Maryland | 20-0141677 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) | |
200 S. Orange Avenue Suite 2700, Orlando, Florida | 32801 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer | þ | Accelerated filer | o | ||
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | o | |
Emerging growth company | o | ||||
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. o |
Part I - Financial Information | Page | ||
Item 1. | Financial Statements (unaudited) | ||
Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017 | |||
Condensed Consolidated Statements of Operations and Comprehensive Income for the Three and Six Months Ended June 30, 2018 and 2017 | |||
Condensed Consolidated Statement of Changes in Equity for the Six Months Ended June 30, 2018 | |||
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and 2017 | |||
Notes to the Condensed Consolidated Financial Statements | |||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. | Controls and Procedures | ||
Part II - Other Information | |||
Item 1. | Legal Proceedings | ||
Item 1A. | Risk Factors | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | ||
Item 3. | Defaults Upon Senior Securities | ||
Item 4. | Mine Safety Disclosures | ||
Item 5. | Other Information | ||
Item 6. | Exhibits | ||
Signatures |
June 30, 2018 | December 31, 2017 | ||||||
Assets | (Unaudited) | ||||||
Investment properties: | |||||||
Land | $ | 440,930 | $ | 440,930 | |||
Buildings and other improvements | 2,935,912 | 2,878,375 | |||||
Total | $ | 3,376,842 | $ | 3,319,305 | |||
Less: accumulated depreciation | (703,798 | ) | (628,450 | ) | |||
Net investment properties | $ | 2,673,044 | $ | 2,690,855 | |||
Cash and cash equivalents | 184,809 | 71,884 | |||||
Restricted cash and escrows | 63,000 | 58,520 | |||||
Accounts and rents receivable, net of allowance for doubtful accounts | 42,728 | 35,865 | |||||
Intangible assets, net of accumulated amortization of $5,134 and $3,286, respectively | 66,153 | 68,000 | |||||
Other assets | 53,981 | 37,512 | |||||
Assets held for sale | — | 152,672 | |||||
Total assets (including $69,576 and $70,269, respectively, related to consolidated variable interest entities - Note 6) | $ | 3,083,715 | $ | 3,115,308 | |||
Liabilities | |||||||
Debt, net of loan discounts and unamortized deferred financing costs (Note 7) | $ | 1,117,750 | $ | 1,322,593 | |||
Accounts payable and accrued expenses | 84,180 | 77,005 | |||||
Distributions payable | 31,335 | 29,930 | |||||
Other liabilities | 43,714 | 40,694 | |||||
Total liabilities (including $46,303 and $46,637, respectively, related to consolidated variable interest entities - Note 6) | $ | 1,276,979 | $ | 1,470,222 | |||
Commitments and Contingencies (Note 14) | |||||||
Stockholders' equity | |||||||
Common stock, $0.01 par value, 500,000,000 shares authorized, 111,929,945 and 106,735,336 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively | $ | 1,120 | $ | 1,068 | |||
Additional paid in capital | 2,044,132 | 1,924,124 | |||||
Accumulated other comprehensive income | 22,169 | 10,677 | |||||
Accumulated distributions in excess of net earnings | (296,830 | ) | (320,964 | ) | |||
Total Company stockholders' equity | $ | 1,770,591 | $ | 1,614,905 | |||
Non-controlling interests | 36,145 | 30,181 | |||||
Total equity | $ | 1,806,736 | $ | 1,645,086 | |||
Total liabilities and equity | $ | 3,083,715 | $ | 3,115,308 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues: | |||||||||||||||
Rooms revenues | $ | 175,823 | $ | 164,868 | $ | 338,405 | $ | 309,319 | |||||||
Food and beverage revenues | 86,419 | 66,552 | 172,835 | 128,376 | |||||||||||
Other revenues | 14,815 | 12,972 | 30,316 | 25,157 | |||||||||||
Total revenues | $ | 277,057 | $ | 244,392 | $ | 541,556 | $ | 462,852 | |||||||
Expenses: | |||||||||||||||
Rooms expenses | 38,132 | 35,349 | 77,176 | 68,979 | |||||||||||
Food and beverage expenses | 53,528 | 41,798 | 106,503 | 80,982 | |||||||||||
Other direct expenses | 4,715 | 3,303 | 9,189 | 6,309 | |||||||||||
Other indirect expenses | 63,068 | 55,441 | 126,393 | 108,713 | |||||||||||
Management and franchise fees | 12,447 | 11,722 | 24,007 | 23,100 | |||||||||||
Total hotel operating expenses | $ | 171,890 | $ | 147,613 | $ | 343,268 | $ | 288,083 | |||||||
Depreciation and amortization | 38,602 | 36,625 | 77,403 | 73,104 | |||||||||||
Real estate taxes, personal property taxes and insurance | 11,819 | 10,696 | 23,679 | 22,056 | |||||||||||
Ground lease expense | 1,141 | 1,409 | 2,707 | 2,785 | |||||||||||
General and administrative expenses | 7,873 | 7,844 | 15,932 | 16,222 | |||||||||||
Gain on business interruption insurance | (2,649 | ) | — | (2,649 | ) | — | |||||||||
Acquisition and terminated transaction costs | 222 | 1,260 | 222 | 1,265 | |||||||||||
Total expenses | $ | 228,898 | $ | 205,447 | $ | 460,562 | $ | 403,515 | |||||||
Operating income | $ | 48,159 | $ | 38,945 | $ | 80,994 | $ | 59,337 | |||||||
Gain on sale of investment properties | 9 | 49,176 | 42,294 | 49,176 | |||||||||||
Other income | 446 | 186 | 832 | 338 | |||||||||||
Interest expense | (13,053 | ) | (11,146 | ) | (26,769 | ) | (21,297 | ) | |||||||
Loss on extinguishment of debt | (384 | ) | (274 | ) | (465 | ) | (274 | ) | |||||||
Net income before income taxes | $ | 35,177 | $ | 76,887 | $ | 96,886 | $ | 87,280 | |||||||
Income tax expense | (5,646 | ) | (5,889 | ) | (10,311 | ) | (8,055 | ) | |||||||
Net income | $ | 29,531 | $ | 70,998 | $ | 86,575 | $ | 79,225 | |||||||
Non-controlling interests in consolidated real estate entities (Note 6) | (20 | ) | (126 | ) | 159 | (54 | ) | ||||||||
Non-controlling interests of Common Units in Operating Partnership (Note 1) | (717 | ) | (1,454 | ) | (2,283 | ) | (1,640 | ) | |||||||
Net income attributable to non-controlling interests | $ | (737 | ) | $ | (1,580 | ) | $ | (2,124 | ) | $ | (1,694 | ) | |||
Net income attributable to common stockholders | $ | 28,794 | $ | 69,418 | $ | 84,451 | $ | 77,531 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Basic and diluted earnings per share | |||||||||||||||
Net income per share available to common stockholders - basic and diluted | $ | 0.26 | $ | 0.65 | $ | 0.78 | $ | 0.72 | |||||||
Weighted average number of common shares (basic) | 108,956,408 | 106,769,003 | 107,874,640 | 106,806,664 | |||||||||||
Weighted average number of common shares (diluted) | 109,220,220 | 107,005,884 | 108,115,441 | 107,033,619 | |||||||||||
Comprehensive Income: | |||||||||||||||
Net income | $ | 29,531 | $ | 70,998 | $ | 86,575 | $ | 79,225 | |||||||
Other comprehensive income: | |||||||||||||||
Unrealized gain (loss) on interest rate derivative instruments | 3,643 | (2,815 | ) | 12,459 | (1,672 | ) | |||||||||
Reclassification adjustment for amounts recognized in net income (interest expense) | (606 | ) | 693 | (660 | ) | 1,505 | |||||||||
$ | 32,568 | $ | 68,876 | $ | 98,374 | $ | 79,058 | ||||||||
Comprehensive (income) loss attributable to non-controlling interests: | |||||||||||||||
Non-controlling interests in consolidated real estate entities (Note 6) | (20 | ) | (126 | ) | 159 | (54 | ) | ||||||||
Non-controlling interests of Common Units in Operating Partnership (Note 1) | (796 | ) | (1,411 | ) | (2,590 | ) | (1,637 | ) | |||||||
Comprehensive income attributable to non-controlling interests | $ | (816 | ) | $ | (1,537 | ) | $ | (2,431 | ) | $ | (1,691 | ) | |||
Comprehensive income attributable to the Company | $ | 31,752 | $ | 67,339 | $ | 95,943 | $ | 77,367 |
Common Stock | Non-controlling Interests | |||||||||||||||||||||||||||||||||
Shares | Amount | Additional paid in capital | Accumulated other comprehensive income | Distributions in excess of retained earnings | Operating Partnership | Consolidated Real Estate Entities | Total Non-controlling Interests | Total | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 106,735,336 | $ | 1,068 | $ | 1,924,124 | $ | 10,677 | $ | (320,964 | ) | $ | 17,781 | $ | 12,400 | $ | 30,181 | $ | 1,645,086 | ||||||||||||||||
Net income | — | — | — | — | 84,451 | 2,283 | (159 | ) | 2,124 | 86,575 | ||||||||||||||||||||||||
Proceeds from sale of common stock, net | 5,090,656 | 51 | 119,906 | — | — | — | — | — | 119,957 | |||||||||||||||||||||||||
Dividends, common shares / units ($0.55) | — | — | — | — | (60,317 | ) | (517 | ) | — | (517 | ) | (60,834 | ) | |||||||||||||||||||||
Share-based compensation | 153,779 | 2 | 1,122 | — | — | 3,971 | — | 3,971 | 5,095 | |||||||||||||||||||||||||
Shares redeemed to satisfy tax withholding on vested share-based compensation | (49,826 | ) | (1 | ) | (1,020 | ) | — | — | — | — | — | (1,021 | ) | |||||||||||||||||||||
Contributions from non-controlling interests | — | — | — | — | — | — | 79 | 79 | 79 | |||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||||
Unrealized gain on interest rate derivative instruments | — | — | — | 12,135 | — | 324 | — | 324 | 12,459 | |||||||||||||||||||||||||
Reclassification adjustment for amounts recognized in net income | — | — | — | (643 | ) | — | (17 | ) | — | (17 | ) | (660 | ) | |||||||||||||||||||||
Balance at June 30, 2018 | 111,929,945 | $ | 1,120 | $ | 2,044,132 | $ | 22,169 | $ | (296,830 | ) | $ | 23,825 | $ | 12,320 | $ | 36,145 | $ | 1,806,736 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 86,575 | $ | 79,225 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 75,735 | 72,478 | |||||
Amortization of above and below market leases and other lease intangibles | 1,782 | 877 | |||||
Amortization of debt premiums, discounts, and financing costs | 1,367 | 1,402 | |||||
Loss on extinguishment of debt | 465 | 274 | |||||
Gain on sale of investment properties | (42,294 | ) | (49,176 | ) | |||
Share-based compensation expense | 4,827 | 5,182 | |||||
Changes in assets and liabilities: | |||||||
Accounts and rents receivable | (8,440 | ) | (12,932 | ) | |||
Other assets | 1,531 | 2,858 | |||||
Accounts payable and accrued expenses | 6,848 | 2,676 | |||||
Other liabilities | 2,005 | 7,274 | |||||
Net cash provided by operating activities | $ | 130,401 | $ | 110,138 | |||
Cash flows from investing activities: | |||||||
Purchase of investment properties | — | (205,500 | ) | ||||
Capital expenditures and tenant improvements | (55,858 | ) | (29,320 | ) | |||
Proceeds from sale of investment properties | 196,920 | 186,852 | |||||
Deposits for acquisition of hotel properties | (5,000 | ) | — | ||||
Net cash provided by (used in) investing activities | $ | 136,062 | $ | (47,968 | ) | ||
Cash flows from financing activities: | |||||||
Proceeds from mortgage debt and notes payable | 65,000 | 115,000 | |||||
Payoffs of mortgage debt | (228,344 | ) | (127,876 | ) | |||
Principal payments of mortgage debt | (1,853 | ) | (1,206 | ) | |||
Payment of loan fees and deposits | (3,628 | ) | (906 | ) | |||
Proceeds from revolving line of credit draws | — | 80,000 | |||||
Payments on revolving line of credit | (40,000 | ) | (80,000 | ) | |||
Contributions from non-controlling interests | 79 | — | |||||
Proceeds from issuance of common stock, net of offering costs | 120,120 | — | |||||
Repurchase of common shares | — | (4,103 | ) | ||||
Shares redeemed to satisfy tax withholding on vested share based compensation | (1,021 | ) | (1,761 | ) | |||
Dividends | (59,411 | ) | (59,307 | ) | |||
Distributions paid to non-controlling interests | — | (195 | ) | ||||
Net cash used in financing activities | $ | (149,058 | ) | $ | (80,354 | ) | |
Net increase (decrease) in cash and cash equivalents and restricted cash | 117,405 | (18,184 | ) | ||||
Cash and cash equivalents and restricted cash, at beginning of period | 130,404 | 287,027 | |||||
Cash and cash equivalents and restricted cash, at end of period | $ | 247,809 | $ | 268,843 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Supplemental disclosure of cash flow information: | |||||||
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the amount shown in the statements of cash flows: | |||||||
Cash and cash equivalents | $ | 184,809 | $ | 201,815 | |||
Restricted cash | 63,000 | 67,028 | |||||
Total cash and cash equivalents and restricted cash shown in the statements of cash flows | $ | 247,809 | $ | 268,843 | |||
The following represent cash paid during the periods presented for the following: | |||||||
Cash paid for taxes | $ | 5,311 | $ | 3,810 | |||
Cash paid for interest | 27,089 | 19,896 | |||||
Supplemental schedule of non-cash investing activities: | |||||||
Accrued capital expenditures | $ | 2,762 | $ | 3,173 |
• | ASU 2016-08 Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) |
• | ASU 2016-10 Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing |
• | ASU 2016-12 Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients |
• | ASU 2016-20 Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers |
Three Months Ended | Six Months Ended | |||||||
Primary Markets | June 30, 2018 | June 30, 2018 | ||||||
Orlando, FL | $ | 29,909 | $ | 66,293 | ||||
Phoenix, AZ | 25,056 | 56,196 | ||||||
Houston, TX | 24,280 | 50,068 | ||||||
Washington, DC-MD-VA | 22,699 | 38,412 | ||||||
Dallas, TX | 19,933 | 38,159 | ||||||
San Francisco/San Mateo, CA | 18,462 | 36,339 | ||||||
San Jose-Santa Cruz, CA | 14,216 | 29,582 | ||||||
Boston, MA | 14,052 | 21,649 | ||||||
Atlanta, GA | 9,889 | 21,562 | ||||||
California North | 12,170 | 20,558 | ||||||
Other | 86,391 | 162,738 | ||||||
Total | $ | 277,057 | $ | 541,556 |
Three Months Ended | Six Months Ended | |||||||
Primary Markets | June 30, 2017 | June 30, 2017 | ||||||
Houston, TX | $ | 22,887 | $ | 50,296 | ||||
Dallas, TX | 17,223 | 36,658 | ||||||
San Francisco/San Mateo, CA | 16,677 | 33,746 | ||||||
San Jose-Santa Cruz, CA | 14,466 | 28,016 | ||||||
Orlando, FL | 15,685 | 26,175 | ||||||
California North | 12,857 | 21,888 | ||||||
Boston, MA | 14,401 | 21,434 | ||||||
Atlanta, GA | 9,965 | 20,945 | ||||||
Oahu Island, HI | 10,296 | 20,343 | ||||||
Austin, TX | 10,151 | 20,131 | ||||||
Other | 99,784 | 183,220 | ||||||
Total | $ | 244,392 | $ | 462,852 |
Property | Date | Rooms (unaudited) | Gross Sale Price | Net Proceeds | Gain on Sale | ||||||||||||
Aston Waikiki Beach Hotel | 03/2018 | 645 | $ | 200,000 | $ | 196,920 | (1) | $ | 42,430 | (2) | |||||||
Total for the six months ended June 30, 2018 | $ | 200,000 | $ | 196,920 | $ | 42,430 | |||||||||||
Courtyard Birmingham Downtown at UAB | 04/2017 | 122 | $ | 30,000 | $ | 29,176 | $ | 12,972 | |||||||||
Courtyard Fort Worth Downtown/Blackstone, Courtyard Kansas City Country Club Plaza, Courtyard Pittsburgh Downtown, Hampton Inn & Suites Baltimore Inner Harbor, and Residence Inn Baltimore Inner Harbor | 06/2017 | 812 | 163,000 | 157,675 | 36,204 | ||||||||||||
Total for the six months ended June 30, 2017 | $ | 193,000 | $ | 186,851 | $ | 49,176 |
(1) | As of June 30, 2018, $5.0 million of the sales proceeds related to escrows were held back at closing. The holdback escrow is anticipated to be received in September 2018. |
(2) | In addition to the gain on sale recognized during the six months ended June 30, 2018, we also recognized adjustments related to the 2017 dispositions amounting to $0.1 million. |
June 30, 2018 | December 31, 2017 | ||||||
Net investment properties | $ | 66,027 | $ | 67,687 | |||
Other assets | 3,549 | 2,582 | |||||
Total assets | $ | 69,576 | $ | 70,269 | |||
Mortgages payable | (43,500 | ) | (44,074 | ) | |||
Other liabilities | (2,803 | ) | (2,563 | ) | |||
Total liabilities | $ | (46,303 | ) | $ | (46,637 | ) | |
Net assets | $ | 23,273 | $ | 23,632 |
Balance Outstanding as of | ||||||||||||||
Rate Type | Rate(1) | Maturity Date | June 30, 2018 | December 31, 2017 | ||||||||||
Mortgage Loans | ||||||||||||||
Andaz Savannah | Variable | — | 1/14/2019 | $ | — | (3) | $ | 21,500 | ||||||
Hotel Monaco Denver | Fixed(2) | — | 1/17/2019 | — | (3) | 41,000 | ||||||||
Hotel Monaco Chicago | Variable | — | 1/17/2019 | — | (3) | 18,344 | ||||||||
Loews New Orleans Hotel | Variable | — | 2/22/2019 | — | (3) | 37,500 | ||||||||
Andaz Napa | Fixed(2) | 2.99 | % | 3/21/2019 | 38,000 | 38,000 | ||||||||
Westin Galleria Houston & Westin Oaks Houston at The Galleria | Variable | — | 5/1/2019 | — | (3) | 110,000 | ||||||||
Marriott Charleston Town Center | Fixed | 3.85 | % | 7/1/2020 | 15,651 | 15,908 | ||||||||
Grand Bohemian Hotel Charleston (VIE) | Variable | 4.59 | % | 11/10/2020 | 18,739 | 19,026 | ||||||||
Grand Bohemian Hotel Mountain Brook (VIE) | Variable | 4.59 | % | 12/27/2020 | 24,914 | 25,229 | ||||||||
Marriott Dallas City Center | Fixed(2) | 4.05 | % | 1/3/2022 | 51,000 | 51,000 | ||||||||
Hyatt Regency Santa Clara | Fixed(2) | 3.81 | % | 1/3/2022 | 90,000 | 90,000 | ||||||||
Hotel Palomar Philadelphia | Fixed(2) | 4.14 | % | 1/13/2023 | 59,500 | 59,750 | ||||||||
Renaissance Atlanta Waverly Hotel & Convention Center | Variable | 4.19 | % | 8/14/2024 | 100,000 | 100,000 | ||||||||
The Ritz-Carlton, Pentagon City | Fixed(4) | 3.69 | % | 1/31/2025 | 65,000 | — | ||||||||
Residence Inn Boston Cambridge | Fixed | 4.48 | % | 11/1/2025 | 62,325 | 62,833 | ||||||||
Grand Bohemian Hotel Orlando | Fixed | 4.53 | % | 3/1/2026 | 59,763 | 60,000 | ||||||||
Marriott San Francisco Airport Waterfront | Fixed | 4.63 | % | 5/1/2027 | 115,000 | 115,000 | ||||||||
Total Mortgage Loans | 4.16 | % | (5) | $ | 699,892 | $ | 865,090 | |||||||
Unsecured Term Loan $175M | Fixed(6) | 2.74 | % | 2/15/2021 | 175,000 | 175,000 | ||||||||
Unsecured Term Loan $125M | Fixed(6) | 3.28 | % | 10/22/2022 | 125,000 | 125,000 | ||||||||
Unsecured Term Loan $125M | Fixed(6) | 3.62 | % | 9/13/2024 | 125,000 | 125,000 | ||||||||
Senior Unsecured Credit Facility | Variable | 3.59 | % | 2/28/2022 | — | 40,000 | ||||||||
Mortgage Loan Discounts, net(7) | — | — | — | (223 | ) | (255 | ) | |||||||
Unamortized Deferred Financing Costs, net | — | — | — | (6,919 | ) | (7,242 | ) | |||||||
Total Debt, net of loan discounts and unamortized deferred financing costs | 3.78 | % | (5) | $ | 1,117,750 | $ | 1,322,593 |
(1) | Variable index is one-month LIBOR as of June 30, 2018. |
(2) | The Company entered into interest rate swap agreements to fix the interest rate of the variable rate mortgage loans through maturity. |
(3) | During the six months ended June 30, 2018, the Company elected its prepayment option per the terms of the respective mortgage loan agreement and repaid the outstanding balance. |
(4) | The Company entered into interest rate swap agreements to fix the interest rate of the variable rate mortgage loan from June 1, 2018 through January 2023. The effective interest rate on the loan will be 3.69% through January 2019 after which the rate will increase to 4.95% through January 2023. |
(5) | Represents the weighted average interest rate as of June 30, 2018. |
(6) | LIBOR has been fixed for a portion of or the entire term of the loan. The spread may vary, as it is determined by the Company's leverage ratio. |
(7) | Loan discounts recognized upon loan modifications, net of the accumulated amortization. |
As of June 30, 2018 | Weighted average interest rate | |||||
2018 | $ | 2,277 | 4.37% | |||
2019 | 42,622 | 3.14% | ||||
2020 | 61,341 | 4.40% | ||||
2021 | 180,135 | 2.79% | ||||
2022 | 271,459 | 3.62% | ||||
Thereafter | 567,058 | 4.15% | ||||
Total Debt | $ | 1,124,892 | 3.78% | |||
Total Loan Discounts, net | (223 | ) | — | |||
Unamortized Deferred Financing Costs, net | (6,919 | ) | — | |||
Debt, net of loan discounts and unamortized deferred financing costs | $ | 1,117,750 | 3.78% |
June 30, 2018 | December 31, 2017 | |||||||||||||||||||||||||
Hedged Debt | Type | Fixed Rate | Index + Spread | Effective Date | Maturity | Notional Amounts | Estimated Fair Value | Notional Amounts | Estimated Fair Value | |||||||||||||||||
$175M Term Loan | Swap | 1.30% | 1-Month LIBOR + 1.50% | 10/22/2015 | 2/15/2021 | $ | 50,000 | $ | 1,746 | $ | 50,000 | $ | 1,134 | |||||||||||||
$175M Term Loan | Swap | 1.29% | 1-Month LIBOR + 1.50% | 10/22/2015 | 2/15/2021 | 65,000 | 2,289 | 65,000 | 1,497 | |||||||||||||||||
$175M Term Loan | Swap | 1.29% | 1-Month LIBOR + 1.50% | 10/22/2015 | 2/15/2021 | 60,000 | 2,109 | 60,000 | 1,379 | |||||||||||||||||
$125M Term Loan | Swap | 1.83% | 1-Month LIBOR + 1.45% | 1/15/2016 | 10/22/2022 | 50,000 | 1,853 | 50,000 | 675 | |||||||||||||||||
$125M Term Loan | Swap | 1.83% | 1-Month LIBOR + 1.45% | 1/15/2016 | 10/22/2022 | 25,000 | 922 | 25,000 | 334 | |||||||||||||||||
$125M Term Loan | Swap | 1.84% | 1-Month LIBOR + 1.45% | 1/15/2016 | 10/22/2022 | 25,000 | 914 | 25,000 | 325 | |||||||||||||||||
$125M Term Loan | Swap | 1.83% | 1-Month LIBOR + 1.45% | 1/15/2016 | 10/22/2022 | 25,000 | 916 | 25,000 | 330 | |||||||||||||||||
Mortgage Debt | Swap | 1.54% | 1-Month LIBOR + 2.60% | 1/13/2016 | 1/13/2023 | 59,500 | 2,931 | 60,000 | 1,630 | |||||||||||||||||
Mortgage Debt | Swap | 0.88% | 1-Month LIBOR + 2.10% | 9/1/2016 | 1/17/2019 | 41,000 | 306 | 41,000 | 386 | |||||||||||||||||
Mortgage Debt | Swap | 0.89% | 1-Month LIBOR + 2.10% | 9/1/2016 | 3/21/2019 | 38,000 | 387 | 38,000 | 428 | |||||||||||||||||
Mortgage Debt | Swap | 1.80% | 1-Month LIBOR + 2.25% | 3/1/2017 | 1/3/2022 | 51,000 | 1,582 | 51,000 | 588 | |||||||||||||||||
Mortgage Debt | Swap | 1.80% | 1-Month LIBOR + 2.00% | 3/1/2017 | 1/3/2022 | 45,000 | 1,370 | 45,000 | 521 | |||||||||||||||||
Mortgage Debt | Swap | 1.81% | 1-Month LIBOR + 2.00% | 3/1/2017 | 1/3/2022 | 45,000 | 1,399 | 45,000 | 493 | |||||||||||||||||
$125M Term Loan | Swap | 1.92% | 1-Month LIBOR + 1.80% | 10/13/2017 | 10/12/2022 | 40,000 | 1,300 | 40,000 | 362 | |||||||||||||||||
$125M Term Loan | Swap | 1.92% | 1-Month LIBOR + 1.80% | 10/13/2017 | 10/12/2022 | 40,000 | 1,293 | 40,000 | 358 | |||||||||||||||||
$125M Term Loan | Swap | 1.92% | 1-Month LIBOR + 1.80% | 10/13/2017 | 10/12/2022 | 25,000 | 805 | 25,000 | 218 | |||||||||||||||||
$125M Term Loan | Swap | 1.92% | 1-Month LIBOR + 1.80% | 10/13/2017 | 10/12/2022 | 20,000 | 649 | 20,000 | 180 | |||||||||||||||||
Mortgage Debt | Swap | 2.80% | 1-Month LIBOR + 2.10% | 6/1/2018 | 2/1/2023 | 24,000 | (45 | ) | — | — | ||||||||||||||||
Mortgage Debt(1) | Swap | 2.89% | 1-Month LIBOR + 2.10% | 1/17/2019 | 2/1/2023 | — | (89 | ) | — | — | ||||||||||||||||
$ | 728,500 | $ | 22,637 | $ | 705,000 | $ | 10,838 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||
Effect of derivative instruments: | Location in Statement of Operations and Comprehensive Income: | |||||||||||||||||
Gain (loss) recognized in other comprehensive income | Unrealized gain (loss) on interest rate derivative instruments | $ | 3,643 | $ | (2,815 | ) | $ | 12,459 | $ | (1,672 | ) | |||||||
Gain (loss) reclassified from accumulated other comprehensive income to net income | Reclassification adjustment for amounts recognized in net income | $ | (606 | ) | $ | 693 | $ | (660 | ) | $ | 1,505 | |||||||
Total interest expense in which effects of cash flow hedges are recorded | Interest expense | $ | 13,053 | $ | 11,146 | $ | 26,769 | $ | 21,297 |
• | Level 1 - Quoted prices for identical assets or liabilities in active markets that the entity has the ability to access. |
• | Level 2 - Observable inputs, other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data. |
• | Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
Fair Value Measurement Date | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
Location / Description | Significant Unobservable Inputs (Level 2) | Significant Unobservable Inputs (Level 2) | ||||||
Other assets | ||||||||
Interest rate swap assets | $ | 22,637 | $ | 10,838 | ||||
Total | $ | 22,637 | $ | 10,838 |
June 30, 2018 | December 31, 2017 | |||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||
Total Debt, net of discounts | $ | 1,124,669 | $ | 1,131,952 | $ | 1,289,835 | $ | 1,303,550 | ||||||||
Senior Unsecured Credit Facility | — | — | 40,000 | 40,101 | ||||||||||||
Total | $ | 1,124,669 | $ | 1,131,952 | $ | 1,329,835 | $ | 1,343,651 |
Dividend per Share/Unit | For the Quarter Ended | Record Date | Payable Date | |||
$0.275 | March 31, 2018 | March 30, 2018 | April 13, 2018 | |||
$0.275 | June 30, 2018 | June 29, 2018 | July 13, 2018 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to common stockholders | $ | 28,794 | $ | 69,418 | $ | 84,451 | $ | 77,531 | |||||||
Dividends paid on unvested share-based compensation | (152 | ) | (162 | ) | (304 | ) | (303 | ) | |||||||
Undistributed earnings attributable to unvested share based compensation | — | (69 | ) | (34 | ) | (30 | ) | ||||||||
Net income available to common stockholders | $ | 28,642 | $ | 69,187 | $ | 84,113 | $ | 77,198 | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding - Basic | 108,956,408 | 106,769,003 | 107,874,640 | 106,806,664 | |||||||||||
Effect of dilutive share-based compensation | 263,812 | 236,881 | 240,801 | 226,955 | |||||||||||
Weighted average shares outstanding - Diluted | 109,220,220 | 107,005,884 | 108,115,441 | 107,033,619 | |||||||||||
Basic and diluted earnings per share: | |||||||||||||||
Net income per share available to common stockholders - basic and diluted | $ | 0.26 | $ | 0.65 | $ | 0.78 | $ | 0.72 |
2014 Share Unit Plan Share Units | 2015 Incentive Award Plan Restricted Stock Units(1) | 2015 Incentive Award Plan LTIP Units(1) | Total | |||||||||||
Unvested as of December 31, 2017 | 48,682 | 264,302 | 1,662,073 | 1,975,057 | ||||||||||
Granted | — | 125,276 | 835,026 | 960,302 | ||||||||||
Vested(2) | (48,682 | ) | (105,113 | ) | (108,327 | ) | (262,122 | ) | ||||||
Expired | — | (2,541 | ) | — | (2,541 | ) | ||||||||
Forfeited | — | — | — | — | ||||||||||
Unvested as of June 30, 2018 | — | 281,924 | 2,388,772 | 2,670,696 | ||||||||||
Weighted average fair value of unvested shares/units | — | $ | 14.35 | $ | 8.23 | $ | 8.88 |
(1) | Includes time-based and performance-based units. |
(2) | During the six months ended June 30, 2018, 49,826 shares of common stock were withheld by the Company upon the settlement of the applicable award in order to satisfy minimum federal and state tax withholding requirements with respect to Share Units and Restricted Stock Units under the 2014 Share Unit Plan and the 2015 Incentive Award Plan. |
Performance Award Grant Date | Percentage of Total Award | Grant Date Fair Value by Component (in dollars) | Volatility | Interest Rate | Dividend Yield | |||||
February 20, 2018 | ||||||||||
Absolute TSR Restricted Stock Units | 25% | $6.54 | 24.52% | 1.82% - 2.47% | 5.553% | |||||
Relative TSR Restricted Stock Units | 75% | $10.44 | 24.52% | 1.82% - 2.47% | 5.553% | |||||
Absolute TSR Class A LTIPs | 25% | $6.60 | 24.52% | 1.82% - 2.47% | 5.553% | |||||
Relative TSR Class A LTIPs | 75% | $10.13 | 24.52% | 1.82% - 2.47% | 5.553% |
Six Months Ended June 30, | ||||||||||||||||||||
2018 | 2017 | Variance | ||||||||||||||||||
Number of properties at January 1 | 39 | 42 | (3) | |||||||||||||||||
Properties acquired | — | 1 | (1) | |||||||||||||||||
Properties disposed | (1) | (6) | 5 | |||||||||||||||||
Number of properties at June 30 | 38 | 37 | 1 | |||||||||||||||||
Number of rooms at January 1 | 11,533 | 10,911 | 622 | |||||||||||||||||
Rooms in properties acquired or added to portfolio upon completion of property improvements(1) | — | 816 | (816) | |||||||||||||||||
Rooms in properties disposed or combined during property improvements(2) | (681) | (952) | 271 | |||||||||||||||||
Number of rooms at June 30 | 10,852 | 10,775 | 77 | |||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2018 | 2017 | Variance | 2018 | 2017 | Variance | |||||||||||||||
Portfolio Statistics: | ||||||||||||||||||||
Occupancy (3) | 80.1 | % | 78.6 | % | 150 bps | 77.4 | % | 76.1 | % | 130 bps | ||||||||||
ADR (3) | $ | 222.28 | $ | 208.86 | 6.4% | $ | 217.40 | $ | 204.75 | 6.2% | ||||||||||
RevPAR (3) | $ | 178.04 | $ | 164.10 | 8.5% | $ | 168.25 | $ | 155.72 | 8.0% |
(1) | During the six months ended June 30, 2017, the Company acquired the 815-room Hyatt Regency Grand Cypress and added one room at RiverPlace Hotel upon completion of property improvements. |
(2) | During the six months ended June 30, 2018, we disposed of the 645-room Aston Waikiki Beach Hotel. At the Hyatt Regency Grand Cypress we converted 72 guestrooms into 36 newly created suites, which resulted in a reduction in our total room count. During the six months ended June 30, 2017, the Company disposed of six hotels with 934 rooms. At the Westin Galleria Houston we converted 36 guestrooms into 18 newly created suites, which resulted in a reduction in our total room count. |
(3) | For hotels acquired during the applicable period, operating statistics are included starting on the date of acquisition. For hotels disposed of during the period, operating results and statistics are only included through the date of respective disposition. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase / (Decrease) | Variance | 2018 | 2017 | Increase / (Decrease) | Variance | ||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||
Rooms revenues | $ | 175,823 | $ | 164,868 | $ | 10,955 | 6.6 | % | $ | 338,405 | $ | 309,319 | $ | 29,086 | 9.4 | % | |||||||||||||
Food and beverage revenues | 86,419 | 66,552 | 19,867 | 29.9 | % | 172,835 | 128,376 | 44,459 | 34.6 | % | |||||||||||||||||||
Other revenues | 14,815 | 12,972 | 1,843 | 14.2 | % | 30,316 | 25,157 | 5,159 | 20.5 | % | |||||||||||||||||||
Total revenues | $ | 277,057 | $ | 244,392 | $ | 32,665 | 13.4 | % | $ | 541,556 | $ | 462,852 | $ | 78,704 | 17.0 | % |
• | $25.4 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $19.0 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $60.5 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $30.6 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $21.2 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $1.1 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $46.5 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $2.2 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $4.0 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City primarily due to resort fees, parking and spa revenue; and |
• | $2.5 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $9.4 million increase contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City primarily due to resort fees, parking and spa revenue; and |
• | $3.2 million decrease attributed to the disposition of eight hotels since April 2017. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase / (Decrease) | Variance | 2018 | 2017 | Increase / (Decrease) | Variance | ||||||||||||||||||||||
Hotel operating expenses: | |||||||||||||||||||||||||||||
Rooms expenses | $ | 38,132 | $ | 35,349 | $ | 2,783 | 7.9 | % | $ | 77,176 | $ | 68,979 | $ | 8,197 | 11.9 | % | |||||||||||||
Food and beverage expenses | 53,528 | 41,798 | 11,730 | 28.1 | % | 106,503 | 80,982 | 25,521 | 31.5 | % | |||||||||||||||||||
Other direct expenses | 4,715 | 3,303 | 1,412 | 42.7 | % | 9,189 | 6,309 | 2,880 | 45.6 | % | |||||||||||||||||||
Other indirect expenses | 63,068 | 55,441 | 7,627 | 13.8 | % | 126,393 | 108,713 | 17,680 | 16.3 | % | |||||||||||||||||||
Management and franchise fees | 12,447 | 11,722 | 725 | 6.2 | % | 24,007 | 23,100 | 907 | 3.9 | % | |||||||||||||||||||
Total hotel operating expenses | $ | 171,890 | $ | 147,613 | $ | 24,277 | 16.4 | % | $ | 343,268 | $ | 288,083 | $ | 55,185 | 19.2 | % |
• | $33.7 million contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $12.1 million decrease attributed to the disposition of eight hotels since April 2017. |
• | $73.6 million contributed by the four hotels acquired since May 2017, which included the Hyatt Regency Grand Cypress, Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch, Royal Palms Resort & Spa and The Ritz-Carlton, Pentagon City; and |
• | $20.0 million decrease attributed to the disposition of eight hotels since April 2017. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase / (Decrease) | Variance | 2018 | 2017 | Increase / (Decrease) | Variance | ||||||||||||||||||||||
Depreciation and amortization | $ | 38,602 | $ | 36,625 | $ | 1,977 | 5.4 | % | $ | 77,403 | $ | 73,104 | $ | 4,299 | 5.9 | % | |||||||||||||
Real estate taxes, personal property taxes and insurance | 11,819 | 10,696 | 1,123 | 10.5 | % | 23,679 | 22,056 | 1,623 | 7.4 | % | |||||||||||||||||||
Ground lease expense | 1,141 | 1,409 | (268 | ) | (19.0 | )% | 2,707 | 2,785 | (78 | ) | (2.8 | )% | |||||||||||||||||
General and administrative expenses | 7,873 | 7,844 | 29 | 0.4 | % | 15,932 | 16,222 | (290 | ) | (1.8 | )% | ||||||||||||||||||
Gain on business interruption insurance | (2,649 | ) | — | (2,649 | ) | — | (2,649 | ) | — | (2,649 | ) | — | |||||||||||||||||
Acquisition and terminated transaction costs | 222 | 1,260 | (1,038 | ) | (82 | )% | 222 | 1,265 | (1,043 | ) | (82 | )% | |||||||||||||||||
Total corporate and other expenses | $ | 57,008 | $ | 57,834 | $ | (826 | ) | (1.4 | )% | $ | 117,294 | $ | 115,432 | $ | 1,862 | 1.6 | % |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||
2018 | 2017 | Increase / (Decrease) | Variance | 2018 | 2017 | Increase / (Decrease) | Variance | ||||||||||||||||||||||
Non-operating income and expenses: | |||||||||||||||||||||||||||||
Gain on sale of investment properties | $ | 9 | $ | 49,176 | $ | (49,167 | ) | (100.0 | )% | $ | 42,294 | $ | 49,176 | $ | (6,882 | ) | (14.0 | )% | |||||||||||
Other income | 446 | 186 | 260 | 139.8 | % | 832 | 338 | 494 | 146.2 | % | |||||||||||||||||||
Interest expense | (13,053 | ) | (11,146 | ) | 1,907 | 17.1 | % | (26,769 | ) | (21,297 | ) | 5,472 | 25.7 | % | |||||||||||||||
Loss on extinguishment of debt | (384 | ) | (274 | ) | 110 | 40.1 | % | (465 | ) | (274 | ) | 191 | 69.7 | % | |||||||||||||||
Income tax expense | (5,646 | ) | (5,889 | ) | (243 | ) | (4.1 | )% | (10,311 | ) | (8,055 | ) | 2,256 | 28.0 | % |
Mortgage Loan | Principal Repaid (in millions) | Original Maturity | Repayment Date | |||||
Hotel Monaco Chicago(1) | $ | 18.3 | 01/2019 | 02/2018 | ||||
Andaz Savannah(1) | 21.5 | 01/2019 | 04/2018 | |||||
Hotel Monaco Denver | 41.0 | 01/2019 | 05/2018 | |||||
Loews New Orleans Hotel(1) | 37.5 | 02/2019 | 05/2018 | |||||
Westin Galleria Houston & Westin Oaks Houston at The Galleria(1) | 110.0 | 05/2019 | 06/2018 | |||||
Total repayments during the six months ended June 30, 2018 | $ | 228.3 |
(1) | Mortgage loan had a variable interest rate. |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Net cash provided by operating activities | $ | 130,401 | $ | 110,138 | |||
Net cash provided by (used in) investing activities | 136,062 | (47,968 | ) | ||||
Net cash used in financing activities | (149,058 | ) | (80,354 | ) | |||
Increase (decrease) in cash and cash equivalents and restricted cash | $ | 117,405 | $ | (18,184 | ) | ||
Cash and cash equivalents and restricted cash, at beginning of year | 130,404 | 287,027 | |||||
Cash and cash equivalents and restricted cash, at end of period | $ | 247,809 | $ | 268,843 |
• | Cash provided by operating activities was $130.4 million and $110.1 million for the six months ended June 30, 2018 and 2017, respectively. Our cash flows provided by operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for corporate expenses and other working capital changes. Our cash flows provided by operating activities may also be affected by changes in our portfolio resulting from hotel acquisitions, dispositions or renovations. The net increase to cash provided by operating activities during the six months ended June 30, 2018 was primarily due to changes in our portfolio composition reflecting completed acquisitions and dispositions and the timing of such transactions. Refer to the "Results of Operations" section for further discussion of our operating results for the six months ended June 30, 2018 and 2017. |
• | Cash provided by investing activities was $136.1 million and cash used in investing activities was $48.0 million for the six months ended June 30, 2018, and 2017, respectively. Cash provided by investing activities for the six months ended June 30, 2018 was primarily due to (i) the disposition of Aston Waikiki Beach Hotel for net proceeds of $196.9 million offset by (ii) $55.9 million in capital improvements at our hotel properties. Cash used in investing activities for the six months ended June 30, 2017 was primarily due to (i) the acquisition of the Hyatt Regency Grand Cypress for $205.5 million, and (ii) $29.3 million in capital improvements at our hotel properties, offset by (iii) $186.9 million in proceeds from the disposition of six hotels during the first half of 2017. |
• | Cash used in financing activities was $149.1 million and $80.4 million for the six months ended June 30, 2018, and 2017, respectively. Cash used in financing activities for the six months ended June 30, 2018 was primarily attributed to (i) the payment of $59.4 million in dividends to common stockholders and Operating Partnership unit holders, (ii) the repayment of mortgage debt totaling $228.3 million, (iii) the repayment of the outstanding balance on the line of credit totaling $40.0 million and (iv) payment of $3.6 million in loan costs attributed to the amended and restated unsecured revolving credit facility and new mortgage loan entered into during the first quarter of 2018. These decreases were offset by proceeds of (i) $120.1 million, net of transaction costs, from the sale of our common stock through the ATM program and (ii) $65 million from the funding of mortgage debt. Cash used in financing activities for the six months ended June 30, 2017 was primarily comprised of (i) the repayment of mortgage debt totaling $127.9 million, (ii) $5.9 million used to repurchase common shares, of which $4.1 million was under the Repurchase Program and $1.8 million was used to redeem shares of common stock to satisfy employee withholding requirements in connection with stock compensation vesting, and (iii) the payment of $59.3 million in dividends to common stockholders and Operating Partnership unit holders offset by (iv) proceeds of $115 million from the funding of mortgage debt. |
Payments due by period | |||||||||||||||||||
Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
Debt maturities(1) | $ | 1,364,816 | $ | 24,779 | $ | 193,724 | $ | 518,938 | $ | 627,375 | |||||||||
Ground leases | 40,160 | 787 | 3,139 | 3,139 | 33,095 | ||||||||||||||
Corporate office lease | 4,736 | 202 | 835 | 882 | 2,817 | ||||||||||||||
Total | $ | 1,409,712 | $ | 25,768 | $ | 197,698 | $ | 522,959 | $ | 663,287 |
(1) | Includes principal and interest payments, for both variable and fixed rate loans. The variable rate interest payments were calculated based upon the variable rate spread plus 1-month LIBOR as of June 30, 2018. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 29,531 | $ | 70,998 | $ | 86,575 | $ | 79,225 | |||||||
Adjustments: | |||||||||||||||
Interest expense | 13,053 | 11,146 | 26,769 | 21,297 | |||||||||||
Income tax expense | 5,646 | 5,889 | 10,311 | 8,055 | |||||||||||
Depreciation and amortization | 38,602 | 36,625 | 77,403 | 73,104 | |||||||||||
EBITDA | $ | 86,832 | $ | 124,658 | $ | 201,058 | $ | 181,681 | |||||||
Gain on sale of investment properties | (9 | ) | (49,176 | ) | (42,294 | ) | (49,176 | ) | |||||||
EBITDAre | $ | 86,823 | $ | 75,482 | $ | 158,764 | $ | 132,505 | |||||||
Reconciliation to Adjusted EBITDAre | |||||||||||||||
Non-controlling interests in consolidated real estate entities | (20 | ) | (126 | ) | 159 | (54 | ) | ||||||||
Adjustments related to non-controlling interests in consolidated real estate entities | (352 | ) | (330 | ) | (695 | ) | (652 | ) | |||||||
Depreciation and amortization related to corporate assets | (99 | ) | (103 | ) | (203 | ) | (223 | ) | |||||||
Loss on extinguishment of debt | 384 | 274 | 465 | 274 | |||||||||||
Acquisition and terminated transaction costs | 222 | 1,260 | 222 | 1,265 | |||||||||||
Amortization of share-based compensation expense | 2,757 | 2,951 | 4,827 | 5,182 | |||||||||||
Amortization of above and below market ground leases and straight-line rent expense | 122 | 168 | 237 | 388 | |||||||||||
Other non-recurring expenses | 10 | — | (195 | ) | — | ||||||||||
Adjusted EBITDAre attributable to common stock and unit holders | $ | 89,847 | $ | 79,576 | $ | 163,581 | $ | 138,685 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net income | $ | 29,531 | $ | 70,998 | $ | 86,575 | $ | 79,225 | |||||||
Adjustments: | |||||||||||||||
Depreciation and amortization related to investment properties | 38,503 | 36,522 | 77,200 | 72,881 | |||||||||||
Gain on sale of investment properties | (9 | ) | (49,176 | ) | (42,294 | ) | (49,176 | ) | |||||||
Non-controlling interests in consolidated real estate entities | (20 | ) | (126 | ) | 159 | (54 | ) | ||||||||
Adjustments related to non-controlling interests in consolidated real estate entities | (226 | ) | (226 | ) | (452 | ) | (451 | ) | |||||||
FFO attributable to common stock and unit holders | $ | 67,779 | $ | 57,992 | $ | 121,188 | $ | 102,425 | |||||||
Reconciliation to Adjusted FFO | |||||||||||||||
Loss on extinguishment of debt | 384 | 274 | 465 | 274 | |||||||||||
Acquisition and terminated transaction costs | 222 | 1,260 | 222 | 1,265 | |||||||||||
Loan related costs, net of adjustment related to non-controlling interests(1) | 643 | 679 | 1,360 | 1,395 | |||||||||||
Amortization of share-based compensation expense | 2,757 | 2,951 | 4,827 | 5,182 | |||||||||||
Amortization of above and below market ground leases and straight-line rent expense | 122 | 168 | 237 | 388 | |||||||||||
Other non-recurring expenses | 10 | — | (195 | ) | — | ||||||||||
Adjusted FFO attributable to common stock and unit holders | $ | 71,917 | $ | 63,324 | $ | 128,104 | $ | 110,929 |
(1) | Loan related costs included amortization of debt discounts, premiums and deferred loan origination costs. |
2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | Fair Value | ||||||||||||||||||||||||
Maturing debt(1): | |||||||||||||||||||||||||||||||
Fixed rate debt (mortgages and term loans)(2) | $ | 1,758 | $ | 41,606 | $ | 19,223 | $ | 180,135 | $ | 271,328 | $ | 467,189 | $ | 981,239 | $ | 991,393 | |||||||||||||||
Variable rate debt (mortgage loans) | 519 | 1,016 | 42,118 | — | 131 | 99,869 | 143,653 | 140,559 | |||||||||||||||||||||||
Total | $ | 2,277 | $ | 42,622 | $ | 61,341 | $ | 180,135 | $ | 271,459 | $ | 567,058 | $ | 1,124,892 | $ | 1,131,952 | |||||||||||||||
Weighted average interest rate on debt: | |||||||||||||||||||||||||||||||
Fixed rate debt (mortgages and term loans) | 4.30% | 3.11% | 3.99% | 2.79% | 3.62% | 4.14% | 3.70% | 4.29% | |||||||||||||||||||||||
Variable rate debt (mortgage loans) | 4.59% | 4.59% | 4.59% | — | 4.19% | 4.19% | 4.31% | 5.46% |
(1) | Excludes mortgage discounts of $0.2 million as of June 30, 2018. See Item 7A of our most recent Annual Report on Form 10-K and Note 7 to our condensed consolidated financial statements included herein. |
(2) | Includes all fixed rate debt, and all variable rate debt that was swapped to fixed rates as of June 30, 2018. |
Exhibit Number | Exhibit Description | |
Articles of Restatement of Xenia Hotels & Resorts, Inc., as filed on November 10, 2015 with the Maryland Department of Assessments and Taxation (incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-Q (File No. 001-36594) filed on November 12, 2015) | ||
Articles Supplementary of Xenia Hotels and Resorts, Inc., as filed on November 10, 2015 with the Maryland Department of Assessments and Taxation (incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q (File No. 001-36594) filed on November 12, 2015) | ||
Articles Supplementary of Xenia Hotels and Resorts, Inc., as filed on March 15, 2017 with the Maryland Department of Assessments and Taxation (incorporated by reference to Exhibit 3.1 to the Company’s Periodic Report on Form 8-K (File No. 001-36594) filed on March 15, 2017) | ||
Articles of Amendment of Xenia Hotels and Resorts, Inc. as filed on May 22, 2018 with the Maryland Department of Assessments and Taxation (incorporated by reference to Exhibit 3.1 to the Company’s Period Report on Form 8-K (File No. 001-36594) filed on May 23, 2018) | ||
Articles Supplementary of Xenia Hotels and Resorts, Inc. as filed on May 22, 2018 with the Maryland Department of Assessments and Taxation (incorporated by reference to Exhibit 3.2 to the Company’s Period Report on Form 8-K (File No. 001-36594) filed on May 23, 2018) | ||
Amended and Restated Bylaws of Xenia Hotels & Resorts, Inc. (incorporated by reference to Exhibit 3.3 to the Company’s Periodic Report on Form 8-K (File No. 001-36594) filed on May 23, 2018) | ||
Amended and Restated Revolving Credit Agreement, dated as of January 11, 2018, among XHR LP, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-36594) filed on January 12, 2018) | ||
Amended and Restated Parent Guaranty, dated as of January 11, 2018, by Xenia Hotels & Resorts, Inc. for the benefit of JPMorgan Chase Bank, N.A., as administrative agent for the lenders (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 001-36594) filed on January 12, 2018) | ||
Amended and Restated Subsidiary Guaranty, dated as of January 11, 2018, by certain subsidiaries of XHR LP for the benefit of JPMorgan Chase Bank, N.A., as administrative agent for the lenders (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K (File No. 001-36594) filed on February 27, 2018) | ||
31.1* | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2* | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1* | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
Xenia Hotels & Resorts, Inc. | |
August 2, 2018 | |
/s/ MARCEL VERBAAS | |
Marcel Verbaas | |
Chairman and Chief Executive Officer | |
(Principal Executive Officer) | |
/s/ ATISH SHAH | |
Atish Shah | |
Executive Vice President, Chief Financial Officer and Treasurer | |
(Principal Financial Officer) | |
/s/ JOSEPH T. JOHNSON | |
Joseph T. Johnson | |
Senior Vice President and Chief Accounting Officer | |
(Principal Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Xenia Hotels & Resorts, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ MARCEL VERBAAS |
Marcel Verbaas |
Chairman and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Xenia Hotels & Resorts, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ ATISH SHAH |
Atish Shah |
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of XHR. |
/s/ MARCEL VERBAAS |
Marcel Verbaas |
Chairman and Chief Executive Officer (Principal Executive Officer) |
/s/ ATISH SHAH |
Atish Shah |
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 27, 2018 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Xenia Hotels & Resorts, Inc. | |
Entity Central Index Key | 0001616000 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 111,929,945 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Intangible assets, accumulated amortization | $ 5,134 | $ 3,286 |
Total assets related to consolidated variable interest entities | 69,576 | 70,269 |
Total liabilities related to consolidated variable interest entities | $ 46,303 | $ 46,637 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock shares, issued (in shares) | 111,929,945 | 106,735,336 |
Common stock shares, outstanding (in shares) | 111,929,945 | 106,735,336 |
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
|
Statement of Stockholders' Equity [Abstract] | |||
Common stock dividend declared (in dollars per share) | $ 0.275 | $ 0.275 | $ 0.55 |
Condensed Consolidated Statements of Cash Flows (Supplemental) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | $ 184,809 | $ 201,815 |
Restricted cash | 63,000 | 67,028 |
Total cash and cash equivalents and restricted cash shown in the statements of cash flows | 247,809 | 268,843 |
Cash paid for taxes | 5,311 | 3,810 |
Cash paid for interest | 27,089 | 19,896 |
Supplemental schedule of non-cash investing activities: | ||
Accrued capital expenditures | $ 2,762 | $ 3,173 |
Organization |
6 Months Ended |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Xenia Hotels & Resorts, Inc. (the "Company" or "Xenia") is a Maryland corporation that invests primarily in premium full service and lifestyle hotels, with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). Substantially all of the Company's assets are held by, and all the operations are conducted through XHR LP (the "Operating Partnership"). XHR GP, Inc. is the sole general partner of XHR LP and is wholly owned by the Company. As of June 30, 2018, the Company collectively owned 97.4% of the common limited partnership units issued by the Operating Partnership ("Common Units"). The remaining 2.6% of the Common Units are owned by the other limited partners. To qualify as a real estate investment trust ("REIT"), the Company cannot operate or manage its hotels. Therefore, the Operating Partnership and its subsidiaries lease the hotel properties to XHR Holding, Inc. and its subsidiaries (collectively with its subsidiaries, "XHR Holding"), the Company's taxable REIT subsidiary ("TRS"), which engages third-party eligible independent contractors to manage the hotels. As of June 30, 2018, the Company owned 38 lodging properties, 36 of which were wholly owned. The remaining two hotels are owned through individual investments in real estate entities, in which the Company has a 75% ownership interest in each investment. |
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The unaudited interim condensed consolidated financial statements and related notes have been prepared on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") and in conformity with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. The unaudited financial statements include normal recurring adjustments, which management considers necessary for the fair presentation of the condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income, condensed consolidated statements of changes in equity and condensed consolidated statements of cash flows for the periods presented. The unaudited condensed 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, 2017, included in the Company's Annual Report on Form 10-K filed with the SEC on February 27, 2018. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of actual operating results for the entire year. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, XHR Holding, and its consolidated investments in real estate entities. The Company's subsidiaries and consolidated investments in real estate entities generally consist of limited liability companies, limited partnerships and the TRS. The effects of all inter-company transactions have been eliminated. Certain prior year amounts in these financial statements have been reclassified to conform to the presentation for the three and six months ended June 30, 2018. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management's best judgment, after considering past, current and expected economic conditions. Actual results could differ from these estimates. Risks and Uncertainties For the six months ended June 30, 2018, the Company had a geographical concentration of revenues generated from hotels in the Orlando, Florida and Phoenix, Arizona markets that each exceeded 10% of total revenues for the period. For the six months ended June 30, 2017, the Company had a geographical concentration of revenues generated from hotels in Houston, Texas that represented 11% of total revenues. To the extent that there are adverse changes in these markets, or the industry sectors that operate in these markets, our business and operating results could be negatively impacted. The state of the overall economy can significantly impact hotel operational performance and thus, impact the Company's financial position. Should any of our hotels experience a significant decline in operational performance, it may affect the Company's ability to make distributions to our stockholders, service debt, or meet other financial obligations. Consolidation The Company evaluates its investments in partially owned entities to determine whether any such entities may be a variable interest entity ("VIE"). If the entity is a VIE, the determination of whether the Company is the primary beneficiary must be made. The primary beneficiary determination is based on a qualitative assessment as to whether the entity has (i) power to direct significant activities of the VIE and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The Company will consolidate a VIE if it is deemed to be the primary beneficiary. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary, or the entity is not a VIE and over which the Company does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances at one or more institutions generally exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant as the Company does not anticipate the financial institutions’ non-performance. Restricted Cash and Escrows Restricted cash primarily relates to lodging furniture, fixtures and equipment reserves as required per the terms of our management and franchise agreements, cash held in restricted escrows for real estate taxes and insurance escrows, capital spending reserves, and at times disposition related hold back escrows. Disposition of Real Estate In February 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The guidance aims at better clarifying the scope of asset derecognition and adds further guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The Company adopted ASU 2017-05 on January 1, 2018 using the modified retrospective approach. Upon adoption of ASU 2017-05, there was no change in income from continuing operations, net income nor any financial statement line item during the three and six months ended June 30, 2018 and 2017. Therefore, there was no cumulative effect adjustment recorded to distributions in excess of retained earnings on the adoption date. The Company accounts for dispositions of real estate in accordance with Subtopic 610-20 for the transactions between the Company and unrelated third parties that are not considered a customer in the ordinary course of business. Typically, the real estate assets disposed of do not represent the transfer of a business or contain a material amount of financial assets, if any. The real estate assets promised in a sales contract are typically nonfinancial assets (i.e. land or a leasehold interest in land, building, furniture, fixtures and equipment) or in substance nonfinancial assets. The Company recognizes a gain in full when the real estate is sold, provided (a) there is a valid contract and (b) transfer of control has occurred. Involuntary Conversion and Business Interruption Insurance During the second half of 2017, several of the Company's lodging properties were impacted by natural disasters, including two major hurricanes and a series of wildfires in California. Any insurance recoveries for property damage expected to be received in excess of the recorded loss will be treated as a gain and will not be recorded until contingencies are resolved. In addition to property damage insurance recoveries, the Company may be entitled to business interruption insurance recoveries for certain properties related to natural disasters, however, it will not record an insurance recovery receivable for these losses until a final settlement has been reached with the insurance company. Any insurance proceeds received in excess of insurance deductibles will be accounted for as a gain. During the three and six months ended June 30, 2018, the Company recognized $2.6 million of business interruption insurance proceeds related to business lost at Hyatt Centric Key West Resort & Spa as a result of Hurricane Irma, which is included in gain on business interruption insurance on the condensed consolidated statement of operations and comprehensive income for the periods then ended. Of the $2.6 million recognized, $1.4 million of the proceeds related to lost income in the third and fourth quarters of 2017, with the remaining $1.2 million attributable to lost income from the first quarter of 2018. Share-Based Compensation The Company has adopted a share-based incentive plan that provides for the grant of stock options, stock awards, restricted stock units, Operating Partnership Units and other equity-based awards. Share-based compensation is measured at the estimated fair value of the award on the date of grant, adjusted for forfeitures, and recognized as an expense on a straight-line basis over the longest vesting period for each grant for the entire award. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of the Company's shares, expected dividend yield, expected term and assumptions of whether certain of these awards will achieve performance thresholds. Share-based compensation is included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income and capitalized in building and other improvements in the condensed consolidated balance sheets for certain employees that manage property developments, renovations and capital improvements. Derivatives and Hedging Activities In the normal course of business, the Company is exposed to the effects of interest rate changes. The Company limits the risks associated with interest rate changes by following established risk management policies and procedures which may include the use of derivative instruments. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company assesses at the inception of the hedge whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract and are recorded on the balance sheet at fair value, with offsetting changes recorded to other comprehensive income (loss). The Company nets assets and liabilities when the right of offset exists. The Company incorporates credit valuation adjustments to reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (Topic 842), Leases, which replaces Topic 840, Leases, and requires most leases, in which we are the lessee, to be recorded on the Company's balance sheet as either operating or financing leases with a right of use asset and a corresponding lease liability measured at present value. Operating leases will be recognized on the income statement on a straight-line basis as lease expense and financing leases will be accounted for similarly to the accounting for amortizing debt. Leases with terms of less than 12 months will continue to be accounted for as they are under the current standard. The new standard is effective for the Company on January 1, 2019. The Company is currently working with its third-party hotel managers to determine the completeness of its lease population and to obtain an understanding of implementation efforts at the hotel level. This process includes reviewing lease agreements, evaluating materiality of hotel level leases and determining what, if any, changes there are to hotel-level internal controls. The Company is finalizing its calculations of existing ground and corporate lease obligations, which includes the determination of discount rates to determine the lease liability and the corresponding right-of-use asset upon adoption. The Company is also evaluating the overall impact the standard will have on its consolidated financial statements and related disclosures and continues to monitor the final standard updates issued by the FASB. The Company anticipates adopting the standard on January 1, 2019 using the modified retrospective method. In January 2018, the FASB issued ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842. This guidance permits an entity to elect an optional transition practical expedient to not evaluate under land easements that exist or have expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. An entity that elects this practical expedient would apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under Topic 840. The Company plans to adopt the practical expedient in ASU 2018-01 upon adoption of ASU 2016-02. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases. This guidance was issued to address stakeholders' questions on how to apply certain aspects of the new guidance in Topic 842. The clarifications are to be applied upon transition of Topic 842, which is effective for the Company on January 1, 2019. The Company is currently evaluating these clarifications to determine the impact they have on its Topic 842 implementation efforts and its consolidated financial statements and related disclosures. Also in July 2018, the FASB issued ASU 2018-11, Targeted Improvements to Topic 842, Leases. This guidance provides another option for transition, which allows entities not to apply the new lease standard in the comparative periods they present in their financial statements in the year of adoption. In addition, this guidance provides lessors with a practical expedient to not separate non-lease components from the associated lease components when certain criteria is met. These improvements are to be applied upon transition of Topic 842, which is effective for the Company on January 1, 2019. The Company is currently evaluating these improvements to determine the impact they have on its Topic 842 implementation efforts and its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance is intended to assist entities with evaluating whether a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If the threshold is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The Company adopted ASU 2017-01 on January 1, 2018 on a prospective basis. The Company anticipates that most future acquisitions will be accounted for as asset acquisitions rather than business combinations. As such, asset acquisitions will require the Company to capitalize future acquisition costs as part of the purchase price allocation, rather than expensing these costs as we have historically done when transactions were accounted for as business combinations. Also in January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. The guidance is intended to simplify the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test under the current guidance, which requires a hypothetical purchase price allocation. A goodwill impairment under ASU 2017-04 will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for the Company on January 1, 2020; however, early adoption is permitted. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The guidance is intended to clarify when certain changes to terms or conditions of share-based payment awards must be accounted for as modifications but does not change the accounting for modifications. The new standard is to be applied prospectively to awards modified on or after the adoption date. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have any impact on the Company's consolidated financial statements or related disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. The Company early adopted the standard in April 2018 using the modified retrospective transition approach. Prior to April 2018, the Company had not recorded ineffectiveness related to its active hedging relationships and therefore no transition adjustment was required upon adoption. In subsequent periods, any ineffectiveness related to the Company's derivative instruments will be reflected in accumulated other comprehensive income. While the Company made minor presentation changes in its disclosure on derivative and hedging activities, the adoption of ASU 2017-12 did not have a material effect on the Company’s consolidated financial statements. |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue Adoption of new accounting guidance In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The Company adopted ASU 2014-09, and all of the following ASU clarifications on January 1, 2018 using the modified retrospective approach:
Upon adoption of ASU 2014-09 and related ASU clarifications, there was no change on income from continuing operations, net income, or any financial statement line item and there was no cumulative effect adjustment recorded to accumulated distributions in excess of net earnings on the adoption date. The Company concluded upon adoption of ASU 2014-09, the disposition of real estate assets, including hotels, qualify as a sale of a nonfinancial asset and should be recognized under the guidance in ASU 2017-05. Revenue from Contracts with Customers Revenue consists of amounts derived from hotel operations, including the sale of rooms for lodging accommodations, food and beverage, and other ancillary revenue generated by hotel amenities including parking, spa, resort fees and other services. Revenues are generated from various distribution channels including but not limited to direct bookings, global distribution systems and the Internet travel sites. Room transaction prices are based on an individual hotel's location, room type and the bundle of services included in the reservation and are set by the hotel daily. Any discounts, including advanced purchase, loyalty point redemptions or promotions are recognized at the discounted rate whereas rebates and incentives are recorded as a reduction in room revenue when earned. Revenues from online channels are generally recognized net of commission fees, unless the end price paid by the guest is known. Rooms revenue is recognized over the length of stay that the hotel room is occupied by the guest. Cash received from a guest prior to check-in is recorded as an advanced deposit and is generally recognized as room revenue at the time the room reservation has become non-cancellable, upon occupancy or upon expiration of the re-booking date. Advance deposits are included in other liabilities on the consolidated balance sheet. Payment of any remaining balance is typically due from the guest upon check-out. Sales, use, occupancy, and similar taxes are collected and presented on a net basis (excluded from revenues). Food and beverage transaction prices are based on the stated price for the specific food or beverage and varies depending on type, venue and hotel location. Service charges are typically a percentage of food and beverage charges and meeting space rental. Food and beverage revenue is recognized at the point in time in which the goods and/or services are rendered to the guest. Cash received in advance of an event is recorded as either a security or advance deposit. Security and advance deposits are recognized as revenue when it becomes non-cancellable or at the time the food and beverage goods and services are rendered to the guest. Payment for the remaining balance of food and beverage goods and services is due upon delivery and completion of such goods and services. Parking and audio visual fees are recognized at the time services are provided to the guest. In parking and audio visual contracts in which we have control over the services provided, we are considered the principal in the agreement and recognize the related revenues gross of associated costs. If we do not have control over the services in the contract, we are considered the agent and record the related revenues net of associated costs. Resort fees, spa and other ancillary amenity revenues are recognized at the point in time the goods or services have been rendered to the guest at the stated price for the service or amenity. Rental income is generated from space lease agreements from retail tenants in our hotels. Rental income is recognized on a straight-line basis over the term of the underlying lease. Percentage rent is recognized at the point in time in which the underlying thresholds are achieved and percentage rent is earned. Our revenue sources are affected by conditions impacting the travel and hospitality industry as well as competition from other hotels and businesses in similar markets. The following represents total revenue disaggregated by primary geographical markets (as defined by STR, Inc. ("STR")) for the three and six months ended June 30, 2018 and 2017 (in thousands):
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Investment Properties |
6 Months Ended |
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Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Investment Properties | Investment Properties No hotels were acquired during the three and six months ended June 30, 2018. In May 2017, the Company acquired the 815-room Hyatt Regency Grand Cypress located in Orlando, Florida for a purchase price of $205.5 million, excluding closing costs, that was funded with cash. The Company recognized acquisition costs of $1.2 million for the three and six months ended June 30, 2017, respectively, which are included in acquisition and terminated transaction costs on the Company’s condensed consolidated statements of operations and comprehensive income for the periods then ended. The results of operations for Hyatt Regency Grand Cypress have been included in the Company’s condensed consolidated statements of operations and comprehensive income since the acquisition date. During the six months ended June 30, 2018, the Company converted 72 guestrooms into 36 newly created suites, which resulted in a reduction in our total room count. |
Disposed Properties |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disposed Properties | Disposed Properties The following represents the disposition details for the hotels sold during the six months ended June 30, 2018 and 2017, respectively (in thousands):
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Investment in Real Estate Entities |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Real Estate Entities | Investment in Real Estate Entities The Company has a 75% interest in two investments in real estate entities that own and operate the Grand Bohemian Hotel Charleston and the Grand Bohemian Hotel Mountain Brook. These entities are considered VIE's because the entities did not have enough equity to finance their activities without additional subordinated financial support. The Company determined that it has the power to direct the activities of the VIE's that most significantly impact the VIE's economic performance, as well as the obligation to absorb losses of the VIE's that could potentially be significant to the VIE, or the right to receive benefits from the VIE's that could potentially be significant to the VIE. As such, the Company has a controlling financial interest and is considered the primary beneficiary of each of these entities. Therefore, these entities are consolidated by the Company. The following are the liabilities of the consolidated VIE's, which are non-recourse to the Company, and the assets that can be used to settle those obligations (in thousands):
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Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Debt as of June 30, 2018 and December 31, 2017 consisted of the following (dollar amounts in thousands):
In connection with repaying mortgage loans during the three and six months ended June 30, 2018, the Company wrote off the related unamortized deferred financing costs of $384 thousand and $465 thousand, respectively, which is included in loss on extinguishment of debt on the condensed consolidated statements of operations and comprehensive income for the periods then ended. Total debt outstanding as of June 30, 2018 and December 31, 2017 was $1,125 million and $1,330 million and had a weighted average interest rate of 3.78% and 3.71% per annum, respectively. The remaining unamortized mortgage discounts as of June 30, 2018 and December 31, 2017 were $0.2 million and $0.3 million, respectively. The following table shows scheduled principal payments and debt maturities for the next five years and thereafter (in thousands):
Of the total outstanding debt at June 30, 2018, none of the mortgage loans were recourse to the Company. Certain loans have options to extend the maturity dates if exercised by the Company, subject to being compliant with certain covenants and the payment of an extension fee. Some of the mortgage loans require compliance with certain covenants, such as debt service coverage ratios, loan-to-value tests, investment restrictions and distribution limitations. As of June 30, 2018, the Company was in compliance with all such covenants. Senior Unsecured Credit Facility As of June 30, 2018, there was no outstanding balance on the senior unsecured facility. During the three and six months ended June 30, 2018, the Company incurred unused commitment fees of approximately $0.4 million and $0.7 million, respectively, and interest expense of $0 and $34 thousand, respectively. During the three and six months ended June 30, 2017, the Company incurred unused commitment fees of approximately $0.3 million and $0.6 million, respectively, and interest expense of $0.2 million, respectively. |
Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives The Company primarily uses interest rate swaps as part of its interest rate risk management strategy for variable-rate debt. As of June 30, 2018, all interest rate swaps were designated as cash flow hedges and involve the receipt of variable-rate payments from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Unrealized gains and losses of hedging instruments are reported in other comprehensive income. Amounts reported in accumulated other comprehensive income (loss) related to currently outstanding derivatives are recognized as an adjustment to income (loss) through interest expense as interest payments are made on the Company’s variable rate debt. As of June 30, 2018 and December 31, 2017, all derivative instruments held by the Company with the right of offset were in a net asset position and were included in other assets on the condensed consolidated balance sheets. The following table summarizes the terms of the derivative financial instruments held by the Company as of June 30, 2018 and December 31, 2017, respectively (in thousands):
(1) The interest rate swap is effective January 2019. Upon effectiveness, the notional amount will be $41 million. The table below details the location in the condensed consolidated financial statements of the gain (loss) recognized on derivative financial instruments designated as cash flow hedges for the three and six months ended June 30, 2018 and 2017 (in thousands):
The Company expects approximately $5.3 million will be reclassified from accumulated other comprehensive income as a reduction to interest expense in the next 12 months. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The Company defines fair value based on the price that would be received upon sale of an asset or the exit price that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value. The fair value hierarchy consists of three broad levels, which are described below:
The Company has estimated the fair value of its financial and non-financial instruments using widely accepted valuation techniques and available market information. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that would be realized upon disposition. Recurring Measurements For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of their fair value is as follows, which are netted as applicable per the terms of the respective master netting agreements (in thousands):
The fair value of each derivative instrument is based on a discounted cash flow analysis of the expected cash flows under each arrangement. This analysis reflects the contractual terms of the derivative instrument, including the period to maturity, and utilizes observable market-based inputs, including interest rate curves and implied volatilities, which are classified within Level 2 of the fair value hierarchy. The Company also incorporates credit value adjustments to appropriately reflect each parties’ nonperformance risk in the fair value measurement, which utilizes Level 3 inputs such as estimates of current credit spreads. However, the Company has assessed that the credit valuation adjustments are not significant to the overall valuation of the derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified within Level 2 of the fair value hierarchy. Non-Recurring Measurements Financial Instruments Not Measured at Fair Value The table below represents the fair value of financial instruments presented at carrying values in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 (in thousands):
The Company estimated the fair value of its total debt, net of discounts, using a weighted average effective interest rate of 4.4% and 3.93% per annum as of June 30, 2018 and December 31, 2017, respectively. The Company has determined that its debt instrument valuations are classified in Level 2 of the fair value hierarchy. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company estimated the TRS income tax expense for the three and six months ended June 30, 2018 using an estimated federal and state statutory combined rate of 29.81% and recognized income tax expense of $5.6 million and $10.3 million, respectively. The Company estimated the TRS income tax expense for the three and six months ended June 30, 2017 using an estimated federal and state statutory combined rate of 40.1% and recognized income tax expense of $5.9 million and $8.1 million, respectively. |
Stockholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity Common Stock In March 2018, the Company entered into an "At-the-Market" ("ATM") program pursuant to an Equity Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC, Robert W. Baird & Co. Incorporated, Jefferies LLC, KeyBanc Capital Markets Inc., and Raymond James & Associates, Inc. In accordance with the terms of the ATM Agreement, the Company may from time to time offer, and sell shares of its common stock having an aggregate offering price of up to $200 million. During the three and six months ended June 30, 2018, the Company received gross proceeds of $122.2 million, and paid $1.5 million in transaction fees, from the issuance of 5,090,656 shares of its common stock in accordance with the ATM Agreement. In addition, the Company amortized capitalized transaction costs of $0.7 million during the three and six months ended June 30, 2018 that were previously included in other assets. As of June 30, 2018, the Company had $77.8 million available for sale under the ATM Agreement. In December 2015, the Company’s Board of Directors authorized a stock repurchase program pursuant to which the Company is authorized to purchase up to $100 million of the Company’s outstanding Common Stock in the open market, in privately negotiated transactions or otherwise, including pursuant to Rule 10b5-1 plans. In November 2016, the Company's Board of Directors authorized the repurchase of up to an additional $75 million of the Company's outstanding Common Stock (such repurchase authorizations collectively referred to as the "Repurchase Program"). The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares. No shares were purchased as part of the Repurchase Program during the three and six months ended June 30, 2018. For the three and six months ended June 30, 2017, 132,843 and 240,352 shares were repurchased under the Repurchase Program, at a weighted average price of $17.44 and $17.07 per share for an aggregate purchase price of $2.3 million and $4.1 million, respectively. As of June 30, 2018, the Company had approximately $96.9 million remaining under its share repurchase authorization. Distributions The Company declared the following dividends during the six months ended June 30, 2018:
Non-Controlling Interest of Common Units in Operating Partnership As of June 30, 2018, the Operating Partnership had 2,984,633 long-term incentive partnership units (“LTIP Units”) outstanding, representing a 2.6% partnership interest held by the limited partners. Of the 2,984,633 LTIP units outstanding at June 30, 2018, 595,861 units had vested. Only vested LTIP Units may be converted to Common Units of the Operating Partnership, which in turn can be tendered for redemption per the terms of the LTIP Unit award agreements. As of June 30, 2018, the Company had accrued $243 thousand in dividends related to the LTIP Units, which were paid in July 2018. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings Per Share Basic earnings per common share is calculated by dividing income or loss available to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share is calculated by dividing income or loss available to common stockholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation. Unvested share-based awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and are included in the computation of earnings per share pursuant to the two-class method. Accordingly, distributed and undistributed earnings attributable to unvested share-based compensation (participating securities) have been excluded, as applicable, from net income or loss available to common stockholders used in the basic and diluted earnings per share calculations. Income allocated to non-controlling interest in the Operating Partnership has been excluded from the numerator and Common Units and vested LTIP Units in the Operating Partnership, which may be converted to common shares, have been omitted from the denominator for the purpose of computing diluted earnings per share since including these amounts in the numerator and denominator would have no impact. The following table reconciles net income attributable to common stockholders to basic and diluted earnings per share (in thousands, except share and per share data):
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Share Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share Based Compensation | Share Based Compensation Restricted Stock Units In February 2018, the Compensation Committee (the "Compensation Committee") of the Board of Directors of the Company approved the grant of Restricted Stock Units under the Company's 2015 Incentive Award Plan to certain Company employees (the "2018 Restricted Stock Units"). The 2018 Restricted Stock Units include 79,812 Restricted Stock Units that vest over a three-year period based on the holder's continued service with the Company or any of its affiliates and 45,464 performance-based Restricted Stock Units that cliff vest based on the achievement of applicable performance goals over a three-year period. The 2018 Restricted Stock Units have weighted average grant date fair value of $15.92 per share. Each time-based 2018 Restricted Stock Unit will vest as follows, subject to the employee’s continued service through each applicable vesting date: 33% on February 4, 2019, which is the first anniversary of the vesting commencement date of the award (February 4, 2018), 33% on the second anniversary of the vesting commencement date, and 34% on the third anniversary of the vesting commencement date. Of the performance-based 2018 Restricted Stock Units, twenty-five percent (25%) are designated as absolute total stockholder return ("TSR") units (the "Absolute TSR Share Units"), and vest based on achievement of varying levels of the Company’s TSR over the three-year performance period. The other seventy-five percent (75%) of the performance-based 2018 Restricted Stock Units are designated as relative TSR share units (the "Relative TSR Share Units") and vest based on the ranking of the Company’s TSR as compared to a defined peer group over the three-year performance period. LTIP Unit Grants In February 2018, the Compensation Committee approved the issuance of 725,860 performance-based LTIP Units (the "2018 Class A LTIP Units") and 84,505 time-based LTIP Units (the "2018 Time-Based LTIP Units") of the Operating Partnership under the 2015 Incentive Award Plan that had a weighted average grant date fair value of $8.79 per unit. Each award of 2018 Time-Based LTIP Units will vest as follows, subject to the executive’s continued service through each applicable vesting date: 33% on February 4, 2019, which is the first anniversary of the vesting commencement date of the award (February 4, 2018), 33% on the second anniversary of the vesting commencement date, and 34% on the third anniversary of the vesting commencement date. A portion of each award of 2018 Class A LTIP Units is designated as a number of “base units.” Twenty-five percent (25%) of the base units are designated as absolute TSR base units, and vest based on achievement of varying levels of the Company’s TSR over the three-year performance period. The other seventy-five percent (75%) of the base units are designated as relative TSR base units and vest based on the ranking of the Company’s TSR as compared to a defined peer group over the three-year performance period. In May 2018, pursuant to the Company's Director Compensation Program, as amended and restated as of February 21, 2018, the Company approved the issuance of 24,661 fully-vested LTIP Units to the Company's seven non-employee directors with a weighted average grant date fair value of $24.13 per unit. LTIP Units (other than Class A LTIP Units that have not vested), whether vested or not, receive the same quarterly per-unit distributions as Common Units, which equal the per-share distributions on the Common Stock of the Company. Class A LTIP Units that have not vested receive a quarterly per-unit distribution equal to 10% of the distribution paid on Common Units. The following is a summary of the unvested incentive awards under the Company's 2014 Share Unit Plan and the 2015 Incentive Award Plan as of June 30, 2018:
The fair value of the time-based Restricted Stock Units and Time-Based LTIP Units are determined based on the closing price of the Company’s Common Stock on the grant date and compensation expense is recognized on a straight-line basis over the vesting period. The grant date fair values of performance-based awards for the 2018 Restricted Stock Units and the 2018 Class A LTIP Units were determined based on a Monte Carlo simulation method with the following assumptions, and compensation expense is recognized on a straight-line basis over the performance period:
The absolute and relative stockholder returns are market conditions as defined by Accounting Standard Codification ("ASC") 718, Compensation - Stock Compensation. Market conditions include provisions wherein the vesting condition is met through the achievement of a specific value of the Company’s Common Stock, which is total stockholder return in this case. Market conditions differ from other performance awards under ASC 718 in that the probability of attaining the condition (and thus vesting of the units or shares) is reflected in the initial grant date fair value of the award. Accordingly, it is not appropriate to reconsider the probability of vesting in the award subsequent to the initial measurement of the award, nor is it appropriate to reverse any of the expense if the condition is not met. Therefore, once the expense for these awards is measured, the expense must be recognized over the service period regardless of whether the target is met, or at what level the target is met. Expense may only be reversed if the holder of the instrument forfeits the award as a result of the holder's termination of service of the Company prior to vesting. For the three and six months ended June 30, 2018 the Company recognized approximately $2.2 million and $4.2 million, respectively, of share-based compensation expense (net of forfeitures) related to Share units, Restricted Stock Units, and LTIP Units provided to certain of its executive officers and other members of management. In addition, during the three and six months ended June 30, 2018 we recognized $595 thousand of share-based compensation expense, related to LTIP units that were provided to the Company's Board of Directors and we capitalized approximately $138 thousand and $268 thousand, respectively, related to Restricted Stock Units provided to certain members of management that oversee development and capital projects on behalf of the Company. As of June 30, 2018, there was $14.3 million of total unrecognized compensation costs related to unvested Restricted Stock Units, Class A LTIP Units and Time-Based LTIP Units issued under the 2015 Incentive Award Plan, which are expected to be recognized over a remaining weighted-average period of 2 additional years. For the three and six months ended June 30, 2017, the Company recognized approximately $2.4 million and $4.6 million, respectively, of share-based compensation expense (net of forfeitures) related to Share Units, Restricted Stock Units, and LTIP Units provided to certain of its executive officers and other members of management. In addition, we recognized $595 thousand of share-based compensation expense, related to LTIP units, that were provided to the Company's Board of Directors and we capitalized approximately $152 thousand and $306 thousand, respectively, related to Restricted Stock Units provided to certain members of management that oversee development and capital projects on behalf of the Company. |
Commitments and Contingencies |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Certain leases and management agreements require the Company to reserve funds relating to replacements and renewals of the hotels' furniture, fixtures and equipment. As of June 30, 2018 and December 31, 2017, the Company had a balance of $48.8 million and $46.6 million, respectively, in reserves for such future improvements. This amount is included in restricted cash and escrows on the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017, respectively. The Company is subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. While the resolution of these matters cannot be predicted with certainty, management believes, based on currently available information, that the final outcome of such matters will not have a material adverse effect on the financial condition of the Company. |
Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The unaudited interim condensed consolidated financial statements and related notes have been prepared on an accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP" or "GAAP") and in conformity with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to financial information. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. The unaudited financial statements include normal recurring adjustments, which management considers necessary for the fair presentation of the condensed consolidated balance sheets, condensed consolidated statements of operations and comprehensive income, condensed consolidated statements of changes in equity and condensed consolidated statements of cash flows for the periods presented. The unaudited condensed 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, 2017, included in the Company's Annual Report on Form 10-K filed with the SEC on February 27, 2018. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of actual operating results for the entire year. |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of the Company, the Operating Partnership, XHR Holding, and its consolidated investments in real estate entities. The Company's subsidiaries and consolidated investments in real estate entities generally consist of limited liability companies, limited partnerships and the TRS. The effects of all inter-company transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and revenues and expenses. These estimates are prepared using management's best judgment, after considering past, current and expected economic conditions. Actual results could differ from these estimates. |
Risks and Uncertainties | Risks and Uncertainties For the six months ended June 30, 2018, the Company had a geographical concentration of revenues generated from hotels in the Orlando, Florida and Phoenix, Arizona markets that each exceeded 10% of total revenues for the period. For the six months ended June 30, 2017, the Company had a geographical concentration of revenues generated from hotels in Houston, Texas that represented 11% of total revenues. To the extent that there are adverse changes in these markets, or the industry sectors that operate in these markets, our business and operating results could be negatively impacted. The state of the overall economy can significantly impact hotel operational performance and thus, impact the Company's financial position. Should any of our hotels experience a significant decline in operational performance, it may affect the Company's ability to make distributions to our stockholders, service debt, or meet other financial obligations. |
Consolidation | Consolidation The Company evaluates its investments in partially owned entities to determine whether any such entities may be a variable interest entity ("VIE"). If the entity is a VIE, the determination of whether the Company is the primary beneficiary must be made. The primary beneficiary determination is based on a qualitative assessment as to whether the entity has (i) power to direct significant activities of the VIE and (ii) an obligation to absorb losses or the right to receive benefits that could be potentially significant to the VIE. The Company will consolidate a VIE if it is deemed to be the primary beneficiary. The equity method of accounting is applied to entities in which the Company is not the primary beneficiary, or the entity is not a VIE and over which the Company does not have effective control, but can exercise influence over the entity with respect to its operations and major decisions. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all demand deposits, money market accounts and investments in certificates of deposit and repurchase agreements purchased with a maturity of three months or less, at the date of purchase, to be cash equivalents. The Company maintains its cash and cash equivalents at financial institutions. The combined account balances at one or more institutions generally exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage and, as a result, there is a concentration of credit risk related to amounts on deposit in excess of FDIC insurance coverage. The Company believes that the risk is not significant as the Company does not anticipate the financial institutions’ non-performance. |
Restricted Cash and Escrows | Restricted Cash and Escrows Restricted cash primarily relates to lodging furniture, fixtures and equipment reserves as required per the terms of our management and franchise agreements, cash held in restricted escrows for real estate taxes and insurance escrows, capital spending reserves, and at times disposition related hold back escrows. |
Disposition of Real Estate | Disposition of Real Estate In February 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The guidance aims at better clarifying the scope of asset derecognition and adds further guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with non-customers. The Company adopted ASU 2017-05 on January 1, 2018 using the modified retrospective approach. Upon adoption of ASU 2017-05, there was no change in income from continuing operations, net income nor any financial statement line item during the three and six months ended June 30, 2018 and 2017. Therefore, there was no cumulative effect adjustment recorded to distributions in excess of retained earnings on the adoption date. The Company accounts for dispositions of real estate in accordance with Subtopic 610-20 for the transactions between the Company and unrelated third parties that are not considered a customer in the ordinary course of business. Typically, the real estate assets disposed of do not represent the transfer of a business or contain a material amount of financial assets, if any. The real estate assets promised in a sales contract are typically nonfinancial assets (i.e. land or a leasehold interest in land, building, furniture, fixtures and equipment) or in substance nonfinancial assets. The Company recognizes a gain in full when the real estate is sold, provided (a) there is a valid contract and (b) transfer of control has occurred. |
Involuntary Conversion and Business Interruption Insurance | Involuntary Conversion and Business Interruption Insurance During the second half of 2017, several of the Company's lodging properties were impacted by natural disasters, including two major hurricanes and a series of wildfires in California. Any insurance recoveries for property damage expected to be received in excess of the recorded loss will be treated as a gain and will not be recorded until contingencies are resolved. In addition to property damage insurance recoveries, the Company may be entitled to business interruption insurance recoveries for certain properties related to natural disasters, however, it will not record an insurance recovery receivable for these losses until a final settlement has been reached with the insurance company. Any insurance proceeds received in excess of insurance deductibles will be accounted for as a gain. |
Share-Based Compensation | Share-Based Compensation The Company has adopted a share-based incentive plan that provides for the grant of stock options, stock awards, restricted stock units, Operating Partnership Units and other equity-based awards. Share-based compensation is measured at the estimated fair value of the award on the date of grant, adjusted for forfeitures, and recognized as an expense on a straight-line basis over the longest vesting period for each grant for the entire award. The determination of fair value of these awards is subjective and involves significant estimates and assumptions including expected volatility of the Company's shares, expected dividend yield, expected term and assumptions of whether certain of these awards will achieve performance thresholds. Share-based compensation is included in general and administrative expenses in the accompanying condensed consolidated statements of operations and comprehensive income and capitalized in building and other improvements in the condensed consolidated balance sheets for certain employees that manage property developments, renovations and capital improvements. |
Derivatives and Hedging Activities | Derivatives and Hedging Activities In the normal course of business, the Company is exposed to the effects of interest rate changes. The Company limits the risks associated with interest rate changes by following established risk management policies and procedures which may include the use of derivative instruments. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategies for undertaking various hedge transactions. The Company assesses at the inception of the hedge whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items. Instruments that meet these hedging criteria are formally designated as hedges at the inception of the derivative contract and are recorded on the balance sheet at fair value, with offsetting changes recorded to other comprehensive income (loss). The Company nets assets and liabilities when the right of offset exists. The Company incorporates credit valuation adjustments to reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 (Topic 842), Leases, which replaces Topic 840, Leases, and requires most leases, in which we are the lessee, to be recorded on the Company's balance sheet as either operating or financing leases with a right of use asset and a corresponding lease liability measured at present value. Operating leases will be recognized on the income statement on a straight-line basis as lease expense and financing leases will be accounted for similarly to the accounting for amortizing debt. Leases with terms of less than 12 months will continue to be accounted for as they are under the current standard. The new standard is effective for the Company on January 1, 2019. The Company is currently working with its third-party hotel managers to determine the completeness of its lease population and to obtain an understanding of implementation efforts at the hotel level. This process includes reviewing lease agreements, evaluating materiality of hotel level leases and determining what, if any, changes there are to hotel-level internal controls. The Company is finalizing its calculations of existing ground and corporate lease obligations, which includes the determination of discount rates to determine the lease liability and the corresponding right-of-use asset upon adoption. The Company is also evaluating the overall impact the standard will have on its consolidated financial statements and related disclosures and continues to monitor the final standard updates issued by the FASB. The Company anticipates adopting the standard on January 1, 2019 using the modified retrospective method. In January 2018, the FASB issued ASU 2018-01, Land Easement Practical Expedient for Transition to Topic 842. This guidance permits an entity to elect an optional transition practical expedient to not evaluate under land easements that exist or have expired before the entity’s adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. An entity that elects this practical expedient would apply the practical expedient consistently to all of its existing or expired land easements that were not previously accounted for as leases under Topic 840. The Company plans to adopt the practical expedient in ASU 2018-01 upon adoption of ASU 2016-02. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases. This guidance was issued to address stakeholders' questions on how to apply certain aspects of the new guidance in Topic 842. The clarifications are to be applied upon transition of Topic 842, which is effective for the Company on January 1, 2019. The Company is currently evaluating these clarifications to determine the impact they have on its Topic 842 implementation efforts and its consolidated financial statements and related disclosures. Also in July 2018, the FASB issued ASU 2018-11, Targeted Improvements to Topic 842, Leases. This guidance provides another option for transition, which allows entities not to apply the new lease standard in the comparative periods they present in their financial statements in the year of adoption. In addition, this guidance provides lessors with a practical expedient to not separate non-lease components from the associated lease components when certain criteria is met. These improvements are to be applied upon transition of Topic 842, which is effective for the Company on January 1, 2019. The Company is currently evaluating these improvements to determine the impact they have on its Topic 842 implementation efforts and its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The guidance is intended to assist entities with evaluating whether a set of transferred assets and activities is a business. Under the new guidance, an entity first determines whether substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. If this threshold is met, the set is not a business. If the threshold is not met, the entity then evaluates whether the set meets the requirement that a business include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs. The Company adopted ASU 2017-01 on January 1, 2018 on a prospective basis. The Company anticipates that most future acquisitions will be accounted for as asset acquisitions rather than business combinations. As such, asset acquisitions will require the Company to capitalize future acquisition costs as part of the purchase price allocation, rather than expensing these costs as we have historically done when transactions were accounted for as business combinations. Also in January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. The guidance is intended to simplify the accounting for goodwill impairment and removes Step 2 of the goodwill impairment test under the current guidance, which requires a hypothetical purchase price allocation. A goodwill impairment under ASU 2017-04 will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. The same one-step impairment test will be applied to goodwill at all reporting units, even those with zero or negative carrying amounts. Entities will be required to disclose the amount of goodwill at reporting units with zero or negative carrying amounts. The new standard is effective for the Company on January 1, 2020; however, early adoption is permitted. The Company does not expect the adoption of ASU 2017-04 to have a material impact on its consolidated financial statements and related disclosures. In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The guidance is intended to clarify when certain changes to terms or conditions of share-based payment awards must be accounted for as modifications but does not change the accounting for modifications. The new standard is to be applied prospectively to awards modified on or after the adoption date. The Company adopted ASU 2017-09 on January 1, 2018. The adoption of ASU 2017-09 did not have any impact on the Company's consolidated financial statements or related disclosures. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities (Topic 815). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard in any interim period after issuance of the update, or alternatively requires adoption for fiscal years beginning after December 15, 2018. The Company early adopted the standard in April 2018 using the modified retrospective transition approach. Prior to April 2018, the Company had not recorded ineffectiveness related to its active hedging relationships and therefore no transition adjustment was required upon adoption. In subsequent periods, any ineffectiveness related to the Company's derivative instruments will be reflected in accumulated other comprehensive income. While the Company made minor presentation changes in its disclosure on derivative and hedging activities, the adoption of ASU 2017-12 did not have a material effect on the Company’s consolidated financial statements. |
Revenue from Contracts with Customers | Revenue from Contracts with Customers Revenue consists of amounts derived from hotel operations, including the sale of rooms for lodging accommodations, food and beverage, and other ancillary revenue generated by hotel amenities including parking, spa, resort fees and other services. Revenues are generated from various distribution channels including but not limited to direct bookings, global distribution systems and the Internet travel sites. Room transaction prices are based on an individual hotel's location, room type and the bundle of services included in the reservation and are set by the hotel daily. Any discounts, including advanced purchase, loyalty point redemptions or promotions are recognized at the discounted rate whereas rebates and incentives are recorded as a reduction in room revenue when earned. Revenues from online channels are generally recognized net of commission fees, unless the end price paid by the guest is known. Rooms revenue is recognized over the length of stay that the hotel room is occupied by the guest. Cash received from a guest prior to check-in is recorded as an advanced deposit and is generally recognized as room revenue at the time the room reservation has become non-cancellable, upon occupancy or upon expiration of the re-booking date. Advance deposits are included in other liabilities on the consolidated balance sheet. Payment of any remaining balance is typically due from the guest upon check-out. Sales, use, occupancy, and similar taxes are collected and presented on a net basis (excluded from revenues). Food and beverage transaction prices are based on the stated price for the specific food or beverage and varies depending on type, venue and hotel location. Service charges are typically a percentage of food and beverage charges and meeting space rental. Food and beverage revenue is recognized at the point in time in which the goods and/or services are rendered to the guest. Cash received in advance of an event is recorded as either a security or advance deposit. Security and advance deposits are recognized as revenue when it becomes non-cancellable or at the time the food and beverage goods and services are rendered to the guest. Payment for the remaining balance of food and beverage goods and services is due upon delivery and completion of such goods and services. Parking and audio visual fees are recognized at the time services are provided to the guest. In parking and audio visual contracts in which we have control over the services provided, we are considered the principal in the agreement and recognize the related revenues gross of associated costs. If we do not have control over the services in the contract, we are considered the agent and record the related revenues net of associated costs. Resort fees, spa and other ancillary amenity revenues are recognized at the point in time the goods or services have been rendered to the guest at the stated price for the service or amenity. Rental income is generated from space lease agreements from retail tenants in our hotels. Rental income is recognized on a straight-line basis over the term of the underlying lease. Percentage rent is recognized at the point in time in which the underlying thresholds are achieved and percentage rent is earned. Our revenue sources are affected by conditions impacting the travel and hospitality industry as well as competition from other hotels and businesses in similar markets. |
Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following represents total revenue disaggregated by primary geographical markets (as defined by STR, Inc. ("STR")) for the three and six months ended June 30, 2018 and 2017 (in thousands):
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Disposed Properties (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disposition Details for Properties Sold | The following represents the disposition details for the hotels sold during the six months ended June 30, 2018 and 2017, respectively (in thousands):
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Investment in Real Estate Entities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following are the liabilities of the consolidated VIE's, which are non-recourse to the Company, and the assets that can be used to settle those obligations (in thousands):
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Instruments | Debt as of June 30, 2018 and December 31, 2017 consisted of the following (dollar amounts in thousands):
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Schedule of Maturities of Long-term Debt | The following table shows scheduled principal payments and debt maturities for the next five years and thereafter (in thousands):
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Derivatives (Tables) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the Terms of the Derivative Financial Instruments Held by the Company | The following table summarizes the terms of the derivative financial instruments held by the Company as of June 30, 2018 and December 31, 2017, respectively (in thousands):
(1) The interest rate swap is effective January 2019. Upon effectiveness, the notional amount will be $41 million. |
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Schedule of Gain (Loss) Recognized on Derivative Financial Instruments | The table below details the location in the condensed consolidated financial statements of the gain (loss) recognized on derivative financial instruments designated as cash flow hedges for the three and six months ended June 30, 2018 and 2017 (in thousands):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | For assets and liabilities measured at fair value on a recurring basis, quantitative disclosure of their fair value is as follows, which are netted as applicable per the terms of the respective master netting agreements (in thousands):
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Schedule of Carrying Values and Estimated Fair Values of Debt Instruments | The table below represents the fair value of financial instruments presented at carrying values in the condensed consolidated balance sheets as of June 30, 2018 and December 31, 2017 (in thousands):
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Stockholders' Equity (Tables) |
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
Schedule of Dividends Declared | The Company declared the following dividends during the six months ended June 30, 2018:
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table reconciles net income attributable to common stockholders to basic and diluted earnings per share (in thousands, except share and per share data):
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Share Based Compensation (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Nonvested Incentive Awards | The following is a summary of the unvested incentive awards under the Company's 2014 Share Unit Plan and the 2015 Incentive Award Plan as of June 30, 2018:
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Schedule of Assumptions for Performance Awards | The grant date fair values of performance-based awards for the 2018 Restricted Stock Units and the 2018 Class A LTIP Units were determined based on a Monte Carlo simulation method with the following assumptions, and compensation expense is recognized on a straight-line basis over the performance period:
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Summary of Significant Accounting Policies - Risks and Uncertainties (Details) - Revenue - Geographic Concentration Risk |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Orlando, FL | Minimum | ||
Concentration Risk [Line Items] | ||
Concentration risk (percent) | 10.00% | |
Phoenix, AZ | Minimum | ||
Concentration Risk [Line Items] | ||
Concentration risk (percent) | 10.00% | |
Houston, TX | ||
Concentration Risk [Line Items] | ||
Concentration risk (percent) | 11.00% |
Summary of Significant Accounting Policies - Involuntary Conversion (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
event
|
Jun. 30, 2017
USD ($)
|
|
Liability for Catastrophe Claims [Line Items] | |||||
Gain on business interruption insurance | $ 2,649 | $ 0 | $ 2,649 | $ 0 | |
Hurricane [Member] | |||||
Liability for Catastrophe Claims [Line Items] | |||||
Number of hurricanes | event | 2 | ||||
Gain on business interruption insurance | 2,600 | 2,600 | |||
Gain on business interruption insurance, recovery of prior year income | 1,400 | 1,400 | |||
Gain on business interruption insurance, recovery of current year income | $ 1,200 | $ 1,200 |
Investment Properties - Narrative (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|---|
May 31, 2017
USD ($)
guest_room
|
Jun. 30, 2018
USD ($)
property
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
guest_room
suite
property
|
Jun. 30, 2017
USD ($)
|
|
Business Acquisition [Line Items] | |||||
Number of properties acquired | property | 0 | 0 | |||
Acquisition and terminated transaction costs | $ 222 | $ 1,260 | $ 222 | $ 1,265 | |
Number of guestrooms converted | guest_room | 72 | ||||
Number of newly created suites | suite | 36 | ||||
Hyatt Regency Grand Cypress | |||||
Business Acquisition [Line Items] | |||||
Number of guest rooms | guest_room | 815 | ||||
Consideration transferred in acquisition | $ 205,500 | ||||
Acquisition and terminated transaction costs | $ 1,200 | $ 1,200 |
Investment in Real Estate Entities - Narrative (Details) - VIE, primary beneficiary |
6 Months Ended |
---|---|
Jun. 30, 2018
real_estate_investment
| |
Real Estate Properties [Line Items] | |
Variable interest entity, ownership percentage | 75.00% |
Number of investments in real estate entities | 2 |
Investment in Real Estate Entities - Schedule of Consolidated Variable Interest Entities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Variable Interest Entity [Line Items] | ||
Assets | $ 69,576 | $ 70,269 |
Liabilities | (46,303) | (46,637) |
VIE, primary beneficiary | ||
Variable Interest Entity [Line Items] | ||
Assets | 69,576 | 70,269 |
Liabilities | (46,303) | (46,637) |
Net assets | 23,273 | 23,632 |
Net investment properties | VIE, primary beneficiary | ||
Variable Interest Entity [Line Items] | ||
Assets | 66,027 | 67,687 |
Other assets | VIE, primary beneficiary | ||
Variable Interest Entity [Line Items] | ||
Assets | 3,549 | 2,582 |
Mortgages payable | VIE, primary beneficiary | ||
Variable Interest Entity [Line Items] | ||
Liabilities | (43,500) | (44,074) |
Other liabilities | VIE, primary beneficiary | ||
Variable Interest Entity [Line Items] | ||
Liabilities | $ (2,803) | $ (2,563) |
Debt - Narrative (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 384,000 | $ 274,000 | $ 465,000 | $ 274,000 | |
Long-term debt, gross | $ 1,124,892,000 | $ 1,124,892,000 | $ 1,330,000,000 | ||
Weighted average interest rate | 3.78% | 3.78% | 3.71% | ||
Unamortized mortgage discounts | $ 223,000 | $ 223,000 | |||
Recourse debt | 0 | 0 | |||
Mortgages | |||||
Debt Instrument [Line Items] | |||||
Long-term debt, gross | $ 699,892,000 | $ 699,892,000 | $ 865,090,000 | ||
Weighted average interest rate | 4.16% | 4.16% | |||
Unamortized mortgage discounts | $ 223,000 | $ 223,000 | $ 255,000 | ||
Unsecured Debt | Senior Unsecured Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate | 3.59% | 3.59% | |||
Long-term line of credit | $ 0 | $ 0 | |||
Line of credit, unused borrowing capacity fee | 400,000 | 300,000 | 700,000 | 600,000 | |
Interest expense, debt | $ 0 | $ 200,000 | $ 34,000 | $ 200,000 |
Debt - Schedule of Long-Term Debt Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Maturities of Long-term Debt [Abstract] | ||
2018 | $ 2,277 | |
2019 | 42,622 | |
2020 | 61,341 | |
2021 | 180,135 | |
2022 | 271,459 | |
Thereafter | 567,058 | |
Total | 1,124,892 | $ 1,330,000 |
Total Loan Discounts, net | (223) | |
Unamortized Deferred Financing Costs, net | (6,919) | (7,242) |
Debt, net of loan discounts and unamortized deferred financing costs | $ 1,117,750 | $ 1,322,593 |
Weighted Average Interest Rates [Abstract] | ||
2018 | 4.37% | |
2019 | 3.14% | |
2020 | 4.40% | |
2021 | 2.79% | |
2022 | 3.62% | |
Thereafter | 4.15% | |
Weighted average interest rate | 3.78% | 3.71% |
Derivatives - Recognized Gain (Loss) on Cash Flow Hedges (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (loss) recognized in other comprehensive income | $ 3,643 | $ (2,815) | $ 12,459 | $ (1,672) |
Gain (loss) reclassified from accumulated other comprehensive income to net income | (606) | 693 | (660) | 1,505 |
Interest expense | $ 13,053 | $ 11,146 | $ 26,769 | $ 21,297 |
Derivatives - Narrative (Details) $ in Millions |
6 Months Ended |
---|---|
Jun. 30, 2018
USD ($)
| |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Expected reclassification from accumulated OCI to interest expense in next twelve months | $ 5.3 |
Estimate of time for reclassification | 12 months |
Fair Value Measurements - Narrative (Details) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Mortgages | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Weighted average effective interest rate | 4.40% | 3.93% |
Fair Value Measurements - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - Fair Value, Measurements, Recurring - Fair Value, Inputs, Level 2 - Interest Rate Swap - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Interest rate swap assets | $ 22,637 | $ 10,838 |
Total | $ 22,637 | $ 10,838 |
Fair Value Measurements - Schedule of Fair and Carrying Value of Financial Instruments (Details) - Fair Value, Inputs, Level 2 - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Carrying Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Debt, net of discounts | $ 1,124,669 | $ 1,289,835 |
Senior Unsecured Credit Facility | 0 | 40,000 |
Total | 1,124,669 | 1,329,835 |
Estimated Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Total Debt, net of discounts | 1,131,952 | 1,303,550 |
Senior Unsecured Credit Facility | 0 | 40,101 |
Total | $ 1,131,952 | $ 1,343,651 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax Disclosure [Abstract] | ||||
Estimated federal and state statutory combined rate | 29.81% | 40.10% | 29.81% | 40.10% |
Income tax expense | $ (5,646) | $ (5,889) | $ (10,311) | $ (8,055) |
Stockholders' Equity - Distributions (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Mar. 31, 2018 |
Jun. 30, 2018 |
|
Equity [Abstract] | |||
Common stock dividend declared (in dollars per share) | $ 0.275 | $ 0.275 | $ 0.55 |
Stockholders' Equity - Non-controlling Interest of Common Units in Operating Partnership (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Class of Stock [Line Items] | ||
Distributions payable | $ 31,335 | $ 29,930 |
Time-Based LTIP Units and Class A LTIP Units | ||
Class of Stock [Line Items] | ||
Number of units outstanding, vested and nonvested (in shares) | 2,984,633 | |
Time-Based LTIP Units and Class A LTIP Units | Common Stock | ||
Class of Stock [Line Items] | ||
Distributions payable | $ 243 | |
2015 Incentive Award Plan | Time-Based LTIP Units and Class A LTIP Units | ||
Class of Stock [Line Items] | ||
Number of units vested (in shares) | 595,861 | |
XHR LP (Operating Partnership) | ||
Class of Stock [Line Items] | ||
Ownership percentage by noncontrolling owners (percent) | 2.60% |
Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
---|---|---|---|
Other Commitments [Line Items] | |||
Restricted cash and escrows | $ 63,000 | $ 58,520 | $ 67,028 |
Hotel Furniture, Fixtures, and Equipment Reserves | |||
Other Commitments [Line Items] | |||
Restricted cash and escrows | $ 48,800 | $ 46,600 |
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