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Debt
 6 Months Ended
Jun. 30, 2023
Debt Disclosure [Abstract]  
Debt Debt
The Company’s mortgage loans are collateralized by first-mortgage liens on certain of the Company’s properties. The mortgage loans are non-recourse except for instances of fraud or misapplication of funds. Mortgage, revolving credit facility, and unsecured term loan debt consisted of the following (dollars in thousands):
 
CollateralInterest RateMaturity DateJune 30, 2023
Property Carrying Value		Balance Outstanding on Loan as of
June 30, 2023December 31,
2022
Revolving Credit Facility (1)— %October 28, 2026$— $— $— 
Unsecured Term Loan (2)6.40 %October 28, 2025— 90,000 — 
Construction Loan (3)11.0 %August 4, 2024— — 39,331 
Homewood Suites by Hilton San Antonio, TX 4.59 %February 6, 2023— — 14,402 
Residence Inn by Marriott Vienna, VA4.49 %February 6, 2023— — 19,680 
Courtyard by Marriott Houston, TX4.19 %May 6, 2023— — 16,200 
Hyatt Place Pittsburgh, PA4.65 %July 6, 202331,113 19,694 19,975 
Residence Inn by Marriott Bellevue, WA4.97 %December 6, 202358,567 40,634 41,133 
Residence Inn by Marriott Garden Grove, CA4.79 %April 6, 202437,063 29,843 30,184 
Residence Inn by Marriott Silicon Valley I, CA 4.64 %July 1, 202466,000 60,710 61,280 
Residence Inn by Marriott Silicon Valley II, CA4.64 %July 1, 202473,743 66,237 66,860 
Residence Inn by Marriott San Mateo, CA 4.64 %July 1, 202455,606 45,532 45,960 
Residence Inn by Marriott Mountain View, CA4.64 %July 1, 202440,765 35,508 35,842 
SpringHill Suites by Marriott Savannah, GA4.62 %July 6, 202430,985 28,100 28,365 
Hilton Garden Inn Marina del Rey, CA4.68 %July 6, 202436,773 19,281 19,535 
Homewood Suites by Hilton Billerica, MA 4.32 %December 6, 202411,055 14,643 14,804 
Hampton Inn & Suites Houston Medical Center, TX 4.25 %January 6, 202514,211 16,523 16,706 
Total debt before unamortized debt issue costs$455,881 $466,705 $470,257 
Unamortized term loan and mortgage debt issue costs(846)(373)
Total debt outstanding$465,859 $469,884 
 
1.The interest rate for the revolving credit facility is variable and based on one-month term secured overnight financing rate ("SOFR") plus a spread of 1.50% to 2.25% based on the Company's leverage and a credit spread adjustment of 0.10%.
2.The interest rate for the unsecured term loan is variable and based on one-month term SOFR plus a spread of 1.45% to 2.20% based on the Company's leverage and a credit spread adjustment of 0.10%.
3.On August 4, 2020, a subsidiary of Chatham entered into an agreement with affiliates of Mack Real Estate Credit Strategies to obtain a $40.0 million loan to fund the remaining construction costs of the Home2 Suites by Hilton Woodland Hills Los Angeles ("Home2 Woodland Hills") hotel development. The loan had an initial term of 4 years and there were two six-month extension options. The interest rate on the loan was LIBOR, subject to a 0.25% floor, plus a spread of 7.5%. The loan was repaid on February 1, 2023.
On October 28, 2022, the Company entered into a $215.0 million unsecured revolving credit facility and a $90.0 million unsecured delayed-draw term loan facility that replaced the Company’s previous $250.0 million revolving credit facility that was scheduled to mature on March 8, 2023. The revolving credit facility has an initial maturity of October 28, 2026 and provides two six-month extension options. The unsecured delayed-draw term loan facility has an initial maturity of October 28, 2025 and provides two one-year extension options. On December 19, 2022, the Company executed an amendment to its unsecured revolving credit facility, increasing commitments by $45.0 million for a total borrowing capacity of $260.0 million.
During the six months ended June 30, 2023, the Company repaid the $39.3 million construction loan on the Home2 Woodland Hills hotel property, and the maturing mortgage loans of $14.4 million on the Homewood Suites San Antonio hotel property, $19.7 million on the Residence Inn Tysons hotel property and $16.0 million on the Courtyard Houston hotel property. The Company utilized borrowings under its unsecured delayed-draw term loan to repay these loans and no prepayment penalties were incurred.
The Company estimates the fair value of its fixed rate debt by discounting the future cash flows of each instrument at estimated market rates. All of the Company's mortgage loans are fixed-rate. Rates take into consideration general market conditions, quality and estimated value of collateral and maturity of debt with similar credit terms and are classified within level 3 of the fair value hierarchy. The estimated fair value of the Company’s fixed rate debt as of June 30, 2023 and December 31, 2022 was $365.2 million and $412.7 million, respectively.
The Company estimates the fair value of its variable rate debt by taking into account general market conditions and the estimated credit terms it could obtain for debt with similar maturity and is classified within level 3 of the fair value hierarchy. As of June 30, 2023, the Company’s variable rate debt consisted of borrowings under its revolving credit facility and its unsecured delayed-draw term loan. The estimated fair value of the Company’s variable rate debt as of June 30, 2023 and December 31, 2022 was $90.0 million and $39.3 million, respectively.
The Company's mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of the lenders until a specified debt service coverage ratio or debt yield is reached. Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. As of June 30, 2023, four of our mortgage debt lenders have enforced cash trap provisions resulting in $5.6 million of restricted cash. The Company does not expect that such cash traps will affect its ability to satisfy its short-term liquidity requirements.
Future scheduled principal payments of debt obligations as of June 30, 2023, for the current year and each of the next five calendar years and thereafter are as follows (in thousands):
Amount
2023 (remaining six months)$63,741 
2024297,003 
2025105,961 
2026— 
2027— 
Thereafter— 
Total debt before unamortized debt issue costs$466,705 
Unamortized term loan and mortgage debt issue costs(846)
Total debt outstanding$465,859 
Accounting for Derivative Instruments
The Company had interest rate cap agreements to hedge against interest rate fluctuations related to the construction loan for the Home2 Woodland Hills hotel. The Company recorded its derivative instruments on the balance sheet at their estimated fair values. Changes in the fair value of the derivatives are recorded each period in current earnings or in other comprehensive income, depending on whether a derivative is designated as part of a hedging relationship and, if it is, depending on the type of hedging relationship. The Company's interest rate caps were not designated as a hedge but to eliminate the incremental cost to the Company if the one-month LIBOR were to exceed 3.5%. Accordingly, the interest rate caps were recorded on the balance sheet under prepaid expenses and other assets at the estimated fair value and realized and unrealized changes in the fair value are reported in the consolidated statement of operations. During the six months ended June 30, 2023, the Company terminated its interest rate caps related to the construction loan when the loan was repaid.