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Subsequent Events | 3 Months Ended
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Mar. 31, 2020
Subsequent Events [Abstract] |
Subsequent Events | Subsequent Events On May 6, 2020, Chatham executed an amendment to its credit facility that provides for the waiver of certain financial covenants through March 31, 2021 and allows Chatham to borrow up to the entire $250 million facility size during this period. The amendment also provides for a waiver of cross-default provisions related to up to $125 million of non-recourse mortgage debt during the modification period. During this covenant waiver period, Chatham will be required to maintain a minimum liquidity of $25 million which will include both unrestricted cash and credit facility availability. For the first three quarters after financial covenants are reinstated on June 30, 2021, EBITDA and net operating income figures used to calculate covenant compliance and borrowing base availability will be based on annualized amounts. In connection with the amendment, Chatham added six hotels to the credit facility’s borrowing base which now has a total of 18 properties. The amendment provided Chatham’s credit facility lenders with pledges of the equity in the 18 borrowing base hotels. Chatham has six additional hotels that are not a part of the credit facility’s borrowing base and do not serve as collateral for existing mortgage loans. During the covenant waiver period interest will be calculated as LIBOR (subject to a 0.5% floor) plus a spread of 2.5% if borrowings remain at or below $200 million and a spread of 3.0% if borrowings exceed $200 million. The amendment places additional limits on Chatham’s ability to incur debt, pay dividends, and make capital expenditures during the covenant waiver period. During the modification period, Chatham is generally not allowed to incur debt except for debt borrowed under the credit facility, refinancing debt, up to $40 million of construction debt to finance the Warner Center hotel project, $10 million of qualified government debt, and up to $12 million of any incremental principal of non-recourse mortgage debt arising from the deferral of interest payments. During the modification period, common share dividends are allowed but limited to 100 percent of REIT taxable income, and any dividends paid would include a cash component no greater than the minimum percentage allowed under the Internal Revenue Code. During the modification period, capital expenditures are limited to $7.5 million for the completion of renovations that have already commenced, $5 million of discretionary capital expenditures, capital expenditures incurred in connection with emergency repairs, life safety repairs, ordinary course maintenance, or as required by law or franchisors, $10 million related to the Warner Center project if a development loan is not obtained, and up to $5 million in excess the total proceeds raised from a Warner Center development loan if such loan is obtained. Chatham paid a fee of 0.1% to lenders that consented to the amendment based on their level of credit facility commitments. On April 7, 2020 the NewINK JV failed to make a debt service payment related to its $855.0 million loan. The NewINK JV failed to make an additional debt service payment on May 7, 2020. The failure to make the required debt service payments is an event of default under the NewINK loan agreement and could result in a foreclosure by the lender. The NewINK JV is attempting to negotiate a forbearance agreement with the lender but cannot provide any assurance that such an agreement will be reached. The NewINK JV debt is non-recourse to Chatham with the exception of customary non-recourse carve-out provisions such as fraud, material and intentional misrepresentations and misapplication of funds. A default under the NewINK loan agreement does not trigger a cross-default under any of Chatham’s debt agreements. On April 9, 2020 the Inland JV failed to make a debt service payment related to its $780.0 million loan. The Inland JV failed to make an additional debt service payment on May 9, 2020. The failure to make the required debt service payments is an event of default under the Inland loan agreement and could result in a foreclosure by the lender. The Inland JV is attempting to negotiate a forbearance agreement with the lender but cannot provide any assurance that such an agreement will be reached. The Inland JV debt is non-recourse to Chatham with the exception of customary non-recourse carve-out provisions such as fraud, material and intentional misrepresentations and misapplication of funds. A default under the Inland loan agreement does not trigger a cross-default under any of Chatham’s debt agreements.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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