Debt

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



				Outstanding Borrowings at
				Successor			Predecessor
	Number of Assets Encumbered	Interest Rate at December 31, 2017	Maturity Date	December 31, 2017			December 31, 2016
Senior secured notes (1)(2)(3)	9	5.63%	March 2023	$	552,669		$	525,000
Senior unsecured notes (1)(2)(4)	—	6.00%	June 2025	510,047			475,000
PNC Bank/Wells Fargo (5)	4	4.95%	October 2022	120,893			120,109
Prudential (6)	1	4.94%	October 2022	30,323			30,184
Scotiabank (1) (7)	1	LIBOR + 3.00%	November 2018	85,404			85,000
Line of credit (8)	7	LIBOR + 2.75%	June 2019	—			119,000
	22			1,299,336			1,354,293
Deferred financing costs, net				(231		)	(15,967		)
Debt, net				$	1,299,105		$	1,338,326


(1)	Requires payments of interest only through maturity.


(2)	Includes $28.7 million and $35.1 million at December 31, 2017 related to fair value adjustments on the senior secured notes and the senior unsecured notes, respectively, that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(3)

On February 27, 2018, RLJ announced that it will early redeem the senior secured notes in full on March 9, 2018 (the "Redemption Date"). In accordance with the terms and conditions set forth in the indenture governing the senior secured notes, the aggregate amount payable upon redemption will be approximately $539.4 million, which includes the redemption price of 102.813% for the outstanding principal amount plus accrued and unpaid interest thereon through, but not including the Redemption Date.


(4)	The Company has the option to redeem the senior unsecured notes beginning June 1, 2020 at a premium of 103.0%.


(5)	Includes $3.0 million at December 31, 2017 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.


(6)	Includes $0.7 million at December 31, 2017 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.


(7)	Includes $0.4 million at December 31, 2017 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.


(8)	At December 31, 2016, there was $281.0 million of borrowing capacity on the line of credit. The line of credit was paid down and terminated in connection with the Mergers.

The senior unsecured notes and the senior secured notes (collectively, the "Senior Notes") contain certain financial covenants relating to the Company's total leverage ratio, secured leverage ratio and interest coverage ratio. If an event of default exists, the Company is not permitted to (i) incur additional indebtedness, except to refinance maturing debt with replacement debt, as defined under our indentures; (ii) pay dividends in excess of the minimum distributions required to qualify as a REIT; (iii) repurchase capital stock; or (iv) merge. As of December 31, 2017 and 2016, the Company was in compliance with all financial covenants.

Certain mortgage agreements are subject to customary financial covenants. The Company was in compliance with all financial covenants at December 31, 2017 and 2016.

Interest Expense

During the Successor period of September 1, 2017 through December 31, 2017, the Company recognized $19.3 million of interest expense. During the Predecessor period of January 1, 2017 through August 31, 2017, the Company recognized $51.7 million of interest expense, which is net of capitalized interest of $1.1 million.

During the Predecessor years ended December 31, 2016 and 2015, the Company recognized $78.2 million of interest expense, which is net of capitalized interest of $1.0 million, and $79.1 million of interest expense, which is net of capitalized interest of $6.0 million, respectively.

Future Minimum Principal Payments

As of December 31, 2017, the future minimum principal payments on the debt were as follows (in thousands):



2018	$	87,726
2019	3,106
2020	3,245
2021	3,432
2022	134,919
Thereafter	999,010
Total (1)	$	1,231,438

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(1)	Excludes a total of $67.9 million related to fair value adjustments on debt.