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Debt | 9 Months Ended
--- | ---
Sep. 30, 2024
Debt Disclosure [Abstract] |
Debt | Debt The Company's debt consisted of the following (in thousands):
| September 30, 2024 |  | December 31, 2023
Senior Notes, net | $ | 993,445 |  |  | $ | 991,672 |
Revolver Outstanding | 100,000 |  |  | — |
Term Loans, net | 918,006 |  |  | 821,443 |
Mortgage loans, net | 207,375 |  |  | 407,663 |
Debt, net | $ | 2,218,826 |  |  | $ | 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 |  | September 30, 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 |  |  |  |  |  | (6,555) |  |  | (8,328) |
Total senior notes, net |  |  |  |  |  | $ | 993,445 |  |  | $ | 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"); •$500.0 million term loan with a scheduled maturity date of September 24, 2027 and up to two one-year extension options if certain conditions are satisfied (the "$500 Million Term Loan Maturing 2027"); •$200.0 million term loan with a scheduled maturity date of January 31, 2026 and up to 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 up to two one-year extension options if certain conditions are satisfied (the "$225 Million Term Loan Maturing 2026"). The $500 Million Term Loan Maturing 2027, the $200 Million Term Loan Maturing 2026, and the $225 Million Term Loan Maturing 2026 are collectively referred to as the "Term Loans." In September 2024, the Company entered into the $500 Million Term Loan Maturing 2027, the proceeds of which were used to repay an existing $400.0 million term loan with a scheduled maturity date of May 18, 2025 (the "$400 Million Term Loan Maturing 2025") and $100.0 million of outstanding borrowings under the Revolver. The $500 Million Term Loan Maturing 2027 matures on September 24, 2027, with up to two one-year extension options if certain conditions are satisfied. Borrowings under the $500 Million Term Loan Maturing 2027 bear interest at a variable rate with the same terms as the $400 Million Term Loan Maturing 2025. The Company paid approximately $5.1 million in lender fees and legal costs related to the refinancing. The Company's unsecured credit agreements consisted of the following (dollars in thousands):
|  |  |  |  |  | Carrying Value at
|  | Interest Rate at September 30, 2024 (1) |  | Maturity Date |  | September 30, 2024 |  | December 31, 2023
Revolver (2) |  | 6.59% |  | May 2027 |  | $ | 100,000 |  |  | $ | — |
$500 Million Term Loan Maturing 2027 |  | 4.82% |  | September 2027 (4) |  | 500,000 |  |  | — |
$400 Million Term Loan Maturing 2025 (3) |  | N/A |  | N/A |  | — |  |  | 400,000 |
$200 Million Term Loan Maturing 2026 |  | 6.55% |  | January 2026 (4) |  | 200,000 |  |  | 200,000 |
$225 Million Term Loan Maturing 2026 |  | 3.91% |  | May 2026 (4) |  | 225,000 |  |  | 225,000 |
|  |  |  |  |  | 1,025,000 |  |  | 825,000 |
Deferred financing costs, net (5) |  |  |  |  |  | (6,994) |  |  | (3,557) |
Total Revolver and Term Loans, net |  |  |  |  |  | $ | 1,018,006 |  |  | $ | 821,443 |
(1)Interest rate at September 30, 2024 gives effect to interest rate hedges. (2)At September 30, 2024 and December 31, 2023, there was $500.0 million and $600.0 million, respectively, of borrowing capacity on the Revolver. 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. In September 2024, the Company utilized part of the $500 Million Term Loan Maturing 2027 proceeds to repay $100.0 million of outstanding borrowings under the Revolver. (3)In September 2024, the Company utilized part of the $500 Million Term Loan Maturing 2027 proceeds to pay off this term loan. (4)This Term Loan includes two one-year extension options at the Company's discretion, subject to certain conditions. (5)Excludes $4.3 million and $5.6 million as of September 30, 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 September 30, 2024 |  | Maturity Date |  | September 30, 2024 |  | December 31, 2023
Mortgage loan (1) |  | N/A |  | N/A |  | N/A |  | $ | — |  |  | $ | 200,000 |
Mortgage loan (2) |  | 3 |  | 4.78% | (4) | April 2025 | (5) | 96,000 |  |  | 96,000 |
Mortgage loan (2) |  | 4 |  | 5.29% | (4) | April 2025 | (5) | 85,000 |  |  | 85,000 |
Mortgage loan (3) |  | 1 |  | 5.06% |  | January 2029 |  | 26,562 |  |  | 26,833 |
|  | 8 |  |  |  |  |  | 207,562 |  |  | 407,833 |
Deferred financing costs, net |  |  |  |  |  |  |  | (187) |  |  | (170) |
Total mortgage loans, net |  |  |  |  |  |  |  | $ | 207,375 |  |  | $ | 407,663 |
(1)In April 2024, the Company repaid this mortgage loan using a $200.0 million draw under its Revolver. (2)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity. (3)Includes $1.6 million and $1.8 million at September 30, 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. (4)Interest rate at September 30, 2024 gives effect to interest rate hedges. (5)This mortgage loan provides for a one-year extension option to April 2026, subject to certain conditions. 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 September 30, 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 September 30, |  | For the nine months ended September 30,
| 2024 |  | 2023 |  | 2024 |  | 2023
Senior Notes | $ | 9,695 |  |  | $ | 9,695 |  |  | $ | 29,070 |  |  | $ | 29,070 |
Revolver and Term Loans | 14,228 |  |  | 7,365 |  |  | 37,075 |  |  | 23,176 |
Mortgage loans | 2,671 |  |  | 5,727 |  |  | 10,939 |  |  | 15,286 |
Amortization of deferred financing costs | 1,663 |  |  | 1,564 |  |  | 4,779 |  |  | 4,528 |
Non-cash interest expense related to interest rate hedges | 386 |  |  | 482 |  |  | 1,287 |  |  | 1,446 |
Total interest expense | $ | 28,643 |  |  | $ | 24,833 |  |  | $ | 83,150 |  |  | $ | 73,506 |

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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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