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 | 80,566,496 | |
(Class) | Outstanding at August 5, 2013 |
PART I. FINANCIAL INFORMATION | |
PART II. OTHER INFORMATION | |
June 30, 2013 | December 31, 2012 | ||||||
Assets | (Unaudited) | ||||||
Cash and cash equivalents | $ | 250,464 | $ | 185,935 | |||
Marketable securities | 24,521 | 23,620 | |||||
Total cash, cash equivalents and marketable securities | 274,985 | 209,555 | |||||
Investment in hotel properties, net | 2,938,552 | 2,872,304 | |||||
Restricted cash | 77,954 | 84,786 | |||||
Accounts receivable, net of allowance of $364 and $265, respectively | 37,540 | 35,116 | |||||
Inventories | 2,296 | 2,111 | |||||
Notes receivable, net of allowance of $8,138 and $8,333, respectively | 11,404 | 11,331 | |||||
Investment in unconsolidated joint ventures | 154,173 | 158,694 | |||||
Deferred costs, net | 14,186 | 17,194 | |||||
Prepaid expenses | 15,277 | 10,145 | |||||
Derivative assets, net | 26 | 6,391 | |||||
Other assets | 5,565 | 4,594 | |||||
Intangible asset, net | 2,676 | 2,721 | |||||
Due from affiliates | 2,369 | 1,168 | |||||
Due from third-party hotel managers | 55,155 | 48,619 | |||||
Total assets | $ | 3,592,158 | $ | 3,464,729 | |||
Liabilities and Equity | |||||||
Liabilities: | |||||||
Indebtedness | $ | 2,381,932 | $ | 2,339,410 | |||
Accounts payable and accrued expenses | 96,898 | 84,293 | |||||
Dividends payable | 20,585 | 18,258 | |||||
Unfavorable management contract liabilities | 8,847 | 11,165 | |||||
Due to related party, net | 782 | 3,725 | |||||
Due to third-party hotel managers | 2,038 | 1,410 | |||||
Liabilities associated with marketable securities and other | 1,666 | 1,641 | |||||
Other liabilities | 6,083 | 6,348 | |||||
Total liabilities | 2,518,831 | 2,466,250 | |||||
Redeemable noncontrolling interests in operating partnership | 182,289 | 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 June 30, 2013 and December 31, 2012 | 17 | 17 | |||||
Series D Cumulative Preferred Stock, 9,468,706 shares issued and outstanding at June 30, 2013 and December 31, 2012 | 95 | 95 | |||||
Series E Cumulative Preferred Stock, 4,630,000 shares issued and outstanding at June 30, 2013 and December 31, 2012 | 46 | 46 | |||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 124,896,765 shares issued, 79,316,147 and 68,150,617 shares outstanding at June 30, 2013 and December 31, 2012, respectively | 1,249 | 1,249 | |||||
Additional paid-in capital | 1,866,293 | 1,766,168 | |||||
Accumulated other comprehensive loss | (263 | ) | (282 | ) | |||
Accumulated deficit | (835,308 | ) | (770,467 | ) | |||
Treasury stock, at cost (45,580,618 shares and 56,746,148 shares at June 30, 2013 and December 31, 2012, respectively) | (142,245 | ) | (164,884 | ) | |||
Total shareholders’ equity of the Company | 889,884 | 831,942 | |||||
Noncontrolling interests in consolidated entities | 1,154 | 15,358 | |||||
Total equity | 891,038 | 847,300 | |||||
Total liabilities and equity | $ | 3,592,158 | $ | 3,464,729 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
REVENUE | (Unaudited) | (Unaudited) | |||||||||||||
Rooms | $ | 205,740 | $ | 189,829 | $ | 389,209 | $ | 359,288 | |||||||
Food and beverage | 43,234 | 41,943 | 82,884 | 81,650 | |||||||||||
Other | 9,429 | 8,929 | 18,145 | 16,743 | |||||||||||
Total hotel revenue | 258,403 | 240,701 | 490,238 | 457,681 | |||||||||||
Other | 136 | 77 | 243 | 152 | |||||||||||
Total Revenue | 258,539 | 240,778 | 490,481 | 457,833 | |||||||||||
EXPENSES | |||||||||||||||
Hotel operating expenses: | |||||||||||||||
Rooms | 45,075 | 41,802 | 87,231 | 80,402 | |||||||||||
Food and beverage | 27,616 | 26,950 | 54,791 | 53,951 | |||||||||||
Other expenses | 73,356 | 71,171 | 141,648 | 136,265 | |||||||||||
Management fees | 10,686 | 9,892 | 20,579 | 18,881 | |||||||||||
Total hotel operating expenses | 156,733 | 149,815 | 304,249 | 289,499 | |||||||||||
Property taxes, insurance, and other | 11,663 | 10,138 | 23,911 | 21,850 | |||||||||||
Depreciation and amortization | 32,842 | 33,477 | 65,322 | 67,133 | |||||||||||
Impairment charges | (99 | ) | (95 | ) | (195 | ) | (187 | ) | |||||||
Transaction costs | 1,170 | — | 1,170 | — | |||||||||||
Corporate, general, and administrative | 14,699 | 11,930 | 29,215 | 22,176 | |||||||||||
Total Operating Expenses | 217,008 | 205,265 | 423,672 | 400,471 | |||||||||||
OPERATING INCOME | 41,531 | 35,513 | 66,809 | 57,362 | |||||||||||
Equity in earnings (loss) of unconsolidated joint ventures | 2,367 | 23 | (4,521 | ) | (10,281 | ) | |||||||||
Interest income | 13 | 22 | 49 | 54 | |||||||||||
Other income | 310 | 6,703 | 6,132 | 14,317 | |||||||||||
Interest expense and amortization of loan costs | (36,026 | ) | (36,284 | ) | (71,406 | ) | (71,160 | ) | |||||||
Write-off of loan costs and exit fees | — | — | (1,971 | ) | — | ||||||||||
Unrealized gain (loss) on marketable securities | (919 | ) | 1,628 | 1,782 | 3,413 | ||||||||||
Unrealized gain (loss) on derivatives | 789 | (7,458 | ) | (6,360 | ) | (17,399 | ) | ||||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | 8,065 | 147 | (9,486 | ) | (23,694 | ) | |||||||||
Income tax expense | (465 | ) | (1,366 | ) | (1,069 | ) | (2,245 | ) | |||||||
INCOME (LOSS) FROM CONTINUING OPERATIONS | 7,600 | (1,219 | ) | (10,555 | ) | (25,939 | ) | ||||||||
Income (loss) from discontinued operations | — | (4,721 | ) | — | (4,554 | ) | |||||||||
NET INCOME (LOSS) | 7,600 | (5,940 | ) | (10,555 | ) | (30,493 | ) | ||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | 8 | (54 | ) | 715 | 224 | ||||||||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (502 | ) | 1,180 | 2,260 | 4,238 | ||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY | 7,106 | (4,814 | ) | (7,580 | ) | (26,031 | ) | ||||||||
Preferred dividends | (8,491 | ) | (8,490 | ) | (16,981 | ) | (16,822 | ) | |||||||
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | (1,385 | ) | $ | (13,304 | ) | $ | (24,561 | ) | $ | (42,853 | ) | |||
INCOME (LOSS) PER SHARE - BASIC AND DILUTED: | |||||||||||||||
Basic: | |||||||||||||||
Loss from continuing operations attributable to common shareholders | $ | (0.02 | ) | $ | (0.14 | ) | $ | (0.36 | ) | $ | (0.58 | ) | |||
Income (loss) from discontinued operations attributable to common shareholders | — | (0.06 | ) | — | (0.06 | ) | |||||||||
Loss attributable to common shareholders | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.36 | ) | $ | (0.64 | ) | |||
Weighted average common shares outstanding – basic | 68,489 | 67,639 | 68,088 | 67,396 | |||||||||||
Diluted: | |||||||||||||||
Loss from continuing operations attributable to common shareholders | $ | (0.02 | ) | $ | (0.14 | ) | $ | (0.36 | ) | $ | (0.58 | ) | |||
Income (loss) from discontinued operations attributable to common shareholders | — | (0.06 | ) | — | (0.06 | ) | |||||||||
Loss attributable to common shareholders | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.36 | ) | $ | (0.64 | ) | |||
Weighted average common shares outstanding – diluted | 68,489 | 67,639 | 68,088 | 67,396 | |||||||||||
Dividends declared per common share | $ | 0.12 | $ | 0.11 | $ | 0.24 | $ | 0.22 | |||||||
Amounts attributable to common shareholders: | |||||||||||||||
Income (loss) from continuing operations | $ | 7,106 | $ | (678 | ) | $ | (7,580 | ) | $ | (22,043 | ) | ||||
Income (loss) from discontinued operations | — | (4,136 | ) | — | (3,988 | ) | |||||||||
Preferred dividends | (8,491 | ) | (8,490 | ) | (16,981 | ) | (16,822 | ) | |||||||
Net loss attributable to common shareholders | $ | (1,385 | ) | $ | (13,304 | ) | $ | (24,561 | ) | $ | (42,853 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Net income (loss) | $ | 7,600 | $ | (5,940 | ) | $ | (10,555 | ) | $ | (30,493 | ) | ||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Change in unrealized loss on derivatives | — | (102 | ) | (2 | ) | (111 | ) | ||||||||
Reclassification to interest expense | 16 | 11 | 24 | 23 | |||||||||||
Total other comprehensive income (loss) | 16 | (91 | ) | 22 | (88 | ) | |||||||||
Comprehensive income (loss) | 7,616 | (6,031 | ) | (10,533 | ) | (30,581 | ) | ||||||||
Less: Comprehensive (income) loss attributable to noncontrolling interests in consolidated entities | 8 | (54 | ) | 715 | 224 | ||||||||||
Less: Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership | (504 | ) | 1,191 | 2,257 | 4,249 | ||||||||||
Comprehensive income (loss) attributable to the Company | $ | 7,120 | $ | (4,894 | ) | $ | (7,561 | ) | $ | (26,108 | ) |
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 | — | — | — | — | — | — | — | — | 1,184 | — | — | — | — | — | 1,184 | 11,709 | ||||||||||||||||||||||||||||||||||||||||||
Forfeitures of restricted common shares | — | — | — | — | — | — | — | — | 3 | — | — | (1 | ) | (3 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Issuance of restricted shares/units | — | — | — | — | — | — | — | — | (540 | ) | — | — | 198 | 540 | — | — | 69 | |||||||||||||||||||||||||||||||||||||||||
Issuances of preferred stock | — | — | — | — | — | — | — | — | 244 | — | — | — | — | — | 244 | — | ||||||||||||||||||||||||||||||||||||||||||
Purchases of Treasury Shares | — | — | — | — | — | — | — | — | — | — | — | (32 | ) | (391 | ) | — | (391 | ) | — | |||||||||||||||||||||||||||||||||||||||
Reissuances of Treasury Shares | — | — | — | — | — | — | — | — | 103,398 | — | — | 11,000 | 22,493 | — | 125,891 | — | ||||||||||||||||||||||||||||||||||||||||||
Dividends declared- common stock | — | — | — | — | — | — | — | — | — | (17,718 | ) | — | — | — | — | (17,718 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared- Preferred Stock- Series A | — | — | — | — | — | — | — | — | — | (1,771 | ) | — | — | — | — | (1,771 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared- Preferred Stock- Series D | — | — | — | — | — | — | — | — | — | (10,001 | ) | — | — | — | — | (10,001 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Dividends declared – Preferred Stock- Series E | — | — | — | — | — | — | — | — | — | (5,209 | ) | — | — | — | — | (5,209 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Net unrealized loss on derivative instruments | — | — | — | — | — | — | — | — | — | — | (2 | ) | — | — | — | (2 | ) | — | ||||||||||||||||||||||||||||||||||||||||
Reclassification to interest expense | — | — | — | — | — | — | — | — | — | — | 21 | — | — | — | 21 | 3 | ||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interests | — | — | — | — | — | — | — | — | — | — | — | — | — | (13,489 | ) | (13,489 | ) | (5,137 | ) | |||||||||||||||||||||||||||||||||||||||
Redemption value adjustment | — | — | — | — | — | — | — | — | — | (22,562 | ) | — | — | — | — | (22,562 | ) | 22,562 | ||||||||||||||||||||||||||||||||||||||||
Unvested operating partnership units adjustment | — | — | — | — | — | — | — | — | (4,164 | ) | — | — | — | — | — | (4,164 | ) | 4,164 | ||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | — | (7,580 | ) | — | — | — | (715 | ) | (8,295 | ) | (2,260 | ) | ||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2013 | 1,657 | $ | 17 | 9,469 | $ | 95 | 4,630 | $ | 46 | 124,897 | $ | 1,249 | $ | 1,866,293 | $ | (835,308 | ) | $ | (263 | ) | (45,581 | ) | $ | (142,245 | ) | $ | 1,154 | $ | 891,038 | $ | 182,289 |
Six Months Ended June 30, | |||||||
2013 | 2012 | ||||||
Cash Flows from Operating Activities | (Unaudited) | ||||||
Net loss | $ | (10,555 | ) | $ | (30,493 | ) | |
Adjustments to reconcile net loss to net cash flow provided by operating activities: | |||||||
Depreciation and amortization | 65,322 | 68,539 | |||||
Impairment charges | (195 | ) | 3,933 | ||||
Amortization of loan costs, write-off of loan costs, and exit fees | 5,755 | 2,678 | |||||
Equity in loss of unconsolidated joint ventures | 4,521 | 10,281 | |||||
Income from financing derivatives | (6,215 | ) | (15,935 | ) | |||
Gain on disposition of hotel properties | (76 | ) | — | ||||
Realized and unrealized gains on marketable securities | (1,388 | ) | (1,730 | ) | |||
Purchases of marketable securities | (14,255 | ) | (32,739 | ) | |||
Sales of marketable securities | 14,124 | 32,538 | |||||
Net settlement of trading derivatives | 229 | (1,435 | ) | ||||
Unrealized loss on derivatives | 6,360 | 17,399 | |||||
Equity-based compensation | 12,893 | 9,369 | |||||
Changes in operating assets and liabilities, exclusive of effect of hotel acquisition: | |||||||
Restricted cash | 6,832 | 7,511 | |||||
Accounts receivable and inventories | (4,071 | ) | (12,070 | ) | |||
Prepaid expenses and other assets | (5,528 | ) | (3,249 | ) | |||
Accounts payable and accrued expenses | 13,698 | 14,817 | |||||
Due to/from affiliates | (1,201 | ) | (1,053 | ) | |||
Due to/from related parties | (2,943 | ) | (239 | ) | |||
Due to/from third-party hotel managers | (5,908 | ) | 1,176 | ||||
Other liabilities | (2,548 | ) | (1,094 | ) | |||
Net cash provided by operating activities | 74,851 | 68,204 | |||||
Cash Flows from Investing Activities | |||||||
Proceeds from payments of notes receivable | 122 | 123 | |||||
Net proceeds from sales of hotel properties | 307 | — | |||||
Acquisition of hotel property, net of cash acquired | (88,204 | ) | — | ||||
Improvements and additions to hotel properties | (44,850 | ) | (44,086 | ) | |||
Net cash used in investing activities | (132,625 | ) | (43,963 | ) | |||
Cash Flows from Financing Activities | |||||||
Borrowings on indebtedness | 199,875 | 135,000 | |||||
Repayments of indebtedness | (157,353 | ) | (180,912 | ) | |||
Payments of loan costs | (2,876 | ) | (3,666 | ) | |||
Payments of dividends | (37,509 | ) | (35,044 | ) | |||
Purchases of treasury shares | (391 | ) | — | ||||
Payments for derivatives | (36 | ) | (137 | ) | |||
Cash income from derivatives | 7,878 | 16,028 | |||||
Issuance of common stock | — | — | |||||
Issuance of preferred stock | 244 | 15,983 | |||||
Issuances of treasury stock | 125,891 | — | |||||
Contributions from noncontrolling interests in consolidated entities | — | 300 | |||||
Distributions to noncontrolling interests in consolidated entities | (13,489 | ) | — | ||||
Other | 69 | 64 | |||||
Net cash provided by (used in) financing activities | 122,303 | (52,384 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 64,529 | (28,143 | ) | ||||
Cash and cash equivalents at beginning of period | 185,935 | 167,609 | |||||
Cash and cash equivalents at end of period | $ | 250,464 | $ | 139,466 | |||
Supplemental Cash Flow Information | |||||||
Interest paid | $ | 65,701 | $ | 68,873 | |||
Income taxes paid (refunded) | $ | 936 | $ | (204 | ) | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activity | |||||||
Accrued interest added to principal of indebtedness | $ | — | $ | 2,397 |
1. | Organization and Description of Business |
• | 95 consolidated hotel properties ("legacy hotel properties"), including 91 directly owned and four owned through majority-owned investments in consolidated entities, which represent 20,176 total rooms (or 19,915 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), |
• | 92 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 and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. |
• | Marriott International, Inc. (“Marriott”) currently manages 32 of our legacy hotel properties. There were eight additional hotel properties managed by Marriott until May 31, 2013. For these 40 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 31st, June 30th, September 30th and December 31st. Therefore, in any given quarterly period, period-over-period results will have different ending dates. For Marriott-managed hotels, the 2013 and 2012 fiscal years began on December 29, 2012 and December 31, 2011, respectively. The second quarters of 2013 and 2012 began on April 1, 2013 and March 24, 2012, respectively and ended on June 30, 2013 and June 15, 2012, respectively. As a result, the quarter ended June 30, 2013 contained 91 days while the quarter ended June 15, 2012 contained 84 days and the six month periods contained 184 days and 168 days, respectively. 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 |
June 30, 2013 | December 31, 2012 | ||||||
Land | $ | 523,708 | $ | 483,242 | |||
Buildings and improvements | 2,820,311 | 2,779,589 | |||||
Furniture, fixtures, and equipment | 215,204 | 224,907 | |||||
Construction in progress | 8,997 | 10,499 | |||||
Condominium properties | 12,590 | 12,690 | |||||
Total cost | 3,580,810 | 3,510,927 | |||||
Accumulated depreciation | (642,258 | ) | (638,623 | ) | |||
Investments in hotel properties, net | $ | 2,938,552 | $ | 2,872,304 |
Land | $ | 40,466 | |
Buildings and improvements | 40,466 | ||
Furniture, fixtures, and equipment | 8,993 | ||
89,925 | |||
Net other assets and liabilities | (1,691 | ) | |
Total | $ | 88,234 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total revenue | $ | 261,248 | $ | 245,742 | $ | 499,142 | $ | 468,333 | |||||||
Income (loss) from continuing operations | $ | 9,436 | $ | 513 | $ | (6,132 | ) | $ | (21,985 | ) | |||||
Net income (loss) | $ | 9,436 | $ | (4,208 | ) | $ | (6,132 | ) | $ | (26,539 | ) |
5. | Notes Receivable |
6. | Investment in Unconsolidated Joint Ventures |
PIM Highland JV | |||||||
Condensed Consolidated Balance Sheets | |||||||
June 30, 2013 | December 31, 2012 | ||||||
Total assets | $ | 1,416,682 | $ | 1,417,204 | |||
Total liabilities | 1,180,613 | 1,176,298 | |||||
Members' equity | 236,069 | 240,906 | |||||
Total liabilities and members' equity | $ | 1,416,682 | $ | 1,417,204 | |||
Our ownership interest in PIM Highland JV | $ | 154,173 | $ | 158,694 |
PIM Highland JV | |||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Total revenue | $ | 118,263 | $ | 112,802 | $ | 220,536 | $ | 206,054 | |||||||
Total expenses | (97,305 | ) | (95,169 | ) | (192,065 | ) | (185,236 | ) | |||||||
Operating income | 20,958 | 17,633 | 28,471 | 20,818 | |||||||||||
Interest income and other | 23 | 33 | 41 | 64 | |||||||||||
Interest expense, amortization and write-offs of deferred loan costs, discounts and premiums and exit fees | (16,149 | ) | (15,886 | ) | (31,851 | ) | (31,411 | ) | |||||||
Other expenses | — | (11 | ) | — | (64 | ) | |||||||||
Income tax expense | (782 | ) | (1,089 | ) | (1,498 | ) | (2,463 | ) | |||||||
Net income (loss) | $ | 4,050 | $ | 680 | $ | (4,837 | ) | $ | (13,056 | ) | |||||
Our equity in earnings (loss) of PIM Highland JV | $ | 2,367 | $ | 23 | $ | (4,521 | ) | $ | (10,281 | ) |
7. | Assets Held for Sale and Discontinued Operations |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2012 | 2012 | ||||||
Hotel revenues | $ | 8,355 | $ | 17,187 | |||
Hotel operating expenses | (7,557 | ) | (14,751 | ) | |||
Operating income | 798 | 2,436 | |||||
Property taxes, insurance, and other | (387 | ) | (830 | ) | |||
Depreciation and amortization | (707 | ) | (1,406 | ) | |||
Impairment charges | (4,120 | ) | (4,120 | ) | |||
Interest expense and amortization of loan costs | (305 | ) | (634 | ) | |||
Loss from discontinued operations before income tax expense | (4,721 | ) | (4,554 | ) | |||
Income tax expense | — | — | |||||
Loss from discontinued operations | (4,721 | ) | (4,554 | ) | |||
Loss from discontinued operations attributable to redeemable noncontrolling interest in operating partnership | 585 | 566 | |||||
Loss from discontinued operations attributable to the Company | $ | (4,136 | ) | $ | (3,988 | ) |
8. | Indebtedness |
Indebtedness | Collateral | Maturity | Interest Rate | June 30, 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% | 170,682 | 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% | 5,198 | 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% | 103,523 | 104,680 | ||||||
Mortgage loan | 10 hotels | July 2015 | 5.22% | 151,044 | 152,513 | ||||||
Mortgage loan | 8 hotels | December 2015 | 5.7% | 95,910 | 96,907 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 109,154 | 110,169 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 90,522 | 91,364 | ||||||
Mortgage loan | 5 hotels | February 2016 | 5.53% | 78,412 | 79,140 | ||||||
Mortgage loan (6) | 1 hotel | April 2017 | 5.91% | 34,523 | 34,735 | ||||||
Mortgage loan | 2 hotels | April 2017 | 5.95% | 126,519 | 127,289 | ||||||
Mortgage loan | 3 hotels | April 2017 | 5.95% | 257,455 | 259,021 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 114,039 | 114,732 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 102,503 | 103,126 | ||||||
Mortgage loan | 5 hotels | April 2017 | 5.95% | 155,970 | 156,918 | ||||||
Mortgage loan | 7 hotels | April 2017 | 5.95% | 124,758 | 125,517 | ||||||
Mortgage loan (5) | 2 hotels | February 2018 | LIBOR (1) + 3.50% | 199,275 | — | ||||||
TIF loan (6) (7) | 1 hotel | June 2018 | 12.85% | 8,098 | 8,098 | ||||||
Mortgage loan | 1 hotel | November 2020 | 6.26% | 101,916 | 102,562 | ||||||
Mortgage loan | 1 hotel | April 2034 | Greater of 6.00% or Prime + 1.00% | 6,431 | 6,507 | ||||||
Total | $ | 2,381,932 | $ | 2,339,410 |
9. | Income (Loss) Per Share |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Loss from continuing operations allocated to common shareholders: | |||||||||||||||
Loss from continuing operations attributable to the Company | $ | 7,106 | $ | (678 | ) | $ | (7,580 | ) | $ | (22,043 | ) | ||||
Less: Dividends on preferred stocks | (8,491 | ) | (8,490 | ) | (16,981 | ) | (16,822 | ) | |||||||
Less: Dividends on common stock | (9,467 | ) | (7,442 | ) | (17,606 | ) | (14,838 | ) | |||||||
Less: Dividends on unvested restricted shares | (51 | ) | (56 | ) | (112 | ) | (160 | ) | |||||||
Undistributed loss from continuing operations | (10,903 | ) | (16,666 | ) | (42,279 | ) | (53,863 | ) | |||||||
Add back: Dividends on common stock | 9,467 | 7,442 | 17,606 | 14,838 | |||||||||||
Distributed and undistributed loss from continuing operations - basic and diluted | $ | (1,436 | ) | $ | (9,224 | ) | $ | (24,673 | ) | $ | (39,025 | ) | |||
Income from discontinued operations allocated to common shareholders: | |||||||||||||||
Income from discontinued operations - basic and diluted | $ | — | $ | (4,136 | ) | $ | — | $ | (3,988 | ) | |||||
Weighted average shares outstanding: | |||||||||||||||
Weighted average shares outstanding - basic and diluted | 68,489 | 67,639 | 68,088 | 67,396 | |||||||||||
Basic loss per share: | |||||||||||||||
Loss from continuing operations allocated to common shareholders per share | $ | (0.02 | ) | $ | (0.14 | ) | $ | (0.36 | ) | $ | (0.58 | ) | |||
Income from discontinued operations allocated to common shareholders per share | — | (0.06 | ) | — | (0.06 | ) | |||||||||
Net loss allocated to common shareholders per share | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.36 | ) | $ | (0.64 | ) | |||
Diluted loss per share: | |||||||||||||||
Loss from continuing operations allocated to common shareholders per share | $ | (0.02 | ) | $ | (0.14 | ) | $ | (0.36 | ) | $ | (0.58 | ) | |||
Income from discontinued operations allocated to common shareholders per share | — | (0.06 | ) | — | (0.06 | ) | |||||||||
Net loss allocated to common shareholders per share | $ | (0.02 | ) | $ | (0.20 | ) | $ | (0.36 | ) | $ | (0.64 | ) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Loss from continuing operations allocated to common shareholders is not adjusted for: | |||||||||||||||
Income allocated to unvested restricted shares | $ | 51 | $ | 56 | $ | 112 | $ | 160 | |||||||
Income (loss) attributable to noncontrolling interest in operating partnership units | 502 | (1,180 | ) | (2,260 | ) | (4,238 | ) | ||||||||
Total | $ | 553 | $ | (1,124 | ) | $ | (2,148 | ) | $ | (4,078 | ) | ||||
Weighted average diluted shares are not adjusted for: | |||||||||||||||
Effect of unvested restricted shares | 106 | 101 | 126 | 266 | |||||||||||
Effect of assumed conversion of operating partnership units | 18,894 | 17,577 | 18,430 | 17,129 | |||||||||||
Total | 19,000 | 17,678 | 18,556 | 17,395 |
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 | ||||||||||||||
June 30, 2013: | |||||||||||||||||
Assets | |||||||||||||||||
Derivative Assets: | |||||||||||||||||
Interest rate derivatives - non-hedges | $ | — | $ | 24 | $ | — | $ | 24 | (1) | ||||||||
Interest rate derivatives - hedges | — | 2 | — | 2 | (1) | ||||||||||||
Equity put and call options | 862 | — | — | 862 | (2) | ||||||||||||
Non-derivative Assets: | |||||||||||||||||
Equity and US treasury securities | 23,659 | — | — | 23,659 | (2) | ||||||||||||
Total | 24,521 | 26 | — | 24,547 | |||||||||||||
Liabilities | |||||||||||||||||
Derivative Liabilities: | |||||||||||||||||
Credit default swaps | — | 2,802 | (2,992 | ) | (190 | ) | (3) | ||||||||||
Short-equity call options | (79 | ) | — | — | (79 | ) | (3) | ||||||||||
Non-derivative Liabilities: | |||||||||||||||||
Margin account balance | (1,397 | ) | — | — | (1,397 | ) | (3) | ||||||||||
Total | (1,476 | ) | 2,802 | (2,992 | ) | (1,666 | ) | ||||||||||
Net | $ | 23,045 | $ | 2,828 | $ | (2,992 | ) | $ | 22,881 | ||||||||
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 June 30, | Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Derivative Assets: | |||||||||||||||||||||||
Interest rate derivatives | $ | 16 | $ | (13,034 | ) | $ | — | $ | 13,477 | $ | 16 | $ | 11 | ||||||||||
Equity put and call options | (18 | ) | (963 | ) | — | — | — | — | |||||||||||||||
Non-derivative Assets: | |||||||||||||||||||||||
Equity and US treasury securities | (1,466 | ) | 1,391 | — | — | — | — | ||||||||||||||||
Total | (1,468 | ) | (12,606 | ) | — | 13,477 | 16 | 11 | |||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative Liabilities: | |||||||||||||||||||||||
Interest rate derivatives | — | 5,089 | — | (5,511 | ) | — | — | ||||||||||||||||
Credit default swaps | 750 | 487 | — | — | — | — | |||||||||||||||||
Short-equity put options | — | 317 | — | — | — | — | |||||||||||||||||
Short-equity call options | 670 | (420 | ) | — | — | — | — | ||||||||||||||||
Total | 1,420 | 5,473 | — | (5,511 | ) | — | — | ||||||||||||||||
Net | $ | (48 | ) | $ | (7,133 | ) | $ | — | $ | 7,966 | $ | 16 | $ | 11 | |||||||||
Total combined | |||||||||||||||||||||||
Interest rate derivatives | $ | 16 | $ | (7,945 | ) | $ | — | $ | 7,966 | $ | 16 | $ | 11 | ||||||||||
Credit default swaps | 773 | 487 | — | — | — | — | |||||||||||||||||
Total derivatives | 789 | (1) | (7,458 | ) | (1) | — | (2) | 7,966 | (2) | 16 | 11 | ||||||||||||
Unrealized gain (loss) on marketable securities | (919 | ) | (3) | 1,628 | (3) | — | — | — | — | ||||||||||||||
Realized gain (loss) loss on marketable securities | 82 | (2) (4) | (1,303 | ) | (2) | — | — | — | — | ||||||||||||||
Net | $ | (48 | ) | $ | (7,133 | ) | $ | — | $ | 7,966 | $ | 16 | $ | 11 |
Gain (Loss) Recognized In Income | Interest Savings (Cost) Recognized In Income | Reclassified from Accumulated OCI into Interest Expense | |||||||||||||||||||||
Six Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||
Assets | |||||||||||||||||||||||
Derivative Assets: | |||||||||||||||||||||||
Interest rate derivatives | $ | (10,629 | ) | $ | (22,433 | ) | $ | 10,639 | $ | 26,830 | $ | 24 | $ | 23 | |||||||||
Put and call options | 186 | (2,330 | ) | — | — | — | — | ||||||||||||||||
Non-derivative Assets: | |||||||||||||||||||||||
Equity and US treasury securities | 1,110 | 4,015 | — | — | — | — | |||||||||||||||||
Total | (9,333 | ) | (20,748 | ) | 10,639 | 26,830 | 24 | 23 | |||||||||||||||
Liabilities | |||||||||||||||||||||||
Derivative Liabilities: | |||||||||||||||||||||||
Interest rate derivatives | 4,400 | 6,742 | (4,424 | ) | (10,895 | ) | — | — | |||||||||||||||
Credit default swaps | (175 | ) | (1,708 | ) | — | — | — | — | |||||||||||||||
Short-equity put options | 7 | 830 | — | — | — | — | |||||||||||||||||
Short-equity call options | 85 | (783 | ) | — | — | — | — | ||||||||||||||||
Non-derivative Liabilities: | |||||||||||||||||||||||
Short-equity securities | — | — | — | — | — | ||||||||||||||||||
Total | 4,317 | 5,081 | (4,424 | ) | (10,895 | ) | — | — | |||||||||||||||
Net | $ | (5,016 | ) | $ | (15,667 | ) | $ | 6,215 | $ | 15,935 | $ | 24 | $ | 23 | |||||||||
Total combined | |||||||||||||||||||||||
Interest rate derivatives | $ | (6,229 | ) | $ | (15,691 | ) | $ | 6,215 | $ | 15,935 | $ | 24 | $ | 23 | |||||||||
Credit default swaps | (131 | ) | (1,708 | ) | |||||||||||||||||||
Total derivatives | (6,360 | ) | (1) | (17,399 | ) | (1) | 6,215 | (2) | 15,935 | (2) | 24 | 23 | |||||||||||
Unrealized gain on marketable securities | 1,782 | (3) | 3,413 | (3) | — | — | — | — | |||||||||||||||
Realized loss on marketable securities | (438 | ) | (2) (4) | (1,681 | ) | (2) | — | — | — | — | |||||||||||||
Net | $ | (5,016 | ) | $ | (15,667 | ) | $ | 6,215 | $ | 15,935 | $ | 24 | $ | 23 | |||||||||
12. | Summary of Fair Value of Financial Instruments |
June 30, 2013 | December 31, 2012 | ||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | ||||||||||||
Financial assets and liabilities measured at fair value: | |||||||||||||||
Marketable securities | $ | 24,521 | $ | 24,521 | $ | 23,620 | $ | 23,620 | |||||||
Derivative assets, net | $ | 26 | $ | 26 | $ | 6,391 | $ | 6,391 | |||||||
Liabilities associated with marketable securities and other | $ | 1,666 | $ | 1,666 | $ | 1,641 | $ | 1,641 | |||||||
Financial assets not measured at fair value: | |||||||||||||||
Cash and cash equivalents | $ | 250,464 | $ | 250,464 | $ | 185,935 | $ | 185,935 | |||||||
Restricted cash | $ | 77,954 | $ | 77,954 | $ | 84,786 | $ | 84,786 | |||||||
Accounts receivable | $ | 37,540 | $ | 37,540 | $ | 35,116 | $ | 35,116 | |||||||
Notes receivable | $ | 11,404 | $14,136 to $15,625 | $ | 11,331 | $14,385 to $15,899 | |||||||||
Due from affiliates | $ | 2,369 | $ | 2,369 | $ | 1,168 | $ | 1,168 | |||||||
Due from third-party hotel managers | $ | 55,155 | $ | 55,155 | $ | 48,619 | $ | 48,619 | |||||||
Financial liabilities not measured at fair value: | |||||||||||||||
Indebtedness | $ | 2,381,932 | $2,322,867 to $2,567,380 | $ | 2,339,410 | $2,266,991 to $2,505,622 | |||||||||
Accounts payable and accrued expenses | $ | 96,898 | $ | 96,898 | $ | 84,293 | $ | 84,293 | |||||||
Dividends payable | $ | 20,585 | $ | 20,585 | $ | 18,258 | $ | 18,258 | |||||||
Due to related party, net | $ | 782 | $ | 782 | $ | 3,725 | $ | 3,725 | |||||||
Due to third-party hotel managers | $ | 2,038 | $ | 2,038 | $ | 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 June 30, 2013: | |||||||||||||||
Total revenue | $ | 258,539 | $ | — | $ | — | $ | 258,539 | |||||||
Total hotel operating expenses | 156,733 | — | — | 156,733 | |||||||||||
Property taxes, insurance, and other | 11,663 | — | — | 11,663 | |||||||||||
Depreciation and amortization | 32,842 | — | — | 32,842 | |||||||||||
Impairment charges | — | (99 | ) | — | (99 | ) | |||||||||
Transaction costs | 1,170 | — | — | 1,170 | |||||||||||
Corporate, general, and administrative | — | — | 14,699 | 14,699 | |||||||||||
Total expenses (income) | 202,408 | (99 | ) | 14,699 | 217,008 | ||||||||||
Operating income (loss) | 56,131 | 99 | (14,699 | ) | 41,531 | ||||||||||
Equity in earnings of unconsolidated joint ventures | 2,367 | — | — | 2,367 | |||||||||||
Interest income | — | — | 13 | 13 | |||||||||||
Other income | — | — | 310 | 310 | |||||||||||
Interest expense and amortization of loan costs | — | — | (36,026 | ) | (36,026 | ) | |||||||||
Unrealized loss on marketable securities | — | — | (919 | ) | (919 | ) | |||||||||
Unrealized gain on derivatives | — | — | 789 | 789 | |||||||||||
Income (loss) from continuing operations before income taxes | 58,498 | 99 | (50,532 | ) | 8,065 | ||||||||||
Income tax expense | (465 | ) | (465 | ) | |||||||||||
Income (loss) from continuing operations | $ | 58,498 | $ | 99 | $ | (50,997 | ) | $ | 7,600 | ||||||
As of June 30, 2013: | |||||||||||||||
Total assets | $ | 3,285,389 | $ | 3,773 | $ | 302,996 | $ | 3,592,158 |
Direct Hotel Investments | Hotel Financing | Corporate | Consolidated | ||||||||||||
Three Months Ended June 30, 2012: | |||||||||||||||
Total revenue | $ | 240,778 | $ | — | $ | — | $ | 240,778 | |||||||
Total hotel operating expenses | 149,815 | — | — | 149,815 | |||||||||||
Property taxes, insurance, and other | 10,138 | — | — | 10,138 | |||||||||||
Depreciation and amortization | 33,477 | — | — | 33,477 | |||||||||||
Impairment charges | — | (95 | ) | — | (95 | ) | |||||||||
Corporate, general, and administrative | — | — | 11,930 | 11,930 | |||||||||||
Total expenses (income) | 193,430 | (95 | ) | 11,930 | 205,265 | ||||||||||
Operating income (loss) | 47,348 | 95 | (11,930 | ) | 35,513 | ||||||||||
Equity in earnings of unconsolidated joint ventures | 23 | — | — | 23 | |||||||||||
Interest income | — | — | 22 | 22 | |||||||||||
Other income | — | — | 6,703 | 6,703 | |||||||||||
Interest expense and amortization of loan costs | — | — | (36,284 | ) | (36,284 | ) | |||||||||
Unrealized gain on marketable securities | — | — | 1,628 | 1,628 | |||||||||||
Unrealized loss on derivatives | — | — | (7,458 | ) | (7,458 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 47,371 | 95 | (47,319 | ) | 147 | ||||||||||
Income tax expense | — | — | (1,366 | ) | (1,366 | ) | |||||||||
Income (loss) from continuing operations | $ | 47,371 | $ | 95 | $ | (48,685 | ) | $ | (1,219 | ) | |||||
As of June 30, 2012: | |||||||||||||||
Total assets | $ | 3,279,468 | $ | 3,632 | $ | 241,579 | $ | 3,524,679 |
Direct Hotel Investments | Hotel Financing | Corporate | Consolidated | ||||||||||||
Six Months Ended June 30, 2013: | |||||||||||||||
Total revenue | $ | 490,481 | $ | — | $ | — | $ | 490,481 | |||||||
Total hotel operating expenses | 304,249 | — | — | 304,249 | |||||||||||
Property taxes, insurance, and other | 23,911 | — | — | 23,911 | |||||||||||
Depreciation and amortization | 65,322 | — | — | 65,322 | |||||||||||
Impairment charges | — | (195 | ) | — | (195 | ) | |||||||||
Transaction costs | 1,170 | — | — | 1,170 | |||||||||||
Corporate, general, and administrative | — | — | 29,215 | 29,215 | |||||||||||
Total expenses (income) | 394,652 | (195 | ) | 29,215 | 423,672 | ||||||||||
Operating income (loss) | 95,829 | 195 | (29,215 | ) | 66,809 | ||||||||||
Equity in loss of unconsolidated joint ventures | (4,521 | ) | — | — | (4,521 | ) | |||||||||
Interest income | — | — | 49 | 49 | |||||||||||
Other income | — | — | 6,132 | 6,132 | |||||||||||
Interest expense and amortization of loan costs | — | — | (71,406 | ) | (71,406 | ) | |||||||||
Write-off of loan costs and exit fees | — | — | (1,971 | ) | (1,971 | ) | |||||||||
Unrealized gain on marketable securities | — | — | 1,782 | 1,782 | |||||||||||
Unrealized loss on derivatives | — | — | (6,360 | ) | (6,360 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 91,308 | 195 | (100,989 | ) | (9,486 | ) | |||||||||
Income tax expense | — | — | (1,069 | ) | (1,069 | ) | |||||||||
Income (loss) from continuing operations | $ | 91,308 | $ | 195 | $ | (102,058 | ) | $ | (10,555 | ) | |||||
Direct Hotel Investments | Hotel Financing | Corporate | Consolidated | ||||||||||||
Six Months Ended June 30, 2012: | |||||||||||||||
Total revenue | $ | 457,833 | $ | — | $ | — | $ | 457,833 | |||||||
Total hotel operating expenses | 289,499 | — | — | 289,499 | |||||||||||
Property taxes, insurance, and other | 21,850 | — | — | 21,850 | |||||||||||
Depreciation and amortization | 67,133 | — | — | 67,133 | |||||||||||
Impairment charges | — | (187 | ) | — | (187 | ) | |||||||||
Corporate, general, and administrative | — | — | 22,176 | 22,176 | |||||||||||
Total expenses (income) | 378,482 | (187 | ) | 22,176 | 400,471 | ||||||||||
Operating income (loss) | 79,351 | 187 | (22,176 | ) | 57,362 | ||||||||||
Equity in loss of unconsolidated joint ventures | (10,281 | ) | — | — | (10,281 | ) | |||||||||
Interest income | — | — | 54 | 54 | |||||||||||
Other income | — | — | 14,317 | 14,317 | |||||||||||
Interest expense and amortization of loan costs | — | — | (71,160 | ) | (71,160 | ) | |||||||||
Unrealized gain on marketable securities | — | — | 3,413 | 3,413 | |||||||||||
Unrealized loss on derivatives | — | — | (17,399 | ) | (17,399 | ) | |||||||||
Income (loss) from continuing operations before income taxes | 69,070 | 187 | (92,951 | ) | (23,694 | ) | |||||||||
Income tax expense | — | — | (2,245 | ) | (2,245 | ) | |||||||||
Income (loss) from continuing operations | $ | 69,070 | $ | 187 | $ | (95,196 | ) | $ | (25,939 | ) | |||||
• | factors discussed our Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange commission on March 1, 2013, including those set forth under the sections titled “Risk Factors,” “Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties,” as updated in this Form 10-Q; |
• | general and economic business conditions affecting the lodging and travel industry; |
• | general volatility of the capital markets and the market price of our common stock; |
• | changes in our business or investment strategy; |
• | availability, terms, and deployment of capital; |
• | availability of qualified personnel; |
• | changes in our industry and the market in which we operate, interest rates, or general or local economic conditions; and |
• | the degree and nature of our competition. |
• | 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 June 30, | Favorable/ (Unfavorable) Change | Six Months Ended June 30, | Favorable/ (Unfavorable) Change | ||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
Total revenue | $ | 258,539 | $ | 240,778 | $ | 17,761 | $ | 490,481 | $ | 457,833 | $ | 32,648 | |||||||||||
Total hotel operating expenses | $ | (156,733 | ) | $ | (149,815 | ) | $ | (6,918 | ) | $ | (304,249 | ) | $ | (289,499 | ) | $ | (14,750 | ) | |||||
Property taxes, insurance, and other | $ | (11,663 | ) | $ | (10,138 | ) | $ | (1,525 | ) | $ | (23,911 | ) | $ | (21,850 | ) | $ | (2,061 | ) | |||||
Depreciation and amortization | $ | (32,842 | ) | $ | (33,477 | ) | $ | 635 | $ | (65,322 | ) | $ | (67,133 | ) | $ | 1,811 | |||||||
Impairment charges | $ | 99 | $ | 95 | $ | 4 | $ | 195 | $ | 187 | $ | 8 | |||||||||||
Transaction costs | $ | (1,170 | ) | $ | — | $ | (1,170 | ) | $ | (1,170 | ) | $ | — | $ | (1,170 | ) | |||||||
Corporate, general, and administrative | $ | (14,699 | ) | $ | (11,930 | ) | $ | (2,769 | ) | $ | (29,215 | ) | $ | (22,176 | ) | $ | (7,039 | ) | |||||
Operating income | $ | 41,531 | $ | 35,513 | $ | 6,018 | $ | 66,809 | $ | 57,362 | $ | 9,447 | |||||||||||
Equity in earnings (loss) of unconsolidated joint ventures | $ | 2,367 | $ | 23 | $ | 2,344 | $ | (4,521 | ) | $ | (10,281 | ) | $ | 5,760 | |||||||||
Interest income | $ | 13 | $ | 22 | $ | (9 | ) | $ | 49 | $ | 54 | $ | (5 | ) | |||||||||
Other income | $ | 310 | $ | 6,703 | $ | (6,393 | ) | $ | 6,132 | $ | 14,317 | $ | (8,185 | ) | |||||||||
Interest expense and amortization of loan costs | $ | (36,026 | ) | $ | (36,284 | ) | $ | 258 | $ | (71,406 | ) | $ | (71,160 | ) | $ | (246 | ) | ||||||
Write-off of loan costs and exit fees | $ | — | $ | — | $ | — | $ | (1,971 | ) | $ | — | $ | (1,971 | ) | |||||||||
Unrealized gain (loss) on marketable securities | $ | (919 | ) | $ | 1,628 | $ | (2,547 | ) | $ | 1,782 | $ | 3,413 | $ | (1,631 | ) | ||||||||
Unrealized gain (loss) on derivatives | $ | 789 | $ | (7,458 | ) | $ | 8,247 | $ | (6,360 | ) | $ | (17,399 | ) | $ | 11,039 | ||||||||
Income tax expense | $ | (465 | ) | $ | (1,366 | ) | $ | 901 | $ | (1,069 | ) | $ | (2,245 | ) | $ | 1,176 | |||||||
Income (loss) from continuing operations | $ | 7,600 | $ | (1,219 | ) | $ | 8,819 | $ | (10,555 | ) | $ | (25,939 | ) | $ | 15,384 | ||||||||
Loss from discontinued operations | $ | — | $ | (4,721 | ) | $ | 4,721 | $ | — | $ | (4,554 | ) | $ | 4,554 | |||||||||
Net income (loss) | $ | 7,600 | $ | (5,940 | ) | $ | 13,540 | $ | (10,555 | ) | $ | (30,493 | ) | $ | 19,938 | ||||||||
(Income) loss from consolidated entities attributable to noncontrolling interests | $ | 8 | $ | (54 | ) | $ | 62 | $ | 715 | $ | 224 | $ | 491 | ||||||||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | $ | (502 | ) | $ | 1,180 | $ | (1,682 | ) | $ | 2,260 | $ | 4,238 | $ | (1,978 | ) | ||||||||
Net income (loss) attributable to the Company | $ | 7,106 | $ | (4,814 | ) | $ | 11,920 | $ | (7,580 | ) | $ | (26,031 | ) | $ | 18,451 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
RevPar (revenue per available room) | $ | 111.75 | $ | 107.35 | $ | 105.61 | $ | 101.57 | |||||||
Occupancy | 78.70 | % | 78.60 | % | 75.00 | % | 74.80 | % | |||||||
ADR (average daily rate) | $ | 142.07 | $ | 136.60 | $ | 140.75 | $ | 135.72 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) | $ | 7,600 | $ | (5,940 | ) | $ | (10,555 | ) | $ | (30,493 | ) | ||||
(Income) loss from consolidated entities attributable to noncontrolling interests | 8 | (54 | ) | 715 | 224 | ||||||||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (502 | ) | 1,180 | 2,260 | 4,238 | ||||||||||
Net income (loss) attributable to the Company | 7,106 | (4,814 | ) | (7,580 | ) | (26,031 | ) | ||||||||
Interest income | (13 | ) | (22 | ) | (49 | ) | (54 | ) | |||||||
Interest expense and amortization of loan costs | 35,529 | 36,239 | 70,501 | 71,090 | |||||||||||
Depreciation and amortization | 32,005 | 33,434 | 63,665 | 67,017 | |||||||||||
Impairment charges | (99 | ) | 4,025 | (195 | ) | 3,933 | |||||||||
Income tax expense | 465 | 1,366 | 1,069 | 2,245 | |||||||||||
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership | 502 | (1,180 | ) | (2,260 | ) | (4,238 | ) | ||||||||
Equity in (earnings) loss of unconsolidated joint ventures | (2,367 | ) | (23 | ) | 4,521 | 10,281 | |||||||||
Company's portion of EBITDA of unconsolidated joint ventures | 26,747 | 25,116 | 44,136 | 39,680 | |||||||||||
EBITDA | 99,875 | 94,141 | 173,808 | 163,923 | |||||||||||
Amortization of unfavorable management contract liabilities | (586 | ) | (565 | ) | (1,197 | ) | (1,129 | ) | |||||||
Write-off of loan costs and exit fees | — | — | 1,971 | — | |||||||||||
Other income (1) | (310 | ) | (6,703 | ) | (6,132 | ) | (14,317 | ) | |||||||
Transaction costs and management conversion costs (2) | 1,300 | — | 1,300 | — | |||||||||||
Transaction costs related to proposed spin-off | 3,856 | — | 3,856 | — | |||||||||||
Legal costs related to litigation settlements (3) | — | 1,467 | — | 1,707 | |||||||||||
Unrealized (gain) loss on marketable securities | 919 | (1,628 | ) | (1,782 | ) | (3,413 | ) | ||||||||
Unrealized (gain) loss on derivatives | (789 | ) | 7,458 | 6,360 | 17,399 | ||||||||||
Equity-based compensation | 4,550 | 4,223 | 12,893 | 9,369 | |||||||||||
Company's portion of adjustments to EBITDA of unconsolidated joint ventures | 3 | 49 | 22 | 144 | |||||||||||
Adjusted EBITDA | $ | 108,818 | $ | 98,442 | $ | 191,099 | $ | 173,683 |
(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. |
(2) | Includes $130 of management conversion costs. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income (loss) | $ | 7,600 | $ | (5,940 | ) | $ | (10,555 | ) | $ | (30,493 | ) | ||||
(Income) loss from consolidated entities attributable to noncontrolling interests | 8 | (54 | ) | 715 | 224 | ||||||||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | (502 | ) | 1,180 | 2,260 | 4,238 | ||||||||||
Preferred dividends | (8,491 | ) | (8,490 | ) | (16,981 | ) | (16,822 | ) | |||||||
Net loss attributable to common shareholders | (1,385 | ) | (13,304 | ) | (24,561 | ) | (42,853 | ) | |||||||
Depreciation and amortization of real estate | 31,900 | 33,374 | 63,462 | 66,892 | |||||||||||
Impairment charges | (99 | ) | 4,025 | (195 | ) | 3,933 | |||||||||
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership | 502 | (1,180 | ) | (2,260 | ) | (4,238 | ) | ||||||||
Equity in (earnings) loss of unconsolidated joint ventures | (2,367 | ) | (23 | ) | 4,521 | 10,281 | |||||||||
Company's portion of FFO of unconsolidated joint ventures | 14,617 | 12,955 | 20,253 | 15,410 | |||||||||||
FFO available to common shareholders | 43,168 | 35,847 | 61,220 | 49,425 | |||||||||||
Write-off of loan costs and exit fees | — | — | 1,971 | — | |||||||||||
Transaction costs and management conversion costs (1) | 1,300 | — | 1,300 | — | |||||||||||
Transaction costs related to proposed spin-off | 3,856 | — | 3,856 | — | |||||||||||
Legal costs related to litigation settlements (2) | — | 1,467 | — | 1,707 | |||||||||||
Other income (3) | (310 | ) | 1,303 | 83 | 1,681 | ||||||||||
Unrealized (gain) loss on marketable securities | 919 | (1,628 | ) | (1,782 | ) | (3,413 | ) | ||||||||
Unrealized (gain) loss on derivatives | (789 | ) | 7,458 | 6,360 | 17,399 | ||||||||||
Equity-based compensation adjustment for modified employment terms | — | (511 | ) | 4,678 | 480 | ||||||||||
Company's portion of adjustments to FFO of unconsolidated joint ventures | 3 | 49 | 22 | 144 | |||||||||||
Adjusted FFO available to common shareholders | $ | 48,147 | $ | 43,985 | $ | 77,708 | $ | 67,423 |
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 |
Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||
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 | ||
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 | ||
Pier House Resort | Key West, FL | Full service | 142 | 100 | % | 142 |
Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||
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 | 20,176 | 19,915 |
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* | Amendment No. 1 to Fourth Amended and Restated Agreement of Limited Partnership of Ashford Hospitality Limited Partnership, dated June 26, 2012 | ||
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 June 30, 2013 are 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 402 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: | August 7, 2013 | By: | /s/ MONTY J. BENNETT |
Monty J. Bennett | |||
Chief Executive Officer | |||
Date: | August 7, 2013 | By: | /s/ DAVID J. KIMICHIK |
David J. Kimichik | |||
Chief Financial Officer |
Six Months Ended | Year Ended December 31, | ||||||||||||||||||||||
June 30, 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||||
Earnings | |||||||||||||||||||||||
Income (loss) from continuing operations before provision for income taxes and redeemable noncontrolling interests | $ | (9,486 | ) | $ | (56,183 | ) | $ | 9,383 | $ | (26,280 | ) | $ | (182,933 | ) | $ | 101,925 | |||||||
Amount recorded for (income) loss in unconsolidated joint venture | 4,521 | 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 | 67,622 | 140,066 | 134,585 | 143,264 | 139,390 | 153,116 | |||||||||||||||||
Amortization of debt expense and premium | 3,784 | 6,194 | 4,648 | 5,838 | 7,700 | 6,747 | |||||||||||||||||
Interest component of operating leases | 180 | 354 | 385 | 525 | 598 | 622 | |||||||||||||||||
$ | 66,621 | $ | 111,264 | $ | 134,473 | $ | 144,104 | $ | (36,858 | ) | $ | 266,415 | |||||||||||
Fixed charges | |||||||||||||||||||||||
Interest on indebtedness | $ | 67,622 | $ | 140,066 | $ | 134,585 | $ | 143,264 | $ | 139,390 | $ | 153,116 | |||||||||||
Amortization of debt expense and premium | 3,784 | 6,194 | 4,648 | 5,838 | 7,700 | 6,747 | |||||||||||||||||
Interest component of operating leases | 180 | 354 | 385 | 525 | 598 | 622 | |||||||||||||||||
Dividends to Class B unit holders | 1,472 | 2,943 | 2,943 | 2,943 | 2,827 | 2,788 | |||||||||||||||||
$ | 73,058 | $ | 149,557 | $ | 142,561 | $ | 152,570 | $ | 150,515 | $ | 163,273 | ||||||||||||
Preferred stock dividends | |||||||||||||||||||||||
Preferred Series A | $ | 1,771 | $ | 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 | 10,001 | 19,869 | 18,940 | 13,871 | 11,971 | 16,052 | |||||||||||||||||
Preferred Series E | 5,209 | 10,417 | 6,019 | — | — | — | |||||||||||||||||
$ | 16,981 | $ | 33,802 | $ | 29,513 | $ | 21,194 | $ | 19,322 | $ | 26,642 | ||||||||||||
Combined fixed charges and preferred stock dividends | $ | 90,039 | $ | 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) | $ | 6,437 | $ | 38,293 | $ | 8,088 | $ | 8,466 | $ | 187,373 | |||||||||||||
Deficit (Combined fixed charges and preferred stock dividends) | $ | 23,418 | $ | 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 |
Derivative Instruments and Hedging
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging | Derivative Instruments and Hedging Interest Rate Derivatives – We are exposed to risks arising from our business operations, economic conditions, and financial markets. To manage these risks, we use interest rate derivatives to hedge our debt and potentially improve cash flows. We also use non-hedge derivatives to capitalize on the historical correlation between changes in LIBOR and RevPAR. Interest rate derivatives may include interest rate swaps, caps, floors and flooridors. Our derivatives are subject to master-netting settlement arrangements. The maturities on these instruments range from May 2014 to March 2015. To mitigate nonperformance risk, we routinely rely on a third party’s analysis of the creditworthiness of the counterparties, which supports our belief that the counterparties’ nonperformance risk is limited. All derivatives are recorded at fair value. Credit Default Swap Derivatives – In August 2011, we entered into credit default swap transactions for a notional amount of $100.0 million to hedge financial and capital market risk for an upfront cost of $8.2 million that was subsequently returned to us as collateral by our counterparty. A credit default swap is a derivative contract that functions like an insurance policy against the credit risk of an entity or obligation. The seller of protection assumes the credit risk of the reference obligation from the buyer (us) of protection in exchange for annual premium payments. If a default or a loss, as defined in the credit default swap agreements, occurs on the underlying bonds, then the buyer of protection is protected against those losses. The only liability for us, the buyer, is the annual premium and any change in value of the underlying CMBX index (if the trade is terminated prior to maturity). For all CMBX trades completed to date, we were the buyer of protection. Credit default swaps are subject to master-netting settlement arrangements and credit support annexes. Assuming the underlying bonds pay off at par over their remaining average life, our total exposure for these trades is approximately $8.5 million. 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. The change in market value of credit default swaps is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty when the change in market value is over $250,000. Credit default swaps had a net carrying value of a liability of $190,000 as of June 30, 2013, which is included in "Liabilities associated with marketable securities and other" in the consolidated balance sheets. At December 31, 2012, credit default swaps had a carrying value of an asset of $170,000, which is included in “Derivative assets, net” in the consolidated balance sheets. We recognized unrealized gains (losses) of $773,000 and $(131,000) for the three and six months ended June 30, 2013, respectively, and $487,000 and $(1.7) million for the three and six months ended June 30, 2012, respectively, that are included in “Unrealized gain (loss) on derivatives” in the consolidated statements of operations. Marketable Securities and Liabilities Associated with Marketable Securities and other – We invest in public securities, including stocks and put and call options, which are considered derivatives. At June 30, 2013, we had investments in these derivatives totaling $862,000 and liabilities of $79,000. At December 31, 2012, we had investments in these derivatives totaling $612,000 and liabilities of $299,000. |
Equity and Equity-Based Compensation (At-the-Market Preferred Stock Offering) (Narrative) (Details) (USD $)
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6 Months Ended | 0 Months Ended | 3 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | 3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | |||||||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 20, 2013
Common Stock
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Jun. 30, 2013
Series A Preferred Stock [Member]
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Jun. 30, 2012
Series A Preferred Stock [Member]
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Jun. 30, 2013
Series D Preferred Stock [Member]
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Jun. 30, 2012
Series D Preferred Stock [Member]
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Mar. 02, 2012
At-the-Market Preferred Stock Offering [Member]
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Jun. 30, 2012
At-the-Market Preferred Stock Offering [Member]
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Jun. 30, 2013
At-the-Market Preferred Stock Offering [Member]
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Jun. 30, 2012
At-the-Market Preferred Stock Offering [Member]
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Mar. 02, 2012
At-the-Market Preferred Stock Offering [Member]
Series A Preferred Stock [Member]
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Jun. 30, 2013
At-the-Market Preferred Stock Offering [Member]
Series A Preferred Stock [Member]
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Jun. 30, 2012
At-the-Market Preferred Stock Offering [Member]
Series A Preferred Stock [Member]
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Jun. 30, 2013
At-the-Market Preferred Stock Offering [Member]
Series A Preferred Stock [Member]
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Jun. 30, 2012
At-the-Market Preferred Stock Offering [Member]
Series A Preferred Stock [Member]
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Mar. 02, 2012
At-the-Market Preferred Stock Offering [Member]
Series D Preferred Stock [Member]
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Jun. 30, 2013
At-the-Market Preferred Stock Offering [Member]
Series D Preferred Stock [Member]
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Class of Stock [Line Items] | ||||||||||||||||||
Shares issued (in dollars per share) | $ 12.00 | |||||||||||||||||
Term of option to purchase additional stock | 30 days | |||||||||||||||||
Additional shares authorized for purchase (in shares) | 1,650,000 | |||||||||||||||||
Stock issuance costs | $ 125,900,000 | |||||||||||||||||
Shares issued (in shares) | 11,000,000 | |||||||||||||||||
Proceeds from issuance of stock | 132,000,000 | |||||||||||||||||
Preferred stock, shares pursuant to the underwriters (in shares) | 700,000 | 700,000 | ||||||||||||||||
Percentage of preferred stock shares | 8.55% | 8.55% | 8.45% | 8.45% | 8.55% | 8.55% | 8.45% | 8.45% | ||||||||||
Market price of cumulative preferred stock | 30,000,000 | |||||||||||||||||
At-the-market preferred shares issued (in shares) | 0 | 48,575 | 252,227 | 169,306 | 501,909 | 0 | ||||||||||||
Net proceeds from issuance of preferred stock | 244,000 | 15,983,000 | 1,200,000 | 6,200,000 | 4,200,000 | 12,300,000 | ||||||||||||
ATM proceeds, net of commissions and other expenses | $ 7,300,000 | $ 16,000,000 |
Summary of Significant Transactions
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6 Months Ended |
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Jun. 30, 2013
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Summary of Significant Transactions [Abstract] | |
Summary of Significant Transactions | Summary of Significant Transactions Refinanced our $141.7 Million Mortgage Loan - On February 26, 2013, we refinanced our $141.7 million loan due August 2013, which had an outstanding balance of $141.0 million, with a $199.9 million loan due February 2018. The new loan provides for an interest rate of LIBOR + 3.50%, with no LIBOR floor. The new loan continues to be secured by the Capital Hilton in Washington, DC and the Hilton La Jolla Torrey Pines in La Jolla, CA. We have a 75% ownership interest in the properties, with Hilton holding the remaining 25%. The excess loan proceeds above closing costs and reserves were distributed to the partners on a pro rata basis. Our share of the excess loan proceeds was approximately $40.5 million, which was added to our unrestricted cash balance. Acquisition of the Pier House Resort - On May 14, 2013, we acquired a 100% interest in the Pier House Resort in Key West, Florida, for a contractual purchase price of $90.0 million in cash and incurred transaction costs of approximately $747,000, which are included in transaction costs. The purchase price has been allocated to the assets acquired and liabilities assumed on a preliminary basis using estimated fair value information currently available. We are in the process of evaluating the values assigned to investments in hotel properties, property level working capital balances and any potential intangibles. Thus, the balances recorded are subject to change and could result in adjustments. Any change to the amounts recorded within the investments in hotel properties will also impact the deprecation and amortization expense included on our consolidated statement of operations. Planned Spin-off of an 8-hotel Portfolio - On June 17, 2013, we announced that our Board of Directors had approved a plan to spin-off an 80% ownership interest in an 8-hotel portfolio, totaling 3,146 rooms (2,912 net rooms excluding those attributable to our partners), to holders of our common stock in the form of a taxable special distribution. The distribution will be comprised of common stock in Ashford Hospitality Prime, Inc. (“Ashford Prime”), a newly formed company to which we plan to contribute the portfolio interests. This distribution will be made on a pro rata basis to holders of our common stock as of the distribution record date. A Form 10 registration statement has been filed with the SEC. The Form 10 registration statement must become effective before the spin-off can be completed. The spin-off is expected to take place by the end of the third quarter and completion is subject to third party consents, the execution of inter-company agreements, arrangement of adequate financing arrangements and other related matters. Ashford Prime is expected to qualify as a real estate investment trust (“REIT”) for federal income tax purposes, and intends to file an application to list its shares of common stock on the New York Stock Exchange, under the symbol “AHP.” The proposed transaction also includes options to purchase the Marriott Crystal Gateway in Arlington, Virginia and the Pier House Resort in Key West, Florida. Ashford Prime is expected to have an initial annual dividend policy of a minimum of $0.04 per Ashford Hospitality Trust, Inc. share equivalent. The net assets of the eight hotel properties in the spin-off will be included in "assets held and used" until the spin-off is completed and the assets have been disposed of in accordance with the applicable accounting guidance. The operating results of the hotel properties in our consolidated statements of operations will be evaluated at the time the disposal is completed for inclusion in discontinued operations, in accordance with the applicable accounting guidance. The Marriott Crystal Gateway in Arlington, Virginia and the Pier House Resort in Key West, Florida are included in "assets held and used" and continuing operations as they do not meet the requirements to be classified as "held for sale" or "discontinued operations" in accordance with the applicable accounting guidance. Common Stock Offering - On June 20, 2013, we commenced a follow-on public offering of 11.0 million shares of our common stock at $12.00 per share for gross proceeds of $132.0 million. The aggregate proceeds, net of the 4.25% underwriting discount and other expenses of $500,000, were approximately $125.9 million. The offering settled on June 26, 2013. We granted the underwriters a 30-day option to purchase up to an additional 1.65 million shares of our common stock. Subsequent to June 30, 2013 the underwriters partially exercised their option and purchased an additional 1.25 million shares of our common stock at a price of $12.00 per share less the underwriting discount and dividend resulting in additional proceeds of approximately $14.2 million. See Note 17. |
Subsequent Events
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6 Months Ended |
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Jun. 30, 2013
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 19, 2013, the underwriters partially exercised their option to purchase an additional 1.25 million shares of our common stock at a price of $12.00 per share less the underwriting discount and dividend resulting in additional net proceeds of approximately $14.2 million. Subsequent to June 30, 2013, our Board of Directors determined that our dividend will remain at $0.12 per outstanding common share per quarter for the remainder of 2013, even after the spin-off of Ashford Prime. In December 2013, we will provide our dividend policy for 2014. However, the adoption of a dividend policy is subject to review and does not commit our Board of Directors to declare future dividends. |
Fair Value Measurements
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Fair Value Hierarchy – For disclosure purposes, financial instruments, whether measured at fair value on a recurring or nonrecurring basis or not measured at fair value, are classified in a hierarchy consisting of three levels based on the observability of valuation inputs in the market place as discussed below:
Fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts/payments and the discounted expected variable cash payments/receipts. Fair values of interest rate caps, floors, flooridors, and corridors are determined using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates fell below the strike rates of the floors or rise above the strike rates of the caps. Variable interest rates used in the calculation of projected receipts and payments on the swaps, caps, and floors are based on an expectation of future interest rates derived from observable market interest rate curves (LIBOR forward curves) and volatilities (Level 2 inputs). We also incorporate credit valuation adjustments (Level 3 inputs) to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk. Fair values of credit default swaps are obtained from a third party who publishes various information including the index composition and price data (Level 2 inputs). The fair value of credit default swaps does not contain credit-risk-related adjustments as the change in fair value is settled net through posting cash collateral or reclaiming cash collateral between us and our counterparty. Fair values of marketable securities and liabilities associated with marketable securities, including public equity securities, equity put and call options, and other investments, are based on their quoted market closing prices (Level 1 inputs). When a majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy. However, when valuation adjustments associated with our derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by us and our counterparties, which we consider significant (10% or more) to the overall valuation of our derivatives, the derivative valuations in their entirety are classified in Level 3 of the fair value hierarchy. Transfers of inputs between levels are determined at the end of each reporting period. In determining the fair values of our derivatives at June 30, 2013, the LIBOR interest rate forward curve (Level 2 inputs) assumed an uptrend from 0.19% to 0.32% for the remaining term of our derivatives. Credit spreads (Level 3 inputs) used in determining the fair values of hedge and non-hedge designated derivatives assumed an uptrend in nonperformance risk for us and all of our counterparties through the maturity dates. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):
____________________________________ (1) Reported net as “Derivative assets, net” in the consolidated balance sheets. (2) Reported as “Marketable securities” in the consolidated balance sheets. (3) Reported as “Liabilities associated with marketable securities and other” in the consolidated balance sheets. (4) Represents cash collateral posted by our counterparty. Effect of Fair-Value-Measured Assets and Liabilities on Consolidated Statements of Operations The following tables summarizes the effect of fair-value-measured assets and liabilities on the consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
(1) Reported as “Unrealized loss on derivatives” in the consolidated statements of operations. (2) Included in “Other income” in the consolidated statements of operations. (3) Reported as “Unrealized gain on marketable securities” in the consolidated statements of operations. (4) Includes cost of $23 and $44 for the three and six months ended June 30, 2013 associated with credit default swaps. For the three and six months ended June 30, 2013, the change in fair values of our interest rate derivatives that were recognized as change in other comprehensive income totaled $0 and $(2,000), respectively. For the three and six months ended June 30, 2012, the change in fair values of our interest rate derivatives that were recognized as change in other comprehensive income totaled $(102,000) and $(111,000), respectively. During the next twelve months, we expect $177,000 of accumulated comprehensive loss will be reclassified to interest expense. |
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 |
Jun. 30, 2013
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Dec. 31, 2012
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Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | $ 24,547 | $ 34,411 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | (1,666) | (6,041) | ||||||||||
Assets and liabilities, fair value disclosure | 22,881 | 28,370 | ||||||||||
Margin Account Balance [Member]
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Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | (1,397) | [1] | (1,342) | [1] | ||||||||
Interest Rate Derivatives [Member] | Not Designated As Hedging Instrument [Member]
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Derivative Assets: | ||||||||||||
Derivative assets | 24 | [2] | 10,617 | [2] | ||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (4,400) | [2] | ||||||||||
Interest Rate Derivatives [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 2 | [2] | 4 | [2] | ||||||||
Call Option and Other [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 862 | [3] | 612 | [3] | ||||||||
Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 23,659 | [3] | 23,008 | [3] | ||||||||
Credit Default Swaps [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (190) | [1] | ||||||||||
Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 170 | [2] | ||||||||||
Short Equity Put Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (7) | [1] | ||||||||||
Short Equity Call Options [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (79) | [1] | (292) | [1] | ||||||||
Quoted Market Prices (Level 1) [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | 24,521 | 23,620 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | (1,476) | (1,641) | ||||||||||
Assets and liabilities, fair value disclosure | 23,045 | 21,979 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Margin Account Balance [Member]
|
||||||||||||
Non-derivative liabilities | ||||||||||||
Non-derivative Liabilities: | (1,397) | (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 | 862 | 612 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Equity Securities [Member] | Equity securities [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Non-derivative assets | 23,659 | 23,008 | ||||||||||
Quoted Market Prices (Level 1) [Member] | Credit Default Swaps [Member]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 0 | |||||||||||
Quoted Market Prices (Level 1) [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 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 | (79) | (292) | ||||||||||
Significant Other Observable Inputs (Level 2) [Member]
|
||||||||||||
Non-derivative Assets: | ||||||||||||
Assets, fair value disclousre, Total | 26 | 13,554 | ||||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | 2,802 | (4,400) | ||||||||||
Assets and liabilities, fair value disclosure | 2,828 | 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 | 24 | 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 | 2 | 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]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | 2,802 | |||||||||||
Significant Other Observable Inputs (Level 2) [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | 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 | 0 | [4] | (2,763) | [4] | ||||||||
Non-derivative liabilities | ||||||||||||
Liabilities, fair value disclousre, Total | (2,992) | [4] | 0 | [4] | ||||||||
Assets and liabilities, fair value disclosure | (2,992) | [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]
|
||||||||||||
Derivative Liabilities: | ||||||||||||
Derivative liabilities | (2,992) | |||||||||||
Counterparty and Cash Collateral Netting [Member] | Credit Default Swaps [Member] | Designated As Hedging Instrument [Member]
|
||||||||||||
Derivative Assets: | ||||||||||||
Derivative assets | (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] | ||||||||
|
Notes Receivable (Details) (USD $)
|
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Mortgage Loans on Real Estate [Line Items] | ||
Note receivable | $ 8,100,000 | |
Interest rate of note receivable | 12.85% | 12.85% |
Carrying value of note | 11,404,000 | 11,331,000 |
Mezzanine Loan [Member]
|
||
Mortgage Loans on Real Estate [Line Items] | ||
Number of mezzanine loans | 1 | 1 |
Interest rate | 6.09% | 6.09% |
Loan Secured By One Hotel Property [Member]
|
||
Mortgage Loans on Real Estate [Line Items] | ||
Carrying value of note | 3,300,000 | 3,200,000 |
Valuation allowance, net | $ 8,100,000 | $ 8,300,000 |
Number Of Hotel Properties In Portfolio As Security For Loan Receivable | 1 | |
Number of hotel properties held as collateral | 1 |
Investment in Unconsolidated Joint Ventures (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Preliminary Balance Sheet | The following tables summarize the consolidated balance sheets as of June 30, 2013 and December 31, 2012 and the consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 of the PIM Highland JV (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Preliminary Statement of Operations |
|
Investment in Hotel Properties, net (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
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Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Investment in Hotel Properties | Investments in hotel properties, net consisted of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pier House Resort [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets Acquired and Liabilities Assumed | The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed in the acquisition (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pro Forma Information | The following table reflects the unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2012, reflecting the addition of the Pier House operating results for the applicable periods from January 1, 2012 through May 13, 2013 and the removal of the $747,000 of transaction costs for the three and six months ended June 30, 2013 (in thousands):
|
Derivative Instruments and Hedging (Details) (USD $)
|
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Aug. 31, 2011
|
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Unrealized gains (losses) on derivatives | $ 789,000 | $ (7,458,000) | $ (6,360,000) | $ (17,399,000) | ||
Investment Derivatives [Member]
|
||||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||||
Investment in derivatives | 862,000 | 862,000 | 612,000 | |||
Derivative liabilities | 79,000 | 79,000 | 299,000 | |||
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 (liability) | (190,000) | (190,000) | 170,000 | |||
Unrealized gains (losses) on derivatives | $ 773,000 | $ 487,000 | $ (131,000) | $ (1,700,000) |
Organization and Description of Business (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
Hotels
|
Dec. 31, 2012
|
Jun. 30, 2013
Subsidiaries [Member]
Hotels
|
Jun. 30, 2013
PIM Highland JV [Member]
Room
Hotels
|
Mar. 10, 2011
PIM Highland JV [Member]
Hotels
|
Jun. 30, 2013
World Quest Resort [Member]
Condominium
|
Jun. 30, 2013
Loan secured by one hotel property [Member]
|
Dec. 31, 2012
Loan secured by one hotel property [Member]
|
Jun. 30, 2013
Joint Venture Restructuring [Member]
|
Jun. 30, 2013
Wholly Owned Properties [Member]
Hotels
|
Jun. 30, 2013
Majority Owned Properties [Member]
Hotels
Room
|
---|---|---|---|---|---|---|---|---|---|---|---|
Real Estate Properties [Line Items] | |||||||||||
Number of hotel properties owned | 95 | 91 | 4 | ||||||||
Total number of rooms owned through majority investments in joint ventures | 20,176 | ||||||||||
Number of rooms owned through majority investments in joint ventures, net | 19,915 | ||||||||||
Number of hotel properties held by majority owned joint venture | 28 | 28 | |||||||||
Percentage of common equity interest | 71.74% | 71.74% | |||||||||
Percentage of preferred equity interest | 50.00% | ||||||||||
Number of rooms through preferred equity interest in joint ventures, gross | 8,084 | ||||||||||
Number of rooms through preferred equity interest in joint ventures, net | 5,800 | ||||||||||
Number of hotel condominiums acquired | 92 | ||||||||||
Carrying value of note | $ 11,404 | $ 11,331 | $ 3,300 | $ 3,200 | $ 8,100 | ||||||
Number of hotel properties managed by affiliates | 54 | 21 |
Investment in Unconsolidated Joint Ventures (Summary of Preliminary Balance Sheet) (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2012
|
---|---|---|---|
Real Estate Properties [Line Items] | |||
Total assets | $ 3,592,158 | $ 3,464,729 | $ 3,524,679 |
Total liabilities | 2,518,831 | 2,466,250 | |
Total liabilities and equity | 3,592,158 | 3,464,729 | |
Our ownership interest in PIM Highland JV | 154,173 | 158,694 | |
PIM Highland JV [Member]
|
|||
Real Estate Properties [Line Items] | |||
Total assets | 1,416,682 | 1,417,204 | |
Total liabilities | 1,180,613 | 1,176,298 | |
Members' equity | 236,069 | 240,906 | |
Total liabilities and equity | 1,416,682 | 1,417,204 | |
Our ownership interest in PIM Highland JV | $ 154,173 | $ 158,694 |
Fair Value Measurements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table presents our assets and liabilities measured at fair value on a recurring basis aggregated by the level within which measurements fall in the fair value hierarchy (in thousands):
____________________________________ (1) Reported net as “Derivative assets, net” in the consolidated balance sheets. (2) Reported as “Marketable securities” in the consolidated balance sheets. (3) Reported as “Liabilities associated with marketable securities and other” in the consolidated balance sheets. (4) Represents cash collateral posted by our counterparty. |
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Effect of Fair Value Measured Assets and Liabilities on Consolidated Statements of Operations | The following tables summarizes the effect of fair-value-measured assets and liabilities on the consolidated statements of operations for the three and six months ended June 30, 2013 and 2012 (in thousands):
(1) Reported as “Unrealized loss on derivatives” in the consolidated statements of operations. (2) Included in “Other income” in the consolidated statements of operations. (3) Reported as “Unrealized gain on marketable securities” in the consolidated statements of operations. (4) Includes cost of $23 and $44 for the three and six months ended June 30, 2013 associated with credit default swaps. |
Indebtedness (Details) (USD $)
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6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 0 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | 12 Months Ended | 0 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
Mortgage loan 1 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 1 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 2 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 2 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 2 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 3 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 3 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 4 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 4 [Member]
Hotels
|
Jun. 30, 2013
Senior credit facility 1 [Member]
|
Dec. 31, 2012
Senior credit facility 1 [Member]
|
Jun. 30, 2013
Senior credit facility 1 [Member]
Minimum [Member]
|
Dec. 31, 2012
Senior credit facility 1 [Member]
Minimum [Member]
|
Jun. 30, 2013
Senior credit facility 1 [Member]
Maximum [Member]
|
Dec. 31, 2012
Senior credit facility 1 [Member]
Maximum [Member]
|
Jun. 30, 2013
Mortgage loan 5 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 5 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 6 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 6 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 7 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 7 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 8 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 8 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 9 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 9 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 10 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 10 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 11 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 11 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 12 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 12 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 13 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 13 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 14 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 14 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 15 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 15 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 16 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 16 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 17 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 17 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 18 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 18 [Member]
Hotels
|
Feb. 26, 2013
Mortgage loan 19 [Member]
|
Jun. 30, 2013
Mortgage loan 19 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 19 [Member]
Hotels
|
Jun. 30, 2013
TIF Loan [Member]
Hotels
|
Dec. 31, 2012
TIF Loan [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 20 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 20 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 21 [Member]
Hotels
|
Dec. 31, 2012
Mortgage loan 21 [Member]
Hotels
|
Jun. 30, 2013
Mortgage loan 21 [Member]
Minimum [Member]
|
Dec. 31, 2012
Mortgage loan 21 [Member]
Minimum [Member]
|
Jun. 30, 2013
Letter of Credit [Member]
|
Feb. 26, 2013
Refinanced Mortgage Loan [Member]
|
Sep. 30, 2012
Interest Rate Contract [Member]
|
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Debt Instrument [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Collateral (in hotels) | 2 | [1] | 2 | [1] | 5 | [2] | 5 | [2] | 5 | [2] | 9 | [3] | 9 | [3] | 1 | 1 | 5 | [3] | 5 | [3] | 8 | 8 | 10 | 10 | 8 | 8 | 5 | 5 | 5 | 5 | 5 | 5 | 1 | [4] | 1 | [4] | 2 | 2 | 3 | 3 | 5 | 5 | 5 | 5 | 5 | 5 | 7 | 7 | 2 | [1] | 2 | [1] | 1 | [4],[5] | 1 | [4],[5] | 1 | 1 | 1 | 1 | ||||||||||||||||||||||||||||||||||
Interest Rate | 8.32% | 8.32% | 6.40% | [3] | 6.40% | [3] | 5.75% | 5.75% | 5.22% | 5.22% | 5.70% | 5.70% | 5.53% | 5.53% | 5.53% | 5.53% | 5.53% | 5.53% | 5.91% | [4] | 5.91% | [4] | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 5.95% | 12.85% | [4],[5] | 5.95% | [4],[5] | 6.26% | 5.95% | 6.00% | 6.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt instrument description of variable rate basis | LIBOR | [1],[6] | LIBOR | [1],[6] | LIBOR | [2],[6] | LIBOR | [2],[6] | LIBOR | [3],[6] | LIBOR | [3],[6] | LIBOR | [6],[7] | LIBOR | [6],[7] | LIBOR | [3],[6] | LIBOR | [3],[6] | LIBOR | LIBOR | [1],[6] | LIBOR | [1],[6] | Prime | Prime | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis spread on variable rate | 2.75% | [1] | 2.75% | [1] | 4.50% | [2] | 4.50% | [2] | 4.50% | [2] | 6.50% | [3] | 6.50% | [3] | 2.75% | [7] | 2.75% | [7] | 3.50% | [7] | 3.50% | [7] | 6.15% | [3] | 6.15% | [3] | 3.50% | 3.50% | [1] | 3.50% | [1] | 1.00% | 1.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indebtedness | $ 2,381,932,000 | $ 2,339,410,000 | $ 0 | [1] | $ 141,667,000 | [1] | $ 170,682,000 | [2] | $ 170,682,000 | [2] | $ 173,180,000 | [2] | $ 135,000,000 | [3] | $ 135,000,000 | [3] | $ 5,198,000 | $ 5,285,000 | $ 0 | [7] | $ 0 | [7] | $ 211,000,000 | [3] | $ 211,000,000 | [3] | $ 103,523,000 | $ 104,680,000 | $ 151,044,000 | $ 152,513,000 | $ 95,910,000 | $ 96,907,000 | $ 109,154,000 | $ 110,169,000 | $ 90,522,000 | $ 91,364,000 | $ 78,412,000 | $ 79,140,000 | $ 34,523,000 | [4] | $ 34,735,000 | [4] | $ 126,519,000 | $ 127,289,000 | $ 257,455,000 | $ 259,021,000 | $ 114,039,000 | $ 114,732,000 | $ 102,503,000 | $ 103,126,000 | $ 155,970,000 | $ 156,918,000 | $ 124,758,000 | $ 125,517,000 | $ 199,275,000 | [1] | $ 0 | [1] | $ 8,098,000 | [4],[5] | $ 8,098,000 | [4],[5] | $ 101,916,000 | $ 102,562,000 | $ 6,431,000 | $ 6,507,000 | $ 141,000,000 | |||||||||||||||||||||||||||
LIBOR floor percentage | 0.195% | 0.209% | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Term of mortgage loan extension option | 1 year | 1 year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Senior credit facility, borrowing capacity | 165,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility further possible expansion, aggregate size | 225,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Line of credit facility, maximum borrowing capacity | 10,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Face amount of debt | 199,900,000 | 141,700,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Floor interest rate | 0.00% | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from mortgage re-finance | 40,500,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net credit default of swap asset (liability) | $ (190,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Significant Accounting Policies (Policies)
|
6 Months Ended | ||||||||
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Jun. 30, 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. No impairment charges were recorded for investment in hotel properties included in continuing operations for the three and six months ended June 30, 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 when contractually due. Payments received on impaired nonaccrual loans are recorded as adjustments to impairment charges. No interest income was recorded for the three and six months ended June 30, 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 June 30, 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 and six months ended June 30, 2013 and 2012. Valuation adjustments of $99,000 and $195,000 on previously impaired notes were credited to impairment charges during the three and six months ended June 30, 2013, respectively. Valuation adjustments of $95,000 and $187,000 on previously impaired notes were credited to impairment charges during the three and six months ended June 30, 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 and six months ended June 30, 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 $154.2 million at June 30, 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 and six months ended June 30, 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 and six months ended June 30, 2012, we recognized an impairment charge of $4.1 million on the Hilton El Conquistador hotel. There were no assets held for sale as of June 30, 2013 and December 31, 2012. |
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Investments in Securities and Other | Marketable securities, 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 and other” 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 marketable securities." |
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Revenue Recognition | Hotel revenues, including room, food, beverage, and ancillary revenues such as Internet access, 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 when contractually due. Sales taxes collected from customers and submitted to taxing authorities are not recorded in revenue. |
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Derivatives and Hedges | We 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 our 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 and six months ended June 30, 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. |
Consolidated Statement of Changes in Equity (USD $)
In Thousands, unless otherwise specified |
Total
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Series A Preferred Stock [Member]
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Series D Preferred Stock [Member]
|
Series E Preferred Stock [Member]
|
Preferred Stock
Series A Preferred Stock [Member]
|
Preferred Stock
Series D Preferred Stock [Member]
|
Preferred Stock
Series E Preferred Stock [Member]
|
Common Stock
|
Additional Paid In Capital
|
Accumulated Deficit
|
Accumulated Deficit
Series A Preferred Stock [Member]
|
Accumulated Deficit
Series D Preferred Stock [Member]
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Accumulated Deficit
Series E Preferred Stock [Member]
|
Accumulated Other Comprehensive Loss
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Treasury Stock
|
Noncontrolling Interests In Consolidated Entities
|
Noncontrolling Interests in Operating Partnership
|
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Beginning balance, value at Dec. 31, 2012 | $ 847,300 | $ 17 | $ 95 | $ 46 | $ 1,249 | $ 1,766,168 | $ (770,467) | $ (282) | $ (164,884) | $ 15,358 | $ 151,179 | ||||||
Beginning balance, shares (in shares) at Dec. 31, 2012 | 1,657 | 9,469 | 4,630 | 124,897 | 56,746 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||
Equity-based compensation | 1,184 | 1,184 | 11,709 | ||||||||||||||
Forfeitures of restricted common shares | 0 | 3 | (3) | ||||||||||||||
Forfeitures of Restricted Common Shares (in shares) | 1 | ||||||||||||||||
Issuance of restricted shares/units | 0 | (540) | 540 | 69 | |||||||||||||
Issuance of restricted shares/units (in shares) | 198 | ||||||||||||||||
Issuances of preferred stock | 244 | 244 | |||||||||||||||
Purchases of Treasury Shares | (391) | 0 | (391) | ||||||||||||||
Purchases of Treasury Shares (in shares) | 32 | ||||||||||||||||
Reissuances of Treasury Shares | 125,891 | 103,398 | 22,493 | ||||||||||||||
Reissuances of Treasury Shares (in shares) | 11,000 | ||||||||||||||||
Dividends declared- common stock | (17,718) | (17,718) | |||||||||||||||
Dividends declared- Preferred Stock | (1,771) | (10,001) | (5,209) | (1,771) | (10,001) | (5,209) | |||||||||||
Net unrealized loss on derivative instruments | (2) | (2) | |||||||||||||||
Reclassification to interest expense | 21 | 21 | 3 | ||||||||||||||
Distributions to noncontrolling interests | (13,489) | (13,489) | (5,137) | ||||||||||||||
Redemption value adjustment | (22,562) | (22,562) | 22,562 | ||||||||||||||
Unvested operating partnership units adjustment | (4,164) | (4,164) | 4,164 | ||||||||||||||
Net loss | (7,580) | (7,580) | (715) | (2,260) | |||||||||||||
Net loss | (8,295) | ||||||||||||||||
Ending balance, value at Jun. 30, 2013 | $ 891,038 | $ 17 | $ 95 | $ 46 | $ 1,249 | $ 1,866,293 | $ (835,308) | $ (263) | $ (142,245) | $ 1,154 | $ 182,289 | ||||||
Ending balance, shares (in shares) at Jun. 30, 2013 | 1,657 | 9,469 | 4,630 | 124,897 | 45,581 |
Organization and Description of Business
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6 Months Ended | ||||||||||||||||
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Jun. 30, 2013
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Organization and Description of Business | Organization and Description of Business Ashford Hospitality Trust, Inc., together with its subsidiaries (“Ashford”), is a self-advised real estate investment trust (“REIT”) focused on investing in the hospitality industry across all segments and in all methods including direct real estate, securities, equity, and debt. We own our lodging investments and conduct our business through Ashford Hospitality Limited Partnership ("AHLP"), our operating partnership. Ashford OP General Partner LLC, a wholly-owned subsidiary of Ashford Hospitality Trust, Inc., serves as the sole general partner of our operating partnership. In this report, terms such as the "Company,” “we,” “us,” or “our” refer to Ashford Hospitality Trust, Inc. and all entities included in its consolidated financial statements. As of June 30, 2013, we owned interests in the following hotel properties (all located in the United States) and notes receivable:
For federal income tax purposes, we have elected to be treated as a REIT, which imposes limitations related to operating hotels. As of June 30, 2013, our 95 legacy hotel properties were leased or owned by our wholly owned subsidiaries that are treated as taxable REIT subsidiaries for federal income tax purposes (collectively, these subsidiaries are referred to as “Ashford TRS”). Ashford TRS then engages third-party or affiliated hotel management companies to operate the hotels under management contracts. Hotel operating results related to these properties are included in the consolidated statements of operations. As of June 30, 2013, the 28 hotel properties owned by our unconsolidated joint venture, PIM Highland JV, are leased to its wholly owned subsidiary that is treated as a taxable REIT subsidiary for federal income tax purposes. As of June 30, 2013, Remington Lodging & Hospitality, LLC, together with its affiliates (“Remington Lodging”), which is beneficially wholly owned by Mr. Monty J. Bennett, our Chairman and Chief Executive Officer and Mr. Archie Bennett, Jr., our Chairman Emeritus, managed 54 of our 95 legacy hotel properties, 21 of the 28 PIM Highland JV hotel properties, and WorldQuest Resort. Third-party management companies managed the remaining hotel properties. |
Investment in Hotel Properties, net
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Jun. 30, 2013
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Hotel Properties, net | Investments in Hotel Properties, net Investments in hotel properties, net consisted of the following (in thousands):
Acquisition of the Pier House Resort - On May 14, 2013 we acquired a 100% interest in the Pier House Resort in Key West, Florida, for a contractual purchase price of $90.0 million in cash. In connection with the acquisition, we incurred transaction costs of $747,000, which are included in transaction costs on the consolidated statement of operations. The purchase price has been allocated to the assets acquired and liabilities assumed on a preliminary basis using estimated fair value information currently available. We are in the process of evaluating the values assigned to investments in hotel properties, property level working capital balances and any potential intangibles. Thus, the balances reflected below are subject to change and could result in adjustments. Any change to the amounts recorded within the investments in hotel properties will also impact the depreciation and amortization expense included on our consolidated statements of operations. The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed in the acquisition (in thousands):
The results of operations of the hotel property have been included in our results of operations since May 14, 2013. For both the three and six months ended June 30, 2013, we have included revenues of $2.4 million and net income of $575,000 in the consolidated statements of operations. The following table reflects the unaudited pro forma results of operations as if the acquisition had occurred on January 1, 2012, reflecting the addition of the Pier House operating results for the applicable periods from January 1, 2012 through May 13, 2013 and the removal of the $747,000 of transaction costs for the three and six months ended June 30, 2013 (in thousands):
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Significant Accounting Policies
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6 Months Ended | ||||||||||||||||
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Jun. 30, 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. No impairment charges were recorded for investment in hotel properties included in continuing operations for the three and six months ended June 30, 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 when contractually due. Payments received on impaired nonaccrual loans are recorded as adjustments to impairment charges. No interest income was recorded for the three and six months ended June 30, 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 June 30, 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 and six months ended June 30, 2013 and 2012. Valuation adjustments of $99,000 and $195,000 on previously impaired notes were credited to impairment charges during the three and six months ended June 30, 2013, respectively. Valuation adjustments of $95,000 and $187,000 on previously impaired notes were credited to impairment charges during the three and six months ended June 30, 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 and six months ended June 30, 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 $154.2 million at June 30, 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 and six months ended June 30, 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 and six months ended June 30, 2012, we recognized an impairment charge of $4.1 million on the Hilton El Conquistador hotel. There were no assets held for sale as of June 30, 2013 and December 31, 2012. Marketable Securities – Marketable securities, 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 and other” 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 marketable securities." Revenue Recognition – Hotel revenues, including room, food, beverage, and ancillary revenues such as Internet access, 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 when contractually due. Sales taxes collected from customers and submitted to taxing authorities are not recorded in revenue. Derivatives and Hedges – We 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 our 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 and six months ended June 30, 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. |
Investment in Unconsolidated Joint Ventures (Summary of Preliminary Statement of Operations) (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Real Estate Properties [Line Items] | ||||
Total revenue | $ 258,539 | $ 240,778 | $ 490,481 | $ 457,833 |
Total expenses | (217,008) | (205,265) | (423,672) | (400,471) |
OPERATING INCOME (LOSS) | 41,531 | 35,513 | 66,809 | 57,362 |
Interest income and other | 13 | 22 | 49 | 54 |
Interest expense, amortization and write-offs of deferred loan costs, discounts and premiums and exit fees | (36,026) | (36,284) | (71,406) | (71,160) |
Income tax expense | (465) | (1,366) | (1,069) | (2,245) |
NET INCOME (LOSS) | 7,600 | (5,940) | (10,555) | (30,493) |
Our equity in earnings (loss) of PIM Highland JV | 2,367 | 23 | (4,521) | (10,281) |
PIM Highland JV [Member]
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Real Estate Properties [Line Items] | ||||
Total revenue | 118,263 | 112,802 | 220,536 | 206,054 |
Total expenses | (97,305) | (95,169) | (192,065) | (185,236) |
OPERATING INCOME (LOSS) | 20,958 | 17,633 | 28,471 | 20,818 |
Interest income and other | 23 | 33 | 41 | 64 |
Interest expense, amortization and write-offs of deferred loan costs, discounts and premiums and exit fees | (16,149) | (15,886) | (31,851) | (31,411) |
Other expenses | 0 | (11) | 0 | (64) |
Income tax expense | (782) | (1,089) | (1,498) | (2,463) |
NET INCOME (LOSS) | 4,050 | 680 | (4,837) | (13,056) |
Our equity in earnings (loss) of PIM Highland JV | $ 2,367 | $ 23 | $ (4,521) | $ (10,281) |
Assets Held for Sale and Discontinued Operations (Tables)
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Jun. 30, 2013
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Operating results of discontinued operations | The following table summarizes the operating results of the discontinued hotel properties (in thousands):
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Summary of Fair Value of Financial Instruments (Tables)
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Investments, All Other Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Amounts and Estimated Fair Values of Financial Instruments | Carrying amounts and estimated fair values of financial instruments, for periods indicated, were as follows (in thousands):
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Investment in Hotel Properties, net (Details) (USD $)
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3 Months Ended | 6 Months Ended | 2 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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May 14, 2013
Capital Hilton and Hilton La Jolla Torrey Pines [Member]
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Jun. 30, 2013
Pier House Resort [Member]
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May 14, 2013
Pier House Resort [Member]
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Investment in hotel properties, net | ||||||||
Land | $ 523,708,000 | $ 523,708,000 | $ 483,242,000 | |||||
Buildings and improvements | 2,820,311,000 | 2,820,311,000 | 2,779,589,000 | |||||
Furniture, fixtures, and equipment | 215,204,000 | 215,204,000 | 224,907,000 | |||||
Construction in progress | 8,997,000 | 8,997,000 | 10,499,000 | |||||
Condominium properties | 12,590,000 | 12,590,000 | 12,690,000 | |||||
Total cost | 3,580,810,000 | 3,580,810,000 | 3,510,927,000 | |||||
Accumulated depreciation | (642,258,000) | (642,258,000) | (638,623,000) | |||||
Investments in hotel properties, net | 2,938,552,000 | 2,938,552,000 | 2,872,304,000 | |||||
Percentage of interest in the hotel properties | 100.00% | 100.00% | ||||||
Purchase price | 90,000,000 | 90,000,000 | ||||||
Transaction costs | 747,000 | 747,000 | ||||||
Summary of the preliminary estimated fair value of the assets acquired and liabilities assumed in the acquisition | ||||||||
Land | 40,466,000 | |||||||
Buildings and improvements | 40,466,000 | |||||||
Furniture, fixtures, and equipment | 8,993,000 | |||||||
Property, plant, and equipment | 89,925,000 | |||||||
Net other assets and liabilities | (1,691,000) | |||||||
Total | 88,234,000 | |||||||
Revenue of acquiree included in statement of operations | 2,400,000 | |||||||
Net income of acquiree included in statement of operations | 575,000 | |||||||
Summary of pro forma results of operations as if the acquisition had occurred on January 1, 2012 | ||||||||
Total revenue | 261,248,000 | 245,742,000 | 499,142,000 | 468,333,000 | ||||
Income (loss) from continuing operations | 9,436,000 | 513,000 | (6,132,000) | (21,985,000) | ||||
Net income (loss) | $ 9,436,000 | $ (4,208,000) | $ (6,132,000) | $ (26,539,000) |
Equity and Equity-Based Compensation (Equity-Based Compensation and Noncontrolling Interests) (Narrative) (Details) (USD $)
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3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Class of Stock [Line Items] | |||||
Equity-based compensation | $ 740,000 | $ 170,000 | $ 1,200,000 | $ 1,800,000 | |
Noncontrolling joint venture partners ownership interests, Minimum | 15.00% | 15.00% | 15.00% | ||
Noncontrolling joint venture partners ownership interests, Maximum | 25.00% | 25.00% | 25.00% | ||
Carrying value of property in which Noncontrolling Joint Venture Partners have ownership interests | 1,200,000 | 1,200,000 | 15,400,000 | ||
Income (loss) from consolidated joint ventures attributable to noncontrolling interests | (8,000) | 54,000 | (715,000) | (224,000) | |
Majority Owned Properties [Member]
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|||||
Class of Stock [Line Items] | |||||
Number of hotel properties with JV interests | 4 | 4 | 4 | ||
Restricted Stock [Member]
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|||||
Class of Stock [Line Items] | |||||
Restricted stock unamortized cost | $ 3,800,000 | $ 3,800,000 | |||
Restricted Stock [Member] | Minimum [Member]
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|||||
Class of Stock [Line Items] | |||||
Amortized period (in days and years) | 9 months 6 days | ||||
Restricted Stock [Member] | Maximum [Member]
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|||||
Class of Stock [Line Items] | |||||
Amortized period (in days and years) | 2 years 8 months 4 days |