Debt

12 Months Ended

Dec. 31, 2020

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


					Outstanding Borrowings at
	Number of Assets Encumbered	Interest Rate	Maturity Date		December 31, 2020		December 31, 2019

Senior notes (1)(2)(3)	—	6.00%	June 2025		$	495,759	$	500,484
Mortgage loan (4)	3	4.95%	October 2022		86,775		89,299
Mortgage loan (5)	1	4.94%	October 2022		27,972		28,785
Mortgage loan (1)(6)	3	1.74%	April 2024	(7)	96,000		96,000
	7				706,506		714,568
Deferred financing costs, net					(643)		(841)
Debt, net					$	705,863	$	713,727

(1)Requires payments of interest only through maturity.

(2)The Senior Notes (as defined below) include $20.9 million and $25.6 million at December 31, 2020 and 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 $0.9 million and $1.4 million at December 31, 2020 and 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 December 31, 2020 and 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.

If an event of default under the indenture governing the 6.000% Senior Notes due 2025 (the "Senior Notes") exists, the Company is not permitted to (i) incur additional indebtedness, except to refinance maturing debt with replacement debt, as defined under the Company's indentures; (ii) pay dividends in excess of the minimum distributions required to qualify as a REIT; (iii) repurchase capital stock; or (iv) merge. 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. Failure to meet these incurrence covenant thresholds does not, in and of itself, constitute an event of default under the Senior Notes indenture. As of December 31, 2020, the Company was in compliance with all covenants except the interest coverage ratio, which, as a result, currently prohibits the Company from incurring additional debt until such ratio becomes compliant. As of December 31, 2019, the Company was in compliance with all financial covenants.

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. At December 31, 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 December 31, 2020 and 2019.

Interest Expense

During the years ended December 31, 2020, 2019 and 2018, the Company recognized $31.2 million, $31.9 million and $37.9 million of interest expense, respectively.

Future Minimum Principal Payments

As of December 31, 2020, the future minimum principal payments were as follows (in thousands):


2021	$	2,603
2022	110,997
2023	—
2024	96,000
2025	474,888

Total (1)	$	684,488

(1)Excludes a total of $22.0 million related to fair value adjustments on debt.