Dispositions, Impairment Charges and Assets Held For Sale

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

Dispositions, Impairment Charges and Assets Held For Sale

Dispositions

On August 1, 2023, the Company sold the WorldQuest Resort in Orlando, Florida (“WorldQuest”) for $14.8 million in cash. The sale resulted in a gain of approximately $6.4 million for the year ended December 31, 2023, which was included in “gain (loss) on consolidation of VIE and disposition of assets” in the consolidated statements of operations.

On November 9, 2023, the Company sold the Sheraton Bucks County in Langhorne, Pennsylvania for $13.8 million in cash. The sale resulted in a gain of approximately $3.9 million for the year ended December 31, 2023, which was included in “gain (loss) on consolidation of VIE and disposition of assets” in the consolidated statements of operations.

On June 9, 2023 the Company received a 30-day extension to satisfy the extension conditions in order to negotiate modifications to the KEYS pool F extension test. On July 7, 2023, the Company elected not to make the required paydown to extend its KEYS pool F loan thereby defaulting on such loan. The KEYS pool F loan had a $215.1 million debt balance and was secured by Embassy Suites Flagstaff, Embassy Suites Walnut Creek, Marriott Bridgewater, Marriott Research Triangle, and the W Atlanta Downtown.

On November 29, 2023, the Company completed the deed in lieu of foreclosure transaction for the transfer of ownership of the KEYS F loan to the mortgage lender, which resulted in a gain on extinguishment of debt of approximately $53.4 million for the year ended December 31, 2023, which is included in “gain (loss) on extinguishment of debt” in the consolidated statements of operations. See note 7.

On September 1, 2022, the Company sold the Sheraton in Ann Arbor, MI (“Sheraton Ann Arbor”) for total consideration of approximately $35.7 million, which included cash of $34.5 million and an interest-free receivable with an estimated fair value of $1.2 million and a face value of $1.5 million. The payment of the $1.5 million is deferred until the last day of the twenty-fourth month following the closing date. The sale resulted in a loss of approximately $1,000 for the year ended December 31, 2022, which was included in “gain (loss) on consolidation of VIE and disposition of assets” in the consolidated statement of operations. The Company also repaid the $30.0 million mortgage loan secured by the hotel property. See note 7.

On January 20, 2021, the Company sold the Le Meridien in Minneapolis, Minnesota, for approximately $7.9 million in cash. The sale resulted in a loss of approximately $90,000 for the year ended December 31, 2021, which was included in “gain (loss) on disposition of assets and hotel properties” in the consolidated statement of operations.

In February 2021, the Company was informed by its lender that it had initiated foreclosure proceedings for the foreclosure of the SpringHill Suites Durham and SpringHill Suites Charlotte, which secured the Company’s $19.4 million mortgage loan. The foreclosure proceedings were completed on April 29, 2021 and resulted in a gain on extinguishment of debt of

approximately $10.6 million for the year ended December 31, 2021, which was included in “gain (loss) on extinguishment of debt” in the consolidated statement of operations.

The results of operations for disposed hotel properties are included in net income (loss) through the date of disposition. See note 2 for the fiscal year 2021, 2022 and 2023 dispositions. The following table includes condensed financial information for the years ended December 31, 2023, 2022 and 2021 from the Company’s dispositions (in thousands):


	Year Ended December 31,
		2023		2022		2021
Total hotel revenue		$	80,018	$	88,983	$	58,867
Total hotel operating expenses		(60,698)		(65,053)		(47,817)
Property taxes, insurance and other		(3,906)		(4,402)		(4,560)
Depreciation and amortization		(12,782)		(17,322)		(20,867)

Total operating expenses		(77,386)		(86,777)		(73,244)
Gain (loss) on disposition of assets and hotel properties		10,279		(1)		237
Operating income (loss)		12,911		2,205		(14,140)
Interest income		40		5		—
Interest expense and amortization of discounts and loan costs		(20,994)		(13,805)		(8,796)
Write-off of premiums, loan costs and exit fees		(110)		—		—
Gain (loss) on extinguishment of debt		53,386		—		10,566
Income (loss) before income taxes		45,233		(11,595)		(12,370)
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership		(521)		90		103
Net income (loss) attributable to the Company		$	44,712	$	(11,505)	$	(12,267)

Impairment Charges

During the years ended December 31, 2023, 2022 and 2021, no impairment charges were recorded.

Assets Held For Sale

On December 14, 2023, the Company entered into a purchase and sale agreement for the Residence Inn Salt Lake City hotel in Salt Lake City, Utah. As of December 31, 2023, the Residence Inn Salt Lake City was classified as held for sale. Depreciation and amortization ceased as of the date the assets were deemed held for sale. Since the sale of the Residence Inn Salt Lake City does not represent a strategic shift that has (or will have) a major effect on our operations or financial results, its results of operations were not reported as discontinued operations in the consolidated financial statements. See note 25.

The major classes of assets and liabilities related to assets held for sale included in the consolidated balance sheet at December 31, 2023 were as follows:


	December 31, 2023
Assets
Investments in hotel properties, net	$	11,949
Cash and cash equivalents	1
Restricted cash	223
Accounts receivable, net	171


Prepaid expenses	22





Due from third-party hotel managers	17
Assets held for sale	$	12,383

Liabilities
Indebtedness, net	$	14,366
Accounts payable and accrued expenses	231
Accrued interest	55






Due from Ashford Inc.	1
Liabilities related to assets held for sale	$	14,653