Debt

Consolidated debt consisted of the following (dollars in thousands):



	Encumbered Hotels		Interest Rate (%)		Maturity Date	September 30, 2011		December 31, 2010
Line of credit^(a)	11 hotels		L + 4.50		August 2014^(b)	$	—	$	—
Mortgage debt
Mortgage debt	9 hotels		L + 0.93	^(c)	November 2011^(d)	178,178		250,000
Mortgage debt	8 hotels		L + 5.10	^(e)	April 2015	203,192		212,000
Mortgage debt	7 hotels		9.02		April 2014	109,811		113,220
Mortgage debt	5 hotels	^(f)	6.66		June - August 2014	67,848		69,206
Mortgage debt	1 hotel		5.81		July 2016	10,990		11,321
Senior notes
Senior secured notes	6 hotels		6.75		June 2019	525,000		—
Senior secured notes^(g)	13 hotels	^(h)	10.00		October 2014	457,556		582,821
Retired debt	—		—		—	—		309,741
Total	60 hotels					$	1,552,575	$	1,548,309


(a)	We currently have full availability under our $225 million line of credit.


(b)	The line of credit can be extended for one year (to 2015), subject to satisfying certain conditions.


(c)	We purchased an interest rate cap ($250 million notional amount) that caps LIBOR at 7.8% and expires November 2011.


(d)	In October 2011, we modified this loan and extended maturity up to two years. In conjunction with the modification, we repaid $20 million of the principal balance, reducing the outstanding balance to $158 million. The new interest rate is L + 2.20%.


(e)	LIBOR (for this loan) is subject to a 3% floor. We purchased an interest rate cap ($212 million notional amount) that caps LIBOR at 5.0% and expires May 2012.


(f)	The hotels securing this debt are subject to separate loan agreements and are not cross-collateralized.


(g)	These notes have $492 million in aggregate principal outstanding ($144 million in aggregate principal amount was redeemed in June 2011) and were initially sold at a discount that provided an effective yield of 12.875% before transaction costs.


(h)	One hotel was sold after September 30, 2011.


6.	Debt — (continued)

In March 2011, we established a $225 million secured line of credit with a group of seven banks. At the same time, we repaid a $198.3 million secured loan and a $28.8 million secured loan with a combination of $52.1 million of cash on hand and funds drawn under our new line of credit (all of which has subsequently been repaid). The repaid loans would have matured in 2013 and 2012 (including extensions), respectively, and were secured by mortgages on 11 hotels. Those same hotels secure repayment of amounts outstanding under the line of credit. The credit facility bears interest at LIBOR, plus 4.5%, with no LIBOR floor.

In May 2011, we issued $525.0 million in aggregate principal amount of 6.75% senior secured notes due 2019. Net proceeds after initial purchasers' expenses were approximately $511 million, a portion of which was used to purchase Royalton and Morgans for $140.0 million, with the remainder available for general corporate purposes.

In May 2011, we repaid loans aggregating $45.3 million secured by two hotels when we sold the hotels.

In June 2011, we repaid (at maturity) a $7.3 million loan that was secured by one hotel.

In June 2011, we obtained a $24.0 million loan to refinance a loan secured by one hotel. The old loan balance was $27.8 million and provided that, upon refinancing, $3.8 million of the loan would be forgiven. We recognized a $3.7 million net gain from extinguishment of debt in connection with the refinancing. In July 2011, we repaid this loan in full, and recognized a $187,000 loss from the extinguishment.

In June 2011, we repaid the remaining outstanding $46.4 million of our 9% senior notes when they matured.

In June 2011, we redeemed $144 million in aggregate principal amount of our 10% senior notes using $158 million of net proceeds of our recent equity offering. Under the terms of the indenture governing the redeemed notes, the redemption price was 110% of the principal amount of the redeemed notes, together with accrued and unpaid interest thereon to the redemption date. We recognized a $27.4 million debt extinguishment charge related to the prepayment premium and the write-off of a pro rata portion of the related debt discount and deferred loan costs.

In July 2011, we repaid loans aggregating $35.2 million secured by two hotels when we sold the hotels.

We reported $33.6 million and $34.5 million of interest expense for the three months ended September 30, 2011 and 2010, respectively, which is net of: (i) interest income of $59,000 and $104,000 and (ii) capitalized interest of $403,000 and $187,000, respectively. We reported $101.9 million and $105.0 million of interest expense for the nine months ended September 30, 2011 and 2010, respectively, which is net of: (i) interest income of $153,000 and $304,000 and (ii) capitalized interest of $913,000 and $471,000, respectively.