Indebtedness, net

3 Months Ended

Mar. 31, 2022

Indebtedness, net

Indebtedness consisted of the following (in thousands):

March 31, 2022

December 31, 2021

Indebtedness

Collateral

Maturity

Interest Rate (1)

Default Rate (2)

Debt Balance

Mortgage loan (4)

7 hotels

June 2022

LIBOR (3) + 3.65%

n/a

180,720

Mortgage loan (4)

7 hotels

June 2022

LIBOR(3) + 3.39%

n/a

174,400

Mortgage loan (4)

5 hotels

June 2022

LIBOR(3) + 3.73%

n/a

221,040

Mortgage loan (4)

5 hotels

June 2022

LIBOR(3) + 4.02%

n/a

262,640

Mortgage loan (4)

5 hotels

June 2022

LIBOR(3) + 2.73%

n/a

160,000

Mortgage loan (4)

5 hotels

June 2022

LIBOR(3) + 3.68%

n/a

215,120

Mortgage loan (5)

1 hotel

July 2022

LIBOR(3) + 3.95%

n/a

33,200

Mortgage loan (6)

17 hotels

November 2022

LIBOR(3) + 3.00%

n/a

415,000

419,000

Mortgage loan (7)

1 hotel

November 2022

LIBOR(3) + 2.70%

n/a

25,000

Mortgage loan (8)

1 hotel

December 2022

LIBOR(3) + 2.25%

n/a

16,100

Mortgage loan (9)

1 hotel

January 2023

LIBOR(3) + 3.40%

n/a

37,000

Mortgage loan (10)

8 hotels

February 2023

LIBOR(3) + 3.07%

n/a

395,000

Mortgage loan (11)

2 hotels

March 2023

LIBOR(3) + 2.75%

n/a

240,000

Mortgage loan (12)

19 hotels

April 2023

LIBOR(3) + 3.20%

n/a

910,475

910,694

Mortgage loan

1 hotel

June 2023

LIBOR(3) + 2.45%

n/a

73,450

Mortgage loan

1 hotel

January 2024

5.49%

n/a

6,454

6,492

Mortgage loan

1 hotel

January 2024

5.49%

n/a

9,420

9,474

Term loan (13)

Equity

January 2024

16.00%

n/a

200,000

Mortgage loan

1 hotel

May 2024

4.99%

n/a

6,115

6,150

Mortgage loan

1 hotel

June 2024

LIBOR(3) + 2.00%

n/a

8,881

Mortgage loan

2 hotels

August 2024

4.85%

n/a

11,367

11,427

Mortgage loan

3 hotels

August 2024

4.90%

n/a

22,735

22,853

Mortgage loan (14)

1 hotel

November 2024

LIBOR(3) + 4.65%

n/a

84,000

Mortgage loan (15)

3 hotels

February 2025

4.45%

4.00%

50,098

Mortgage loan

1 hotel

March 2025

4.66%

n/a

23,743

23,883

Mortgage loan (16)

1 hotel

August 2025

LIBOR(3) + 3.80%

n/a

98,000

3,879,958

3,884,622

Premiums (discounts), net

(30,079)

(32,777)

Capitalized default interest and late charges

19,735

23,511

Deferred loan costs, net

(13,576)

(15,440)

Embedded debt derivative

26,974

27,906

Indebtedness, net

3,883,012

3,887,822

_____________________________

(1) Interest rates do not include default or late payment rates in effect on one mortgage loan.

(2) Default rates are presented for mortgage loans which were in default, in accordance with the terms and conditions of the applicable mortgage agreement, as of March 31, 2022. The default rate is accrued in addition to the stated interest rate.

(3) LIBOR rates were 0.452% and 0.101% at March 31, 2022 and December 31, 2021, respectively.

(4) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in June 2021.

(5) This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.25%.

(6) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in November 2021. On March 2, 2022, we repaid $4.0 million of principal on this mortgage loan.

(7) This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions. The second one-year extension option began in November 2021. This mortgage loan has a LIBOR floor of 1.25%.

(8) This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.25%.

(9) This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions.

(10) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in February 2022.

(11) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The second one-year extension period began in March 2022.

(12) This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions. The third one-year extension period began in April 2022.

(13) This term loan has two one-year extension options, subject to satisfaction of certain conditions.

(14) This mortgage loan has two one-year extension options, subject to the satisfaction of certain conditions. This mortgage loan has a LIBOR floor of 0.10%.

(15) As of March 31, 2022, this mortgage loan was in default under the terms and conditions of the mortgage loan agreement. Default interest has been accrued, in accordance with the terms of the mortgage loan agreement, and is reflected in the Company’s consolidated balance sheets and statements of operations.

(16) This mortgage loan has one one-year extension option, subject to the satisfaction of certain conditions.

We recognized net premium (discount) amortization as presented in the table below (in thousands):


	Three Months Ended March 31,
Line Item	2022		2021
Interest expense, net of discount amortization	$	(2,698)	$	(2,465)

The amortization of the net premium (discount) is computed using a method that approximates the effective interest method, which is included in “interest expense and amortization of discounts and loan costs” in the consolidated statements of operations.

During the years ended December 31, 2021 and 2020 the Company entered into forbearance and other agreements which were evaluated to be considered troubled debt restructurings due to terms that allowed for deferred interest and the forgiveness of default interest and late charges. As a result of the troubled debt restructurings all accrued default interest and late charges were capitalized into the applicable loan balances and are being amortized over the remaining term of the loan using the effective interest method. The amount of default interest and late charges capitalized into the loan balance was $32.6 million during the three months ended March 31, 2021. No gain or loss was initially recognized as the carrying amount of the original loans was not greater than the undiscounted cash flows of the modified loans. The amount of the capitalized principal that was amortized during the three months ended March 31, 2022 and 2021, was $3.8 million and $16.8 million, respectively. These amounts are included in “interest expense and amortization of discounts and loan costs” in the consolidated statement of operations.

We have extension options relating to certain property level loans that will permit us to extend the maturity date of our loans if certain conditions are satisfied at the respective extension dates, including the achievement of debt yield targets required in order to extend such loans. To the extent we decide to extend the maturity date of the debt outstanding under the loans, we may be required to prepay a significant amount of the loans in order to meet the required debt yield targets.

We are required to maintain certain financial ratios under various debt and related agreements. If we violate covenants in any debt or related agreement, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. As of March 31, 2022, we were in compliance with all covenants related to mortgage loans for which we entered into forbearance and other agreements. We were also in compliance with all covenants under the senior secured term loan facility with Oaktree Capital Management L.P. (“Oaktree”) (the “Oaktree Credit Agreement”). The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of Ashford Trust or Ashford Trust OP, our operating partnership, and the liabilities of such subsidiaries do not constitute the obligations of Ashford Trust or Ashford Trust OP.