Indebtedness, net

12 Months Ended

Dec. 31, 2020

Indebtedness, net consisted of the following (dollars in thousands):


				December 31, 2020				December 31, 2019
Indebtedness	Collateral	Maturity	Interest Rate	Debt Balance		Book Value of Collateral		Debt Balance		Book Value of Collateral
Secured revolving credit facility (3)	Equity	October 2022	Base Rate (2) + 1.25% to 2.50% or LIBOR (1) + 2.25% to 3.50%	$	—	$	—	$	—	$	—
Mortgage loan (4)	Park Hyatt Beaver Creek Resort & Spa	April 2021	LIBOR (1) + 2.75%	67,500		140,516		67,500		144,667
Mortgage loan (5)	The Notary Hotel	June 2021	LIBOR (1) + 2.16%	435,000		439,215		435,000		465,005
	The Clancy
	Sofitel Chicago Magnificent Mile
	Marriott Seattle Waterfront
Mortgage loan (6)	The Ritz-Carlton St. Thomas	August 2021	LIBOR (1) + 3.95%	42,500		130,216		42,500		134,796
Mortgage loan (7)	Hotel Yountville	May 2022	LIBOR (1) + 2.55%	51,000		87,795		51,000		90,088
Mortgage loan (7)	Bardessono Hotel and Spa	August 2022	LIBOR (1) + 2.55%	40,000		56,645		40,000		59,542
Term loan (3)	Equity	October 2022	Base Rate (2) + 1.25% to 2.50% or LIBOR (1) + 2.25% to 3.50%	61,495		—		—		—
Mortgage loan (7)	The Ritz-Carlton Sarasota	April 2023	LIBOR (1) + 2.65%	100,000		163,814		100,000		166,023
Mortgage loan (7)	The Ritz-Carlton Lake Tahoe	January 2024	LIBOR (1) + 2.10%	54,000		113,821		54,000		115,988
Mortgage loan (8)	Capital Hilton	February 2024	LIBOR (1) + 1.70%	197,229		203,918		195,000		215,163
	Hilton La Jolla Torrey Pines
Mortgage loan (7)	Pier House Resort & Spa	September 2024	LIBOR (1) + 1.85%	80,000		88,650		80,000		90,150
				1,128,724		1,424,590		1,065,000		1,481,422
Capitalized default interest and late charges				7,304		—		—		—
Deferred loan costs, net				(5,434)		—		(6,514)		—
Indebtedness, net				$	1,130,594	$	1,424,590	$	1,058,486	$	1,481,422

__________________

(1)LIBOR rates were 0.144% and 1.763% at December 31, 2020 and December 31, 2019, respectively.

(2)Base Rate, as defined in the secured term loan agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5%, or (iii) LIBOR + 1.0%.

(3)Effective June 8, 2020, we amended our secured revolving credit facility totaling $75 million, which was the total borrowing capacity. In conjunction with the amendment, we repaid $10.0 million of principal and converted the facility to a term loan with a principal balance of $65 million. The amended term loan is interest only until March 2021 and bears interest at a rate of Base Rate + 1.25% - 2.50% or LIBOR + 2.25% - 3.5%, with a LIBOR floor of 0.50%.

(4)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in April 2020.

(5)Effective June 9, 2020, we executed a FF&E accommodation agreement for this mortgage loan. Terms of the agreement included lender-held reserves were made available to fund property-level operating expenses and monthly FF&E escrow deposits were waived through January 2021. This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in June 2020.

(6)The interest rate spread on this mortgage loan changed from 4.95% as of December 31, 2019, to 3.95% as of March 31, 2020, based on an appraisal received in accordance with the August 5, 2019 loan amendment. This mortgage loan has a LIBOR floor of 1.00%. This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions.

(7)Effective May 1, 2020, we executed a forbearance agreement for this mortgage loan. Terms of the agreement included adding a LIBOR floor of 0.25%; deferral of interest payments for three months with the option to extend the interest payment deferral an additional three months, which was exercised in August 2020, with all deferred payments due at maturity; lender-held reserves were made available to fund property-level operating expenses; and monthly FF&E escrow deposits were waived through December 2020.

(8)Effective September 24, 2020, we executed a forbearance agreement for this mortgage loan. Terms of the agreement included deferral of interest payments for six months, lender-held reserves were made available to fund property-level operating expenses, and monthly FF&E escrow deposits were waived through December 2020. In conjunction with the forbearance agreement, deferred interest payments of $2.2 million were capitalized into the principal balance and are to be repaid in 12 monthly installments beginning January 2021.

On January 15, 2019, in connection with the acquisition of the 170-room Ritz-Carlton Lake Tahoe located in Truckee, California, the Company completed the financing of a $54.0 million mortgage loan. This mortgage loan provides for an interest rate of LIBOR + 2.10%. The mortgage loan is interest only and has a five year term.

On January 22, 2019, the Company refinanced its existing mortgage loan with an outstanding balance of approximately $186.8 million and a final maturity date in November 2021 with a new $195.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.70% and has a five-year term. The mortgage loan is secured by the same two hotels: the Capital Hilton and Hilton La Jolla Torrey Pines. These two hotels are held in a joint venture in which we have a 75% equity interest.

On August 5, 2019, the Company amended its mortgage loan with an outstanding balance of $42.0 million with a new $42.5 million mortgage loan that is interest only, originally bearing interest at a rate of LIBOR + 4.95% with a two-year initial term and three one-year extension options, subject to the satisfaction of certain conditions. The mortgage loan is secured by The Ritz-Carlton St. Thomas.

On September 30, 2019, the Company refinanced its mortgage loan with an outstanding balance of $70.0 million with a new $80.0 million mortgage loan that is interest only, bears interest at a rate of LIBOR + 1.85% and has a five-year term with no extension options. The mortgage loan is secured by the Pier House Resort & Spa.

On October 25, 2019, the Company entered into a new $75.0 million secured revolving credit facility which replaces the Company’s previous credit facility that was scheduled to mature on November 10, 2019. The new credit facility provides for a three-year revolving line of credit and bears interest at a range of 1.25% to 2.50% over Base Rate or 2.25% to 3.50% over LIBOR, depending on the leverage level of the Company. There are two, one-year extension options subject to the satisfaction of certain conditions. The new credit facility includes the opportunity to expand the borrowing capacity by up to $175.0 million to an aggregate size of $250.0 million. There was no amount outstanding on the Company’s previous credit facility as of December 31, 2019.

In April 2020, certain subsidiaries of the Company applied for and received loans from Key Bank, N.A. under the Payroll Protection Program (“PPP”), which was established under the CARES Act. All funds borrowed under the PPP totaling $34.3 million were returned on or before May 7, 2020.

On June 8, 2020, the Company entered into the First Amendment to the Second Amended and Restated Credit Agreement (the “Amendment”). The Amendment converted the $75 million Second Amended and Restated Credit Agreement, dated October 25, 2019 (the “Credit Facility”), which was a secured revolving credit facility, into a $65 million secured term loan. The Company had borrowed the full borrowing capacity of $75 million under the Credit Facility and repaid $10 million on June 8, 2020, in connection with the signing of the Amendment. Pursuant to the terms of the Amendment, borrowings will bear interest at a rate of LIBOR plus 3.50% or Base Rate plus 2.50% until June 30, 2021. After such date, the pricing will revert to the original terms of the Credit Facility. The Amendment also added principal amortization of $5 million per quarter commencing on March 31, 2021. The Amendment changes the terms of certain financial covenants that the Company was subject to under the Credit Facility. The Amendment has the same maturity date of October 25, 2022 but removes the two one-year extension options and also removes the Company’s ability to reborrow amounts that have been repaid.

On February 22, 2021, the Company entered into the Second Amendment to Second Amended and Restated Credit Agreement. The amendment provides an extension of the waiver on the majority of the covenants through the fourth quarter of 2021 and a reduced fixed charge coverage ratio covenant through the end of 2022. The first period in which covenants will be tested is for the fiscal quarter ending March 31, 2022. The amendment also allows the Company to utilize approximately $9.3 million of cash held in FF&E reserve accounts at certain properties for discretionary capital expenditures.

We are required to maintain certain financial ratios under our secured term loan. If we violate covenants in any debt 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. 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 the consolidated group. Beginning on April 1, 2020, we did not make at least one interest payment under nearly all of our loan agreements, which constituted an “Event of Default” as such term is defined under the applicable loan documents. Further, the Company triggered an “Event of Default,” as defined under the secured revolving credit facility agreement as a result of the Company being in default on mortgage and mezzanine loans with an aggregate principal amount in excess of $200 million. Pursuant to the terms of the applicable loan documents, such an Event of Default caused an automatic increase in the interest rate on our outstanding loan balance for the period such Event of Default remains outstanding. Following an Event of Default, our lenders can generally elect to accelerate all principal and accrued interest payments that remain outstanding under the applicable loan

agreement and foreclose on the applicable hotel properties that are security for such loans. Such Event of Default under the senior revolving credit facility agreement was eliminated by the First Amendment to Second Amended and Restated Credit Agreement, dated June 8, 2020, which provides that defaults under mortgage and mezzanine loans with an aggregate principal amount in excess of $200 million do not trigger a default under the senior revolving credit agreement unless such mortgage or mezzanine loans are also accelerated, and excluding from the $200 million threshold, any default and acceleration under those certain mortgage and mezzanine loans having an aggregate principal amount of $435 million and secured by the Marriott Seattle Waterfront, Sofitel Chicago Magnificent Mile, The Notary Hotel and The Clancy.

During the second and third quarter of 2020, we reached forbearance and other agreements with our lenders relating to loans secured by the Pier House Resort & Spa, The Ritz-Carlton Sarasota, The Ritz-Carlton Lake Tahoe, Hotel Yountville, Bardessono Hotel and Spa, Sofitel Chicago Magnificent Mile, The Notary Hotel, The Clancy, Marriott Seattle Waterfront, Capital Hilton and Hilton La Jolla Torrey Pines. As of December 31, 2020, no loans are in default. See note 16 for discussion of the loan modification agreement with Lismore Capital LLC (“Lismore”).

As of December 31, 2020, the Company determined that all of the forbearance and other agreements evaluated were considered troubled debt restructurings due to terms that allowed for deferred interest and the forgiveness of default interest and late charges. No gain or loss was recognized during the year ended December 31, 2020, as the carrying amount of the original loans was not greater than the undiscounted cash flows of the modified loans. Additionally, as a result of the troubled debt restructurings all accrued default interest and late charges were capitalized into the applicable loan balances and will be amortized over the remaining term of the loan using the effective interest method. The amount of default interest and late charges capitalized into indebtedness as of December 31, 2020, was $9.9 million. The amount of principal amortization during the year ended December 31, 2020 was $2.6 million.

Maturities and scheduled amortization of indebtedness as of December 31, 2020, assuming no extension of existing extension options for each of the following five years and thereafter are as follows (in thousands):


2021	$	567,229
2022	132,495
2023	100,000
2024	329,000
2025	—
Thereafter	—
Total	$	1,128,724