgage loan requires payments of interest only through maturity. (3)Interest rate at December 31, 2023 gives effect to interest rate hedges. (4)This mortgage loan provides two one-year extension options, subject to certain conditions. In December 2023, the Company sent a one-year extension notice on this mortgage loan. The extension notice is subject to leverage and debt service coverage ratio ("DSCR") tests and is currently under review by the lender. Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or DSCR. Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. At December 31, 2023, all mortgage loans exceeded the minimum debt yield or DSCR thresholds. Interest Expense The components of the Company's interest expense consisted of the following (in thousands):
| For the year ended December 31,
| 2023 |  | 2022 |  | 2021
Senior Notes | $ | 38,764 |  |  | $ | 38,820 |  |  | $ | 34,079 |
Revolver and Term Loans | 31,000 |  |  | 34,126 |  |  | 54,733 |
Mortgage loans | 21,014 |  |  | 13,563 |  |  | 13,306 |
Amortization of deferred financing costs | 6,100 |  |  | 5,967 |  |  | 5,884 |
Non-cash interest expense related to interest rate hedges | 1,929 |  |  | 679 |  |  | (1,636) |
Total interest expense | $ | 98,807 |  |  | $ | 93,155 |  |  | $ | 106,366 |
Future Minimum Principal Payments As of December 31, 2023, excluding extension options, the future minimum principal payments were as follows (in thousands):
2024 | $ | 381,000 |
2025 | 400,000 |
2026 | 925,000 |
2027 | — |
2028 | — |
Thereafter | 525,000 |
Total (1) | $ | 2,231,000 |
(1)Excludes a $1.8 million fair value adjustment on debt.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I + Details
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