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Indebtedness, net
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Indebtedness, net Indebtedness, net
Indebtedness, net consisted of the following (dollars in thousands):
Indebtedness
Collateral
Current Maturity
Final
Maturity (15)
Interest Rate
September 30, 2024December 31, 2023
Mortgage loan (3)
Cameo Beverly Hills August 2024August 2024
SOFR (1) + 3.66%
$— $30,000 
Mortgage loan (4)
Hilton La Jolla Torrey Pines
August 2024
August 20249.00%— 66,600 
Mortgage loan (5)
The Ritz-Carlton Lake Tahoe
January 2025
January 2026
SOFR (1) + 3.60%
53,413 53,413 
Mortgage loan (6)
Park Hyatt Beaver Creek Resort & Spa
February 2025
February 2027
SOFR (1) + 2.86%
70,500 70,500 
Mortgage loan (7)
The Notary Hotel
June 2025
June 2025
SOFR (1) + 2.66%
293,180 293,180 
The Clancy
Sofitel Chicago Magnificent Mile
Marriott Seattle Waterfront
Mortgage loan (8)(9)
The Ritz-Carlton St. Thomas
August 2025
August 2026
SOFR (1) + 4.35%
— 42,500 
Mortgage loan (9)(10)
Pier House Resort & Spa
September 2025
September 2026
SOFR (1) + 3.60%
— 80,000 
Mortgage loan (11)
The Ritz-Carlton Reserve Dorado Beach
March 2026March 2026
SOFR (1) + 4.75%
62,000 — 
Convertible Senior NotesEquityJune 2026June 20264.50%86,250 86,250 
BAML Credit Facility (9)(12)
Bardessono Hotel & Spa
July 2026July 2027
Base Rate (2) +1.25% to 2.00% or
SOFR (1) + 2.35% to 3.10%
— 200,000 
Hotel Yountville
The Ritz-Carlton Sarasota
Mortgage loan (9)
Bardessono Hotel & Spa
August 2026August 2029
SOFR (1) + 3.24%
407,000 — 
Hotel Yountville
The Ritz-Carlton Sarasota
Pier House Resort & Spa
The Ritz-Carlton St. Thomas
Mortgage loan (13)
Four Seasons Resort ScottsdaleDecember 2026December 2028
SOFR (1) + 3.75%
140,000 140,000 
Mortgage loan (14)
Capital HiltonDecember 2026December 2028
SOFR (1) + 3.75%
110,600 110,600 
1,222,943 1,173,043 
Capitalized default interest and late charges, net
— 120 
Deferred loan costs, net(13,831)(9,135)
Premiums/(discounts), net(1,099)(1,584)
Indebtedness, net$1,208,013 $1,162,444 
__________________
(1)SOFR rates were 4.85% and 5.35% at September 30, 2024 and December 31, 2023, respectively.
(2)Base Rate, as defined in the secured credit facility agreement, is the greater of (i) the prime rate set by Bank of America, (ii) federal funds rate + 0.50%, (iii) Term SOFR + 1.00%, or (iv) 1.00%.
(3)This mortgage loan had a SOFR floor of 1.50%. On April 9, 2024, we repaid this mortgage loan.
(4)On February 5, 2024, we amended this mortgage loan. Terms of the amendment included extending the maturity date by six months from February 2024 to August 2024, and converting the interest rate from a variable rate of SOFR + 1.70% to a fixed rate of 9.00%. This mortgage loan was secured by the Hilton La Jolla Torrey Pines. On July 17, 2024, we sold this property for $165.0 million and repaid the mortgage loan.
(5)This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.
(6)This mortgage loan has three one-year extension options, subject to satisfaction of certain conditions, of which the first was exercised February 2024.
(7)This mortgage loan has five one-year extension options, subject to satisfaction of certain conditions, of which the fifth was exercised in June 2024.
(8)On January 29, 2024, we amended this mortgage loan. Terms of the amendment included extending the current maturity date one year to August 2025, and the variable rate increased from SOFR + 4.04% to SOFR 4.35%. This amended mortgage loan has one one-year extension option, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 4.00%.
(9)On August 7, 2024, we refinanced this mortgage loan and credit facility into a new $407.0 million mortgage loan. The new mortgage loan is interest only and bears interest at a rate of SOFR + 3.24%, has a two-year initial term, and has three one-year extension options, subject to satisfaction of certain conditions. Braemar holds a tranche of Commercial Mortgage-Backed Securities (“CMBS”) that has a par value of $42.2 million and a rate of SOFR + 5.20%.
(10)On January 3, 2024, we amended this mortgage loan. Terms of the amendment included extending the current maturity date one year to September 2025, and the variable rate increased from SOFR + 1.95% to SOFR + 3.60%. This mortgage loan has one one-year extension option, subject to satisfaction of certain conditions.
(11)On March 7, 2024, we entered into a new $62.0 million mortgage loan. The new mortgage loan is interest only and bears interest at a rate of SOFR + 4.75%.
(12)This secured credit facility has one one-year extension option, subject to satisfaction of certain conditions.
(13)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 1.00%.
(14)This mortgage loan has two one-year extension options, subject to satisfaction of certain conditions. This mortgage loan has a SOFR floor of 2.00%.
(15)The final maturity date assumes all available extension options will be exercised.
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 year ended December 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.
On July 17, 2024, the Company sold the Hilton La Jolla Torrey Pines for $165 million in cash, subject to customary pro-rations and adjustments. Additionally, the Company repaid the $66.6 million mortgage loan secured by the hotel property.
On August 7, 2024, the Company closed on a refinancing involving five hotels. The new mortgage loan totals $407 million and has a two-year initial term with three one-year extension options, subject to the satisfaction of certain conditions, taking the final maturity to 2029. The loan is interest only and provides for a floating interest rate of SOFR + 3.24%. The loan is secured by five hotels: Pier House Resort & Spa, Bardessono Hotel & Spa, Hotel Yountville, The Ritz-Carlton Sarasota, and The Ritz-Carlton St. Thomas. The new loan refinanced the $80.0 million loan secured by the Pier House Resort & Spa which had an interest rate of SOFR + 3.60% and had a final maturity date in September 2026, the $42.5 million loan secured by The Ritz-Carlton St. Thomas which had an interest rate of SOFR + 4.35% and had a final maturity date in August 2026, and the $200.0 million secured credit facility secured by The Ritz-Carlton Sarasota, Hotel Yountville, and Bardessono Hotel & Spa which had an interest rate of SOFR + 3.10% and had a final maturity date in July 2027.
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. For the three and nine months ended September 30, 2024, the Company recorded coupon interest expense of $970,000 and $2.9 million, respectively. For the three and nine months ended September 30, 2023, the Company recorded coupon interest expense of $970,000 and $2.9 million, respectively.
For the three and nine months ended September 30, 2024, the Company recorded discount amortization of $157,000 and $463,000, respectively, related to the initial purchase discount, with the remaining discount balance to be amortized through
June 2026. For the three and nine months ended September 30, 2023, the Company recorded discount amortization of $148,000 and $438,000, respectively.
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. As of September 30, 2024, the conversion rate is 182.1014. 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 September 30, 2024, we were in compliance with all covenants.