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Indebtedness, net
 3 Months Ended
Mar. 31, 2023
Debt Disclosure [Abstract]  
Indebtedness, net Indebtedness, net
Indebtedness, net consisted of the following (dollars in thousands):
IndebtednessCollateralCurrent Maturity
Final
Maturity (11)
Interest RateMarch 31, 2023December 31, 2022
Mortgage loan (3)
The Ritz-Carlton SarasotaApril 2023April 2023
LIBOR (1) + 2.65%
$98,250 $98,500 
Mortgage loan (4)
Hotel YountvilleMay 2023May 2023
LIBOR (1) + 2.55%
51,000 51,000 
Mortgage loan (5)
The Notary HotelJune 2023June 2025
LIBOR (1) + 2.16%
435,000 435,000 
The Clancy
Sofitel Chicago Magnificent Mile
Marriott Seattle Waterfront
Mortgage loanBardessono Hotel and SpaAugust 2023August 2023
SOFR (2) + 2.65%
40,000 40,000 
Mortgage loan (6)
The Ritz-Carlton St. ThomasAugust 2023August 2024
LIBOR (1) + 3.95%
42,500 42,500 
Mortgage loan The Ritz-Carlton Lake TahoeJanuary 2024January 2024
SOFR (2) + 2.20%
54,000 54,000 
Mortgage loan
Capital HiltonFebruary 2024February 2024
LIBOR (1) + 1.70%
195,000 195,000 
Hilton La Jolla Torrey Pines
Mortgage loan (7)
Park Hyatt Beaver Creek Resort & SpaFebruary 2024February 2027
SOFR (2) + 2.86%
70,500 70,500 
Mortgage loan (8)
The Ritz-Carlton Reserve Dorado BeachMarch 2024March 2026
LIBOR (1) + 6.00%
— 54,000 
Mortgage loan (9)
Mr. C Beverly Hills HotelAugust 2024August 2024
LIBOR (1) + 3.60%
30,000 30,000 
Mortgage loanPier House Resort & SpaSeptember 2024September 2024
SOFR (2) + 1.95%
80,000 80,000 
Mortgage loan (10)
Four Seasons Resort ScottsdaleDecember 2025December 2027
SOFR (2) + 3.75%
100,000 100,000 
Convertible Senior NotesEquityJune 2026June 20264.50%86,250 86,250 
1,282,500 1,336,750 
Capitalized default interest and late charges, net1,465 1,934 
Deferred loan costs, net(4,266)(5,054)
Premiums/(discounts), net(2,057)500 
Indebtedness, net$1,277,642 $1,334,130 
__________________
(1)LIBOR rates were 4.86% and 4.39% at March 31, 2023 and December 31, 2022, respectively.
(2)SOFR rates were 4.80% and 4.36% at March 31, 2023 and December 31, 2022, respectively.
(3)On April 4, 2023, we amended this mortgage loan. Terms of the amendment replaced the variable interest rate of LIBOR +2.65% with SOFR+2.75%, extended the current maturity date to October 2023, and added one six-month extension option, subject to satisfaction of certain conditions.
(4)On April 18, 2023, we amended this mortgage loan. Terms of the amendment replaced the variable interest rate of LIBOR +2.55% with SOFR+2.65%, extended the current maturity date to November 2023, and added one six-month extension option, subject to satisfaction of certain conditions.
(5)This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the third was exercised in June 2022.
(6)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in August 2022. This mortgage loan has a LIBOR floor of 1.00%.
(7)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions.
(8)On January 18, 2023, we repaid this mortgage loan.
(9)This mortgage loan has a LIBOR floor of 1.50%.
(10)This mortgage loan has a SOFR floor of 1.00%.
(11)The final maturity date assumes all available extension options will be exercised.
During the second and third quarters 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. 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.
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 loans using the effective interest method. The amount of principal that was amortized was approximately $468,000 and $523,000, respectively, for the three months ended March 31, 2023 and 2022.
On January 18, 2023, the Company repaid its $54.0 million mortgage loan secured by The Ritz-Carlton Reserve Dorado Beach, which resulted in a gain on extinguishment of debt of $2.3 million for the three months ended March 31, 2023. The gain
was primarily attributable to the premium that was recorded upon the assumption of the mortgage loan when the hotel was acquired.
Convertible Senior Notes
In May 2021, the Company issued $86.25 million aggregate principal amount of 4.50% Convertible Senior Notes due June 2026 (the “Convertible Senior Notes”). The net proceeds from this offering of the Convertible Senior Notes were approximately $82.8 million after deducting the underwriting fees and other expenses paid by the Company.
The Convertible Senior Notes are governed by an indenture between the Company and U.S. Bank National Association, as trustee. The Convertible Senior Notes bear interest at a rate of 4.50% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2021. The Convertible Senior Notes will mature on June 1, 2026. The Company recorded coupon interest expense of $970,000 and $970,000 for the three months ended March 31, 2023 and 2022, respectively.
The Company recorded discount amortization of $144,000 and $132,000 related to the initial purchase discount for the three months ended March 31, 2023 and 2022, with the remaining discount balance to be amortized through June 2026.
The Convertible Senior Notes are convertible at any time prior to the close of business on the business day immediately preceding the maturity date for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the election of the Company, based on an initial conversion rate of 157.7909 shares of the Company’s common stock per $1,000 principal amount of notes (equivalent to a conversion price of approximately $6.34 per share of common stock), subject to adjustment of the conversion rate under certain circumstances. In addition, following the occurrence of certain corporate events, if the Company provides notice of redemption or if it exercises its option to convert the Convertible Senior Notes, the Company will, in certain circumstances, increase the conversion rate for a holder that converts its Convertible Senior Notes in connection with such corporate event, such notice of redemption, or such issuer conversion option, as the case may be.
The Company may redeem the Convertible Senior Notes at the Company’s option, in whole or in part, on any business day on or after the date of issuance if the last reported sale price per share of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides a notice of redemption at a redemption price equal to 100% of the principal amount of the Convertible Senior Notes to be redeemed subject to certain adjustments, plus accrued and unpaid interest to, but excluding, the redemption date.
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. As of March 31, 2023, we were in compliance with all covenants.