Debt

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



					Outstanding Borrowings at
	Number of Assets Encumbered	Interest Rate	Maturity Date		September 30, 2018			December 31, 2017
Senior secured notes (1)(2)(3)	9	5.63%	—		$	—		$	552,669
Senior unsecured notes (1)(2)(4)	—	6.00%	June 2025		506,503			510,047
PNC Bank/Wells Fargo (5)	3	4.95%	October 2022		92,322			120,893
Prudential (6)	1	4.94%	October 2022		29,758			30,323
Scotiabank (1) (7)	1	LIBOR + 3.00%	November 2018	(8)	85,073			85,404
	14				713,656			1,299,336
Deferred financing costs, net					(24		)	(231		)
Debt, net					$	713,632		$	1,299,105


(1)	Requires payments of interest only through maturity.


(2)	The senior secured notes include $28.7 million at December 31, 2017, and the senior unsecured notes include $31.5 million and $35.1 million at September 30, 2018 and December 31, 2017, respectively, related to fair value adjustments that RLJ pushed down to the Company's consolidated financial statements as a result of the Mergers.

(3)

On March 9, 2018, the Company completed the early redemption of the senior secured notes in full for an aggregate amount of approximately $539.0 million, which included the redemption price of 102.813% for the outstanding principal amount. The Company recognized a gain of approximately $12.9 million on the early redemption, which is included in gain (loss) on extinguishment of indebtedness, net in the accompanying consolidated statements of operations and comprehensive income (loss).


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


(5)	Includes $2.0 million and $3.0 million at September 30, 2018 and December 31, 2017, 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.


(6)	Includes $0.6 million and $0.7 million at September 30, 2018 and December 31, 2017, 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.


(7)	Includes $0.1 million and $0.4 million at September 30, 2018 and December 31, 2017, 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.


(8)	On November 5, 2018, RLJ LP paid off the Scotiabank mortgage loan in full. In connection with the mortgage loan payoff, the Company's consolidated joint venture entered into an $85.0 million related party loan with RLJ LP at an interest rate of LIBOR + 3.00% that has a maturity date of November 9, 2023.

The senior unsecured notes and the senior secured notes (collectively, the "Senior Notes"), and certain mortgage agreements are subject to customary financial covenants. As of September 30, 2018 and December 31, 2017, the Company was in compliance with all financial covenants.

Interest Expense

During the three and nine months ended September 30, 2018, the Company recognized $8.5 million and $30.2 million of interest expense, respectively.

During the Successor period of September 1, 2017 through September 30, 2017, the Company recognized $4.8 million of interest expense. During the Predecessor period of July 1, 2017 through August 31, 2017, the Company recognized $12.9 million of interest expense, which is net of capitalized interest of $0.3 million.

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.