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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, 20212022

OR
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 ClassTrading SymbolName of Exchange on Which Registered
Common Shares of beneficial interest, par value $0.01 per shareRLJNew York Stock Exchange
$1.95 Series A Cumulative Convertible Preferred Shares, par value $0.01 per shareRLJ-ANew 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, 164,917,75028, 2022, 166,843,586 common shares of beneficial interest of the Registrant, $0.01 par value per share, were outstanding.



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TABLE OF CONTENTS
 
  Page
   
   
 
   
 Consolidated Financial Statements (unaudited) 
 
 
 
 
 
   
   
   
   
 
 

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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, 2021December 31, 2020March 31, 2022December 31, 2021
AssetsAssets  Assets  
Investment in hotel properties, netInvestment 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 venturesInvestment in unconsolidated joint ventures6,665 6,798 Investment in unconsolidated joint ventures6,644 6,522 
Cash and cash equivalentsCash and cash equivalents647,844 899,813 Cash and cash equivalents479,047 665,341 
Restricted cash reservesRestricted cash reserves33,391 34,977 Restricted cash reserves43,254 48,528 
Hotel and other receivables, net of allowance of $253 and $292, respectively19,054 13,346 
Hotel and other receivables, net of allowance of $322 and $274, respectivelyHotel and other receivables, net of allowance of $322 and $274, respectively37,876 31,091 
Lease right-of-use assetsLease right-of-use assets141,660 142,989 Lease right-of-use assets143,606 144,988 
Prepaid expense and other assetsPrepaid expense and other assets37,004 32,833 Prepaid expense and other assets56,182 33,390 
Total assetsTotal assets$5,328,563 $5,617,172 Total assets$4,921,657 $5,148,976 
Liabilities and EquityLiabilities and Equity  Liabilities and Equity  
Debt, netDebt, net$2,377,981 $2,587,731 Debt, net$2,210,725 $2,409,438 
Accounts payable and other liabilitiesAccounts payable and other liabilities159,538 172,325 Accounts payable and other liabilities129,962 155,136 
Advance deposits and deferred revenueAdvance deposits and deferred revenue28,211 32,177 Advance deposits and deferred revenue21,434 20,047 
Lease liabilitiesLease liabilities121,954 122,593 Lease liabilities122,326 123,031 
Accrued interestAccrued interest13,288 6,206 Accrued interest8,210 19,110 
Distributions payableDistributions payable8,383 8,752 Distributions payable8,208 8,347 
Total liabilitiesTotal liabilities2,709,355 2,929,784 Total liabilities2,500,865 2,735,109 
Commitments and Contingencies (Note 11)00
Commitments and Contingencies (Note 10)Commitments and Contingencies (Note 10)00
EquityEquity Equity 
Shareholders’ equity:Shareholders’ equity: Shareholders’ equity: 
Preferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorizedPreferred shares of beneficial interest, $0.01 par value, 50,000,000 shares authorizedPreferred 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, 2020366,936 366,936 
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, respectively1,649 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, 2021Series 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, 2021366,936 366,936 
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, respectivelyCommon 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, respectively1,668 1,665 
Additional paid-in capitalAdditional paid-in capital3,078,824 3,077,142 Additional paid-in capital3,097,166 3,092,883 
Accumulated other comprehensive loss(52,330)(69,050)
Distributions in excess of net earningsDistributions 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’ equityTotal shareholders’ equity2,599,373 2,666,517 Total shareholders’ equity2,407,215 2,397,632 
Noncontrolling interest:  
Noncontrolling interests:Noncontrolling interests:  
Noncontrolling interest in the Operating PartnershipNoncontrolling interest in the Operating Partnership6,209 6,316 
Noncontrolling interest in consolidated joint venturesNoncontrolling interest in consolidated joint ventures12,365 13,002 Noncontrolling interest in consolidated joint ventures7,368 9,919 
Noncontrolling interest in the Operating Partnership7,470 7,869 
Total noncontrolling interest19,835 20,871 
Total noncontrolling interestsTotal noncontrolling interests13,577 16,235 
Total equityTotal equity2,619,208 2,687,388 Total equity2,420,792 2,413,867 
Total liabilities and equityTotal 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 LossIncome (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,
20212020 20222021
RevenuesRevenuesRevenues
Operating revenuesOperating revenuesOperating revenues
Room revenueRoom revenue$102,772 $218,892 Room revenue$205,779 $102,772 
Food and beverage revenueFood and beverage revenue6,242 30,767 Food and beverage revenue20,901 6,242 
Other revenueOther revenue10,538 15,822 Other revenue16,219 10,538 
Total revenuesTotal revenues119,552 265,481 Total revenues242,899 119,552 
ExpensesExpensesExpenses
Operating expensesOperating expensesOperating expenses
Room expenseRoom expense29,427 63,753 Room expense53,828 29,427 
Food and beverage expenseFood and beverage expense4,556 26,381 Food and beverage expense16,169 4,556 
Management and franchise fee expenseManagement and franchise fee expense5,361 17,144 Management and franchise fee expense20,388 5,361 
Other operating expenseOther operating expense49,120 80,957 Other operating expense68,654 49,120 
Total property operating expensesTotal property operating expenses88,464 188,235 Total property operating expenses159,039 88,464 
Depreciation and amortizationDepreciation and amortization46,943 49,173 Depreciation and amortization46,865 46,943 
Impairment lossesImpairment losses5,946 Impairment losses— 5,946 
Property tax, insurance and otherProperty tax, insurance and other20,081 28,692 Property tax, insurance and other22,513 20,081 
General and administrativeGeneral and administrative10,800 11,769 General and administrative14,134 10,800 
Transaction costsTransaction costs60 10 Transaction costs62 60 
Total operating expensesTotal operating expenses172,294 277,879 Total operating expenses242,613 172,294 
Other income465 579 
Other income, netOther income, net7,285 465 
Interest incomeInterest income384 2,966 Interest income172 384 
Interest expenseInterest expense(27,895)(23,813)Interest expense(24,561)(27,895)
Gain on sale of hotel properties, netGain on sale of hotel properties, net1,083 102 Gain on sale of hotel properties, net1,417 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 venturesLoss before equity in income (loss) from unconsolidated joint ventures(15,401)(78,705)
Equity in income (loss) from unconsolidated joint venturesEquity in income (loss) from unconsolidated joint ventures122 (298)
Loss before income tax expenseLoss before income tax expense(15,279)(79,003)
Income tax expenseIncome tax expense(190)(114)
Net lossNet 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 PartnershipNoncontrolling interest in the Operating Partnership104 396 
Noncontrolling interest in consolidated joint venturesNoncontrolling interest in consolidated joint ventures736 1,313 Noncontrolling interest in consolidated joint ventures118 736 
Noncontrolling interest in the Operating Partnership396 192 
Net loss attributable to RLJNet loss attributable to RLJ(77,985)(29,324)Net loss attributable to RLJ(15,247)(77,985)
Preferred dividendsPreferred dividends(6,279)(6,279)Preferred dividends(6,279)(6,279)
Net loss attributable to common shareholdersNet loss attributable to common shareholders$(84,264)$(35,603)Net loss attributable to common shareholders$(21,526)$(84,264)
Basic and diluted per common share data:Basic and diluted per common share data:Basic and diluted per common share data:
Net loss per share attributable to common shareholdersNet loss per share attributable to common shareholders$(0.51)$(0.21)Net loss per share attributable to common shareholders$(0.13)$(0.51)
Weighted-average number of common sharesWeighted-average number of common shares163,826,009 167,149,733 Weighted-average number of common shares164,179,661 163,826,009 
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Comprehensive loss:
Comprehensive income (loss):Comprehensive income (loss):
Net lossNet loss$(79,117)$(30,829)Net loss$(15,469)$(79,117)
Unrealized gain (loss) on interest rate derivatives16,720 (56,477)
Comprehensive loss(62,397)(87,306)
Unrealized gain on interest rate derivativesUnrealized gain on interest rate derivatives34,193 16,720 
Reclassification of unrealized gains on discontinued cash flow hedges to other income, netReclassification of unrealized gains on discontinued cash flow hedges to other income, net(5,866)— 
Comprehensive income (loss)Comprehensive income (loss)12,858 (62,397)
Comprehensive loss attributable to noncontrolling interests:Comprehensive loss attributable to noncontrolling interests:Comprehensive loss attributable to noncontrolling interests:
Noncontrolling interest in the Operating PartnershipNoncontrolling interest in the Operating Partnership104 396 
Noncontrolling interest in consolidated joint venturesNoncontrolling interest in consolidated joint ventures736 1,313 Noncontrolling interest in consolidated joint ventures118 736 
Noncontrolling interest in the Operating Partnership396 192 
Comprehensive loss attributable to RLJ$(61,265)$(85,801)
Comprehensive income (loss) attributable to RLJComprehensive 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’ EquityNoncontrolling Interest  Shareholders’ EquityNoncontrolling Interest 
Preferred StockCommon Stock    Preferred StockCommon Stock   
SharesAmountSharesPar 
Value
Additional
Paid-in Capital
Distributions in excess of net earningsAccumulated Other Comprehensive
Loss
Operating
Partnership
Consolidated
Joint 
Ventures
Total 
Equity
SharesAmountSharesPar 
Value
Additional
Paid-in Capital
Distributions in excess of net earningsAccumulated Other Comprehensive
(Loss) Income
Operating
Partnership
Consolidated
Joint 
Ventures
Total 
Equity
Balance at December 31, 202012,879,475 $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, 2021Balance at December 31, 202112,879,475 $366,936 166,503,062 $1,665 $3,092,883 $(1,046,739)$(17,113)$6,316 $9,919 $2,413,867 
Net lossNet loss— — — — — (77,985)— (396)(736)(79,117)Net loss— — — — — (15,247)— (104)(118)(15,469)
Unrealized gain on interest rate derivativesUnrealized 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, netReclassification of unrealized gains on discontinued cash flow hedges to other income, net— — — — — — (5,866)— — (5,866)
Contributions from consolidated joint venture partnersContributions from consolidated joint venture partners— — — — — — — — 99 99 Contributions from consolidated joint venture partners— — — — — — — — 156 156 
Distribution to consolidated joint venture partnersDistribution to consolidated joint venture partners— — — — — — — — (2,589)(2,589)
Issuance of restricted stockIssuance of restricted stock— — 432,779 (4)— — — — — 
Amortization of share-based compensationAmortization 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 stockShares 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 stockForfeiture of restricted stock— — (1,382)— — — — Forfeiture of restricted stock— — (4,629)— — — — — — — 
Distributions on preferred sharesDistributions on preferred shares— — — — — (6,279)— — — (6,279)Distributions on preferred shares— — — — — (6,279)— — — (6,279)
Distributions on common shares and unitsDistributions 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, 202112,879,475 $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, 2022Balance at March 31, 202212,879,475 $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’ EquityNoncontrolling Interest  Shareholders’ EquityNoncontrolling Interest 
Preferred StockCommon Stock    Preferred StockCommon Stock   
SharesAmountSharesPar 
Value
Additional 
Paid-in
Capital
Distributions in excess of net earningsAccumulated Other Comprehensive LossOperating
Partnership
Consolidated
Joint
Ventures
Total
Equity
SharesAmountSharesPar 
Value
Additional 
Paid-in
Capital
Distributions in excess of net earningsAccumulated Other Comprehensive LossOperating
Partnership
Consolidated
Joint
Ventures
Total
Equity
Balance at December 31, 201912,879,475 $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, 2020Balance at December 31, 202012,879,475 $366,936 165,002,752 $1,650 $3,077,142 $(710,161)$(69,050)$7,869 $13,002 $2,687,388 
Net lossNet 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 derivativesUnrealized gain on interest rate derivatives— — — — — — 16,720 — — 16,720 
Redemption of Operating Partnership units— — — — — — — (8)— (8)
Contributions from consolidated joint venture partnersContributions from consolidated joint venture partners— — — — — — — — 270 270 Contributions from consolidated joint venture partners— — — — — — — — 99 99 
Issuance of restricted stock— — 525,169 (5)— — — — 
Amortization of share-based compensationAmortization 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 stockShares acquired to satisfy minimum required federal and state tax withholding on vesting restricted stock— — (38,875)(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 stockForfeiture of restricted stock— — (6,424)— — — — — — Forfeiture of restricted stock— — (1,382)— — — — — — — 
Distributions on preferred sharesDistributions on preferred shares— — — — — (6,279)— — — (6,279)Distributions on preferred shares— — — — — (6,279)— — — (6,279)
Distributions on common shares and unitsDistributions on common shares and units— — — — — (852)— (135)— (987)Distributions on common shares and units— — — — — (1,281)— (3)— (1,284)
Balance at March 31, 202012,879,475 $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, 2021Balance at March 31, 202112,879,475 $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,
20212020 20222021
Cash flows from operating activitiesCash flows from operating activities  Cash flows from operating activities  
Net lossNet 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, netGain on sale of hotel properties, net(1,083)(102)Gain on sale of hotel properties, net(1,417)(1,083)
Depreciation and amortizationDepreciation and amortization46,943 49,173 Depreciation and amortization46,865 46,943 
Amortization of deferred financing costsAmortization of deferred financing costs1,321 1,021 Amortization of deferred financing costs1,684 1,321 
Other amortizationOther amortization(615)(596)Other amortization403 (615)
Unrealized loss on discontinued cash flow hedges1,556 
Equity in loss (income) from unconsolidated joint ventures298 (585)
Reclassification of unrealized gains on discontinued cash flow hedges to other income, netReclassification of unrealized gains on discontinued cash flow hedges to other income, net(5,866)— 
Equity in (income) loss from unconsolidated joint venturesEquity in (income) loss from unconsolidated joint ventures(122)298 
Impairment lossesImpairment losses5,946 Impairment losses— 5,946 
Amortization of share-based compensationAmortization of share-based compensation2,752 2,696 Amortization of share-based compensation5,184 2,752 
Deferred income taxes(1,242)
Changes in assets and liabilities:Changes in assets and liabilities: Changes in assets and liabilities: 
Hotel and other receivables, netHotel and other receivables, net(5,708)16,989 Hotel and other receivables, net(6,946)(5,708)
Prepaid expense and other assetsPrepaid expense and other assets(4,192)10,715 Prepaid expense and other assets(4,254)(4,192)
Accounts payable and other liabilitiesAccounts payable and other liabilities1,331 (22,204)Accounts payable and other liabilities(320)1,331 
Advance deposits and deferred revenueAdvance deposits and deferred revenue(3,966)(8,529)Advance deposits and deferred revenue1,449 (3,966)
Accrued interestAccrued interest7,082 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 activitiesNet cash flow provided by (used in) operating activities10,291 (29,008)
Cash flows from investing activitiesCash flows from investing activities  Cash flows from investing activities  
Proceeds from the sale of hotel properties, net3,990 102 
Proceeds from sales of hotel properties, netProceeds from sales of hotel properties, net34,125 3,990 
Improvements and additions to hotel propertiesImprovements and additions to hotel properties(9,901)(31,027)Improvements and additions to hotel properties(24,334)(9,901)
Contributions to unconsolidated joint venturesContributions to unconsolidated joint ventures(165)(100)Contributions to unconsolidated joint ventures— (165)
Distributions from unconsolidated joint ventures in excess of earnings1,593 
Net cash flow used in investing activities(6,076)(29,432)
Net cash flow provided by (used in) investing activitiesNet cash flow provided by (used in) investing activities9,791 (6,076)
Cash flows from financing activitiesCash flows from financing activities  Cash flows from financing activities  
Borrowings under Revolver400,000 
Repayment of RevolverRepayment of Revolver(200,000)Repayment of Revolver(200,000)(200,000)
Scheduled mortgage loan principal paymentsScheduled mortgage loan principal payments(900)(634)Scheduled mortgage loan principal payments— (900)
Repayment of term loans(8,475)
Repayments of Term LoansRepayments of Term Loans— (8,475)
Repurchase of common shares under a share repurchase program(62,605)
Repurchase of common shares to satisfy employee tax withholding requirementsRepurchase 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 sharesDistributions on preferred shares(6,279)(6,279)Distributions on preferred shares(6,279)(6,279)
Distributions on common sharesDistributions on common shares(1,650)(56,051)Distributions on common shares(1,666)(1,650)
Distributions on and redemption of Operating Partnership unitsDistributions on and redemption of Operating Partnership units(3)(390)Distributions on and redemption of Operating Partnership units(3)(3)
Payments of deferred financing costs(105)
Contributions from consolidated joint venture partnersContributions from consolidated joint venture partners99 270 Contributions from consolidated joint venture partners156 99 
Net cash flow (used in) provided by financing activities(218,471)273,572 
Distribution to consolidated joint venture partnersDistribution to consolidated joint venture partners(2,589)— 
Net cash flow used in financing activitiesNet cash flow used in financing activities(211,650)(218,471)
Net change in cash, cash equivalents, and restricted cash reservesNet 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 yearCash, cash equivalents, and restricted cash reserves, beginning of year934,790 927,160 Cash, cash equivalents, and restricted cash reserves, beginning of year713,869 934,790 
Cash, cash equivalents, and restricted cash reserves, end of periodCash, 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 165,690,419167,615,417 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 10297 hotel properties with approximately 22,60021,400 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% interestsnon-controlling interest in entitiesan entity owning 21 hotel properties.property. The Company consolidates its real estate interests in the 10096 hotel properties in which it holds a controlling financial interest, and the Company records the real estate interestsinterest in the twoone hotel propertiesproperty in which it holds an indirect 50% non-controlling interest using the equity method of accounting. The Company leases 10196 of the 10297 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, 20202021, 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.

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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 interestsinterest in 2 joint ventures1 hotel property in which it holds an indirecta 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 bethat 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, 2021December 31, 2020March 31, 2022December 31, 2021
Land and improvementsLand and improvements$1,088,246 $1,089,597 Land and improvements$972,633 $975,688 
Buildings and improvementsBuildings and improvements4,082,175 4,084,712 Buildings and improvements3,964,442 4,001,875 
Furniture, fixtures and equipmentFurniture, fixtures and equipment698,683 697,404 Furniture, fixtures and equipment689,967 691,057 
5,869,104 5,871,713 5,627,042 5,668,620 
Accumulated depreciationAccumulated depreciation(1,426,159)(1,385,297)Accumulated depreciation(1,471,994)(1,449,504)
Investment in hotel properties, netInvestment 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, 20212022 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.

ImpairmentImpairments

During the three months ended March 31, 2021, the Company entered into purchase and sale agreements to sellevaluated the recoverability of two hotel properties with an aggregate book value of approximately $18.5 million. The Companyand recorded impairment losses of $5.9 million to write downadjust the hotel propertieshotels' 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 closeclosed 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 NameLocationSale DateRooms
Marriott Denver Airport @ Gateway ParkAurora, COMarch 8, 2022238 

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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, 2021December 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 value13,329 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,
20212020
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 NameLocationSale DateRooms
Courtyard Houston SugarlandStafford, TXJanuary 21, 2021112 
Total112 

6.5.          Revenue

For the three months ended March 31, 2021For the three months ended March 31, 2020For the three months ended March 31, 2022For the three months ended March 31, 2021
Room RevenueFood and Beverage RevenueOther RevenueTotal RevenueRoom RevenueFood and Beverage RevenueOther RevenueTotal RevenueRoom RevenueFood and Beverage RevenueOther RevenueTotal RevenueRoom RevenueFood and Beverage RevenueOther RevenueTotal Revenue
South FloridaSouth 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 CaliforniaSouthern California11,905 339 1,407 13,651 23,860 2,862 2,144 28,866 Southern California23,591 1,661 2,158 27,410 11,905 339 1,407 13,651 
Northern CaliforniaNorthern California8,844 218 700 9,762 33,511 3,785 1,305 38,601 Northern California20,207 1,613 1,037 22,857 8,844 218 700 9,762 
ChicagoChicago6,392 683 358 7,433 8,914 2,222 466 11,602 Chicago8,960 1,622 460 11,042 6,392 683 358 7,433 
HoustonHouston5,323 98 668 6,089 10,939 714 974 12,627 Houston8,528 569 867 9,964 5,323 98 668 6,089 
Pittsburgh4,630 237 170 5,037 4,620 1,105 296 6,021 
AustinAustin8,382 671 740 9,793 3,607 223 478 4,308 
Washington DCWashington DC4,135 29 284 4,448 8,824 200 541 9,565 Washington DC8,326 117 590 9,033 4,135 29 284 4,448 
New York CityNew York City7,662 789 473 8,924 3,238 17 129 3,384 
AtlantaAtlanta7,685 385 825 8,895 3,148 68 493 3,709 
New OrleansNew Orleans7,856 164 697 8,717 2,350 — 383 2,733 
DenverDenver6,552 1,727 321 8,600 2,202 398 330 2,930 
CharlestonCharleston6,738 1,196 502 8,436 3,177 300 402 3,879 
OrlandoOrlando6,507 595 1,045 8,147 2,847 133 825 3,805 
TampaTampa6,492 766 606 7,864 2,847 384 313 3,544 
LouisvilleLouisville4,845 1,993 879 7,717 1,781 368 355 2,504 
OtherOther36,037 2,294 2,797 41,128 20,149 620 1,657 22,426 
TotalTotal$205,779 $20,901 $16,219 $242,899 $102,772 $6,242 $10,538 $119,552 



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Austin3,607 223 478 4,308 7,508 1,261 1,250 10,019 
Charleston3,177 300 402 3,879 4,967 1,348 362 6,677 
Orlando2,847 133 825 3,805 5,724 418 556 6,698 
Atlanta3,148 68 493 3,709 6,564 410 550 7,524 
Tampa2,847 384 313 3,544 4,967 868 380 6,215 
New York City3,238 17 129 3,384 16,295 2,134 934 19,363 
Denver2,202 398 330 2,930 6,760 2,267 335 9,362 
Louisville1,781 368 355 2,504 5,898 3,778 862 10,538 
Other17,869 383 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, 2021December 31, 2020March 31, 2022December 31, 2021
Senior Notes$494,578 $495,759 
Senior Notes, netSenior Notes, net$987,534 $986,942 
RevolverRevolver200,000 400,000 Revolver— 200,000 
Term Loans, netTerm Loans, net1,160,485 1,168,304 Term Loans, net815,439 815,004 
Mortgage loans, netMortgage loans, net522,918 523,668 Mortgage loans, net407,752 407,492 
Debt, netDebt, net$2,377,981 $2,587,731 Debt, net$2,210,725 $2,409,438 

Senior Notes

TheAs of March 31, 2022 and December 31, 2021, respectively, the Company's senior unsecured notes are referred to asSenior Notes (collectively, the "Senior Notes." The Company's Senior NotesNotes") consisted of the following (in(dollars in thousands):
Outstanding Borrowings at
Interest RateMaturity DateMarch 31, 2021December 31, 2020
Senior unsecured notes (1) (2) (3)6.00%June 2025$494,578 $495,759 

Carrying Value at
Interest RateMaturity DateMarch 31, 2022December 31, 2021
Senior Notes due 20294.00%September 2029$500,000 $500,000 
Senior Notes due 20263.75%July 2026500,000 500,000 
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:
CovenantCompliance
Maintenance Covenant
Unencumbered Asset to Unencumbered Debt Ratio> 150.0%Yes
Incurrence Covenants
Consolidated Indebtedness less than Adjusted Total Assets< .65xYes
Consolidated Secured Indebtedness less than Adjusted Total Assets< .45xYes
Interest Coverage Ratio> 1.5xYes

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

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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 atCarrying Value at
Interest Rate at March 31, 2021 (1)Maturity DateMarch 31, 2021December 31, 2020Interest Rate at March 31, 2022 (1)Maturity DateMarch 31, 2022December 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 2022141,525 150,000 
$400 Million Term Loan Maturing 2023$400 Million Term Loan Maturing 20234.73%January 2023400,000 400,000 $400 Million Term Loan Maturing 20234.69%January 2023 (4)203,944 203,944 
$225 Million Term Loan Maturing 2023$225 Million Term Loan Maturing 20234.73%January 2023225,000 225,000 $225 Million Term Loan Maturing 20234.27%January 2023 (5)114,718 114,718 
$150 Million Term Loan Maturing 2023$150 Million Term Loan Maturing 20234.18%June 2023 (6)100,000 100,000 
$400 Million Term Loan Maturing 2025$400 Million Term Loan Maturing 20253.92%May 2025400,000 400,000 $400 Million Term Loan Maturing 20254.00%May 2025400,000 400,000 
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, netTotal 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, 20212022 gives effect to interest rate hedges.
(2)At March 31, 20212022 and December 31, 2020,2021, there was $400.0$600.0 million and $200.0400.0 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, 20212022 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:
CovenantCompliance
Leverage ratio (1)<= 7.00xN/A (3)
Fixed charge coverage ratio (2)>= 1.50xN/A (3)
Secured indebtedness ratio<= 45.0%N/A (3)
Unencumbered indebtedness ratio<= 60.0%N/A (3)
Unencumbered debt service coverage ratio>= 2.00xN/A (3)
Maintain minimum liquidity level>= $125.0$150.0 millionYes

(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 existingCompany's financial maintenance covenants under the Revolver and the Term Loan agreements for all periodsare waived through and including the fiscal quarter ending DecemberMarch 31, 20212022 (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 atCarrying Value at
Number of Assets EncumberedInterest Rate at March 31, 2021Maturity DateMarch 31, 2021December 31, 2020Number of Assets EncumberedInterest Rate at March 31, 2022Maturity DateMarch 31, 2022December 31, 2021
Mortgage loan (1)Mortgage loan (1)73.30 %April 2022(5)$200,000 $200,000 Mortgage loan (1)73.30%(3)April 2022(4)$200,000 $200,000 
Mortgage loan (2)(1)Mortgage loan (2)(1)15.25 %June 202230,099 30,332 Mortgage loan (2)(1)32.53%(3)April 2024(5)96,000 96,000 
Mortgage loan (3)34.95 %October 202286,110 86,775 
Mortgage loan (1)Mortgage loan (1)43.43%(3)April 2024(5)85,000 85,000 
Mortgage loan (4)(2)Mortgage loan (4)(2)14.94 %October 202227,759 27,972 Mortgage loan (4)(2)15.06%January 202927,463 27,554 
Mortgage loan (1)41.71 %April 2024(5)85,000 85,000 
Mortgage loan (1)33.00 %April 2024(5)96,000 96,000 
19524,968 526,079 15408,463 408,554 
Deferred financing costs, netDeferred financing costs, net(2,050)(2,411)Deferred financing costs, net(711)(1,062)
Total mortgage loans, netTotal 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, 20212022 and December 31, 2020,2021, respectively, related to a fair value adjustment on athis mortgage loan.
(3)Includes $0.7 million and $0.9 millionInterest rate at March 31, 2021 and December 31, 2020, respectively, related2022 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, relatedThe mortgage loan provides 2 one year extension options. In April 2022, the Company exercised the first option to a fair value adjustment onextend 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 61 and 2 mortgage loans, respectively, were belowin 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,
2021202020222021
Senior NotesSenior Notes$5,942 $5,944 Senior Notes$9,743 $5,942 
Revolver and Term LoansRevolver and Term Loans17,178 10,652 Revolver and Term Loans9,968 17,178 
Mortgage loansMortgage loans3,454 4,640 Mortgage loans3,210 3,454 
Amortization of deferred financing costsAmortization of deferred financing costs1,321 1,021 Amortization of deferred financing costs1,684 1,321 
Undesignated interest rate swaps1,556 
Non-cash interest expense related to interest rate hedgesNon-cash interest expense related to interest rate hedges(44)— 
Total interest expenseTotal 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 atFair value atNotional value atFair value at
Hedge typeHedge typeInterest
rate
MaturityMarch 31, 2021December 31, 2020March 31, 2021December 31, 2020Hedge typeInterest
rate
MaturityMarch 31, 2022December 31, 2021March 31, 2022December 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 2022125,000 125,000 (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 flowSwap-cash flow2.39%December 202375,000 75,000 (314)(2,504)
Swap-cash flowSwap-cash flow2.51%December 202375,000 75,000 (478)(2,692)
Swap-cash flowSwap-cash flow2.75%November 2023100,000 100,000 (1,112)(3,893)
Swap-cash flow (3)Swap-cash flow (3)1.28%September 202224,662 100,000 (47)(759)
Swap-cash flowSwap-cash flow1.15%April 2021$100,000 $100,000 $(149)$(398)Swap-cash flow1.24%September 2025150,000 150,000 5,703 (860)
Swap-cash flowSwap-cash flow1.20%April 2021100,000 100,000 (157)(418)Swap-cash flow1.16%April 202450,000 50,000 1,167 (338)
Swap-cash flowSwap-cash flow2.15%April 202175,000 75,000 (220)(594)Swap-cash flow1.20%April 202450,000 50,000 1,123 (387)
Swap-cash flowSwap-cash flow1.91%April 202175,000 75,000 (194)(523)Swap-cash flow1.15%April 202450,000 50,000 1,176 (327)
Swap-cash flowSwap-cash flow1.61%June 202150,000 50,000 (251)(433)Swap-cash flow1.10%April 202450,000 50,000 1,230 (267)
Swap-cash flowSwap-cash flow1.56%June 202150,000 50,000 (241)(416)Swap-cash flow0.98%April 202425,000 25,000 679 (61)
Swap-cash flowSwap-cash flow1.71%June 202150,000 50,000 (267)(462)Swap-cash flow0.95%April 202425,000 25,000 695 (43)
Swap-cash flow2.29%December 2022200,000 200,000 (7,788)(9,044)
Swap-cash flow2.29%December 2022125,000 125,000 (4,863)(5,648)
Swap-cash flow2.38%December 2022200,000 200,000 (8,133)(9,436)
Swap-cash flow2.38%December 2022100,000 100,000 (4,065)(4,716)
Swap-cash flow2.75%November 2023100,000 100,000 (6,560)(7,635)
Swap-cash flow2.51%December 202375,000 75,000 (4,620)(5,284)
Swap-cash flow2.39%December 202375,000 75,000 (4,362)(5,012)
Swap-cash flow1.35%September 202149,000 49,000 (308)(454)
Swap-cash flow1.28%September 2022100,000 100,000 (1,713)(2,035)
Swap-cash flow (1)1.24%September 2025150,000 150,000 (2,321)(5,508)
Swap-cash flow (2)1.16%April 202450,000 50,000 (1,094)(1,464)
Swap-cash flow (2)1.20%April 202450,000 50,000 (1,157)(1,526)
Swap-cash flow (2)1.15%April 202450,000 50,000 (1,081)(1,450)
Swap-cash flow (2)1.10%April 202450,000 50,000 (1,005)(1,374)
Swap-cash flow (2)0.98%April 202425,000 25,000 (411)(596)
Swap-cash flow (2)0.95%April 202425,000 25,000 (389)(573)
Swap-cash flow (2)0.93%April 202425,000 25,000 (373)(558)
Swap-cash flow (2)0.90%April 202425,000 25,000 (351)(535)
Swap-cash flow0.85%December 202450,000 50,000 (515)(1,249)
Swap-cash flow0.75%December 202450,000 50,000 (326)(1,047)
Swap-cash flow (3)0.65%January 202650,000 50,000 584 (662)
Swap-cash flow (4)Swap-cash flow (4)0.93%April 202425,000 25,000 705 (31)
Swap-cash flow (4)Swap-cash flow (4)0.90%April 202425,000 25,000 722 (13)
Swap-cash flow (4)Swap-cash flow (4)0.85%December 202450,000 50,000 2,023 221 
Swap-cash flow (4)Swap-cash flow (4)0.75%December 202450,000 50,000 2,159 372 
Swap-cash flow (4)Swap-cash flow (4)0.65%January 202650,000 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)EffectiveIn 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)EffectiveIn 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)EffectiveIn 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, 20212022 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 $69.1of 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 lossincome (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, 20212022 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 lossincome (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 lossincome (loss) at March 31, 20212022 is expected to be reclassified into interest expenseearnings 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, 2021December 31, 2020March 31, 2022December 31, 2021
Carrying ValueFair ValueCarrying ValueFair ValueCarrying ValueFair ValueCarrying ValueFair Value
Senior Notes$494,578 $487,829 $495,759 $484,229 
Senior Notes, netSenior Notes, net$987,534 $939,100 $986,942 $999,060 
Revolver and Term Loans, netRevolver and Term Loans, net1,360,485 1,339,559 1,568,304 1,543,636 Revolver and Term Loans, net815,439 806,218 1,015,004 1,006,647 
Mortgage loans, netMortgage loans, net522,918 512,443 523,668 512,118 Mortgage loans, net407,752 403,211 407,492 401,387 
Debt, netDebt, 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, 20212022 (in thousands):
Fair Value at March 31, 2021Fair Value at March 31, 2022
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Interest rate swap assetInterest rate swap asset$$584 $$584 Interest rate swap asset$— $20,529 $— $20,529 
Interest rate swap liabilityInterest rate swap liability(52,914)(52,914)Interest rate swap liability— (4,494)— (4,494)
TotalTotal$$(52,330)$$(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, 20202021 (in thousands):
Fair Value at December 31, 2020Fair Value at December 31, 2021
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Interest rate swap assetInterest rate swap asset$— $1,548 $— $1,548 
Interest rate swap liabilityInterest rate swap liability$$(69,050)$$(69,050)Interest rate swap liability— (21,465)— (21,465)
TotalTotal$$(69,050)$$(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, 20212022 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, 20212022 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 restricteda 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, 1012022, 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, 20212022 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, 712022, 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, 20212022 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, 20212022 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 repurchased2022 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, 20212022 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, 772,2932022, 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 20152021 Equity Incentive Plan (the "2015"2021 Plan"). The 20152021 Plan provides for a maximum of 7,500,0006,828,527 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, 20212022 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, 20211,252,228 $15.17 
Unvested at January 1, 2022Unvested at January 1, 20222,380,283 $15.43 
GrantedGrantedGranted432,779 15.22 
VestedVested(249,754)15.52 Vested(234,897)15.63 
ForfeitedForfeited(1,382)11.29 Forfeited(4,629)13.34 
Unvested at March 31, 20211,001,092 $15.09 
Unvested at March 31, 2022Unvested at March 31, 20222,573,536 $15.38 

For the three months ended March 31, 20212022 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 2.32.2 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, 20212022 and 20202021 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, ifIf 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 AwardNumber of
Units Granted

Grant Date Fair
Value
Conversion RangeRisk Free Interest RateVolatility
February 2018 (1)264,000$13.990% to 150%2.42%27.44%
February 2019260,000$19.160% to 200%2.52%27.19%
February 2020489,000$12.060% to 200%1.08%23.46%
February 2021431,151$20.900% to 200%0.23%69.47%
Date of AwardNumber of
Units Granted

Grant Date Fair
Value
Conversion RangeRisk Free Interest RateVolatility
February 2019 (1)260,000$19.160% to 200%2.52%27.19%
February 2020489,000$11.590% to 200%1.08%23.46%
February 2021431,151$20.900% to 200%0.23%69.47%
February 2022407,024$21.960% 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 convertedwill convert into approximately 26,000133,000 restricted shares.

For the three months ended March 31, 20212022 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 2.62.3 years.

 As of March 31, 2021,2022, there were 903,3383,493,984 common shares available for future grant under the 20152021 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, 20212022 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,
20212020 20222021
Numerator:Numerator:Numerator:
Net loss attributable to RLJNet loss attributable to RLJ$(77,985)$(29,324)Net loss attributable to RLJ$(15,247)$(77,985)
Less: Preferred dividendsLess: Preferred dividends(6,279)(6,279)Less: Preferred dividends(6,279)(6,279)
Less: Dividends paid on unvested restricted sharesLess: Dividends paid on unvested restricted shares(10)(13)Less: Dividends paid on unvested restricted shares(26)(10)
Less: Undistributed earnings attributable to unvested restricted sharesLess: Undistributed earnings attributable to unvested restricted sharesLess: Undistributed earnings attributable to unvested restricted shares— — 
Net loss attributable to common shareholders excluding amounts attributable to unvested restricted sharesNet 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 dilutedWeighted-average number of common shares - basic and diluted163,826,009 167,149,733 Weighted-average number of common shares - basic and diluted164,179,661 163,826,009 
Net loss per share attributable to common shareholders - basic and dilutedNet 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)
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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,
2021202020222021
Reconciliation of cash, cash equivalents, and restricted cash reservesReconciliation of cash, cash equivalents, and restricted cash reservesReconciliation of cash, cash equivalents, and restricted cash reserves
Cash and cash equivalentsCash and cash equivalents$647,844 $1,157,818 Cash and cash equivalents$479,047 $647,844 
Restricted cash reservesRestricted cash reserves33,391 43,548 Restricted cash reserves43,254 33,391 
Cash, cash equivalents, and restricted cash reservesCash, cash equivalents, and restricted cash reserves$681,235 $1,201,366 Cash, cash equivalents, and restricted cash reserves$522,301 $681,235 
Interest paidInterest paid$20,886 $10,625 Interest paid$33,911 $20,886 
Income taxes paidIncome taxes paid$134 $104 Income taxes paid$$134 
Operating cash flow lease payments for operating leasesOperating 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 transactionsSupplemental investing and financing transactionsSupplemental investing and financing transactions
In connection with the sale of hotel property, the Company recorded the following:
Sale of hotel property$4,410 $
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 priceSales price$35,450 $4,410 
Transaction costsTransaction costs(300)102 Transaction costs(599)(300)
Operating prorationsOperating prorations(120)Operating prorations(726)(120)
Proceeds from the sale of hotel property, net$3,990 $102 
Proceeds from the sale of hotel properties, netProceeds from the sale of hotel properties, net$34,125 $3,990 
Supplemental non-cash transactionsSupplemental non-cash transactionsSupplemental non-cash transactions
Accrued capital expendituresAccrued 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, 20202021 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. OurWe own a geographically diversified portfolio of hotels are concentratedlocated 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 characteristicsthat 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 10297 hotel properties with approximately 22,60021,400 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% interestsnon-controlling interest in entitiesan entity owning twoone hotel properties.property. We consolidate our real estate interests in the 10096 hotel properties in which we hold a controlling financial interest, and we record the real estate interests in the twoone hotel propertiesproperty in which we hold an indirecta 50% non-controlling interest using the equity method of accounting. We lease 10196 of the 10297 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 adversean 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 willcould 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 consumerbusiness 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 Cityfor 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 continuecompleted 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, 20212022 and 2020,2021, we owned 10297 and 104102 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, 20212022 and 2020.2021.  The non-comparable properties include eight hotel properties include one disposition that waswere sold or otherwise disposed and three acquisitions that were completed in 20202021 and one disposition that was completed in 2021.2022.
COVID-19

BeginningDuring the three months ended March 31, 2022, we benefited from significant growth in March 2020, we experienceddemand 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 declineimprovement 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 to2022 over the same period in 2020.the prior year.

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Comparison of the three months ended March 31, 20212022 to the three months ended March 31, 20202021
For the three months ended March 31,   For the three months ended March 31, 
20212020$ Change% Change 20222021$ Change
(amounts in thousands)  (amounts in thousands)
RevenuesRevenues    Revenues   
Operating revenuesOperating revenues    Operating revenues   
Room revenueRoom revenue$102,772 $218,892 $(116,120)(53.0)%Room revenue$205,779 $102,772 $103,007 
Food and beverage revenueFood and beverage revenue6,242 30,767 (24,525)(79.7)%Food and beverage revenue20,901 6,242 14,659 
Other revenueOther revenue10,538 15,822 (5,284)(33.4)%Other revenue16,219 10,538 5,681 
Total revenuesTotal revenues119,552 265,481 (145,929)(55.0)%Total revenues242,899 119,552 123,347 
ExpensesExpenses    Expenses   
Operating expensesOperating expenses    Operating expenses   
Room expenseRoom expense29,427 63,753 (34,326)(53.8)%Room expense53,828 29,427 24,401 
Food and beverage expenseFood and beverage expense4,556 26,381 (21,825)(82.7)%Food and beverage expense16,169 4,556 11,613 
Management and franchise fee expenseManagement and franchise fee expense5,361 17,144 (11,783)(68.7)%Management and franchise fee expense20,388 5,361 15,027 
Other operating expenseOther operating expense49,120 80,957 (31,837)(39.3)%Other operating expense68,654 49,120 19,534 
Total property operating expensesTotal property operating expenses88,464 188,235 (99,771)(53.0)%Total property operating expenses159,039 88,464 70,575 
Depreciation and amortizationDepreciation and amortization46,943 49,173 (2,230)(4.5)%Depreciation and amortization46,865 46,943 (78)
Impairment lossesImpairment losses5,946 — 5,946 100.0 %Impairment losses— 5,946 (5,946)
Property tax, insurance and otherProperty tax, insurance and other20,081 28,692 (8,611)(30.0)%Property tax, insurance and other22,513 20,081 2,432 
General and administrativeGeneral and administrative10,800 11,769 (969)(8.2)%General and administrative14,134 10,800 3,334 
Transaction costsTransaction costs60 10 50 — %Transaction costs62 60 
Total operating expensesTotal operating expenses172,294 277,879 (105,585)(38.0)%Total operating expenses242,613 172,294 70,319 
Other income465 579 (114)(19.7)%
Other income, netOther income, net7,285 465 6,820 
Interest incomeInterest income384 2,966 (2,582)(87.1)%Interest income172 384 (212)
Interest expenseInterest expense(27,895)(23,813)(4,082)17.1 %Interest expense(24,561)(27,895)3,334 
Gain on sale of hotel properties, netGain on sale of hotel properties, net1,083 102 981 — %Gain on sale of hotel properties, net1,417 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 venturesLoss before equity in income (loss) from unconsolidated joint ventures(15,401)(78,705)63,304 
Equity in income (loss) from unconsolidated joint venturesEquity in income (loss) from unconsolidated joint ventures122 (298)420 
Loss before income tax expenseLoss before income tax expense(15,279)(79,003)63,724 
Income tax expenseIncome tax expense(190)(114)(76)
Net lossNet 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 PartnershipNoncontrolling interest in the Operating Partnership104 396 (292)
Noncontrolling interest in consolidated joint venturesNoncontrolling interest in consolidated joint ventures736 1,313 (577)(43.9)%Noncontrolling interest in consolidated joint ventures118 736 (618)
Noncontrolling interest in the Operating Partnership396 192 204 — %
Net loss attributable to RLJNet loss attributable to RLJ(77,985)(29,324)(48,661)— %Net loss attributable to RLJ(15,247)(77,985)62,738 
Preferred dividendsPreferred dividends(6,279)(6,279)— — %Preferred dividends(6,279)(6,279)— 
Net loss attributable to common shareholdersNet 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 $145.9increased $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 decreaseincrease was the result of a $116.1$103.0 million decreaseincrease in room revenue, a $24.5$14.7 million decreaseincrease in food and beverage revenue, and a $5.3$5.7 million decreaseincrease in other revenue.

Room Revenue
 
Room revenue decreased $116.1increased $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 decreaseincrease was the result of a $0.5$101.5 million decreaseincrease 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 decreaseincrease in room revenue from the comparable properties was attributable to a 52.4% decreasean increase in RevPAR, primarily dueincluding 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,
20212020% Change202220212019
OccupancyOccupancy43.0 %60.5 %(29.0)%Occupancy61.2 %44.6 %76.4 %
ADRADR$118.63 $176.81 (32.9)%ADR$175.57 $120.05 $189.87 
RevPARRevPAR$50.99 $107.04 (52.4)%RevPAR$107.39 $53.54 $145.01 
 
Food and Beverage Revenue
 
Food and beverage revenue decreased $24.5increased $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 fordue to an increase in demand over the three months ended March 31, 2020.prior period. The decreaseincrease was the result of a $24.5 million decrease in food and beverage revenuealso 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 $5.3increased $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 decreaseincrease in other revenue was primarily attributable to the comparable propertiesan increase in parking, resort fees, and gift shop sales due to higher occupancy. Additionally, cancellation fees increased due to the impactspread of the Omicron variant of COVID-19 pandemic.in early 2022.

Property Operating Expenses
 
Property operating expenses decreased $99.8increased $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 decreaseincrease 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,
20212020$ Change% Change20222021$ Change
Room expenseRoom expense$29,427 $63,598 $(34,171)(53.7)%Room expense$52,279 $27,944 $24,335 
Food and beverage expenseFood and beverage expense4,560 26,378 $(21,818)(82.7)%Food and beverage expense15,747 4,470 11,277 
Management and franchise fee expenseManagement and franchise fee expense5,361 17,121 $(11,760)(68.7)%Management and franchise fee expense19,770 4,940 14,830 
Other operating expenseOther operating expense49,142 80,513 $(31,371)(39.0)%Other operating expense66,555 45,868 20,687 
Total property operating expensesTotal 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 decreaseincrease 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
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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, 20212022 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 closethat 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 $8.6increased $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 decreaseincrease 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 decreaseincrease in property tax, insurance and other expense attributable to the comparable properties included a decrease in rent expense duewas 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 $1.0increased $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 $11.82021. 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 resulting2022 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 $27.9 million for the three months ended March 31, 2021.  Interest expense decreased due to lower average debt balances and lower effective interest rates after taking into account the impact of interest rate swaps in each of the periods. The components of our interest expense for the three months ended March 31, 20212022 and 20202021 were as follows (in thousands):
For the three months ended March 31,
20212020$ Change% Change
Senior Notes$5,942 $5,944 $(2)— %
Revolver and Term Loans17,178 10,652 6,526 61.3 %
Mortgage loans3,454 4,640 (1,186)(25.6)%
Amortization of deferred financing costs1,321 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,
20222021$ Change
Senior Notes$9,743 $5,942 $3,801 
Revolver and Term Loans9,968 17,178 (7,210)
Mortgage loans3,210 3,454 (244)
Amortization of deferred financing costs1,684 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, 20212022 and 20202021 (in thousands):
 For the three months ended March 31,
 20212020
Net loss$(79,117)$(30,829)
Preferred dividends(6,279)(6,279)
Depreciation and amortization46,943 49,173 
Gain on sale of hotel properties, net(1,083)(102)
Impairment losses5,946 — 
Noncontrolling interest in consolidated joint ventures736 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 costs60 10 
Amortization of share-based compensation2,752 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)$16,870 
 For the three months ended March 31,
 20222021
Net loss$(15,469)$(79,117)
Preferred dividends(6,279)(6,279)
Depreciation and amortization46,865 46,943 
Gain on sale of hotel properties, net(1,417)(1,083)
Impairment losses— 5,946 
Noncontrolling interest in consolidated joint ventures118 736 
Adjustments related to consolidated joint ventures (1)(49)(75)
Adjustments related to unconsolidated joint ventures (2)295 294 
FFO24,064 (32,635)
Transaction costs62 60 
Amortization of share-based compensation5,185 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 incomeexpenses and expensesincome 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, 20212022 and 20202021 (in thousands):
For the three months ended March 31, For the three months ended March 31,
20212020 20222021
Net lossNet loss$(79,117)$(30,829)Net loss$(15,469)$(79,117)
Depreciation and amortizationDepreciation and amortization46,943 49,173 Depreciation and amortization46,865 46,943 
Interest expense, net of interest incomeInterest expense, net of interest income27,511 20,847 Interest expense, net of interest income24,389 27,511 
Income tax expense (benefit)114 (1,150)
Income tax expenseIncome tax expense190 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 
EBITDAEBITDA(4,139)38,659 EBITDA56,382 (4,139)
Gain on sale of hotel properties, netGain on sale of hotel properties, net(1,083)(102)Gain on sale of hotel properties, net(1,417)(1,083)
Impairment lossesImpairment losses5,946 — Impairment losses— 5,946 
EBITDAre
EBITDAre
724 38,557 
EBITDAre
54,965 724 
Transaction costsTransaction costs60 10 Transaction costs62 60 
Amortization of share-based compensationAmortization of share-based compensation2,752 2,696 Amortization of share-based compensation5,185 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 EBITDAAdjusted 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 incomeexpenses and expensesincome 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 inprovided by operating activities totaled $29.0$10.3 million and the net cash flow provided byused in operating activities totaled $30.1$29.0 million for the three months ended March 31, 20212022 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, 20212022 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 investingfinancing activities totaled $29.4$211.7 million for the three months ended March 31, 20202022 primarily due to $31.0the $200.0 million repayment of the outstanding balance on the Revolver, $7.9 million in routine capital improvementsdistributions to shareholders and additionsunitholders, $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 repaymentpay 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 decreasehave 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):
20212022202320242025Total 20222023202420252026ThereafterTotal
Fixed rate debt (1)Fixed rate debt (1)$2,379 $140,386 $— $— $474,888 $617,653 Fixed rate debt (1)$— $— $— $— $500,000 $525,000$1,025,000 
Weighted-average interest rateWeighted-average interest rate5.01 %5.01 %— %— %6.00 %5.77 %Weighted-average interest rate— %— %— %— %3.75 %4.05 %3.90 %
Variable rate debt (1)Variable rate debt (1)$— $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 adjustmentsadjustment 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, 20212022 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, 20212022 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:
PeriodTotal 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, 2021387 $14.28 — 16,528,029 
February 1, 2021 through February 28, 202182,857 $15.17 — 13,590,882 
March 1, 2021 through March 31, 2021— $— — — 
Total83,244  —  
PeriodTotal 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/AN/A
February 1, 2022 through February 28, 202287,626 $14.48 N/AN/A
March 1, 2022 through March 31, 2022— $— N/AN/A
Total87,626  —  
(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 20152021 Plan.
(2)The maximum number of shares that may yet be repurchased under thea 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:
 NomineeVotes ForVotes AgainstAbstentionsBroker
Non-Votes
Robert L. Johnson  137,771,141  2,430,741675,31010,181,077
Leslie D. Hale140,540,676  325,57710,93910,181,077
Evan Bayh  136,686,135  4,179,03712,02010,181,077
Arthur R. Collins138,079,4412,788,3619,39010,181,077
Nathaniel A. Davis127,627,86813,236,80312,52110,181,077
Patricia L. Gibson139,664,2431,197,77415,17510,181,077
Robert M. La Forgia  139,266,448  1,597,85112,89310,181,077
Robert J. McCarthy  139,547,817  1,316,48312,89210,181,077
Robin Zeigler132,577,4968,287,26712,42910,181,077
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 AbstentionsBroker 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 AbstentionsBroker Non-Votes
36,852,166 104,002,223 22,80310,181,077

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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
3.2
3.3
3.4
3.5
3.6
31.1* 
31.2* 
32.1* 
101.INS Inline XBRL Instance Document Submitted electronically with this report
101.SCH Inline XBRL Taxonomy Extension Schema Document Submitted electronically with this report
101.CAL Inline XBRL Taxonomy Calculation Linkbase Document Submitted electronically with this report
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Submitted electronically with this report
101.LAB Inline XBRL Taxonomy Label Linkbase Document Submitted electronically with this report
101.PRE Inline XBRL Taxonomy Presentation Linkbase Document Submitted electronically with this report
104Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)Submitted electronically with this report

 *Filed herewith


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Table of Contents
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 RLJ LODGING TRUST
  
Dated: May 6, 20215, 2022/s/ LESLIE D. HALE
 Leslie D. Hale
 President and Chief Executive Officer
Dated: May 6, 20215, 2022/s/ SEAN M. MAHONEY
 Sean M. Mahoney
 Executive Vice President and Chief Financial Officer
 (Principal Financial Officer)
Dated: May 6, 20215, 2022/s/ CHRISTOPHER A. GORMSEN
 Christopher A. Gormsen
 Senior Vice President and Chief Accounting Officer
 (Principal Accounting Officer)
35