þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 86-1062192 | |
(State or other jurisdiction of incorporation or organization) | (IRS employer identification number) | |
14185 Dallas Parkway, Suite 1100 | ||
Dallas, Texas | 75254 | |
(Address of principal executive offices) | (Zip code) |
Large accelerated filer | þ | Accelerated filer | ¨ | |
Non-accelerated filer | ¨ | Smaller reporting company | ¨ |
Common Stock, $0.01 par value per share | 68,300,605 | |
(Class) | Outstanding at May 8, 2013 |
PART I. FINANCIAL INFORMATION | |
PART II. OTHER INFORMATION | |
March 31, 2013 | December 31, 2012 | ||||||
Assets | (Unaudited) | ||||||
Cash and cash equivalents | $ | 209,982 | $ | 185,935 | |||
Marketable securities | 27,769 | 23,620 | |||||
Total cash, cash equivalents and marketable securities | 237,751 | 209,555 | |||||
Investment in hotel properties, net | 2,857,538 | 2,872,304 | |||||
Restricted cash | 78,896 | 84,786 | |||||
Accounts receivable, net of allowance of $290 and $265, respectively | 34,627 | 35,116 | |||||
Inventories | 2,141 | 2,111 | |||||
Notes receivable, net of allowance of $8,237 and $8,333, respectively | 11,367 | 11,331 | |||||
Investment in unconsolidated joint ventures | 151,806 | 158,694 | |||||
Deferred costs, net | 16,073 | 17,194 | |||||
Prepaid expenses | 11,884 | 10,145 | |||||
Derivative assets, net | 237 | 6,391 | |||||
Other assets | 7,118 | 4,594 | |||||
Intangible asset, net | 2,698 | 2,721 | |||||
Due from affiliates | 1,884 | 1,168 | |||||
Due from third-party hotel managers | 57,670 | 48,619 | |||||
Total assets | $ | 3,471,690 | $ | 3,464,729 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Indebtedness | $ | 2,390,725 | $ | 2,339,410 | |||
Accounts payable and accrued expenses | 81,573 | 84,293 | |||||
Dividends payable | 19,250 | 18,258 | |||||
Unfavorable management contract liabilities | 10,553 | 11,165 | |||||
Due to related party, net | 1,373 | 3,725 | |||||
Due to third-party hotel managers | 2,058 | 1,410 | |||||
Liabilities associated with marketable securities | 3,511 | 1,641 | |||||
Other liabilities | 6,408 | 6,348 | |||||
Total liabilities | 2,515,451 | 2,466,250 | |||||
Redeemable noncontrolling interests in operating partnership | 196,468 | 151,179 | |||||
Equity: | |||||||
Preferred stock, $0.01 par value, 50,000,000 shares authorized: | |||||||
Series A Cumulative Preferred Stock, 1,657,206 shares issued and outstanding at March 31, 2013 and December 31, 2012 | 17 | 17 | |||||
Series D Cumulative Preferred Stock, 9,468,706 shares issued and outstanding at March 31, 2013 and December 31, 2012 | 95 | 95 | |||||
Series E Cumulative Preferred Stock, 4,630,000 shares issued and outstanding at March 31, 2013 and December 31, 2012 | 46 | 46 | |||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 124,896,765 shares issued, 68,332,627 and 68,150,617 shares outstanding at March 31, 2013 and December 31, 2012, respectively | 1,249 | 1,249 | |||||
Additional paid-in capital | 1,759,037 | 1,766,168 | |||||
Accumulated other comprehensive loss | (277 | ) | (282 | ) | |||
Accumulated deficit | (837,169 | ) | (770,467 | ) | |||
Treasury stock, at cost (56,564,138 shares and 56,746,148 shares at March 31, 2013 and December 31, 2012, respectively) | (164,389 | ) | (164,884 | ) | |||
Total shareholders’ equity of the Company | 758,609 | 831,942 | |||||
Noncontrolling interests in consolidated entities | 1,162 | 15,358 | |||||
Total equity | 759,771 | 847,300 | |||||
Total liabilities and equity | $ | 3,471,690 | $ | 3,464,729 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
REVENUE | (Unaudited) | ||||||
Rooms | $ | 183,469 | $ | 169,459 | |||
Food and beverage | 39,650 | 39,707 | |||||
Other | 8,716 | 7,814 | |||||
Total hotel revenue | 231,835 | 216,980 | |||||
Other | 107 | 75 | |||||
Total Revenue | 231,942 | 217,055 | |||||
EXPENSES | |||||||
Hotel operating expenses: | |||||||
Rooms | 42,156 | 38,601 | |||||
Food and beverage | 27,175 | 27,000 | |||||
Other expenses | 68,292 | 65,094 | |||||
Management fees | 9,893 | 8,990 | |||||
Total hotel operating expenses | 147,516 | 139,685 | |||||
Property taxes, insurance, and other | 12,248 | 11,709 | |||||
Depreciation and amortization | 32,480 | 33,656 | |||||
Impairment charges | (96 | ) | (92 | ) | |||
Corporate, general, and administrative | 14,516 | 10,247 | |||||
Total Operating Expenses | 206,664 | 195,205 | |||||
OPERATING INCOME | 25,278 | 21,850 | |||||
Equity in loss of unconsolidated joint ventures | (6,888 | ) | (10,304 | ) | |||
Interest income | 36 | 32 | |||||
Other income | 5,822 | 7,613 | |||||
Interest expense and amortization of loan costs | (35,380 | ) | (34,875 | ) | |||
Write-off of loan costs and exit fees | (1,971 | ) | — | ||||
Unrealized gain on marketable securities | 2,701 | 1,785 | |||||
Unrealized loss on derivatives | (7,149 | ) | (9,941 | ) | |||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (17,551 | ) | (23,840 | ) | |||
Income tax expense | (604 | ) | (879 | ) | |||
LOSS FROM CONTINUING OPERATIONS | (18,155 | ) | (24,719 | ) | |||
Income from discontinued operations | — | 166 | |||||
NET LOSS | (18,155 | ) | (24,553 | ) | |||
Loss from consolidated entities attributable to noncontrolling interests | 707 | 278 | |||||
Net loss attributable to redeemable noncontrolling interests in operating partnership | 2,762 | 3,057 | |||||
NET LOSS ATTRIBUTABLE TO THE COMPANY | (14,686 | ) | (21,218 | ) | |||
Preferred dividends | (8,490 | ) | (8,331 | ) | |||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (23,176 | ) | $ | (29,549 | ) | |
INCOME (LOSS) PER SHARE - BASIC AND DILUTED: | |||||||
Basic: | |||||||
Loss from continuing operations attributable to common shareholders | $ | (0.34 | ) | $ | (0.44 | ) | |
Income from discontinued operations attributable to common shareholders | — | — | |||||
Loss attributable to common shareholders | $ | (0.34 | ) | $ | (0.44 | ) | |
Weighted average common shares outstanding – basic | 67,682 | 67,152 | |||||
Diluted: | |||||||
Loss from continuing operations attributable to common shareholders | $ | (0.34 | ) | $ | (0.44 | ) | |
Income from discontinued operations attributable to common shareholders | — | — | |||||
Loss attributable to common shareholders | $ | (0.34 | ) | $ | (0.44 | ) | |
Weighted average common shares outstanding – diluted | 67,682 | 67,152 | |||||
Dividends declared per common share | $ | 0.12 | $ | 0.11 | |||
Amounts attributable to common shareholders: | |||||||
Loss from continuing operations | $ | (14,686 | ) | $ | (21,365 | ) | |
Income from discontinued operations | — | 147 | |||||
Preferred dividends | (8,490 | ) | (8,331 | ) | |||
Net loss attributable to common shareholders | $ | (23,176 | ) | $ | (29,549 | ) |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
(Unaudited) | |||||||
Net loss | $ | (18,155 | ) | $ | (24,553 | ) | |
Other comprehensive income, net of tax: | |||||||
Change in unrealized loss on derivatives | (2 | ) | (9 | ) | |||
Reclassification to interest expense | 8 | 12 | |||||
Total other comprehensive income | 6 | 3 | |||||
Comprehensive loss | (18,149 | ) | (24,550 | ) | |||
Less: Comprehensive loss attributable to noncontrolling interests in consolidated entities | 707 | 278 | |||||
Less: Comprehensive loss attributable to redeemable noncontrolling interests in operating partnership | 2,761 | 3,057 | |||||
Comprehensive loss attributable to the Company | $ | (14,681 | ) | $ | (21,215 | ) |
Preferred Stock | Additional Paid In Capital | Accumulated Other Comprehensive Loss | Noncontrolling Interests In Consolidated Entities | Noncontrolling Interests in Operating Partnership | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Series A | Series D | Series E | Common Stock | Accumulated Deficit | Treasury Stock | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amounts | Shares | Amounts | Shares | Amounts | Shares | Amounts | Shares | Amounts | Total | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance at January 1, 2013 | 1,657 | $ | 17 | 9,469 | $ | 95 | 4,630 | $ | 46 | 124,897 | $ | 1,249 | $ | 1,766,168 | $ | (770,467 | ) | $ | (282 | ) | (56,746 | ) | $ | (164,884 | ) | $ | 15,358 | $ | 847,300 | $ | 151,179 | |||||||||||||||||||||||||||
Equity-based compensation | — | — | — | — | — | — | — | — | 444 | — | — | — | — | — | 444 | 7,898 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted shares/units | — | — | — | — | — | — | — | — | (495 | ) | — | — | 182 | 495 | — | — | 62 | |||||||||||||||||||||||||||||||||||||||||
Issuances of preferred stock | — | — | — | — | — | — | — | — | 244 | — | — | — | — | — | 244 | — | ||||||||||||||||||||||||||||||||||||||||||
Dividends declared- common stock | — | — | — | — | — | — | — | — | — | (8,200 | ) | — | — | — | — | (8,200 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared- Preferred Stock- Series A | — | — | — | — | — | — | — | — | — | (886 | ) | — | — | — | — | (886 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared- Preferred Stock- Series D | — | — | — | — | — | — | — | — | — | (5,000 | ) | — | — | — | — | (5,000 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared – Preferred Stock- Series E | — | — | — | — | — | — | — | — | — | (2,604 | ) | — | — | — | — | (2,604 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Net unrealized loss on derivative instruments | — | — | — | — | — | — | — | — | — | — | (2 | ) | — | — | — | (2 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Reclassification to interest expense | — | — | — | — | — | — | — | — | — | — | 7 | — | — | — | 7 | 1 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | — | — | — | — | — | (13,489 | ) | (13,489 | ) | (2,560 | ) | |||||||||||||||||||||||||||||||||||||||
Redemption value adjustment | — | — | — | — | — | — | — | — | — | (35,326 | ) | — | — | — | — | (35,326 | ) | 35,326 | ||||||||||||||||||||||||||||||||||||||||
Unvested operating partnership units adjustment | — | — | — | — | — | — | — | — | (7,324 | ) | — | — | — | — | — | (7,324 | ) | 7,324 | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (14,686 | ) | — | — | — | (707 | ) | (15,393 | ) | (2,762 | ) | ||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2013 | 1,657 | $ | 17 | 9,469 | $ | 95 | 4,630 | $ | 46 | 124,897 | $ | 1,249 | $ | 1,759,037 | $ | (837,169 | ) | $ | (277 | ) | (56,564 | ) | $ | (164,389 | ) | $ | 1,162 | $ | 759,771 | $ | 196,468 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Cash Flows from Operating Activities | (Unaudited) | ||||||
Net loss | $ | (18,155 | ) | $ | (24,553 | ) | |
Adjustments to reconcile net loss to net cash flow provided by operating activities: | |||||||
Depreciation and amortization | 32,480 | 34,355 | |||||
Impairment charges | (96 | ) | (92 | ) | |||
Amortization of loan costs, write-off of loan costs, and exit fees | 3,903 | 1,212 | |||||
Equity in loss of unconsolidated joint ventures | 6,888 | 10,304 | |||||
Income from financing derivatives | (6,215 | ) | (7,969 | ) | |||
Gain on disposition of hotel properties | (24 | ) | — | ||||
Realized and unrealized gains on marketable securities | (2,202 | ) | (1,407 | ) | |||
Purchases of marketable securities | (10,605 | ) | (27,647 | ) | |||
Sales of marketable securities | 10,528 | 27,512 | |||||
Net settlement of trading derivatives | (961 | ) | (2,069 | ) | |||
Unrealized loss on derivatives | 7,149 | 9,941 | |||||
Equity-based compensation | 8,342 | 5,146 | |||||
Changes in operating assets and liabilities: | |||||||
Restricted cash | 5,890 | (12,170 | ) | ||||
Accounts receivable and inventories | (1,204 | ) | (11,442 | ) | |||
Prepaid expenses and other assets | (4,255 | ) | 179 | ||||
Accounts payable and accrued expenses | (498 | ) | 7,816 | ||||
Due to/from affiliates | (716 | ) | 960 | ||||
Due to/from related parties | (2,352 | ) | (1,650 | ) | |||
Due to/from third-party hotel managers | (8,403 | ) | 4,367 | ||||
Other liabilities | (505 | ) | (532 | ) | |||
Net cash provided by operating activities | 18,989 | 12,261 | |||||
Cash Flows from Investing Activities | |||||||
Proceeds from payments of notes receivable | 60 | 62 | |||||
Net proceeds from sales of hotel properties | 148 | — | |||||
Improvements and additions to hotel properties | (20,017 | ) | (23,253 | ) | |||
Net cash used in investing activities | (19,809 | ) | (23,191 | ) | |||
Cash Flows from Financing Activities | |||||||
Borrowings on indebtedness | 199,875 | — | |||||
Repayments of indebtedness and capital leases | (148,560 | ) | (6,193 | ) | |||
Payments of loan costs | (2,849 | ) | (210 | ) | |||
Payments of dividends | (18,258 | ) | (16,941 | ) | |||
Payments for derivatives | (36 | ) | — | ||||
Cash income from derivatives | 7,878 | 7,963 | |||||
Issuance of preferred stock | 244 | 8,724 | |||||
Contributions from noncontrolling interests in consolidated entities | — | 300 | |||||
Distributions to noncontrolling interests in consolidated entities | (13,489 | ) | — | ||||
Other | 62 | 64 | |||||
Net cash provided by (used in) financing activities | 24,867 | (6,293 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 24,047 | (17,223 | ) | ||||
Cash and cash equivalents at beginning of period | 185,935 | 167,609 | |||||
Cash and cash equivalents at end of period | $ | 209,982 | $ | 150,386 | |||
Supplemental Cash Flow Information | |||||||
Interest paid | $ | 31,100 | $ | 33,998 | |||
Income taxes paid (refunded) | $ | 99 | $ | (857 | ) | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activity | |||||||
Accrued interest added to principal of indebtedness | $ | — | $ | 1,180 |
1. | Organization and Description of Business |
• | 94 consolidated hotel properties ("legacy hotel properties"), including 90 directly owned and four owned through majority-owned investments in consolidated entities, which represent 20,034 total rooms (or 19,773 net rooms excluding those attributable to our partners), |
• | 28 hotel properties owned through a 71.74% common equity interest and a 50.0% preferred equity interest in an unconsolidated joint venture (“PIM Highland JV”), which represent 8,084 total rooms (or 5,800 net rooms excluding those attributable to our joint venture partner), |
• | 93 hotel condominium units at WorldQuest Resort in Orlando, Florida, and |
• | a mezzanine loan with a carrying value of $3.3 million and a note with the city of Philadelphia, Pennsylvania of $8.1 million. |
2. | Significant Accounting Policies |
• | Historical seasonality patterns at some of our properties cause fluctuations in our overall operating results. Consequently, operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. |
• | Marriott International, Inc. (“Marriott”) manages 40 of our legacy hotel properties. For these Marriott-managed hotels, the 2012 fiscal year reflects twelve weeks of operations in each of the first three quarters of the year and 16 weeks for the fourth quarter of the year. Beginning in 2013, the fiscal quarters end on March 31, June 30, September 30 and December 31. Therefore, in any given quarterly period, period-over-period results will have different ending dates. For Marriott-managed hotels, the first quarters of 2013 and 2012 began on December 29, 2012 and December 31, 2011, respectively and ended on March 31, 2013 and March 23, 2012, respectively. As a result, the quarter ended March 31, 2013 contained 93 days while the quarter ended March 23, 2012 contained 84 days. Prior results have not been adjusted. |
a) | the effective portion of changes in fair value is initially reported as a component of “Accumulated Other Comprehensive Income (Loss)” (“OCI”) in the equity section of the consolidated balance sheets and reclassified to interest expense in the consolidated statements of operations in the period during which the hedged transaction affects earnings, and |
b) | the ineffective portion of changes in fair value is recognized directly in earnings as “Unrealized loss on derivatives” in the consolidated statements of operations. |
3. | Summary of Significant Transactions |
4. | Investments in Hotel Properties, net |
March 31, 2013 | December 31, 2012 | ||||||
Land | $ | 483,242 | $ | 483,242 | |||
Buildings and improvements | 2,792,515 | 2,779,589 | |||||
Furniture, fixtures, and equipment | 232,535 | 224,907 | |||||
Construction in progress | 7,701 | 10,499 | |||||
Condominium properties | 12,556 | 12,690 | |||||
Total cost | 3,528,549 | 3,510,927 | |||||
Accumulated depreciation | (671,011 | ) | (638,623 | ) | |||
Investments in hotel properties, net | $ | 2,857,538 | $ | 2,872,304 |
5. | Notes Receivable |
6. | Investment in Unconsolidated Joint Ventures |
PIM Highland JV | |||||||
Condensed Consolidated Balance Sheets | |||||||
March 31, 2013 | December 31, 2012 | ||||||
Total Assets | $ | 1,408,012 | $ | 1,417,204 | |||
Total Liabilities | 1,175,993 | 1,176,298 | |||||
Members' equity | 232,019 | 240,906 | |||||
Total liabilities and members' equity | $ | 1,408,012 | $ | 1,417,204 | |||
Our ownership interest in PIM Highland JV | $ | 151,806 | $ | 158,694 |
PIM Highland JV | |||||||
Condensed Consolidated Statements of Operations | |||||||
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Total revenue | $ | 102,273 | $ | 93,252 | |||
Total expenses | (94,760 | ) | (90,067 | ) | |||
Operating income | 7,513 | 3,185 | |||||
Interest income and other | 18 | 31 | |||||
Interest expense, amortization and write-offs of deferred loan costs, discounts and premiums and exit fees | (15,702 | ) | (15,525 | ) | |||
Other expenses | — | (54 | ) | ||||
Income tax expense | (716 | ) | (1,374 | ) | |||
Net loss | $ | (8,887 | ) | $ | (13,737 | ) | |
Our equity in loss of PIM Highland JV | $ | (6,888 | ) | $ | (10,304 | ) |
7. | Assets Held for Sale and Discontinued Operations |
Three Months Ended March 31, | |||
2012 | |||
Hotel revenues | $ | 8,832 | |
Hotel operating expenses | (7,194 | ) | |
Operating income | 1,638 | ||
Property taxes, insurance, and other | (444 | ) | |
Depreciation and amortization | (699 | ) | |
Interest expense and amortization of loan costs | (329 | ) | |
Income from discontinued operations before income tax expense | 166 | ||
Income tax expense | — | ||
Income from discontinued operations | 166 | ||
Income from discontinued operations attributable to redeemable noncontrolling interest in operating partnership | (19 | ) | |
Income from discontinued operations attributable to the Company | $ | 147 |
8. | Indebtedness |
Indebtedness | Collateral | Maturity | Interest Rate | March 31, 2013 | December 31, 2012 | ||||||
Mortgage loan (5) | 2 hotels | August 2013 | LIBOR (1) + 2.75% | $ | — | $ | 141,667 | ||||
Mortgage loan (3) | 5 hotels | March 2014 | LIBOR (1) + 4.50% | 172,416 | 173,180 | ||||||
Mortgage loan (2) | 9 hotels | May 2014 | LIBOR (1) + 6.50% | 135,000 | 135,000 | ||||||
Mortgage loan | 1 hotel | May 2014 | 8.32% | 5,249 | 5,285 | ||||||
Senior credit facility (4) | Various | September 2014 | LIBOR (1) + 2.75% to 3.50% | — | — | ||||||
Mortgage loan (2) | 5 hotels | November 2014 | Greater of 6.40% or LIBOR (1) + 6.15% | 211,000 | 211,000 | ||||||
Mortgage loan | 8 hotels | December 2014 | 5.75% | 104,089 | 104,680 | ||||||
Mortgage loan | 10 hotels | July 2015 | 5.22% | 151,899 | 152,513 | ||||||
Mortgage loan | 8 hotels | December 2015 | 5.7% | 96,397 | 96,907 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 109,743 | 110,169 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 91,010 | 91,364 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 78,834 | 79,140 | ||||||
Mortgage loan (6) | 1 hotel | April 2017 | 5.91% | 34,624 | 34,735 | ||||||
Mortgage loan | 2 hotels | April 2017 | 5.95% | 126,886 | 127,289 | ||||||
Mortgage loan | 3 hotels | April 2017 | 5.95% | 258,202 | 259,021 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 114,369 | 114,732 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 102,800 | 103,126 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 156,422 | 156,918 | ||||||
Mortgage loan | 7 hotels | April 2017 | 5.95% | 125,120 | 125,517 | ||||||
Mortgage loan (5) | 2 hotels | February 2018 | LIBOR (1) + 3.50% | 199,875 | — | ||||||
TIF loan (6) (7) | 1 hotel | June 2018 | 12.85% | 8,098 | 8,098 | ||||||
Mortgage loan | 1 hotel | November 2020 | 6.26% | 102,224 | 102,562 | ||||||
Mortgage loan | 1 hotel | April 2034 | Greater of 6.00% or Prime + 1.00% | 6,468 | 6,507 | ||||||
Total | $ | 2,390,725 | $ | 2,339,410 |
9. | Income (Loss) Per Share |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Loss from continuing operations allocated to common shareholders: | |||||||
Loss from continuing operations attributable to the Company | $ | (14,686 | ) | $ | (21,365 | ) | |
Less: Dividends on preferred stocks | (8,490 | ) | (8,331 | ) | |||
Less: Dividends on common stock | (8,139 | ) | (7,396 | ) | |||
Less: Dividends on unvested restricted shares | (61 | ) | (104 | ) | |||
Undistributed loss from continuing operations | (31,376 | ) | (37,196 | ) | |||
Add back: Dividends on common stock | 8,139 | 7,396 | |||||
Distributed and undistributed loss from continuing operations - basic and diluted | $ | (23,237 | ) | $ | (29,800 | ) | |
Income from discontinued operations allocated to common shareholders: | |||||||
Income from discontinued operations - basic and diluted | $ | — | $ | 147 | |||
Weighted average shares outstanding: | |||||||
Weighted average shares outstanding - basic and diluted | 67,682 | 67,152 | |||||
Basic loss per share: | |||||||
Loss from continuing operations allocated to common shareholders per share | $ | (0.34 | ) | $ | (0.44 | ) | |
Income from discontinued operations allocated to common shareholders per share | — | — | |||||
Net loss allocated to common shareholders per share | $ | (0.34 | ) | $ | (0.44 | ) | |
Diluted loss per share: | |||||||
Loss from continuing operations allocated to common shareholders per share | $ | (0.34 | ) | $ | (0.44 | ) | |
Income from discontinued operations allocated to common shareholders per share | — | — | |||||
Net loss allocated to common shareholders per share | $ | (0.34 | ) | $ | (0.44 | ) |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Loss from continuing operations allocated to common shareholders is not adjusted for: | |||||||
Income allocated to unvested restricted shares | $ | 61 | $ | 104 | |||
Loss attributable to noncontrolling interest in operating partnership units | (2,762 | ) | (3,076 | ) | |||
Total | $ | (2,701 | ) | $ | (2,972 | ) | |
Weighted average diluted shares are not adjusted for: | |||||||
Effect of unvested restricted shares | 146 | 431 | |||||
Effect of assumed conversion of operating partnership units | 17,967 | 16,682 | |||||
Total | 18,113 | 17,113 |
10. | Derivative Instruments and Hedging |
11. | Fair Value Measurements |
• | Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. |
• | Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. |
• | Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability. |
Quoted Market Prices (Level 1) | Significant Other Observable Inputs (Level 2) | Counterparty and Cash Collateral Netting (4) | Total | ||||||||||||||
March 31, 2013: | |||||||||||||||||
Assets | |||||||||||||||||
Derivative Assets: | |||||||||||||||||
Interest rate derivatives - non-hedges | $ | — | $ | 9 | $ | — | $ | 9 | (1) | ||||||||
Interest rate derivatives - hedges | — | 1 | — | 1 | (1) | ||||||||||||
Credit default swaps | — | 2,029 | (1,802 | ) | 227 | (1) | |||||||||||
Equity put and call options | 816 | — | — | 816 | (2) | ||||||||||||
Non-derivative Assets: | |||||||||||||||||
Equity and US treasury securities | 26,953 | — | — | 26,953 | (2) | ||||||||||||
Total | 27,769 | 2,039 | (1,802 | ) | 28,006 | ||||||||||||
Liabilities | |||||||||||||||||
Derivative Liabilities: | |||||||||||||||||
Short-equity call options | (679 | ) | — | — | (679 | ) | (3) | ||||||||||
Non-derivative Liabilities: | |||||||||||||||||
Margin account balance | (2,832 | ) | — | — | (2,832 | ) | (3) | ||||||||||
Total | (3,511 | ) | — | — | (3,511 | ) | |||||||||||
Net | $ | 24,258 | $ | 2,039 | $ | (1,802 | ) | $ | 24,495 | ||||||||
December 31, 2012: | |||||||||||||||||
Assets | |||||||||||||||||
Derivative Assets: | |||||||||||||||||
Interest rate derivatives - non-hedges | $ | — | $ | 10,617 | $ | — | $ | 10,617 | (1) | ||||||||
Interest rate derivatives - hedges | — | 4 | — | 4 | (1) | ||||||||||||
Credit default swaps | — | 2,933 | (2,763 | ) | 170 | (1) | |||||||||||
Equity put and call options | 612 | — | — | 612 | (2) | ||||||||||||
Non-derivative Assets: | |||||||||||||||||
Equity and US treasury securities | 23,008 | — | — | 23,008 | (2) | ||||||||||||
Total | 23,620 | 13,554 | (2,763 | ) | 34,411 | ||||||||||||
Liabilities | |||||||||||||||||
Derivative Liabilities: | |||||||||||||||||
Interest rate derivatives - non-hedges | — | (4,400 | ) | — | (4,400 | ) | (1) | ||||||||||
Short-equity put options | (7 | ) | — | — | (7 | ) | (3) | ||||||||||
Short-equity call options | (292 | ) | — | — | (292 | ) | (3) | ||||||||||
Non-derivative Liabilities: | |||||||||||||||||
Margin account balance | (1,342 | ) | — | — | (1,342 | ) | (3) | ||||||||||
Total | (1,641 | ) | (4,400 | ) | — | (6,041 | ) | ||||||||||
Net | $ | 21,979 | $ | 9,154 | $ | (2,763 | ) | $ | 28,370 |
Gain (Loss) Recognized In Income | Interest Savings (Cost) Recognized In Income | Reclassified from Accumulated OCI into Interest Expense | |||||||||||||||||||||
Three Months Ended March 31, | Three Months Ended March 31, | Three Months Ended March 31, | |||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Derivative Assets: | |||||||||||||||||||||||
Interest rate derivatives | $ | (10,645 | ) | $ | (9,399 | ) | $ | 10,639 | $ | 13,353 | $ | 8 | $ | 12 | |||||||||
Equity put and call options | 204 | (1,367 | ) | — | — | — | — | ||||||||||||||||
Credit default swaps | (925 | ) | — | — | — | — | — | ||||||||||||||||
Non-derivative Assets: | |||||||||||||||||||||||
Equity and US treasury securities | 2,576 | 2,624 | — | — | — | — | |||||||||||||||||
Total | (8,790 | ) | (8,142 | ) | 10,639 | 13,353 | 8 | 12 | |||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative Liabilities: | |||||||||||||||||||||||
Interest rate derivatives | 4,400 | 1,653 | (4,424 | ) | (5,384 | ) | — | — | |||||||||||||||
Credit default swaps | — | (2,195 | ) | — | — | — | — | ||||||||||||||||
Short-equity put options | 7 | 513 | — | — | — | — | |||||||||||||||||
Short-equity call options | (585 | ) | (363 | ) | — | — | — | — | |||||||||||||||
Total | 3,822 | (392 | ) | (4,424 | ) | (5,384 | ) | — | — | ||||||||||||||
Net | $ | (4,968 | ) | $ | (8,534 | ) | $ | 6,215 | $ | 7,969 | $ | 8 | $ | 12 | |||||||||
Total combined | |||||||||||||||||||||||
Interest rate derivatives | $ | (6,245 | ) | $ | (7,746 | ) | $ | 6,215 | $ | 7,969 | $ | 8 | $ | 12 | |||||||||
Credit default swaps | (904 | ) | (2,195 | ) | — | — | — | — | |||||||||||||||
Total derivatives | (7,149 | ) | (1) | (9,941 | ) | (1) | 6,215 | (2) | 7,969 | (2) | 8 | 12 | |||||||||||
Unrealized gain on marketable securities | 2,701 | (3) | 1,785 | (3) | — | — | — | — | |||||||||||||||
Realized loss on marketable securities | (520 | ) | (2) (4) | (378 | ) | (2) | — | — | — | — | |||||||||||||
Net | $ | (4,968 | ) | $ | (8,534 | ) | $ | 6,215 | $ | 7,969 | $ | 8 | $ | 12 |
12. | Summary of Fair Value of Financial Instruments |
March 31, 2013 | December 31, 2012 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Financial assets and liabilities measured at fair value: | |||||||||||||||
Marketable securities | $ | 27,769 | $ | 27,769 | $ | 23,620 | $ | 23,620 | |||||||
Derivative assets, net | $ | 237 | $ | 237 | $ | 6,391 | $ | 6,391 | |||||||
Liabilities associated with marketable securities | $ | 3,511 | $ | 3,511 | $ | 1,641 | $ | 1,641 | |||||||
Financial assets not measured at fair value: | |||||||||||||||
Cash and cash equivalents | $ | 209,982 | $ | 209,982 | $ | 185,935 | $ | 185,935 | |||||||
Restricted cash | $ | 78,896 | $ | 78,896 | $ | 84,786 | $ | 84,786 | |||||||
Accounts receivable | $ | 34,627 | $ | 34,627 | $ | 35,116 | $ | 35,116 | |||||||
Notes receivable | $ | 11,367 | $14,325 to $15,833 | $ | 11,331 | $14,385 to $15,899 | |||||||||
Due from affiliates | $ | 1,884 | $ | 1,884 | $ | 1,168 | $ | 1,168 | |||||||
Due from third-party hotel managers | $ | 57,670 | $ | 57,670 | $ | 48,619 | $ | 48,619 | |||||||
Financial liabilities not measured at fair value: | |||||||||||||||
Indebtedness | $ | 2,390,725 | $2,350,728 to $2,598,173 | $ | 2,339,410 | $2,266,991 to $2,505,622 | |||||||||
Accounts payable and accrued expenses | $ | 81,573 | $ | 81,573 | $ | 84,293 | $ | 84,293 | |||||||
Dividends payable | $ | 19,250 | $ | 19,250 | $ | 18,258 | $ | 18,258 | |||||||
Due to related party, net | $ | 1,373 | $ | 1,373 | $ | 3,725 | $ | 3,725 | |||||||
Due to third-party hotel managers | $ | 2,058 | $ | 2,058 | $ | 1,410 | $ | 1,410 |
13. | Redeemable Noncontrolling Interests in Operating Partnership |
14. | Equity and Equity-Based Compensation |
15. | Commitments and Contingencies |
16. | Segment Reporting |
Direct Hotel Investments | Hotel Financing | Corporate | Consolidated | ||||||||||||
Three Months Ended March 31, 2013: | |||||||||||||||
Total revenue | $ | 231,942 | $ | — | $ | — | $ | 231,942 | |||||||
Total hotel operating expenses | 147,516 | — | — | 147,516 | |||||||||||
Property taxes, insurance, and other | 12,248 | — | — | 12,248 | |||||||||||
Depreciation and amortization | 32,480 | — | — | 32,480 | |||||||||||
Impairment charges | — | (96 | ) | — | (96 | ) | |||||||||
Corporate, general, and administrative | — | — | 14,516 | 14,516 | |||||||||||
Total expenses (income) | 192,244 | (96 | ) | 14,516 | 206,664 | ||||||||||
Operating income (loss) | 39,698 | 96 | (14,516 | ) | 25,278 | ||||||||||
Equity in loss of unconsolidated joint ventures | (6,888 | ) | — | — | (6,888 | ) | |||||||||
Interest income | — | — | 36 | 36 | |||||||||||
Other income | — | — | 5,822 | 5,822 | |||||||||||
Interest expense and amortization of loan costs | — | — | (35,380 | ) | (35,380 | ) | |||||||||
Write-off of loan costs and exit fees | — | — | (1,971 | ) | (1,971 | ) | |||||||||
Unrealized gain on marketable securities | — | — | 2,701 | 2,701 | |||||||||||
Unrealized loss on derivatives | — | — | (7,149 | ) | (7,149 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 32,810 | 96 | (50,457 | ) | (17,551 | ) | |||||||||
Income tax expense | (604 | ) | (604 | ) | |||||||||||
Income (loss) from continuing operations | $ | 32,810 | $ | 96 | $ | (51,061 | ) | $ | (18,155 | ) | |||||
As of March 31, 2013: | |||||||||||||||
Total assets | $ | 3,181,821 | $ | 3,736 | $ | 286,133 | $ | 3,471,690 |
Direct Hotel Investments | Hotel Financing | Corporate | Consolidated | ||||||||||||
Three Months Ended March 31, 2012: | |||||||||||||||
Total revenue | $ | 217,055 | $ | — | $ | — | $ | 217,055 | |||||||
Total hotel operating expenses | 139,685 | — | — | 139,685 | |||||||||||
Property taxes, insurance, and other | 11,709 | — | — | 11,709 | |||||||||||
Depreciation and amortization | 33,656 | — | — | 33,656 | |||||||||||
Impairment charges | — | (92 | ) | — | (92 | ) | |||||||||
Corporate, general, and administrative | — | — | 10,247 | 10,247 | |||||||||||
Total expenses (income) | 185,050 | (92 | ) | 10,247 | 195,205 | ||||||||||
Operating income (loss) | 32,005 | 92 | (10,247 | ) | 21,850 | ||||||||||
Equity in loss of unconsolidated joint ventures | (10,304 | ) | — | — | (10,304 | ) | |||||||||
Interest income | — | — | 32 | 32 | |||||||||||
Other income | — | — | 7,613 | 7,613 | |||||||||||
Interest expense and amortization of loan costs | — | — | (34,875 | ) | (34,875 | ) | |||||||||
Unrealized gain on marketable securities | — | — | 1,785 | 1,785 | |||||||||||
Unrealized loss on derivatives | — | — | (9,941 | ) | (9,941 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 21,701 | 92 | (45,633 | ) | (23,840 | ) | |||||||||
Income tax expense | — | — | (879 | ) | (879 | ) | |||||||||
Income (loss) from continuing operations | $ | 21,701 | $ | 92 | $ | (46,512 | ) | $ | (24,719 | ) | |||||
As of March 31, 2012: | |||||||||||||||
Total assets | $ | 3,293,145 | $ | 3,599 | $ | 269,423 | $ | 3,566,167 |
• | acquisition of hotel properties; |
• | disposition of hotel properties; |
• | investing in securities; |
• | pursuing capital market activities to enhance long-term shareholder value; |
• | preserving capital, enhancing liquidity, and continuing current cost-saving measures; |
• | implementing selective capital improvements designed to increase profitability; |
• | implementing effective asset management strategies to minimize operating costs and increase revenues; |
• | financing or refinancing hotels on competitive terms; |
• | utilizing hedges and derivatives to mitigate risks; and |
• | making other investments or divestitures that our Board of Directors deems appropriate. |
Three Months Ended March 31, | Favorable/ (Unfavorable) Change | ||||||||||
2013 | 2012 | ||||||||||
Total revenue | $ | 231,942 | $ | 217,055 | $ | 14,887 | |||||
Total hotel operating expenses | $ | (147,516 | ) | $ | (139,685 | ) | $ | (7,831 | ) | ||
Property taxes, insurance, and other | $ | (12,248 | ) | $ | (11,709 | ) | $ | (539 | ) | ||
Depreciation and amortization | $ | (32,480 | ) | $ | (33,656 | ) | $ | 1,176 | |||
Impairment charges | $ | 96 | $ | 92 | $ | 4 | |||||
Corporate, general, and administrative | $ | (14,516 | ) | $ | (10,247 | ) | $ | (4,269 | ) | ||
Operating income | $ | 25,278 | $ | 21,850 | $ | 3,428 | |||||
Equity in loss of unconsolidated joint ventures | $ | (6,888 | ) | $ | (10,304 | ) | $ | 3,416 | |||
Interest income | $ | 36 | $ | 32 | $ | 4 | |||||
Other income | $ | 5,822 | $ | 7,613 | $ | (1,791 | ) | ||||
Interest expense and amortization of loan costs | $ | (35,380 | ) | $ | (34,875 | ) | $ | (505 | ) | ||
Write-off of loan costs and exit fees | $ | (1,971 | ) | $ | — | $ | (1,971 | ) | |||
Unrealized gain on marketable securities | $ | 2,701 | $ | 1,785 | $ | 916 | |||||
Unrealized loss on derivatives | $ | (7,149 | ) | $ | (9,941 | ) | $ | 2,792 | |||
Income tax expense | $ | (604 | ) | $ | (879 | ) | $ | 275 | |||
Loss from continuing operations | $ | (18,155 | ) | $ | (24,719 | ) | $ | 6,564 | |||
Income from discontinued operations | $ | — | $ | 166 | $ | (166 | ) | ||||
Net loss | $ | (18,155 | ) | $ | (24,553 | ) | $ | 6,398 | |||
Loss from consolidated entities attributable to noncontrolling interests | $ | 707 | $ | 278 | $ | 429 | |||||
Net loss attributable to redeemable noncontrolling interests in operating partnership | $ | 2,762 | $ | 3,057 | $ | (295 | ) | ||||
Net loss attributable to the Company | $ | (14,686 | ) | $ | (21,218 | ) | $ | 6,532 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
RevPar (revenue per available room) | $ | 99.48 | $ | 95.79 | |||
Occupancy | 71.42 | % | 71.09 | % | |||
ADR (average daily rate) | $ | 139.29 | $ | 134.74 |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Net loss | $ | (18,155 | ) | $ | (24,553 | ) | |
Loss from consolidated entities attributable to noncontrolling interests | 707 | 278 | |||||
Net loss attributable to redeemable noncontrolling interests in operating partnership | 2,762 | 3,057 | |||||
Net loss attributable to the Company | (14,686 | ) | (21,218 | ) | |||
Interest income | (36 | ) | (32 | ) | |||
Interest expense and amortization of loan costs | 34,972 | 34,851 | |||||
Depreciation and amortization | 31,661 | 33,583 | |||||
Impairment charges | (96 | ) | (92 | ) | |||
Income tax expense | 604 | 879 | |||||
Net loss attributable to redeemable noncontrolling interests in operating partnership | (2,762 | ) | (3,057 | ) | |||
Equity in loss of unconsolidated joint ventures | 6,888 | 10,304 | |||||
Company's portion of EBITDA of unconsolidated joint ventures | 17,389 | 14,564 | |||||
EBITDA | 73,934 | 69,782 | |||||
Amortization of unfavorable management contract liabilities | (612 | ) | (565 | ) | |||
Write-off of loan costs and exit fees | 1,971 | — | |||||
Other income (1) | (5,822 | ) | (7,613 | ) | |||
Unrealized gain on marketable securities | (2,701 | ) | (1,785 | ) | |||
Unrealized loss on derivatives | 7,149 | 9,941 | |||||
Equity-based compensation | 8,342 | 5,146 | |||||
Company's portion of adjustments to EBITDA of unconsolidated joint ventures | 19 | 95 | |||||
Adjusted EBITDA | $ | 82,280 | $ | 75,001 |
(1) | Other income, primarily consisting of income from interest rate derivatives in both periods and net realized loss on marketable securities in both periods, is excluded from Adjusted EBITDA. |
Three Months Ended March 31, | |||||||
2013 | 2012 | ||||||
Net loss | $ | (18,155 | ) | $ | (24,553 | ) | |
Loss from consolidated entities attributable to noncontrolling interests | 707 | 278 | |||||
Net loss attributable to redeemable noncontrolling interests in operating partnership | 2,762 | 3,057 | |||||
Preferred dividends | (8,490 | ) | (8,331 | ) | |||
Net loss attributable to common shareholders | (23,176 | ) | (29,549 | ) | |||
Depreciation and amortization of real estate | 31,615 | 33,517 | |||||
Impairment charges | (96 | ) | (92 | ) | |||
Net loss attributable to redeemable noncontrolling interests in operating partnership | (2,762 | ) | (3,057 | ) | |||
Equity in loss of unconsolidated joint ventures | 6,888 | 10,304 | |||||
Company's portion of FFO of unconsolidated joint ventures | 5,636 | 2,455 | |||||
FFO available to common shareholders | 18,105 | 13,578 | |||||
Write-off of loan costs and exit fees | 1,971 | — | |||||
Other income (1) | 393 | 356 | |||||
Unrealized gain on marketable securities | (2,701 | ) | (1,785 | ) | |||
Unrealized loss on derivatives | 7,149 | 9,941 | |||||
Equity-based compensation adjustment for modified employment terms | 4,678 | 991 | |||||
Company's portion of adjustments to FFO of unconsolidated joint ventures | 19 | 95 | |||||
Adjusted FFO available to common shareholders | $ | 29,614 | $ | 23,176 |
Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||
Fee Simple Properties | ||||||||
Embassy Suites | Austin, TX | Full service | 150 | 100 | % | 150 | ||
Embassy Suites | Dallas, TX | Full service | 150 | 100 | % | 150 | ||
Embassy Suites | Herndon, VA | Full service | 150 | 100 | % | 150 | ||
Embassy Suites | Las Vegas, NV | Full service | 220 | 100 | % | 220 | ||
Embassy Suites | Syracuse, NY | Full service | 215 | 100 | % | 215 | ||
Embassy Suites | Flagstaff, AZ | Full service | 119 | 100 | % | 119 | ||
Embassy Suites | Houston, TX | Full service | 150 | 100 | % | 150 | ||
Embassy Suites | West Palm Beach, FL | Full service | 160 | 100 | % | 160 | ||
Embassy Suites | Philadelphia, PA | Full service | 263 | 100 | % | 263 | ||
Embassy Suites | Walnut Creek, CA | Full service | 249 | 100 | % | 249 | ||
Embassy Suites | Arlington, VA | Full service | 267 | 100 | % | 267 | ||
Embassy Suites | Portland, OR | Full service | 276 | 100 | % | 276 | ||
Embassy Suites | Santa Clara, CA | Full service | 257 | 100 | % | 257 | ||
Embassy Suites | Orlando, FL | Full service | 174 | 100 | % | 174 | ||
Hilton Garden Inn | Jacksonville, FL | Select service | 119 | 100 | % | 119 | ||
Hilton | Houston, TX | Full service | 243 | 100 | % | 243 | ||
Hilton | St. Petersburg, FL | Full service | 333 | 100 | % | 333 | ||
Hilton | Santa Fe, NM | Full service | 157 | 100 | % | 157 | ||
Hilton | Bloomington, MN | Full service | 300 | 100 | % | 300 | ||
Hilton | Washington DC | Full service | 544 | 75 | % | 408 | ||
Hilton | Costa Mesa, CA | Full service | 486 | 100 | % | 486 | ||
Homewood Suites | Mobile, AL | Select service | 86 | 100 | % | 86 | ||
Hampton Inn | Lawrenceville, GA | Select service | 86 | 100 | % | 86 | ||
Hampton Inn | Evansville, IN | Select service | 141 | 100 | % | 141 | ||
Hampton Inn | Terre Haute, IN | Select service | 112 | 100 | % | 112 | ||
Hampton Inn | Buford, GA | Select service | 92 | 100 | % | 92 | ||
Marriott | Durham, NC | Full service | 225 | 100 | % | 225 | ||
Marriott | Arlington, VA | Full service | 697 | 100 | % | 697 | ||
Marriott | Seattle, WA | Full service | 358 | 100 | % | 358 | ||
Marriott | Bridgewater, NJ | Full service | 347 | 100 | % | 347 | ||
Marriott | Plano, TX | Full service | 404 | 100 | % | 404 | ||
Marriott | Dallas, TX | Full service | 266 | 100 | % | 266 | ||
SpringHill Suites by Marriott | Jacksonville, FL | Select service | 102 | 100 | % | 102 | ||
SpringHill Suites by Marriott | Baltimore, MD | Select service | 133 | 100 | % | 133 | ||
SpringHill Suites by Marriott | Kennesaw, GA | Select service | 90 | 100 | % | 90 | ||
SpringHill Suites by Marriott | Buford, GA | Select service | 96 | 100 | % | 96 | ||
SpringHill Suites by Marriott | Gaithersburg, MD | Select service | 162 | 100 | % | 162 | ||
SpringHill Suites by Marriott | Centreville, VA | Select service | 136 | 100 | % | 136 | ||
SpringHill Suites by Marriott | Charlotte, NC | Select service | 136 | 100 | % | 136 | ||
SpringHill Suites by Marriott | Durham, NC | Select service | 120 | 100 | % | 120 | ||
SpringHill Suites by Marriott | Orlando, FL | Select service | 400 | 100 | % | 400 | ||
SpringHill Suites by Marriott | Manhattan Beach, CA | Select service | 164 | 100 | % | 164 | ||
SpringHill Suites by Marriott | Plymouth Meeting, PA | Select service | 199 | 100 | % | 199 | ||
SpringHill Suites by Marriott | Glen Allen, VA | Select service | 136 | 100 | % | 136 | ||
Fairfield Inn by Marriott | Kennesaw, GA | Select service | 87 | 100 | % | 87 | ||
Fairfield Inn by Marriott | Orlando, FL | Select service | 388 | 100 | % | 388 | ||
Courtyard by Marriott | Bloomington, IN | Select service | 117 | 100 | % | 117 |
Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||
Courtyard by Marriott | Columbus, IN | Select service | 90 | 100 | % | 90 | ||
Courtyard by Marriott | Louisville, KY | Select service | 150 | 100 | % | 150 | ||
Courtyard by Marriott | Crystal City, VA | Select service | 272 | 100 | % | 272 | ||
Courtyard by Marriott | Ft. Lauderdale, FL | Select service | 174 | 100 | % | 174 | ||
Courtyard by Marriott | Overland Park, KS | Select service | 168 | 100 | % | 168 | ||
Courtyard by Marriott | Palm Desert, CA | Select service | 151 | 100 | % | 151 | ||
Courtyard by Marriott | Foothill Ranch, CA | Select service | 156 | 100 | % | 156 | ||
Courtyard by Marriott | Alpharetta, GA | Select service | 154 | 100 | % | 154 | ||
Courtyard by Marriott | Philadelphia, PA | Select service | 498 | 100 | % | 498 | ||
Courtyard by Marriott | Seattle, WA | Select service | 250 | 100 | % | 250 | ||
Courtyard by Marriott | San Francisco, CA | Select service | 405 | 100 | % | 405 | ||
Courtyard by Marriott | Orlando, FL | Select service | 312 | 100 | % | 312 | ||
Courtyard by Marriott | Oakland, CA | Select service | 156 | 100 | % | 156 | ||
Courtyard by Marriott | Scottsdale, AZ | Select service | 180 | 100 | % | 180 | ||
Courtyard by Marriott | Plano, TX | Select service | 153 | 100 | % | 153 | ||
Courtyard by Marriott | Edison, NJ | Select service | 146 | 100 | % | 146 | ||
Courtyard by Marriott | Newark, CA | Select service | 181 | 100 | % | 181 | ||
Courtyard by Marriott | Manchester, CT | Select service | 90 | 85 | % | 77 | ||
Courtyard by Marriott | Basking Ridge, NJ | Select service | 235 | 100 | % | 235 | ||
Marriott Residence Inn | Lake Buena Vista, FL | Select service | 210 | 100 | % | 210 | ||
Marriott Residence Inn | Evansville, IN | Select service | 78 | 100 | % | 78 | ||
Marriott Residence Inn | Orlando, FL | Select service | 350 | 100 | % | 350 | ||
Marriott Residence Inn | Falls Church, VA | Select service | 159 | 100 | % | 159 | ||
Marriott Residence Inn | San Diego, CA | Select service | 150 | 100 | % | 150 | ||
Marriott Residence Inn | Salt Lake City, UT | Select service | 144 | 100 | % | 144 | ||
Marriott Residence Inn | Palm Desert, CA | Select service | 130 | 100 | % | 130 | ||
Marriott Residence Inn | Las Vegas, NV | Select service | 256 | 100 | % | 256 | ||
Marriott Residence Inn | Phoenix, AZ | Select service | 200 | 100 | % | 200 | ||
Marriott Residence Inn | Plano, TX | Select service | 126 | 100 | % | 126 | ||
Marriott Residence Inn | Newark, CA | Select service | 168 | 100 | % | 168 | ||
Marriott Residence Inn | Manchester, CT | Select service | 96 | 85 | % | 82 | ||
Marriott Residence Inn | Atlanta, GA | Select service | 150 | 100 | % | 150 | ||
Marriott Residence Inn | Jacksonville, FL | Select service | 120 | 100 | % | 120 | ||
TownePlace Suites by Marriott | Manhattan Beach, CA | Select service | 144 | 100 | % | 144 | ||
One Ocean | Atlantic Beach, FL | Full service | 193 | 100 | % | 193 | ||
Sheraton Hotel | Langhorne, PA | Full service | 187 | 100 | % | 187 | ||
Sheraton Hotel | Minneapolis, MN | Full service | 222 | 100 | % | 222 | ||
Sheraton Hotel | Indianapolis, IN | Full service | 371 | 100 | % | 371 | ||
Sheraton Hotel | Anchorage, AK | Full service | 370 | 100 | % | 370 | ||
Sheraton Hotel | San Diego, CA | Full service | 260 | 100 | % | 260 | ||
Hyatt Regency | Coral Gables, FL | Full service | 242 | 100 | % | 242 | ||
Crowne Plaza | Beverly Hills, CA | Full service | 260 | 100 | % | 260 | ||
Annapolis Historic Inn | Annapolis, MD | Full service | 124 | 100 | % | 124 | ||
Ground Lease Properties | ||||||||
Hilton | Ft. Worth, TX | Full service | 294 | 100 | % | 294 | ||
Hilton | La Jolla, CA | Full service | 394 | 75 | % | 296 | ||
Crowne Plaza | Key West, FL | Full service | 160 | 100 | % | 160 | ||
Renaissance | Tampa, FL | Full service | 293 | 100 | % | 293 | ||
Total | 20,034 | 19,773 |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 6. | EXHIBITS |
Exhibit | Description | ||
3.1 | Articles of Amendment and Restatement (incorporated by reference to Exhibit 3.1 of Form S-11/A, filed on July 31, 2003) | ||
3.2 | Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K, filed on November 12, 2010) | ||
10.1 | Chairman Emeritus Agreement, dated as of January 7, 2013, between Ashford Hospitality Trust, Inc. and Archie Bennett, Jr. (incorporated by reference to Exhibit 10.1 to the Registrant's 8-K, filed on January 9, 2013) | ||
10.2.1* | Employment Agreement, dated as of March 24, 2011, between Ashford Hospitality Trust, Inc. and Jeremy Welter | ||
10.2.2* | Amendment to Employment Agreement, dated as of November 10, 2011, between Ashford Hospitality Trust, Inc. and Jeremy Welter | ||
12.0* | Statement Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Stock Dividends | ||
31.1* | Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended | ||
31.2* | Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) and Rule 15d-14(a) of Securities Exchange Act of 1934, as amended | ||
32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | ||
The following materials from the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements Comprehensive Income (Loss); (iii) Consolidated Statement of Changes in Equity; (iv) Consolidated Statements of Cash Flows; and (v) Notes to the Consolidated Financial Statements. In accordance with Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. | |||
101.INS | XBRL Instance Document | Submitted electronically with this report. | |
101.SCH | XBRL Taxonomy Extension Schema Document | Submitted electronically with this report. | |
101.CAL | XBRL Taxonomy Calculation Linkbase Document | Submitted electronically with this report. | |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically with this report. | |
101.LAB | XBRL Taxonomy Label Linkbase Document. | Submitted electronically with this report. | |
101.PRE | XBRL Taxonomy Presentation Linkbase Document. | Submitted electronically with this report. |
Date: | May 9, 2013 | By: | /s/ MONTY J. BENNETT |
Monty J. Bennett | |||
Chief Executive Officer | |||
Date: | May 9, 2013 | By: | /s/ DAVID J. KIMICHIK |
David J. Kimichik | |||
Chief Financial Officer |
A. | The REIT and the Operating Partnership (collectively, the “Company”) and the Executive are parties to a certain Employment Agreement (as amended, the “Agreement”), dated as of March 24, 2011; |
B. | The Company, at the direction of the Compensation Committee, desire to modify the Employment Agreement as specifically set forth herein; |
C. | The Executive has agreed to accept this Amendment pursuant to the terms and conditions set forth herein; and |
D. | All terms with their initial letter capitalized as set forth in the Employment Agreement shall have the same meaning herein as given such terms in the Employment Agreement |
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
March 31, 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||
Earnings | |||||||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes and redeemable noncontrolling interests | $ | (17,551 | ) | $ | (56,183 | ) | $ | 9,383 | $ | (26,280 | ) | $ | (182,933 | ) | $ | 101,925 | |||||||
Amount recorded for (income) loss in unconsolidated joint venture | 6,888 | 20,833 | (14,528 | ) | 20,265 | (2,486 | ) | 2,205 | |||||||||||||||
Add: | |||||||||||||||||||||||
Distributions from equity investment in joint venture | — | — | — | 492 | 873 | 1,800 | |||||||||||||||||
Interest on indebtedness | 33,448 | 140,066 | 134,585 | 143,264 | 139,390 | 153,116 | |||||||||||||||||
Amortization of debt expense and premium | 1,932 | 6,194 | 4,648 | 5,838 | 7,700 | 6,747 | |||||||||||||||||
Interest component of operating leases | 88 | 354 | 385 | 525 | 598 | 622 | |||||||||||||||||
$ | 24,805 | $ | 111,264 | $ | 134,473 | $ | 144,104 | $ | (36,858 | ) | $ | 266,415 | |||||||||||
Fixed charges | |||||||||||||||||||||||
Interest on indebtedness | $ | 33,448 | $ | 140,066 | $ | 134,585 | $ | 143,264 | $ | 139,390 | $ | 153,116 | |||||||||||
Amortization of debt expense and premium | 1,932 | 6,194 | 4,648 | 5,838 | 7,700 | 6,747 | |||||||||||||||||
Interest component of operating leases | 88 | 354 | 385 | 525 | 598 | 622 | |||||||||||||||||
Dividends to Class B unit holders | 736 | 2,943 | 2,943 | 2,943 | 2,827 | 2,788 | |||||||||||||||||
$ | 36,204 | $ | 149,557 | $ | 142,561 | $ | 152,570 | $ | 150,515 | $ | 163,273 | ||||||||||||
Preferred stock dividends | |||||||||||||||||||||||
Preferred Series A | $ | 886 | $ | 3,516 | $ | 3,180 | $ | 3,180 | $ | 3,180 | $ | 4,855 | |||||||||||
Preferred Series B-1 | — | — | 1,374 | 4,143 | 4,171 | 5,735 | |||||||||||||||||
Preferred Series D | 5,000 | 19,869 | 18,940 | 13,871 | 11,971 | 16,052 | |||||||||||||||||
Preferred Series E | 2,604 | 10,417 | 6,019 | — | — | — | |||||||||||||||||
$ | 8,490 | $ | 33,802 | $ | 29,513 | $ | 21,194 | $ | 19,322 | $ | 26,642 | ||||||||||||
Combined fixed charges and preferred stock dividends | $ | 44,694 | $ | 183,359 | $ | 172,074 | $ | 173,764 | $ | 169,837 | $ | 189,915 | |||||||||||
Ratio of earnings to fixed charges | 1.63 | ||||||||||||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends | 1.40 | ||||||||||||||||||||||
Deficit (Fixed charges) | $ | 11,399 | $ | 38,293 | $ | 8,088 | $ | 8,466 | $ | 187,373 | |||||||||||||
Deficit (Combined fixed charges and preferred stock dividends) | $ | 19,889 | $ | 72,095 | $ | 37,601 | $ | 29,660 | $ | 206,695 | |||||||||||||
1. | I have reviewed this quarterly report on Form 10-Q of Ashford Hospitality Trust, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MONTY J. BENNETT | |
Monty J. Bennett | |
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Ashford Hospitality Trust, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ DAVID J. KIMICHIK | |
David J. Kimichik | |
Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ MONTY J. BENNETT | |
Monty J. Bennett | |
Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or 5(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ DAVID J. KIMICHIK | |
David J. Kimichik | |
Chief Financial Officer |
Investment in Unconsolidated Joint Ventures (Details) (USD $)
|
3 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | ||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
Mar. 31, 2013
Property in Nevis [Member]
|
Dec. 31, 2012
Property in Nevis [Member]
|
Mar. 10, 2011
PIM Highland JV [Member]
Hotels
|
Mar. 31, 2013
PIM Highland JV [Member]
Person
|
Dec. 31, 2012
PIM Highland JV [Member]
|
Mar. 10, 2011
PIM Highland JV [Member]
Minimum [Member]
|
|
Real Estate Properties [Line Items] | ||||||||
Number of hotel properties held by majority owned joint venture | 28 | |||||||
Percentage of common equity interest | 71.74% | 50.00% | ||||||
Preferred equity interest earning accrued | $ 25,000,000 | |||||||
Unpaid annual return with priority over common equity distributions | 15.00% | |||||||
Number of members of executive committee | 4 | |||||||
Number of persons designated to executive committee by joint venture partner | 2 | |||||||
Investment in unconsolidated joint ventures | 151,806,000 | 158,694,000 | 151,806,000 | 158,694,000 | ||||
Subordinated beneficial interest in trust percentage | 14.40% | 14.40% | ||||||
Carrying value of subordinated beneficial interest | $ 0 |
Equity and Equity-Based Compensation (Summary of Dividends Declated (Narrative) (Details) (USD $)
|
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Dec. 31, 2012
|
|
Common stock related: | |||
Dividends declared per common share (in dollars per share) | $ 0.12 | $ 0.11 | $ 0.11 |
Dividends annualized target (in dollars per share) | $ 0.48 | ||
Series A Preferred Stock [Member]
|
|||
Preferred stocks: | |||
Dividends declared per preferred share (in dollars per share) | $ 0.5344 | $ 0.5344 | |
Percentage of preferred stock shares | 8.55% | 8.55% | |
Series D Preferred Stock [Member]
|
|||
Preferred stocks: | |||
Dividends declared per preferred share (in dollars per share) | $ 0.5281 | $ 0.5281 | |
Percentage of preferred stock shares | 8.45% | 8.45% | |
Series E Preferred Stock [Member]
|
|||
Preferred stocks: | |||
Dividends declared per preferred share (in dollars per share) | $ 0.5625 | $ 0.5625 | |
Percentage of preferred stock shares | 9.00% | 9.00% |
Fair Value Measurements (Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) (Fair Value Measurements Recurring [Member], USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | $ 28,006 | $ 34,411 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | (3,511) | (6,041) | ||||||||||
Assets and liabilities, fair value disclosure | 24,495 | 28,370 | ||||||||||
Margin Account Balance [Member]
|
||||||||||||
Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | (2,832) | [1] | (1,342) | [1] | ||||||||
Interest Rate Derivatives [Member] | Not Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 9 | [2] | 10,617 | [2] | ||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (4,400) | [2] | ||||||||||
Interest Rate Derivatives [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 1 | [2] | 4 | [2] | ||||||||
Call Option and Other [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 816 | [3] | 612 | [3] | ||||||||
Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 26,953 | [3] | 23,008 | [3] | ||||||||
Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 227 | [2] | 170 | [2] | ||||||||
Short Equity Put Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (7) | [1] | ||||||||||
Short Equity Call Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (679) | [1] | (292) | [1] | ||||||||
Quoted Market Prices (Level 1) [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | 27,769 | 23,620 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | (3,511) | (1,641) | ||||||||||
Assets and liabilities, fair value disclosure | 24,258 | 21,979 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Margin Account Balance [Member]
|
||||||||||||
Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | (2,832) | (1,342) | ||||||||||
Quoted Market Prices (Level 1) [Member] | Interest Rate Derivatives [Member] | Not Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | 0 | ||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | |||||||||||
Quoted Market Prices (Level 1) [Member] | Interest Rate Derivatives [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | 0 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Call Option and Other [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 816 | 612 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 26,953 | 23,008 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | 0 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Short Equity Put Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (7) | |||||||||||
Quoted Market Prices (Level 1) [Member] | Short Equity Call Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (679) | (292) | ||||||||||
Significant Other Observable Inputs (Level 2) [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | 2,039 | 13,554 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | 0 | (4,400) | ||||||||||
Assets and liabilities, fair value disclosure | 2,039 | 9,154 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Margin Account Balance [Member]
|
||||||||||||
Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | 0 | 0 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Derivatives [Member] | Not Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 9 | 10,617 | ||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (4,400) | |||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Interest Rate Derivatives [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 1 | 4 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Call Option and Other [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | 0 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 0 | 0 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 2,029 | 2,933 | ||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Short Equity Put Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | |||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Short Equity Call Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | 0 | ||||||||||
Counterparty and Cash Collateral Netting [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | (1,802) | [4] | (2,763) | [4] | ||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | 0 | [4] | 0 | [4] | ||||||||
Assets and liabilities, fair value disclosure | (1,802) | [4] | (2,763) | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Margin Account Balance [Member]
|
||||||||||||
Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | 0 | [4] | 0 | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Interest Rate Derivatives [Member] | Not Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | [4] | 0 | [4] | ||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | [4] | ||||||||||
Counterparty and Cash Collateral Netting [Member] | Interest Rate Derivatives [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | [4] | 0 | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Call Option and Other [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 0 | [4] | 0 | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 0 | [4] | 0 | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | (1,802) | [4] | (2,763) | [4] | ||||||||
Counterparty and Cash Collateral Netting [Member] | Short Equity Put Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | [4] | ||||||||||
Counterparty and Cash Collateral Netting [Member] | Short Equity Call Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | $ 0 | [4] | $ 0 | [4] | ||||||||
|
Derivative Instruments and Hedging (Details) (USD $)
|
3 Months Ended | 3 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
Mar. 31, 2013
Investment Derivatives [Member]
|
Dec. 31, 2012
Investment Derivatives [Member]
|
Mar. 31, 2013
Credit Default Swaps [Member]
|
Dec. 31, 2012
Credit Default Swaps [Member]
|
Aug. 31, 2011
Credit Default Swaps [Member]
|
|
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Notional amount of swap transactions | $ 100,000,000 | ||||||
Transaction cost | 8,200,000 | ||||||
Total exposure of bonds | 8,500,000 | ||||||
Change in market value of credit default swap | 250,000 | ||||||
Net credit default of swap asset | 227,000 | 170,000 | |||||
Unrealized loss on derivatives | 7,149,000 | 9,941,000 | 904,000 | 2,200,000 | |||
Investment in derivatives | 816,000 | 612,000 | |||||
Derivative liabilities | $ 679,000 | $ 299,000 |
Segment Reporting (Tables)
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Mar. 31, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Information Related To Reportable Segments | Financial information related to our reportable segments was as follows (in thousands):
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Significant Accounting Policies (Policies)
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3 Months Ended | ||||||||
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Mar. 31, 2013
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Accounting Policies [Abstract] | |||||||||
Basis of Presentation | The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements include the accounts of Ashford Hospitality Trust, Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our 2012 Annual Report to Shareholders on Form 10-K and Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on March 1, 2013 and March 12, 2013, respectively. The following items affect reporting comparability related to our consolidated financial statements:
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Use of Estimates | The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
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Investments in Hotel Properties, net | Hotel properties are generally stated at cost. However, four hotel properties contributed upon Ashford's formation in 2003 are stated at the predecessor's historical cost, net of impairment charges, if any, plus a partial step-up related to the acquisition of noncontrolling interests from third parties associated with certain of these properties. For hotel properties owned through our majority-owned entities, the carrying basis attributable to the partners' minority ownership is recorded at the predecessor's historical cost, net of any impairment charges, while the carrying basis attributable to our majority ownership is recorded based on the allocated purchase price of our ownership interests in the entities. All improvements and additions which extend the useful life of hotel properties are capitalized. |
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Impairment of Investment in Hotel Properties | Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property's net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. If an asset is deemed to be impaired, we record an impairment charge for the amount that the property's net book value exceeds its estimated fair value, or fair value, less cost to sell. No impairment charges were recorded for investment in hotel properties included in continuing operations for the three months ended March 31, 2013 and 2012. |
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Notes Receivable | Mezzanine loan financing, classified as notes receivable, represents loans held for investment and intended to be held to maturity. Accordingly, these notes are recorded at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and allowance for losses when a loan is deemed to be impaired. Premiums, discounts, and net origination fees are amortized or accreted as an adjustment to interest income using the effective interest method over the life of the loan. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Payments received on impaired nonaccrual loans are recorded as adjustments to impairment charges. No interest income was recorded for the three months ended March 31, 2013 and 2012. Variable interest entities (“VIEs”), as defined by authoritative accounting guidance, must be consolidated by their controlling interest beneficiaries if the VIEs do not effectively disperse risks among the parties involved. Our remaining mezzanine note receivable at March 31, 2013 is secured by a hotel property and is subordinate to the controlling interest in the secured hotel property. Although the note receivable is considered to be a variable interest in the entity that owns the related hotel, we are not considered to be the primary beneficiary of the hotel property as a result of holding the loan. Therefore, we do not consolidate the hotel property for which we have provided financing. We will evaluate interests in entities acquired or created in the future to determine whether such entities should be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions. |
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Impairment of Notes Receivable | We review notes receivable for impairment each reporting period. A loan is impaired when, based on current information and events, collection of all amounts recorded as assets on the balance sheet is no longer considered probable. We apply normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. When a loan is impaired, we measure impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the balance sheet. We may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Loan impairments are recorded as a valuation allowance and a charge to earnings. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded during the three months ended March 31, 2013 and 2012. Valuation adjustments of $96,000 and $92,000 on previously impaired notes were credited to impairment charges during the three months ended March 31, 2013 and 2012, respectively. |
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Investments in Unconsolidated Joint Ventures | Investments in unconsolidated joint ventures, in which we have ownership interests ranging from 14.4% to 71.74%, are accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the joint ventures' net income (loss). We review investments in our unconsolidated joint ventures for impairment in each reporting period. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity earnings (loss) in unconsolidated joint ventures. No such impairments were recorded in the three months ended March 31, 2013 and 2012. Our investments in unconsolidated joint ventures are considered to be variable interests in the underlying entities. VIEs, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, (ii) an implicit financial responsibility to ensure that the VIE operates as designed, and (iii) an obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct our unconsolidated joint ventures’ activities and operations, we are not considered to be the primary beneficiary of these joint ventures. Although we have a 71.74% majority ownership in PIM Highland JV, all major decisions related to the joint venture, including establishment of policies and operating procedures with respect to business affairs and incurring obligations and expenditures, are subject to the approval of an executive committee, which is comprised of four persons with us and our joint venture partner each designating two of those persons. As a result, we utilize the equity accounting method with respect to PIM Highland JV, which had a carrying value of $151.8 million at March 31, 2013 based on our share of the joint venture’s equity. We will evaluate the interests in entities acquired or created in the future to determine whether such entities should be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions. |
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Assets Held for Sale and Discontinued Operations | We classify assets as held for sale when management has obtained a firm commitment from a buyer and consummation of the sale is considered probable and expected within one year. In addition, we deconsolidate a property upon transfer of title. When deconsolidating a property/subsidiary, we recognize a gain or loss in net income measured as the difference between the fair value of any consideration received, the fair value of any retained noncontrolling investment in the former subsidiary at the date the subsidiary is deconsolidated, and the carrying amount of the former property/subsidiary. The related operations of assets held for sale are reported as discontinued if a) such operations and cash flows can be clearly distinguished, both operationally and financially, from our ongoing operations, b) such operations and cash flows will be eliminated from ongoing operations once the disposal occurs, and c) we will not have any significant continuing involvement subsequent to the disposal. During the three months ended March 31, 2012, discontinued operations included two hotel properties disposed of in 2012. The Doubletree Guest Suites hotel in Columbus, Ohio was sold in November 2012 and the Hilton El Conquistador hotel in Tucson, Arizona was disposed of in December 2012. For the three months ended March 31, 2013 and 2012, there were no impairment charges. There were no assets held for sale as of March 31, 2013 and December 31, 2012. |
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Investments in Securities and Other | Marketable securities and other investments, including U.S. treasury bills, public equity securities and equity put and call options of certain publicly traded companies, are recorded at fair value. Equity put and call options are considered derivatives. The fair value of these investments is based on the closing price as of the balance sheet date and is reported as “Marketable securities” or “Liabilities associated with marketable securities” in the consolidated balance sheets. On the consolidated statements of operations, net investment income, including interest income (expense), dividends, realized gains or losses and related costs incurred, is reported as a component of “Other income” while unrealized gains and losses on these investments are reported as “Unrealized gain on investments." |
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Revenue Recognition | Hotel revenues, including room, food, beverage, and ancillary revenues such as long-distance telephone service, laundry, parking, and space rentals, are recognized when services have been rendered. Interest income is recognized when earned. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Sales taxes collected from customers and submitted to taxing authorities are not recorded in revenue. |
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Derivatives and Hedges | We primarily use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in LIBOR (London Interbank Offered Rate) and RevPAR (Revenue per Available Room). Interest rate derivatives could include swaps, caps, floors and flooridors. We assess the effectiveness of each hedging relationship by comparing changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. We also use credit default swaps to hedge financial and capital market risk. All of these derivatives are subject to master-netting settlement arrangements and the credit default swaps are subject to credit support annexes. For credit default swaps, cash collateral is posted by us as well as our counterparty. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral. All derivatives are recorded at fair value in accordance with the applicable authoritative accounting guidance. Interest rate derivatives and credit default swaps are reported as “Derivative assets, net” or “Derivative liabilities” in the consolidated balance sheets. Accrued interest on non-hedge designated interest rate derivatives is included in “Accounts receivable, net” in the consolidated balance sheets. For interest rate derivatives designated as cash flow hedges:
For non-hedge designated interest rate derivatives and credit default swaps, changes in fair value are recognized in earnings as “Unrealized loss on derivatives” in the consolidated statements of operations. |
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Income Taxes | As a REIT, we generally will not be subject to federal corporate income tax on the portion of our net income (loss) that does not relate to taxable REIT subsidiaries. However, Ashford TRS is treated as a taxable REIT subsidiary for federal income tax purposes. In accordance with authoritative accounting guidance, we account for income taxes related to Ashford TRS using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, the analysis utilized by us in determining our deferred tax asset valuation allowance involves considerable management judgment and assumptions. |
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Recently Adopted Accounting Standards | In December 2011, the Financial Accounting Standards Board issued accounting guidance to require disclosures about offsetting assets and liabilities. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master-netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements that are either netted on the balance sheet or subject to an enforceable master-netting agreement or similar arrangement. The new accounting guidance is effective for fiscal years, and interim periods within those years, beginning after January 1, 2013 and the disclosures should be reported retrospectively for all comparative periods presented. We adopted this accounting guidance on January 1, 2013. The adoption of this accounting guidance did not have any impact on our financial position or results of operations. |
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Reclassifications | Certain amounts in the consolidated financial statements for the three months ended March 31, 2012 have been reclassified for discontinued operations. Additionally, certain amounts due from affiliates have been reclassified in the 2012 consolidated statement of cashflows. These reclassifications had no effect on our cash flows, equity, or net income (loss) previously reported. |
Summary of Fair Value of Financial Instruments (Narrative) (Details) (USD $)
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3 Months Ended | 12 Months Ended |
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Mar. 31, 2013
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Dec. 31, 2012
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Maximum maturity term of financial assets | 90 days | 90 days |
Carrying value of note | $ 11,367,000 | $ 11,331,000 |
Carrying value of total indebtedness of continuing operations | $ 2,400,000,000 | $ 2,300,000,000 |
Minimum [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes receivable fair value variance from carrying value (as a percent) | 26.00% | 27.00% |
Total indebtedness fair value variance from carrying value (as a percent) | 98.30% | 96.90% |
Maximum [Member]
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Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Notes receivable fair value variance from carrying value (as a percent) | 39.30% | 40.30% |
Total indebtedness fair value variance from carrying value (as a percent) | 108.70% | 107.10% |
Investment in Hotel Properties, net (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
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Dec. 31, 2012
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Investment in hotel properties, net | ||
Land | $ 483,242 | $ 483,242 |
Buildings and improvements | 2,792,515 | 2,779,589 |
Furniture, fixtures and equipment | 232,535 | 224,907 |
Construction in progress | 7,701 | 10,499 |
Condominium properties | 12,556 | 12,690 |
Total cost | 3,528,549 | 3,510,927 |
Accumulated depreciation | (671,011) | (638,623) |
Investment in hotel properties, net | $ 2,857,538 | $ 2,872,304 |
Redeemable Noncontrolling Interests in Operating Partnership (Narrative) (Details) (USD $)
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3 Months Ended | 3 Months Ended | 3 Months Ended | 3 Months Ended | ||||||||
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Mar. 31, 2013
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Mar. 31, 2012
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Dec. 31, 2012
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Mar. 31, 2013
Partnership Interest [Member]
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Mar. 31, 2012
Partnership Interest [Member]
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Dec. 31, 2012
Partnership Interest [Member]
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Mar. 31, 2013
Class B Common Units [Member]
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Mar. 31, 2013
Long Term Incentive Plan [Member]
PartnershipUnit
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Mar. 31, 2012
Long Term Incentive Plan [Member]
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May 31, 2011
Long Term Incentive Plan [Member]
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Mar. 31, 2013
Long Term Incentive Plan [Member]
Minimum [Member]
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Mar. 31, 2013
Long Term Incentive Plan [Member]
Maximum [Member]
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Redeemable Noncontrolling Interest [Line Items] | ||||||||||||
Dividend rate common units | 7.20% | |||||||||||
Time period after issuance that common units may be redeemed (in years) | 1 year | |||||||||||
Vesting periods, Minimum (in years) | 3 years | 5 years | ||||||||||
Common partnership unit per converted Long-Term Incentive Plan unit | 1 | |||||||||||
Issunance of LTIP units | $ 6,900,000 | |||||||||||
Value of units which had not reached full economic parity with the common units | 1,200,000 | 1,200,000 | ||||||||||
Aggregate value of LTIP units on date of grant | 67,300,000 | |||||||||||
Compensation expense | 444,000 | 1,600,000 | 7,900,000 | 3,600,000 | ||||||||
Unamortized value of LTIP unit | 30,500,000 | |||||||||||
Amortization period of LTIP unit (in years) | 1 year | 2 years 11 months 4 days | ||||||||||
Number of operating partnership units presented for redemption or converted to shares of common stock. | 0 | |||||||||||
Redeemable noncontrolling interests in operating partnership | 196,468,000 | 151,179,000 | 196,500,000 | 151,200,000 | ||||||||
Percentage of ownership in operating partnership | 13.11% | 12.92% | ||||||||||
Carrying value of redeemable noncontrolling interests, including adjustments | 145,300,000 | 110,000,000 | ||||||||||
Allocated net income (loss) to redeemable noncontrolling interests | (2,800,000) | (3,100,000) | ||||||||||
Cash distributions declared | $ 2,600,000 | $ 2,300,000 |
Fair Value Measurements (Narrative) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
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Mar. 31, 2013
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Mar. 31, 2012
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Fair Value Disclosures [Abstract] | ||
Fair value consideration threshold for transfer in/out of unobservable inputs | 10.00% | |
Lower Uptrend in the LIBOR interest rate | 0.20% | |
Higher Uptrend in the LIBOR interest rate | 0.31% | |
Derivaitve expense related to credit default swaps | $ 21 | |
Change in fair values of interest rate derivatives | (2) | (9) |
Accumulated comprehensive loss reclassified to interest expense | $ 165 |
Significant Accounting Policies
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3 Months Ended | ||||||||||||||||
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Mar. 31, 2013
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Accounting Policies [Abstract] | |||||||||||||||||
Significant Accounting Policies | Significant Accounting Policies Basis of Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These consolidated financial statements include the accounts of Ashford Hospitality Trust, Inc., its majority-owned subsidiaries, and its majority-owned entities in which it has a controlling interest. All significant intercompany accounts and transactions between consolidated entities have been eliminated in these consolidated financial statements. These consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in our 2012 Annual Report to Shareholders on Form 10-K and Form 10-K/A filed with the Securities and Exchange Commission (“SEC”) on March 1, 2013 and March 12, 2013, respectively. The following items affect reporting comparability related to our consolidated financial statements:
Use of Estimates – The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Investments in Hotel Properties, net – Hotel properties are generally stated at cost. However, four hotel properties contributed upon Ashford's formation in 2003 are stated at the predecessor's historical cost, net of impairment charges, if any, plus a partial step-up related to the acquisition of noncontrolling interests from third parties associated with certain of these properties. For hotel properties owned through our majority-owned entities, the carrying basis attributable to the partners' minority ownership is recorded at the predecessor's historical cost, net of any impairment charges, while the carrying basis attributable to our majority ownership is recorded based on the allocated purchase price of our ownership interests in the entities. All improvements and additions which extend the useful life of hotel properties are capitalized. Impairment of Investment in Hotel Properties – Hotel properties are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Recoverability of the hotel is measured by comparison of the carrying amount of the hotel to the estimated future undiscounted cash flows, which take into account current market conditions and our intent with respect to holding or disposing of the hotel. If our analysis indicates that the carrying value of the hotel is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the property's net book value exceeds its estimated fair value, or fair value, less cost to sell. In evaluating impairment of hotel properties, we make many assumptions and estimates, including projected cash flows, expected holding period, and expected useful life. Fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions and third-party appraisals, where considered necessary. If an asset is deemed to be impaired, we record an impairment charge for the amount that the property's net book value exceeds its estimated fair value, or fair value, less cost to sell. No impairment charges were recorded for investment in hotel properties included in continuing operations for the three months ended March 31, 2013 and 2012. Notes Receivable – Mezzanine loan financing, classified as notes receivable, represents loans held for investment and intended to be held to maturity. Accordingly, these notes are recorded at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and allowance for losses when a loan is deemed to be impaired. Premiums, discounts, and net origination fees are amortized or accreted as an adjustment to interest income using the effective interest method over the life of the loan. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Payments received on impaired nonaccrual loans are recorded as adjustments to impairment charges. No interest income was recorded for the three months ended March 31, 2013 and 2012. Variable interest entities (“VIEs”), as defined by authoritative accounting guidance, must be consolidated by their controlling interest beneficiaries if the VIEs do not effectively disperse risks among the parties involved. Our remaining mezzanine note receivable at March 31, 2013 is secured by a hotel property and is subordinate to the controlling interest in the secured hotel property. Although the note receivable is considered to be a variable interest in the entity that owns the related hotel, we are not considered to be the primary beneficiary of the hotel property as a result of holding the loan. Therefore, we do not consolidate the hotel property for which we have provided financing. We will evaluate interests in entities acquired or created in the future to determine whether such entities should be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions. Impairment of Notes Receivable – We review notes receivable for impairment each reporting period. A loan is impaired when, based on current information and events, collection of all amounts recorded as assets on the balance sheet is no longer considered probable. We apply normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. When a loan is impaired, we measure impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the balance sheet. We may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral-dependent. Loan impairments are recorded as a valuation allowance and a charge to earnings. Our assessment of impairment is based on considerable management judgment and assumptions. No impairment charges were recorded during the three months ended March 31, 2013 and 2012. Valuation adjustments of $96,000 and $92,000 on previously impaired notes were credited to impairment charges during the three months ended March 31, 2013 and 2012, respectively. Investments in Unconsolidated Joint Ventures – Investments in unconsolidated joint ventures, in which we have ownership interests ranging from 14.4% to 71.74%, are accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the joint ventures' net income (loss). We review investments in our unconsolidated joint ventures for impairment in each reporting period. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any impairment is recorded in equity earnings (loss) in unconsolidated joint ventures. No such impairments were recorded in the three months ended March 31, 2013 and 2012. Our investments in unconsolidated joint ventures are considered to be variable interests in the underlying entities. VIEs, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, (ii) an implicit financial responsibility to ensure that the VIE operates as designed, and (iii) an obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct our unconsolidated joint ventures’ activities and operations, we are not considered to be the primary beneficiary of these joint ventures. Although we have a 71.74% majority ownership in PIM Highland JV, all major decisions related to the joint venture, including establishment of policies and operating procedures with respect to business affairs and incurring obligations and expenditures, are subject to the approval of an executive committee, which is comprised of four persons with us and our joint venture partner each designating two of those persons. As a result, we utilize the equity accounting method with respect to PIM Highland JV, which had a carrying value of $151.8 million at March 31, 2013 based on our share of the joint venture’s equity. We will evaluate the interests in entities acquired or created in the future to determine whether such entities should be consolidated. In evaluating VIEs, our analysis involves considerable management judgment and assumptions. Assets Held for Sale and Discontinued Operations – We classify assets as held for sale when management has obtained a firm commitment from a buyer and consummation of the sale is considered probable and expected within one year. In addition, we deconsolidate a property upon transfer of title. When deconsolidating a property/subsidiary, we recognize a gain or loss in net income measured as the difference between the fair value of any consideration received, the fair value of any retained noncontrolling investment in the former subsidiary at the date the subsidiary is deconsolidated, and the carrying amount of the former property/subsidiary. The related operations of assets held for sale are reported as discontinued if a) such operations and cash flows can be clearly distinguished, both operationally and financially, from our ongoing operations, b) such operations and cash flows will be eliminated from ongoing operations once the disposal occurs, and c) we will not have any significant continuing involvement subsequent to the disposal. During the three months ended March 31, 2012, discontinued operations included two hotel properties disposed of in 2012. The Doubletree Guest Suites hotel in Columbus, Ohio was sold in November 2012 and the Hilton El Conquistador hotel in Tucson, Arizona was disposed of in December 2012. For the three months ended March 31, 2013 and 2012, there were no impairment charges. There were no assets held for sale as of March 31, 2013 and December 31, 2012. Marketable Securities – Marketable securities and other investments, including U.S. treasury bills, public equity securities and equity put and call options of certain publicly traded companies, are recorded at fair value. Equity put and call options are considered derivatives. The fair value of these investments is based on the closing price as of the balance sheet date and is reported as “Marketable securities” or “Liabilities associated with marketable securities” in the consolidated balance sheets. On the consolidated statements of operations, net investment income, including interest income (expense), dividends, realized gains or losses and related costs incurred, is reported as a component of “Other income” while unrealized gains and losses on these investments are reported as “Unrealized gain on investments." Revenue Recognition – Hotel revenues, including room, food, beverage, and ancillary revenues such as long-distance telephone service, laundry, parking, and space rentals, are recognized when services have been rendered. Interest income is recognized when earned. We discontinue recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. Sales taxes collected from customers and submitted to taxing authorities are not recorded in revenue. Derivatives and Hedges – We primarily use interest rate derivatives to hedge our risks and to capitalize on the historical correlation between changes in LIBOR (London Interbank Offered Rate) and RevPAR (Revenue per Available Room). Interest rate derivatives could include swaps, caps, floors and flooridors. We assess the effectiveness of each hedging relationship by comparing changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction. We also use credit default swaps to hedge financial and capital market risk. All of these derivatives are subject to master-netting settlement arrangements and the credit default swaps are subject to credit support annexes. For credit default swaps, cash collateral is posted by us as well as our counterparty. We offset the fair value of the derivative and the obligation/right to return/reclaim cash collateral. All derivatives are recorded at fair value in accordance with the applicable authoritative accounting guidance. Interest rate derivatives and credit default swaps are reported as “Derivative assets, net” or “Derivative liabilities” in the consolidated balance sheets. Accrued interest on non-hedge designated interest rate derivatives is included in “Accounts receivable, net” in the consolidated balance sheets. For interest rate derivatives designated as cash flow hedges:
For non-hedge designated interest rate derivatives and credit default swaps, changes in fair value are recognized in earnings as “Unrealized loss on derivatives” in the consolidated statements of operations. Income Taxes - As a REIT, we generally will not be subject to federal corporate income tax on the portion of our net income (loss) that does not relate to taxable REIT subsidiaries. However, Ashford TRS is treated as a taxable REIT subsidiary for federal income tax purposes. In accordance with authoritative accounting guidance, we account for income taxes related to Ashford TRS using the asset and liability method under which deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. In addition, the analysis utilized by us in determining our deferred tax asset valuation allowance involves considerable management judgment and assumptions. Recently Adopted Accounting Standards – In December 2011, the Financial Accounting Standards Board issued accounting guidance to require disclosures about offsetting assets and liabilities. Entities are required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master-netting arrangement. This scope would include derivatives, sale and repurchase agreements and reverse sale and repurchase agreements, and securities borrowing and securities lending arrangements that are either netted on the balance sheet or subject to an enforceable master-netting agreement or similar arrangement. The new accounting guidance is effective for fiscal years, and interim periods within those years, beginning after January 1, 2013 and the disclosures should be reported retrospectively for all comparative periods presented. We adopted this accounting guidance on January 1, 2013. The adoption of this accounting guidance did not have any impact on our financial position or results of operations. Reclassifications – Certain amounts in the consolidated financial statements for the three months ended March 31, 2012 have been reclassified for discontinued operations. Additionally, certain amounts due from affiliates have been reclassified in the 2012 consolidated statement of cashflows. These reclassifications had no effect on our cash flows, equity, or net income (loss) previously reported. |