UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35169

RLJ LODGING TRUST

(Exact Name of Registrant as Specified in Its Charter)


Maryland						27-4706509
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)


3 Bethesda Metro Center, Suite 1000
Bethesda,	Maryland	20814
(Address of Principal Executive Offices)		(Zip Code)

(301) 280-7777

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12 (b) of the Exchange Act:

Title of Each Class

Trading Symbol

Name of Exchange on Which Registered

Common Shares of beneficial interest, par value $0.01 per share

RLJ

New York Stock Exchange

$1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share

RLJ-A

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of April ~~29, 2021, 164,917,750~~28, 2022, 166,843,586 common shares of beneficial interest of the Registrant, $0.01 par value per share, were outstanding.

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		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Financial Statements (unaudited)
	Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021	1
	Statements of Operations and Comprehensive ~~Loss~~Income (Loss) for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021	2
	Statements of Changes in Equity for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021	4
	Statements of Cash Flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021	6
	Notes to the Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2120
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3231
Item 4.	Controls and Procedures	3231

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	3332
Item 1A.	Risk Factors	3332
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3332
Item 3.	Defaults Upon Senior Securities	3332
Item 4.	Mine Safety Disclosures	3332
Item 5.	Other Information	3332
Item 6.	Exhibits	34

Signatures		35

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

RLJ Lodging Trust

Consolidated Balance Sheets

(Amounts in thousands, except share and per share data)

(unaudited)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Investment in hotel properties, net	Investment in hotel properties, net	$	4,442,945	$	4,486,416	Investment in hotel properties, net	$	4,155,048	$	4,219,116
Investment in unconsolidated joint ventures	Investment in unconsolidated joint ventures	6,665		6,798		Investment in unconsolidated joint ventures	6,644		6,522
Cash and cash equivalents	Cash and cash equivalents	647,844		899,813		Cash and cash equivalents	479,047		665,341
Restricted cash reserves	Restricted cash reserves	33,391		34,977		Restricted cash reserves	43,254		48,528
Hotel and other receivables, net of allowance of $253 and $292, respectively		19,054		13,346
Hotel and other receivables, net of allowance of $322 and $274, respectively						Hotel and other receivables, net of allowance of $322 and $274, respectively	37,876		31,091
Lease right-of-use assets	Lease right-of-use assets	141,660		142,989		Lease right-of-use assets	143,606		144,988

Prepaid expense and other assets	Prepaid expense and other assets	37,004		32,833		Prepaid expense and other assets	56,182		33,390

Total assets	Total assets	$	5,328,563	$	5,617,172	Total assets	$	4,921,657	$	5,148,976
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Debt, net	Debt, net	$	2,377,981	$	2,587,731	Debt, net	$	2,210,725	$	2,409,438
Accounts payable and other liabilities	Accounts payable and other liabilities	159,538		172,325		Accounts payable and other liabilities	129,962		155,136

Advance deposits and deferred revenue	Advance deposits and deferred revenue	28,211		32,177		Advance deposits and deferred revenue	21,434		20,047
Lease liabilities	Lease liabilities	121,954		122,593		Lease liabilities	122,326		123,031
Accrued interest	Accrued interest	13,288		6,206		Accrued interest	8,210		19,110
Distributions payable	Distributions payable	8,383		8,752		Distributions payable	8,208		8,347
Total liabilities	Total liabilities	2,709,355		2,929,784		Total liabilities	2,500,865		2,735,109
Commitments and Contingencies (Note 11)		0		0
Commitments and Contingencies (Note 10)						Commitments and Contingencies (Note 10)	0		0
Equity	Equity					Equity
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized	Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized					Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorized
Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2021 and December 31, 2020		366,936		366,936
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 164,918,126 and 165,002,752 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		1,649		1,650
Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2022 and December 31, 2021						Series A Cumulative Convertible Preferred Shares, $0.01 par value, 12,950,000 shares authorized; 12,879,475 shares issued and outstanding, liquidation value of $328,266, at March 31, 2022 and December 31, 2021	366,936		366,936
Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 166,843,586 and 166,503,062 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively						Common shares of beneficial interest, $0.01 par value, 450,000,000 shares authorized; 166,843,586 and 166,503,062 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	1,668		1,665
Additional paid-in capital	Additional paid-in capital	3,078,824		3,077,142		Additional paid-in capital	3,097,166		3,092,883
Accumulated other comprehensive loss		(52,330)		(69,050)
Distributions in excess of net earnings	Distributions in excess of net earnings	(795,706)		(710,161)		Distributions in excess of net earnings	(1,069,769)		(1,046,739)
Accumulated other comprehensive income (loss)						Accumulated other comprehensive income (loss)	11,214		(17,113)
Total shareholders’ equity	Total shareholders’ equity	2,599,373		2,666,517		Total shareholders’ equity	2,407,215		2,397,632
Noncontrolling interest:
Noncontrolling interests:						Noncontrolling interests:
Noncontrolling interest in the Operating Partnership						Noncontrolling interest in the Operating Partnership	6,209		6,316
Noncontrolling interest in consolidated joint ventures	Noncontrolling interest in consolidated joint ventures	12,365		13,002		Noncontrolling interest in consolidated joint ventures	7,368		9,919
Noncontrolling interest in the Operating Partnership		7,470		7,869
Total noncontrolling interest		19,835		20,871
Total noncontrolling interests						Total noncontrolling interests	13,577		16,235

Total equity	Total equity	2,619,208		2,687,388		Total equity	2,420,792		2,413,867
Total liabilities and equity	Total liabilities and equity	$	5,328,563	$	5,617,172	Total liabilities and equity	$	4,921,657	$	5,148,976

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss)

(Amounts in thousands, except share and per share data)

(unaudited)


		For the three months ended March 31,						For the three months ended March 31,
			2021		2020				2022		2021
Revenues	Revenues						Revenues
Operating revenues	Operating revenues						Operating revenues
Room revenue	Room revenue		$	102,772	$	218,892	Room revenue		$	205,779	$	102,772
Food and beverage revenue	Food and beverage revenue		6,242		30,767		Food and beverage revenue		20,901		6,242
Other revenue	Other revenue		10,538		15,822		Other revenue		16,219		10,538
Total revenues	Total revenues		119,552		265,481		Total revenues		242,899		119,552
Expenses	Expenses						Expenses
Operating expenses	Operating expenses						Operating expenses
Room expense	Room expense		29,427		63,753		Room expense		53,828		29,427
Food and beverage expense	Food and beverage expense		4,556		26,381		Food and beverage expense		16,169		4,556
Management and franchise fee expense	Management and franchise fee expense		5,361		17,144		Management and franchise fee expense		20,388		5,361
Other operating expense	Other operating expense		49,120		80,957		Other operating expense		68,654		49,120
Total property operating expenses	Total property operating expenses		88,464		188,235		Total property operating expenses		159,039		88,464
Depreciation and amortization	Depreciation and amortization		46,943		49,173		Depreciation and amortization		46,865		46,943
Impairment losses	Impairment losses		5,946		0		Impairment losses		—		5,946
Property tax, insurance and other	Property tax, insurance and other		20,081		28,692		Property tax, insurance and other		22,513		20,081
General and administrative	General and administrative		10,800		11,769		General and administrative		14,134		10,800
Transaction costs	Transaction costs		60		10		Transaction costs		62		60
Total operating expenses	Total operating expenses		172,294		277,879		Total operating expenses		242,613		172,294
Other income			465		579
Other income, net							Other income, net		7,285		465
Interest income	Interest income		384		2,966		Interest income		172		384
Interest expense	Interest expense		(27,895)		(23,813)		Interest expense		(24,561)		(27,895)
Gain on sale of hotel properties, net	Gain on sale of hotel properties, net		1,083		102		Gain on sale of hotel properties, net		1,417		1,083

Loss before equity in (loss) income from unconsolidated joint ventures			(78,705)		(32,564)
Equity in (loss) income from unconsolidated joint ventures			(298)		585
Loss before income tax (expense) benefit			(79,003)		(31,979)
Income tax (expense) benefit			(114)		1,150
Loss before equity in income (loss) from unconsolidated joint ventures							Loss before equity in income (loss) from unconsolidated joint ventures		(15,401)		(78,705)
Equity in income (loss) from unconsolidated joint ventures							Equity in income (loss) from unconsolidated joint ventures		122		(298)
Loss before income tax expense							Loss before income tax expense		(15,279)		(79,003)
Income tax expense							Income tax expense		(190)		(114)
Net loss	Net loss		(79,117)		(30,829)		Net loss		(15,469)		(79,117)
Net loss attributable to noncontrolling interests:	Net loss attributable to noncontrolling interests:						Net loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership							Noncontrolling interest in the Operating Partnership		104		396
Noncontrolling interest in consolidated joint ventures	Noncontrolling interest in consolidated joint ventures		736		1,313		Noncontrolling interest in consolidated joint ventures		118		736
Noncontrolling interest in the Operating Partnership			396		192

Net loss attributable to RLJ	Net loss attributable to RLJ		(77,985)		(29,324)		Net loss attributable to RLJ		(15,247)		(77,985)
Preferred dividends	Preferred dividends		(6,279)		(6,279)		Preferred dividends		(6,279)		(6,279)
Net loss attributable to common shareholders	Net loss attributable to common shareholders		$	(84,264)	$	(35,603)	Net loss attributable to common shareholders		$	(21,526)	$	(84,264)

Basic and diluted per common share data:	Basic and diluted per common share data:						Basic and diluted per common share data:
Net loss per share attributable to common shareholders	Net loss per share attributable to common shareholders		$	(0.51)	$	(0.21)	Net loss per share attributable to common shareholders		$	(0.13)	$	(0.51)
Weighted-average number of common shares	Weighted-average number of common shares		163,826,009		167,149,733		Weighted-average number of common shares		164,179,661		163,826,009

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Comprehensive loss:
Comprehensive income (loss):						Comprehensive income (loss):
Net loss	Net loss	$	(79,117)	$	(30,829)	Net loss	$	(15,469)	$	(79,117)
Unrealized gain (loss) on interest rate derivatives		16,720		(56,477)

Comprehensive loss		(62,397)		(87,306)
Unrealized gain on interest rate derivatives						Unrealized gain on interest rate derivatives	34,193		16,720
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net						Reclassification of unrealized gains on discontinued cash flow hedges to other income, net	(5,866)		—
Comprehensive income (loss)						Comprehensive income (loss)	12,858		(62,397)
Comprehensive loss attributable to noncontrolling interests:	Comprehensive loss attributable to noncontrolling interests:					Comprehensive loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership						Noncontrolling interest in the Operating Partnership	104		396
Noncontrolling interest in consolidated joint ventures	Noncontrolling interest in consolidated joint ventures	736		1,313		Noncontrolling interest in consolidated joint ventures	118		736
Noncontrolling interest in the Operating Partnership		396		192

Comprehensive loss attributable to RLJ		$	(61,265)	$	(85,801)
Comprehensive income (loss) attributable to RLJ						Comprehensive income (loss) attributable to RLJ	$	13,080	$	(61,265)

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


		Shareholders’ Equity												Noncontrolling Interest									Shareholders’ Equity														Noncontrolling Interest
		Preferred Stock			Common Stock																		Preferred Stock				Common Stock
		Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Loss		Operating Partnership		Consolidated Joint Ventures		Total Equity					Shares		Amount		Shares		Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive (Loss) Income		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at December 31, 2020		12,879,475	$	366,936	165,002,752	$	1,650	$	3,077,142	$	(710,161)	$	(69,050)	$	7,869	$	13,002	$	2,687,388
Balance at December 31, 2021																				Balance at December 31, 2021		12,879,475		$	366,936	166,503,062		$	1,665	$	3,092,883	$	(1,046,739)	$	(17,113)	$	6,316	$	9,919	$	2,413,867
Net loss	Net loss	—	—		—	—		—		(77,985)		—		(396)		(736)		(79,117)			Net loss		—		—		—		—		—		(15,247)		—		(104)		(118)		(15,469)
Unrealized gain on interest rate derivatives	Unrealized gain on interest rate derivatives	—	—		—	—		—		—		16,720		—		—		16,720			Unrealized gain on interest rate derivatives		—		—		—		—		—		—		34,193		—		—		34,193

Reclassification of unrealized gains on discontinued cash flow hedges to other income, net																				Reclassification of unrealized gains on discontinued cash flow hedges to other income, net		—		—		—		—		—		—		(5,866)		—		—		(5,866)

Contributions from consolidated joint venture partners	Contributions from consolidated joint venture partners	—	—		—	—		—		—		—		—		99		99			Contributions from consolidated joint venture partners		—		—		—		—		—		—		—		—		156		156
Distribution to consolidated joint venture partners																				Distribution to consolidated joint venture partners		—		—		—		—		—		—		—		—		(2,589)		(2,589)

Issuance of restricted stock																				Issuance of restricted stock		—		—		432,779		4		(4)		—		—		—		—		—
Amortization of share-based compensation	Amortization of share-based compensation	—	—		—	—		2,944		—		—		—		—		2,944			Amortization of share-based compensation		—		—		—		—		5,555		—		—		—		—		5,555

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(83,244)	(1)		(1,262)		—		—		—		—		(1,263)			Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock		—		—		(87,626)		(1)		(1,268)		—		—		—		—		(1,269)

Forfeiture of restricted stock	Forfeiture of restricted stock	—	—		(1,382)	0		0		—		—		—		—		0			Forfeiture of restricted stock		—		—		(4,629)		—		—		—		—		—		—		—
Distributions on preferred shares	Distributions on preferred shares	—	—		—	—		—		(6,279)		—		—		—		(6,279)			Distributions on preferred shares		—		—		—		—		—		(6,279)		—		—		—		(6,279)
Distributions on common shares and units	Distributions on common shares and units	—	—		—	—		—		(1,281)		—		(3)		—		(1,284)			Distributions on common shares and units		—		—		—		—		—		(1,504)		—		(3)		—		(1,507)

Balance at March 31, 2021		12,879,475	$	366,936	164,918,126	$	1,649	$	3,078,824	$	(795,706)	$	(52,330)	$	7,470	$	12,365	$	2,619,208
Balance at March 31, 2022																				Balance at March 31, 2022		12,879,475		$	366,936	166,843,586		$	1,668	$	3,097,166	$	(1,069,769)	$	11,214	$	6,209	$	7,368	$	2,420,792

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Changes in Equity

(Amounts in thousands, except share data)

(unaudited)


		Shareholders’ Equity												Noncontrolling Interest									Shareholders’ Equity														Noncontrolling Interest
		Preferred Stock			Common Stock																		Preferred Stock				Common Stock
		Shares	Amount		Shares	Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Loss		Operating Partnership		Consolidated Joint Ventures		Total Equity					Shares		Amount		Shares		Par Value		Additional Paid-in Capital		Distributions in excess of net earnings		Accumulated Other Comprehensive Loss		Operating Partnership		Consolidated Joint Ventures		Total Equity
Balance at December 31, 2019		12,879,475	$	366,936	169,852,246	$	1,699	$	3,127,982	$	(274,769)	$	(19,514)	$	10,084	$	14,065	$	3,226,483
Balance at December 31, 2020																				Balance at December 31, 2020		12,879,475		$	366,936	165,002,752		$	1,650	$	3,077,142	$	(710,161)	$	(69,050)	$	7,869	$	13,002	$	2,687,388
Net loss	Net loss	—	—		—	—		—		(29,324)		—		(192)		(1,313)		(30,829)			Net loss		—		—		—		—		—		(77,985)		—		(396)		(736)		(79,117)
Unrealized loss on interest rate derivatives		—	—		—	—		—		—		(56,477)		—		—		(56,477)
Unrealized gain on interest rate derivatives																				Unrealized gain on interest rate derivatives		—		—		—		—		—		—		16,720		—		—		16,720

Redemption of Operating Partnership units		—	—		—	—		—		—		—		(8)		—		(8)

Contributions from consolidated joint venture partners	Contributions from consolidated joint venture partners	—	—		—	—		—		—		—		—		270		270			Contributions from consolidated joint venture partners		—		—		—		—		—		—		—		—		99		99
Issuance of restricted stock		—	—		525,169	5		(5)		—		—		—		—		0

Amortization of share-based compensation	Amortization of share-based compensation	—	—		—	—		2,900		—		—		—		—		2,900			Amortization of share-based compensation		—		—		—		—		2,944		—		—		—		—		2,944

Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock	—	—		(38,875)	0		(634)		—		—		—		—		(634)			Shares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock		—		—		(83,244)		(1)		(1,262)		—		—		—		—		(1,263)
Shares acquired as part of a share repurchase program		—	—		(5,489,335)	(55)		(62,550)		—		—		—		—		(62,605)

Forfeiture of restricted stock	Forfeiture of restricted stock	—	—		(6,424)	—		—		—		—		—		—		0			Forfeiture of restricted stock		—		—		(1,382)		—		—		—		—		—		—		—
Distributions on preferred shares	Distributions on preferred shares	—	—		—	—		—		(6,279)		—		—		—		(6,279)			Distributions on preferred shares		—		—		—		—		—		(6,279)		—		—		—		(6,279)
Distributions on common shares and units	Distributions on common shares and units	—	—		—	—		—		(852)		—		(135)		—		(987)			Distributions on common shares and units		—		—		—		—		—		(1,281)		—		(3)		—		(1,284)

Balance at March 31, 2020		12,879,475	$	366,936	164,842,781	$	1,649	$	3,067,693	$	(311,224)	$	(75,991)	$	9,749	$	13,022	$	3,071,834
Balance at March 31, 2021																				Balance at March 31, 2021		12,879,475		$	366,936	164,918,126		$	1,649	$	3,078,824	$	(795,706)	$	(52,330)	$	7,470	$	12,365	$	2,619,208

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Consolidated Statements of Cash Flows

(Amounts in thousands)

(unaudited)


		For the three months ended March 31,					For the three months ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(79,117)	$	(30,829)	Net loss	$	(15,469)	$	(79,117)
Adjustments to reconcile net loss to cash flow (used in) provided by operating activities:
Adjustments to reconcile net loss to cash flow provided by (used in) operating activities:						Adjustments to reconcile net loss to cash flow provided by (used in) operating activities:
Gain on sale of hotel properties, net	Gain on sale of hotel properties, net	(1,083)		(102)		Gain on sale of hotel properties, net	(1,417)		(1,083)

Depreciation and amortization	Depreciation and amortization	46,943		49,173		Depreciation and amortization	46,865		46,943
Amortization of deferred financing costs	Amortization of deferred financing costs	1,321		1,021		Amortization of deferred financing costs	1,684		1,321
Other amortization	Other amortization	(615)		(596)		Other amortization	403		(615)
Unrealized loss on discontinued cash flow hedges		0		1,556
Equity in loss (income) from unconsolidated joint ventures		298		(585)
Reclassification of unrealized gains on discontinued cash flow hedges to other income, net						Reclassification of unrealized gains on discontinued cash flow hedges to other income, net	(5,866)		—

Equity in (income) loss from unconsolidated joint ventures						Equity in (income) loss from unconsolidated joint ventures	(122)		298

Impairment losses	Impairment losses	5,946		0		Impairment losses	—		5,946

Amortization of share-based compensation	Amortization of share-based compensation	2,752		2,696		Amortization of share-based compensation	5,184		2,752
Deferred income taxes		0		(1,242)

Changes in assets and liabilities:	Changes in assets and liabilities:					Changes in assets and liabilities:
Hotel and other receivables, net	Hotel and other receivables, net	(5,708)		16,989		Hotel and other receivables, net	(6,946)		(5,708)
Prepaid expense and other assets	Prepaid expense and other assets	(4,192)		10,715		Prepaid expense and other assets	(4,254)		(4,192)
Accounts payable and other liabilities	Accounts payable and other liabilities	1,331		(22,204)		Accounts payable and other liabilities	(320)		1,331
Advance deposits and deferred revenue	Advance deposits and deferred revenue	(3,966)		(8,529)		Advance deposits and deferred revenue	1,449		(3,966)
Accrued interest	Accrued interest	7,082		12,003		Accrued interest	(10,900)		7,082
Net cash flow (used in) provided by operating activities		(29,008)		30,066
Net cash flow provided by (used in) operating activities						Net cash flow provided by (used in) operating activities	10,291		(29,008)
Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities

Proceeds from the sale of hotel properties, net		3,990		102
Proceeds from sales of hotel properties, net						Proceeds from sales of hotel properties, net	34,125		3,990
Improvements and additions to hotel properties	Improvements and additions to hotel properties	(9,901)		(31,027)		Improvements and additions to hotel properties	(24,334)		(9,901)

Contributions to unconsolidated joint ventures	Contributions to unconsolidated joint ventures	(165)		(100)		Contributions to unconsolidated joint ventures	—		(165)

Distributions from unconsolidated joint ventures in excess of earnings		0		1,593

Net cash flow used in investing activities		(6,076)		(29,432)

Net cash flow provided by (used in) investing activities						Net cash flow provided by (used in) investing activities	9,791		(6,076)
Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Borrowings under Revolver		0		400,000

Repayment of Revolver	Repayment of Revolver	(200,000)		0		Repayment of Revolver	(200,000)		(200,000)

Scheduled mortgage loan principal payments	Scheduled mortgage loan principal payments	(900)		(634)		Scheduled mortgage loan principal payments	—		(900)
Repayment of term loans		(8,475)		0
Repayments of Term Loans						Repayments of Term Loans	—		(8,475)

Repurchase of common shares under a share repurchase program		0		(62,605)

Repurchase of common shares to satisfy employee tax withholding requirements	Repurchase of common shares to satisfy employee tax withholding requirements	(1,263)		(634)		Repurchase of common shares to satisfy employee tax withholding requirements	(1,269)		(1,263)
Distributions on preferred shares	Distributions on preferred shares	(6,279)		(6,279)		Distributions on preferred shares	(6,279)		(6,279)
Distributions on common shares	Distributions on common shares	(1,650)		(56,051)		Distributions on common shares	(1,666)		(1,650)
Distributions on and redemption of Operating Partnership units	Distributions on and redemption of Operating Partnership units	(3)		(390)		Distributions on and redemption of Operating Partnership units	(3)		(3)

Payments of deferred financing costs		0		(105)

Contributions from consolidated joint venture partners	Contributions from consolidated joint venture partners	99		270		Contributions from consolidated joint venture partners	156		99

Net cash flow (used in) provided by financing activities		(218,471)		273,572
Distribution to consolidated joint venture partners						Distribution to consolidated joint venture partners	(2,589)		—
Net cash flow used in financing activities						Net cash flow used in financing activities	(211,650)		(218,471)
Net change in cash, cash equivalents, and restricted cash reserves	Net change in cash, cash equivalents, and restricted cash reserves	(253,555)		274,206		Net change in cash, cash equivalents, and restricted cash reserves	(191,568)		(253,555)
Cash, cash equivalents, and restricted cash reserves, beginning of year	Cash, cash equivalents, and restricted cash reserves, beginning of year	934,790		927,160		Cash, cash equivalents, and restricted cash reserves, beginning of year	713,869		934,790
Cash, cash equivalents, and restricted cash reserves, end of period	Cash, cash equivalents, and restricted cash reserves, end of period	$	681,235	$	1,201,366	Cash, cash equivalents, and restricted cash reserves, end of period	$	522,301	$	681,235

The accompanying notes are an integral part of these consolidated financial statements.

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RLJ Lodging Trust

Notes to the Consolidated Financial Statements

(unaudited)

1. General

Organization

RLJ Lodging Trust (the "Company") was formed as a Maryland real estate investment trust ("REIT") on January 31, 2011. The Company is a self-advised and self-administered REIT that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company elected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with its taxable year ended December 31, 2011.

Substantially all of the Company’s assets and liabilities are held by, and all of its operations are conducted through, RLJ Lodging Trust, L.P. (the "Operating Partnership"). The Company is the sole general partner of the Operating Partnership. As of March 31, ~~2021,~~2022, there were ~~165,690,419~~167,615,417 units of limited partnership interest in the Operating Partnership ("OP units") outstanding and the Company owned, through a combination of direct and indirect interests, 99.5% of the outstanding OP units.

As of March 31, ~~2021,~~2022, the Company owned ~~102~~97 hotel properties with approximately ~~22,600~~21,400 rooms, located in 2322 states and the District of Columbia. The Company, through wholly-owned subsidiaries, owned a 100% interest in 9895 of its hotel properties, a ~~98.3% controlling interest in the DoubleTree Metropolitan Hotel New York City, a~~ 95% controlling interest in ~~The Knickerbocker,~~one hotel property, and a 50% ~~interests~~non-controlling interest in ~~entities~~an entity owning 21 hotel ~~properties.~~property. The Company consolidates its real estate interests in the ~~100~~96 hotel properties in which it holds a controlling ~~financial~~ interest, and the Company records the real estate ~~interests~~interest in ~~the two~~one hotel ~~properties~~property in which it holds an indirect 50% non-controlling interest using the equity method of accounting. The Company leases ~~101~~96 of the ~~102~~97 hotel properties to its taxable REIT subsidiaries ("TRS"), of which the Company owns a controlling financial interest.

COVID-19

The global outbreak of the novel coronavirus, or COVID-19, and the public health measures that have been undertaken in response have had, and will likely continue to have, a material ~~adverse~~ impact on the Company's financial results and ~~liquidity, and such adverse impact may continue well beyond the containment of such outbreak and vaccination distribution.~~liquidity. Since the extent to which the COVID-19 pandemic will continue to impact the Company's operations will depend on future developments that are highly uncertain, the Company cannot estimate the impact on its business, financial condition or near- or longer-term financial or operational results with reasonable certainty. As of March 31, 2021, operations at 4 hotels remained suspended; subsequent to the end of the quarter, the Company reopened 1 of the suspended hotels. The remaining 3 suspended hotel properties are located in New York City and San Francisco and the Company will continue to evaluate reopening these hotels based on market conditions and other factors. All open hotels are currently operating under aggressive operating cost containment plans, including significantly reduced staffing, elimination of non-essential amenities and services, and modified food and beverage offerings.

2. Summary of Significant Accounting Policies

The Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021, filed with the Securities and Exchange Commission ("SEC") on February 24, 2022 (the "Annual Report"), contains a discussion of the Company's significant accounting policies. Other than noted below, there have been no significant changes to the Company's significant accounting policies since December 31, ~~2020.~~2021.

Basis of Presentation and Principles of Consolidation

The unaudited consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("GAAP") and in conformity with the rules and regulations of the ~~Securities and Exchange Commission ("SEC")~~SEC applicable to financial information. The unaudited financial statements include all adjustments that are necessary, in the opinion of management, to fairly state the consolidated balance sheets, statements of operations and comprehensive ~~loss,~~income (loss), statements of changes in equity and statements of cash flows.

The unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto as of and for the year ended December 31, ~~2020,~~2021, included in the ~~Company's~~ Annual ~~Report on Form 10-K filed with the SEC on February 26, 2021.~~Report.

~~Table of Contents~~

The consolidated financial statements include the accounts of the Company, the Operating Partnership and its wholly-owned subsidiaries, and joint ventures in which the Company has a majority voting interest and control. For the controlled subsidiaries that are not wholly-owned, the third-party ownership interest represents a noncontrolling interest, which is presented separately in the consolidated financial statements. The Company also records the real estate ~~interests~~interest in ~~2 joint ventures~~1 hotel property in which it holds ~~an indirect~~a 50% non-controlling interest using the equity method of accounting. All intercompany balances and transactions have been eliminated in consolidation.

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Reclassifications

Certain prior year amounts in these financial statements have been reclassified to conform to the current year presentation with no impact to net loss and comprehensive ~~loss,~~income (loss), shareholders’ equity or cash flows.

Use of Estimates

The preparation of the Company’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Given the additional and unforeseen effects from the COVID-19 pandemic, these estimates have become more challenging, and actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In ~~December 2019,~~March 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.~~ The guidance enhances and simplifies various aspects of the current income tax guidance and reduces complexity by removing certain exceptions to the general framework. The Company adopted this new standard on January 1, 2021. The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

~~In March 2020, the FASB issued ASU~~ 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides optional expedients for applying GAAP to contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate ("LIBOR") or another reference rate ~~expected to be~~that was discontinued at the end of 2021 because of reference rate reform. The guidance was effective upon issuance and expires on December 31, 2022. Based on the Company's assessment, there was no material impact arising from this guidance and the Company did not elect to apply any of the optional expedients.

3. Investment in Hotel Properties

Investment in hotel properties consisted of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Land and improvements	Land and improvements	$	1,088,246	$	1,089,597	Land and improvements	$	972,633	$	975,688
Buildings and improvements	Buildings and improvements	4,082,175		4,084,712		Buildings and improvements	3,964,442		4,001,875
Furniture, fixtures and equipment	Furniture, fixtures and equipment	698,683		697,404		Furniture, fixtures and equipment	689,967		691,057
		5,869,104		5,871,713			5,627,042		5,668,620
Accumulated depreciation	Accumulated depreciation	(1,426,159)		(1,385,297)		Accumulated depreciation	(1,471,994)		(1,449,504)
Investment in hotel properties, net	Investment in hotel properties, net	$	4,442,945	$	4,486,416	Investment in hotel properties, net	$	4,155,048	$	4,219,116

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized depreciation expense related to its investment in hotel properties of approximately ~~$46.8~~$46.7 million and ~~$48.9~~$46.8 million, respectively.

~~Impairment~~Impairments

During the three months ended March 31, 2021, the Company ~~entered into purchase and sale agreements to sell~~evaluated the recoverability of two hotel properties ~~with an aggregate book value of approximately $18.5 million. The Company~~and recorded impairment losses of $5.9 million to ~~write down~~adjust the ~~hotel properties~~hotels' carrying amounts to their estimated fair ~~value.~~values. The fair values were determined based on the contractual sales price pursuant to an executed purchase and sale agreement (a Level 2 measurement in the fair value hierarchy). The sales of these ~~two~~ hotel properties ~~are expected to close~~closed in May 2021. There was no impairment recorded during ~~the second quarter 2021. For~~ the three months ended March 31, ~~2020, there was no impairment loss.~~2022.

4.Sale of Hotel Properties

In connection with the sale of hotel properties for the three months ended March 31, 2022 and 2021, the Company recorded a net gain of $1.4 million and $1.1 million, respectively.

During the three months ended March 31, 2022, the Company sold the following hotel property for a sales price of approximately $35.5 million:

Hotel Property Name

Location

Sale Date

Rooms

Marriott Denver Airport @ Gateway Park

Aurora, CO

March 8, 2022

238

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4.~~Investment in Unconsolidated Joint Ventures~~

As of March 31, 2021 and December 31, 2020, the Company owned 50% interests in joint ventures that owned 2 hotel properties. During the year ended December 31, 2020, one of the unconsolidated joint ventures determined the property ground lease will terminate on October 31, 2021 and the property will revert to the ground lessor at that time.

The Company accounts for the investments in its unconsolidated joint ventures under the equity method of accounting. The Company makes adjustments to the equity in loss from unconsolidated joint ventures related to the difference between the Company's basis in the investment in the unconsolidated joint ventures as compared to the historical basis of the assets and liabilities of the joint ventures. As of March 31, 2021 and December 31, 2020, the unconsolidated joint ventures' debt consisted entirely of non-recourse mortgage debt.

~~The following table summarizes the components of the Company's investments in unconsolidated joint ventures (in thousands):~~

March 31, 2021 December 31, 2020
Equity basis of the joint venture investments $ (6,664) $ (6,687)
Cost of the joint venture investments in excess of the joint venture book value 13,329 13,485
Investment in unconsolidated joint ventures $ 6,665 $ 6,798

~~The following table summarizes the components of the Company's equity in loss from unconsolidated joint ventures (in thousands):~~

For the three months ended March 31,
2021 2020
Operating (loss) income $ (142) $ 864
Depreciation of cost in excess of book value (156) (279)
Equity in (loss) income from unconsolidated joint ventures $ (298) $ 585

5.~~Sale of Hotel Properties~~

During the three months ended March 31, 2021, the Company sold 1the following hotel property for a sales price of approximately $4.4 million. In connection with this transaction, the Company recorded a net gain of $1.1 million, which is included in gain on sale of hotel properties, net, in the accompanying consolidated statements of operations and comprehensive loss.

~~The following table discloses the hotel property that was sold during the three months ended March 31, 2021:~~million:

Hotel Property Name

Location

Sale Date

Rooms

Courtyard Houston Sugarland

Stafford, TX

January 21, 2021

112

~~Total~~

~~112~~

6.5. Revenue


		For the three months ended March 31, 2021								For the three months ended March 31, 2020									For the three months ended March 31, 2022								For the three months ended March 31, 2021
		Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue		Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue			Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue		Room Revenue		Food and Beverage Revenue		Other Revenue		Total Revenue
South Florida	South Florida	$	20,827	$	2,364	$	1,756	$	24,947	$	31,124	$	4,497	$	1,952	$	37,573	South Florida	$	37,411	$	4,739	$	2,222	$	44,372	$	20,827	$	2,364	$	1,756	$	24,947
Southern California	Southern California	11,905		339		1,407		13,651		23,860		2,862		2,144		28,866		Southern California	23,591		1,661		2,158		27,410		11,905		339		1,407		13,651
Northern California	Northern California	8,844		218		700		9,762		33,511		3,785		1,305		38,601		Northern California	20,207		1,613		1,037		22,857		8,844		218		700		9,762
Chicago	Chicago	6,392		683		358		7,433		8,914		2,222		466		11,602		Chicago	8,960		1,622		460		11,042		6,392		683		358		7,433
Houston	Houston	5,323		98		668		6,089		10,939		714		974		12,627		Houston	8,528		569		867		9,964		5,323		98		668		6,089
Pittsburgh		4,630		237		170		5,037		4,620		1,105		296		6,021
Austin																		Austin	8,382		671		740		9,793		3,607		223		478		4,308
Washington DC	Washington DC	4,135		29		284		4,448		8,824		200		541		9,565		Washington DC	8,326		117		590		9,033		4,135		29		284		4,448
New York City																		New York City	7,662		789		473		8,924		3,238		17		129		3,384
Atlanta																		Atlanta	7,685		385		825		8,895		3,148		68		493		3,709
New Orleans																		New Orleans	7,856		164		697		8,717		2,350		—		383		2,733
Denver																		Denver	6,552		1,727		321		8,600		2,202		398		330		2,930
Charleston																		Charleston	6,738		1,196		502		8,436		3,177		300		402		3,879
Orlando																		Orlando	6,507		595		1,045		8,147		2,847		133		825		3,805
Tampa																		Tampa	6,492		766		606		7,864		2,847		384		313		3,544
Louisville																		Louisville	4,845		1,993		879		7,717		1,781		368		355		2,504
Other																		Other	36,037		2,294		2,797		41,128		20,149		620		1,657		22,426
Total																		Total	$	205,779	$	20,901	$	16,219	$	242,899	$	102,772	$	6,242	$	10,538	$	119,552

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Austin 3,607 223 478 4,308 7,508 1,261 1,250 10,019
Charleston 3,177 300 402 3,879 4,967 1,348 362 6,677
Orlando 2,847 133 825 3,805 5,724 418 556 6,698
Atlanta 3,148 68 493 3,709 6,564 410 550 7,524
Tampa 2,847 384 313 3,544 4,967 868 380 6,215
New York City 3,238 17 129 3,384 16,295 2,134 934 19,363
Denver 2,202 398 330 2,930 6,760 2,267 335 9,362
Louisville 1,781 368 355 2,504 5,898 3,778 862 10,538
Other 17,869 383 1,870 20,122 38,417 2,898 2,915 44,230
Total $ 102,772 $ 6,242 $ 10,538 $ 119,552 $ 218,892 $ 30,767 $ 15,822 $ 265,481

~~Trade Receivables~~

The Company has historically only experienced de minimis credit losses in hotel-level trade receivables. As of March 31, 2021, the Company reviewed its allowance for doubtful accounts and concluded that it was adequate. Because of the adverse impact of the COVID-19 pandemic, the Company could experience a delay in payment and collections.

7.6. Debt

The Company's debt consisted of the following (in thousands):


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Senior Notes		$	494,578	$	495,759
Senior Notes, net						Senior Notes, net	$	987,534	$	986,942
Revolver	Revolver	200,000		400,000		Revolver	—		200,000
Term Loans, net	Term Loans, net	1,160,485		1,168,304		Term Loans, net	815,439		815,004
Mortgage loans, net	Mortgage loans, net	522,918		523,668		Mortgage loans, net	407,752		407,492
Debt, net	Debt, net	$	2,377,981	$	2,587,731	Debt, net	$	2,210,725	$	2,409,438

Senior Notes

~~The~~As of March 31, 2022 and December 31, 2021, respectively, the Company's ~~senior unsecured notes are referred to as~~Senior Notes (collectively, the "Senior ~~Notes." The Company's Senior Notes~~Notes") consisted of the following ~~(in~~(dollars in thousands):

Outstanding Borrowings at
Interest Rate Maturity Date March 31, 2021 December 31, 2020
Senior unsecured notes (1) (2) (3) 6.00% June 2025 $ 494,578 $ 495,759


			Carrying Value at
	Interest Rate	Maturity Date	March 31, 2022		December 31, 2021
Senior Notes due 2029	4.00%	September 2029	$	500,000	$	500,000
Senior Notes due 2026	3.75%	July 2026	500,000		500,000
			1,000,000		1,000,000
Deferred financing costs, net			(12,466)		(13,058)
Total senior notes, net			$	987,534	$	986,942

~~(1)Requires payments of interest only through maturity.~~

~~(2)~~The senior unsecured notes include $19.7 million and $20.9 million at March 31, 2021 and December 31, 2020, respectively, related to acquisition related fair value adjustments on the senior unsecured notes.

~~(3)The Company has the option to redeem the senior unsecured notes at a price of 103.0% of face value.~~

The indentures governing the Senior Notes contain customary covenants that will limit the Operating Partnership’s ability and, in certain instances, the ability of its subsidiaries, to incur additional debt, create liens on assets, make distributions and pay dividends, make certain types of investments, issue guarantees of indebtedness, and make certain restricted payments. These limitations are subject to a ~~maximum unsecured leverage maintenance covenant, which is based on asset value that is calculated at historical cost. In addition,~~number of exceptions and qualifications set forth in the indentures.

A summary of the various restrictive covenants for the Senior Notes are subject to various incurrence covenants that limit the ability of the Company's subsidiary, FelCor Lodging Limited Partnership ("FelCor LP"), to incur additional debt if these covenants are violated. Failure to meet these incurrence covenant thresholds does not, in and of itself, constitute an event of default under the Senior Notes indenture. as follows:

Covenant

Compliance

Maintenance Covenant

Unencumbered Asset to Unencumbered Debt Ratio

> 150.0%

Yes

Incurrence Covenants

Consolidated Indebtedness less than Adjusted Total Assets

< .65x

Yes

Consolidated Secured Indebtedness less than Adjusted Total Assets

< .45x

Yes

Interest Coverage Ratio

> 1.5x

Yes

As of March 31, 2022 and December 31, 2021, the Company was in compliance with all ~~maintenance and incurrence~~ covenants ~~except~~associated with the ~~interest coverage ratio. As a result, FelCor LP is currently prohibited from incurring additional debt.~~Senior Notes.

~~Table of Contents~~

Revolver and Term Loans

The Company has the following ~~unsecured~~ credit agreements in place:

•$600.0 million revolving credit facility with a scheduled maturity date of May 18, 2024 and a one year extension option if certain conditions are satisfied (the "Revolver");

•~~$150.0 million term loan with a scheduled maturity date of January 22, 2022 (the "$150 Million Term Loan Maturing 2022"~~);

•$400.0 million term loan with a scheduled maturity date of January 25, 2023 (the "$400 Million Term Loan Maturing 2023");

•$225.0 million term loan with a scheduled maturity date of January 25, 2023 (the "$225 Million Term Loan Maturing 2023"); and

•$150.0 million term loan with a scheduled maturity date of June 10, 2023 (the "$150 Million Term Loan Maturing 2023"); and

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•$400.0 million term loan with a scheduled maturity date of May 18, 2025 (the "$400 Million Term Loan Maturing 2025").

The ~~$150 Million Term Loan Maturing 2022, the~~ $400 Million Term Loan Maturing 2023, the $225 Million Term Loan Maturing 2023, $150 Million Term Loan Maturing 2023, and the $400 Million Term Loan Maturing 2025 are collectively the "Term Loans."

The Company's ~~unsecured~~ credit agreements consisted of the following ~~(in~~(dollars in thousands):


				Outstanding Borrowings at							Carrying Value at
		Interest Rate at March 31, 2021 (1)	Maturity Date	March 31, 2021		December 31, 2020			Interest Rate at March 31, 2022 (1)	Maturity Date	March 31, 2022		December 31, 2021
Revolver (2)	Revolver (2)	4.39%	May 2024	$	200,000	$	400,000	Revolver (2)	2.95%	May 2024	$	—	$	200,000
$150 Million Term Loan Maturing 2022 (3)		4.03%	January 2022	141,525		150,000
$400 Million Term Loan Maturing 2023	$400 Million Term Loan Maturing 2023	4.73%	January 2023	400,000		400,000		$400 Million Term Loan Maturing 2023	4.69%	January 2023 (4)	203,944		203,944
$225 Million Term Loan Maturing 2023	$225 Million Term Loan Maturing 2023	4.73%	January 2023	225,000		225,000		$225 Million Term Loan Maturing 2023	4.27%	January 2023 (5)	114,718		114,718
$150 Million Term Loan Maturing 2023								$150 Million Term Loan Maturing 2023	4.18%	June 2023 (6)	100,000		100,000
$400 Million Term Loan Maturing 2025	$400 Million Term Loan Maturing 2025	3.92%	May 2025	400,000		400,000		$400 Million Term Loan Maturing 2025	4.00%	May 2025	400,000		400,000
				1,366,525		1,575,000					818,662		1,018,662
Deferred financing costs, net ~~(4)~~(3)	Deferred financing costs, net ~~(4)~~(3)			(6,040)		(6,696)		Deferred financing costs, net ~~(4)~~(3)			(3,223)		(3,658)
Total Revolver and Term Loans, net	Total Revolver and Term Loans, net			$	1,360,485	$	1,568,304	Total Revolver and Term Loans, net			$	815,439	$	1,015,004

(1)Interest rate at March 31, ~~2021~~2022 gives effect to interest rate hedges.

(2)At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, there was ~~$400.0~~$600.0 million and $~~200.0~~400.0 million of remaining capacity on the Revolver, respectively. The Company also has the ability to extend the maturity date for an additional one year period ending May 2025 if certain conditions are satisfied.

(3)~~Pursuant to the terms under the Company's credit agreements, the Company applied $8.5 million of the proceeds from hotel dispositions to reduce the outstanding principal balance of this term loan.~~

~~(4)~~Excludes ~~$3.8~~$2.6 million and ~~$4.1~~$2.9 million as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, related to deferred financing costs on the Revolver, which are included in prepaid expense and other assets in the accompanying consolidated balance sheets.

(4)This term loan includes a one-year extension option for approximately $151.7 million of the principal balance. The exercise of the one-year extension option will be at the Company's discretion, subject to certain conditions.

(5)This term loan includes a one-year extension option for approximately $73.0 million of the principal balance. The exercise of the one-year extension option will be at the Company's discretion, subject to certain conditions.

(6)The Company has the option to extend the maturity one additional year to June 2024.

The Revolver and Term Loans are subject to various financial covenants. A summary of the most restrictive covenants is as follows:

Covenant

Compliance

Leverage ratio (1)

<= 7.00x

N/A (3)

Fixed charge coverage ratio (2)

>= 1.50x

N/A (3)

Secured indebtedness ratio

<= 45.0%

N/A (3)

Unencumbered indebtedness ratio

<= 60.0%

N/A (3)

Unencumbered debt service coverage ratio

>= 2.00x

N/A (3)

Maintain minimum liquidity level

>= ~~$125.0~~$150.0 million

Yes

(1)Leverage ratio is net indebtedness, as defined in the Revolver and Term Loan agreements, to corporate earnings before interest, taxes, depreciation, and amortization ("EBITDA"), as defined in the Revolver and Term Loan agreements.

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(2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Revolver and Term Loan agreements as EBITDA less furniture, fixtures and equipment ("FF&E") reserves, to fixed charges, which is generally defined in the Revolver and Term Loan agreements as interest expense, all regularly scheduled principal payments, preferred dividends paid, and cash taxes paid.

(3)The Company is not currently required to comply with these covenants, see details below.

~~During the year ended December 31, 2020, the Company entered into two amendments to its Revolver and Term Loans.~~ The ~~amendments suspend the testing of all existing~~Company's financial maintenance covenants under the Revolver and the Term Loan agreements ~~for all periods~~are waived through ~~and including~~ the fiscal quarter ending ~~December~~March 31, ~~2021~~2022 (the “Covenant Relief Period”). In addition, for periods following the Covenant Relief Period, ~~the amendments modify~~ certain covenant ~~thresholds.~~

Pursuant to the amendments and through the date that the financial statements are delivered for the quarter ending March 31, 2022 (the "Restriction Period"), the Company is subject to various restrictions including, but not limited to, the requirement to pledge the equity interests in certain subsidiaries that own unencumbered properties to secure the Revolver and Term Loans, equity issuances and incurrences of indebtedness will, subject to various exceptions, be required to be applied as a mandatory prepayment of certain amounts outstanding under the Revolver and the Term Loans. There are also restrictions on the application of net proceeds from asset sales, which will continue until the Company meets certain leverage thresholds as defined in the amendments. In addition, the restrictions limit the ability of the Company and its subsidiaries to incur additional indebtedness, make prepayments of other indebtedness, increase dividends and distributions, make capital expenditures over $175.0 million, and make investments, including acquisitions or mergers over $200.0 million. All of these limitations are subject to various exceptions.

~~At the Company's election, the Restriction Period and the Covenant Relief Period may be terminated early if the Company is at such time able to comply with the applicable financial covenants.~~have been modified. If the Company assesses that it is unlikely to meet the financial covenant thresholds for periods following the Covenant Relief Period, then the Company will seek an extension of the Covenant Relief Period.

In April 2022, the Company also amended the Revolver and Term Loans to allow for repurchases of the Company's shares up to $50.0 million with either cash on hand, cash from operations, or disposition proceeds.

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Mortgage Loans

The Company's mortgage loans consisted of the following ~~(in~~(dollars in thousands):


							Outstanding Borrowings at										Carrying Value at
		Number of Assets Encumbered	Interest Rate at March 31, 2021		Maturity Date		March 31, 2021		December 31, 2020			Number of Assets Encumbered	Interest Rate at March 31, 2022		Maturity Date		March 31, 2022		December 31, 2021
Mortgage loan (1)	Mortgage loan (1)	7	3.30	%	April 2022	(5)	$	200,000	$	200,000	Mortgage loan (1)	7	3.30%	(3)	April 2022	(4)	$	200,000	$	200,000
Mortgage loan ~~(2)~~(1)	Mortgage loan ~~(2)~~(1)	1	5.25	%	June 2022		30,099		30,332		Mortgage loan ~~(2)~~(1)	3	2.53%	(3)	April 2024	(5)	96,000		96,000
Mortgage loan (3)		3	4.95	%	October 2022		86,110		86,775
Mortgage loan (1)											Mortgage loan (1)	4	3.43%	(3)	April 2024	(5)	85,000		85,000
Mortgage loan ~~(4)~~(2)	Mortgage loan ~~(4)~~(2)	1	4.94	%	October 2022		27,759		27,972		Mortgage loan ~~(4)~~(2)	1	5.06%		January 2029		27,463		27,554
Mortgage loan (1)		4	1.71	%	April 2024	(5)	85,000		85,000
Mortgage loan (1)		3	3.00	%	April 2024	(5)	96,000		96,000

		19					524,968		526,079			15					408,463		408,554
Deferred financing costs, net	Deferred financing costs, net						(2,050)		(2,411)		Deferred financing costs, net						(711)		(1,062)
Total mortgage loans, net	Total mortgage loans, net						$	522,918	$	523,668	Total mortgage loans, net						$	407,752	$	407,492

(1)The hotels encumbered by the mortgage loan are cross-collateralized. Requires payments of interest only through maturity.

(2)Includes ~~$0.2~~$2.5 million and ~~$0.3~~$2.6 million at March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, related to a fair value adjustment on athis mortgage loan.

(3)~~Includes $0.7 million and $0.9 million~~Interest rate at March 31, ~~2021 and December 31, 2020, respectively, related~~2022 gives effect to ~~fair value adjustments on the mortgage loans.~~interest rate hedges.

(4)~~Includes $0.2 million and $0.3 million at March 31, 2021 and December 31, 2020, respectively, related~~The mortgage loan provides 2 one year extension options. In April 2022, the Company exercised the first option to ~~a fair value adjustment on~~extend the ~~mortgage loan.~~maturity to April 2023.

(5)The mortgage loan provides 2 one year extension options.

Certain mortgage agreements are subject to various maintenance covenants requiring the Company to maintain a minimum debt yield or debt service coverage ratio ("DSCR"). Failure to meet the debt yield or DSCR thresholds is not an event of default, but instead triggers a cash trap event. During the cash trap event, the lender or servicer of the mortgage loan controls cash outflows until the loan is covenant compliant. In addition certain mortgage loans have other requirements including continued operation and maintenance of the hotel property. At March 31, 2022 and December 31, 2021, ~~all 6~~1 and 2 mortgage loans, respectively, were ~~below~~in cash trap events. In addition, the DSCR covenant for one mortgage loan has been waived through December 31, 2022.

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~~threshold and were in a cash trap event.~~ At March 31, 2022 and December 31, 2021, there was approximately ~~$4.5~~$15.7 million and $22.4 million, respectively, of restricted cash held by lenders due to ~~the~~ cash trap events.

Interest Expense

The components of the Company's interest expense consisted of the following (in thousands):


		For the three months ended March 31,						For the three months ended March 31,
			2021		2020				2022		2021
Senior Notes	Senior Notes		$	5,942	$	5,944	Senior Notes		$	9,743	$	5,942
Revolver and Term Loans	Revolver and Term Loans		17,178		10,652		Revolver and Term Loans		9,968		17,178
Mortgage loans	Mortgage loans		3,454		4,640		Mortgage loans		3,210		3,454
Amortization of deferred financing costs	Amortization of deferred financing costs		1,321		1,021		Amortization of deferred financing costs		1,684		1,321
Undesignated interest rate swaps			0		1,556
Non-cash interest expense related to interest rate hedges							Non-cash interest expense related to interest rate hedges		(44)		—
Total interest expense	Total interest expense		$	27,895	$	23,813	Total interest expense		$	24,561	$	27,895

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8.7. Derivatives and Hedging Activities

The following interest rate swaps have been designated as cash flow hedges (in thousands):


				Notional value at				Fair value at							Notional value at				Fair value at
Hedge type	Hedge type	Interest rate	Maturity	March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020		Hedge type	Interest rate	Maturity	March 31, 2022		December 31, 2021		March 31, 2022		December 31, 2021

Swap-cash flow (1)												Swap-cash flow (1)	2.29%	December 2022	$	200,000	$	200,000	$	(1,566)	$	(4,077)
Swap-cash flow (1)												Swap-cash flow (1)	2.29%	December 2022	125,000		125,000		(977)		(2,545)
Swap-cash flow (2)												Swap-cash flow (2)	2.38%	December 2022	—		87,780		—		(1,879)
Swap-cash flow (2)												Swap-cash flow (2)	2.38%	December 2022	—		36,875		—		(789)
Swap-cash flow												Swap-cash flow	2.39%	December 2023	75,000		75,000		(314)		(2,504)
Swap-cash flow												Swap-cash flow	2.51%	December 2023	75,000		75,000		(478)		(2,692)
Swap-cash flow												Swap-cash flow	2.75%	November 2023	100,000		100,000		(1,112)		(3,893)
Swap-cash flow (3)												Swap-cash flow (3)	1.28%	September 2022	24,662		100,000		(47)		(759)
Swap-cash flow	Swap-cash flow	1.15%	April 2021	$	100,000	$	100,000	$	(149)	$	(398)	Swap-cash flow	1.24%	September 2025	150,000		150,000		5,703		(860)
Swap-cash flow	Swap-cash flow	1.20%	April 2021	100,000		100,000		(157)		(418)		Swap-cash flow	1.16%	April 2024	50,000		50,000		1,167		(338)
Swap-cash flow	Swap-cash flow	2.15%	April 2021	75,000		75,000		(220)		(594)		Swap-cash flow	1.20%	April 2024	50,000		50,000		1,123		(387)
Swap-cash flow	Swap-cash flow	1.91%	April 2021	75,000		75,000		(194)		(523)		Swap-cash flow	1.15%	April 2024	50,000		50,000		1,176		(327)
Swap-cash flow	Swap-cash flow	1.61%	June 2021	50,000		50,000		(251)		(433)		Swap-cash flow	1.10%	April 2024	50,000		50,000		1,230		(267)
Swap-cash flow	Swap-cash flow	1.56%	June 2021	50,000		50,000		(241)		(416)		Swap-cash flow	0.98%	April 2024	25,000		25,000		679		(61)
Swap-cash flow	Swap-cash flow	1.71%	June 2021	50,000		50,000		(267)		(462)		Swap-cash flow	0.95%	April 2024	25,000		25,000		695		(43)
Swap-cash flow		2.29%	December 2022	200,000		200,000		(7,788)		(9,044)
Swap-cash flow		2.29%	December 2022	125,000		125,000		(4,863)		(5,648)
Swap-cash flow		2.38%	December 2022	200,000		200,000		(8,133)		(9,436)
Swap-cash flow		2.38%	December 2022	100,000		100,000		(4,065)		(4,716)
Swap-cash flow		2.75%	November 2023	100,000		100,000		(6,560)		(7,635)
Swap-cash flow		2.51%	December 2023	75,000		75,000		(4,620)		(5,284)
Swap-cash flow		2.39%	December 2023	75,000		75,000		(4,362)		(5,012)
Swap-cash flow		1.35%	September 2021	49,000		49,000		(308)		(454)
Swap-cash flow		1.28%	September 2022	100,000		100,000		(1,713)		(2,035)
Swap-cash flow (1)		1.24%	September 2025	150,000		150,000		(2,321)		(5,508)
Swap-cash flow (2)		1.16%	April 2024	50,000		50,000		(1,094)		(1,464)
Swap-cash flow (2)		1.20%	April 2024	50,000		50,000		(1,157)		(1,526)
Swap-cash flow (2)		1.15%	April 2024	50,000		50,000		(1,081)		(1,450)
Swap-cash flow (2)		1.10%	April 2024	50,000		50,000		(1,005)		(1,374)
Swap-cash flow (2)		0.98%	April 2024	25,000		25,000		(411)		(596)
Swap-cash flow (2)		0.95%	April 2024	25,000		25,000		(389)		(573)
Swap-cash flow (2)		0.93%	April 2024	25,000		25,000		(373)		(558)
Swap-cash flow (2)		0.90%	April 2024	25,000		25,000		(351)		(535)
Swap-cash flow		0.85%	December 2024	50,000		50,000		(515)		(1,249)
Swap-cash flow		0.75%	December 2024	50,000		50,000		(326)		(1,047)
Swap-cash flow (3)		0.65%	January 2026	50,000		50,000		584		(662)
Swap-cash flow (4)												Swap-cash flow (4)	0.93%	April 2024	25,000		25,000		705		(31)
Swap-cash flow (4)												Swap-cash flow (4)	0.90%	April 2024	25,000		25,000		722		(13)
Swap-cash flow (4)												Swap-cash flow (4)	0.85%	December 2024	50,000		50,000		2,023		221
Swap-cash flow (4)												Swap-cash flow (4)	0.75%	December 2024	50,000		50,000		2,159		372
Swap-cash flow (4)												Swap-cash flow (4)	0.65%	January 2026	50,000		50,000		3,147		955
				$	2,124,000	$	2,124,000	$	(52,330)	$	(69,050)				$	1,199,662	$	1,399,655	$	16,035	$	(19,917)

(1)~~Effective~~In June 2021, the Company dedesignated a portion of the original notional value of these swaps as the hedged forecasted transactions were no longer probable of occurring. Therefore, the Company reclassified a total of $4.4 million of unrealized losses included in ~~September 2021.~~other comprehensive income (loss) to other income, net, in the consolidated statements of operations and comprehensive income (loss). The portion of the swaps that were dedesignated were subsequently redesignated and the amounts related to the initial fair values of $4.4 million that were recorded in other comprehensive income (loss) during the new hedging relationship were reclassified to earnings on a straight line basis over the remaining life of these swaps.

(2)~~Effective~~In June 2021, the Company terminated a portion of the original notional value of these swaps as the hedged forecasted transactions were no longer probable of occurring and paid approximately $6.2 million to terminate a portion of these swaps. In February 2022, the Company paid a total of approximately $1.5 million to terminate these swaps and will reclassify the unrealized losses included in ~~April 2021.~~other comprehensive income (loss) to earnings on a straight line basis over the remaining life of these swaps.

(3)~~Effective~~In February 2022, the Company terminated approximately $75.3 million of the original $100.0 million notional value of this swap as the hedged forecasted transactions were no longer probable of occurring. As part of the swap termination, the Company paid approximately $0.2 million to terminate a portion of this swap. The Company will reclassify the unrealized losses included in ~~July 2021.~~other comprehensive income (loss) to earnings on a straight line basis over the remaining life of the swap.

(4)In February 2022, the Company dedesignated these swaps as the hedged forecasted transactions were no longer probable of occurring. Therefore, the Company reclassified a total of approximately $5.9 million of unrealized gains included in other comprehensive income (loss) to other income, net, in the consolidated statements of operations and comprehensive income (loss). These swaps were subsequently redesignated and the amounts related to the initial fair value of $5.9 million that are recorded in other comprehensive income (loss) during the new hedging relationship will be reclassified to earnings on a straight line basis over the remaining life of these swaps.

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the aggregate fair value of the interest rate swap liabilities of ~~$52.9~~$4.5 million and ~~$69.1~~$21.5 million, respectively, was included in accounts payable and other liabilities in the accompanying consolidated balance sheets. As of March 31, 2022 and December 31, 2021, the aggregate fair value of the interest rate swap assets of ~~$0.6~~$20.5 million and $1.5 million, respectively, was included in prepaid expense and other assets in the accompanying consolidated balance sheets.

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As of March 31, ~~2021 and December 31, 2020,~~2022, there was approximately ~~$52.3~~$11.2 million ~~and $69.1~~of unrealized gains included in accumulated other comprehensive income (loss) related to interest rate swaps. As of December 31, 2021, there was approximately $17.1 million ~~respectively,~~ of unrealized losses included in accumulated other comprehensive ~~loss~~income (loss) related to interest rate ~~hedges that are effective in offsetting the variable cash flows.~~swaps. There was 0no ineffectiveness recorded ~~on the designated hedges~~ during the three month periods ended March 31, ~~2021~~2022 or ~~2020.~~2021. For the three months ended March 31, 2022 and 2021, ~~and 2020,~~ approximately ~~$7.3~~$4.9 million and ~~$0.8~~$7.3 million, respectively, of the amounts included in accumulated other comprehensive ~~loss~~income (loss) were reclassified into interest expense for the interest rate ~~swaps that have been designated as cash flow hedges.~~swaps. Approximately ~~$27.1~~$3.3 million of the unrealized losses

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included in accumulated other comprehensive ~~loss~~income (loss) at March 31, ~~2021~~2022 is expected to be reclassified into ~~interest expense~~earnings within the next 12 months.

9.8. Fair Value

Fair Value Measurement

Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market. The fair value hierarchy has three levels of inputs, both observable and unobservable:

•Level 1 — Inputs include quoted market prices in an active market for identical assets or liabilities.

•Level 2 — Inputs are market data, other than Level 1, that are observable either directly or indirectly. Level 2 inputs include quoted market prices for similar assets or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.

•Level 3 — Inputs are unobservable and corroborated by little or no market data.

Fair Value of Financial Instruments

The Company used the following market assumptions and/or estimation methods:

•Cash and cash equivalents, restricted cash reserves, hotel and other receivables, accounts payable and other liabilities — The carrying amounts reported in the consolidated balance sheets for these financial instruments approximate fair value because of their short term maturities.

•Debt — The Company estimated the fair value of the Senior Notes by using publicly available trading prices, which are Level 21 inputs in the fair value hierarchy. The Company estimated the fair value of the Revolver and Term Loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms, which are Level 2 and Level 3 inputs in the fair value hierarchy. The Company estimated the fair value of the mortgage loans by using a discounted cash flow model and incorporating various inputs and assumptions for the effective borrowing rates for debt with similar terms and the loan to estimated fair value of the collateral, which are Level 3 inputs in the fair value hierarchy.

The fair value of the Company's debt was as follows (in thousands):


		March 31, 2021				December 31, 2020					March 31, 2022				December 31, 2021
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value		Carrying Value		Fair Value
Senior Notes		$	494,578	$	487,829	$	495,759	$	484,229
Senior Notes, net										Senior Notes, net	$	987,534	$	939,100	$	986,942	$	999,060
Revolver and Term Loans, net	Revolver and Term Loans, net	1,360,485		1,339,559		1,568,304		1,543,636		Revolver and Term Loans, net	815,439		806,218		1,015,004		1,006,647
Mortgage loans, net	Mortgage loans, net	522,918		512,443		523,668		512,118		Mortgage loans, net	407,752		403,211		407,492		401,387
Debt, net	Debt, net	$	2,377,981	$	2,339,831	$	2,587,731	$	2,539,983	Debt, net	$	2,210,725	$	2,148,529	$	2,409,438	$	2,407,094

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Recurring Fair Value Measurements

The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of March 31, ~~2021~~2022 (in thousands):


		Fair Value at March 31, 2021									Fair Value at March 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Interest rate swap asset	Interest rate swap asset	$	0	$	584	$	0	$	584	Interest rate swap asset	$	—	$	20,529	$	—	$	20,529
Interest rate swap liability	Interest rate swap liability	0		(52,914)		0		(52,914)		Interest rate swap liability	—		(4,494)		—		(4,494)
Total	Total	$	0	$	(52,330)	$	0	$	(52,330)	Total	$	—	$	16,035	$	—	$	16,035

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The following table presents the Company’s fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, ~~2020~~2021 (in thousands):


		Fair Value at December 31, 2020									Fair Value at December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total

Interest rate swap asset										Interest rate swap asset	$	—	$	1,548	$	—	$	1,548
Interest rate swap liability	Interest rate swap liability	$	0	$	(69,050)	$	0	$	(69,050)	Interest rate swap liability	—		(21,465)		—		(21,465)
Total	Total	$	0	$	(69,050)	$	0	$	(69,050)	Total	$	—	(19,917)		$	—	$	(19,917)

The fair values of the derivative financial instruments are determined using widely accepted valuation techniques including a discounted cash flow analysis on the expected cash flows for each derivative. The Company determined that the significant inputs, such as interest yield curves and discount rates, used to value its derivatives fall within Level 2 of the fair value hierarchy and that the credit valuation adjustments associated with the Company’s counterparties and its own credit risk utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. As of March 31, ~~2021,~~2022, the Company assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and determined that the credit valuation adjustments were not significant to the overall valuation of its derivatives. As a result, the Company determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.

~~10.~~9. Income Taxes

The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company is still continuing to provide a full valuation allowance against the deferred tax assets.

The Company had 0no accruals for tax uncertainties as of March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

~~11.~~10. Commitments and Contingencies

Restricted Cash Reserves

The Company is obligated to maintain cash reserve funds for future capital expenditures at the hotels (including the periodic replacement or refurbishment of FF&E as determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents). The management agreements, franchise agreements and/or mortgage loan documents require the Company to reserve cash ranging typically from 3.0% to 5.0% of the individual hotel’s revenues. Any unexpended amounts will remain the property of the Company upon termination of the management agreements, franchise agreements or mortgage loan documents. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, approximately ~~$33.4~~$43.3 million and ~~$35.0~~$48.5 million,

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respectively, was available in the restricted cash reserves for future capital expenditures, real estate taxes, insurance and ~~insurance. In addition,~~debt obligations where certain lenders held restricted cash due to ~~the effects of the COVID-19 pandemic on its operations, the Company has worked with the hotel brands, third-party managers and lenders to allow the use of available restricted~~a cash ~~reserves to cover operating shortfalls at certain hotels.~~trap event.

Litigation

Neither the Company nor any of its subsidiaries is currently involved in any regulatory or legal proceedings that management believes will have a material and adverse effect on the Company's financial position, results of operations or cash flows.

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Management Agreements

As of March 31, ~~2021, 101~~2022, 96 of the Company's consolidated hotel properties were operated pursuant to ~~long-term~~ management agreements with initial terms ranging from one to 25 years. This number includes 29 hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. Each management company receives a base management fee between 1.75% and 3.5% of hotel revenues. Management agreements that include the benefits of a franchise agreement incur a base management fee between ~~3.0%~~2.0% and 7.0% of hotel revenues. The management companies are also eligible to receive an incentive management fee if hotel operating income, as defined in the management agreements, exceeds certain thresholds. The incentive management fee is generally calculated as a percentage of hotel operating income after the Company has received a priority return on its investment in the hotel.

Management fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive ~~loss.~~income (loss). For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company incurred management fee expense of approximately ~~$3.2~~$7.9 million and ~~$8.0~~$3.2 million, respectively.

Franchise Agreements

As of March 31, ~~2021, 71~~2022, 66 of the Company’s hotel properties were operated under franchise agreements with initial terms ranging from one to 30 years. This number excludes 29 hotel properties that receive the benefits of a franchise agreement pursuant to management agreements with Hilton, Hyatt, or Marriott. In addition, one hotel is not operated with a hotel brand so it does not have a franchise agreement. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee, between 3.0% and 6.0% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs between 1.0% and 4.3% of room revenue. Certain hotels are also charged a royalty fee ofbetween 1.5% and 3.0% of food and beverage revenues.

Franchise fees are included in management and franchise fee expense in the accompanying consolidated statements of operations and comprehensive ~~loss.~~income (loss). For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company incurred franchise fee expense of approximately ~~$6.7~~$13.6 million and ~~$13.8~~$6.7 million, respectively.

Wyndham Agreements

In 2019, the Company entered into an agreement with Wyndham to terminate the net operating income guarantee and received termination payments totaling $36.0 million from Wyndham, which amount is included in advance deposits and deferred revenue in the accompanying consolidated balance sheets. Effective January 1, 2020, the Company began recognizing the termination payments over the estimated term of the transitional agreements as a reduction to management and franchise fee expense in the consolidated statements of operations and comprehensive loss.Wyndham. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized approximately $1.0 million and $4.6 million, respectively, as a reduction toin management and franchise fee expense related to the amortization of the termination ~~payments.~~payments over the remaining terms of the management agreements.

~~12.~~11. Equity

Common Shares of Beneficial Interest

During the three months ended March 31, ~~2021, the Company did not repurchase any common shares.~~

~~During the three months ended March 31, 2020, the Company repurchased~~2022 and ~~retired 5,489,335 common shares for approximately $62.6 million.~~

~~During the three months ended March 31,~~ 2021, ~~and 2020,~~ the Company declared a cash dividend of $0.01 per common share.

On April 29, 2022, the Company's board of trustees approved a new share repurchase program to acquire up to an aggregate of $250.0 million of common and preferred shares from May 9, 2022 to May 8, 2023 (the "2022 Share Repurchase Program").

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Series A Preferred Shares

During the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company declared a cash dividend of $0.4875 on each Series A Preferred Share.

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Noncontrolling Interest in Consolidated Joint Ventures

The Company consolidates the joint venture that owns the DoubleTree Metropolitan Hotel New York City, which has a third-party partner that owns a noncontrolling 1.7% ownership interest in the joint venture. In addition, the Company consolidates the joint venture that owns The Knickerbocker, which has a third-party partner that owns a noncontrolling 5% ownership interest in the joint venture. The third-party ownership interests are included in the noncontrolling interest in consolidated joint ventures on the consolidated balance sheets.

Noncontrolling Interest in the Operating Partnership

The Company consolidates the Operating Partnership, which is a majority-owned limited partnership that has a noncontrolling interest. The outstanding OP units held by the limited partners are redeemable for cash, or at the option of the Company, for a like number of common shares. As of March 31, ~~2021, 772,293~~2022, 771,831 outstanding OP units were held by the limited partners. The noncontrolling interest is included in the noncontrolling interest in the Operating Partnership on the consolidated balance sheets.

~~13.~~12. Equity Incentive Plan

The Company may issue share-based awards to officers, employees, non-employee trustees and other eligible persons under the RLJ Lodging Trust ~~2015~~2021 Equity Incentive Plan (the ~~"2015~~"2021 Plan"). The ~~2015~~2021 Plan provides for a maximum of ~~7,500,000~~6,828,527 common shares to be issued in the form of share options, share appreciation rights, restricted share awards, unrestricted share awards, share units, dividend equivalent rights, long-term incentive units, other equity-based awards and cash bonus awards.

On April 30, 2021, the Company's shareholders approved the RLJ Lodging Trust 2021 Equity Incentive Plan (the "2021 Plan"). The maximum number of common shares that will be available for issuance under the 2021 Plan will be equal to the sum of (1) 5,150,000 common shares, (2) the number of shares available for future awards under the 2015 Plan as of the effective date of the 2021 Plan and (3) the number of shares related to awards outstanding under the 2015 Plan as of the effective date of the 2021 Plan that thereafter terminate by expiration or forfeiture, cancellation, or otherwise without the issuance of such shares. Other than the maximum number of common shares available for issuance under the 2021 Plan, there were no significant changes from the 2015 Plan.

Share Awards

From time to time, the Company may award unvested restricted shares as compensation to officers, employees and non-employee trustees. The issued shares vest over a period of time as determined by the board of trustees at the date of grant. The Company recognizes compensation expense for time-based unvested restricted shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures.

Non-employee trustees may also elect to receive unrestricted shares as compensation that would otherwise be paid in cash for their services. The shares issued to non-employee trustees in lieu of cash compensation are unrestricted and include no vesting conditions. The Company recognizes compensation expense for the unrestricted shares issued in lieu of cash compensation on the date of issuance based upon the fair market value of the shares on that date.

A summary of the unvested restricted shares as of March 31, ~~2021~~2022 is as follows:


		2021				2022
		Number of Shares	Weighted-Average Grant Date Fair Value			Number of Shares	Weighted-Average Grant Date Fair Value
Unvested at January 1, 2021		1,252,228	$	15.17
Unvested at January 1, 2022					Unvested at January 1, 2022	2,380,283	$	15.43
Granted	Granted	0	0		Granted	432,779	15.22
Vested	Vested	(249,754)	15.52		Vested	(234,897)	15.63
Forfeited	Forfeited	(1,382)	11.29		Forfeited	(4,629)	13.34
Unvested at March 31, 2021		1,001,092	$	15.09
Unvested at March 31, 2022					Unvested at March 31, 2022	2,573,536	$	15.38

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized approximately ~~$1.9~~$3.5 million and ~~$2.1~~$1.9 million, respectively, of share-based compensation expense related to restricted share awards. As of March 31, ~~2021,~~2022, there

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was ~~$11.7~~$29.8 million of total unrecognized compensation costs related to unvested restricted share awards and these costs are expected to be recognized over a weighted-average period of ~~2.3~~2.2 years. The total fair value of the shares vested (calculated as the number of shares multiplied by the vesting date share price) during the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 was approximately ~~$3.7~~$3.4 million and ~~$2.0~~$3.7 million, respectively.

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Performance Units

From time to time, the Company may award performance units as compensation to officers and employees. The performance units granted prior to 2021 vest over a four year period, including three years of performance-based vesting (the “performance units measurement period”) plus an additional one year of time-based vesting. ~~The performance units granted in 2021 vest at the end of a three year period.~~ These performance units may convert into restricted shares at a range of 0% to 200% of the number of performance units granted contingent upon the Company achieving an absolute total shareholder return (40% of ~~award for performance units granted prior to 2021 and 25% of award for performance units granted in 2021)~~award) and a relative total shareholder return (60% of ~~award for performance units granted prior to 2021 and 75% of award for performance units granted in 2021)~~award) over the measurement period at specified percentiles of the peer group, as defined by the awards. ~~For performance units granted prior to 2021, if~~If at the end of the performance units measurement period the target criterion is met, then 50% of the performance units that are earned will vest at the end of the measurement period. The remaining 50% convert to restricted shares that will vest on the one year anniversary of the end of the measurement period. For any restricted shares issued upon conversion, the award recipient will be entitled to receive payment of an amount equal to all dividends that would have been paid if such restricted shares had been issued at the beginning of the performance units measurement period. The fair value of the performance units is determined using a Monte Carlo simulation, and an expected term equal to the requisite service period for the awards of four years. The Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 50% of the grant date fair value over three years and 50% of the grant date fair value over four years.

The performance units granted in 2021 ifand 2022 vest at the end of a three year period. These performance units may convert into restricted shares at a range of 0% to 200% of the number of performance units granted contingent upon the Company achieving an absolute total shareholder return (25% of award) and a relative shareholder return (75% of award) over the measurement period at specified percentiles of the peer group, as defined by the awards. At the end of the performance units measurement period the target criterion is met, 100% of the performance units that are earned will vest immediately. The award recipients will not be entitled to receive any dividends prior to the date of conversion. For any restricted shares issued upon conversion, the award recipient will be entitled to receive payment of an amount equal to all dividends that would have been paid if such restricted shares had been issued at the beginning of the performance units measurement period. The fair value of the performance units is determined using a Monte Carlo simulation, and an expected term equal to the requisite service period for the awards of four years. For performance units granted prior to 2021, the Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 50% of the grant date fair value over three years and 50% of the grant date fair value over four years. For performance units granted in 2021 and 2022, the Company estimates the compensation expense for the performance units on a straight-line basis using a calculation that recognizes 100% of the grant date fair value over three years.

A summary of the performance unit awards is as follows:

Date of Award Number of
Units Granted
Grant Date Fair
Value Conversion Range Risk Free Interest Rate Volatility
February 2018 (1) 264,000 $13.99 0% to 150% 2.42% 27.44%
February 2019 260,000 $19.16 0% to 200% 2.52% 27.19%
February 2020 489,000 $12.06 0% to 200% 1.08% 23.46%
February 2021 431,151 $20.90 0% to 200% 0.23% 69.47%


Date of Award	Number of Units Granted	Grant Date Fair Value	Conversion Range	Risk Free Interest Rate	Volatility
February 2019 (1)	260,000	$19.16	0% to 200%	2.52%	27.19%
February 2020	489,000	$11.59	0% to 200%	1.08%	23.46%
February 2021	431,151	$20.90	0% to 200%	0.23%	69.47%
February 2022	407,024	$21.96	0% to 200%	1.7%	70.15%

(1) In February ~~2021,~~2022, following the end of the measurement period, the Company met certain threshold criterion and the performance units ~~were converted~~will convert into approximately ~~26,000~~133,000 restricted shares.

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recognized approximately ~~$0.9~~$1.7 million and ~~$0.6~~$0.9 million, respectively, of share-based compensation expense related to the performance unit awards. As of March 31, ~~2021,~~2022, there was ~~$15.2~~$16.5 million of total unrecognized compensation costs related to the performance unit awards and these costs are expected to be recognized over a weighted-average period of ~~2.6~~2.3 years.

As of March 31, ~~2021,~~2022, there were ~~903,338~~3,493,984 common shares available for future grant under the ~~2015~~2021 Plan, which includes potential common shares that may convert from performance units if certain target criterion is met.

~~14.~~13. Earnings per Common Share

Basic earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period excluding the weighted-average number of unvested restricted shares outstanding during the period. Diluted earnings per common share is calculated by dividing net income attributable to common shareholders by the weighted-average number of common shares outstanding during the period, plus any shares that could potentially be outstanding during the period. The potential shares consist of the unvested restricted share grants and unvested performance units, calculated using the treasury stock method. Any anti-dilutive shares have been excluded from the diluted earnings per share calculation.

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Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating shares and are considered in the computation of earnings per share pursuant to the two-class method. If there were any undistributed earnings allocable to the participating shares, they would be deducted from net income attributable to common shareholders used in the basic and diluted earnings per share calculations.

The limited partners’ outstanding OP units (which may be redeemed for common shares under certain circumstances) have been excluded from the diluted earnings per share calculation as there was no effect on the amounts for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, since the limited partners’ share of income would also be added back to net income attributable to common shareholders.

The computation of basic and diluted earnings per common share is as follows (in thousands, except share and per share data):


		For the three months ended March 31,						For the three months ended March 31,
			2021		2020				2022		2021
Numerator:	Numerator:						Numerator:
Net loss attributable to RLJ	Net loss attributable to RLJ		$	(77,985)	$	(29,324)	Net loss attributable to RLJ		$	(15,247)	$	(77,985)
Less: Preferred dividends	Less: Preferred dividends		(6,279)		(6,279)		Less: Preferred dividends		(6,279)		(6,279)
Less: Dividends paid on unvested restricted shares	Less: Dividends paid on unvested restricted shares		(10)		(13)		Less: Dividends paid on unvested restricted shares		(26)		(10)
Less: Undistributed earnings attributable to unvested restricted shares	Less: Undistributed earnings attributable to unvested restricted shares		0		0		Less: Undistributed earnings attributable to unvested restricted shares		—		—
Net loss attributable to common shareholders excluding amounts attributable to unvested restricted shares	Net loss attributable to common shareholders excluding amounts attributable to unvested restricted shares		$	(84,274)	$	(35,616)	Net loss attributable to common shareholders excluding amounts attributable to unvested restricted shares		$	(21,552)	$	(84,274)

Denominator:	Denominator:						Denominator:

Weighted-average number of common shares - basic and diluted	Weighted-average number of common shares - basic and diluted		163,826,009		167,149,733		Weighted-average number of common shares - basic and diluted		164,179,661		163,826,009

Net loss per share attributable to common shareholders - basic and diluted	Net loss per share attributable to common shareholders - basic and diluted		$	(0.51)	$	(0.21)	Net loss per share attributable to common shareholders - basic and diluted		$	(0.13)	$	(0.51)

2019

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~~15.~~14. Supplemental Information to Statements of Cash Flows (in thousands)


		For the three months ended March 31,					For the three months ended March 31,
		2021		2020			2022		2021
Reconciliation of cash, cash equivalents, and restricted cash reserves	Reconciliation of cash, cash equivalents, and restricted cash reserves					Reconciliation of cash, cash equivalents, and restricted cash reserves
Cash and cash equivalents	Cash and cash equivalents	$	647,844	$	1,157,818	Cash and cash equivalents	$	479,047	$	647,844
Restricted cash reserves	Restricted cash reserves	33,391		43,548		Restricted cash reserves	43,254		33,391
Cash, cash equivalents, and restricted cash reserves	Cash, cash equivalents, and restricted cash reserves	$	681,235	$	1,201,366	Cash, cash equivalents, and restricted cash reserves	$	522,301	$	681,235

Interest paid	Interest paid	$	20,886	$	10,625	Interest paid	$	33,911	$	20,886

Income taxes paid	Income taxes paid	$	134	$	104	Income taxes paid	$	6	$	134

Operating cash flow lease payments for operating leases	Operating cash flow lease payments for operating leases	$	2,880	$	3,763	Operating cash flow lease payments for operating leases	$	3,629	$	2,880

Supplemental investing and financing transactions	Supplemental investing and financing transactions					Supplemental investing and financing transactions

In connection with the sale of hotel property, the Company recorded the following:
Sale of hotel property		$	4,410	$	0
In connection with the sale of hotel properties, the Company recorded the following:						In connection with the sale of hotel properties, the Company recorded the following:
Sales price						Sales price	$	35,450	$	4,410
Transaction costs	Transaction costs	(300)		102		Transaction costs	(599)		(300)
Operating prorations	Operating prorations	(120)		0		Operating prorations	(726)		(120)
Proceeds from the sale of hotel property, net		$	3,990	$	102
Proceeds from the sale of hotel properties, net						Proceeds from the sale of hotel properties, net	$	34,125	$	3,990

Supplemental non-cash transactions	Supplemental non-cash transactions					Supplemental non-cash transactions
Accrued capital expenditures	Accrued capital expenditures	$	9,485	$	9,040	Accrued capital expenditures	$	1,454	$	9,485

15.Subsequent Events

In April 2022, the Company sold the 164-room SpringHill Suites Denver North Westminster.

In April 2022, the Company exercised the first extension option on a mortgage loan to extend the maturity to April 2023.

In April 2022, the 2022 Share Repurchase Program was approved and the Revolver and Term Loans were amended to allow for repurchases of the Company's shares.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this report, as well as the information contained in our Annual Report, ~~on Form 10-K for the year ended December 31, 2020, filed with the SEC on February 26, 2021 (the "Annual Report"),~~ which is accessible on the SEC’s website at www.sec.gov.

Statement Regarding Forward-Looking Information

The following information contains certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, that are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act ~~of 1933, as amended~~ and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally are identified by the use of the words "believe," "project," "expect," "anticipate," "estimate," "plan," "may," "will," "will continue," "intend," "should," or similar expressions. Although we believe that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, beliefs and expectations, such forward-looking statements are not predictions of future events or guarantees of future performance and our actual results could differ materially from those set forth in the forward-looking statements.

Currently, one of the most significant factors that could cause actual outcomes to differ materially from our forward-looking statements is the continued adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows and performance, the real estate market and the global economy and

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financial markets. The extent to which the COVID-19 pandemic impacts us will depend on future developments, which are highly uncertain and cannot be predicted with certainty, including the duration of the pandemic and its impact on the demand for travel and on levels of consumer confidence, the actions governments, businesses and individuals take in response to the pandemic, including limiting or banning travel, the impact of the COVID-19 pandemic and actions taken in response to the pandemic on global and regional economies, travel and economic activity, the speed and effectiveness of vaccine and treatment developments and their deployment, including public adoption rates of COVID-19 vaccines and booster shots, and their effectiveness against emerging variants of COVID-19, and the pace of recovery when the COVID-19 pandemic subsides, among others. Moreover, investors are cautioned to interpret many of the risks identified under

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the section entitled “Risk Factors” in our Form 10-K for the year ended December 31, ~~2020~~2021 as being heightened as a result of the ongoing and numerous adverse impacts of the COVID-19 pandemic.

Additional factors that might cause such a difference include the following: increased direct competition, changes in government regulations or accounting rules, changes in local, national and global real estate conditions, declines in the lodging industry, seasonality of the lodging industry, risks related to natural disasters, such as earthquakes and hurricanes, hostilities, including international military conflicts, future terrorist attacks or fear of hostilities that affect travel, public health and/or economic activity and epidemics and/or pandemics, including COVID-19, third-party operator risk, change in operational costs, ramp up of the future economic recovery and re-opening of hotels, our ability to obtain lines of credit or permanent financing on satisfactory terms, changes in interest rates, inflation, duration and access to capital through offerings of our common and preferred shares of beneficial interest, or debt, our ability to identify suitable acquisitions, our ability to close on identified acquisitions and integrate those businesses and inaccuracies of our accounting estimates. Given these uncertainties, undue reliance should not be placed on such statements.

Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. We caution investors not to place undue reliance on these forward-looking statements and urge investors to carefully review the disclosures we make concerning risks and uncertainties in the sections entitled "Forward-Looking Statements," "Risk Factors," and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report, as well as the risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q and identified in other documents filed by us with the SEC.

Overview

We are a self-advised and self-administered Maryland ~~real estate investment trust ("REIT")~~REIT that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. ~~Our~~We own a geographically diversified portfolio of hotels ~~are concentrated~~located in high-growth urban markets that ~~we believe~~ exhibit multiple demand generators and attractive long-term growth prospects. We believe ~~premium-branded, focused-service and compact full-service hotels with these characteristics~~that our investment strategy allows us to generate high levels of Revenue per Available Room ("RevPAR"), strong operating margins and attractive returns.

Our strategy is to own primarily premium-branded, focused-service and compact full-service hotels. Focused-service and compact full-service hotels typically generate most of their revenue from room rentals, have limited food and beverage outlets and meeting space, and require fewer employees than traditional full-service hotels. We believe these types of hotels have the potential to generate attractive returns relative to other types of hotels due to their ability to achieve RevPAR levels at or close to those achieved by traditional full-service hotels while achieving higher profit margins due to their more efficient operating model and less volatile cash flows.

As of March 31, ~~2021,~~2022, we owned ~~102~~97 hotel properties with approximately ~~22,600~~21,400 rooms, located in 2322 states and the District of Columbia. We owned, through wholly-owned subsidiaries, a 100% interest in 9895 of our hotel properties, a ~~98.3% controlling interest in the DoubleTree Metropolitan Hotel New York City, a~~ 95% controlling interest in ~~The Knickerbocker,~~one hotel property, and a 50% ~~interests~~non-controlling interest in ~~entities~~an entity owning ~~two~~one hotel ~~properties.~~property. We consolidate our real estate interests in the ~~100~~96 hotel properties in which we hold a controlling ~~financial~~ interest, and we record the real estate interests in the ~~two~~one hotel ~~properties~~property in which we hold ~~an indirect~~a 50% non-controlling interest using the equity method of accounting. We lease ~~101~~96 of the ~~102~~97 hotel properties to our ~~taxable REIT subsidiaries ("TRS"),~~TRS, of which we own a controlling financial interest.

For U.S. federal income tax purposes, we elected to be taxed as a REIT commencing with our taxable year ended December 31, 2011. Substantially all of our assets and liabilities are held by, and all of our operations are conducted through our ~~operating partnership RLJ Lodging Trust, L.P. (the "Operating Partnership").~~Operating Partnership. We are the sole general partner of the Operating Partnership. As of March 31, ~~2021,~~2022, we owned, through a combination of direct and indirect interests, 99.5% of the units of limited partnership interest in the ~~Operating Partnership ("~~OP ~~units").~~units.

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COVID-19

The global outbreak of ~~the novel coronavirus, or~~ COVID-19 and the public health measures that have been undertaken in response have had, and will likely continue to have, ~~a material adverse~~an impact on the global economy and all aspects of our business. Significant events affecting travel, including the COVID-19 pandemic, typically have an impact on booking patterns, with the full extent of the impact generally determined by the duration of the event and its impact on travel decisions. The effects of the COVID-19 pandemic ~~including related government restrictions, border closings, quarantining, “shelter-in-place” orders and “social distancing,”~~could have ~~significantly limited non-essential travel and also resulted in increased national unemployment and possible~~ lasting changes in consumer behavior that ~~will~~could create headwinds for our hotel ~~properties even after~~

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~~government restrictions are lifted.~~properties. Since we cannot estimate when the COVID-19 pandemic and the responsive measures to combat it will end, we cannot estimate the ultimate operational and financial impact of the COVID-19 pandemic on our business.

The effects of the COVID-19 pandemic have significantly impacted our operations, and combined with macroeconomic trends such as ~~the current economic recession,~~ reduced ~~consumer~~business spending, including on travel, and increased unemployment, lead us to believe that the ongoing effects of the COVID-19 pandemic on our operations will continue to have a material ~~adverse~~ impact on our financial results and liquidity. ~~Such adverse impact may continue well beyond the containment of such outbreak and vaccination distribution.~~

~~As of March 31, 2021, operations at 4 hotels remained suspended; subsequent~~

2022 Significant Activities

Our significant activities reflect our commitment to creating long-term shareholder value through enhancing our hotel portfolio's quality, recycling capital and maintaining a prudent capital structure. The following significant activities have taken place in 2022:

•Paid off the ~~end of the quarter, we reopened 1 of the suspended hotels. The remaining 3 suspended~~$200.0 million outstanding balance on our Revolver using cash on hand.

•Sold two hotel properties ~~are located in New York City~~for a combined sales price of approximately $50.0 million.

•Exercised a one-year extension option on a mortgage loan extending the maturity to April 2023.

•Approved a new share repurchase program and ~~San Francisco and we will continue~~completed a credit facility amendment to evaluate reopening these hotels based on market conditions and other factors. All open hotels are currently operating under aggressive operating cost containment plans, including significantly reduced staffing, eliminationallow for repurchases of ~~non-essential amenities and services, and modified food and beverage offerings.~~our shares.

Our Customers

The majority of our hotels consist of premium-branded, focused-service and compact full-service hotels. As a result of this property profile, the majority of our customers are transient in nature. Transient business typically represents individual business or leisure travelers. The majority of our hotels are located in business districts within major metropolitan areas. Accordingly, business travelers represent the majority of the transient demand at our hotels. As a result, macroeconomic factors impacting business travel have a greater effect on our business than factors impacting leisure travel.

Group business is typically defined as a minimum of 10 guestrooms booked together as part of the same piece of business. Group business may or may not use the meeting space at any given hotel. Given the limited meeting space at the majority of our hotels, group business that utilizes meeting space represents a small component of our customer base.

A number of our hotel properties are affiliated with brands marketed toward extended-stay customers. Extended-stay customers are generally defined as those staying five nights or longer.

Our Revenues and Expenses

Our revenues are primarily derived from the operation of hotels, including the sale of rooms, food and beverage revenue and other revenue, which consists of parking fees, resort fees, gift shop sales and other guest service fees.

Our operating costs and expenses consist of the costs to provide hotel services, including room expense, food and beverage expense, management and franchise fees and other operating expenses. Room expense includes housekeeping and front office wages and payroll taxes, reservation systems, room supplies, laundry services and other costs. Food and beverage expense primarily includes the cost of food, the cost of beverages and the associated labor costs. Other operating expenses include labor and other costs associated with the other operating department revenue, as well as labor and other costs associated with administrative departments, sales and marketing, repairs and maintenance and utility costs. Our hotels that are subject to franchise agreements are charged a royalty fee, plus additional fees for marketing, central reservation systems and other franchisor costs, in order for the hotel properties to operate under the respective brands. Franchise fees are based on a percentage of room revenue and for certain hotels additional franchise fees are charged for food and beverage revenue. Our hotels are managed by independent, third-party management companies under long-term agreements pursuant to which the management companies typically earn base and incentive management fees based on the levels of revenues and profitability of

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each individual hotel property. We generally receive a cash distribution from the management companies on a monthly basis, which reflects hotel-level sales less hotel-level operating expenses.

Key Indicators of Financial Performance

We use a variety of operating, financial and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with ~~accounting principles generally accepted in the United States of America ("GAAP")~~GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including industry standard statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisition opportunities to determine each hotel's contribution to cash flow and its potential to provide attractive long-term total returns. The key indicators include:

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•Average Daily Rate ("ADR")

•Occupancy

•RevPAR

ADR, Occupancy and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel property level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only room revenue.

We also use non-GAAP measures such as FFO, Adjusted FFO, EBITDA, EBITDAre and Adjusted EBITDA to evaluate the operating performance of our business. For a more in depth discussion of the non-GAAP measures, please refer to the "Non-GAAP Financial Measures" section.

Critical Accounting Policies and Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. It is possible that the actual amounts may differ significantly from these estimates and assumptions. We evaluate our estimates, assumptions and judgments on an ongoing basis, based on information that is available to us, our business and industry experience, and various other matters that we believe are reasonable and appropriate for consideration under the circumstances. Our Annual Report ~~on Form 10-K for the year ended December 31, 2020~~ contains a discussion of our critical accounting policies and estimates. There have been no significant changes to our critical accounting policies and estimates since December 31, ~~2020.~~2021.

Results of Operations

At March 31, ~~2021~~2022 and ~~2020,~~2021, we owned ~~102~~97 and ~~104~~102 hotel properties, respectively. Based on when a hotel property is acquired, sold or closed for renovation, the operating results for certain hotel properties are not comparable for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021. The non-comparable properties include eight hotel properties ~~include one disposition~~ that ~~was~~were sold or otherwise disposed and three acquisitions that were completed in ~~2020~~2021 and one disposition that was completed in ~~2021.~~2022.

COVID-19

~~Beginning~~During the three months ended March 31, 2022, we benefited from significant growth in ~~March 2020, we experienced~~demand as the easing of government restrictions improved mobility and overall confidence in travel. These trends, combined with our continuing stringent cost containment initiatives, led to a significant ~~decline~~improvement in ~~occupancy and RevPAR due to the COVID-19 pandemic. We believe the ongoing effects of the COVID-19 pandemic on~~ our operations continue to have a material adverse impact on our financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak. The economic downturn resulting from the COVID-19 pandemic has significantly impacted our business and the overall lodging industry. Operations at certain of our hotel properties remain suspended, while our other hotel properties are operating in a limited capacity, as a result of these operational changes, the results of operations for the three months ended March 31, ~~2021 will not be comparable to~~2022 over the same period in ~~2020.~~the prior year.

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Comparison of the three months ended March 31, ~~2021~~2022 to the three months ended March 31, ~~2020~~2021


		For the three months ended March 31,									For the three months ended March 31,
		2021		2020		$ Change		% Change			2022		2021		$ Change
		(amounts in thousands)									(amounts in thousands)
Revenues	Revenues									Revenues
Operating revenues	Operating revenues									Operating revenues
Room revenue	Room revenue	$	102,772	$	218,892	$	(116,120)	(53.0)	%	Room revenue	$	205,779	$	102,772	$	103,007
Food and beverage revenue	Food and beverage revenue	6,242		30,767		(24,525)		(79.7)	%	Food and beverage revenue	20,901		6,242		14,659
Other revenue	Other revenue	10,538		15,822		(5,284)		(33.4)	%	Other revenue	16,219		10,538		5,681
Total revenues	Total revenues	119,552		265,481		(145,929)		(55.0)	%	Total revenues	242,899		119,552		123,347
Expenses	Expenses									Expenses
Operating expenses	Operating expenses									Operating expenses
Room expense	Room expense	29,427		63,753		(34,326)		(53.8)	%	Room expense	53,828		29,427		24,401
Food and beverage expense	Food and beverage expense	4,556		26,381		(21,825)		(82.7)	%	Food and beverage expense	16,169		4,556		11,613
Management and franchise fee expense	Management and franchise fee expense	5,361		17,144		(11,783)		(68.7)	%	Management and franchise fee expense	20,388		5,361		15,027
Other operating expense	Other operating expense	49,120		80,957		(31,837)		(39.3)	%	Other operating expense	68,654		49,120		19,534
Total property operating expenses	Total property operating expenses	88,464		188,235		(99,771)		(53.0)	%	Total property operating expenses	159,039		88,464		70,575
Depreciation and amortization	Depreciation and amortization	46,943		49,173		(2,230)		(4.5)	%	Depreciation and amortization	46,865		46,943		(78)
Impairment losses	Impairment losses	5,946		—		5,946		100.0	%	Impairment losses	—		5,946		(5,946)
Property tax, insurance and other	Property tax, insurance and other	20,081		28,692		(8,611)		(30.0)	%	Property tax, insurance and other	22,513		20,081		2,432
General and administrative	General and administrative	10,800		11,769		(969)		(8.2)	%	General and administrative	14,134		10,800		3,334
Transaction costs	Transaction costs	60		10		50		—	%	Transaction costs	62		60		2
Total operating expenses	Total operating expenses	172,294		277,879		(105,585)		(38.0)	%	Total operating expenses	242,613		172,294		70,319
Other income		465		579		(114)		(19.7)	%
Other income, net										Other income, net	7,285		465		6,820
Interest income	Interest income	384		2,966		(2,582)		(87.1)	%	Interest income	172		384		(212)
Interest expense	Interest expense	(27,895)		(23,813)		(4,082)		17.1	%	Interest expense	(24,561)		(27,895)		3,334
Gain on sale of hotel properties, net	Gain on sale of hotel properties, net	1,083		102		981		—	%	Gain on sale of hotel properties, net	1,417		1,083		334

Loss before equity in (loss) income from unconsolidated joint ventures		(78,705)		(32,564)		(46,141)		—	%
Equity in (loss) income from unconsolidated joint ventures		(298)		585		(883)		—	%
Loss before income tax (expense) benefit		(79,003)		(31,979)		(47,024)		—	%
Income tax (expense) benefit		(114)		1,150		(1,264)		—	%
Loss before equity in income (loss) from unconsolidated joint ventures										Loss before equity in income (loss) from unconsolidated joint ventures	(15,401)		(78,705)		63,304
Equity in income (loss) from unconsolidated joint ventures										Equity in income (loss) from unconsolidated joint ventures	122		(298)		420
Loss before income tax expense										Loss before income tax expense	(15,279)		(79,003)		63,724
Income tax expense										Income tax expense	(190)		(114)		(76)
Net loss	Net loss	(79,117)		(30,829)		(48,288)		—	%	Net loss	(15,469)		(79,117)		63,648
Net loss attributable to noncontrolling interests:	Net loss attributable to noncontrolling interests:									Net loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating Partnership										Noncontrolling interest in the Operating Partnership	104		396		(292)
Noncontrolling interest in consolidated joint ventures	Noncontrolling interest in consolidated joint ventures	736		1,313		(577)		(43.9)	%	Noncontrolling interest in consolidated joint ventures	118		736		(618)
Noncontrolling interest in the Operating Partnership		396		192		204		—	%

Net loss attributable to RLJ	Net loss attributable to RLJ	(77,985)		(29,324)		(48,661)		—	%	Net loss attributable to RLJ	(15,247)		(77,985)		62,738
Preferred dividends	Preferred dividends	(6,279)		(6,279)		—		—	%	Preferred dividends	(6,279)		(6,279)		—
Net loss attributable to common shareholders	Net loss attributable to common shareholders	$	(84,264)	$	(35,603)	$	(48,661)	—	%	Net loss attributable to common shareholders	$	(21,526)	$	(84,264)	$	62,738

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Revenues

Total revenues ~~decreased $145.9~~increased $123.3 million ~~or 55.0%,~~ to $242.9 million for the three months ended March 31, 2022 from $119.6 million for the three months ended March 31, ~~2021 from $265.5 million for the three months ended March 31, 2020.~~2021. The ~~decrease~~increase was the result of a ~~$116.1~~$103.0 million ~~decrease~~increase in room revenue, a ~~$24.5~~$14.7 million ~~decrease~~increase in food and beverage revenue, and a ~~$5.3~~$5.7 million ~~decrease~~increase in other revenue.

Room Revenue

Room revenue ~~decreased $116.1~~increased $103.0 million ~~or 53.0%,~~ to $205.8 million for the three months ended March 31, 2022 from $102.8 million for the three months ended March 31, ~~2021 from $218.9 million for the three months ended March 31, 2020.~~2021. The ~~decrease~~increase was the result of a ~~$0.5~~$101.5 million ~~decrease~~increase in room revenue attributable to the comparable properties, and a $1.5 million increase in room revenue attributable to the non-comparable ~~properties and a $115.7 million decrease in room revenue attributable to the comparable~~ properties. The ~~decrease~~increase in room revenue from the comparable properties was attributable to ~~a 52.4% decrease~~an increase in RevPAR, ~~primarily due~~including a significant increase in ADR, resulting from an increase in demand over the prior period. The increase was also attributable to the impact of hotels that were closed for all or a portion of the ~~COVID-19 pandemic.~~prior period being open for the entirety of the current period. Though RevPAR increased over the comparable period in 2021, it remained below the comparable period in 2019.

The following are the year-to-date key hotel operating statistics for the comparable ~~properties owned at March 31, 2021 and 2020, respectively:~~properties:


		For the three months ended March 31,									For the three months ended March 31,
		2021			2020			% Change			2022			2021			2019
Occupancy	Occupancy	43.0		%	60.5		%	(29.0)	%	Occupancy	61.2		%	44.6		%	76.4		%
ADR	ADR	$	118.63		$	176.81		(32.9)	%	ADR	$	175.57		$	120.05		$	189.87
RevPAR	RevPAR	$	50.99		$	107.04		(52.4)	%	RevPAR	$	107.39		$	53.54		$	145.01

Food and Beverage Revenue

Food and beverage revenue ~~decreased $24.5~~increased $14.7 million ~~or 79.7%,~~ to $20.9 million for the three months ended March 31, 2022 from $6.2 million for the three months ended March 31, 2021 ~~from $30.8 million for~~due to an increase in demand over the ~~three months ended March 31, 2020.~~prior period. The ~~decrease~~increase was ~~the result of a $24.5 million decrease in food and beverage revenue~~also attributable ~~to the comparable properties. The decrease in food and beverage revenue attributable to the comparable properties was primarily due~~ to the impact of hotels that were closed for all or a portion of the ~~COVID-19 pandemic.~~prior period being open for the entirety of the current period.

Other Revenue

Other revenue, which includes revenue derived from ancillary sources such as parking fees, resort fees, gift shop sales and other guest service fees, ~~decreased $5.3~~increased $5.7 million ~~or 33.4%,~~ to $16.2 million for the three months ended March 31, 2022 from $10.5 million for the three months ended March 31, ~~2021 from $15.8 million for the three months ended March 31, 2020.~~2021. The ~~decrease was due to a $5.3 million decrease~~increase in other revenue was primarily attributable to ~~the comparable properties~~an increase in parking, resort fees, and gift shop sales due to higher occupancy. Additionally, cancellation fees increased due to the ~~impact~~spread of the Omicron variant of COVID-19 ~~pandemic.~~in early 2022.

Property Operating Expenses

Property operating expenses ~~decreased $99.8~~increased $70.6 million ~~or 53.0%,~~ to $159.0 million for the three months ended March 31, 2022 from $88.5 million for the three months ended March 31, ~~2021 from $188.2 million for the three months ended March 31, 2020.~~2021. The ~~decrease~~increase was due to a $71.1 million increase in property operating expenses attributable to the comparable properties, which was partially offset by a $0.6 million decrease in property operating expenses attributable to the non-comparable ~~properties and a $99.1 million decrease in property operating expenses attributable to the comparable~~ properties.

The components of our property operating expenses for the comparable properties ~~owned at March 31, 2021 and 2020, respectively,~~ were as follows (in thousands):


		For the three months ended March 31,									For the three months ended March 31,
		2021		2020		$ Change		% Change			2022		2021		$ Change
Room expense	Room expense	$	29,427	$	63,598	$	(34,171)	(53.7)	%	Room expense	$	52,279	$	27,944	$	24,335
Food and beverage expense	Food and beverage expense	4,560		26,378		$	(21,818)	(82.7)	%	Food and beverage expense	15,747		4,470		11,277
Management and franchise fee expense	Management and franchise fee expense	5,361		17,121		$	(11,760)	(68.7)	%	Management and franchise fee expense	19,770		4,940		14,830
Other operating expense	Other operating expense	49,142		80,513		$	(31,371)	(39.0)	%	Other operating expense	66,555		45,868		20,687
Total property operating expenses	Total property operating expenses	$	88,490	$	187,610	$	(99,120)	(52.8)	%	Total property operating expenses	$	154,351	$	83,222	$	71,129

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The ~~decrease~~increase in property operating expenses attributable to the comparable properties was due toan increase in demand over the ~~impact of the COVID-19 pandemic.~~prior period. Management and franchise fee expense for ~~both~~ the three months ended March 31, 2022 and 2021 ~~and 2020~~

~~Table of Contents~~

included a reduction in management and franchise fee expense of $1.0 million and $4.6 million, respectively, related to the recognition of the Wyndham termination payment. The decrease in the recognition of the Wyndham termination payment was due to certain of the Wyndham agreements expiring in 2021 coupled with the remaining agreements being extended and recognized over a longer period.

Depreciation and Amortization

Depreciation and amortization expense decreased ~~$2.2~~$0.1 million ~~or 4.5%,~~ to $46.9 million for the three months ended March 31, ~~2021~~2022 from ~~$49.2~~$46.9 million for the three months ended March 31, 2020. The decrease was primarily related to a $2.1 million decrease in depreciation and amortization expense attributable to the comparable properties as a result of furniture, fixtures, and equipment at certain hotel properties that were fully depreciated in 2020.2021.

Impairment Losses

During the three months ended March 31, 2021, we recorded impairment losses of $5.9 million related to ~~agreements to sell~~ two hotel properties ~~expected to close~~that were sold in May 2021. There was no impairment recorded during the ~~second quarter 2021.~~three months ended March 31, 2022.

Property Tax, Insurance and Other

Property tax, insurance and other expense ~~decreased $8.6~~increased $2.4 million ~~or 30.0%,~~ to $22.5 million for the three months ended March 31, 2022 from $20.1 million for the three months ended March 31, ~~2021 from $28.7 million for the three months ended March 31, 2020.~~2021. The ~~decrease~~increase was attributable to a ~~$0.8~~$3.6 million increase in property tax, insurance and other expense attributable to the comparable properties, which was partially offset by a $1.2 million decrease in property tax, insurance and other expense attributable to the non-comparable ~~properties and a $7.8 million decrease in property tax, insurance and other expense attributable to the comparable~~ properties. The ~~decrease~~increase in property tax, insurance and other expense attributable to the comparable properties ~~included a decrease in rent expense due~~was primarily attributable to the impact of COVID-19, and a decrease in real estate tax expense due to decreases in real estate tax assessments, including final assessments of certain of our California hotels acquired in our merger with FelCor. The final assessment of these California hotels resulted in a benefit of $5.2 million during the three months ended March 31, 2021 related to the reversal of accrued real estate tax liabilities in excess of the amounts ~~owed.~~owed for certain of our California hotels acquired in our merger with FelCor Lodging Trust that did not recur in 2022. Additionally, the increase was attributable to an increase in insurance expense premiums and ground lease rent due to percentage rent obligations and increases based on the consumer price index. These increases were partially offset by decreases in other real estate tax assessments.

General and Administrative

General and administrative expense ~~decreased $1.0~~increased $3.3 million ~~or 8.2%,~~ to $14.1 million for the three months ended March 31, 2022 from $10.8 million for the three months ended March 31, ~~2021 from $11.8~~2021. The increase was primarily attributable to an increase in compensation expense, including non-cash compensation expense related to share-based awards granted during 2021.

Other Income, net

Other income increased $6.8 million to $7.3 million for the three months ended March 31, ~~2020 resulting~~2022 from ~~our efforts to reduce costs in response~~$0.5 million for the three months ended March 31, 2021. The increase was primarily attributable to the ~~COVID-19 pandemic.~~reclassification of unrealized gains from accumulated other comprehensive income (loss) due to the discontinuation of certain cash flow hedges.

Interest Expense

Interest expense decreased $3.3 million to $24.6 million for the three months ended March 31, 2022 from $27.9 million for the three months ended March 31, 2021. Interest expense decreased due to lower average debt balances and lower effective interest rates after taking into account the impact of interest rate swaps in each of the periods. The components of our interest expense for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 were as follows (in thousands):

For the three months ended March 31,
2021 2020 $ Change % Change
Senior Notes $ 5,942 $ 5,944 $ (2) — %
Revolver and Term Loans 17,178 10,652 6,526 61.3 %
Mortgage loans 3,454 4,640 (1,186) (25.6) %
Amortization of deferred financing costs 1,321 1,021 300 29.4 %
Undesignated interest rate swaps — 1,556 (1,556) (100.0) %
Total interest expense $ 27,895 $ 23,813 $ 4,082 17.1 %

Interest expense increased $4.1 million, or 17.1%, to $27.9 million for the three months ended March 31, 2021 from $23.8 million for the three months ended March 31, 2020. The increase in interest expense was primarily attributable to the outstanding balance on the Revolver that was drawn down in March 2020, and an increase in pricing as a result of the amendments of the Revolver and Term Loans. These increases were partially offset by lower interest rates on our variable rate mortgage loans during the three months ended March 31, 2021, and unrealized losses on certain discontinued cash flow hedges during the three months ended March 31, 2020 that did not recur in 2021.


	For the three months ended March 31,
	2022		2021		$ Change
Senior Notes	$	9,743	$	5,942	$	3,801
Revolver and Term Loans	9,968		17,178		(7,210)
Mortgage loans	3,210		3,454		(244)
Amortization of deferred financing costs	1,684		1,321		363
Non-cash interest expense related to interest rate hedges	(44)		—		(44)
Total interest expense	$	24,561	$	27,895	$	(3,334)

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Gain on Sale of Hotel Properties, net

During the three months ended March 31, 2022, we sold one hotel property for a sales price of approximately $35.5 million and recorded a net gain on sale of approximately $1.4 million. During the three months ended March 31, 2021, we sold one hotel property for a sales price of approximately $4.4 million and recorded a net gain on sale of approximately $1.1 million.

~~Equity in Loss from Unconsolidated Joint Ventures~~

Equity in loss from unconsolidated joint ventures increased $0.9 million to a loss of $0.3 million for the three months ended March 31, 2021 from income of $0.6 million for the three months ended March 31, 2020. The increase is primarily attributable to the impact of COVID-19.

~~Income Taxes~~

As part of our structure, we own TRSs that are subject to federal and state income taxes. Our effective tax rates were (0.2)% and 3.6% for the three months ended March 31, 2021 and 2020, respectively. Income tax expense increased $1.3 million to expense of $0.1 million for the three months ended March 31, 2021 from a benefit of $1.2 million for the three months ended March 31, 2020 primarily attributable to the provisions of a full valuation allowance against net operating losses incurred during the quarter.

Non-GAAP Financial Measures

We consider the following non-GAAP financial measures useful to investors as key supplemental measures of our performance: (1) FFO, (2) Adjusted FFO, (3) EBITDA, (4) EBITDAre and (5) Adjusted EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income or loss as a measure of our operating performance. FFO, Adjusted FFO, EBITDA, EBITDAre, and Adjusted EBITDA, as calculated by us, may not be comparable to FFO, Adjusted FFO, EBITDA, EBITDAre and Adjusted EBITDA as reported by other companies that do not define such terms exactly as we define such terms.

Funds From Operations

We calculate funds from operations ("FFO") in accordance with standards established by the National Association of Real Estate Investment Trusts ("NAREIT"), which defines FFO as net income or loss, excluding gains or losses from sales of real estate, impairment, the cumulative effect of changes in accounting principles, plus depreciation and amortization, and adjustments for unconsolidated partnerships and joint ventures. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. We believe that the presentation of FFO provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs, even though FFO does not represent an amount that accrues directly to common shareholders. Our calculation of FFO may not be comparable to measures calculated by other companies who do not use the NAREIT definition of FFO or do not calculate FFO per diluted share in accordance with NAREIT guidance. Additionally, FFO may not be helpful when comparing us to non-REITs. We present FFO attributable to common shareholders, which includes our OP units, because our OP units may be redeemed for common shares. We believe it is meaningful for the investor to understand FFO attributable to all common shares and OP units.

We further adjust FFO for certain additional items that are not in NAREIT’s definition of FFO, such as hotel transaction costs, pre-opening costs, non-cash income tax expense or benefit, the amortization of share-based compensation, non-cash expense related to discontinued interest rate hedges, and certain other expenses that we consider outside the normal course of operations. We believe that Adjusted FFO provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income and FFO, is beneficial to an investor’s understanding of our operating performance.

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The following table is a reconciliation of our GAAP net loss to FFO attributable to common shareholders and unitholders and Adjusted FFO attributable to common shareholders and unitholders for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):

For the three months ended March 31,
2021 2020
Net loss $ (79,117) $ (30,829)
Preferred dividends (6,279) (6,279)
Depreciation and amortization 46,943 49,173
Gain on sale of hotel properties, net (1,083) (102)
Impairment losses 5,946 —
Noncontrolling interest in consolidated joint ventures 736 1,313
Adjustments related to consolidated joint ventures (1) (75) (75)
Adjustments related to unconsolidated joint ventures (2) 294 494
FFO (32,635) 13,695
Transaction costs 60 10
Amortization of share-based compensation 2,752 2,696
Non-cash income tax benefit — (1,242)
Unrealized loss on discontinued cash flow hedges — 1,557
Other expenses (3) 56 154
Adjusted FFO $ (29,767) $ 16,870


	For the three months ended March 31,
		2022		2021
Net loss		$	(15,469)	$	(79,117)
Preferred dividends		(6,279)		(6,279)
Depreciation and amortization		46,865		46,943
Gain on sale of hotel properties, net		(1,417)		(1,083)
Impairment losses		—		5,946
Noncontrolling interest in consolidated joint ventures		118		736
Adjustments related to consolidated joint ventures (1)		(49)		(75)
Adjustments related to unconsolidated joint ventures (2)		295		294
FFO		24,064		(32,635)
Transaction costs		62		60


Amortization of share-based compensation		5,185		2,752
Non-cash income tax expense		(135)		—

Derivative gains in accumulated other comprehensive income (loss) reclassified to earnings (3)		(5,866)		—
Other expenses (4)		584		56
Adjusted FFO		$	23,894	$	(29,767)

(1)Includes depreciation and amortization expense allocated to the noncontrolling interest in the consolidated joint ventures.

(2)Includes our ownership interest in the depreciation and amortization expense of the unconsolidated joint ventures.

(3)Reclassification of interest rate swap gains from accumulated other comprehensive income (loss) to earnings for discontinued interest rate hedges.

(4)Represents ~~income~~expenses and ~~expenses~~income outside of the normal course of ~~operations.~~operations, including $0.3 million of non-cash interest expense related to discontinued interest rate hedges during the three months ended March 31, 2022.

EBITDA and EBITDAre

Earnings before interest, taxes, depreciation and amortization ("EBITDA") is defined as net income or loss excluding: (1) interest expense; (2) ~~provision for~~ income ~~taxes, including income taxes applicable to sales of assets;~~tax expense; and (3) depreciation and ~~amortization.~~amortization expense. We consider EBITDA useful to an investor in evaluating and facilitating comparisons of our operating performance between periods and between REITs by removing the impact of our capital structure (primarily interest expense) and asset base (primarily depreciation and ~~amortization)~~amortization expense) from our operating results. In addition, EBITDA is used as one measure in determining the value of hotel acquisitions and disposals.

In addition to EBITDA, we present EBITDAre in accordance with NAREIT guidelines, which defines EBITDAre as net income or loss excluding interest expense, income tax expense, depreciation and amortization expense, gains or losses from sales of real estate, impairment, and adjustments for unconsolidated joint ventures. We believe that the presentation of EBITDAre provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs.

We also present Adjusted EBITDA, which includes additional adjustments for items such as ~~gains or losses on extinguishment of indebtedness,~~hotel transaction costs, pre-opening costs, the amortization of share-based compensation, non-cash expense related to discontinued interest rate hedges, and certain other expenses that we consider outside the normal course of operations. We believe that Adjusted EBITDA provides useful supplemental information to investors regarding our ongoing operating performance that, when considered with net income, EBITDA, and EBITDAre, is beneficial to an investor’s understanding of our operating performance.

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The following table is a reconciliation of our GAAP net loss to EBITDA, EBITDAre and Adjusted EBITDA for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021 (in thousands):


		For the three months ended March 31,						For the three months ended March 31,
			2021		2020				2022		2021
Net loss	Net loss		$	(79,117)	$	(30,829)	Net loss		$	(15,469)	$	(79,117)
Depreciation and amortization	Depreciation and amortization		46,943		49,173		Depreciation and amortization		46,865		46,943
Interest expense, net of interest income	Interest expense, net of interest income		27,511		20,847		Interest expense, net of interest income		24,389		27,511
Income tax expense (benefit)			114		(1,150)
Income tax expense							Income tax expense		190		114
Adjustments related to unconsolidated joint ventures (1)	Adjustments related to unconsolidated joint ventures (1)		410		618		Adjustments related to unconsolidated joint ventures (1)		407		410
EBITDA	EBITDA		(4,139)		38,659		EBITDA		56,382		(4,139)

Gain on sale of hotel properties, net	Gain on sale of hotel properties, net		(1,083)		(102)		Gain on sale of hotel properties, net		(1,417)		(1,083)

Impairment losses	Impairment losses		5,946		—		Impairment losses		—		5,946
EBITDAre	EBITDAre		724		38,557		EBITDAre		54,965		724
Transaction costs	Transaction costs		60		10		Transaction costs		62		60

Amortization of share-based compensation	Amortization of share-based compensation		2,752		2,696		Amortization of share-based compensation		5,185		2,752

Other expenses (2)			56		154
Derivative gains in accumulated other comprehensive income (loss) reclassified to earnings (2)							Derivative gains in accumulated other comprehensive income (loss) reclassified to earnings (2)		(5,866)		—
Other expenses (3)							Other expenses (3)		248		56
Adjusted EBITDA	Adjusted EBITDA		$	3,592	$	41,417	Adjusted EBITDA		$	54,594	$	3,592

(1)Includes our ownership interest in the interest, depreciation, and amortization expense of the unconsolidated joint ventures.

(2)Reclassification of interest rate swap gains from accumulated other comprehensive income (loss) to earnings for discontinued interest rate hedges.

(3)Represents ~~income~~expenses and ~~expenses~~income outside of the normal course of operations.

Liquidity and Capital Resources

Our ~~short-term~~ liquidity requirements consist primarily of the funds necessary to pay for operating expenses and other expenditures directly associated with our hotel properties, including:

•funds necessary to pay for the costs of acquiring hotel properties;

•redevelopments, conversions, renovations and other capital expenditures that need to be made periodically to our hotel properties;

•recurring maintenance and capital expenditures necessary to maintain our hotel properties in accordance with brand standards;

•~~operating shortfalls in hotel properties where operations were suspended and hotels with low occupancy;~~

•interest expense and scheduled principal payments on outstanding indebtedness;

•distributions ~~necessary to qualify for taxation as a REIT;~~on common and preferred shares; and

•corporate and other general and administrative expenses.

Our long-term liquidity requirements consist primarily of the funds necessary to pay for the costs of acquiring hotel properties, redevelopments, conversions, renovations and other capital expenditures that need to be made periodically with respect to our hotel properties, and scheduled debt payments, at maturity or otherwise.

Due to the COVID-19 pandemic, we continue to operate open hotels under aggressive operating cost containment plans, including significantly reduced staffing, elimination of non-essential amenities and services, and the closure of most food and beverage outlets. We believe the ongoing effects of the COVID-19 pandemic on our operations continue to have a material adverse impact on our financial results and liquidity, and such adverse impact may continue well beyond the containment of such outbreak and vaccine distribution.

We can make no assurances that the assumptions used to estimate our liquidity requirements will remain accurate because the magnitude, duration and speed of the COVID-19 pandemic are uncertain. These uncertainties make it difficult to predict the impact on our business, financial condition or near- or longer-term financial or operational results with certainty.

We have taken further actions to improve our liquidity position, including capital expenditure and operating expense reductions, suspending ROI initiatives, and reducing dividend payments on our common shares. In addition, during the year ended December 31, 2020, we entered into two amendments to our Revolver and Term Loans. The amendments suspend the

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testing of all existing financial maintenance covenants under the Revolver and the Term Loan agreements for all periods through and including the fiscal quarter ending December 31, 2021 (the “Covenant Relief Period”). In addition, for periods following the Covenant Relief Period, the amendments modify certain covenant thresholds.

As of March 31, ~~2021,~~2022, we had ~~$681.2~~$522.3 million of cash and cash equivalents and restricted cash reserves.

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Sources and Uses of Cash

Cash flows from Operating Activities

The net cash flow ~~used in~~provided by operating activities totaled ~~$29.0~~$10.3 million and the net cash flow ~~provided by~~used in operating activities totaled ~~$30.1~~$29.0 million for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Our cash flows provided by or used in ~~or provided by~~ operating activities generally consist of the net cash generated by or operating shortfalls from our hotel operations, the cash paid for corporate expenses and other working capital changes. Refer to the "Results of Operations" section for further discussion of our operating results for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

Cash flows from Investing Activities

The net cash flow provided by investing activities totaled $9.8 million for the three months ended March 31, 2022 primarily due to the $34.1 million in proceeds from the sale of a hotel property. The net cash flow provided by investing activities was partially offset by $24.3 million in routine capital improvements and additions to our hotel properties.

The net cash flow used in investing activities totaled $6.1 million for the three months ended March 31, 2021 primarily due to $9.9 million in routine capital improvements and additions to our hotel properties. The net cash flow used in investing activities was partially offset by $4.0 million in proceeds from the sale of a hotel property.

Cash flows from Financing Activities

The net cash flow used in ~~investing~~financing activities totaled ~~$29.4~~$211.7 million for the three months ended March 31, ~~2020~~2022 primarily due to ~~$31.0~~the $200.0 million repayment of the outstanding balance on the Revolver, $7.9 million in ~~routine capital improvements~~distributions to shareholders and ~~additions~~unitholders, $2.6 million in distributions to ~~our hotel properties.~~joint venture partners, and $1.3 million paid to repurchase common shares to satisfy employee tax withholding requirements.

~~Cash flows from Financing Activities~~

The net cash flow used in financing activities totaled $218.5 million for the three months ended March 31, 2021 primarily due to the $200.0 million ~~in repayment~~pay down on the Revolver, $8.5 million in repayment of term loans, $7.9 million in distributions to shareholders and unitholders, $1.3 million paid to repurchase common shares to satisfy employee tax withholding requirements, and $0.9 ~~million in scheduled mortgage loan principal payments.~~

The net cash flow provided by financing activities totaled $273.6 million for the three months ended March 31, 2020 primarily due to $400.0 million in borrowings on the Revolver. The net cash flow provided by financing activities was partially offset by $62.7 million in distributions to shareholders and unitholders, $63.2 million paid to repurchase common shares, and $0.6 million in scheduled mortgage loan principal payments.

Capital Expenditures and Reserve Funds

We maintain each of our hotel properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. The cost of routine improvements and alterations are paid out of ~~furniture, fixtures, and equipment ("~~FF~~&E")~~&E reserves, which are funded by a portion of each hotel property’s gross revenues. Routine capital expenditures may be administered by the property management companies. However, we have approval rights over the capital expenditures as part of the annual budget process for each of our hotel properties.

From time to time, certain of our hotel properties may undergo renovations as a result of our decision to upgrade portions of the hotels, such as guestrooms, public space, meeting space, and/or restaurants, in order to better compete with other hotels and alternative lodging options in our markets. In addition, upon acquisition of a hotel property we often are required to complete a property improvement plan in order to bring the hotel up to the respective franchisor’s standards. If permitted by the terms of the management agreement, funding for a renovation will first come from the FF&E reserves. To the extent that the FF&E reserves are not available or sufficient to cover the cost of the renovation, we will fund all or the remaining portion of the renovation with cash and cash equivalents on hand, our Revolver and/or other sources of available liquidity.

With respect to some of our hotels that are operated under franchise agreements with major national hotel brands and for some of our hotels subject to first mortgage liens, we are obligated to maintain FF&E reserve accounts for future capital expenditures at these hotels. The amount funded into each of these reserve accounts is generally determined pursuant to the management agreements, franchise agreements and/or mortgage loan documents for each of the respective hotels, and typically ranges between 3.0% and 5.0% of the respective hotel’s total gross revenue. As of March 31, ~~2021,~~2022, approximately ~~$28.7~~$30.7 million was held in FF&E reserve accounts for future capital expenditures. ~~In addition, due to the effects of the COVID-19~~

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~~pandemic on our operations, we have worked with the brands, third-party managers, and lenders to allow the use of available restricted cash reserves to cover operating shortfalls at certain hotels.~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk includes the risks that arise from changes in interest rates, equity prices and other market changes that affect market sensitive instruments. Our primary market risk exposure is to changes in interest rates on our variable rate debt. As of March 31, ~~2021,~~2022, we had approximately ~~$1.7~~$1.2 billion of total variable rate debt outstanding (or ~~73.9%~~53.9% of total indebtedness) with a weighted-average interest rate of ~~4.04%~~3.88% per annum. After taking into consideration the effect of interest rate swaps, ~~94.8%~~100.0% of our total indebtedness was fixed or effectively fixed. As of March 31, ~~2021,~~2022, if market interest rates on our variable rate debt not subject to interest rate swaps were to increase by 1.00%, or 100 basis points, interest expense would ~~decrease~~have no impact on future earnings and cash flows, ~~by approximately $2.2 million annually,~~ taking into account our existing contractual hedging arrangements.

Our interest rate risk objectives are to limit the impact of interest rate fluctuations on earnings and cash flows and to lower our overall borrowing costs. To achieve these objectives, we manage our exposure to fluctuations in market interest rates through the use of fixed rate debt instruments to the extent that reasonably favorable rates are obtainable. We have entered into derivative financial instruments such as interest rate swaps to mitigate our interest rate risk or to effectively lock the interest rate on a portion of our variable rate debt. We do not enter into derivative or interest rate transactions for speculative purposes.

The following table provides information about our financial instruments that are sensitive to changes in interest rates. For debt obligations outstanding as of March 31, ~~2021,~~2022, the following table presents the principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands):


		2021			2022			2023			2024			2025			Total				2022			2023			2024			2025			2026			Thereafter			Total
Fixed rate debt (1)	Fixed rate debt (1)	$	2,379		$	140,386		$	—		$	—		$	474,888		$	617,653		Fixed rate debt (1)	$	—		$	—		$	—		$	—		$	500,000		$	525,000		$	1,025,000
Weighted-average interest rate	Weighted-average interest rate	5.01		%	5.01		%	—		%	—		%	6.00		%	5.77		%	Weighted-average interest rate	—		%	—		%	—		%	—		%	3.75		%	4.05		%	3.90		%
Variable rate debt (1)	Variable rate debt (1)	$	—		$	341,525		$	625,000		$	381,000		$	400,000		$	1,747,525		Variable rate debt (1)	$	200,000		$	418,662		$	181,000		$	400,000		$	—		$	—		$	1,199,662
Weighted-average interest rate (2)	Weighted-average interest rate (2)	—		%	3.60		%	4.73		%	3.44		%	3.92		%	4.04		%	Weighted-average interest rate (2)	3.30		%	4.45		%	2.95		%	4.00		%	—		%	—		%	3.88		%
Total (3)	Total (3)	$	2,379		$	481,911		$	625,000		$	381,000		$	874,888		$	2,365,178		Total (3)	$	200,000		$	418,662		$	181,000		$	400,000		$	500,000		$	525,000		$	2,224,662

(1)Excludes ~~$6.0~~$3.2 million, $0.7 million and ~~$2.1~~$12.5 million of net deferred financing costs on the Term Loans, ~~and~~ mortgage loans and Senior Notes, respectively.

(2)The weighted-average interest rate gives effect to interest rate swaps, as applicable.

(3)Excludes ~~a total of $20.9~~$2.5 million related to a fair value ~~adjustments~~adjustment on debt.

Our ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during future periods, prevailing interest rates and our hedging strategies at that time.

Changes in market interest rates on our fixed rate debt impact the fair value of our debt, but such changes have no impact to our consolidated financial statements. As of March 31, ~~2021,~~2022, the estimated fair value of our fixed rate debt was ~~$630.7~~$966.0 million, which is based on having the same debt service requirements that could have been borrowed at the date presented, at prevailing current market interest rates. If interest rates were to rise by 1.00%, or 100 basis points, and our fixed rate debt balance remains constant, we expect the fair value of our debt to decrease by approximately ~~$2.1~~$47.2 million.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company’s management, under the supervision and participation of the Company's Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2021.~~2022.

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Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15 and 15d-15 of the Exchange Act) during the period ended March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The nature of the operations of our hotels exposes our hotel properties, the Company and the Operating Partnership to the risk of claims and litigation in the normal course of their business. Other than routine litigation arising out of the ordinary course of business, the Company is not presently subject to any material litigation nor, to the Company's knowledge, is any material litigation threatened against the Company.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, please refer to the "Risk Factors" sections in our Annual Report, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously disclosed in our Annual Report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

The Company did not sell any securities during the quarter ended March 31, ~~2021~~2022 that were not registered under the Securities ~~Act of 1933, as amended (the "Securities Act").~~Act.

Issuer Purchases of Equity Securities

The following table summarizes all of the share repurchases during the three months ended March 31, ~~2021:~~2022:

Period Total number
of shares
purchased (1) Average price
paid per share Total number of
shares purchased as
part of publicly
announced plans or
programs Maximum number
of shares that may
yet be purchased
under the plans or
programs (2)
January 1, 2021 through January 31, 2021 387 $ 14.28 — 16,528,029
February 1, 2021 through February 28, 2021 82,857 $ 15.17 — 13,590,882
March 1, 2021 through March 31, 2021 — $ — — —
Total 83,244 —


Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Maximum number of shares that may yet be purchased under the plans or programs (2)
January 1, 2022 through January 31, 2022	—	$	—	N/A	N/A
February 1, 2022 through February 28, 2022	87,626	$	14.48	N/A	N/A
March 1, 2022 through March 31, 2022	—	$	—	N/A	N/A






Total	87,626			—

(1)Includes surrendered common shares owned by certain employees to satisfy their statutory minimum federal and state tax obligations associated with the vesting of restricted common shares of beneficial interest issued under the ~~2015~~2021 Plan.

(2)The maximum number of shares that may yet be repurchased under ~~the~~a share repurchase program is calculated by dividing the total dollar amount available to repurchase shares by the closing price of our common shares on the last business day of the respective month. ~~The share repurchase program was approved by the Company's board of trustees on February 14, 2020 and expired pursuant to its terms on February 28, 2021.~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

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~~None.~~On April 29, 2022, the Company held its 2022 Annual Meeting of Shareholders (the “Annual Meeting”) at which (i) trustees were elected, (ii) the appointment of PricewaterhouseCoopers LLP (“PWC”), the Company’s independent registered public accounting firm, for the fiscal year ending December 31, 2022 was ratified, and (iii) the compensation paid to the Company’s named executive officers was approved in an advisory vote. The proposals are described in detail in the Company’s Proxy Statement for the Annual Meeting, which was filed with the Securities and Exchange Commission on March 30, 2022. The final results for the votes regarding each proposal are set forth below.

Election of Trustees

The following persons were duly elected as trustees of the Company until the 2023 Annual Meeting of Shareholders or until their successors are duly elected and qualified: Robert L. Johnson, Leslie D. Hale, Evan Bayh, Arthur R. Collins, Nathaniel A. Davis, Patricia L. Gibson, Robert M. La Forgia, Robert J. McCarthy and Robin Zeigler. The table below sets forth the voting results for each trustee nominee:


Nominee	Votes For	Votes Against	Abstentions	Broker Non-Votes
Robert L. Johnson	137,771,141	2,430,741	675,310	10,181,077
Leslie D. Hale	140,540,676	325,577	10,939	10,181,077
Evan Bayh	136,686,135	4,179,037	12,020	10,181,077
Arthur R. Collins	138,079,441	2,788,361	9,390	10,181,077
Nathaniel A. Davis	127,627,868	13,236,803	12,521	10,181,077
Patricia L. Gibson	139,664,243	1,197,774	15,175	10,181,077
Robert M. La Forgia	139,266,448	1,597,851	12,893	10,181,077
Robert J. McCarthy	139,547,817	1,316,483	12,892	10,181,077
Robin Zeigler	132,577,496	8,287,267	12,429	10,181,077

Ratification of PWC as the Company’s independent registered public accounting firm

At the Annual Meeting, the Company’s shareholders ratified the appointment of PWC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022. The table below sets forth the voting results for this proposal:


Votes For	Votes Against	Abstentions	Broker Non-Votes
147,832,763	3,209,356	16,150	—

Advisory Vote to Approve Named Executive Officer Compensation

At the Annual Meeting, the Company’s shareholders voted on a non-binding basis, a resolution to approve the compensation of the Company’s named executive officers. The table below sets forth the voting results for this proposal:


Votes For	Votes Against	Abstentions	Broker Non-Votes
36,852,166	104,002,223	22,803	10,181,077

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Item 6. Exhibits

The exhibits required to be filed by Item 601 of Regulation S-K are noted below:

Exhibit Index

Exhibit
Number

Description of Exhibit

3.1

Articles of Amendment and Restatement of Declaration of Trust of RLJ Lodging Trust (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Registrant's Registration Statement on Form S-11 (File. No. 333-172011) filed on May 5, 2011)

3.2

Articles of Amendment to Articles of Amendment and Restatement of Declaration of Trust of RLJ Lodging Trust (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on May 7, 2015)

3.3

3.4

Articles Supplementary to Articles of Amendment and Restatement of Declaration of Trust (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on February 26, 2015)

3.5

Articles Supplementary designating RLJ Lodging Trust’s $1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per share (incorporated by reference to Exhibit 3.5 to the Registrant’s Form 8-A filed on August 30, 2017)

3.6

Third Amended and Restated Bylaws of RLJ Lodging Trust (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on May 5, 2016)

31.1*

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document