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Debt | 3 Months Ended
--- | ---
Mar. 31, 2024
Debt Disclosure [Abstract] |
Debt | Debt The Company's debt consisted of the following (in thousands):
| March 31, 2024 |  | December 31, 2023
Senior Notes, net | $ | 992,263 |  |  | $ | 991,672 |
Revolver | — |  |  | — |
Term Loans, net | 821,914 |  |  | 821,443 |
Mortgage loans, net | 407,656 |  |  | 407,663 |
Debt, net | $ | 2,221,833 |  |  | $ | 2,220,778 |
Senior Notes The Company's senior notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
|  |  |  |  |  | Carrying Value at
|  | Interest Rate |  | Maturity Date |  | March 31, 2024 |  | December 31, 2023
2029 Senior Notes (1) |  | 4.00% |  | September 2029 |  | $ | 500,000 |  |  | $ | 500,000 |
2026 Senior Notes (1) |  | 3.75% |  | July 2026 |  | 500,000 |  |  | 500,000 |
|  |  |  |  |  | 1,000,000 |  |  | 1,000,000 |
Deferred financing costs, net |  |  |  |  |  | (7,737) |  |  | (8,328) |
Total senior notes, net |  |  |  |  |  | $ | 992,263 |  |  | $ | 991,672 |
(1)Requires payment of interest only through maturity. 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
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 Company's unsecured credit agreements consisted of the following (dollars in thousands):
|  |  |  |  |  | Carrying Value at
|  | Interest Rate at March 31, 2024 (1) |  | Maturity Date |  | March 31, 2024 |  | December 31, 2023
Revolver (2) |  | —% |  | May 2027 |  | $ | — |  |  | $ | — |
$400 Million Term Loan Maturing 2025 |  | 4.48% |  | May 2025 |  | 400,000 |  |  | 400,000 |
$200 Million Term Loan Maturing 2026 |  | 4.82% |  | January 2026 (3) |  | 200,000 |  |  | 200,000 |
$225 Million Term Loan Maturing 2026 |  | 2.97% |  | May 2026 (3) |  | 225,000 |  |  | 225,000 |
|  |  |  |  |  | 825,000 |  |  | 825,000 |
Deferred financing costs, net (4) |  |  |  |  |  | (3,086) |  |  | (3,557) |
Total Revolver and Term Loans, net |  |  |  |  |  | $ | 821,914 |  |  | $ | 821,443 |
(1)Interest rate at March 31, 2024 gives effect to interest rate hedges. (2)There was $600.0 million of capacity on the Revolver at both March 31, 2024 and December 31, 2023. The Company 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. In April 2024, the Company borrowed $200.0 million under the Revolver and utilized the proceeds to repay a $200.0 million maturing mortgage loan, reducing the remaining capacity on the Revolver to $400.0 million. (3)This Term Loan includes two one-year extension options at the Company's discretion, subject to certain conditions. (4)Excludes $5.2 million and $5.6 million as of March 31, 2024 and December 31, 2023, 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 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. Mortgage Loans The Company's mortgage loans consisted of the following (dollars in thousands):
|  |  |  |  |  |  |  | Carrying Value at
|  | Number of Assets Encumbered |  | Interest Rate at March 31, 2024 |  | Maturity Date |  | March 31, 2024 |  | December 31, 2023
Mortgage loan (1) |  | 7 |  | 5.94% | (3) | April 2024 | (4) | $ | 200,000 |  |  | $ | 200,000 |
Mortgage loan (1) |  | 3 |  | 5.03% | (3) | April 2024 | (5) | 96,000 |  |  | 96,000 |
Mortgage loan (1) |  | 4 |  | 5.61% | (3) | April 2024 | (5) | 85,000 |  |  | 85,000 |
Mortgage loan (2) |  | 1 |  | 5.06% |  | January 2029 |  | 26,742 |  |  | 26,833 |
|  | 15 |  |  |  |  |  | 407,742 |  |  | 407,833 |
Deferred financing costs, net |  |  |  |  |  |  |  | (86) |  |  | (170) |
Total mortgage loans, net |  |  |  |  |  |  |  | $ | 407,656 |  |  | $ | 407,663 |
(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity. (2)Includes $1.7 million and $1.8 million at March 31, 2024 and December 31, 2023, 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 March 31, 2024 gives effect to interest rate hedges. (4)In April 2024, the Company fully repaid this mortgage loan using a $200.0 million draw under its Revolver. (5)This mortgage loan provides two one-year extension options, subject to certain conditions. In April 2024, the Company satisfied the conditions required to exercise the first one-year extension option on this mortgage loan to extend the maturity to April 2025, with a second one-year extension option still remaining. 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. At March 31, 2024, 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 three months ended March 31,
|  |  |  |  | 2024 |  | 2023
Senior Notes |  |  |  |  | $ | 9,688 |  |  | $ | 9,688 |
Revolver and Term Loans |  |  |  |  | 9,060 |  |  | 8,543 |
Mortgage loans |  |  |  |  | 5,656 |  |  | 3,943 |
Amortization of deferred financing costs |  |  |  |  | 1,572 |  |  | 1,474 |
Non-cash interest expense related to interest rate hedges |  |  |  |  | 482 |  |  | 482 |
Total interest expense |  |  |  |  | $ | 26,458 |  |  | $ | 24,130 |

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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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