Indebtedness, net

6 Months Ended

Jun. 30, 2022

Indebtedness consisted of the following (in thousands):


				June 30, 2022		December 31, 2021
Indebtedness	Collateral	Maturity	Interest Rate (1)	Debt Balance			Debt Balance
Mortgage loan (2) (3)	1 hotel	July 2022	LIBOR (1) + 3.95%	$	—		$	33,200
Mortgage loan (4)	17 hotels	November 2022	LIBOR(1) + 3.00%	415,000			419,000
Mortgage loan (5)	1 hotel	November 2022	LIBOR(1) + 2.70%	25,000			25,000
Mortgage loan (6)	1 hotel	December 2022	LIBOR(1) + 2.25%	16,100			16,100
Mortgage loan (7)	1 hotel	January 2023	LIBOR(1) + 3.40%	37,000			37,000
Mortgage loan (8)	8 hotels	February 2023	LIBOR(1) + 3.07%	395,000			395,000
Mortgage loan (9)	2 hotels	March 2023	LIBOR(1) + 2.75%	240,000			240,000
Mortgage loan (10)	19 hotels	April 2023	LIBOR(1) + 3.20%	907,030			910,694
Mortgage loan	1 hotel	June 2023	LIBOR(1) + 2.45%	73,450			73,450
Mortgage loan (11)	7 hotels	June 2023	LIBOR(1) + 3.65%	180,720			180,720
Mortgage loan (11)	7 hotels	June 2023	LIBOR(1) + 3.39%	174,400			174,400
Mortgage loan (11)	5 hotels	June 2023	LIBOR(1) + 3.73%	221,040			221,040
Mortgage loan (11)	5 hotels	June 2023	LIBOR(1) + 4.02%	262,640			262,640
Mortgage loan (11)	5 hotels	June 2023	LIBOR(1) + 2.73%	160,000			160,000
Mortgage loan (11)	5 hotels	June 2023	LIBOR(1) + 3.68%	215,120			215,120
Mortgage loan	1 hotel	January 2024	5.49%	6,419			6,492
Mortgage loan	1 hotel	January 2024	5.49%	9,368			9,474
Term loan (12)	Equity	January 2024	16.00%	200,000			200,000
Mortgage loan	1 hotel	May 2024	4.99%	5,941			6,150
Mortgage loan	1 hotel	June 2024	LIBOR(1) + 2.00%	8,881			8,881
Mortgage loan	2 hotels	August 2024	4.85%	11,310			11,427
Mortgage loan	3 hotels	August 2024	4.90%	22,622			22,853
Mortgage loan (13)	1 hotel	November 2024	LIBOR(1) + 4.65%	84,000			84,000
Mortgage loan (14)	3 hotels	February 2025	4.45%	50,098			50,098
Mortgage loan	1 hotel	March 2025	4.66%	23,606			23,883
Mortgage loan (15)	1 hotel	August 2025	LIBOR(1) + 3.80%	98,000			98,000
				3,842,745			3,884,622
Premiums (discounts), net				(27,167)			(32,777)
Capitalized default interest and late charges				15,947			23,511
Deferred loan costs, net				(11,979)			(15,440)
Embedded debt derivative				23,997			27,906
Indebtedness, net				$	3,843,543		$	3,887,822


Indebtedness, net related to assets held for sale (3)	1 hotel	December 2022	LIBOR (1) + 4.40%	29,700			—
				$	3,873,243		$	3,887,822

_____________________________

(1) LIBOR rates were 1.787% and 0.101% at June 30, 2022 and December 31, 2021, respectively.

(2) 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%.

(3) On June 7, 2022, we amended this mortgage loan. Terms of the amendment included a $3.2 million principal repayment, the maturity date was extended to December 2022, and the interest rate spread increased to 4.40%. This mortgage loan has a LIBOR floor of 0.25%.

(4) 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.

(5) 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%.

(6) 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%.

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

(8) 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.

(9) 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.

(10) 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.

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

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

(13) 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%.

(14) As of June 30, 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. On July 1, 2022, this mortgage loan was brought current and is no longer in default.

(15) 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 June 30,				Six Months Ended June 30,
Line Item	2022		2021		2022		2021
Interest expense, net of discount amortization	$	(2,913)	$	(228)	$	(5,611)	$	(2,693)

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 $0 and $32.6 million during the three and six months ended June 30, 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 and six months ended June 30, 2022 and 2021, was $3.8 million and $7.6 million and $10.6 million and $27.6 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 June 30, 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.