Debt |
5. Debt
Mortgage Loans, Net. As of December 31, 2019 and 2018, we had approximately $358.6 million and approximately $364.8 million of outstanding mortgage debt, respectively. The following table sets forth our mortgage debt obligations on our hotels.
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Balance Outstanding as of |
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December 31, |
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December 31, |
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Prepayment |
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Maturity |
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Amortization |
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Interest |
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Property |
2019 |
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2018 |
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Penalties |
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Date |
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Provisions |
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Rate |
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The DeSoto (1) |
$ |
32,967,166 |
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$ |
33,824,350 |
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Yes |
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7/1/2026 |
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25 years |
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4.25% |
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DoubleTree by Hilton Jacksonville
Riverfront (2) |
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34,225,971 |
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34,773,546 |
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Yes |
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7/11/2024 |
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30 years |
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4.88% |
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DoubleTree by Hilton Laurel (3) |
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8,534,892 |
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8,845,299 |
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Yes |
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8/5/2021 |
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25 years |
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5.25% |
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DoubleTree by Hilton Philadelphia Airport (4) |
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41,419,590 |
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42,026,986 |
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None |
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7/31/2023 |
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30 years |
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LIBOR plus 2.27 % |
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DoubleTree by Hilton Raleigh-
Brownstone University (5) |
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18,300,000 |
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18,300,000 |
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Yes |
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7/27/2022 |
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(5) |
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LIBOR plus 4.00 % |
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DoubleTree Resort by Hilton Hollywood
Beach (6) |
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56,057,218 |
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57,064,824 |
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(6) |
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10/1/2025 |
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30 years |
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4.913% |
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Georgian Terrace (7) |
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43,335,291 |
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44,202,968 |
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(7) |
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6/1/2025 |
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30 years |
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4.42% |
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Hotel Alba Tampa, Tapestry Collection by Hilton (8) |
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18,000,104 |
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18,307,000 |
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None |
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6/30/2022 |
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(8) |
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LIBOR plus 3.75 % |
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Hotel Ballast Wilmington, Tapestry Collection by Hilton (9) |
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33,401,622 |
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34,236,104 |
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Yes |
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1/1/2027 |
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25 years |
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4.25% |
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Hyatt Centric Arlington (10) |
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49,173,836 |
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49,885,045 |
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Yes |
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9/18/2028 |
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30 years |
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5.25% |
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Sheraton Louisville Riverside (11) |
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11,114,145 |
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11,414,300 |
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Yes |
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12/1/2026 |
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25 years |
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4.27% |
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The Whitehall (12) |
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14,450,420 |
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14,733,458 |
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Yes |
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2/26/2023 |
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25 years |
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LIBOR plus 3.50 % |
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Total Mortgage Principal Balance |
$ |
360,980,255 |
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$ |
367,613,880 |
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Deferred financing costs, net |
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(2,487,982 |
) |
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(2,951,327 |
) |
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Unamortized premium on loan |
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141,611 |
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166,292 |
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Total Mortgage Loans, Net |
$ |
358,633,884 |
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$ |
364,828,845 |
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(1) |
The note amortizes on a 25-year schedule after an initial 1-year interest-only period (which expired in August 2017), and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date. |
(2) |
The note is subject to a pre-payment penalty until March 2024. Prepayment can be made without penalty thereafter. |
(3) |
The note is subject to a pre-payment penalty until April 2021. Prepayment can be made without penalty thereafter. |
(4) |
The note bears a floating interest rate of 1-month LIBOR plus 2.27%, but we entered into a swap agreement to fix the rate at 5.237%. Under the swap agreement, notional amounts approximate the declining balance of the loan and we are responsible for any potential termination fees associated with early termination of the swap agreement. |
(5) |
The note provides initial proceeds of $18.3 million, with an additional $5.2 million available upon the satisfaction of certain conditions; has an initial term of 4 years with a 1-year extension; bears a floating interest rate of 1-month LIBOR plus 4.00%; requires interest only monthly payments; and following a 12-month lockout, can be prepaid with penalty in year 2 and without penalty thereafter. We entered into an interest-rate cap agreement to limit our exposure through August 1, 2022 to increases in LIBOR exceeding 3.25% on a notional amount of $23,500,000. |
(6) |
With limited exception, the note may not be prepaid until June 2025. |
(7) |
With limited exception, the note may not be prepaid until February 2025. |
(8) |
The note bears a floating interest rate of 1-month LIBOR plus 3.75% subject to a floor rate of 3.75%; with monthly principal payments of $26,812; the note provides that the mortgage can be extended for two additional periods of one year each, subject to certain conditions. |
(9) |
The note amortizes on a 25-year schedule after an initial 1-year interest-only period and is subject to a pre-payment penalty except for any pre-payments made within 120 days of the maturity date. |
(10) |
Following a 5-year lockout, the note can be prepaid with penalty in years 6-10 and without penalty during the final 4 months of the term. |
(11) |
The note bears a fixed interest rate of 4.27% for the first 5 years of the loan, with an option for the lender to reset the interest rate after 5 years. |
(12) |
The note bears a floating interest rate of the 1-month LIBOR plus 3.5%, subject to a floor rate of 4.0% and is subject to prepayment penalties on a declining scale with a 3.0% penalty on or before the first anniversary date, a 2.0% penalty during the second anniversary year and a 1.0% penalty after the third anniversary date. |
At December 31, 2019, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under any of our mortgage loans, with the exception of the mortgage on Hotel Alba Tampa. At December 31, 2019, we failed to meet the DSCR covenant under the mortgage on Hotel Alba Tampa. The loan agreement contains a balancing provision that allows us to either pay down the principal balance of the loan or offer cash collateral sufficient to meet the DSCR requirement. To date, we have provided $2.85 million in cash collateral to the lender. We are currently in discussions with the existing lender to determine a cash collateral reserve amount required to be in compliance under the mortgage. We anticipate that an additional cash collateral amount of approximately $3.65 million would be required to bring us into compliance under the DSCR requirement pursuant to that balancing provision of the loan agreement.
Total future mortgage debt maturities, without respect to any extension of loan maturity, as of December 31, 2019 were as follows:
For the twelve months ending December 31, 2020 |
$ |
6,614,133 |
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December 31, 2021 |
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14,818,983 |
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December 31, 2022 |
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42,247,091 |
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December 31, 2023 |
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59,831,665 |
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December 31, 2024 |
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37,643,946 |
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December 31, 2025 and thereafter |
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199,824,437 |
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Total future maturities |
$ |
360,980,255 |
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Unsecured Notes
7.25% Unsecured Notes. On February 12, 2018, the Company and the Operating Partnership closed on a sale and issuance by the Operating Partnership of an aggregate $25.0 million of the 7.25% Notes, unconditionally guaranteed by the Company. The indenture required quarterly payments of interest and was to mature on February 15, 2021. The 7.25% Notes were redeemed on May 20, 2019 at 101% of face value.
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