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 |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices) | (Zip Code) |
Title of Each Class | Trading Symbol | Name of Exchange on Which Registered | ||||||||||||
$1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share | RLJ-A | New York Stock Exchange |
☒ | Accelerated filer | ☐ | ||||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||||||||
Emerging growth company | ||||||||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Page | ||||||||
Consolidated Financial Statements (unaudited) | ||||||||
September 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Investment in hotel properties, net | $ | $ | |||||||||
Investment in unconsolidated joint ventures | |||||||||||
Cash and cash equivalents | |||||||||||
Restricted cash reserves | |||||||||||
Hotel and other receivables, net of allowance of $ | |||||||||||
Lease right-of-use assets | |||||||||||
Prepaid expense and other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Equity | |||||||||||
Debt, net | $ | $ | |||||||||
Accounts payable and other liabilities | |||||||||||
Advance deposits and deferred revenue | |||||||||||
Lease liabilities | |||||||||||
Accrued interest | |||||||||||
Distributions payable | |||||||||||
Total liabilities | |||||||||||
Commitments and Contingencies (Note 11) | |||||||||||
Equity | |||||||||||
Shareholders’ equity: | |||||||||||
Preferred shares of beneficial interest, $ | |||||||||||
Series A Cumulative Convertible Preferred Shares, $ | |||||||||||
Common shares of beneficial interest, $ | |||||||||||
Additional paid-in capital | |||||||||||
Distributions in excess of net earnings | ( | ( | |||||||||
Accumulated other comprehensive income | |||||||||||
Total shareholders’ equity | |||||||||||
Noncontrolling interests: | |||||||||||
Noncontrolling interest in the Operating Partnership | |||||||||||
Noncontrolling interest in consolidated joint ventures | |||||||||||
Total noncontrolling interests | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues | |||||||||||||||||||||||
Operating revenues | |||||||||||||||||||||||
Room revenue | $ | $ | $ | $ | |||||||||||||||||||
Food and beverage revenue | |||||||||||||||||||||||
Other revenue | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Expenses | |||||||||||||||||||||||
Operating expenses | |||||||||||||||||||||||
Room expense | |||||||||||||||||||||||
Food and beverage expense | |||||||||||||||||||||||
Management and franchise fee expense | |||||||||||||||||||||||
Other operating expenses | |||||||||||||||||||||||
Total property operating expenses | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Property tax, insurance and other | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Transaction costs | ( | ( | |||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Other income, net | |||||||||||||||||||||||
Interest income | |||||||||||||||||||||||
Interest expense | ( | ( | ( | ( | |||||||||||||||||||
Gain (loss) on sale of hotel properties, net | ( | ( | |||||||||||||||||||||
Loss on extinguishment of indebtedness, net | ( | ||||||||||||||||||||||
Income before equity in (loss) income from unconsolidated joint ventures | |||||||||||||||||||||||
Equity in (loss) income from unconsolidated joint ventures | ( | ( | |||||||||||||||||||||
Income before income tax expense | |||||||||||||||||||||||
Income tax expense | ( | ( | ( | ( | |||||||||||||||||||
Net income | |||||||||||||||||||||||
Net (income) loss attributable to noncontrolling interests: | |||||||||||||||||||||||
Noncontrolling interest in the Operating Partnership | ( | ( | ( | ( | |||||||||||||||||||
Noncontrolling interest in consolidated joint ventures | ( | ( | |||||||||||||||||||||
Net income attributable to RLJ | |||||||||||||||||||||||
Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||
Net income attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Basic per common share data: | |||||||||||||||||||||||
Net income per share attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average number of common shares | |||||||||||||||||||||||
Diluted per common share data: | |||||||||||||||||||||||
Net income per share attributable to common shareholders | $ | $ | $ | $ | |||||||||||||||||||
Weighted-average number of common shares | |||||||||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||
Net income | $ | $ | $ | $ | |||||||||||||||||||
Unrealized (loss) gain on interest rate derivatives | ( | ( | |||||||||||||||||||||
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net | ( | ||||||||||||||||||||||
Comprehensive income | |||||||||||||||||||||||
Comprehensive (income) loss attributable to noncontrolling interests: | |||||||||||||||||||||||
Noncontrolling interest in the Operating Partnership | ( | ( | ( | ( | |||||||||||||||||||
Noncontrolling interest in consolidated joint ventures | ( | ( | |||||||||||||||||||||
Comprehensive income attributable to RLJ | $ | $ | $ | $ |
Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ |
Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on interest rate derivatives | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2023 | $ | $ | $ | $ | ( | $ | $ | $ | $ |
Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive (Loss) Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on interest rate derivatives | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net | — | — | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from consolidated joint venture partners | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distribution to consolidated joint venture partners | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of restricted stock | — | — | ( | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | $ |
Shareholders’ Equity | Noncontrolling Interest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Par Value | Additional Paid-in Capital | Distributions in excess of net earnings | Accumulated Other Comprehensive Income | Operating Partnership | Consolidated Joint Ventures | Total Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on interest rate derivatives | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Contributions from consolidated joint venture partners | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distribution to consolidated joint venture partners | — | — | — | — | — | — | — | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Amortization of share-based compensation | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock | — | — | ( | ( | — | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Shares acquired as part of a share repurchase program | — | — | ( | ( | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Forfeiture of restricted stock | — | — | ( | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on preferred shares | — | — | — | — | — | ( | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Distributions on common shares and units | — | — | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | $ | $ | $ | $ | ( | $ | $ | $ | $ |
For the nine months ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Cash flows from operating activities | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to cash flow provided by operating activities: | |||||||||||
Loss (gain) on sale of hotel properties, net | ( | ||||||||||
Loss on extinguishment of indebtedness, net | |||||||||||
Depreciation and amortization | |||||||||||
Amortization of deferred financing costs | |||||||||||
Other amortization | |||||||||||
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net | ( | ||||||||||
Equity in income from unconsolidated joint ventures | ( | ( | |||||||||
Amortization of share-based compensation | |||||||||||
Changes in assets and liabilities: | |||||||||||
Hotel and other receivables, net | ( | ( | |||||||||
Prepaid expense and other assets | |||||||||||
Accounts payable and other liabilities | ( | ||||||||||
Advance deposits and deferred revenue | |||||||||||
Accrued interest | ( | ( | |||||||||
Net cash flow provided by operating activities | |||||||||||
Cash flows from investing activities | |||||||||||
Acquisition of hotel property, net | ( | ||||||||||
(Payments) proceeds from sales of hotel properties, net | ( | ||||||||||
Improvements and additions to hotel properties | ( | ( | |||||||||
Net cash flow used in investing activities | ( | ( | |||||||||
Cash flows from financing activities | |||||||||||
Repayment of Revolver | ( | ||||||||||
Borrowings on Term Loans | |||||||||||
Repayments of Term Loans | ( | ||||||||||
Repurchase of common shares under a share repurchase program | ( | ( | |||||||||
Repurchase of common shares to satisfy employee tax withholding requirements | ( | ( | |||||||||
Distributions on preferred shares | ( | ( | |||||||||
Distributions on common shares | ( | ( | |||||||||
Distributions on Operating Partnership units | ( | ( | |||||||||
Payments of deferred financing costs | ( | ( | |||||||||
Contributions from consolidated joint venture partners | |||||||||||
Distribution to consolidated joint venture partners | ( | ||||||||||
Net cash flow used in financing activities | ( | ( | |||||||||
Net change in cash, cash equivalents, and restricted cash reserves | ( | ( | |||||||||
Cash, cash equivalents, and restricted cash reserves, beginning of year | |||||||||||
Cash, cash equivalents, and restricted cash reserves, end of period | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Land and improvements | $ | $ | |||||||||
Buildings and improvements | |||||||||||
Furniture, fixtures and equipment | |||||||||||
Accumulated depreciation | ( | ( | |||||||||
Investment in hotel properties, net | $ | $ |
Property (1) | Location | Acquisition Date | Management Company (1) | Rooms | Purchase Price (in thousands) | |||||||||||||||||||||||||||
21c Hotel Nashville | Nashville, TN | July 29, 2022 | Accor Hotels | $ | ||||||||||||||||||||||||||||
September 30, 2022 | |||||
Land and improvements | $ | ||||
Buildings and improvements | |||||
Furniture, fixtures and equipment | |||||
Total purchase price | $ |
Hotel Property Name | Location | Sale Date | Rooms | |||||||||||||||||
Marriott Denver Airport @ Gateway Park | Aurora, CO | March 8, 2022 | ||||||||||||||||||
SpringHill Suites Denver North Westminster | Westminster, CO | April 19, 2022 | ||||||||||||||||||
Total |
For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | ||||||||||||||||||||||||||||||||||||||||
Southern California | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Northern California | |||||||||||||||||||||||||||||||||||||||||||||||
South Florida | |||||||||||||||||||||||||||||||||||||||||||||||
Chicago | |||||||||||||||||||||||||||||||||||||||||||||||
New York City | |||||||||||||||||||||||||||||||||||||||||||||||
Boston | |||||||||||||||||||||||||||||||||||||||||||||||
Washington, DC | |||||||||||||||||||||||||||||||||||||||||||||||
Louisville | |||||||||||||||||||||||||||||||||||||||||||||||
Houston | |||||||||||||||||||||||||||||||||||||||||||||||
Austin | |||||||||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | Room Revenue | Food and Beverage Revenue | Other Revenue | Total Revenue | ||||||||||||||||||||||||||||||||||||||||
Northern California | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Southern California | |||||||||||||||||||||||||||||||||||||||||||||||
South Florida | |||||||||||||||||||||||||||||||||||||||||||||||
New York City | |||||||||||||||||||||||||||||||||||||||||||||||
Chicago | |||||||||||||||||||||||||||||||||||||||||||||||
Washington DC | |||||||||||||||||||||||||||||||||||||||||||||||
Louisville | |||||||||||||||||||||||||||||||||||||||||||||||
Boston | |||||||||||||||||||||||||||||||||||||||||||||||
Houston | |||||||||||||||||||||||||||||||||||||||||||||||
Austin | |||||||||||||||||||||||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Senior Notes, net | $ | $ | |||||||||
Revolver | |||||||||||
Term Loans, net | |||||||||||
Mortgage loans, net | |||||||||||
Debt, net | $ | $ |
Carrying Value at | ||||||||||||||||||||||||||
Interest Rate | Maturity Date | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
2029 Senior Notes (1) | September 2029 | $ | $ | |||||||||||||||||||||||
2026 Senior Notes (1) | July 2026 | |||||||||||||||||||||||||
Deferred financing costs, net | ( | ( | ||||||||||||||||||||||||
Total senior notes, net | $ | $ |
Covenant | Compliance | |||||||||||||
Maintenance Covenant | ||||||||||||||
Unencumbered Asset to Unencumbered Debt Ratio | > | Yes | ||||||||||||
Incurrence Covenants | ||||||||||||||
Consolidated Indebtedness less than Adjusted Total Assets | < | Yes | ||||||||||||
Consolidated Secured Indebtedness less than Adjusted Total Assets | < | Yes | ||||||||||||
Interest Coverage Ratio | > | Yes |
Carrying Value at | ||||||||||||||||||||||||||
Interest Rate at September 30, 2023 (1) | Maturity Date | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||
Revolver (2) | May 2027 | $ | $ | |||||||||||||||||||||||
$ | — | |||||||||||||||||||||||||
$ | — | |||||||||||||||||||||||||
$ | — | |||||||||||||||||||||||||
$ | — | |||||||||||||||||||||||||
$ | May 2025 | |||||||||||||||||||||||||
$ | January 2026 (6) | |||||||||||||||||||||||||
$ | May 2026 (6) | |||||||||||||||||||||||||
Deferred financing costs, net (7) | ( | ( | ||||||||||||||||||||||||
Total Revolver and Term Loans, net | $ | $ |
Covenant | Compliance | |||||||||||||
Leverage ratio (1) | <= | Yes | ||||||||||||
Fixed charge coverage ratio (2) | >= | Yes | ||||||||||||
Secured indebtedness ratio | <= | Yes | ||||||||||||
Unencumbered indebtedness ratio | <= | Yes | ||||||||||||
Unencumbered debt service coverage ratio | >= | Yes | ||||||||||||
Carrying Value at | ||||||||||||||||||||||||||||||||
Number of Assets Encumbered | Interest Rate at September 30, 2023 | Maturity Date | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
Mortgage loan (1) | (3) | April 2024 | (4) | $ | $ | |||||||||||||||||||||||||||
Mortgage loan (1) | (3) | April 2024 | (5) | |||||||||||||||||||||||||||||
Mortgage loan (1) | (3) | April 2024 | (5) | |||||||||||||||||||||||||||||
Mortgage loan (2) | January 2029 | |||||||||||||||||||||||||||||||
Deferred financing costs, net | ( | ( | ||||||||||||||||||||||||||||||
Total mortgage loans, net | $ | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Senior Notes | $ | $ | $ | $ | |||||||||||||||||||
Revolver and Term Loans | |||||||||||||||||||||||
Mortgage loans | |||||||||||||||||||||||
Amortization of deferred financing costs | |||||||||||||||||||||||
Non-cash interest expense related to interest rate hedges | |||||||||||||||||||||||
Total interest expense | $ | $ | $ | $ |
Notional value at | Fair value at | |||||||||||||||||||||||||||||||||||||||||||
Hedge type | Swap rate | Effective Date | Maturity Date | September 30, 2023 | December 31, 2022 | September 30, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||||||||
Swap-cash flow-LIBOR | March 2019 | December 2022 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||
Swap-cash flow-LIBOR | March 2019 | December 2022 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Term SOFR | November 2020 | November 2023 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | January 2021 | December 2023 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | January 2021 | December 2023 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (2) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (2) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1)(3) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1)(3) | April 2021 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Term SOFR | April 2023 | April 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1)(3) | June 2020 | December 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (2)(3) | June 2020 | December 2024 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1) | September 2021 | September 2025 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR (1)(3) | July 2021 | January 2026 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
Swap-cash flow-Daily SOFR | April 2024 | April 2027 | ||||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||
Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
Senior Notes, net | $ | $ | $ | $ | |||||||||||||||||||
Revolver and Term Loans, net | |||||||||||||||||||||||
Mortgage loans, net | |||||||||||||||||||||||
Debt, net | $ | $ | $ | $ |
Fair Value at September 30, 2023 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Interest rate swap asset | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ |
Fair Value at December 31, 2022 | |||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
Interest rate swap asset | $ | $ | $ | $ | |||||||||||||||||||
Total | $ | $ | $ | $ |
2023 | |||||||||||
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
Unvested at January 1, 2023 | $ | ||||||||||
Granted | |||||||||||
Vested | ( | ||||||||||
Forfeited | ( | ||||||||||
Unvested at September 30, 2023 | $ |
Date of Award | Number of Units Granted | Grant Date Fair Value | Conversion Range | Risk Free Interest Rate | Volatility | |||||||||||||||||||||||||||
February 2020 (1) | $ | |||||||||||||||||||||||||||||||
February 2021 | $ | |||||||||||||||||||||||||||||||
February 2022 | $ | |||||||||||||||||||||||||||||||
February 2023 | $ |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income attributable to RLJ | $ | $ | $ | $ | |||||||||||||||||||
Less: Preferred dividends | ( | ( | ( | ( | |||||||||||||||||||
Less: Dividends paid on unvested restricted shares | ( | ( | ( | ( | |||||||||||||||||||
Less: Undistributed earnings attributable to unvested restricted shares | ( | ( | ( | ||||||||||||||||||||
Net income attributable to common shareholders excluding amounts attributable to unvested restricted shares | $ | $ | $ | $ | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted-average number of common shares - basic | |||||||||||||||||||||||
Unvested restricted shares | |||||||||||||||||||||||
Unvested performance units | |||||||||||||||||||||||
Weighted-average number of common shares - diluted | |||||||||||||||||||||||
Net income per share attributable to common shareholders - basic | $ | $ | $ | $ | |||||||||||||||||||
Net income per share attributable to common shareholders - diluted | $ | $ | $ | $ |
For the nine months ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Reconciliation of cash, cash equivalents, and restricted cash reserves | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash reserves | |||||||||||
Cash, cash equivalents, and restricted cash reserves | $ | $ | |||||||||
Interest paid | $ | $ | |||||||||
Income taxes paid | $ | $ | |||||||||
Operating cash flow lease payments for operating leases | $ | $ | |||||||||
Right-of-use asset obtained in exchange for lease obligation | $ | $ | |||||||||
Right-of-use asset and liability adjustment due to remeasurement | $ | $ | ( | ||||||||
Supplemental investing and financing transactions | |||||||||||
In connection with the acquisition of a hotel property, the Company recorded the following: | |||||||||||
Purchase of hotel property | $ | $ | |||||||||
Transaction costs | |||||||||||
Operating prorations | ( | ||||||||||
Acquisition of hotel property, net | $ | $ | |||||||||
In connection with the sales of hotel properties, the Company recorded the following: | |||||||||||
Sales price | $ | $ | |||||||||
Transaction costs | ( | ( | |||||||||
Operating prorations | ( | ||||||||||
(Payments) proceeds from sales of hotel properties, net | $ | ( | $ | ||||||||
Supplemental non-cash transactions | |||||||||||
Accrued capital expenditures | $ | $ | |||||||||
For the three months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
(amounts in thousands) | |||||||||||||||||
Revenues | |||||||||||||||||
Operating revenues | |||||||||||||||||
Room revenue | $ | 277,088 | $ | 267,363 | $ | 9,725 | |||||||||||
Food and beverage revenue | 34,181 | 30,600 | 3,581 | ||||||||||||||
Other revenue | 23,137 | 20,108 | 3,029 | ||||||||||||||
Total revenues | 334,406 | 318,071 | 16,335 | ||||||||||||||
Expenses | |||||||||||||||||
Operating expenses | |||||||||||||||||
Room expense | 71,278 | 68,394 | 2,884 | ||||||||||||||
Food and beverage expense | 27,430 | 23,375 | 4,055 | ||||||||||||||
Management and franchise fee expense | 27,095 | 25,390 | 1,705 | ||||||||||||||
Other operating expenses | 87,736 | 82,021 | 5,715 | ||||||||||||||
Total property operating expenses | 213,539 | 199,180 | 14,359 | ||||||||||||||
Depreciation and amortization | 44,727 | 46,559 | (1,832) | ||||||||||||||
Property tax, insurance and other | 26,936 | 20,744 | 6,192 | ||||||||||||||
General and administrative | 14,747 | 13,446 | 1,301 | ||||||||||||||
Transaction costs | 2 | (773) | 775 | ||||||||||||||
Total operating expenses | 299,951 | 279,156 | 20,795 | ||||||||||||||
Other income, net | 1,921 | 710 | 1,211 | ||||||||||||||
Interest income | 5,302 | 1,281 | 4,021 | ||||||||||||||
Interest expense | (24,833) | (22,625) | (2,208) | ||||||||||||||
Gain (loss) on sale of hotel properties, net | 16 | (57) | 73 | ||||||||||||||
Income before equity in loss from unconsolidated joint ventures | 16,861 | 18,224 | (1,363) | ||||||||||||||
Equity in loss from unconsolidated joint ventures | (186) | (150) | (36) | ||||||||||||||
Income before income tax expense | 16,675 | 18,074 | (1,399) | ||||||||||||||
Income tax expense | (332) | (391) | 59 | ||||||||||||||
Net income | 16,343 | 17,683 | (1,340) | ||||||||||||||
Net (income) loss attributable to noncontrolling interests: | |||||||||||||||||
Noncontrolling interest in the Operating Partnership | (50) | (53) | 3 | ||||||||||||||
Noncontrolling interest in consolidated joint ventures | 137 | (36) | 173 | ||||||||||||||
Net income attributable to RLJ | 16,430 | 17,594 | (1,164) | ||||||||||||||
Preferred dividends | (6,279) | (6,279) | — | ||||||||||||||
Net income attributable to common shareholders | $ | 10,151 | $ | 11,315 | $ | (1,164) |
For the three months ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Occupancy | 74.2 | % | 72.8 | % | |||||||
ADR | $ | 191.07 | $ | 188.21 | |||||||
RevPAR | $ | 141.81 | $ | 136.98 |
For the three months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
Room expense | $ | 70,774 | $ | 67,912 | $ | 2,862 | |||||||||||
Food and beverage expense | 26,978 | 22,999 | 3,979 | ||||||||||||||
Management and franchise fee expense | 26,985 | 25,249 | 1,736 | ||||||||||||||
Other operating expenses | 86,034 | 81,530 | 4,504 | ||||||||||||||
Total property operating expenses | $ | 210,771 | $ | 197,690 | $ | 13,081 |
For the three months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
Senior Notes | $ | 9,695 | $ | 9,695 | $ | — | |||||||||||
Revolver and Term Loans | 7,365 | 7,870 | (505) | ||||||||||||||
Mortgage loans | 5,727 | 3,388 | 2,339 | ||||||||||||||
Amortization of deferred financing costs | 1,564 | 1,420 | 144 | ||||||||||||||
Non-cash interest expense related to interest rate hedges | 482 | 252 | 230 | ||||||||||||||
Total interest expense | $ | 24,833 | $ | 22,625 | $ | 2,208 |
For the nine months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
(amounts in thousands) | |||||||||||||||||
Revenues | |||||||||||||||||
Operating revenues | |||||||||||||||||
Room revenue | $ | 833,416 | $ | 753,818 | $ | 79,598 | |||||||||||
Food and beverage revenue | 105,601 | 82,655 | 22,946 | ||||||||||||||
Other revenue | 66,852 | 54,998 | 11,854 | ||||||||||||||
Total revenues | 1,005,869 | 891,471 | 114,398 | ||||||||||||||
Expenses | |||||||||||||||||
Operating expenses | |||||||||||||||||
Room expense | 207,662 | 188,015 | 19,647 | ||||||||||||||
Food and beverage expense | 81,604 | 61,314 | 20,290 | ||||||||||||||
Management and franchise fee expense | 82,554 | 71,846 | 10,708 | ||||||||||||||
Other operating expenses | 254,567 | 227,563 | 27,004 | ||||||||||||||
Total property operating expenses | 626,387 | 548,738 | 77,649 | ||||||||||||||
Depreciation and amortization | 134,648 | 140,346 | (5,698) | ||||||||||||||
Property tax, insurance and other | 76,268 | 66,206 | 10,062 | ||||||||||||||
General and administrative | 43,030 | 40,928 | 2,102 | ||||||||||||||
Transaction costs | 26 | (575) | 601 | ||||||||||||||
Total operating expenses | 880,359 | 795,643 | 84,716 | ||||||||||||||
Other income, net | 3,506 | 8,716 | (5,210) | ||||||||||||||
Interest income | 13,977 | 1,800 | 12,177 | ||||||||||||||
Interest expense | (73,506) | (71,041) | (2,465) | ||||||||||||||
(Loss) gain on sale of hotel properties, net | (28) | 996 | (1,024) | ||||||||||||||
Loss on extinguishment of indebtedness, net | (169) | — | (169) | ||||||||||||||
Income before equity in income from unconsolidated joint ventures | 69,290 | 36,299 | 32,991 | ||||||||||||||
Equity in income from unconsolidated joint ventures | 315 | 255 | 60 | ||||||||||||||
Income before income tax expense | 69,605 | 36,554 | 33,051 | ||||||||||||||
Income tax expense | (1,028) | (1,139) | 111 | ||||||||||||||
Net income | 68,577 | 35,415 | 33,162 | ||||||||||||||
Net (income) loss attributable to noncontrolling interests: | |||||||||||||||||
Noncontrolling interest in the Operating Partnership | (238) | (74) | (164) | ||||||||||||||
Noncontrolling interest in consolidated joint ventures | 131 | (29) | 160 | ||||||||||||||
Net income attributable to RLJ | 68,470 | 35,312 | 33,158 | ||||||||||||||
Preferred dividends | (18,836) | (18,836) | — | ||||||||||||||
Net income attributable to common shareholders | $ | 49,634 | $ | 16,476 | $ | 33,158 |
For the nine months ended September 30, | |||||||||||
2023 | 2022 | ||||||||||
Occupancy | 72.7 | % | 69.6 | % | |||||||
ADR | $ | 197.62 | $ | 187.21 | |||||||
RevPAR | $ | 143.60 | $ | 130.25 |
For the nine months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
Room expense | $ | 205,843 | $ | 186,864 | $ | 18,979 | |||||||||||
Food and beverage expense | 80,069 | 60,723 | 19,346 | ||||||||||||||
Management and franchise fee expense | 82,036 | 71,466 | 10,570 | ||||||||||||||
Other operating expenses | 251,237 | 226,277 | 24,960 | ||||||||||||||
Total property operating expenses | $ | 619,185 | $ | 545,330 | $ | 73,855 |
For the nine months ended September 30, | |||||||||||||||||
2023 | 2022 | $ Change | |||||||||||||||
Senior Notes | $ | 29,070 | $ | 29,125 | $ | (55) | |||||||||||
Revolver and Term Loans | 23,176 | 26,975 | (3,799) | ||||||||||||||
Mortgage loans | 15,286 | 9,926 | 5,360 | ||||||||||||||
Amortization of deferred financing costs | 4,528 | 4,522 | 6 | ||||||||||||||
Non-cash interest expense related to interest rate hedges | 1,446 | 493 | 953 | ||||||||||||||
Total interest expense | $ | 73,506 | $ | 71,041 | $ | 2,465 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net income | $ | 16,343 | $ | 17,683 | $ | 68,577 | $ | 35,415 | |||||||||||||||
Preferred dividends | (6,279) | (6,279) | (18,836) | (18,836) | |||||||||||||||||||
Depreciation and amortization | 44,727 | 46,559 | 134,648 | 140,346 | |||||||||||||||||||
(Gain) loss on sale of hotel properties, net | (16) | 57 | 28 | (996) | |||||||||||||||||||
Noncontrolling interest in consolidated joint ventures | 137 | (36) | 131 | (29) | |||||||||||||||||||
Adjustments related to consolidated joint venture (1) | (44) | (47) | (131) | (144) | |||||||||||||||||||
Adjustments related to unconsolidated joint venture (2) | 236 | 241 | 709 | 831 | |||||||||||||||||||
FFO | 55,104 | 58,178 | 185,126 | 156,587 | |||||||||||||||||||
Transaction costs | 2 | (773) | 26 | (575) | |||||||||||||||||||
Pre-opening costs (3) | 327 | 907 | 1,188 | 1,519 | |||||||||||||||||||
Loss on extinguishment of indebtedness, net | — | — | 169 | — | |||||||||||||||||||
Amortization of share-based compensation | 6,247 | 5,420 | 18,028 | 16,074 | |||||||||||||||||||
Non-cash interest expense related to discontinued interest rate hedges | 482 | 252 | 1,446 | 493 | |||||||||||||||||||
Derivative gains in accumulated other comprehensive income reclassified to earnings (4) | — | — | — | (5,866) | |||||||||||||||||||
Other expenses (5) | 930 | 10 | 1,026 | 56 | |||||||||||||||||||
Adjusted FFO | $ | 63,092 | $ | 63,994 | $ | 207,009 | $ | 168,288 |
For the three months ended September 30, | For the nine months ended September 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net income | $ | 16,343 | $ | 17,683 | $ | 68,577 | $ | 35,415 | |||||||||||||||
Depreciation and amortization | 44,727 | 46,559 | 134,648 | 140,346 | |||||||||||||||||||
Interest expense, net of interest income | 19,531 | 21,344 | 59,529 | 69,241 | |||||||||||||||||||
Income tax expense | 332 | 391 | 1,028 | 1,139 | |||||||||||||||||||
Adjustments related to unconsolidated joint venture (1) | 344 | 354 | 1,034 | 1,169 | |||||||||||||||||||
EBITDA | 81,277 | 86,331 | 264,816 | 247,310 | |||||||||||||||||||
(Gain) loss on sale of hotel properties, net | (16) | 57 | 28 | (996) | |||||||||||||||||||
EBITDAre | 81,261 | 86,388 | 264,844 | 246,314 | |||||||||||||||||||
Transaction costs | 2 | (773) | 26 | (575) | |||||||||||||||||||
Pre-opening costs (2) | 327 | 907 | 1,188 | 1,519 | |||||||||||||||||||
Loss on extinguishment of indebtedness, net | — | — | 169 | — | |||||||||||||||||||
Amortization of share-based compensation | 6,247 | 5,420 | 18,028 | 16,074 | |||||||||||||||||||
Derivative gains in accumulated other comprehensive income reclassified to earnings (3) | — | — | — | (5,866) | |||||||||||||||||||
Other expenses (4) | 930 | 10 | 1,026 | 56 | |||||||||||||||||||
Adjusted EBITDA | $ | 88,767 | $ | 91,952 | $ | 285,281 | $ | 257,522 |
2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Fixed rate debt (1)(2) | $ | — | $ | — | $ | — | $ | 500,000 | $ | — | $ | 525,000 | $ | 1,025,000 | |||||||||||||||||||||||||||
Weighted-average interest rate | — | % | — | % | — | % | 3.75 | % | — | % | 4.05 | % | 3.90 | % | |||||||||||||||||||||||||||
Variable rate debt (1) | $ | — | $ | 381,000 | $ | 400,000 | $ | 425,000 | $ | — | $ | — | $ | 1,206,000 | |||||||||||||||||||||||||||
Weighted-average interest rate (3) | — | % | 5.63 | % | 3.38 | % | 3.21 | % | — | % | — | % | 4.03 | % | |||||||||||||||||||||||||||
Total | $ | — | $ | 381,000 | $ | 400,000 | $ | 925,000 | $ | — | $ | 525,000 | $ | 2,231,000 |
Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum number of shares that may yet be purchased under the plans or programs (1) | |||||||||||||||||||||||||
July 1, 2023 through July 31, 2023 | 224,056 | $ | 10.06 | 224,056 | 22,880,530 | ||||||||||||||||||||||||
August 1, 2023 through August 31, 2023 | 982,760 | $ | 9.77 | 982,760 | 22,629,624 | ||||||||||||||||||||||||
September 1, 2023 through September 30, 2023 | 298,938 | $ | 9.86 | 298,938 | 22,790,720 | ||||||||||||||||||||||||
Total | 1,505,754 | 1,505,754 |
Exhibit Number | Description of Exhibit | |||||||||||||
3.1 | ||||||||||||||
3.2 | ||||||||||||||
3.3 | ||||||||||||||
3.4 | ||||||||||||||
3.5 | ||||||||||||||
3.6 | ||||||||||||||
31.1* | ||||||||||||||
31.2* | ||||||||||||||
32.1* | ||||||||||||||
101.INS | Inline XBRL Instance Document | Submitted electronically with this report | ||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Submitted electronically with this report | ||||||||||||
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | Submitted electronically with this report | ||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Submitted electronically with this report | ||||||||||||
101.LAB | Inline XBRL Taxonomy Label Linkbase Document | Submitted electronically with this report | ||||||||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | Submitted electronically with this report | ||||||||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101) | Submitted electronically with this report |
RLJ LODGING TRUST | |||||
Dated: November 2, 2023 | /s/ LESLIE D. HALE | ||||
Leslie D. Hale | |||||
President and Chief Executive Officer | |||||
Dated: November 2, 2023 | /s/ SEAN M. MAHONEY | ||||
Sean M. Mahoney | |||||
Executive Vice President and Chief Financial Officer | |||||
(Principal Financial Officer) | |||||
Dated: November 2, 2023 | /s/ CHRISTOPHER A. GORMSEN | ||||
Christopher A. Gormsen | |||||
Senior Vice President and Chief Accounting Officer | |||||
(Principal Accounting Officer) |
RLJ LODGING TRUST | |||||
Dated: November 2, 2023 | /s/ LESLIE D. HALE | ||||
Leslie D. Hale | |||||
President and Chief Executive Officer | |||||
RLJ LODGING TRUST | |||||
Dated: November 2, 2023 | /s/ SEAN M. MAHONEY | ||||
Sean M. Mahoney | |||||
Executive Vice President and Chief Financial Officer | |||||
RLJ LODGING TRUST | |||||
Dated: November 2, 2023 | /s/ LESLIE D. HALE | ||||
Leslie D. Hale | |||||
President and Chief Executive Officer | |||||
/s/ SEAN M. MAHONEY | |||||
Sean M. Mahoney | |||||
Executive Vice President and Chief Financial Officer | |||||
General |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General | General Organization RLJ Lodging Trust (the "Company") was formed as a Maryland real estate investment trust ("REIT") on January 31, 2011. The Company is a self-advised and self-administered REIT that owns primarily premium-branded, rooms-oriented, high-margin, focused-service and compact full-service hotels located within heart of demand locations. The Company elected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2011. Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through, RLJ Lodging Trust, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of September 30, 2023, there were 156,944,570 units of limited partnership interest in the Operating Partnership ("OP units") outstanding and the Company owned, through a combination of direct and indirect interests, 99.5% of the outstanding OP units. As of September 30, 2023, the Company owned 97 hotel properties with approximately 21,400 rooms, located in 23 states and the District of Columbia. The Company, through wholly-owned subsidiaries, owned a 100% interest in 95 of its hotel properties, a 95% controlling interest in one hotel property, and a 50% non-controlling interest in an entity owning one hotel property. The Company consolidates its real estate interests in the 96 hotel properties in which it holds a controlling interest, and the Company records the real estate interest in the one hotel property in which it holds an indirect 50% non-controlling interest using the equity method of accounting. The Company leases 96 of the 97 hotel properties to its taxable REIT subsidiaries ("TRSs"), of which the Company owns a controlling financial interest.
|
Summary of Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission ("SEC") on February 28, 2023 (the "Annual Report"), contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, 2022. Basis of Presentation and Principles of Consolidation The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the SEC applicable to financial information. The unaudited financial statements include all adjustments of a normal recurring nature that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive income, statements of changes in equity and statements of cash flows. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Annual Report. The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interest in one hotel property in which it holds a 50% non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net income and comprehensive income, shareholders’ equity or cash flows. Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate that was expected to be discontinued at the end of 2021 because of reference rate reform. The guidance was effective upon issuance and expired on December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the expiration date of Topic 848 to December 31, 2024. The Company elected to apply certain of the optional expedients for contract modifications to its financial instruments impacted by the discontinuance of LIBOR. The Company has completed its modifications to these financial instruments affected by reference rate reform. The application of this guidance did not have a material impact on the Company's consolidated financial statements.
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Investment in Hotel Properties |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Hotel Properties | Investment in Hotel Properties Investment in hotel properties consisted of the following (in thousands):
For the three and nine months ended September 30, 2023, the Company recognized depreciation expense related to its investment in hotel properties of approximately $44.7 million and $134.6 million, respectively. For the three and nine months ended September 30, 2022, the Company recognized depreciation expense related to its investment in hotel properties of approximately $46.5 million and $139.9 million, respectively.
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Acquisition of Hotel Property |
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Hotel Property | Acquisition of Hotel Property During the nine months ended September 30, 2022, the Company acquired a 100% interest in the following property:
(1) During the nine months ended September 30, 2023, the Company converted this hotel property to The Bankers Alley Hotel, a Tapestry Collection by Hilton, and transitioned management to an affiliate of Hilton. The acquisition of the 21c Hotel Nashville was accounted for as an asset acquisition, whereby approximately $1.0 million of transaction costs were capitalized as part of the cost of the acquisition. The allocation of the costs for the property acquired was as follows (in thousands):
The value of the asset acquired was primarily based on a sales comparison approach (for land) and a depreciated replacement cost approach (for building and improvements and furniture, fixtures and equipment). The sales comparison approach used inputs of recent land sales in the hotel market. The depreciated replacement cost approach used inputs of both direct and indirect replacement costs using a nationally recognized authority on replacement cost information as well as the age, square footage and number of rooms of the asset.
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Sale of Hotel Properties |
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Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sale of Hotel Properties | Sale of Hotel Properties During the nine months ended September 30, 2022, the Company sold the following hotel properties in two separate transactions for a combined sales price of approximately $49.9 million.
The Company recorded a net gain of $1.0 million for the nine months ended September 30, 2022 in connection with the sale of these hotel properties.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue The Company recognized revenue from the following geographic markets (in thousands):
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt The Company's debt consisted of the following (in thousands):
Senior Notes The Company's senior notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
(1)Requires payment of interest only through maturity. The indentures governing the Senior Notes contain customary covenants that limit the Operating Partnership’s ability and, in certain instances, the ability of its subsidiaries, to incur additional debt, create liens on assets, make distributions and pay dividends, make certain types of investments, issue guarantees of indebtedness, and make certain restricted payments. These limitations are subject to a number of exceptions and qualifications set forth in the indentures. A summary of the various restrictive covenants for the Senior Notes are as follows:
As of September 30, 2023 and December 31, 2022, the Company was in compliance with all covenants associated with the Senior Notes. Revolver and Term Loans The Company has the following unsecured credit agreements in place: •$600.0 million revolving credit facility with a scheduled maturity date of May 10, 2027 and either a one-year extension option or up to two six-month extension options if certain conditions are satisfied (the "Revolver"); •$400.0 million term loan with a scheduled maturity date of May 18, 2025 (the "$400 Million Term Loan Maturing 2025"); •$200.0 million term loan with a scheduled maturity date of January 31, 2026 and two one-year extension options if certain conditions are satisfied (the "$200 Million Term Loan Maturing 2026"); and •$225.0 million term loan with a scheduled maturity date of May 10, 2026 and two one-year extension options if certain conditions are satisfied (the "$225 Million Term Loan Maturing 2026"). The $400 Million Term Loan Maturing 2025, the $200 Million Term Loan Maturing 2026, and the $225 Million Term Loan Maturing 2026 are collectively referred to as the "Term Loans." In January 2023, the Company received the remaining $95.0 million in proceeds on the $200 Million Term Loan Maturing 2026 and utilized these proceeds to pay off approximately $52.3 million of a term loan with a scheduled maturity date of January 25, 2023 (the "$400 Million Term Loan Maturing 2023") and approximately $41.7 million of another term loan with a scheduled maturity date of January 25, 2023 (the "$225 Million Term Loan Maturing 2023"). In May 2023, the Company amended its Revolver. The amendment extends the maturity date of the Revolver to May 10, 2027, which may be extended by the exercise of either a one-year extension option or up to two six-month extension options, subject to the satisfaction of certain conditions. The borrowings under the Revolver bear interest at a variable rate equal to (i) the Secured Overnight Financing Rate ("SOFR") plus a credit spread adjustment of ten basis points ("Adjusted SOFR") and a margin ranging from 1.40% to 1.95% or (ii) a base rate plus a margin ranging from 0.40% to 0.95%. In May 2023, the Company entered into the $225 Million Term Loan Maturing 2026, the proceeds of which were used to fully repay a $151.7 million term loan with a scheduled maturity date of January 25, 2024 (the "$400 Million Term Loan Maturing 2024") and a $73.0 million term loan with a scheduled maturity date of January 25, 2024 (the "$225 Million Term Loan Maturing 2024"). The $225 Million Term Loan Maturing 2026 matures on May 10, 2026, with two additional one year extension options to May 2027 and May 2028, respectively. Borrowings under the $225 Million Term Loan Maturing 2026 bear interest at a variable rate equal to (i) Adjusted SOFR plus a margin ranging from 1.45% to 2.20% or (ii) a base rate plus a margin ranging from 0.45% to 1.20%. In May 2023, the Company also amended the $400 Million Term Loan Maturing 2025 to bear interest at a variable rate equal to Adjusted SOFR (replacing LIBOR), plus an applicable margin. In addition, during the May 2023 amendments, all of the Company's unsecured credit agreements were amended to, among other things, (i) modify the calculation of certain financial covenants, including increasing the leverage ratio limit to 7.25x, (ii) modify the calculation of the unencumbered leverage ratio, (iii) remove the requirement to provide equity pledges if a certain leverage ratio is exceeded and (iv) reduce the interest floor to zero. The Company paid approximately $7.5 million in lender fees and legal costs related to the refinancing. In all cases, the actual margin is determined based on the Company’s leverage ratio, as calculated under the terms of the facility. The Company's unsecured credit agreements consisted of the following (dollars in thousands):
(1)Interest rate at September 30, 2023 gives effect to interest rate hedges. (2)There was $600.0 million of capacity on the Revolver at both September 30, 2023 and December 31, 2022. The Company has the ability to extend the maturity date for an additional one-year period or up to two six-month periods ending May 2028 if certain conditions are satisfied. (3)In January 2023, the Company received the remaining $95.0 million in proceeds on the $200 Million Term Loan Maturing 2026 and utilized these proceeds to pay off these Term Loans. (4)In May 2023, the Company entered into the $225 Million Term Loan Maturing 2026 and utilized the proceeds to pay off these Term Loans. (5)In January 2023, the Company received the remaining $95.0 million in proceeds on this Term Loan. (6)This Term Loan includes two one-year extension options. The exercise of the extension options will be at the Company's discretion, subject to certain conditions. (7)Excludes $6.0 million and $1.7 million as of September 30, 2023 and December 31, 2022, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets. The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:
(1)Leverage ratio is net indebtedness, as defined in the Revolver and Term Loan agreements, to corporate earnings before interest, taxes, depreciation, and amortization ("EBITDA"), as defined in the Revolver and Term Loan agreements. (2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Revolver and Term Loan agreements as EBITDA less furniture, fixtures and equipment ("FF&E") reserves, to fixed charges, which is generally defined in the Revolver and Term Loan agreements as interest expense, all regularly scheduled principal payments, preferred dividends paid, and cash taxes paid. Mortgage Loans The Company's mortgage loans consisted of the following (dollars in thousands):
(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity. (2)Includes $1.9 million and $2.2 million at September 30, 2023 and December 31, 2022, respectively, related to a fair value adjustment on this mortgage loan. (3)Interest rate at September 30, 2023 gives effect to interest rate hedges. (4)In April 2023, the Company exercised its final extension option to extend the maturity on this mortgage loan to April 2024. (5)This mortgage loan provides two one-year extension options, subject to certain conditions. Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. As of December 31, 2022, although all mortgage loans met their debt yield or DSCR thresholds, one mortgage loan was in a cash trap event pending notification to the lender to remove the restrictions. As of December 31, 2022, there was approximately $26.9 million of restricted cash held by this lender due to the cash trap event, and during the first quarter of 2023, all of the restrictions on this cash were removed. At September 30, 2023, all mortgage loans exceeded the minimum debt yield or DSCR thresholds. Interest Expense The components of the Company's interest expense consisted of the following (in thousands):
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Derivatives and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities | Derivatives and Hedging Activities The following interest rate swaps have been designated as cash flow hedges (in thousands):
(1)In May 2023, the Company modified the benchmark rate on this interest rate swap from LIBOR to Daily SOFR. (2)In July 2023, the Company modified the benchmark rate on this interest rate swap from LIBOR to Daily SOFR. (3)In February 2022, the Company dedesignated these swaps as the hedged forecasted transactions were no longer probable of occurring. Therefore, the Company reclassified a total of approximately $5.9 million of unrealized gains included in accumulated other comprehensive income to other income, net, in the consolidated statements of operations and comprehensive income. These swaps were subsequently redesignated and the amounts related to the initial fair value of $5.9 million that are recorded in other comprehensive income during the new hedging relationship will be reclassified to earnings on a straight line basis over the remaining life of these swaps. As of September 30, 2023 and December 31, 2022, the aggregate fair value of the interest rate swap assets of $42.2 million and $44.7 million, respectively, was included in prepaid expense and other assets in the accompanying consolidated balance sheets. As of September 30, 2023 and December 31, 2022, there was approximately $39.6 million and $40.6 million, respectively, of unrealized gains included in accumulated other comprehensive income related to interest rate swaps. There was no ineffectiveness recorded during the three or nine month periods ended September 30, 2023 or 2022. For the three and nine months ended September 30, 2023, gains of approximately $8.3 million and $21.8 million, respectively, included in accumulated other comprehensive income were reclassified into for the interest rate swaps. For the three and nine months ended September 30, 2022, gains of approximately $1.3 million and losses of approximately $6.8 million, respectively, included in accumulated other comprehensive income were reclassified into interest expense for the interest rate swaps. Approximately $23.3 million of the unrealized gains included in accumulated other comprehensive income at September 30, 2023 is expected to be reclassified into earnings within the next 12 months
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Fair Value |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value Fair Value Measurement Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The fair value hierarchy has three levels of inputs, both observable and unobservable: •Level 1 — Inputs include quoted market prices in an active market for identical assets or liabilities. •Level 2 — Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data. •Level 3 — Inputs are unobservable and corroborated by little or no market data. Fair Value of Financial Instruments The Company used the following market assumptions and/or estimation methods: •Cash and cash equivalents, restricted cash reserves, hotel and other receivables, accounts payable and other liabilities — The carrying amounts reported in the consolidated balance sheets for these financial instruments approximate fair value because of their short term maturities. •Debt — The Company estimated the fair value of the Senior Notes by using publicly available trading prices, which are Level 1 inputs in the fair value hierarchy. The Company estimated the fair value of the Revolver and Term Loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms, which are Level 2 and Level 3 inputs in the fair value hierarchy. The Company estimated the fair value of the mortgage loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms and the loan to estimated fair value of the collateral, which are Level 3 inputs in the fair value hierarchy. The fair value of the Company's debt was as follows (in thousands):
Recurring Fair Value Measurements The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 (in thousands):
The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands):
The fair values of the derivative financial instruments are determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows for each derivative. The Company determined that the significant inputs, such as interest yield curves and discount rates, used to value its derivatives fall within Level 2 of the fair value hierarchy and that the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. As of September 30, 2023, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
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Income Taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss ("NOL"), capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company is still continuing to provide a full valuation allowance against the deferred tax assets related to the NOL carryforwards of RLJ Lodging Trust Master TRS, Inc., the Company's primary TRS. The Company had no accruals for tax uncertainties as of September 30, 2023 and December 31, 2022.
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Commitments and Contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Restricted Cash Reserves The Company is obligated to maintain cash reserve funds for future capital expenditures, real estate taxes, insurance, and debt obligations where lenders hold restricted cash due to cash trap events. The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 3.0% to 5.0% of the individual hotel’s revenues for future capital expenditures (including the periodic replacement or refurbishment of FF&E). Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of September 30, 2023 and December 31, 2022, approximately $35.8 million and $28.2 million, respectively, was available in the restricted cash reserves for future capital expenditures, real estate taxes, and insurance. As of December 31, 2022, there was also approximately $26.9 million of restricted cash held by a lender due to a cash trap event, and during the first quarter of 2023, all of the restrictions on this cash were removed. Litigation Neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows. Management Agreements As of September 30, 2023, 96 of the Company's consolidated hotel properties were operated pursuant to management agreements with initial terms ranging from to 25 years. This number includes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. Each management company receives a base management fee between 1.75% and 3.5% of hotel revenues. Management agreements that include the benefits of a franchise agreement incur a base management fee between 1.75% and 7.0% of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel. Management fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2023, the Company incurred management fee expense of approximately $10.4 million and $32.3 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred management fee expense of approximately $9.2 million and $25.7 million, respectively. Franchise Agreements As of September 30, 2023, 59 of the Company’s consolidated hotel properties were operated under franchise agreements with initial terms ranging from to 30 years. This number excludes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. In addition, two hotels are not operated with a hotel brand so they do not have franchise agreements. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee between 2.0% and 6.0% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs between 1.0% and 4.3% of room revenue. Certain hotels are also charged a royalty fee between 1.5% and 3.0% of food and beverage revenues. Franchise fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2023, the Company incurred franchise fee expense of approximately $16.7 million and $50.2 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred franchise fee expense of approximately $16.2 million and $46.2 million, respectively.
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Equity |
3 Months Ended |
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Sep. 30, 2023 | |
Equity [Abstract] | |
Equity | Equity Common Shares of Beneficial Interest During the nine months ended September 30, 2023, the Company declared a cash dividend of $0.08 per common share in each of the first and second quarters of 2023 and a cash dividend of $0.10 per common share in the third quarter of 2023. During the nine months ended September 30, 2022, the Company declared a cash dividend of $0.01 per common share in each of the first and second quarters of 2022 and a cash dividend of $0.05 per common share in the third quarter of 2022. On April 28, 2023, the Company's board of trustees approved a new share repurchase program to acquire up to an aggregate of $250.0 million of common and preferred shares from May 9, 2023 to May 8, 2024 (the "2023 Share Repurchase Program"). During the nine months ended September 30, 2023, the Company repurchased and retired approximately 6.6 million common shares for approximately $66.8 million, of which $39.9 million was repurchased under a share repurchase program authorized by the Company’s board of trustees in 2022, which expired May 8, 2023, and $26.9 million was repurchased under the 2023 Share Repurchase Program. Subsequent to September 30, 2023, the Company repurchased and retired approximately 0.3 million common shares for approximately $3.2 million. As of November 2, 2023, the 2023 Share Repurchase Program had a remaining capacity of $219.9 million. During the nine months ended September 30, 2022, the Company repurchased and retired approximately 4.2 million common shares for approximately $50.0 million. Series A Preferred Shares During the nine months ended September 30, 2023 and 2022, the Company declared a cash dividend of $0.4875 on each Series A Preferred Share in each of the first, second and third quarters of 2023 and 2022. The Series A Preferred Shares are convertible, in whole or in part, at any time, at the option of the holders into common shares at a conversion rate of 0.2806 common shares for each Series A Preferred Share. Noncontrolling Interest in Consolidated Joint Ventures The Company consolidates the joint venture that owns The Knickerbocker hotel property, which has a third-party partner that owns a noncontrolling 5% ownership interest in the joint venture. The third-party ownership interest is included in the noncontrolling interest in consolidated joint ventures on the consolidated balance sheets. Noncontrolling Interest in the Operating Partnership The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP units held by the limited partners are redeemable for cash, or at the option of the Company, for a like number of common shares. As of September 30, 2023, 771,831 outstanding OP units were held by the limited partners. The noncontrolling interest is included in the noncontrolling interest in the Operating Partnership on the consolidated balance sheets.
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Equity Incentive Plan |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | Equity Incentive Plan The Company may issue share-based awards to officers, employees, non-employee trustees and other eligible persons under the RLJ Lodging Trust 2021 Equity Incentive Plan (the "2021 Plan"). The 2021 Plan provides for a maximum of 6,828,527 common shares to be issued in the form of share options, share appreciation rights, restricted share awards, unrestricted share awards, share units, dividend equivalent rights, long-term incentive units, other equity-based awards and cash bonus awards. Share Awards From time to time, the Company may award unvested restricted shares as compensation to officers, employees and non-employee trustees. The issued shares vest over a period of time as determined by the board of trustees at the date of grant. The Company recognizes compensation expense for time-based unvested restricted shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures. Non-employee trustees may also elect to receive unrestricted shares as compensation that would otherwise be paid in cash for their services. The shares issued to non-employee trustees in lieu of cash compensation are unrestricted and include no vesting conditions. The Company recognizes compensation expense for the unrestricted shares issued in lieu of cash compensation on the date of issuance based upon the fair market value of the shares on that date. A summary of the unvested restricted shares as of September 30, 2023 is as follows:
For the three and nine months ended September 30, 2023, the Company recognized approximately $4.0 million and $11.4 million, respectively, of share-based compensation expense related to restricted share awards. For the three and nine months ended September 30, 2022, the Company recognized approximately $3.5 million and $10.7 million, respectively, of share-based compensation expense related to restricted share awards. As of September 30, 2023, there was $17.7 million of total unrecognized compensation costs related to unvested restricted share awards and these costs are expected to be recognized over a weighted-average period of 1.5 years. The total fair value of the shares vested (calculated as the number of shares multiplied by the vesting date share price) during the nine months ended September 30, 2023 and 2022 was approximately $9.7 million and $8.8 million, respectively. Performance Units The Company aligns its executive officers with its long-term investors by awarding a significant percentage of their equity compensation in the form of multi-year performance unit awards that use both absolute and relative Total Shareholder Return as the primary metrics. The performance units granted prior to 2021 vest over a four year period, including three years of performance-based vesting (the “performance units measurement period”) plus an additional one year of time-based vesting. The Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 50% of the grant date fair value over three years and 50% of the grant date fair value over four years. The performance units granted in 2021, 2022 and 2023 vest at the end of a three year period. These performance units may convert into restricted shares at a range of 0% to 200% of the number of performance units granted contingent upon the Company achieving an absolute total shareholder return (25% of award) and a relative shareholder return (75% of award) over the measurement period at specified percentiles of the peer group, as defined by the awards. At the end of the performance units measurement period, if the target criterion is met, 100% of the performance units that are earned will vest immediately. The award recipients will not be entitled to receive any dividends prior to the date of conversion. For any restricted shares issued upon conversion, the award recipient will be entitled to receive payment of an amount equal to all dividends that would have been paid if such restricted shares had been issued at the beginning of the performance units measurement period. The fair value of the performance units was determined using a Monte Carlo simulation. For performance units granted in 2021, 2022 and 2023, the Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 100% of the grant date fair value over three years. A summary of the performance unit awards is as follows:
(1) In February 2023, following the end of the measurement period, the Company met certain threshold criterion and the performance units converted into approximately 200,000 restricted shares. Half of the restricted shares vested immediately with the remaining half vesting in February 2024. As of September 30, 2023, there were approximately 100,000 unvested restricted shares related to the conversion of the performance units. The total fair value of the vested shares related to the conversion of the performance units (calculated as the number of vested shares multiplied by the vesting date share price) during the nine months ended September 30, 2023 was approximately $1.1 million. For the three and nine months ended September 30, 2023, the Company recognized approximately $2.3 million and $6.7 million, respectively, of share-based compensation expense related to the performance unit awards. For the three and nine months ended September 30, 2022, the Company recognized approximately $1.9 million and $5.4 million, respectively, of share-based compensation expense related to the performance unit awards. As of September 30, 2023, there was $13.1 million of total unrecognized compensation costs related to the performance unit awards and these costs are expected to be recognized over a weighted-average period of 1.9 years. As of September 30, 2023, there were 2,688,397 common shares available for future grant under the 2021 Plan, which includes potential common shares that may convert from performance units if certain target criterion is met.
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Earnings per Common Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Common Share | Earnings per Common Share Basic earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period excluding the weighted-average number of unvested restricted shares outstanding during the period. Diluted earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. The potential shares consist of the unvested restricted share grants and unvested performance units, calculated using the treasury stock method, and convertible Series A Preferred Shares, calculated using the if-converted method. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating shares and are considered in the computation of earnings per share pursuant to the two-class method. If there were any undistributed earnings allocable to the participating shares, they would be deducted from net income attributable to common shareholders used in the basic and diluted earnings per share calculations. The limited partners’ outstanding OP units (which may be redeemed for common shares under certain circumstances) have been excluded from the diluted earnings per share calculation as there was no effect on the amounts for the three and nine months ended September 30, 2023 and 2022, since the limited partners’ share of income would also be added back to net income attributable to common shareholders. The computation of basic and diluted earnings per common share is as follows (in thousands, except share and per share data):
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Supplemental Information to Statements of Cash Flows |
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Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information to Statements of Cash Flows | Supplemental Information to Statements of Cash Flows (in thousands)
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net Income (Loss) Attributable to Parent | $ 16,430 | $ 17,594 | $ 68,470 | $ 35,312 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the SEC applicable to financial information. The unaudited financial statements include all adjustments of a normal recurring nature that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive income, statements of changes in equity and statements of cash flows. The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, included in the Annual Report. The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate interest in one hotel property in which it holds a 50% non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.
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Reclassifications | Reclassifications Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net income and comprehensive income, shareholders’ equity or cash flows.
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Use of Estimates | Use of Estimates The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate that was expected to be discontinued at the end of 2021 because of reference rate reform. The guidance was effective upon issuance and expired on December 31, 2022. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848, which deferred the expiration date of Topic 848 to December 31, 2024. The Company elected to apply certain of the optional expedients for contract modifications to its financial instruments impacted by the discontinuance of LIBOR. The Company has completed its modifications to these financial instruments affected by reference rate reform. The application of this guidance did not have a material impact on the Company's consolidated financial statements.
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Management Agreements | Management Agreements As of September 30, 2023, 96 of the Company's consolidated hotel properties were operated pursuant to management agreements with initial terms ranging from to 25 years. This number includes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. Each management company receives a base management fee between 1.75% and 3.5% of hotel revenues. Management agreements that include the benefits of a franchise agreement incur a base management fee between 1.75% and 7.0% of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel. Management fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2023, the Company incurred management fee expense of approximately $10.4 million and $32.3 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred management fee expense of approximately $9.2 million and $25.7 million, respectively.
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Franchise Agreements | Franchise Agreements As of September 30, 2023, 59 of the Company’s consolidated hotel properties were operated under franchise agreements with initial terms ranging from to 30 years. This number excludes 35 consolidated hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. In addition, two hotels are not operated with a hotel brand so they do not have franchise agreements. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee between 2.0% and 6.0% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs between 1.0% and 4.3% of room revenue. Certain hotels are also charged a royalty fee between 1.5% and 3.0% of food and beverage revenues. Franchise fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive income. For the three and nine months ended September 30, 2023, the Company incurred franchise fee expense of approximately $16.7 million and $50.2 million, respectively. For the three and nine months ended September 30, 2022, the Company incurred franchise fee expense of approximately $16.2 million and $46.2 million, respectively.
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Share-Based Compensation | Share Awards From time to time, the Company may award unvested restricted shares as compensation to officers, employees and non-employee trustees. The issued shares vest over a period of time as determined by the board of trustees at the date of grant. The Company recognizes compensation expense for time-based unvested restricted shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures. Non-employee trustees may also elect to receive unrestricted shares as compensation that would otherwise be paid in cash for their services. The shares issued to non-employee trustees in lieu of cash compensation are unrestricted and include no vesting conditions. The Company recognizes compensation expense for the unrestricted shares issued in lieu of cash compensation on the date of issuance based upon the fair market value of the shares on that date.
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Earnings Per Share | Basic earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period excluding the weighted-average number of unvested restricted shares outstanding during the period. Diluted earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. The potential shares consist of the unvested restricted share grants and unvested performance units, calculated using the treasury stock method, and convertible Series A Preferred Shares, calculated using the if-converted method. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating shares and are considered in the computation of earnings per share pursuant to the two-class method. If there were any undistributed earnings allocable to the participating shares, they would be deducted from net income attributable to common shareholders used in the basic and diluted earnings per share calculations. The limited partners’ outstanding OP units (which may be redeemed for common shares under certain circumstances) have been excluded from the diluted earnings per share calculation as there was no effect on the amounts for the three and nine months ended September 30, 2023 and 2022, since the limited partners’ share of income would also be added back to net income attributable to common shareholders.
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Investment in Hotel Properties (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of investment in hotel properties | Investment in hotel properties consisted of the following (in thousands):
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Acquisition of Hotel Property (Tables) |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property Acquisitions | During the nine months ended September 30, 2022, the Company acquired a 100% interest in the following property:
(1) During the nine months ended September 30, 2023, the Company converted this hotel property to The Bankers Alley Hotel, a Tapestry Collection by Hilton, and transitioned management to an affiliate of Hilton.
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Schedule of Asset Acquisition, Property Allocation Cost | The allocation of the costs for the property acquired was as follows (in thousands):
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Sale of Hotel Properties (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations and Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property disposed of during period | During the nine months ended September 30, 2022, the Company sold the following hotel properties in two separate transactions for a combined sales price of approximately $49.9 million.
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Revenue (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The Company recognized revenue from the following geographic markets (in thousands):
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Debt (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt | The Company's debt consisted of the following (in thousands):
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Schedule of Senior Notes | The Company's senior notes (collectively, the "Senior Notes") consisted of the following (dollars in thousands):
(1)Requires payment of interest only through maturity.
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Schedule Of Debt Instrument Covenants | A summary of the various restrictive covenants for the Senior Notes are as follows:
The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:
(1)Leverage ratio is net indebtedness, as defined in the Revolver and Term Loan agreements, to corporate earnings before interest, taxes, depreciation, and amortization ("EBITDA"), as defined in the Revolver and Term Loan agreements. (2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Revolver and Term Loan agreements as EBITDA less furniture, fixtures and equipment ("FF&E") reserves, to fixed charges, which is generally defined in the Revolver and Term Loan agreements as interest expense, all regularly scheduled principal payments, preferred dividends paid, and cash taxes paid.
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Schedule of Revolver and Term Loans | The Company's unsecured credit agreements consisted of the following (dollars in thousands):
(1)Interest rate at September 30, 2023 gives effect to interest rate hedges. (2)There was $600.0 million of capacity on the Revolver at both September 30, 2023 and December 31, 2022. The Company has the ability to extend the maturity date for an additional one-year period or up to two six-month periods ending May 2028 if certain conditions are satisfied. (3)In January 2023, the Company received the remaining $95.0 million in proceeds on the $200 Million Term Loan Maturing 2026 and utilized these proceeds to pay off these Term Loans. (4)In May 2023, the Company entered into the $225 Million Term Loan Maturing 2026 and utilized the proceeds to pay off these Term Loans. (5)In January 2023, the Company received the remaining $95.0 million in proceeds on this Term Loan. (6)This Term Loan includes two one-year extension options. The exercise of the extension options will be at the Company's discretion, subject to certain conditions. (7)Excludes $6.0 million and $1.7 million as of September 30, 2023 and December 31, 2022, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets.
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Schedule of mortgage loans | The Company's mortgage loans consisted of the following (dollars in thousands):
(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity. (2)Includes $1.9 million and $2.2 million at September 30, 2023 and December 31, 2022, respectively, related to a fair value adjustment on this mortgage loan. (3)Interest rate at September 30, 2023 gives effect to interest rate hedges. (4)In April 2023, the Company exercised its final extension option to extend the maturity on this mortgage loan to April 2024. (5)This mortgage loan provides two one-year extension options, subject to certain conditions.
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Schedule of Interest Expense Components | The components of the Company's interest expense consisted of the following (in thousands):
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Derivatives and Hedging Activities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of interest rate swaps | The following interest rate swaps have been designated as cash flow hedges (in thousands):
(1)In May 2023, the Company modified the benchmark rate on this interest rate swap from LIBOR to Daily SOFR. (2)In July 2023, the Company modified the benchmark rate on this interest rate swap from LIBOR to Daily SOFR. (3)In February 2022, the Company dedesignated these swaps as the hedged forecasted transactions were no longer probable of occurring. Therefore, the Company reclassified a total of approximately $5.9 million of unrealized gains included in accumulated other comprehensive income to other income, net, in the consolidated statements of operations and comprehensive income. These swaps were subsequently redesignated and the amounts related to the initial fair value of $5.9 million that are recorded in other comprehensive income during the new hedging relationship will be reclassified to earnings on a straight line basis over the remaining life of these swaps.
|
Fair Value (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The fair value of the Company's debt was as follows (in thousands):
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Schedule of fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis | The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2023 (in thousands):
The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 (in thousands):
|
Equity Incentive Plan (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Compensation Arrangements by Share-based Payment Award, Performance-Based Units, Vested and Expected to Vest [Table Text Block] | A summary of the performance unit awards is as follows:
(1) In February 2023, following the end of the measurement period, the Company met certain threshold criterion and the performance units converted into approximately 200,000 restricted shares. Half of the restricted shares vested immediately with the remaining half vesting in February 2024. As of September 30, 2023, there were approximately 100,000 unvested restricted shares related to the conversion of the performance units. The total fair value of the vested shares related to the conversion of the performance units (calculated as the number of vested shares multiplied by the vesting date share price) during the nine months ended September 30, 2023 was approximately $1.1 million.
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Restricted share awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the unvested restricted shares | A summary of the unvested restricted shares as of September 30, 2023 is as follows:
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Earnings per Common Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted earnings per common share | The computation of basic and diluted earnings per common share is as follows (in thousands, except share and per share data):
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Supplemental Information to Statements of Cash Flows (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of supplemental information to statements of cash flows |
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Summary of Significant Accounting Policies (Details) |
Sep. 30, 2023
joint_venture
|
---|---|
Subsidiary or Equity Method Investee [Line Items] | |
Real Estate Interests, Number of Joint Ventures | 1 |
Fifty Percent Owned [Member] | Unconsolidated Properties [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Equity Method Investment, Ownership Percentage | 50.00% |
Investment in Hotel Properties (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Property, Plant and Equipment [Abstract] | |||||
Land and improvements | $ 996,972 | $ 996,972 | $ 992,609 | ||
Buildings and improvements | 4,096,444 | 4,096,444 | 4,040,505 | ||
Furniture, fixtures and equipment | 782,305 | 782,305 | 745,978 | ||
Investment in hotel properties, gross | 5,875,721 | 5,875,721 | 5,779,092 | ||
Accumulated depreciation | (1,733,356) | (1,733,356) | (1,598,764) | ||
Investment in hotel properties, net | 4,142,365 | 4,142,365 | $ 4,180,328 | ||
Real Estate Depreciation Expense, Excluding Discontinued Operations Expense | $ 44,700 | $ 46,500 | $ 134,600 | $ 139,900 |
Acquisition of Hotel Property - Additional Information (Details) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Jul. 29, 2022
USD ($)
room
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Schedule of Asset Acquisition [Line Items] | |||
Transaction costs | $ 0 | $ 1,021 | |
Purchase price | $ 0 | $ 59,000 | |
21 C Nashville Hotel | |||
Schedule of Asset Acquisition [Line Items] | |||
Interest acquired | 100.00% | ||
Transaction costs | $ 1,000 | ||
Number of rooms | room | 124 | ||
Purchase price | $ 59,000 |
Acquisition of Hotel Property - Property Acquired (Details) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Jul. 29, 2022
USD ($)
room
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Schedule of Asset Acquisition [Line Items] | |||
Purchase price | $ 0 | $ 59,000 | |
21 C Nashville Hotel | |||
Schedule of Asset Acquisition [Line Items] | |||
Interest acquired | 100.00% | ||
Number of rooms | room | 124 | ||
Purchase price | $ 59,000 |
Acquisition of Hotel Property - Purchase Price Allocation for Asset Acquisition (Details) - USD ($) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Jul. 29, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Schedule of Asset Acquisition [Line Items] | |||
Transaction costs | $ 0 | $ 1,021 | |
21 C Nashville Hotel | |||
Schedule of Asset Acquisition [Line Items] | |||
Total purchase price | 60,021 | ||
Transaction costs | $ 1,000 | ||
21 C Nashville Hotel | Land and improvements | |||
Schedule of Asset Acquisition [Line Items] | |||
Property, plant, and equipment | 19,777 | ||
21 C Nashville Hotel | Buildings and improvements | |||
Schedule of Asset Acquisition [Line Items] | |||
Property, plant, and equipment | 36,169 | ||
21 C Nashville Hotel | Furniture, fixtures and equipment | |||
Schedule of Asset Acquisition [Line Items] | |||
Property, plant, and equipment | $ 4,075 |
Sale of Hotel Properties (Narrative) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
(Payments) proceeds from sales of hotel properties, net | $ 28 | $ 48,053 | ||
Gain (loss) on sale of hotel properties, net | $ 16 | $ (57) | $ (28) | 996 |
Disposals 2022 | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
(Payments) proceeds from sales of hotel properties, net | $ 49,900 |
Debt (Components of Interest Expense) (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Debt | ||||
Amortization of deferred financing costs | $ 1,564 | $ 1,420 | $ 4,528 | $ 4,522 |
Gain (Loss) on Interest Rate Derivative Instruments Not Designated as Hedging Instruments | (482) | (252) | (1,446) | (493) |
Total Interest Expense | 24,833 | 22,625 | 73,506 | 71,041 |
Senior Notes | ||||
Debt | ||||
Interest expense | 9,695 | 9,695 | 29,070 | 29,125 |
Revolver and Term Loans | ||||
Debt | ||||
Interest expense | 7,365 | 7,870 | 23,176 | 26,975 |
Secured Debt | ||||
Debt | ||||
Interest expense | $ 5,727 | $ 3,388 | $ 15,286 | $ 9,926 |
Income Taxes (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Accruals for tax uncertainties | $ 0 | $ 0 |
Commitments and Contingencies (Details) $ in Thousands |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2023
USD ($)
property
hotel
|
Dec. 31, 2022
USD ($)
|
Sep. 30, 2022
USD ($)
|
|
Loss Contingencies [Line Items] | |||
Minimum restricted cash reserve escrows to be maintained as a percentage of the hotel's revenue | 3.00% | ||
Maximum restricted cash reserve escrows to be maintained as percentage of hotel's revenue | 5.00% | ||
Restricted cash reserves for future capital expenditures, real estate taxes and insurance | $ 35,807 | $ 55,070 | $ 51,504 |
Number of Real Estate Properties | property | 97 | ||
Restricted Cash | 28,200 | ||
Number of real estate properties with manchise agreements | hotel | 35 | ||
Lender | |||
Loss Contingencies [Line Items] | |||
Restricted Cash | $ 26,900 |
Commitments and Contingencies (Management Agreements) (Details) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
property
hotel
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
property
hotel
|
Sep. 30, 2022
USD ($)
|
|
Other Commitments | ||||
Number of Hotel Properties Operated under Management Agreements | hotel | 96 | 96 | ||
Number of Real Estate Properties | property | 97 | 97 | ||
Minimum | ||||
Other Commitments | ||||
Management Agreement Term | 3 years | |||
Base Management Fee as Percentage of Hotel Revenues | 1.75% | |||
Management Agreements which include Franchise Agreement, Base Management Fee as Percentage of Hotel Revenues | 1.75% | |||
Maximum | ||||
Other Commitments | ||||
Management Agreement Term | 25 years | |||
Base Management Fee as Percentage of Hotel Revenues | 3.50% | |||
Management Agreements which include Franchise Agreement, Base Management Fee as Percentage of Hotel Revenues | 7.00% | |||
Management Service [Member] | ||||
Other Commitments | ||||
Cost of Goods and Services Sold | $ | $ 10.4 | $ 9.2 | $ 32.3 | $ 25.7 |
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