Debt

9 Months Ended

Sep. 30, 2020

The Company's debt consisted of the following (in thousands):


					Outstanding Borrowings at
	Number of Assets Encumbered	Interest Rate	Maturity Date		September 30, 2020				December 31, 2019
Senior Notes (1)(2)(3)	—	6.00%	June 2025		$	496,940	$	500,484
Mortgage loan (4)	3	4.95%	October 2022		87,410		89,299
Mortgage loan (5)	1	4.94%	October 2022		28,177		28,785
Mortgage loan (1)(6)	3	1.75%	April 2024	(7)	96,000		96,000
	7				708,527		714,568
Deferred financing costs, net					(693)		(841)
Debt, net					$	707,834	$	713,727

(1)Requires payments of interest only through maturity.

(2)The Senior Notes (as defined below) include $22.1 million and $25.6 million at September 30, 2020 and December 31, 2019, respectively, related to fair value adjustments that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(3)The Company has the option to redeem the Senior Notes at a price of 103.0% of face value.

(4)Includes $1.0 million and $1.4 million at September 30, 2020 and December 31, 2019, respectively, related to fair value adjustments on the mortgage loans that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(5)Includes $0.3 million and $0.4 million at September 30, 2020 and December 31, 2019, respectively, related to a fair value adjustment on the mortgage loan that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(6)The hotels encumbered by the mortgage loan are cross-collateralized.

(7)The mortgage loan provides two one year extension options.

The 6.000% Senior Notes due 2025 (the "Senior Notes") are subject to a maximum unsecured leverage maintenance covenant, which is based on asset value that is calculated at historical cost. In addition, the Senior Notes are subject to various incurrence covenants that limit the ability of the Company to incur additional debt if these covenants are violated. As of September 30, 2020, the Company was in compliance with all maintenance and incurrence covenants associated with the Senior Notes.

Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. During the cash trap event, the lender or servicer of the mortgage loan controls cash outflows until the loan is covenant compliant. In addition, certain mortgage loans have other requirements including continued operation and maintenance of the hotel property. While operations at certain hotel properties securing the mortgage loans had been temporarily suspended, the business operations remained that of a hotel, not another form of business, and the hotel properties were maintained. At September 30, 2020, two mortgage loans failed to meet the DSCR threshold and were in cash trap events. The Company was in compliance with all other maintenance covenants associated with the other mortgage loan at September 30, 2020.

During the three and nine months ended September 30, 2020, the Company recognized $7.7 million and $23.5 million of interest expense, respectively. During three and nine months ended September 30, 2019, the Company recognized $8.2 million and $23.7 million of interest expense, respectively.