Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 13, 2020 | Jun. 28, 2019 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-32319 | ||
Entity Registrant Name | Sunstone Hotel Investors, Inc. | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 20-1296886 | ||
Entity Address, Address Line One | 200 Spectrum Center Drive, 21st Floor | ||
Entity Address, City or Town | Irvine | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92618 | ||
City Area Code | 949 | ||
Local Phone Number | 330-4000 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 3.1 | ||
Entity Common Stock, Shares Outstanding | 225,115,704 | ||
Entity Central Index Key | 0001295810 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Common Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Common Stock, $0.01 par value | ||
Trading Symbol | SHO | ||
Security Exchange Name | NYSE | ||
Series E Cumulative Redeemable Preferred Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Series E Cumulative Redeemable Preferred Stock, $0.01 par value | ||
Trading Symbol | SHO.PRE | ||
Security Exchange Name | NYSE | ||
Series F Cumulative Redeemable Preferred Stock | |||
Document Information [Line Items] | |||
Title of 12(b) Security | Series F Cumulative Redeemable Preferred Stock, $0.01 par value | ||
Trading Symbol | SHO.PRF | ||
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 816,857 | $ 809,316 |
Restricted cash | 48,116 | 53,053 |
Accounts receivable, net | 35,209 | 33,844 |
Prepaid expenses and other current assets | 13,550 | 12,261 |
Total current assets | 913,732 | 908,474 |
Investment in hotel properties, net | 2,872,353 | 3,030,998 |
Finance lease right-of-use asset, net | 47,652 | |
Operating lease right-of-use assets, net | 60,629 | |
Deferred financing costs, net | 2,718 | 3,544 |
Other assets, net | 21,890 | 29,817 |
Total assets | 3,918,974 | 3,972,833 |
Current liabilities: | ||
Accounts payable and accrued expenses | 35,614 | 30,425 |
Accrued payroll and employee benefits | 25,002 | 25,039 |
Dividends and distributions payable | 135,872 | 126,461 |
Other current liabilities | 46,955 | 44,962 |
Current portion of notes payable, net | 82,109 | 5,838 |
Total current liabilities | 325,552 | 232,725 |
Notes payable, less current portion, net | 888,954 | 971,225 |
Finance lease obligation, less current portion | 15,570 | 27,009 |
Operating lease obligations, less current portion | 49,691 | |
Other liabilities | 18,136 | 30,703 |
Total liabilities | 1,297,903 | 1,261,662 |
Commitments and contingencies (Note 13) | ||
Equity | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 224,855,351 shares issued and outstanding at December 31, 2019 and 228,246,247 shares issued and outstanding at December 31, 2018 | 2,249 | 2,282 |
Additional paid in capital | 2,683,913 | 2,728,684 |
Retained earnings | 1,318,455 | 1,182,722 |
Cumulative dividends and distributions | (1,619,779) | (1,440,202) |
Total stockholders' equity | 2,574,838 | 2,663,486 |
Noncontrolling interest in consolidated joint venture | 46,233 | 47,685 |
Total equity | 2,621,071 | 2,711,171 |
Total liabilities and equity | 3,918,974 | 3,972,833 |
Series E Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | 115,000 | 115,000 |
Series F Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | $ 75,000 | $ 75,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 224,855,351 | 228,246,247 |
Common stock, shares outstanding (in shares) | 224,855,351 | 228,246,247 |
Series E Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.95% | 6.95% |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 4,600,000 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,600,000 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | $ 25 |
Series F Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.45% | 6.45% |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 3,000,000 | 3,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 3,000,000 | 3,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | $ 25 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
REVENUES | |||
Total revenues | $ 1,115,167 | $ 1,159,053 | $ 1,193,638 |
OPERATING EXPENSES | |||
Advertising and promotion | 54,369 | 55,523 | 58,572 |
Repairs and maintenance | 41,619 | 43,111 | 46,298 |
Utilities | 27,311 | 29,324 | 30,419 |
Franchise costs | 32,265 | 35,423 | 36,681 |
Property tax, ground lease and insurance | 83,265 | 82,414 | 83,716 |
Other property-level expenses | 130,321 | 132,419 | 138,525 |
Corporate overhead | 30,264 | 30,247 | 28,817 |
Depreciation and amortization | 147,748 | 146,449 | 158,634 |
Impairment loss | 24,713 | 1,394 | 40,053 |
Total operating expenses | 977,794 | 977,163 | 1,052,633 |
Interest and other income | 16,557 | 10,500 | 4,340 |
Interest expense | (54,223) | (47,690) | (51,766) |
Gain on sale of assets | 42,935 | 116,961 | 45,474 |
Loss on extinguishment of debt | (835) | (824) | |
Income before income taxes and discontinued operations | 142,642 | 260,826 | 138,229 |
Income tax benefit (provision), net | 151 | (1,767) | 7,775 |
Income from continuing operations | 142,793 | 259,059 | 146,004 |
Income from discontinued operations | 7,000 | ||
NET INCOME | 142,793 | 259,059 | 153,004 |
Income from consolidated joint venture attributable to noncontrolling interest | (7,060) | (8,614) | (7,628) |
Preferred stock dividends | (12,830) | (12,830) | (12,830) |
INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ 122,903 | $ 237,615 | $ 132,546 |
Basic and diluted per share amounts: | |||
Income from continuing operations attributable to common stockholders (in dollars per share) | $ 0.54 | $ 1.05 | $ 0.56 |
Income from discontinued operations (in dollars per share) | 0.03 | ||
Basic and diluted income attributable to common stockholders per common share (in dollars per share) | $ 0.54 | $ 1.05 | $ 0.59 |
Basic and diluted weighted average common shares outstanding (in shares) | 225,681 | 225,924 | 221,898 |
Room | |||
REVENUES | |||
Revenues | $ 767,392 | $ 799,369 | $ 829,320 |
OPERATING EXPENSES | |||
Expenses | 202,889 | 210,204 | 213,301 |
Food and beverage | |||
REVENUES | |||
Revenues | 272,869 | 284,668 | 296,933 |
OPERATING EXPENSES | |||
Expenses | 186,436 | 193,486 | 201,225 |
Other operating | |||
REVENUES | |||
Revenues | 74,906 | 75,016 | 67,385 |
OPERATING EXPENSES | |||
Expenses | $ 16,594 | $ 17,169 | $ 16,392 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Series E Cumulative Redeemable Preferred StockPreferred Stock | Series E Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series E Cumulative Redeemable Preferred Stock | Series F Cumulative Redeemable Preferred StockPreferred Stock | Series F Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series F Cumulative Redeemable Preferred Stock | Common Stock | Additional Paid In Capital | Retained Earnings | Cumulative dividends and distributions | Noncontrolling Interest in Consolidated Joint Venture | Total |
Beginning Balance at Dec. 31, 2016 | $ 115,000 | $ 75,000 | $ 2,201 | $ 2,596,620 | $ 786,901 | $ (1,092,952) | $ 49,062 | $ 2,531,832 | ||||
Beginning Balance (in shares) at Dec. 31, 2016 | 4,600,000 | 3,000,000 | 220,073,140 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 8,514 | 8,514 | ||||||||||
Issuance of restricted common stock, net | $ 4 | (3,797) | (3,793) | |||||||||
Issuance of restricted common stock, net (in shares) | 404,963 | |||||||||||
Forfeiture of restricted common stock (in shares) | (33,298) | |||||||||||
Common stock distributions and distributions payable | (164,231) | (164,231) | ||||||||||
Preferred stock dividends and dividends payable | $ (7,993) | $ (7,993) | $ (4,837) | $ (4,837) | ||||||||
Distributions to noncontrolling interest | (8,250) | (8,250) | ||||||||||
Net proceeds from sale of common stock | $ 48 | 77,884 | 77,932 | |||||||||
Number of shares of common stock sold (in shares) | 4,876,855 | |||||||||||
Net income | 145,376 | 7,628 | 153,004 | |||||||||
Ending Balance at Dec. 31, 2017 | $ 115,000 | $ 75,000 | $ 2,253 | 2,679,221 | 932,277 | (1,270,013) | 48,440 | 2,582,178 | ||||
Ending Balance (in shares) at Dec. 31, 2017 | 4,600,000 | 3,000,000 | 225,321,660 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 9,383 | 9,383 | ||||||||||
Issuance of restricted common stock, net | $ 4 | (4,236) | (4,232) | |||||||||
Issuance of restricted common stock, net (in shares) | 346,526 | |||||||||||
Forfeiture of restricted common stock | $ (1) | 1 | ||||||||||
Forfeiture of restricted common stock (in shares) | (12,793) | |||||||||||
Common stock distributions and distributions payable | (157,359) | (157,359) | ||||||||||
Preferred stock dividends and dividends payable | (7,992) | (7,992) | (4,838) | (4,838) | ||||||||
Distributions to noncontrolling interest | (9,369) | (9,369) | ||||||||||
Net proceeds from sale of common stock | $ 26 | 44,315 | 44,341 | |||||||||
Number of shares of common stock sold (in shares) | 2,590,854 | |||||||||||
Net income | 250,445 | 8,614 | 259,059 | |||||||||
Ending Balance at Dec. 31, 2018 | $ 115,000 | $ 75,000 | $ 2,282 | 2,728,684 | 1,182,722 | (1,440,202) | 47,685 | 2,711,171 | ||||
Ending Balance (in shares) at Dec. 31, 2018 | 4,600,000 | 3,000,000 | 228,246,247 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 9,719 | 9,719 | ||||||||||
Issuance of restricted common stock, net | $ 4 | (4,439) | (4,435) | |||||||||
Issuance of restricted common stock, net (in shares) | 396,972 | |||||||||||
Forfeiture of restricted common stock (in shares) | (3,932) | |||||||||||
Common stock distributions and distributions payable | (166,747) | (166,747) | ||||||||||
Preferred stock dividends and dividends payable | $ (7,993) | $ (7,993) | $ (4,837) | $ (4,837) | ||||||||
Distributions to noncontrolling interest | (8,512) | (8,512) | ||||||||||
Repurchase of outstanding common stock | $ (37) | (50,051) | (50,088) | |||||||||
Repurchase of outstanding common stock (in shares) | (3,783,936) | |||||||||||
Net income | 135,733 | 7,060 | 142,793 | |||||||||
Ending Balance at Dec. 31, 2019 | $ 115,000 | $ 75,000 | $ 2,249 | $ 2,683,913 | $ 1,318,455 | $ (1,619,779) | $ 46,233 | $ 2,621,071 | ||||
Ending Balance (in shares) at Dec. 31, 2019 | 4,600,000 | 3,000,000 | 224,855,351 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Common stock distributions and distributions payable, per share (in dollars per share) | $ 0.74 | $ 0.69 | $ 0.73 |
Series E Cumulative Redeemable Preferred Stock | |||
Preferred stock dividends and dividends payable (in dollars per share) | 1.7375 | 1.7375 | 1.7375 |
Series F Cumulative Redeemable Preferred Stock | |||
Preferred stock dividends and dividends payable (in dollars per share) | $ 1.6125 | $ 1.6125 | $ 1.6125 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 142,793 | $ 259,059 | $ 153,004 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Bad debt expense | 361 | 815 | 730 |
Gain on sale of assets | (42,935) | (116,916) | (52,747) |
Loss on extinguishment of debt | 835 | 824 | |
Noncash interest on derivatives and finance lease obligations, net | 6,051 | (1,190) | 3,106 |
Depreciation | 147,669 | 144,958 | 155,962 |
Amortization of franchise fees and other intangibles | 79 | 1,582 | 3,141 |
Amortization of deferred financing costs | 2,791 | 2,947 | 2,409 |
Amortization of deferred stock compensation | 9,313 | 9,007 | 8,042 |
Impairment loss | 24,713 | 1,394 | 40,053 |
(Gain) loss on hurricane-related damage | (1,100) | 201 | |
Deferred income taxes, net | 688 | 1,132 | (9,235) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (1,726) | 905 | 3,175 |
Prepaid expenses and other assets | (1,387) | 189 | (1,836) |
Accounts payable and other liabilities | 2,935 | 3,322 | (822) |
Accrued payroll and employee benefits | 357 | (1,648) | 784 |
Operating lease right-of-use assets and obligations | (782) | ||
Net cash provided by operating activities | 290,920 | 305,291 | 306,791 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Proceeds from sales of assets | 49,538 | 348,032 | 150,215 |
Proceeds from property insurance | 1,100 | ||
Acquisitions of hotel property and other assets | (705) | (15,147) | (173,728) |
Acquisitions of intangible assets | (25) | (18,543) | |
Renovations and additions to hotel properties and other assets | (95,958) | (159,076) | (115,097) |
Payment for interest rate derivatives | (125) | ||
Net cash (used in) provided by investing activities | (47,150) | 156,366 | (138,735) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from common stock offerings | 45,125 | 79,407 | |
Payment of common stock offering costs | (784) | (1,475) | |
Repurchases of outstanding common stock | (50,088) | ||
Repurchase of common stock for employee tax obligations | (4,435) | (4,232) | (3,793) |
Proceeds from notes payable and debt restructuring | 65,000 | 460,000 | |
Payments on notes payable and debt restructuring | (7,965) | (72,574) | (405,542) |
Payments of costs related to extinguishment of debt | (131) | (1) | |
Payments of deferred financing costs | (4,012) | (3,537) | |
Dividends and distributions paid | (170,166) | (177,622) | (163,014) |
Distributions to noncontrolling interest | (8,512) | (9,369) | (8,250) |
Net cash used in financing activities | (241,166) | (158,599) | (46,205) |
Net increase in cash and cash equivalents and restricted cash | 2,604 | 303,058 | 121,851 |
Cash and cash equivalents and restricted cash, beginning of year | 862,369 | 559,311 | 437,460 |
Cash and cash equivalents and restricted cash, end of year | 864,973 | 862,369 | 559,311 |
Supplemental Disclosure of Cash Flow Information | |||
Cash and cash equivalents | 816,857 | 809,316 | 488,002 |
Restricted cash | 48,116 | 53,053 | 71,309 |
Cash and cash equivalents and restricted cash, end of year | 864,973 | 862,369 | 559,311 |
Cash paid for interest | 45,301 | 44,795 | 40,987 |
Cash (refund) paid for income taxes, net | (395) | 693 | 1,433 |
Supplemental Disclosure of Noncash Investing and Financing Activities | |||
Accrued renovations and additions to hotel properties and other assets | 9,771 | 10,534 | 13,040 |
Amortization of deferred stock compensation - construction activities | 406 | 376 | 472 |
Assignment of finance lease obligation in connection with disposition of hotel | (11,620) | ||
Increase in unsecured term loans due to debt restructuring | 50,000 | ||
Decrease in unsecured term loans due to debt restructuring | (50,000) | ||
Dividends and distributions payable | $ 135,872 | $ 126,461 | $ 133,894 |
Organization and Description of
Organization and Description of Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Description of Business | |
Organization and Description of Business | 1. Organization and Description of Business Sunstone Hotel Investors, Inc. (the “Company”) was incorporated in Maryland on June 28, 2004 in anticipation of an initial public offering of common stock, which was consummated on October 26, 2004. The Company elected to be taxed as a real estate investment trust (“REIT”) for federal income tax purposes, commencing with its taxable year ended on December 31, 2004. The Company, through its 100% controlling interest in Sunstone Hotel Partnership, LLC (the “Operating Partnership”), of which the Company is the sole managing member, and the subsidiaries of the Operating Partnership, including Sunstone Hotel TRS Lessee, Inc. (the “TRS Lessee”) and its subsidiaries, is currently engaged in acquiring, owning, asset managing and renovating or repositioning hotel properties, and may also selectively sell hotels that no longer fit its stated strategy. As a REIT, certain tax laws limit the amount of “non-qualifying” income the Company can earn, including income derived directly from the operation of hotels. The Company leases all of its hotels to its TRS Lessee, which in turn enters into long-term management agreements with third parties to manage the operations of the Company’s hotels, in transactions that are intended to generate qualifying income. As of December 31, 2019, the Company had interests in 20 hotels (the “20 Hotels”), currently held for investment. The Company’s third-party managers included the following: Number of Hotels Subsidiaries of Marriott International, Inc. or Marriott Hotel Services, Inc. (collectively, “Marriott”) 8 Highgate Hotels L.P. and an affiliate 3 Crestline Hotels & Resorts 2 Hilton Worldwide 2 Interstate Hotels & Resorts, Inc. 2 Davidson Hotels & Resorts 1 Hyatt Corporation 1 Singh Hospitality, LLC 1 Total hotels owned as of December 31, 2019 20 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017, include the accounts of the Company, the Operating Partnership, the TRS Lessee and their controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. If the Company determines that it has an interest in a variable interest entity, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity. The Company does not have any comprehensive income other than what is included in net income. If the Company has any comprehensive income in the future such that a statement of comprehensive income would be necessary, the Company will include such statement in one continuous consolidated statement of operations. Certain prior year amounts in these financial statements have been reclassified to conform to the presentation for the year ended December 31, 2019. The Company has evaluated subsequent events through the date of issuance of these financial statements. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and in various bank accounts plus credit card receivables and all short-term investments with an original maturity of three months or less. The Company maintains cash and cash equivalents and certain other financial instruments with various financial institutions. These financial institutions are located throughout the country and the Company’s policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. At December 31, 2019 and 2018, the Company had amounts in banks that were in excess of federally insured amounts. Restricted Cash Restricted cash is comprised of reserve accounts for debt service, interest reserves, seasonality reserves, capital replacements, ground leases, property taxes and excess hotel-generated cash that is held in an account for the benefit of a lender. These restricted funds are subject to supervision and disbursement approval by certain of the Company’s lenders and/or hotel managers. Restricted cash may also include earnest money received from a buyer of one of the Company’s hotels and held in escrow until the sale is complete. Accounts Receivable Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. Accounts receivable also includes, among other things, receivables from tenants who lease space in the Company’s hotels. The Company maintains an allowance for doubtful accounts sufficient to cover potential credit losses. Acquisitions of Hotel Properties and Other Entities Accounting for the acquisition of a hotel property or other entity requires an allocation of the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective relative fair values for an asset acquisition or at their estimated fair values for a business combination. The most difficult estimations of individual fair values are those involving long-lived assets, such as property, equipment and intangible assets, together with any finance or operating lease right-of-use assets and their related obligations. When the Company acquires a hotel property or other entity, it uses all available information to make these fair value determinations, and engages independent valuation specialists to assist in the fair value determinations of the long-lived assets acquired and the liabilities assumed. Due to the inherent subjectivity in determining the estimated fair value of long-lived assets, the Company believes that the recording of acquired assets and liabilities is a critical accounting policy. In addition, the acquisition of a hotel property or other entity requires an analysis of the transaction to determine if it qualifies as the purchase of a business or an asset. If the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the transaction is an asset acquisition. Transaction costs associated with asset acquisitions are capitalized and subsequently depreciated over the life of the related asset, while the same costs associated with a business combination are expensed as incurred and included in corporate overhead on the Company’s consolidated statements of operations. Also, asset acquisitions are not subject to a measurement period, as are business combinations. Investments in Hotel Properties Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at fair value upon acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation is removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations. Depreciation expense is based on the estimated life of the Company’s assets. The life is based on a number of assumptions, including the cost and timing of capital expenditures to maintain and refurbish the Company’s hotels, as well as specific market and economic conditions. Hotel properties are depreciated using the straight-line method over estimated useful lives primarily ranging from five to 40 years for buildings and improvements and three to 12 years for FF&E. Finance lease right-of-use assets other than land are depreciated using the straight-line method over the shorter of either their estimated useful life or the life of the related finance lease obligation. Intangible assets are amortized using the straight-line method over the shorter of their estimated useful life or the length of the related agreement. The Company’s investment in hotel properties, net also includes initial franchise fees which are recorded at cost and amortized using the straight-line method over the terms of the franchise agreements ranging from 14 to 27 years . All other franchise fees that are based on the Company’s results of operations are expensed as incurred. While the Company believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net income or the gain or loss on the sale of any of the Company’s hotels. The Company has not changed the useful lives of any of its assets during the periods discussed. Impairment losses are recorded on long-lived assets to be held and used by the Company when indicators of impairment are present and the future undiscounted net cash flows, including potential sale proceeds, expected to be generated by those assets, based on the Company’s anticipated investment horizon, are less than the assets’ carrying amount. No single indicator would necessarily result in the Company preparing an estimate to determine if a hotel’s future undiscounted cash flows are less than the book value of the hotel. The Company uses judgment to determine if the severity of any single indicator, or the fact there are a number of indicators of less severity that when combined, would result in an indication that a hotel requires an estimate of the undiscounted cash flows to determine if an impairment has occurred. If a hotel is considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The Company performs a fair value assessment, using a discounted cash flow analysis to estimate the fair value of the hotel, taking into account the hotel’s expected cash flow from operations, the Company’s estimate of how long it will continue to own the hotel and the estimated proceeds from the disposition of the hotel. The factors addressed in determining estimated proceeds from disposition include anticipated operating cash flow in the year of disposition and terminal capitalization rate. The Company’s judgement is required in determining the discount rate applied to estimated cash flows, the estimated growth of revenues and expenses, net operating income and margins, the need for capital expenditures, as well as specific market and economic conditions. Based on the Company’s review, one hotel was impaired in 2019, and two hotels were impaired during 2018 and 2017 (see Note 5). Fair value represents the amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than a forced or liquidation sale. The estimation process involved in determining if assets have been impaired and in the determination of fair value is inherently uncertain because it requires estimates of current market yields as well as future events and conditions. Such future events and conditions include economic and market conditions, as well as the availability of suitable financing. The realization of the Company’s investment in hotel properties is dependent upon future uncertain events and conditions and, accordingly, the actual timing and amounts realized by the Company may be materially different from their estimated fair values. Assets Held for Sale The Company considers a hotel held for sale if it is probable that the sale will be completed within twelve months , among other requirements. A sale is considered to be probable once the buyer completes its due diligence of the asset, there is an executed purchase and sale agreement between the Company and the buyer, the buyer waives any closing contingencies, there are no third-party approvals necessary and the Company has received a substantial non-refundable deposit. Depreciation ceases when a property is held for sale. Should an impairment loss be required for assets held for sale, the related assets are adjusted to their estimated fair values, less costs to sell. If the sale of the hotel represents a strategic shift that will have a major effect on the Company’s operations and financial results, the hotel qualifies as a discontinued operation, and operating results are removed from income from continuing operations and reported as discontinued operations. The operating results for any such assets for any prior periods presented must also be reclassified as discontinued operations. No hotels were considered held for sale as of either December 31, 2019 or 2018. Deferred Financing Costs Deferred financing costs consist of loan fees and other financing costs related to the Company’s outstanding indebtedness and credit facility commitments, and are amortized to interest expense over the terms of the related debt or commitment. If a loan is refinanced or paid before its maturity, any unamortized deferred financing costs will generally be expensed unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs related to the Company’s undrawn credit facility are included on the Company’s consolidated balance sheets as an asset, and are amortized ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. Deferred financing costs related to the Company’s outstanding debt are included on the Company’s consolidated balance sheets as a contra-liability (see Note 7), and subsequently amortized ratably over the term of the related debt. Interest Rate Derivatives The Company’s objective in holding interest rate derivatives is to manage its exposure to the interest rate risks related to its floating rate debt. To accomplish this objective, the Company uses interest rate caps and swaps, none of which qualifies for effective hedge accounting treatment. The Company records interest rate caps and swaps on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in the consolidated statements of operations. Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to hotel guests, which is generally defined as the date upon which a guest occupies a room and/or utilizes the hotel’s services. Room revenue is recognized over a guest’s stay at a previously agreed upon daily rate. Additionally, some of the Company’s hotel rooms are booked through independent internet travel intermediaries. If the guest pays the independent internet travel intermediary directly, revenue for the room is recognized by the Company at the price the Company sold the room to the independent internet travel intermediary, less any discount or commission paid. If the guest pays the Company directly, revenue for the room is recognized by the Company on a gross basis, with the related discount or commission recognized in room expense. A majority of the Company’s hotels participate in frequent guest programs sponsored by the hotel brand owners whereby the hotel allows guests to earn loyalty points during their hotel stay. The Company expenses charges associated with these programs as incurred, and recognizes revenue at the amount it will receive from the brand when a guest redeems their loyalty points by staying at one of the Company’s hotels. In addition, some contracts for rooms or food and beverage services require an advance deposit, which the Company records as deferred revenue (or a contract liability) and recognizes once the performance obligations are satisfied. Food and beverage revenue and other ancillary services revenue are generated when a customer chooses to purchase goods or services separately from a hotel room. These revenue streams are recognized during the time the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For those ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. Additionally, the Company collects sales, use, occupancy and other similar taxes at its hotels. These taxes are collected from customers at the time of purchase, but are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency. Trade receivables and contract liabilities consisted of the following (in thousands): December 31, December 31, 2019 2018 Trade receivables, net (1) $ 21,201 $ 18,982 Contract liabilities (2) $ 18,498 $ 16,711 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits, and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. During 2019 and 2018, the Company recognized revenue of approximately $16.7 million and $13.2 million, respectively, related to its outstanding contract liabilities. Advertising and Promotion Costs Advertising and promotion costs are expensed when incurred. Advertising and promotion costs represent the expense for advertising and reservation systems under the terms of the hotel franchise and brand management agreements and general and administrative expenses that are directly attributable to advertising and promotions. Stock Based Compensation Compensation expense related to awards of restricted shares are measured at fair value on the date of grant and amortized over the relevant requisite service period or derived service period. Income Taxes The Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, the TRS Lessee, which leases the Company’s hotels from the Operating Partnership, is subject to federal and state 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 reviews any uncertain tax positions and, if necessary, records the expected future tax consequences of uncertain tax positions in its consolidated financial statements. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. The Company recognizes any penalties and interest related to unrecognized tax benefits in income tax expense in its consolidated statements of operations. Noncontrolling Interest The Company’s consolidated financial statements include an entity in which the Company has a controlling financial interest. Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interest is reported on the consolidated balance sheets within equity, separately from the Company’s equity. On the consolidated statements of operations, revenues, expenses and net income or loss from the less-than-wholly-owned subsidiary are reported at their consolidated amounts, including both the amounts attributable to the Company and the noncontrolling interest. Income or loss is allocated to the noncontrolling interest based on its weighted average ownership percentage for the applicable period. The consolidated statements of equity include beginning balances, activity for the period and ending balances for each component of stockholders’ equity, noncontrolling interest and total equity. At December 31, 2019, 2018 and 2017, the noncontrolling interest reported in the Company’s consolidated financial statements consisted of a third-party’s 25.0% ownership interest in the Hilton San Diego Bayfront. Dividends Under current federal income tax laws related to REITs, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders. Currently, the Company pays quarterly cash dividends to its common stockholders, as well as to the preferred stockholders of its 6.95% Series E Cumulative Redeemable Preferred Stock (“Series E preferred stock”) and its 6.45% Series F Cumulative Preferred Stock (“Series F preferred stock”) as declared by the Company’s board of directors. The Company’s ability to pay dividends is dependent on the receipt of distributions from the Operating Partnership. Earnings Per Share The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated assuming all of the Company’s net income is distributed as dividends to each class of stock based on their contractual rights. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share. Basic earnings (loss) attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock awards and the incremental common shares issuable upon the exercise of stock options (before their expiration in April 2018), using the more dilutive of either the two-class method or the treasury stock method. The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): Year Ended Year Ended Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Numerator: Net income $ 142,793 $ 259,059 $ 153,004 Income from consolidated joint venture attributable to noncontrolling interest (7,060) (8,614) (7,628) Preferred stock dividends (12,830) (12,830) (12,830) Distributions paid on unvested restricted stock compensation (901) (814) (860) Undistributed income allocated to unvested restricted stock compensation — (422) — Numerator for basic and diluted income attributable to common stockholders $ 122,002 $ 236,379 $ 131,686 Denominator: Weighted average basic and diluted common shares outstanding 225,681 225,924 221,898 Basic and diluted income attributable to common stockholders per common share $ 0.54 $ 1.05 $ 0.59 The Company’s unvested restricted shares associated with its long-term incentive plan and shares associated with common stock options, as applicable, have been excluded from the above calculation of earnings per share for the years ended December 31, 2019, 2018 and 2017, as their inclusion would have been anti-dilutive. Segment Reporting The Company considers each of its hotels to be an operating segment, and allocates resources and assesses the operating performance for each hotel. Because all of the Company’s hotels have similar economic characteristics, facilities and services, the hotels have been aggregated into a single reportable segment, hotel ownership. New Accounting Standards and Accounting Changes In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, “ Leases (Topic 842) ” (“ASU No. 2016-02”), which requires companies to record a right-of-use asset and a lease liability on the balance sheet for all leases with a term greater than 12 months regardless of their classification. All entities will classify leases as either operating or finance to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessees and lessors record on the balance sheet. The new standard requires the following: ● Lessees: Leases are accounted for using a dual approach, classifying leases as either operating or financing based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized on a straight-line basis over the term of the lease (for operating leases) or based on an effective interest method (for finance leases). A lessee is required to record a right-of-use asset and a lease liability on its balance sheet for all leases with a term of greater than 12 months regardless of their classification as operating or finance leases. ● Lessors: Leases are accounted for using an approach that is substantially equivalent to existing guidance for operating, sales-type and financing leases, but aligned with the FASB’s revenue standard. Subsequent to the issuance of ASU No. 2016-02, the FASB issued several clarifications and updates, including Accounting Standards Update No. 2018-01, “ Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 ” (“ASU No. 2018-01”) in January 2018, Accounting Standards Update No. 2018-10, “ Codification Improvements to Topic 842, Leases ” (“ASU No. 2018-10”) and Accounting Standards Update No. 2018-11, “ Leases (Topic 842): Targeted Improvements ” (“ASU No. 2018-11”) in July 2018, Accounting Standards Update No. 2018-20, “ Leases (Topic 842): Narrow-Scope Improvements for Lessors ” (“ASU No. 2018-20”) in December 2018 and Accounting Standards Update No. 2019-01, “ Leases (Topic 842): Codification Improvements ” (“ASU No. 2019-01”) in March 2019. The Company adopted ASU No. 2016-02 on January 1, 2019, along with its related clarifications and amendments, and made the following elections: ● to not separate lease components from nonlease components by underlying asset. By making this election, the Company is required to account for the nonlease components together with the related lease components as a single lease component (ASU No. 2016-02); ● to not reassess whether a land easement not previously accounted for as a lease would now be a lease (ASU No. 2018-01); ● to not reassess whether an expired or existing contract meets the definition of a lease (ASU No. 2018-11); ● to not reassess the lease classification at the adoption date for existing leases (ASU No. 2018-11); ● to not reassess whether costs previously capitalized as initial direct costs would continue to be amortized (ASU No. 2018-11); ● to apply the optional modified retrospective transition approach, allowing companies to initially apply the standard at the adoption date without revising comparable periods (ASU No. 2018-11); and ● to not evaluate whether sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset (ASU No. 2018-20). Lessee Perspective The adjustments related to operating leases affected the Company’s January 1, 2019 consolidated balance sheet as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Operating lease right-of-use assets, net $ — $ 64,075 $ 64,075 Investment in hotel properties, net (intangible assets) $ 50,889 (18,398) $ 32,491 Total asset adjustments $ 45,677 Operating lease obligations, current and noncurrent $ — $ 58,663 $ 58,663 Other liabilities (deferred rent) $ 12,986 (12,986) $ — Total liability adjustments $ 45,677 Upon adoption of the new standard, the Company reclassified amounts related to its finance leases as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Finance lease right-of-use assets, net $ — $ 55,727 $ 55,727 Investment in hotel properties, net (land) $ 611,993 (6,605) $ 605,388 Investment in hotel properties, net (buildings and improvements, net of accumulated depreciation) $ 2,167,680 (49,122) $ 2,118,558 Total asset adjustments $ — Finance lease obligations, current and noncurrent $ — $ 27,010 $ 27,010 Capital lease obligations, current and noncurrent $ 27,010 (27,010) $ — Total liability adjustments $ — The Company determines if a contract is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than 12 months , the Company records a ROU asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. Operating lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes. Operating lease ROU assets are recognized at the lease commencement date, and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Lessor Perspective : For lease agreements in which the Company is the lessor, the Company analyzed the impact of the standard and determined that there was no material impact to the recognition, measurement, or presentation of these revenues. Upon adoption, the Company analyzed the lease and nonlease components, including real estate taxes and common area maintenance expenses, of its lease agreements and determined that the timing and pattern of transfer for both components are the same. In addition, the Company determined that the predominate component was the lease component and, as such, the leases will continue to qualify as operating leases and the Company will account for and present the lease component and the nonlease component as a single component. The Company will continue to collect nonlease amounts directly from its tenants, including real estate taxes and other expenses, and remit these amounts directly to third-parties. None of the Company’s tenants pay third-parties directly. The Company believes that all of its tenant receivables are probable of collection as of December 31, 2019. See Note 9 for additional lease disclosures. In June 2016, the FASB issued Accounting Standards Update No. 20 |
Investment in Hotel Properties
Investment in Hotel Properties | 12 Months Ended |
Dec. 31, 2019 | |
Investment in Hotel Properties | |
Investment in Hotel Properties | 3. Investment in Hotel Properties Investment in hotel properties, net consisted of the following (in thousands): December 31, 2019 2018 Land $ 601,181 $ 611,993 Buildings and improvements 2,950,534 2,983,308 Furniture, fixtures and equipment 506,754 486,441 Intangible assets 32,610 56,021 Franchise fees 743 778 Construction in progress 40,639 60,744 Investment in hotel properties, gross 4,132,461 4,199,285 Accumulated depreciation and amortization (1,260,108) (1,168,287) Investment in hotel properties, net $ 2,872,353 $ 3,030,998 In 2019, the Company recorded an impairment loss of $24.7 million on the Renaissance Harborplace (see Note 5). Intangible Assets Intangible assets included in the Company’s investment in hotel properties, net consisted of the following (in thousands): December 31, 2019 2018 Easement/Element agreements (1) $ 28,163 $ 28,163 Ground lease/airspace agreements (2) 3,486 25,585 In-place lease agreements (3) — 1,312 Below market management agreement (4) 961 961 32,610 56,021 Accumulated amortization (685) (5,132) $ 31,925 $ 50,889 Amortization expense on these intangible assets for the years ended December 31, 2019, 2018 and 2017 consisted of the following (in thousands): 2019 2018 2017 Ground lease/airspace agreements (2) $ — $ 255 $ 255 In-place lease agreements (3) 35 237 276 Below market management agreement (4) 91 91 299 Advanced bookings (5) — 1,201 2,340 Above market lease agreements (6) — 8 16 $ 126 $ 1,792 $ 3,186 (1) The Easement/Element agreements as of both December 31, 2019 and 2018 consisted of an easement at the Hilton Times Square, and the exclusive perpetual rights to certain space at the Renaissance Washington DC (the “Element”), both of which were valued at fair value at the date of acquisition. The agreements have indefinite useful lives, and, therefore, are not amortized. These non-amortizable intangible assets are reviewed annually for impairment and more frequently if events or circumstances indicate that the asset may be impaired. If a non-amortizable intangible asset is subsequently determined to have a finite useful life, the intangible asset will be written down to the lower of its fair value or carrying amount and then amortized prospectively, based on the remaining useful life of the intangible asset. (2) Ground lease/airspace agreements as of December 31, 2019 included airspace agreements at both the Renaissance Harborplace and the Oceans Edge Resort & Marina. The airspace assets at the Renaissance Harborplace and the Oceans Edge Resort & Marina were both valued at fair value at the dates of acquisition, and both have indefinite useful lives and are not amortized. As part of the total impairment loss recorded on the Renaissance Harborplace in 2019 (see Note 5), the Company wrote down the carrying amount of the hotel’s airspace agreement by $0.5 million to reduce the asset down to its fair market value. As of December 31, 2018, ground lease/airspace agreements also included a ground lease agreement at the Hilton Times Square, which was valued at fair value at the date of acquisition. Upon adoption of ASU No. 2016-02 on January 1, 2019, the remaining $18.4 million balance of the agreement was reclassified to operating lease right-of-use assets, net in the Company’s consolidated balance sheet (see Note 2). Prior to its reclassification, the agreement was amortized using the straight-line method over its remaining non-cancelable lease term, and the amortization expense was included in property tax, ground lease and insurance expense in the Company’s consolidated statements of operations. (3) Prior to being fully amortized in July 2019, in-place lease agreements included agreements at the Hilton San Diego Bayfront, the Hyatt Regency San Francisco and the Wailea Beach Resort. Prior to being fully amortized in July 2018, in-place lease agreements also included agreements at the Oceans Edge Resort & Marina. The agreements were valued at fair value at the dates of acquisition, and were amortized using the straight-line method over the remaining non-cancelable terms of the related agreements. The amortization expense for the agreements was included in depreciation and amortization expense in the Company’s consolidated statements of operations. (4) The below market management agreement at the Hilton Garden Inn Chicago Downtown/Magnificent Mile was valued at fair value at the acquisition date. The agreement is amortized using the straight-line method over the remaining non-cancelable term, and will be fully amortized in December 2022. Prior to being fully amortized in July 2017, the agreement also contained a component related to the potential management of a future hotel, which was amortized using the straight-line method over the remaining non-cancelable term. The amortization expense for the agreement is included in other property-level expenses in the Company’s consolidated statements of operations. (5) Prior to being fully amortized in July 2018, advanced bookings consisted of advance deposits related to the purchases of the Boston Park Plaza, the Hyatt Regency San Francisco and the Wailea Beach Resort. The contractual advanced hotel bookings were recorded at a discounted present value based on estimated collectability, and were amortized using the straight-line method over the periods the amounts were expected to be collected. The amortization expense for contractual advanced hotel bookings was included in depreciation and amortization expense in the Company’s consolidated statements of operations. (6) Prior to being fully amortized in July 2018 and February 2017, the above market lease agreements consisted of favorable tenant leases at the Hyatt Regency San Francisco and the Hilton New Orleans St. Charles, respectively. The agreements were valued at fair value at the dates of acquisition, and amortized using the straight-line method over the remaining non-cancelable term of the related agreements. The amortization expense for the agreements was included in other operating revenue in the Company’s consolidated statements of operations. |
Disposals and Discontinued Oper
Disposals and Discontinued Operations | 12 Months Ended |
Dec. 31, 2019 | |
Disposal Group, Including Discontinued Operations | |
Disposals | 4. Disposals and Discontinued Operations Disposals - 2019 The Company sold the Courtyard by Marriott Los Angeles, located in California, in October 2019, for net proceeds of $49.5 million, recording a net gain of $42.9 million on the sale. The sale did not represent a strategic shift that had a major impact on the Company’s business plan or its primary markets; therefore, the hotel did not qualify as a discontinued operation. Disposals - 2018 The Company sold the Marriott Philadelphia and the Marriott Quincy, located in Pennsylvania and Massachusetts, respectively, in January 2018, the Hyatt Regency Newport Beach, located in California, in July 2018, the Marriott Houston and the Hilton North Houston (the “Houston hotels”), located in Texas, in October 2018 and the Marriott Tysons Corner, located in Virginia, in December 2018. None of these sales represented a strategic shift that had a major impact on the Company’s business plan or its primary markets; therefore, none of these hotels qualified as a discontinued operation. The details of the sales were as follows (in thousands): Net Proceeds Net Gain Marriott Philadelphia and Marriott Quincy $ 136,983 $ 15,659 Hyatt Regency Newport Beach 94,043 53,128 Houston hotels 32,421 336 Marriott Tysons Corner 84,526 47,838 $ 347,973 $ 116,961 Disposals - 2017 The Company sold the Fairmont Newport Beach, located in California, in February 2017, and the Marriott Park City, located in Utah, in June 2017. Neither sale represented a strategic shift that had a major impact on the Company’s business plan or its primarily markets; therefore, neither of these hotels qualified as a discontinued operation. The details of the sales were as follows (in thousands): Net Proceeds Net Gain Fairmont Newport Beach $ 122,832 $ 44,285 Marriott Park City 27,026 1,189 $ 149,858 $ 45,474 The following table provides summary results of operations for the hotels sold in 2019, 2018 and 2017, which are included in continuing operations for their respective ownership periods (in thousands): 2019 2018 2017 Total revenues $ 10,422 $ 79,627 $ 168,375 Income before income taxes and discontinued operations (1) $ 2,044 $ 11,190 $ 19,811 Gain on sale of assets $ 42,935 $ 116,961 $ 45,474 (1) Income before income taxes and discontinued operations does not include the gain recognized on the hotel sales. Discontinued Operations In 2017, the Company recognized an additional $7.0 million gain related to its 2013 sale of four hotels and a laundry facility located in Rochester, Minnesota. |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Derivatives | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements and Interest Rate Derivatives | |
Fair Value Measurements and Interest Rate Derivatives | 5. Fair Value Measurements and Interest Rate Derivatives Fair Value Measurements As of December 31, 2019 and 2018, the carrying amount of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses were representative of their fair values due to the short-term maturity of these instruments. A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. As of both December 31, 2019 and 2018, the Company measured its interest rate derivatives at fair value on a recurring basis. Prior to the Company’s collateral assignment release in August 2019, the Company also measured a life insurance policy and a related retirement benefit agreement at fair value on a recurring basis. The Company estimated the fair value of its interest rate derivatives using Level 2 measurements based on quotes obtained from the counterparties, which are based upon the consideration that would be required to terminate the agreements. Both the life insurance policy and the related retirement benefit agreement, which were for a former Company associate, were valued using Level 2 measurements. During the fourth quarter of 2019, the Company reviewed the operational performance and management’s estimated hold period for the Renaissance Harborplace. During this review, the Company identified indicators of impairment related to declining demand trends at both the hotel and in the Baltimore market, along with management’s plan for the hotel’s estimated hold period. These indicators were significant so that, in accordance with the Company’s policy, the Company prepared an estimate of the future undiscounted cash flows expected to be generated by the hotel during its anticipated holding period, using assumptions for forecasted revenue and operating expenses as well as the estimated market value of the hotel. Based on this analysis, the Company concluded the hotel should be impaired as the estimated future undiscounted cash flows were less than the hotel’s carrying value. To determine the impairment loss to be recognized, the Company applied Level 3 measurements to estimate the fair value of the hotel, using a discounted cash flow analysis, taking into account the hotel’s expected cash flow and its estimated market value based upon the hotel’s anticipated holding period. The Company concluded that the hotel’s estimated fair value was less than its carrying value, resulting in the Company recording an impairment charge of $24.7 million, which is included in impairment loss on the Company’s consolidated statements of operations for the year ended December 31, 2019. In both 2018 and 2017, the Company identified indicators of impairment due to continued weakness in the Houston market, and reviewed the Houston hotels for possible impairment. U sing Level 3 measurements, including each hotel’s undiscounted cash flow, which took into account each hotel’s expected cash flow from operations, anticipated holding period and estimated proceeds from disposition, the Company determined that neither hotel’s carrying value was fully recoverable. As such, the Company recorded impairment charges of $1.4 million and $40.1 million in 2018 and 2017, respectively, both of which are included in impairment loss on the Company’s consolidated statements of operations for the years ended December 31, 2018 and 2017. The Company sold the Houston hotels in October 2018 (see Note 4). The following table presents the Company’s assets measured at fair value on a recurring and nonrecurring basis at December 31, 2019 and 2018 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 December 31, 2019: Renaissance Harborplace $ 96,725 $ — $ — $ 96,725 Total assets measured at fair value at December 31, 2019 $ 96,725 $ — $ — $ 96,725 December 31, 2018: Interest rate swap derivatives $ 4,789 $ — $ 4,789 $ — Life insurance policy (1) 386 — 386 — Total assets measured at fair value at December 31, 2018 $ 5,175 $ — $ 5,175 $ — (1) Prior to the Company’s collateral assignment release in August 2019, the split life insurance policy was for a former Company associate. As of December 31, 2018, the amount was included in other assets, net on the accompanying consolidated balance sheet. The following table presents the Company’s liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2019 and 2018 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 December 31, 2019: Interest rate swap derivatives $ 1,081 $ — $ 1,081 $ — Total liabilities measured at fair value at December 31, 2019 $ 1,081 $ — $ 1,081 $ — December 31, 2018: Retirement benefit agreement (1) $ 386 $ — $ 386 $ — Total liabilities measured at fair value at December 31, 2018 $ 386 $ — $ 386 $ — (1) Prior to the Company’s collateral assignment release in August 2019, the retirement benefit agreement was for a former Company associate. As of December 31, 2018, the amount was included in accrued payroll and employee benefits in the accompanying consolidated balance sheet. Interest Rate Derivatives The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at December 31, 2019 and 2018 (in thousands): Estimated Fair Value of Strike / Capped Effective Maturity Notional December 31, Hedged Debt Type LIBOR Rate Index Date Date Amount 2019 2018 Hilton San Diego Bayfront Cap 4.250 % 1-Month LIBOR May 1, 2017 May 1, 2019 $ N/A $ N/A $ — Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR November 10, 2017 December 9, 2020 $ 220,000 — — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (132) 2,521 $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (949) 2,268 $ (1,081) $ 4,789 (1) The fair values of both swap agreements are included in other liabilities and other assets, net on the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. Noncash changes in the fair values of the Company’s interest rate derivatives resulted in increases (decreases) to interest expense for the years ended December 31, 2019, 2018 and 2017 as follows (in thousands): 2019 2018 2017 Noncash interest on derivatives $ 5,870 $ (1,395) $ (1,520) Fair Value of Debt As of December 31, 2019 and 2018, 77.4% and 77.6%, respectively, of the Company’s outstanding debt had fixed interest rates, including the effects of interest rate swap agreements. The Company uses Level 3 measurements to estimate the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates. The Company’s principal balances and fair market values of its consolidated debt as of December 31, 2019 and 2018 were as follows (in thousands): December 31, 2019 December 31, 2018 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Debt $ 974,863 $ 976,012 $ 982,828 $ 971,082 (1) The principal balance of debt is presented before any unamortized deferred financing costs. |
Other Assets
Other Assets | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets | |
Other Assets | 6. Other Assets Other assets, net consisted of the following (in thousands): December 31, 2019 2018 Property and equipment, net $ 7,642 $ 8,426 Goodwill — 990 Deferred rent on straight-lined third-party tenant leases 3,542 3,177 Deferred income tax assets, net 7,415 8,407 Interest rate derivatives — 4,789 Other receivables 2,984 3,209 Other 307 819 Total other assets, net $ 21,890 $ 29,817 |
Notes Payable
Notes Payable | 12 Months Ended |
Dec. 31, 2019 | |
Notes Payable | |
Notes Payable | 7. Notes Payable Notes payable consisted of the following (in thousands): December 31, 2019 2018 Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 5.95% ; maturing at dates ranging from November 2020 through January 2025 . The notes are collateralized by first deeds of trust on four hotel properties at both December 31, 2019 and 2018. $ 329,863 $ 337,828 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points; initial maturity in December 2020 with three one-year extensions, which the Company intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR , depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 2.941% . Matures in September 2022 . 85,000 85,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR , depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.853% , resulting in an effective interest rate of 3.203% . Matures in January 2023 . 100,000 100,000 Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.69% ; maturing in January 2026 . 120,000 120,000 Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.79% ; maturing in January 2028 . 120,000 120,000 Total notes payable $ 974,863 $ 982,828 Current portion of notes payable $ 83,975 $ 7,804 Less: current portion of deferred financing costs (1,866) (1,966) Carrying value of current portion of notes payable $ 82,109 $ 5,838 Notes payable, less current portion $ 890,888 $ 975,024 Less: long-term portion of deferred financing costs (1,934) (3,799) Carrying value of notes payable, less current portion $ 888,954 $ 971,225 Aggregate future principal maturities and amortization of notes payable at December 31, 2019, are as follows (in thousands): 2020 $ 83,975 (1) 2021 111,247 2022 88,446 2023 323,593 (1) 2024 75,615 Thereafter 291,987 Total $ 974,863 (1) Reflects the intended exercise of all three available one-year options to extend the maturity date of the $220.0 million loan secured by the Hilton San Diego Bayfront from December 2020 to December 2023. Notes Payable Transactions - 2018 In October 2018, the Company amended and extended its credit facility agreement and repriced its two unsecured term loans. The amended credit facility agreement provides for a $500.0 million unsecured revolving credit facility, a $100.0 million increase from the previous credit facility. In addition, the Company has the right to increase the amount of the revolving credit facility, or to add term loans, up to an aggregate commitment of $800.0 million subject to lender approval. Under the terms of the amendment, the interest rate pricing grid for the credit facility was reduced from a range of 155 to 230 basis points over the applicable LIBOR to a range of 140 to 225 basis points over the applicable LIBOR , and the credit facility’s maturity date was extended from April 2019 to April 2023 . The amendment also repriced the term loans, which bear interest pursuant to a leverage-based pricing grid, from the previous range of 1.80% to 2.55% over the applicable LIBOR to a range of 1.35% to 2.20% over the applicable LIBOR . The spread to LIBOR may vary depending on the Company’s overall leverage as defined by the Company’s credit agreement. Based on the Company’s current leverage, the interest rate of the $85.0 million term loan was reduced from 3.391% under the previous agreement to 2.941% under the current agreement, and the interest rate of the $100.0 million term loan was reduced from 3.653% under the previous agreement to 3.203% under the current agreement. The maturity dates for both term loans remain unchanged. Deferred Financing Costs and Losses on Extinguishment of Debt Deferred financing costs and loss on extinguishment of debt for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands): 2019 2018 (1) 2017 (2) Payments of deferred financing costs $ — $ 4,012 $ 3,537 Loss on extinguishment of debt $ — $ 835 $ 824 (1) During 2018, the Company paid a total of $4.0 million in deferred financing costs and incurred a loss on extinguishment of debt totaling $0.8 million related to its credit facility amendment and extension and term loans repricing. (2) During 2017, the Company paid a total of $3.5 million in deferred financing costs related to its new $220.0 million loan secured by the Hilton San Diego Bayfront, its Senior Notes and its credit facility. In addition, during 2017, the Company incurred a loss on extinguishment of debt totaling $0.8 million related to its 2017 debt repayment and refinancing. Interest Expense Total interest incurred and expensed on the notes payable and finance lease obligations for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands): 2019 2018 2017 Interest expense on debt and finance lease obligations $ 45,381 $ 45,933 $ 46,251 Noncash interest on derivatives and finance lease obligations, net 6,051 (1,190) 3,106 Amortization of deferred financing costs 2,791 2,947 2,409 Total interest expense $ 54,223 $ 47,690 $ 51,766 |
Other Current Liabilities and O
Other Current Liabilities and Other Liabilities | 12 Months Ended |
Dec. 31, 2019 | |
Other Current Liabilities and Other Liabilities | |
Other Current Liabilities and Other Liabilities | 8. Other Current Liabilities and Other Liabilities Other Current Liabilities Other current liabilities consisted of the following (in thousands): December 31, 2019 2018 Property, sales and use taxes payable $ 16,074 $ 15,684 Accrued interest 6,735 7,306 Advance deposits 18,001 16,711 Management fees payable 1,527 1,142 Other 4,618 4,119 Total other current liabilities $ 46,955 $ 44,962 Other Liabilities Other liabilities consisted of the following (in thousands): December 31, 2019 2018 Deferred revenue $ 5,225 $ 5,017 Deferred rent — 12,986 Deferred property taxes payable (1) 8,887 9,284 Interest rate derivatives 1,081 — Other 2,943 3,416 Total other liabilities $ 18,136 $ 30,703 (1) Under the terms of a sublease agreement at the Hilton Times Square, sublease rent amounts are currently considered to be property taxes under a payment-in-lieu of taxes (“PILOT”) program, and will be paid beginning in 2020 through 2029. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Leases | 9. Leases Lessee Accounting The Company has both finance and operating leases for ground, building, office and airspace leases, maturing in dates ranging from 2028 through 2097, including expected renewal options. Including all renewal options available to the Company, the lease maturity date extends to 2147. Leases were included on the Company’s consolidated balance sheet as follows (in thousands): December 31, 2019 Finance Lease: Right-of-use asset, net (buildings and improvements) $ 58,799 Accumulated depreciation (11,147) Right-of-use asset, net $ 47,652 Accounts payable and accrued expenses $ 1 Lease obligations, less current portion 15,570 Total lease obligation $ 15,571 Remaining lease term 78 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 60,629 Accounts payable and accrued expenses $ 4,743 Lease obligations, less current portion 49,691 Total lease obligations $ 54,434 Weighted average remaining lease term 25 years Weighted average discount rate 5.4 % The components of lease expense were as follows (in thousands): 2019 Finance lease cost: Amortization of right-of-use asset $ 1,470 Interest on lease obligations (1) 2,357 Total finance lease cost $ 3,827 Operating lease cost (2) $ 13,056 (1) Interest on lease obligations includes interest expense of $1.0 million on the Courtyard by Marriott Los Angeles’s finance lease obligation before the hotel’s sale in October 2019 (see Note 4). (2) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds. During the year ended December 31, 2019, the Company recorded $6.1 million in percentage rent related to its operating leases. Supplemental cash flow information related to leases was as follows (in thousands): 2019 Operating cash flows used for operating leases $ 7,238 Changes in operating lease right-of-use assets $ 3,447 Changes in operating lease obligations (4,229) Changes in operating lease right-of-use assets and lease obligations, net $ (782) Operating right-of-use assets obtained in exchange for operating lease obligations $ 45,677 Future maturities of the Company’s finance and operating lease obligations at December 31, 2019 were as follows (in thousands): Finance Lease Operating Leases 2020 $ 1,403 $ 7,519 2021 1,403 7,570 2022 1,403 7,622 2023 1,403 7,676 2024 1,403 7,732 Thereafter 102,400 73,983 Total lease payments 109,415 112,102 Less: interest (1) (93,844) (57,668) Present value of lease obligations $ 15,571 $ 54,434 (1) Calculated using the appropriate discount rate for each lease. Total rent expense incurred pursuant to ground, building and air operating lease agreements was $14.3 million and $15.3 million in 2018 and 2017, respectively. Prior to the Company’s adoption of the new leases standard, as of December 31, 2018, capital lease assets were included in investment in hotel properties, net on the Company’s consolidated balance sheets as follows (in thousands): December 31, 2018 Gross capital lease asset - buildings and improvements $ 58,799 Gross capital lease asset - land 6,605 Gross capital lease assets 65,404 Accumulated depreciation (9,677) Net capital lease assets 55,727 Prior to the Company’s adoption of the new leases standard, as of December 31, 2018, future minimum undiscounted operating lease payments, along with the present value of net future capital lease payments were as follows (in thousands): Operating Leases 2019 $ 8,159 2020 8,441 2021 8,486 2022 8,531 2023 8,576 Thereafter 159,190 Total operating lease payments $ 201,383 Capital Leases 2019 $ 2,357 2020 2,357 2021 2,389 2022 2,453 2023 2,453 Thereafter 136,220 Total capital lease payments 148,229 Less: interest (1) (121,219) Present value of capital lease payments $ 27,010 (1) Interest includes the amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental borrowing rate at lease inception. Lessor Accounting During the year ended December 31, 2019, the Company recognized $10.8 million in lease-related revenue, which is included in other operating revenue on the Company’s consolidated statement of operations. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 10. Income Taxes The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): December 31, 2019 2018 Deferred Tax Assets: Net operating loss carryforward $ 2,875 $ 3,711 Other reserves 1,090 1,052 State taxes and other 3,322 3,168 Depreciation 492 476 Total deferred tax assets 7,779 8,407 Deferred Tax Liabilities: Amortization (38) (53) Deferred revenue (284) (213) Other (42) (38) Total deferred tax liabilities (364) (304) Deferred tax assets, net $ 7,415 $ 8,103 At December 31, 2019 and 2018, the net operating loss carryforwards for federal income tax purposes totaled approximately $10.2 million and $15.3 million, respectively. These losses, which begin to expire in 2031, are available to offset future income through 2032. The Company’s income tax benefit (provision), net was included in the consolidated statements of operations as follows (in thousands): 2019 2018 2017 Current: Federal $ 790 $ 4 $ (298) State 49 (639) (1,162) Current income tax benefit (provision), net 839 (635) (1,460) Deferred: Federal (1,112) (365) (5,591) State 424 (767) (442) Change in valuation allowance — — 15,268 Deferred income tax (provision) benefit, net (688) (1,132) 9,235 Income tax benefit (provision), net $ 151 $ (1,767) $ 7,775 The differences between the income tax benefit (provision) calculated at the statutory U.S. federal income tax rate of 21% (35% prior to 2018) and the actual income tax benefit (provision), net recorded for continuing operations were as follows (in thousands): 2019 2018 2017 Expected federal tax expense at statutory rate $ (29,955) $ (54,773) $ (46,998) Tax impact of REIT election 29,810 54,779 43,237 Expected tax (provision) benefit of TRS (145) 6 (3,761) State income tax benefit (provision), net of federal benefit 335 (606) (318) Change in valuation allowance — — 14,340 Other permanent items 562 (1,167) (381) AMT credit (refund) receivable (601) — 1,421 Effect of rate change — — (3,526) Income tax benefit (provision), net $ 151 $ (1,767) $ 7,775 The Company’s tax years from 2015 to 2018 will remain open to examination by the federal and state authorities for three and four years, respectively. In 2017, the Company fully released its valuation allowance primarily related to its federal and state net operating loss carryforwards as the Company determined it was more likely than not that these net deferred tax assets will be realized. The decision to release the valuation allowance was made after management considered all available evidence, both positive and negative, including but not limited to, historical operating results, cumulative income in recent years and forecasted earnings. In addition, in 2017, the Company wrote-down the value of its net deferred tax assets as a result of the Tax Cuts and Jobs Act (“TCJA”), which lowered the corporate tax rates from a maximum of 35% to a flat rate of 21% effective for tax years beginning after December 31, 2017. Characterization of Distributions For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. For the years ended December 31, 2019, 2018 and 2017, distributions paid per share were characterized as follows (unaudited): 2019 (1) 2018 (1) 2017 Amount % Amount % Amount % Common Stock: Ordinary income $ 0.606 81.84 % $ 0.634 91.89 % $ 0.554 75.95 % Capital gain 0.134 18.16 0.056 8.11 0.176 24.05 Return of capital — — — — — — Total $ 0.740 100 % $ 0.690 100 % $ 0.730 100 % Preferred Stock — Series E Ordinary income $ 1.422 81.84 % $ 1.597 91.89 % $ 1.320 75.95 % Capital gain 0.316 18.16 0.141 8.11 0.418 24.05 Return of capital — — — — — — Total $ 1.738 100 % $ 1.738 100 % $ 1.738 100 % Preferred Stock — Series F Ordinary income $ 1.320 81.84 % $ 1.482 91.89 % $ 1.225 75.95 % Capital gain 0.293 18.16 0.131 8.11 0.388 24.05 Return of capital — — — — — — Total $ 1.613 100 % $ 1.613 100 % $ 1.613 100 % (1) Ordinary income in both 2019 and 2018 qualifies for Section 199A treatment per the TCJA. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 11. Stockholders’ Equity Series E Cumulative Redeemable Preferred Stock In March 2016, the Company issued 4,600,000 shares of its Series E preferred stock with a liquidation preference of $25.00 per share. On or after March 11, 2021, the Series E preferred stock will be redeemable at the Company’s option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. Upon the occurrence of a change of control, as defined by the Articles Supplementary for Series E preferred stock, holders of the Series E preferred stock may, under certain circumstances, convert their preferred shares into shares of the Company’s common stock. Series F Cumulative Redeemable Preferred Stock In May 2016, the Company issued 3,000,000 shares of its Series F preferred stock with a liquidation preference of $25.00 per share. On or after May 17, 2021, the Series F preferred stock will be redeemable at the Company’s option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. Upon the occurrence of a change of control, as defined by the Articles Supplementary for Series F preferred stock, holders of the Series F preferred stock may, under certain circumstances, convert their preferred shares into shares of the Company’s common stock. Common Stock In February 2017, the Company entered into separate “At the Market” Agreements (the “ATM Agreements”) with each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC In accordance with the terms of the ATM Agreements, During 2018, the Company received gross proceeds of $45.1 million, and paid $0.8 million in costs, from the issuance of 2,590,854 shares of its common stock in connection with the ATM Agreements. In February 2017, the Company’s board of directors authorized a stock repurchase program to acquire up to an aggregate of $300.0 million of the Company’s common and preferred stock. During 2019, the Company repurchased 3,783,936 shares of its common stock for $50.1 million, including fees and commissions, leaving approximately $250.0 million of remaining authorized capacity under the program. Future purchases will depend on various factors, including the Company’s capital needs, as well as the Company’s common and preferred stock price. Dividends and Distributions The Company declared dividends per share on its Series E preferred stock and Series F preferred stock, along with distributions per share on its common stock during 2019, 2018 and 2017 as follows: 2019 2018 2017 Series E preferred stock $ 1.7375 $ 1.7375 $ 1.7375 Series F preferred stock $ 1.6125 $ 1.6125 $ 1.6125 Common stock $ 0.7400 $ 0.6900 $ 0.7300 |
Long-Term Incentive Plan
Long-Term Incentive Plan | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Incentive Plan | |
Long-Term Incentive Plan | 12. Long-Term Incentive Plan The Company’s Long-Term Incentive Plan (“LTIP”) provides for the granting to directors, officers and eligible employees awards that may be made in the form of incentive or nonqualified stock options, restricted shares or units, performance shares or units, share appreciation rights, or any combination thereof. The Company has reserved 12,050,000 common shares for issuance under the LTIP, and 3,721,962 shares remain available for future issuance as of December 31, 2019. At December 31, 2019, there were no stock options, restricted units, performance shares or units, or share appreciation rights issued or outstanding under the LTIP. Stock Grants Restricted shares granted pursuant to the Company’s LTIP generally vest over a period of three years from the date of grant. Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the LTIP and remain available for future issuance. Shares of common stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligations upon the vesting of a stock grant are not added back to the LTIP. Compensation expense related to awards of restricted shares are measured at fair value on the date of grant and amortized over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur. The Company’s amortization expense and forfeitures related to restricted shares for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands): 2019 2018 2017 Amortization expense, including forfeitures $ 9,313 $ 9,007 $ 8,042 In addition, the Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels. During both 2019 and 2018, these capitalized costs totaled $0.4 million. During 2017, these capitalized costs totaled $0.5 million. The following is a summary of non-vested restricted stock grant activity: 2019 2018 2017 Weighted Weighted Weighted Average Average Average Shares Price Shares Price Shares Price Outstanding at beginning of year 1,177,760 $ 14.89 1,175,049 $ 14.12 1,095,908 $ 13.36 Granted 701,754 $ 14.35 617,595 $ 15.84 654,266 $ 15.11 Vested (657,732) $ 14.32 (602,091) $ 14.37 (541,827) $ 13.78 Forfeited (3,932) $ 15.48 (12,793) $ 14.39 (33,298) $ 14.10 Outstanding at end of year 1,217,850 $ 14.88 1,177,760 $ 14.89 1,175,049 $ 14.12 As of December 31, 2019, $9.9 million in compensation expense related to non-vested restricted stock grants remained to be recognized over a weighted-average period of 21 months . |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 13. Commitments and Contingencies Management Agreements Management agreements with the Company’s third-party hotel managers require the Company to pay between 1.75% and 3.0% of total revenue of the managed hotels to the third-party managers each month as a basic management fee. In addition to basic management fees, provided certain operating thresholds are met, the Company may also be required to pay incentive management fees to certain of its third-party managers. Total basic management and incentive management fees incurred by the Company during the years ended December 31, 2019, 2018 and 2017 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (in thousands): 2019 2018 2017 Basic management fees $ 31,061 $ 31,947 $ 33,318 Incentive management fees 8,005 7,169 6,301 Total basic and incentive management fees $ 39,066 $ 39,116 $ 39,619 License and Franchise Agreements The Company has entered into license and franchise agreements related to certain of its hotels. The license and franchise agreements require the Company to, among other things, pay monthly fees that are calculated based on specified percentages of certain revenues. The license and franchise agreements generally contain specific standards for, and restrictions and limitations on, the operation and maintenance of the hotels which are established by the franchisors to maintain uniformity in the system created by each such franchisor. Such standards generally regulate the appearance of the hotel, quality and type of goods and services offered, signage and protection of trademarks. Compliance with such standards may from time to time require the Company to make significant expenditures for capital improvements. Total license and franchise fees incurred by the Company during the years ended December 31, 2019, 2018 and 2017 were included in franchise costs on the Company’s consolidated statements of operations as follows (in thousands): 2019 2018 2017 Franchise assessments (1) $ 24,389 $ 25,966 $ 26,902 Franchise royalties 7,876 9,457 9,779 Total franchise costs $ 32,265 $ 35,423 $ 36,681 (1) Includes advertising, reservation and frequent guest program assessments. Renovation and Construction Commitments At December 31, 2019, the Company had various contracts outstanding with third parties in connection with the ongoing renovations of certain of its hotels. The remaining commitments under these contracts at December 31, 2019 totaled $47.6 million. Employment Agreements As of December 31, 2019, the Company had employment agreements with certain executive employees, which expire March 31, 2020, and automatically renew for successive one-year periods, absent written notice by either party. The terms of the agreements stipulate payments of base salaries and bonuses. The Company’s approximate minimum future obligations under employment agreements through their expiration dates totaled $0.7 million as of December 31, 2019. 401(k) Savings and Retirement Plan The Company’s employees may participate, subject to eligibility, in the Company’s 401(k) Savings and Retirement Plan (the “401(k) Plan”). Qualified employees are eligible to participate in the 401(k) Plan after attaining 21 years of age and after the first of the month following the completion of six calendar months of employment. Three percent of eligible employee annual base earnings are contributed by the Company as a Safe Harbor elective contribution. Safe Harbor contributions made by the Company totaled $0.2 million in each of the years 2019, 2018 and 2017, and were included in corporate overhead expense. The Company is also responsible for funding various retirement plans at certain hotels operated by its management companies. Other property-level expenses on the Company’s consolidated statements of operations includes matching contributions into these various retirement plans of $1.4 million in 2019, $1.6 million in 2018 and $1.5 million in 2017. Collective Bargaining Agreements The Company is subject to exposure to collective bargaining agreements at certain hotels operated by its management companies. At December 31, 2019, approximately 32.8% of workers employed by the Company’s third-party managers were covered by such collective bargaining agreements. Concentration of Risk The concentration of the Company’s hotels in California, Florida, the greater Washington DC area, Hawaii, Illinois and Massachusetts exposes the Company’s business to economic and severe weather conditions, competition and real and personal property tax rates unique to these locales. As of December 31, 2019, 15 of the 20 Hotels were geographically concentrated as follows: Percentage of Total 2019 Number of Hotels Total Rooms Consolidated Revenue California 5 30 % 33 % Florida 2 9 % 10 % Greater Washington DC area 2 13 % 11 % Hawaii 1 5 % 11 % Illinois 3 11 % 7 % Massachusetts 2 14 % 15 % Other The Company has provided customary unsecured indemnities to certain lenders, including in particular, environmental indemnities. The Company has performed due diligence on the potential environmental risks, including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate the Company to reimburse the indemnified parties for damages related to certain environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, the Company could have recourse against other previous owners or a claim against its environmental insurance policies. At December 31, 2019, the Company had $0.4 million of outstanding irrevocable letters of credit to guarantee the Company’s financial obligations related to workers’ compensation insurance programs from prior policy years. The beneficiaries of these letters of credit may draw upon these letters of credit in the event of a contractual default by the Company relating to each respective obligation. No draws have been made through December 31, 2019. The Company is subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on its financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. |
Quarterly Operating Results (Un
Quarterly Operating Results (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Operating Results (Unaudited) | |
Quarterly Operating Results (Unaudited) | 14. Quarterly Operating Results (Unaudited) The Company’s consolidated quarterly results for the years ended December 31, 2019 and 2018 are as follows (in thousands): 2019 Quarter Ended March 31 June 30 September 30 December 31 Total revenues $ 257,680 $ 302,896 $ 281,639 $ 272,952 Total operating expenses 233,474 243,297 239,346 261,677 Operating income $ 24,206 $ 59,599 $ 42,293 $ 11,275 Net income $ 17,916 $ 45,918 $ 33,545 $ 45,414 Income attributable to common stockholders $ 13,110 $ 40,756 $ 27,829 $ 41,208 Income attributable to common stockholders per share — basic and diluted $ 0.06 $ 0.18 $ 0.12 $ 0.18 2018 Quarter Ended March 31 June 30 September 30 December 31 Total revenues $ 271,446 $ 317,447 $ 289,308 $ 280,852 Total operating expenses 245,005 255,592 241,220 235,346 Operating income $ 26,441 $ 61,855 $ 48,088 $ 45,506 Net income $ 38,455 $ 51,262 $ 91,586 $ 77,756 Income attributable to common stockholders $ 32,809 $ 45,681 $ 86,002 $ 73,123 Income attributable to common stockholders per share — basic and diluted $ 0.15 $ 0.20 $ 0.38 $ 0.32 Income attributable to common stockholders per share is computed independently for each of the quarters presented and therefore may not sum to the annual amount for the year. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Subsequent Events | 15. Subsequent Events In February 2020, the Company’s board of directors authorized an increase to the Company’s stock repurchase program to acquire up to $500.0 million of common and preferred stock. The authorization has no stated expiration date. In addition, the board of directors reauthorized the Company’s ATM Agreements, or new similar agreements, allowing the Company to issue common stock up to an aggregate offering amount of $300.0 million. The Company has not yet amended the existing ATM Agreements or entered into new similar agreements providing for such increased capacity, and will do so if and when the Company’s management determines it appropriate. The reauthorization has no stated expiration date. |
Schedule III-Real Estate and Ac
Schedule III-Real Estate and Accumulated Depreciation | 12 Months Ended |
Dec. 31, 2019 | |
Schedule III-Real Estate and Accumulated Depreciation | |
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure | SUNSTONE HOTEL INVESTORS, INC. SCHEDULE II I—REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2019 (In thousands) Cost Capitalized Gross Amount at Initial costs Subsequent to Acquisition December 31, 2019 (1) Bldg. and Bldg. and Bldg. and Accum. Date Depr. Encmbr. Land Impr. Land Impr. Land Impr. Totals Depr. Acq./Constr. Life Boston Park Plaza $ — (2) $ 58,527 $ 170,589 $ — $ 121,435 $ 58,527 $ 292,024 $ 350,551 $ 68,966 2013 5 - 35 Embassy Suites Chicago — 79 46,886 6,348 24,117 6,427 71,003 77,430 36,438 2002 5 - 35 Embassy Suites La Jolla 59,213 27,900 70,450 — 16,930 27,900 87,380 115,280 37,961 2006 5 - 35 Hilton Garden Inn Chicago Downtown/Magnificent Mile — (2) 14,040 66,350 — 10,339 14,040 76,689 90,729 12,839 2012 5 - 50 Hilton New Orleans St. Charles — (2) 3,698 53,578 — 9,934 3,698 63,512 67,210 9,700 2013 5 - 35 Hilton San Diego Bayfront 220,000 — 424,992 — 22,830 — 447,822 447,822 71,541 2011 5 - 57 Hilton Times Square 77,686 — 221,488 — 32,429 — 253,917 253,917 115,477 2006 5 - 35 Hyatt Centric Chicago Magnificent Mile — (2) — 91,964 — (39,003) — 52,961 52,961 18,800 2012 5 - 40 Hyatt Regency San Francisco — (2) 116,140 131,430 — 56,198 116,140 187,628 303,768 51,226 2013 5 - 35 JW Marriott New Orleans 81,885 — 73,420 15,147 37,658 15,147 111,078 126,225 24,273 2011 5 - 35 Marriott Boston Long Wharf — (2) 51,598 170,238 — 70,980 51,598 241,218 292,816 92,672 2007 5 - 35 Marriott Portland — (2) 5,341 20,705 — 8,132 5,341 28,837 34,178 16,338 2000 5 - 35 Wailea Beach Resort — (2) 119,707 194,137 — 108,342 119,707 302,479 422,186 48,009 2014 5 - 40 Oceans Edge Resort & Marina — (2) 92,510 74,361 704 1,832 93,214 76,193 169,407 5,309 2017 5 - 40 Renaissance Harborplace — (2) 25,085 102,707 (4,911) 13,002 20,174 115,709 135,883 48,527 2005 5 - 35 Renaissance Los Angeles Airport — (2) 7,800 52,506 — 19,317 7,800 71,823 79,623 27,674 2007 5 - 35 Renaissance Long Beach — (2) 10,437 37,300 — 27,088 10,437 64,388 74,825 26,888 2005 5 - 35 Renaissance Orlando at SeaWorld ® — (2) — 119,733 30,717 65,394 30,717 185,127 215,844 76,553 2005 5 - 35 Renaissance Washington DC 111,079 14,563 132,800 — 47,342 14,563 180,142 194,705 84,351 2005 5 - 35 Renaissance Westchester — (2) 5,751 17,069 — 23,535 5,751 40,604 46,355 14,836 2010 5 - 35 $ 549,863 $ 553,176 $ 2,272,703 $ 48,005 $ 677,831 $ 601,181 $ 2,950,534 $ 3,551,715 $ 888,378 (1) The aggregate cost of properties for federal income tax purposes is approximately $4.1 billion (unaudited) at December 31, 2019. (2) Hotel is pledged as collateral by the Company’s credit facility. As of December 31, 2019, the Company has no outstanding indebtedness under its credit facility. The following is a reconciliation of real estate assets and accumulated depreciation (in thousands): Hotel Properties 2019 2018 2017 Reconciliation of land and buildings and improvements: Balance at the beginning of the year $ 3,595,301 $ 3,654,623 $ 3,667,466 Additions during year: Acquisitions 704 15,147 166,871 Improvements 78,579 96,481 91,067 Impairment loss (34,888) (1,797) (67,345) Changes in reporting presentation (58,799) 171,675 (53,047) Dispositions (29,182) (340,828) (150,389) Balance at the end of the year $ 3,551,715 $ 3,595,301 $ 3,654,623 Reconciliation of accumulated depreciation: Balance at the beginning of the year $ 815,628 $ 776,077 $ 803,913 Depreciation 107,949 108,175 112,176 Changes in reporting presentation (22,249) 56,872 (87,427) Retirement (12,950) (125,496) (52,585) Balance at the end of the year $ 888,378 $ 815,628 $ 776,077 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of December 31, 2019 and 2018, and for the years ended December 31, 2019, 2018 and 2017, include the accounts of the Company, the Operating Partnership, the TRS Lessee and their controlled subsidiaries. All significant intercompany balances and transactions have been eliminated. If the Company determines that it has an interest in a variable interest entity, the Company will consolidate the entity when it is determined to be the primary beneficiary of the entity. The Company does not have any comprehensive income other than what is included in net income. If the Company has any comprehensive income in the future such that a statement of comprehensive income would be necessary, the Company will include such statement in one continuous consolidated statement of operations. Certain prior year amounts in these financial statements have been reclassified to conform to the presentation for the year ended December 31, 2019. The Company has evaluated subsequent events through the date of issuance of these financial statements. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents includes cash on hand and in various bank accounts plus credit card receivables and all short-term investments with an original maturity of three months or less. The Company maintains cash and cash equivalents and certain other financial instruments with various financial institutions. These financial institutions are located throughout the country and the Company’s policy is designed to limit exposure to any one institution. The Company performs periodic evaluations of the relative credit standing of those financial institutions that are considered in the Company’s investment strategy. At December 31, 2019 and 2018, the Company had amounts in banks that were in excess of federally insured amounts. |
Restricted Cash | Restricted Cash Restricted cash is comprised of reserve accounts for debt service, interest reserves, seasonality reserves, capital replacements, ground leases, property taxes and excess hotel-generated cash that is held in an account for the benefit of a lender. These restricted funds are subject to supervision and disbursement approval by certain of the Company’s lenders and/or hotel managers. Restricted cash may also include earnest money received from a buyer of one of the Company’s hotels and held in escrow until the sale is complete. |
Accounts Receivable | Accounts Receivable Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. Accounts receivable also includes, among other things, receivables from tenants who lease space in the Company’s hotels. The Company maintains an allowance for doubtful accounts sufficient to cover potential credit losses. |
Acquisitions of Hotel Properties and Other Entities | Acquisitions of Hotel Properties and Other Entities Accounting for the acquisition of a hotel property or other entity requires an allocation of the purchase price to the assets acquired and the liabilities assumed in the transaction at their respective relative fair values for an asset acquisition or at their estimated fair values for a business combination. The most difficult estimations of individual fair values are those involving long-lived assets, such as property, equipment and intangible assets, together with any finance or operating lease right-of-use assets and their related obligations. When the Company acquires a hotel property or other entity, it uses all available information to make these fair value determinations, and engages independent valuation specialists to assist in the fair value determinations of the long-lived assets acquired and the liabilities assumed. Due to the inherent subjectivity in determining the estimated fair value of long-lived assets, the Company believes that the recording of acquired assets and liabilities is a critical accounting policy. In addition, the acquisition of a hotel property or other entity requires an analysis of the transaction to determine if it qualifies as the purchase of a business or an asset. If the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, then the transaction is an asset acquisition. Transaction costs associated with asset acquisitions are capitalized and subsequently depreciated over the life of the related asset, while the same costs associated with a business combination are expensed as incurred and included in corporate overhead on the Company’s consolidated statements of operations. Also, asset acquisitions are not subject to a measurement period, as are business combinations. |
Investments in Hotel Properties | Investments in Hotel Properties Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at fair value upon acquisition. Property and equipment purchased after the hotel acquisition date is recorded at cost. Replacements and improvements are capitalized, while repairs and maintenance are expensed as incurred. Upon the sale or retirement of a fixed asset, the cost and related accumulated depreciation is removed from the Company’s accounts and any resulting gain or loss is included in the statements of operations. Depreciation expense is based on the estimated life of the Company’s assets. The life is based on a number of assumptions, including the cost and timing of capital expenditures to maintain and refurbish the Company’s hotels, as well as specific market and economic conditions. Hotel properties are depreciated using the straight-line method over estimated useful lives primarily ranging from five to 40 years for buildings and improvements and three to 12 years for FF&E. Finance lease right-of-use assets other than land are depreciated using the straight-line method over the shorter of either their estimated useful life or the life of the related finance lease obligation. Intangible assets are amortized using the straight-line method over the shorter of their estimated useful life or the length of the related agreement. The Company’s investment in hotel properties, net also includes initial franchise fees which are recorded at cost and amortized using the straight-line method over the terms of the franchise agreements ranging from 14 to 27 years . All other franchise fees that are based on the Company’s results of operations are expensed as incurred. While the Company believes its estimates are reasonable, a change in the estimated lives could affect depreciation expense and net income or the gain or loss on the sale of any of the Company’s hotels. The Company has not changed the useful lives of any of its assets during the periods discussed. Impairment losses are recorded on long-lived assets to be held and used by the Company when indicators of impairment are present and the future undiscounted net cash flows, including potential sale proceeds, expected to be generated by those assets, based on the Company’s anticipated investment horizon, are less than the assets’ carrying amount. No single indicator would necessarily result in the Company preparing an estimate to determine if a hotel’s future undiscounted cash flows are less than the book value of the hotel. The Company uses judgment to determine if the severity of any single indicator, or the fact there are a number of indicators of less severity that when combined, would result in an indication that a hotel requires an estimate of the undiscounted cash flows to determine if an impairment has occurred. If a hotel is considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The Company performs a fair value assessment, using a discounted cash flow analysis to estimate the fair value of the hotel, taking into account the hotel’s expected cash flow from operations, the Company’s estimate of how long it will continue to own the hotel and the estimated proceeds from the disposition of the hotel. The factors addressed in determining estimated proceeds from disposition include anticipated operating cash flow in the year of disposition and terminal capitalization rate. The Company’s judgement is required in determining the discount rate applied to estimated cash flows, the estimated growth of revenues and expenses, net operating income and margins, the need for capital expenditures, as well as specific market and economic conditions. Based on the Company’s review, one hotel was impaired in 2019, and two hotels were impaired during 2018 and 2017 (see Note 5). Fair value represents the amount at which an asset could be bought or sold in a current transaction between willing parties, that is, other than a forced or liquidation sale. The estimation process involved in determining if assets have been impaired and in the determination of fair value is inherently uncertain because it requires estimates of current market yields as well as future events and conditions. Such future events and conditions include economic and market conditions, as well as the availability of suitable financing. The realization of the Company’s investment in hotel properties is dependent upon future uncertain events and conditions and, accordingly, the actual timing and amounts realized by the Company may be materially different from their estimated fair values. |
Assets Held for Sale | Assets Held for Sale The Company considers a hotel held for sale if it is probable that the sale will be completed within twelve months , among other requirements. A sale is considered to be probable once the buyer completes its due diligence of the asset, there is an executed purchase and sale agreement between the Company and the buyer, the buyer waives any closing contingencies, there are no third-party approvals necessary and the Company has received a substantial non-refundable deposit. Depreciation ceases when a property is held for sale. Should an impairment loss be required for assets held for sale, the related assets are adjusted to their estimated fair values, less costs to sell. If the sale of the hotel represents a strategic shift that will have a major effect on the Company’s operations and financial results, the hotel qualifies as a discontinued operation, and operating results are removed from income from continuing operations and reported as discontinued operations. The operating results for any such assets for any prior periods presented must also be reclassified as discontinued operations. No hotels were considered held for sale as of either December 31, 2019 or 2018. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs consist of loan fees and other financing costs related to the Company’s outstanding indebtedness and credit facility commitments, and are amortized to interest expense over the terms of the related debt or commitment. If a loan is refinanced or paid before its maturity, any unamortized deferred financing costs will generally be expensed unless specific rules are met that would allow for the carryover of such costs to the refinanced debt. Deferred financing costs related to the Company’s undrawn credit facility are included on the Company’s consolidated balance sheets as an asset, and are amortized ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. Deferred financing costs related to the Company’s outstanding debt are included on the Company’s consolidated balance sheets as a contra-liability (see Note 7), and subsequently amortized ratably over the term of the related debt. |
Interest Rate Derivatives | Interest Rate Derivatives The Company’s objective in holding interest rate derivatives is to manage its exposure to the interest rate risks related to its floating rate debt. To accomplish this objective, the Company uses interest rate caps and swaps, none of which qualifies for effective hedge accounting treatment. The Company records interest rate caps and swaps on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in the consolidated statements of operations. |
Revenue Recognition | Revenue Recognition Revenues are recognized when control of the promised goods or services is transferred to hotel guests, which is generally defined as the date upon which a guest occupies a room and/or utilizes the hotel’s services. Room revenue is recognized over a guest’s stay at a previously agreed upon daily rate. Additionally, some of the Company’s hotel rooms are booked through independent internet travel intermediaries. If the guest pays the independent internet travel intermediary directly, revenue for the room is recognized by the Company at the price the Company sold the room to the independent internet travel intermediary, less any discount or commission paid. If the guest pays the Company directly, revenue for the room is recognized by the Company on a gross basis, with the related discount or commission recognized in room expense. A majority of the Company’s hotels participate in frequent guest programs sponsored by the hotel brand owners whereby the hotel allows guests to earn loyalty points during their hotel stay. The Company expenses charges associated with these programs as incurred, and recognizes revenue at the amount it will receive from the brand when a guest redeems their loyalty points by staying at one of the Company’s hotels. In addition, some contracts for rooms or food and beverage services require an advance deposit, which the Company records as deferred revenue (or a contract liability) and recognizes once the performance obligations are satisfied. Food and beverage revenue and other ancillary services revenue are generated when a customer chooses to purchase goods or services separately from a hotel room. These revenue streams are recognized during the time the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For those ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. Additionally, the Company collects sales, use, occupancy and other similar taxes at its hotels. These taxes are collected from customers at the time of purchase, but are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency. Trade receivables and contract liabilities consisted of the following (in thousands): December 31, December 31, 2019 2018 Trade receivables, net (1) $ 21,201 $ 18,982 Contract liabilities (2) $ 18,498 $ 16,711 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits, and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. During 2019 and 2018, the Company recognized revenue of approximately $16.7 million and $13.2 million, respectively, related to its outstanding contract liabilities. |
Advertising and Promotion Costs | Advertising and Promotion Costs Advertising and promotion costs are expensed when incurred. Advertising and promotion costs represent the expense for advertising and reservation systems under the terms of the hotel franchise and brand management agreements and general and administrative expenses that are directly attributable to advertising and promotions. |
Stock Based Compensation | Stock Based Compensation Compensation expense related to awards of restricted shares are measured at fair value on the date of grant and amortized over the relevant requisite service period or derived service period. |
Income Taxes | Income Taxes The Company is subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, the TRS Lessee, which leases the Company’s hotels from the Operating Partnership, is subject to federal and state 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 reviews any uncertain tax positions and, if necessary, records the expected future tax consequences of uncertain tax positions in its consolidated financial statements. Tax positions not deemed to meet the “more-likely-than-not” threshold are recorded as a tax benefit or expense in the current year. The Company’s management is required to analyze all open tax years, as defined by the statute of limitations, for all major jurisdictions, which includes federal and certain states. The Company recognizes any penalties and interest related to unrecognized tax benefits in income tax expense in its consolidated statements of operations. |
Noncontrolling Interest | Noncontrolling Interest The Company’s consolidated financial statements include an entity in which the Company has a controlling financial interest. Noncontrolling interest is the portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. Such noncontrolling interest is reported on the consolidated balance sheets within equity, separately from the Company’s equity. On the consolidated statements of operations, revenues, expenses and net income or loss from the less-than-wholly-owned subsidiary are reported at their consolidated amounts, including both the amounts attributable to the Company and the noncontrolling interest. Income or loss is allocated to the noncontrolling interest based on its weighted average ownership percentage for the applicable period. The consolidated statements of equity include beginning balances, activity for the period and ending balances for each component of stockholders’ equity, noncontrolling interest and total equity. At December 31, 2019, 2018 and 2017, the noncontrolling interest reported in the Company’s consolidated financial statements consisted of a third-party’s 25.0% ownership interest in the Hilton San Diego Bayfront. |
Dividends | Dividends Under current federal income tax laws related to REITs, the Company is required to distribute at least 90% of its REIT taxable income to its stockholders. Currently, the Company pays quarterly cash dividends to its common stockholders, as well as to the preferred stockholders of its 6.95% Series E Cumulative Redeemable Preferred Stock (“Series E preferred stock”) and its 6.45% Series F Cumulative Preferred Stock (“Series F preferred stock”) as declared by the Company’s board of directors. The Company’s ability to pay dividends is dependent on the receipt of distributions from the Operating Partnership. |
Earnings Per Share | Earnings Per Share The Company applies the two-class method when computing its earnings per share. Net income per share for each class of stock is calculated assuming all of the Company’s net income is distributed as dividends to each class of stock based on their contractual rights. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are considered participating securities and are included in the computation of earnings per share. Basic earnings (loss) attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not anti-dilutive. Potential common shares consist of unvested restricted stock awards and the incremental common shares issuable upon the exercise of stock options (before their expiration in April 2018), using the more dilutive of either the two-class method or the treasury stock method. The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): Year Ended Year Ended Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Numerator: Net income $ 142,793 $ 259,059 $ 153,004 Income from consolidated joint venture attributable to noncontrolling interest (7,060) (8,614) (7,628) Preferred stock dividends (12,830) (12,830) (12,830) Distributions paid on unvested restricted stock compensation (901) (814) (860) Undistributed income allocated to unvested restricted stock compensation — (422) — Numerator for basic and diluted income attributable to common stockholders $ 122,002 $ 236,379 $ 131,686 Denominator: Weighted average basic and diluted common shares outstanding 225,681 225,924 221,898 Basic and diluted income attributable to common stockholders per common share $ 0.54 $ 1.05 $ 0.59 The Company’s unvested restricted shares associated with its long-term incentive plan and shares associated with common stock options, as applicable, have been excluded from the above calculation of earnings per share for the years ended December 31, 2019, 2018 and 2017, as their inclusion would have been anti-dilutive. |
Segment Reporting | Segment Reporting The Company considers each of its hotels to be an operating segment, and allocates resources and assesses the operating performance for each hotel. Because all of the Company’s hotels have similar economic characteristics, facilities and services, the hotels have been aggregated into a single reportable segment, hotel ownership. |
New Accounting Standards and Accounting Changes | New Accounting Standards and Accounting Changes In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, “ Leases (Topic 842) ” (“ASU No. 2016-02”), which requires companies to record a right-of-use asset and a lease liability on the balance sheet for all leases with a term greater than 12 months regardless of their classification. All entities will classify leases as either operating or finance to determine how to recognize lease-related revenue and expense. Classification will continue to affect amounts that lessees and lessors record on the balance sheet. The new standard requires the following: ● Lessees: Leases are accounted for using a dual approach, classifying leases as either operating or financing based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification determines whether the lease expense is recognized on a straight-line basis over the term of the lease (for operating leases) or based on an effective interest method (for finance leases). A lessee is required to record a right-of-use asset and a lease liability on its balance sheet for all leases with a term of greater than 12 months regardless of their classification as operating or finance leases. ● Lessors: Leases are accounted for using an approach that is substantially equivalent to existing guidance for operating, sales-type and financing leases, but aligned with the FASB’s revenue standard. Subsequent to the issuance of ASU No. 2016-02, the FASB issued several clarifications and updates, including Accounting Standards Update No. 2018-01, “ Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842 ” (“ASU No. 2018-01”) in January 2018, Accounting Standards Update No. 2018-10, “ Codification Improvements to Topic 842, Leases ” (“ASU No. 2018-10”) and Accounting Standards Update No. 2018-11, “ Leases (Topic 842): Targeted Improvements ” (“ASU No. 2018-11”) in July 2018, Accounting Standards Update No. 2018-20, “ Leases (Topic 842): Narrow-Scope Improvements for Lessors ” (“ASU No. 2018-20”) in December 2018 and Accounting Standards Update No. 2019-01, “ Leases (Topic 842): Codification Improvements ” (“ASU No. 2019-01”) in March 2019. The Company adopted ASU No. 2016-02 on January 1, 2019, along with its related clarifications and amendments, and made the following elections: ● to not separate lease components from nonlease components by underlying asset. By making this election, the Company is required to account for the nonlease components together with the related lease components as a single lease component (ASU No. 2016-02); ● to not reassess whether a land easement not previously accounted for as a lease would now be a lease (ASU No. 2018-01); ● to not reassess whether an expired or existing contract meets the definition of a lease (ASU No. 2018-11); ● to not reassess the lease classification at the adoption date for existing leases (ASU No. 2018-11); ● to not reassess whether costs previously capitalized as initial direct costs would continue to be amortized (ASU No. 2018-11); ● to apply the optional modified retrospective transition approach, allowing companies to initially apply the standard at the adoption date without revising comparable periods (ASU No. 2018-11); and ● to not evaluate whether sales taxes and other similar taxes imposed by a governmental authority on a specific lease revenue-producing transaction are the primary obligation of the lessor as owner of the underlying leased asset (ASU No. 2018-20). Lessee Perspective The adjustments related to operating leases affected the Company’s January 1, 2019 consolidated balance sheet as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Operating lease right-of-use assets, net $ — $ 64,075 $ 64,075 Investment in hotel properties, net (intangible assets) $ 50,889 (18,398) $ 32,491 Total asset adjustments $ 45,677 Operating lease obligations, current and noncurrent $ — $ 58,663 $ 58,663 Other liabilities (deferred rent) $ 12,986 (12,986) $ — Total liability adjustments $ 45,677 Upon adoption of the new standard, the Company reclassified amounts related to its finance leases as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Finance lease right-of-use assets, net $ — $ 55,727 $ 55,727 Investment in hotel properties, net (land) $ 611,993 (6,605) $ 605,388 Investment in hotel properties, net (buildings and improvements, net of accumulated depreciation) $ 2,167,680 (49,122) $ 2,118,558 Total asset adjustments $ — Finance lease obligations, current and noncurrent $ — $ 27,010 $ 27,010 Capital lease obligations, current and noncurrent $ 27,010 (27,010) $ — Total liability adjustments $ — The Company determines if a contract is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense for these short-term leases is recognized on a straight-line basis over the lease term. For leases with an initial term greater than 12 months , the Company records a ROU asset and a corresponding lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease obligations represent the Company’s obligation to make fixed lease payments as stipulated by the lease. Operating lease obligations are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate (“IBR”) based on information available at the commencement date in determining the present value of lease payments over the lease term. The IBR is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In order to estimate the Company’s IBR, the Company first looks to its own unsecured debt offerings, and adjusts the rate for both length of term and secured borrowing using available market data as well as consultations with leading national financial institutions that are active in the issuance of both secured and unsecured notes. Operating lease ROU assets are recognized at the lease commencement date, and include the amount of the initial operating lease obligation, any lease payments made at or before the commencement date, excluding any lease incentives received, and any initial direct costs incurred. For leases that have extension options that the Company can exercise at its discretion, management uses judgment to determine if it is reasonably certain that the Company will in fact exercise such option. If the extension option is reasonably certain to occur, the Company includes the extended term’s lease payments in the calculation of the respective lease liability. None of the Company’s leases contain any material residual value guarantees or material restrictive covenants. The Company reviews its right-of-use assets for indicators of impairment. If such assets are considered to be impaired, the related assets are adjusted to their estimated fair value and an impairment loss is recognized. The impairment loss recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Lessor Perspective : For lease agreements in which the Company is the lessor, the Company analyzed the impact of the standard and determined that there was no material impact to the recognition, measurement, or presentation of these revenues. Upon adoption, the Company analyzed the lease and nonlease components, including real estate taxes and common area maintenance expenses, of its lease agreements and determined that the timing and pattern of transfer for both components are the same. In addition, the Company determined that the predominate component was the lease component and, as such, the leases will continue to qualify as operating leases and the Company will account for and present the lease component and the nonlease component as a single component. The Company will continue to collect nonlease amounts directly from its tenants, including real estate taxes and other expenses, and remit these amounts directly to third-parties. None of the Company’s tenants pay third-parties directly. The Company believes that all of its tenant receivables are probable of collection as of December 31, 2019. See Note 9 for additional lease disclosures. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, “ Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Organization and Description _2
Organization and Description of Business (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Description of Business | |
Schedule of number of hotels managed by each third-party manager | As of December 31, 2019, the Company had interests in 20 hotels (the “20 Hotels”), currently held for investment. The Company’s third-party managers included the following: Number of Hotels Subsidiaries of Marriott International, Inc. or Marriott Hotel Services, Inc. (collectively, “Marriott”) 8 Highgate Hotels L.P. and an affiliate 3 Crestline Hotels & Resorts 2 Hilton Worldwide 2 Interstate Hotels & Resorts, Inc. 2 Davidson Hotels & Resorts 1 Hyatt Corporation 1 Singh Hospitality, LLC 1 Total hotels owned as of December 31, 2019 20 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Schedule of contract assets and liabilities | Trade receivables and contract liabilities consisted of the following (in thousands): December 31, December 31, 2019 2018 Trade receivables, net (1) $ 21,201 $ 18,982 Contract liabilities (2) $ 18,498 $ 16,711 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits, and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except per share data): Year Ended Year Ended Year Ended December 31, 2019 December 31, 2018 December 31, 2017 Numerator: Net income $ 142,793 $ 259,059 $ 153,004 Income from consolidated joint venture attributable to noncontrolling interest (7,060) (8,614) (7,628) Preferred stock dividends (12,830) (12,830) (12,830) Distributions paid on unvested restricted stock compensation (901) (814) (860) Undistributed income allocated to unvested restricted stock compensation — (422) — Numerator for basic and diluted income attributable to common stockholders $ 122,002 $ 236,379 $ 131,686 Denominator: Weighted average basic and diluted common shares outstanding 225,681 225,924 221,898 Basic and diluted income attributable to common stockholders per common share $ 0.54 $ 1.05 $ 0.59 |
Schedule of financial statement adjustments due to adoption of ASU 2016-02 | The adjustments related to operating leases affected the Company’s January 1, 2019 consolidated balance sheet as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Operating lease right-of-use assets, net $ — $ 64,075 $ 64,075 Investment in hotel properties, net (intangible assets) $ 50,889 (18,398) $ 32,491 Total asset adjustments $ 45,677 Operating lease obligations, current and noncurrent $ — $ 58,663 $ 58,663 Other liabilities (deferred rent) $ 12,986 (12,986) $ — Total liability adjustments $ 45,677 Upon adoption of the new standard, the Company reclassified amounts related to its finance leases as follows (in thousands): Balance Pre-Adoption Adjustments Balance Post-Adoption Finance lease right-of-use assets, net $ — $ 55,727 $ 55,727 Investment in hotel properties, net (land) $ 611,993 (6,605) $ 605,388 Investment in hotel properties, net (buildings and improvements, net of accumulated depreciation) $ 2,167,680 (49,122) $ 2,118,558 Total asset adjustments $ — Finance lease obligations, current and noncurrent $ — $ 27,010 $ 27,010 Capital lease obligations, current and noncurrent $ 27,010 (27,010) $ — Total liability adjustments $ — |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | Investment in hotel properties, net consisted of the following (in thousands): December 31, 2019 2018 Land $ 601,181 $ 611,993 Buildings and improvements 2,950,534 2,983,308 Furniture, fixtures and equipment 506,754 486,441 Intangible assets 32,610 56,021 Franchise fees 743 778 Construction in progress 40,639 60,744 Investment in hotel properties, gross 4,132,461 4,199,285 Accumulated depreciation and amortization (1,260,108) (1,168,287) Investment in hotel properties, net $ 2,872,353 $ 3,030,998 |
Schedule of intangible assets included in Investment in Hotel Properties | Intangible assets included in the Company’s investment in hotel properties, net consisted of the following (in thousands): December 31, 2019 2018 Easement/Element agreements (1) $ 28,163 $ 28,163 Ground lease/airspace agreements (2) 3,486 25,585 In-place lease agreements (3) — 1,312 Below market management agreement (4) 961 961 32,610 56,021 Accumulated amortization (685) (5,132) $ 31,925 $ 50,889 |
Schedule of amortization expense of intangible assets included in investment in hotel properties | Amortization expense on these intangible assets for the years ended December 31, 2019, 2018 and 2017 consisted of the following (in thousands): 2019 2018 2017 Ground lease/airspace agreements (2) $ — $ 255 $ 255 In-place lease agreements (3) 35 237 276 Below market management agreement (4) 91 91 299 Advanced bookings (5) — 1,201 2,340 Above market lease agreements (6) — 8 16 $ 126 $ 1,792 $ 3,186 (1) The Easement/Element agreements as of both December 31, 2019 and 2018 consisted of an easement at the Hilton Times Square, and the exclusive perpetual rights to certain space at the Renaissance Washington DC (the “Element”), both of which were valued at fair value at the date of acquisition. The agreements have indefinite useful lives, and, therefore, are not amortized. These non-amortizable intangible assets are reviewed annually for impairment and more frequently if events or circumstances indicate that the asset may be impaired. If a non-amortizable intangible asset is subsequently determined to have a finite useful life, the intangible asset will be written down to the lower of its fair value or carrying amount and then amortized prospectively, based on the remaining useful life of the intangible asset. (2) Ground lease/airspace agreements as of December 31, 2019 included airspace agreements at both the Renaissance Harborplace and the Oceans Edge Resort & Marina. The airspace assets at the Renaissance Harborplace and the Oceans Edge Resort & Marina were both valued at fair value at the dates of acquisition, and both have indefinite useful lives and are not amortized. As part of the total impairment loss recorded on the Renaissance Harborplace in 2019 (see Note 5), the Company wrote down the carrying amount of the hotel’s airspace agreement by $0.5 million to reduce the asset down to its fair market value. As of December 31, 2018, ground lease/airspace agreements also included a ground lease agreement at the Hilton Times Square, which was valued at fair value at the date of acquisition. Upon adoption of ASU No. 2016-02 on January 1, 2019, the remaining $18.4 million balance of the agreement was reclassified to operating lease right-of-use assets, net in the Company’s consolidated balance sheet (see Note 2). Prior to its reclassification, the agreement was amortized using the straight-line method over its remaining non-cancelable lease term, and the amortization expense was included in property tax, ground lease and insurance expense in the Company’s consolidated statements of operations. (3) Prior to being fully amortized in July 2019, in-place lease agreements included agreements at the Hilton San Diego Bayfront, the Hyatt Regency San Francisco and the Wailea Beach Resort. Prior to being fully amortized in July 2018, in-place lease agreements also included agreements at the Oceans Edge Resort & Marina. The agreements were valued at fair value at the dates of acquisition, and were amortized using the straight-line method over the remaining non-cancelable terms of the related agreements. The amortization expense for the agreements was included in depreciation and amortization expense in the Company’s consolidated statements of operations. (4) The below market management agreement at the Hilton Garden Inn Chicago Downtown/Magnificent Mile was valued at fair value at the acquisition date. The agreement is amortized using the straight-line method over the remaining non-cancelable term, and will be fully amortized in December 2022. Prior to being fully amortized in July 2017, the agreement also contained a component related to the potential management of a future hotel, which was amortized using the straight-line method over the remaining non-cancelable term. The amortization expense for the agreement is included in other property-level expenses in the Company’s consolidated statements of operations. (5) Prior to being fully amortized in July 2018, advanced bookings consisted of advance deposits related to the purchases of the Boston Park Plaza, the Hyatt Regency San Francisco and the Wailea Beach Resort. The contractual advanced hotel bookings were recorded at a discounted present value based on estimated collectability, and were amortized using the straight-line method over the periods the amounts were expected to be collected. The amortization expense for contractual advanced hotel bookings was included in depreciation and amortization expense in the Company’s consolidated statements of operations. (6) Prior to being fully amortized in July 2018 and February 2017, the above market lease agreements consisted of favorable tenant leases at the Hyatt Regency San Francisco and the Hilton New Orleans St. Charles, respectively. The agreements were valued at fair value at the dates of acquisition, and amortized using the straight-line method over the remaining non-cancelable term of the related agreements. The amortization expense for the agreements was included in other operating revenue in the Company’s consolidated statements of operations. |
Disposals and Discontinued Op_2
Disposals and Discontinued Operations (Tables) - Sold, not considered a discontinued operation | 12 Months Ended |
Dec. 31, 2019 | |
Schedule of operating results for sold entities | The following table provides summary results of operations for the hotels sold in 2019, 2018 and 2017, which are included in continuing operations for their respective ownership periods (in thousands): 2019 2018 2017 Total revenues $ 10,422 $ 79,627 $ 168,375 Income before income taxes and discontinued operations (1) $ 2,044 $ 11,190 $ 19,811 Gain on sale of assets $ 42,935 $ 116,961 $ 45,474 (1) Income before income taxes and discontinued operations does not include the gain recognized on the hotel sales. |
2018 Disposals | |
Schedule of proceeds and gain on sale of hotels | The details of the sales were as follows (in thousands): Net Proceeds Net Gain Marriott Philadelphia and Marriott Quincy $ 136,983 $ 15,659 Hyatt Regency Newport Beach 94,043 53,128 Houston hotels 32,421 336 Marriott Tysons Corner 84,526 47,838 $ 347,973 $ 116,961 |
2017 Disposals | |
Schedule of proceeds and gain on sale of hotels | The details of the sales were as follows (in thousands): Net Proceeds Net Gain Fairmont Newport Beach $ 122,832 $ 44,285 Marriott Park City 27,026 1,189 $ 149,858 $ 45,474 |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Derivatives (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value Measurements and Interest Rate Derivatives | |
Schedule of assets measured at fair value on a recurring and nonrecurring basis | The following table presents the Company’s assets measured at fair value on a recurring and nonrecurring basis at December 31, 2019 and 2018 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 December 31, 2019: Renaissance Harborplace $ 96,725 $ — $ — $ 96,725 Total assets measured at fair value at December 31, 2019 $ 96,725 $ — $ — $ 96,725 December 31, 2018: Interest rate swap derivatives $ 4,789 $ — $ 4,789 $ — Life insurance policy (1) 386 — 386 — Total assets measured at fair value at December 31, 2018 $ 5,175 $ — $ 5,175 $ — (1) Prior to the Company’s collateral assignment release in August 2019, the split life insurance policy was for a former Company associate. As of December 31, 2018, the amount was included in other assets, net on the accompanying consolidated balance sheet. |
Schedule of liabilities measured at fair value on a recurring and nonrecurring basis | The following table presents the Company’s liabilities measured at fair value on a recurring and nonrecurring basis at December 31, 2019 and 2018 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 December 31, 2019: Interest rate swap derivatives $ 1,081 $ — $ 1,081 $ — Total liabilities measured at fair value at December 31, 2019 $ 1,081 $ — $ 1,081 $ — December 31, 2018: Retirement benefit agreement (1) $ 386 $ — $ 386 $ — Total liabilities measured at fair value at December 31, 2018 $ 386 $ — $ 386 $ — (1) Prior to the Company’s collateral assignment release in August 2019, the retirement benefit agreement was for a former Company associate. As of December 31, 2018, the amount was included in accrued payroll and employee benefits in the accompanying consolidated balance sheet. |
Schedule of interest rate derivatives | The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at December 31, 2019 and 2018 (in thousands): Estimated Fair Value of Strike / Capped Effective Maturity Notional December 31, Hedged Debt Type LIBOR Rate Index Date Date Amount 2019 2018 Hilton San Diego Bayfront Cap 4.250 % 1-Month LIBOR May 1, 2017 May 1, 2019 $ N/A $ N/A $ — Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR November 10, 2017 December 9, 2020 $ 220,000 — — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (132) 2,521 $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (949) 2,268 $ (1,081) $ 4,789 (1) The fair values of both swap agreements are included in other liabilities and other assets, net on the accompanying consolidated balance sheets as of December 31, 2019 and 2018, respectively. |
Schedule of changes in fair value of interest rate derivatives | Noncash changes in the fair values of the Company’s interest rate derivatives resulted in increases (decreases) to interest expense for the years ended December 31, 2019, 2018 and 2017 as follows (in thousands): 2019 2018 2017 Noncash interest on derivatives $ 5,870 $ (1,395) $ (1,520) |
Schedule of principal values and estimated fair values of debt | The Company’s principal balances and fair market values of its consolidated debt as of December 31, 2019 and 2018 were as follows (in thousands): December 31, 2019 December 31, 2018 Carrying Amount (1) Fair Value Carrying Amount (1) Fair Value Debt $ 974,863 $ 976,012 $ 982,828 $ 971,082 (1) The principal balance of debt is presented before any unamortized deferred financing costs. |
Other Assets (Tables)
Other Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Assets | |
Schedule of other assets | Other assets, net consisted of the following (in thousands): December 31, 2019 2018 Property and equipment, net $ 7,642 $ 8,426 Goodwill — 990 Deferred rent on straight-lined third-party tenant leases 3,542 3,177 Deferred income tax assets, net 7,415 8,407 Interest rate derivatives — 4,789 Other receivables 2,984 3,209 Other 307 819 Total other assets, net $ 21,890 $ 29,817 |
Notes Payable (Tables)
Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands): December 31, 2019 2018 Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 5.95% ; maturing at dates ranging from November 2020 through January 2025 . The notes are collateralized by first deeds of trust on four hotel properties at both December 31, 2019 and 2018. $ 329,863 $ 337,828 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points; initial maturity in December 2020 with three one-year extensions, which the Company intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR , depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 2.941% . Matures in September 2022 . 85,000 85,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points over one-month LIBOR , depending on the Company's leverage ratios. LIBOR has been swapped to a fixed rate of 1.853% , resulting in an effective interest rate of 3.203% . Matures in January 2023 . 100,000 100,000 Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.69% ; maturing in January 2026 . 120,000 120,000 Unsecured Senior Notes requiring semi-annual payments of interest only, bearing interest at 4.79% ; maturing in January 2028 . 120,000 120,000 Total notes payable $ 974,863 $ 982,828 Current portion of notes payable $ 83,975 $ 7,804 Less: current portion of deferred financing costs (1,866) (1,966) Carrying value of current portion of notes payable $ 82,109 $ 5,838 Notes payable, less current portion $ 890,888 $ 975,024 Less: long-term portion of deferred financing costs (1,934) (3,799) Carrying value of notes payable, less current portion $ 888,954 $ 971,225 |
Schedule of aggregate future principal maturities and amortization of notes payable | Aggregate future principal maturities and amortization of notes payable at December 31, 2019, are as follows (in thousands): 2020 $ 83,975 (1) 2021 111,247 2022 88,446 2023 323,593 (1) 2024 75,615 Thereafter 291,987 Total $ 974,863 (1) Reflects the intended exercise of all three available one-year options to extend the maturity date of the $220.0 million loan secured by the Hilton San Diego Bayfront from December 2020 to December 2023. |
Schedule of deferred financing costs and losses on extinguishment of debt | Deferred financing costs and loss on extinguishment of debt for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands): 2019 2018 (1) 2017 (2) Payments of deferred financing costs $ — $ 4,012 $ 3,537 Loss on extinguishment of debt $ — $ 835 $ 824 (1) During 2018, the Company paid a total of $4.0 million in deferred financing costs and incurred a loss on extinguishment of debt totaling $0.8 million related to its credit facility amendment and extension and term loans repricing. (2) During 2017, the Company paid a total of $3.5 million in deferred financing costs related to its new $220.0 million loan secured by the Hilton San Diego Bayfront, its Senior Notes and its credit facility. In addition, during 2017, the Company incurred a loss on extinguishment of debt totaling $0.8 million related to its 2017 debt repayment and refinancing. |
Schedule of interest expense | Total interest incurred and expensed on the notes payable and finance lease obligations for the years ended December 31, 2019, 2018 and 2017 was as follows (in thousands): 2019 2018 2017 Interest expense on debt and finance lease obligations $ 45,381 $ 45,933 $ 46,251 Noncash interest on derivatives and finance lease obligations, net 6,051 (1,190) 3,106 Amortization of deferred financing costs 2,791 2,947 2,409 Total interest expense $ 54,223 $ 47,690 $ 51,766 |
Other Current Liabilities and_2
Other Current Liabilities and Other Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Other Current Liabilities and Other Liabilities | |
Schedule of other current liabilities | Other current liabilities consisted of the following (in thousands): December 31, 2019 2018 Property, sales and use taxes payable $ 16,074 $ 15,684 Accrued interest 6,735 7,306 Advance deposits 18,001 16,711 Management fees payable 1,527 1,142 Other 4,618 4,119 Total other current liabilities $ 46,955 $ 44,962 |
Schedule of other liabilities | Other liabilities consisted of the following (in thousands): December 31, 2019 2018 Deferred revenue $ 5,225 $ 5,017 Deferred rent — 12,986 Deferred property taxes payable (1) 8,887 9,284 Interest rate derivatives 1,081 — Other 2,943 3,416 Total other liabilities $ 18,136 $ 30,703 (1) Under the terms of a sublease agreement at the Hilton Times Square, sublease rent amounts are currently considered to be property taxes under a payment-in-lieu of taxes (“PILOT”) program, and will be paid beginning in 2020 through 2029. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Leases | |
Schedule of supplemental balance sheet information related to leases | Leases were included on the Company’s consolidated balance sheet as follows (in thousands): December 31, 2019 Finance Lease: Right-of-use asset, net (buildings and improvements) $ 58,799 Accumulated depreciation (11,147) Right-of-use asset, net $ 47,652 Accounts payable and accrued expenses $ 1 Lease obligations, less current portion 15,570 Total lease obligation $ 15,571 Remaining lease term 78 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 60,629 Accounts payable and accrued expenses $ 4,743 Lease obligations, less current portion 49,691 Total lease obligations $ 54,434 Weighted average remaining lease term 25 years Weighted average discount rate 5.4 % |
Lease costs | The components of lease expense were as follows (in thousands): 2019 Finance lease cost: Amortization of right-of-use asset $ 1,470 Interest on lease obligations (1) 2,357 Total finance lease cost $ 3,827 Operating lease cost (2) $ 13,056 (1) Interest on lease obligations includes interest expense of $1.0 million on the Courtyard by Marriott Los Angeles’s finance lease obligation before the hotel’s sale in October 2019 (see Note 4). (2) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds. During the year ended December 31, 2019, the Company recorded $6.1 million in percentage rent related to its operating leases. |
Schedule of supplemental cash flow information related to leases | Supplemental cash flow information related to leases was as follows (in thousands): 2019 Operating cash flows used for operating leases $ 7,238 Changes in operating lease right-of-use assets $ 3,447 Changes in operating lease obligations (4,229) Changes in operating lease right-of-use assets and lease obligations, net $ (782) Operating right-of-use assets obtained in exchange for operating lease obligations $ 45,677 |
Summary of Future payments on leases, Finance lease | Future maturities of the Company’s finance and operating lease obligations at December 31, 2019 were as follows (in thousands): Finance Lease Operating Leases 2020 $ 1,403 $ 7,519 2021 1,403 7,570 2022 1,403 7,622 2023 1,403 7,676 2024 1,403 7,732 Thereafter 102,400 73,983 Total lease payments 109,415 112,102 Less: interest (1) (93,844) (57,668) Present value of lease obligations $ 15,571 $ 54,434 (1) Calculated using the appropriate discount rate for each lease. |
Summary of Future payments on leases, Operating lease | Finance Lease Operating Leases 2020 $ 1,403 $ 7,519 2021 1,403 7,570 2022 1,403 7,622 2023 1,403 7,676 2024 1,403 7,732 Thereafter 102,400 73,983 Total lease payments 109,415 112,102 Less: interest (1) (93,844) (57,668) Present value of lease obligations $ 15,571 $ 54,434 (1) Calculated using the appropriate discount rate for each lease. |
Schedule of Capital Leased Assets | Prior to the Company’s adoption of the new leases standard, as of December 31, 2018, capital lease assets were included in investment in hotel properties, net on the Company’s consolidated balance sheets as follows (in thousands): December 31, 2018 Gross capital lease asset - buildings and improvements $ 58,799 Gross capital lease asset - land 6,605 Gross capital lease assets 65,404 Accumulated depreciation (9,677) Net capital lease assets 55,727 |
Schedule of Future Minimum Rental Payments for Operating Leases | Prior to the Company’s adoption of the new leases standard, as of December 31, 2018, future minimum undiscounted operating lease payments, along with the present value of net future capital lease payments were as follows (in thousands): Operating Leases 2019 $ 8,159 2020 8,441 2021 8,486 2022 8,531 2023 8,576 Thereafter 159,190 Total operating lease payments $ 201,383 |
Schedule of Future Minimum Lease Payments for Capital Leases | Capital Leases 2019 $ 2,357 2020 2,357 2021 2,389 2022 2,453 2023 2,453 Thereafter 136,220 Total capital lease payments 148,229 Less: interest (1) (121,219) Present value of capital lease payments $ 27,010 (1) Interest includes the amount necessary to reduce net minimum lease payments to present value calculated at the Company’s incremental borrowing rate at lease inception. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of deferred tax assets (liabilities) | The significant components of the Company’s deferred tax assets and liabilities were as follows (in thousands): December 31, 2019 2018 Deferred Tax Assets: Net operating loss carryforward $ 2,875 $ 3,711 Other reserves 1,090 1,052 State taxes and other 3,322 3,168 Depreciation 492 476 Total deferred tax assets 7,779 8,407 Deferred Tax Liabilities: Amortization (38) (53) Deferred revenue (284) (213) Other (42) (38) Total deferred tax liabilities (364) (304) Deferred tax assets, net $ 7,415 $ 8,103 |
Schedule of income tax benefit (provision), net | The Company’s income tax benefit (provision), net was included in the consolidated statements of operations as follows (in thousands): 2019 2018 2017 Current: Federal $ 790 $ 4 $ (298) State 49 (639) (1,162) Current income tax benefit (provision), net 839 (635) (1,460) Deferred: Federal (1,112) (365) (5,591) State 424 (767) (442) Change in valuation allowance — — 15,268 Deferred income tax (provision) benefit, net (688) (1,132) 9,235 Income tax benefit (provision), net $ 151 $ (1,767) $ 7,775 |
Schedule of effective income tax rate reconciliation | The differences between the income tax benefit (provision) calculated at the statutory U.S. federal income tax rate of 21% (35% prior to 2018) and the actual income tax benefit (provision), net recorded for continuing operations were as follows (in thousands): 2019 2018 2017 Expected federal tax expense at statutory rate $ (29,955) $ (54,773) $ (46,998) Tax impact of REIT election 29,810 54,779 43,237 Expected tax (provision) benefit of TRS (145) 6 (3,761) State income tax benefit (provision), net of federal benefit 335 (606) (318) Change in valuation allowance — — 14,340 Other permanent items 562 (1,167) (381) AMT credit (refund) receivable (601) — 1,421 Effect of rate change — — (3,526) Income tax benefit (provision), net $ 151 $ (1,767) $ 7,775 |
Schedule of characterization of distributions | Characterization of Distributions For income tax purposes, distributions paid consist of ordinary income, capital gains, return of capital or a combination thereof. For the years ended December 31, 2019, 2018 and 2017, distributions paid per share were characterized as follows (unaudited): 2019 (1) 2018 (1) 2017 Amount % Amount % Amount % Common Stock: Ordinary income $ 0.606 81.84 % $ 0.634 91.89 % $ 0.554 75.95 % Capital gain 0.134 18.16 0.056 8.11 0.176 24.05 Return of capital — — — — — — Total $ 0.740 100 % $ 0.690 100 % $ 0.730 100 % Preferred Stock — Series E Ordinary income $ 1.422 81.84 % $ 1.597 91.89 % $ 1.320 75.95 % Capital gain 0.316 18.16 0.141 8.11 0.418 24.05 Return of capital — — — — — — Total $ 1.738 100 % $ 1.738 100 % $ 1.738 100 % Preferred Stock — Series F Ordinary income $ 1.320 81.84 % $ 1.482 91.89 % $ 1.225 75.95 % Capital gain 0.293 18.16 0.131 8.11 0.388 24.05 Return of capital — — — — — — Total $ 1.613 100 % $ 1.613 100 % $ 1.613 100 % (1) Ordinary income in both 2019 and 2018 qualifies for Section 199A treatment per the TCJA. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Stockholders' Equity | |
Schedule of dividends and distributions declared per share | The Company declared dividends per share on its Series E preferred stock and Series F preferred stock, along with distributions per share on its common stock during 2019, 2018 and 2017 as follows: 2019 2018 2017 Series E preferred stock $ 1.7375 $ 1.7375 $ 1.7375 Series F preferred stock $ 1.6125 $ 1.6125 $ 1.6125 Common stock $ 0.7400 $ 0.6900 $ 0.7300 |
Long-Term Incentive Plan (Table
Long-Term Incentive Plan (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long-Term Incentive Plan | |
Schedule of amortization expense and forfeitures related to restricted shares | The Company’s amortization expense and forfeitures related to restricted shares for the years ended December 31, 2019, 2018 and 2017 were as follows (in thousands): 2019 2018 2017 Amortization expense, including forfeitures $ 9,313 $ 9,007 $ 8,042 |
Schedule of non-vested stock grant activity | The following is a summary of non-vested restricted stock grant activity: 2019 2018 2017 Weighted Weighted Weighted Average Average Average Shares Price Shares Price Shares Price Outstanding at beginning of year 1,177,760 $ 14.89 1,175,049 $ 14.12 1,095,908 $ 13.36 Granted 701,754 $ 14.35 617,595 $ 15.84 654,266 $ 15.11 Vested (657,732) $ 14.32 (602,091) $ 14.37 (541,827) $ 13.78 Forfeited (3,932) $ 15.48 (12,793) $ 14.39 (33,298) $ 14.10 Outstanding at end of year 1,217,850 $ 14.88 1,177,760 $ 14.89 1,175,049 $ 14.12 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Schedule of basic and incentive management fees | Total basic management and incentive management fees incurred by the Company during the years ended December 31, 2019, 2018 and 2017 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (in thousands): 2019 2018 2017 Basic management fees $ 31,061 $ 31,947 $ 33,318 Incentive management fees 8,005 7,169 6,301 Total basic and incentive management fees $ 39,066 $ 39,116 $ 39,619 |
Schedule of license and franchise costs | Total license and franchise fees incurred by the Company during the years ended December 31, 2019, 2018 and 2017 were included in franchise costs on the Company’s consolidated statements of operations as follows (in thousands): 2019 2018 2017 Franchise assessments (1) $ 24,389 $ 25,966 $ 26,902 Franchise royalties 7,876 9,457 9,779 Total franchise costs $ 32,265 $ 35,423 $ 36,681 (1) Includes advertising, reservation and frequent guest program assessments. |
Schedule of hotel geographic concentration of risk | As of December 31, 2019, 15 of the 20 Hotels were geographically concentrated as follows: Percentage of Total 2019 Number of Hotels Total Rooms Consolidated Revenue California 5 30 % 33 % Florida 2 9 % 10 % Greater Washington DC area 2 13 % 11 % Hawaii 1 5 % 11 % Illinois 3 11 % 7 % Massachusetts 2 14 % 15 % |
Quarterly Operating Results (_2
Quarterly Operating Results (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Operating Results (Unaudited) | |
Schedule of consolidated quarterly results | The Company’s consolidated quarterly results for the years ended December 31, 2019 and 2018 are as follows (in thousands): 2019 Quarter Ended March 31 June 30 September 30 December 31 Total revenues $ 257,680 $ 302,896 $ 281,639 $ 272,952 Total operating expenses 233,474 243,297 239,346 261,677 Operating income $ 24,206 $ 59,599 $ 42,293 $ 11,275 Net income $ 17,916 $ 45,918 $ 33,545 $ 45,414 Income attributable to common stockholders $ 13,110 $ 40,756 $ 27,829 $ 41,208 Income attributable to common stockholders per share — basic and diluted $ 0.06 $ 0.18 $ 0.12 $ 0.18 2018 Quarter Ended March 31 June 30 September 30 December 31 Total revenues $ 271,446 $ 317,447 $ 289,308 $ 280,852 Total operating expenses 245,005 255,592 241,220 235,346 Operating income $ 26,441 $ 61,855 $ 48,088 $ 45,506 Net income $ 38,455 $ 51,262 $ 91,586 $ 77,756 Income attributable to common stockholders $ 32,809 $ 45,681 $ 86,002 $ 73,123 Income attributable to common stockholders per share — basic and diluted $ 0.15 $ 0.20 $ 0.38 $ 0.32 |
Organization and Description _3
Organization and Description of Business (Details) | 12 Months Ended |
Dec. 31, 2019itemproperty | |
Organization and Description of Business | |
Number of hotels owned by the Company | property | 15 |
Number of hotels held for investment | property | 20 |
Sunstone Hotel Partnership, LLC | |
Organization and Description of Business | |
Controlling interest owned (as a percent) | 100.00% |
Hotel owned by the Company | |
Organization and Description of Business | |
Number of hotels owned by the Company | property | 20 |
Number of hotels managed by third parties | 20 |
Hotel owned by the Company | Marriott | |
Organization and Description of Business | |
Number of hotels managed by third parties | 8 |
Hotel owned by the Company | Highgate Hotels L.P. and an affiliate | |
Organization and Description of Business | |
Number of hotels managed by third parties | 3 |
Hotel owned by the Company | Crestline Hotels & Resorts | |
Organization and Description of Business | |
Number of hotels managed by third parties | 2 |
Hotel owned by the Company | Hilton Worldwide | |
Organization and Description of Business | |
Number of hotels managed by third parties | 2 |
Hotel owned by the Company | Interstate Hotels & Resorts, Inc | |
Organization and Description of Business | |
Number of hotels managed by third parties | 2 |
Hotel owned by the Company | Davidson Hotels & Resorts | |
Organization and Description of Business | |
Number of hotels managed by third parties | 1 |
Hotel owned by the Company | Hyatt Corporation | |
Organization and Description of Business | |
Number of hotels managed by third parties | 1 |
Hotel owned by the Company | Singh Hospitality, LLC | |
Organization and Description of Business | |
Number of hotels managed by third parties | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)property | Dec. 31, 2018USD ($)property | Dec. 31, 2017property | |
Investments in Hotel Properties | |||
Number of hotels owned by the Company | property | 15 | ||
Assets Held for Sale | |||
Maximum time period for sale for classification of asset as held for sale | 12 months | ||
Revenue Recognition | |||
Trade receivables, net | $ 21,201 | $ 18,982 | |
Contract liabilities | 18,498 | 16,711 | |
Deferred revenue recognized | $ 16,700 | $ 13,200 | |
Hilton San Diego Bayfront | |||
Stockholders' Equity Attributable to Noncontrolling Interest | |||
Noncontrolling interest percentage in Hilton San Diego Bayfront | 25.00% | 25.00% | 25.00% |
Initial franchise fees | Minimum | |||
Investments in Hotel Properties | |||
Estimated useful life | 14 years | ||
Initial franchise fees | Maximum | |||
Investments in Hotel Properties | |||
Estimated useful life | 27 years | ||
Buildings and improvements | Minimum | |||
Investments in Hotel Properties | |||
Estimated useful life for property, plant and equipment | 5 years | ||
Buildings and improvements | Maximum | |||
Investments in Hotel Properties | |||
Estimated useful life for property, plant and equipment | 40 years | ||
Furniture, fixtures and equipment | Minimum | |||
Investments in Hotel Properties | |||
Estimated useful life for property, plant and equipment | 3 years | ||
Furniture, fixtures and equipment | Maximum | |||
Investments in Hotel Properties | |||
Estimated useful life for property, plant and equipment | 12 years | ||
Impaired hotels | |||
Investments in Hotel Properties | |||
Number of hotels owned by the Company | property | 1 | 2 | 2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | |||||||||||
Net income | $ 45,414 | $ 33,545 | $ 45,918 | $ 17,916 | $ 77,756 | $ 91,586 | $ 51,262 | $ 38,455 | $ 142,793 | $ 259,059 | $ 153,004 |
Income from consolidated joint venture attributable to noncontrolling interest | (7,060) | (8,614) | (7,628) | ||||||||
Preferred stock dividends | (12,830) | (12,830) | (12,830) | ||||||||
Distributions paid on unvested restricted stock compensation | (901) | (814) | (860) | ||||||||
Undistributed income allocated to unvested restricted stock compensation | (422) | ||||||||||
Numerator for basic and diluted income attributable to common stockholders | $ 122,002 | $ 236,379 | $ 131,686 | ||||||||
Denominator: | |||||||||||
Weighted average basic and diluted common shares outstanding (in shares) | 225,681 | 225,924 | 221,898 | ||||||||
Basic and diluted income attributable to common stockholders per common share (in dollars per share) | $ 0.18 | $ 0.12 | $ 0.18 | $ 0.06 | $ 0.32 | $ 0.38 | $ 0.20 | $ 0.15 | $ 0.54 | $ 1.05 | $ 0.59 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Adoption of New Lease Standard (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 | |
Operating Leases | |||
Operating lease right-of-use assets, net | $ 60,629 | $ 64,075 | |
Intangible assets | 32,610 | 32,491 | $ 56,021 |
Assets | 3,918,974 | 3,972,833 | |
Operating lease obligations, current and noncurrent | $ 54,434 | $ 58,663 | |
Operating lease obligations | us-gaap:OperatingLeaseLiabilityNoncurrent us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent us-gaap:OtherLiabilitiesNoncurrent | |
Deferred rent | 12,986 | ||
Liabilities | $ 1,297,903 | 1,261,662 | |
Finance Lease | |||
Finance lease right-of-use assets, net | 47,652 | $ 55,727 | |
Land | 601,181 | 605,388 | 611,993 |
Building and improvements, net | 2,118,558 | ||
Finance lease obligations, current and noncurrent | $ 15,571 | 27,010 | |
Leases | |||
Leases Initial Maximum Term Not Recorded On Balance Sheet | 12 months | ||
Leases Initial Minimum Term Recorded Right Of Use Assets | 12 months | ||
Buildings and improvements | |||
Finance Lease | |||
Finance lease right-of-use assets, net | $ 47,652 | ||
Balance Pre-Adoption | |||
Operating Leases | |||
Intangible assets | 50,889 | ||
Deferred rent | 12,986 | ||
Finance Lease | |||
Land | 611,993 | ||
Building and improvements, net | 2,167,680 | ||
Capital lease obligations, current and noncurrent | $ 27,010 | ||
New Lease Standard Adjustments | |||
Operating Leases | |||
Operating lease right-of-use assets, net | 64,075 | ||
Intangible assets | (18,398) | ||
Assets | 45,677 | ||
Operating lease obligations, current and noncurrent | 58,663 | ||
Deferred rent | (12,986) | ||
Liabilities | 45,677 | ||
Finance Lease | |||
Finance lease right-of-use assets, net | 55,727 | ||
Land | (6,605) | ||
Building and improvements, net | (49,122) | ||
Finance lease obligations, current and noncurrent | 27,010 | ||
Capital lease obligations, current and noncurrent | $ (27,010) |
Investment in Hotel Propertie_2
Investment in Hotel Properties (Details) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019USD ($)property | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Jan. 01, 2019USD ($) | |
Number of hotels held for investment | property | 20 | |||
Land | $ 601,181 | $ 611,993 | $ 605,388 | |
Buildings and improvements | 2,950,534 | 2,983,308 | ||
Furniture, fixtures and equipment | 506,754 | 486,441 | ||
Intangible assets | 32,610 | 56,021 | $ 32,491 | |
Franchise fees | 743 | 778 | ||
Construction in progress | 40,639 | 60,744 | ||
Investment in hotel properties, gross | 4,132,461 | 4,199,285 | ||
Accumulated depreciation and amortization | (1,260,108) | (1,168,287) | ||
Investment in hotel properties, net | 2,872,353 | 3,030,998 | ||
Asset Impairment Charges | ||||
Impairment loss | 24,713 | $ 1,394 | $ 40,053 | |
Renaissance Harborplace | ||||
Asset Impairment Charges | ||||
Impairment loss | $ 24,700 |
Investment in Hotel Propertie_3
Investment in Hotel Properties - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Jan. 01, 2019 | |
Intangible Assets | ||||
Amortization expense | $ 79 | $ 1,582 | $ 3,141 | |
Payment to acquire intangible asset | 25 | 18,543 | ||
Intangible assets | 32,610 | 56,021 | $ 32,491 | |
Intangible assets included in hotel properties | ||||
Intangible Assets | ||||
Value of intangibles at acquisition | 32,610 | 56,021 | ||
Accumulated amortization | (685) | (5,132) | ||
Net balance of intangibles at end of period | 31,925 | 50,889 | ||
Amortization expense | 126 | 1,792 | 3,186 | |
Intangible assets included in hotel properties | Ground lease/airspace agreements | ||||
Intangible Assets | ||||
Value of intangibles at acquisition | 3,486 | 25,585 | ||
Amortization expense | 255 | 255 | ||
Intangible assets included in hotel properties | In-place lease agreements | ||||
Intangible Assets | ||||
Value of intangibles at acquisition | 1,312 | |||
Amortization expense | 35 | 237 | 276 | |
Intangible assets included in hotel properties | Below-market management agreement | ||||
Intangible Assets | ||||
Value of intangibles at acquisition | 961 | 961 | ||
Amortization expense | 91 | 91 | 299 | |
Intangible assets included in hotel properties | Advanced bookings | ||||
Intangible Assets | ||||
Amortization expense | 1,201 | 2,340 | ||
Intangible assets included in hotel properties | Above market lease agreements | ||||
Intangible Assets | ||||
Amortization expense | 8 | $ 16 | ||
Intangible assets included in hotel properties | Indefinite-Lived Intangible Asset | ||||
Intangible Assets | ||||
Value of intangibles at acquisition | 28,163 | $ 28,163 | ||
Renaissance Harborplace Airspace | Indefinite-Lived Intangible Asset | ||||
Intangible Assets | ||||
Impairment of airspace agreement | $ 500 | |||
New Lease Standard Adjustments | ||||
Intangible Assets | ||||
Intangible assets | (18,398) | |||
New Lease Standard Adjustments | Hilton Times Square | Ground lease/airspace agreements | ||||
Intangible Assets | ||||
Intangible assets | $ 18,400 |
Disposals and Discontinued Op_3
Disposals and Discontinued Operations - Disposals (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Detail of Disposals | ||||
Gain on sale of assets | $ 42,935 | $ 116,961 | $ 45,474 | |
Sold, not considered a discontinued operation | ||||
Detail of Disposals | ||||
Gain on sale of assets | 42,935 | 116,961 | 45,474 | |
Total revenues | 10,422 | 79,627 | 168,375 | |
Income before income taxes | $ 2,044 | 11,190 | 19,811 | |
Sold, not considered a discontinued operation | Courtyard by Marriott Los Angeles | ||||
Detail of Disposals | ||||
Net proceeds received from sale | $ 49,500 | |||
Gain on sale of assets | $ 42,900 | |||
Sold, not considered a discontinued operation | 2018 Disposals | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 347,973 | |||
Gain on sale of assets | 116,961 | |||
Sold, not considered a discontinued operation | Marriott Philadelphia and Marriott Quincy | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 136,983 | |||
Gain on sale of assets | 15,659 | |||
Sold, not considered a discontinued operation | Hyatt Regency Newport Beach | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 94,043 | |||
Gain on sale of assets | 53,128 | |||
Sold, not considered a discontinued operation | Houston Hotels | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 32,421 | |||
Gain on sale of assets | 336 | |||
Sold, not considered a discontinued operation | Marriott Tysons Corner | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 84,526 | |||
Gain on sale of assets | $ 47,838 | |||
Sold, not considered a discontinued operation | 2017 Disposals | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 149,858 | |||
Gain on sale of assets | 45,474 | |||
Sold, not considered a discontinued operation | Fairmont Newport Beach | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 122,832 | |||
Gain on sale of assets | 44,285 | |||
Sold, not considered a discontinued operation | Marriott Park City | ||||
Detail of Disposals | ||||
Net proceeds received from sale | 27,026 | |||
Gain on sale of assets | $ 1,189 |
Disposals and Discontinued Op_4
Disposals and Discontinued Operations - Discontinued Operations (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Rochester Portfolio | Sold, considered a discontinued operation | |
Gain on sale of hotels and other assets, net | $ 7 |
Fair Value Measurements and I_3
Fair Value Measurements and Interest Rate Derivatives - Fair Value Measurements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Asset Impairment Charges | |||
Impairment loss | $ 24,713 | $ 1,394 | $ 40,053 |
Assets: | |||
Investment in hotel properties, net | 2,872,353 | 3,030,998 | |
Interest rate derivative assets | 4,789 | ||
Liabilities: | |||
Interest rate derivative liabilities | 1,081 | ||
Level 2 | |||
Assets: | |||
Life insurance policy | 386 | ||
Total assets | 5,175 | ||
Liabilities: | |||
Retirement benefit agreement | 386 | ||
Total liabilities | 1,081 | 386 | |
Level 2 | Interest Rate Swap | |||
Assets: | |||
Interest rate derivative assets | 4,789 | ||
Liabilities: | |||
Interest rate derivative liabilities | 1,081 | ||
Level 3 | |||
Assets: | |||
Total assets | 96,725 | ||
Total at the end of the period | |||
Assets: | |||
Life insurance policy | 386 | ||
Total assets | 96,725 | 5,175 | |
Liabilities: | |||
Retirement benefit agreement | 386 | ||
Total liabilities | 1,081 | 386 | |
Total at the end of the period | Interest Rate Swap | |||
Assets: | |||
Interest rate derivative assets | 4,789 | ||
Liabilities: | |||
Interest rate derivative liabilities | 1,081 | ||
Renaissance Harborplace | |||
Asset Impairment Charges | |||
Impairment loss | 24,700 | ||
Renaissance Harborplace | Level 3 | |||
Asset Impairment Charges | |||
Impairment loss | 24,700 | ||
Assets: | |||
Investment in hotel properties, net | 96,725 | ||
Renaissance Harborplace | Total at the end of the period | |||
Assets: | |||
Investment in hotel properties, net | $ 96,725 | ||
Houston Hotels | Level 3 | |||
Asset Impairment Charges | |||
Impairment loss | $ 1,400 | $ 40,100 |
Fair Value Measurements and I_4
Fair Value Measurements and Interest Rate Derivatives - Interest Rate Derivatives (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Interest Rate Derivatives | |||
Fair values of derivative assets | $ 4,789 | ||
Noncash interest on derivatives | $ 5,870 | $ (1,395) | $ (1,520) |
Hilton San Diego Bayfront mortgage payable | |||
Interest Rate Derivatives | |||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
$85.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
$100.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
Interest rate derivatives | |||
Interest Rate Derivatives | |||
Fair value of interest rate derivatives | $ (1,081) | $ 4,789 | |
Interest Rate Cap | Not designated as hedging instrument | Hilton San Diego Bayfront previous mortgage payable | |||
Interest Rate Derivatives | |||
Strike rate under interest rate cap agreement | 4.25% | 4.25% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
Effective date | May 1, 2017 | May 1, 2017 | |
Interest rate derivative maturity date | May 1, 2019 | May 1, 2019 | |
Hilton San Diego Bayfront new interest rate cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage payable | |||
Interest Rate Derivatives | |||
Strike rate under interest rate cap agreement | 6.00% | 6.00% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
Effective date | Nov. 10, 2017 | Nov. 10, 2017 | |
Interest rate derivative maturity date | Dec. 9, 2020 | Dec. 9, 2020 | |
Notional amount | $ 220,000 | ||
Interest Rate Swap | Not designated as hedging instrument | $85.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
Effective date | Oct. 29, 2015 | Oct. 29, 2015 | |
Interest rate derivative maturity date | Sep. 2, 2022 | Sep. 2, 2022 | |
Notional amount | $ 85,000 | ||
Fair value of interest rate derivatives | $ (132) | $ 2,521 | |
Interest Rate Swap | Not designated as hedging instrument | $100.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |
Effective date | Jan. 29, 2016 | Jan. 29, 2016 | |
Interest rate derivative maturity date | Jan. 31, 2023 | Jan. 31, 2023 | |
Notional amount | $ 100,000 | ||
Fair value of interest rate derivatives | $ (949) | $ 2,268 |
Fair Value Measurements and I_5
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Percentage of Debt Bearing Fixed Interest Rates | 77.40% | 77.60% |
Total notes payable | $ 974,863 | $ 982,828 |
Level 3 | ||
Fair value of debt | $ 976,012 | $ 971,082 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other assets, net | ||
Property and equipment, net | $ 7,642 | $ 8,426 |
Goodwill | 990 | |
Deferred rent on straight-lined third-party tenant leases | 3,542 | 3,177 |
Deferred income tax assets, net | 7,415 | 8,103 |
Deferred income tax assets | 7,779 | 8,407 |
Interest rate derivative assets | 4,789 | |
Other receivables | 2,984 | 3,209 |
Other | 307 | 819 |
Total other assets, net | $ 21,890 | $ 29,817 |
Notes Payable (Details)
Notes Payable (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019USD ($)property | Dec. 31, 2018USD ($)property | |
Notes Payable | ||
Total notes payable | $ 974,863 | $ 982,828 |
Current portion of notes payable | 83,975 | 7,804 |
Less: current portion of deferred financing costs | (1,866) | (1,966) |
Current portion of notes payable, net | 82,109 | 5,838 |
Notes payable, less current portion | 890,888 | 975,024 |
Less: long-term portion of deferred financing costs | (1,934) | (3,799) |
Carrying value of notes payable, less current portion | 888,954 | $ 971,225 |
Aggregate Future Principal Maturities and Amortization of Notes Payable | ||
2020 | 83,975 | |
2021 | 111,247 | |
2022 | 88,446 | |
2023 | 323,593 | |
2024 | 75,615 | |
Thereafter | 291,987 | |
Total | $ 974,863 | |
Notes payable maturing in various years | ||
Notes Payable | ||
Number of hotels provided as collateral | property | 4 | 4 |
Total notes payable | $ 329,863 | $ 337,828 |
Notes payable maturing in various years | Minimum | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 4.12% | 4.12% |
Debt maturity date | Nov. 1, 2020 | Nov. 1, 2020 |
Notes payable maturing in various years | Maximum | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 5.95% | 5.95% |
Debt maturity date | Jan. 6, 2025 | Jan. 6, 2025 |
Hilton San Diego Bayfront mortgage payable | ||
Notes Payable | ||
Debt maturity date | Dec. 9, 2020 | Dec. 9, 2020 |
Number of hotels provided as collateral | property | 1 | 1 |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Interest rate added to base rate (as a percent) | 1.05% | 1.05% |
Number of extension periods available for secured debt | 3 | 3 |
Term of extension period for secured debt | 1 year | 1 year |
Total notes payable | $ 220,000 | $ 220,000 |
$85.0 million term loan | ||
Notes Payable | ||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Fixed rate under interest rate swap agreement | 1.591% | 1.591% |
Term loan total interest rate, including effect of swap agreement | 2.941% | 2.941% |
Total notes payable | $ 85,000 | $ 85,000 |
$85.0 million term loan | Minimum | ||
Notes Payable | ||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% |
$85.0 million term loan | Maximum | ||
Notes Payable | ||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% |
$100.0 million term loan | ||
Notes Payable | ||
Debt maturity date | Jan. 31, 2023 | Jan. 31, 2023 |
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Fixed rate under interest rate swap agreement | 1.853% | 1.853% |
Term loan total interest rate, including effect of swap agreement | 3.203% | 3.203% |
Total notes payable | $ 100,000 | $ 100,000 |
$100.0 million term loan | Minimum | ||
Notes Payable | ||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% |
$100.0 million term loan | Maximum | ||
Notes Payable | ||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% |
Series A Senior Notes | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 4.69% | 4.69% |
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 |
Total notes payable | $ 120,000 | $ 120,000 |
Series B Senior Notes | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 4.79% | 4.79% |
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 |
Total notes payable | $ 120,000 | $ 120,000 |
Not designated as hedging instrument | Interest Rate Swap | $85.0 million term loan | ||
Notes Payable | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Fixed rate under interest rate swap agreement | 1.591% | 1.591% |
Not designated as hedging instrument | Interest Rate Swap | $100.0 million term loan | ||
Notes Payable | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Fixed rate under interest rate swap agreement | 1.853% | 1.853% |
Notes Payable - Transactions (D
Notes Payable - Transactions (Details) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | 12 Months Ended | |
Oct. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | |
Amended Credit Facility | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Amount available under amended credit facility agreement | $ 500 | |||
Increase in amount available under amended credit facility agreement | 100 | |||
Maximum borrowing capacity under amended credit facility with lender approval | $ 800 | |||
Interest rate, description of reference rate | one-month LIBOR | |||
Debt maturity date | Apr. 14, 2023 | |||
Previous Credit Facility Before Amendment | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | |||
Debt maturity date | Apr. 2, 2019 | |||
Unsecured Term Loans | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
$85.0 million term loan | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 | ||
Term loan total interest rate, including effect of swap agreement | 2.941% | 2.941% | ||
$85.0 million term loan | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Term loan total interest rate, including effect of swap agreement | 2.941% | 3.391% | ||
$100.0 million term loan | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
Debt maturity date | Jan. 31, 2023 | Jan. 31, 2023 | ||
Term loan total interest rate, including effect of swap agreement | 3.203% | 3.203% | ||
$100.0 million term loan | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Term loan total interest rate, including effect of swap agreement | 3.203% | 3.653% | ||
Series A Senior Notes | ||||
Debt Transactions | ||||
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 | ||
Series B Senior Notes | ||||
Debt Transactions | ||||
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 | ||
Hilton San Diego Bayfront mortgage payable | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.05% | 1.05% | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
Debt maturity date | Dec. 9, 2020 | Dec. 9, 2020 | ||
Minimum | Amended Credit Facility | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.40% | |||
Minimum | Previous Credit Facility Before Amendment | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.55% | |||
Minimum | Unsecured Term Loans | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.35% | 1.80% | ||
Minimum | $85.0 million term loan | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||
Minimum | $100.0 million term loan | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||
Maximum | Amended Credit Facility | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 2.25% | |||
Maximum | Previous Credit Facility Before Amendment | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 2.30% | |||
Maximum | Unsecured Term Loans | 2018 Debt Transactions | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 2.20% | 2.55% | ||
Maximum | $85.0 million term loan | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | ||
Maximum | $100.0 million term loan | ||||
Debt Transactions | ||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | ||
Not designated as hedging instrument | Interest Rate Cap | Hilton San Diego Bayfront previous mortgage payable | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
Not designated as hedging instrument | Interest Rate Swap | $85.0 million term loan | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||
Not designated as hedging instrument | Interest Rate Swap | $100.0 million term loan | ||||
Debt Transactions | ||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Notes Payable - Deferred Financ
Notes Payable - Deferred Financing Costs, Loss On Extinguishment of Debt and Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred Financing Costs and Losses on Extinguishment of Debt | |||
Payments of deferred financing costs | $ 4,012 | $ 3,537 | |
Loss on extinguishment of debt | 835 | 824 | |
Interest Expense | |||
Noncash interest on derivatives and finance lease obligations, net | $ 6,051 | (1,190) | 3,106 |
Amortization of deferred financing costs | 2,791 | 2,947 | 2,409 |
Total interest expense | 54,223 | 47,690 | 51,766 |
Notes payable [Member] | |||
Interest Expense | |||
Interest expense on debt and finance lease obligations | 45,381 | 45,933 | 46,251 |
Noncash interest on derivatives and finance lease obligations, net | 6,051 | (1,190) | 3,106 |
Amortization of deferred financing costs | 2,791 | 2,947 | 2,409 |
Total interest expense | $ 54,223 | $ 47,690 | $ 51,766 |
Other Current Liabilities and_3
Other Current Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Other Current Liabilities | ||
Property, sales and use taxes payable | $ 16,074 | $ 15,684 |
Accrued interest | 6,735 | 7,306 |
Advance deposits | 18,001 | 16,711 |
Management fees payable | 1,527 | 1,142 |
Other | 4,618 | 4,119 |
Total other current liabilities | 46,955 | 44,962 |
Other Liabilities | ||
Deferred revenue | 5,225 | 5,017 |
Deferred rent | 12,986 | |
Deferred property taxes payable | 8,887 | 9,284 |
Interest rate derivative liabilities | 1,081 | |
Other | 2,943 | 3,416 |
Total other liabilities | $ 18,136 | $ 30,703 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Finance Lease | |||
Finance lease right-of-use asset, net | $ 47,652 | $ 55,727 | |
Finance lease obligation, current | $ 1 | ||
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | ||
Finance lease obligation, less current portion | $ 15,570 | $ 27,009 | |
Total finance lease obligation | $ 15,571 | 27,010 | |
Weighted average remaining finance lease term | 78 years | ||
Weighted average finance lease discount rate | 9.00% | ||
Operating Leases | |||
Operating lease right-of-use assets, net | $ 60,629 | 64,075 | |
Operating lease obligations, current | $ 4,743 | ||
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | ||
Operating lease obligations, less current portion | $ 49,691 | ||
Total operating lease obligations | $ 54,434 | $ 58,663 | |
Operating lease obligations | us-gaap:OperatingLeaseLiabilityNoncurrent us-gaap:OtherLiabilitiesNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent us-gaap:OtherLiabilitiesNoncurrent | |
Weighted average remaining operating lease term | 25 years | ||
Weighted average operating lease discount rate | 5.40% | ||
Buildings and improvements | |||
Finance Lease | |||
Finance lease right of use asset gross | $ 58,799 | ||
Accumulated depreciation finance lease right-of-use asset | (11,147) | ||
Finance lease right-of-use asset, net | $ 47,652 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease Cost | |
Amortization of right-of-use assets | $ 1,470 |
Interest on lease obligations | 2,357 |
Finance lease cost | 3,827 |
Operating lease cost | 13,056 |
Percentage rent | 6,100 |
Sold, not considered a discontinued operation | Courtyard by Marriott Los Angeles | |
Lease Cost | |
Interest on lease obligations | $ 1,000 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Cash Payments on Lease Obligations | |
Operating cash flows from operating leases | $ 7,238 |
Increase (Decrease) in Operating Capital | |
Changes in operating lease right-of-use assets | 3,447 |
Changes in operating lease obligations | (4,229) |
Operating lease right-of-use assets and liabilities | (782) |
Right-Of-Use Assets Obtained in Exchange for Lease Obligations | |
Operating leases | $ 45,677 |
Leases - Future Maturities of L
Leases - Future Maturities of Lease Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Jan. 01, 2019 |
Finance Lease | ||
2020 | $ 1,403 | |
2021 | 1,403 | |
2022 | 1,403 | |
2023 | 1,403 | |
2024 | 1,403 | |
Thereafter | 102,400 | |
Total lease payments | 109,415 | |
Less: interest | (93,844) | |
Present value of lease obligations | 15,571 | $ 27,010 |
Operating Leases | ||
2020 | 7,519 | |
2021 | 7,570 | |
2022 | 7,622 | |
2023 | 7,676 | |
2024 | 7,732 | |
Thereafter | 73,983 | |
Total lease payments | 112,102 | |
Less: interest | (57,668) | |
Present value of lease obligations | $ 54,434 | $ 58,663 |
Leases - Lessee Information Pri
Leases - Lessee Information Prior to the Adoption of ASU 2016-02 (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Leases, Rent Expense, Net | ||
Operating leases, rent expense | $ 14,300 | $ 15,300 |
Capital Leases, Lessee Balance Sheet | ||
Capital leased assets, gross | 65,404 | |
Accumulated depreciation | (9,677) | |
Capital leased assets, net | 55,727 | |
Future minimum lease payments under operating leases | ||
2019 | 8,159 | |
2020 | 8,441 | |
2021 | 8,486 | |
2022 | 8,531 | |
2023 | 8,576 | |
Thereafter | 159,190 | |
Total operating lease payments | 201,383 | |
Future minimum lease payments under capital leases | ||
2019 | 2,357 | |
2020 | 2,357 | |
2021 | 2,389 | |
2022 | 2,453 | |
2023 | 2,453 | |
Thereafter | 136,220 | |
Total capital lease payments | 148,229 | |
Less: interest | (121,219) | |
Present value of capital lease payments | 27,010 | |
Land [Member] | Courtyard by Marriott Los Angeles | ||
Capital Leases, Lessee Balance Sheet | ||
Capital leased assets, gross | 6,605 | |
Buildings and improvements | Hyatt Centric Chicago Magnificent Mile | ||
Capital Leases, Lessee Balance Sheet | ||
Capital leased assets, gross | $ 58,799 |
Leases - Lessor Information (De
Leases - Lessor Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Lease-related revenue | |
Lease-related revenue | $ 10.8 |
Operating Lease, Income, Comprehensive Income [Extensible List] | Revenues |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Deferred tax assets | |||
Net operating loss carryforward | $ 2,875 | $ 3,711 | |
Other reserves | 1,090 | 1,052 | |
State taxes and other | 3,322 | 3,168 | |
Depreciation | 492 | 476 | |
Total deferred tax assets | 7,779 | 8,407 | |
Deferred tax liabilities | |||
Amortization | (38) | (53) | |
Deferred revenue | (284) | (213) | |
Other | (42) | (38) | |
Total deferred tax liabilities | (364) | (304) | |
Deferred tax assets, net | 7,415 | 8,103 | |
Net operating loss carryforwards for federal income tax purposes | 10,200 | 15,300 | |
Current income tax benefit (provision): | |||
Federal | 790 | 4 | $ (298) |
State and Local tax | 49 | (639) | (1,162) |
Current income tax benefit (provision), net | 839 | (635) | (1,460) |
Deferred income tax benefit (provision): | |||
Federal | (1,112) | (365) | (5,591) |
State | 424 | (767) | (442) |
Change in deferred tax asset valuation allowance | 15,268 | ||
Deferred income tax (provision) benefit, net | (688) | (1,132) | 9,235 |
Income tax benefit (provision), net | $ 151 | $ (1,767) | $ 7,775 |
Corporate tax rate (as a percent) | 21.00% | 21.00% | 35.00% |
Effective Income Tax Rate Reconciliation, Amount | |||
Expected federal tax expense at statutory rate | $ (29,955) | $ (54,773) | $ (46,998) |
Tax impact of REIT election | 29,810 | 54,779 | 43,237 |
Expected tax (provision) benefit of TRS | (145) | 6 | (3,761) |
State income tax benefit (provision), net of federal benefit | 335 | (606) | (318) |
Change in valuation allowance | 14,340 | ||
Other permanent items | 562 | (1,167) | (381) |
AMT credit (refund) receivable | (601) | 1,421 | |
Effect of rate change | (3,526) | ||
Income tax benefit (provision), net | $ 151 | $ (1,767) | $ 7,775 |
Income Taxes - Characterization
Income Taxes - Characterization of Distributions (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Common Stock | |||
Income Taxes | |||
Ordinary income (in dollars per share) | $ 0.606 | $ 0.634 | $ 0.554 |
Capital gain (in dollars per share) | 0.134 | 0.056 | 0.176 |
Total (in dollars per share) | $ 0.740 | $ 0.690 | $ 0.730 |
Ordinary income (as a percent) | 81.84% | 91.89% | 75.95% |
Capital gain (as a percent) | 18.16% | 8.11% | 24.05% |
Total (as a percent) | 100.00% | 100.00% | 100.00% |
Series E Cumulative Redeemable Preferred Stock | |||
Income Taxes | |||
Ordinary income (in dollars per share) | $ 1.422 | $ 1.597 | $ 1.320 |
Capital gain (in dollars per share) | 0.316 | 0.141 | 0.418 |
Total (in dollars per share) | $ 1.738 | $ 1.738 | $ 1.738 |
Ordinary income (as a percent) | 81.84% | 91.89% | 75.95% |
Capital gain (as a percent) | 18.16% | 8.11% | 24.05% |
Total (as a percent) | 100.00% | 100.00% | 100.00% |
Series F Cumulative Redeemable Preferred Stock | |||
Income Taxes | |||
Ordinary income (in dollars per share) | $ 1.320 | $ 1.482 | $ 1.225 |
Capital gain (in dollars per share) | 0.293 | 0.131 | 0.388 |
Total (in dollars per share) | $ 1.613 | $ 1.613 | $ 1.613 |
Ordinary income (as a percent) | 81.84% | 91.89% | 75.95% |
Capital gain (as a percent) | 18.16% | 8.11% | 24.05% |
Total (as a percent) | 100.00% | 100.00% | 100.00% |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - $ / shares | 1 Months Ended | 12 Months Ended | ||
May 31, 2016 | Mar. 31, 2016 | Dec. 31, 2019 | Dec. 31, 2018 | |
Series E Cumulative Redeemable Preferred Stock | ||||
Stockholders' equity | ||||
Number of shares of preferred stock sold (in shares) | 4,600,000 | |||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.95% | 6.95% | ||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | |
Redemption price (in dollars per share) | $ 25 | |||
Series F Cumulative Redeemable Preferred Stock | ||||
Stockholders' equity | ||||
Number of shares of preferred stock sold (in shares) | 3,000,000 | |||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.45% | 6.45% | ||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | |
Redemption price (in dollars per share) | $ 25 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Feb. 28, 2017 | |
Stockholders' equity | ||||
Proceeds from issuance of common stock | $ 45,125 | $ 79,407 | ||
Payments of stock issuance costs | 784 | 1,475 | ||
Share Repurchase Program | ||||
Stockholders' equity | ||||
Repurchase Program, number of shares repurchased (in shares) | 3,783,936 | |||
Repurchase Program, value of shares repurchased | $ 50,100 | |||
Repurchase Program, remaining authorized capacity | $ 250,000 | |||
Maximum | Share Repurchase Program | ||||
Stockholders' equity | ||||
Stock Repurchase Program, maximum amount authorized for repurchase | $ 300,000 | |||
Common Stock | At The Market | ||||
Stockholders' equity | ||||
Proceeds from issuance of common stock | 45,100 | 79,400 | ||
Payments of stock issuance costs | $ 800 | $ 1,500 | ||
ATM Program, number of shares sold or issued (in shares) | 0 | 2,590,854 | 4,876,855 | |
ATM Program, remaining amount authorized for issuance | $ 175,500 | |||
Common Stock | Maximum | At The Market | ||||
Stockholders' equity | ||||
ATM Program, maximum amount authorized for issuance | $ 300,000 |
Stockholders' Equity - Dividend
Stockholders' Equity - Dividends (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Dividends | |||
Common stock dividends declared (in dollars per share) | $ 0.74 | $ 0.69 | $ 0.73 |
Series E Cumulative Redeemable Preferred Stock | |||
Dividends | |||
Preferred stock dividends and dividends payable (in dollars per share) | 1.7375 | 1.7375 | 1.7375 |
Series F Cumulative Redeemable Preferred Stock | |||
Dividends | |||
Preferred stock dividends and dividends payable (in dollars per share) | 1.6125 | 1.6125 | 1.6125 |
Common Stock | |||
Dividends | |||
Common stock dividends declared (in dollars per share) | $ 0.7400 | $ 0.6900 | $ 0.7300 |
Long-Term Incentive Plan (Detai
Long-Term Incentive Plan (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Compensation Expense and Forfeitures | |||
Capitalized compensation cost related to shares issued to design and construction employees | $ 406 | $ 376 | $ 472 |
Restricted Shares | |||
Long-Term Incentive Plan | |||
Number of common shares reserved for issuance under LTIP (in shares) | 12,050,000 | ||
Number of shares available for future issuance (in shares) | 3,721,962 | ||
Vesting period | 3 years | ||
Compensation Expense and Forfeitures | |||
Amortization Expense, including forfeitures | $ 9,313 | 9,007 | 8,042 |
Capitalized compensation cost related to shares issued to design and construction employees | $ 400 | $ 400 | $ 500 |
Non-Vested Stock Grants, Number of Shares | |||
Outstanding at the beginning of the period (in shares) | 1,177,760 | 1,175,049 | 1,095,908 |
Granted (in shares) | 701,754 | 617,595 | 654,266 |
Vested (in shares) | (657,732) | (602,091) | (541,827) |
Forfeited (in shares) | (3,932) | (12,793) | (33,298) |
Outstanding at the end of the period (in shares) | 1,217,850 | 1,177,760 | 1,175,049 |
Non-Vested Stock Grants, Weighted Average Price | |||
Outstanding at the beginning of the period (in dollars per share) | $ 14.89 | $ 14.12 | $ 13.36 |
Granted (in dollars per share) | 14.35 | 15.84 | 15.11 |
Vested (in dollars per share) | 14.32 | 14.37 | 13.78 |
Forfeited (in dollars per share) | 15.48 | 14.39 | 14.10 |
Outstanding at the end of the period (in dollars per share) | $ 14.88 | $ 14.89 | $ 14.12 |
Compensation cost to be recognized related to non-vested restricted stock grants | $ 9,900 | ||
Weighted average period over which compensation cost will be recognized | 21 months | ||
Deferred shares, share purchase rights, or share appreciation rights issued or outstanding under the LTIP | |||
Long-Term Incentive Plan | |||
Number of awards other than grants outstanding | 0 |
Commitments and Contingencies -
Commitments and Contingencies - Management Fees, Franchise Costs and Renovation Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Basic and incentive management fees incurred | |||
Other property-level expenses | $ 130,321 | $ 132,419 | $ 138,525 |
License and Franchise Agreements | |||
Franchise assessments | 24,389 | 25,966 | 26,902 |
Franchise royalties | 7,876 | 9,457 | 9,779 |
Franchise costs | 32,265 | 35,423 | 36,681 |
Basic management fees | |||
Basic and incentive management fees incurred | |||
Other property-level expenses | 31,061 | 31,947 | 33,318 |
Incentive management fees | |||
Basic and incentive management fees incurred | |||
Other property-level expenses | 8,005 | 7,169 | 6,301 |
Total basic and incentive management fees | |||
Basic and incentive management fees incurred | |||
Other property-level expenses | $ 39,066 | $ 39,116 | $ 39,619 |
Minimum | |||
Management Agreements | |||
Basic management fees (as a percent) | 1.75% | ||
Maximum | |||
Management Agreements | |||
Basic management fees (as a percent) | 3.00% | ||
Renovation and Construction Commitments | |||
Renovation and Construction Commitments | |||
Remaining construction commitments | $ 47,600 |
Commitments and Contingencies_2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)property | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Employment Agreements | |||
Employment agreement obligations | $ | $ 700 | ||
401(k) Savings and Hotel Retirement Plans | |||
Age required for participating in 401(k) plan | 21 years | 21 years | 21 years |
Employment period required for participating in 401(k) plan | 6 months | 6 months | 6 months |
Concentration of Risk | |||
Number of hotels held for investment | 20 | ||
Number of hotels owned by the Company | 15 | ||
Other | |||
Term of unsecured environmental indemnities | 0 years | ||
Damage limitation of unsecured environmental indemnities | $ | $ 0 | ||
Safe Harbor Plan | |||
401(k) Savings and Hotel Retirement Plans | |||
Percentage of eligible employee annual base earnings contributed by the company (as a percent) | 3.00% | 3.00% | 3.00% |
Contributions to retirement plans | $ | $ 200 | $ 200 | $ 200 |
Hotel retirement plans | |||
401(k) Savings and Hotel Retirement Plans | |||
Contributions to retirement plans | $ | $ 1,400 | $ 1,600 | $ 1,500 |
California | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 5 | ||
Florida | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 2 | ||
Greater Washington DC area | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 2 | ||
Hawaii | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 1 | ||
Illinois | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 3 | ||
Massachusetts | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 2 | ||
Collective Bargaining Agreements | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 32.80% | ||
Percentage of total rooms | California | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 30.00% | ||
Percentage of total rooms | Florida | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 9.00% | ||
Percentage of total rooms | Greater Washington DC area | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 13.00% | ||
Percentage of total rooms | Hawaii | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 5.00% | ||
Percentage of total rooms | Illinois | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 11.00% | ||
Percentage of total rooms | Massachusetts | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 14.00% | ||
Percentage of total revenue generated by hotels | California | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 33.00% | ||
Percentage of total revenue generated by hotels | Florida | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 10.00% | ||
Percentage of total revenue generated by hotels | Greater Washington DC area | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 11.00% | ||
Percentage of total revenue generated by hotels | Hawaii | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 11.00% | ||
Percentage of total revenue generated by hotels | Illinois | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 7.00% | ||
Percentage of total revenue generated by hotels | Massachusetts | |||
Concentration of Risk | |||
Concentration risk (as a percent) | 15.00% | ||
Workers' compensation insurance programs | |||
Other | |||
Outstanding irrevocable letters of credit | $ | $ 400 | ||
Draws on letters of credit | $ | $ 0 | ||
Hotel owned by the Company | |||
Concentration of Risk | |||
Number of hotels owned by the Company | 20 |
Quarterly Operating Results (_3
Quarterly Operating Results (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Operating Results (Unaudited) | |||||||||||
Revenues | $ 272,952 | $ 281,639 | $ 302,896 | $ 257,680 | $ 280,852 | $ 289,308 | $ 317,447 | $ 271,446 | $ 1,115,167 | $ 1,159,053 | $ 1,193,638 |
Total operating expenses | 261,677 | 239,346 | 243,297 | 233,474 | 235,346 | 241,220 | 255,592 | 245,005 | 977,794 | 977,163 | 1,052,633 |
Operating income | 11,275 | 42,293 | 59,599 | 24,206 | 45,506 | 48,088 | 61,855 | 26,441 | |||
Net income | 45,414 | 33,545 | 45,918 | 17,916 | 77,756 | 91,586 | 51,262 | 38,455 | 142,793 | 259,059 | 153,004 |
Income attributable to common stockholders | $ 41,208 | $ 27,829 | $ 40,756 | $ 13,110 | $ 73,123 | $ 86,002 | $ 45,681 | $ 32,809 | $ 122,903 | $ 237,615 | $ 132,546 |
Income attributable to common stockholders per share - basic and diluted (in dollars per share) | $ 0.18 | $ 0.12 | $ 0.18 | $ 0.06 | $ 0.32 | $ 0.38 | $ 0.20 | $ 0.15 | $ 0.54 | $ 1.05 | $ 0.59 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - Common Stock $ in Millions | Feb. 13, 2020USD ($) |
At The Market | |
Subsequent Events | |
ATM Program, maximum amount authorized for issuance | $ 300 |
Share Repurchase Program | |
Subsequent Events | |
Stock Repurchase Program, maximum amount authorized for repurchase | $ 500 |
Schedule III-Real Estate and _2
Schedule III-Real Estate and Accumulated Depreciation (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Gross Amount at year end | |
Aggregate cost of properties for federal income tax purposes | $ 4,100,000 |
Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | 549,863 |
Initial costs | |
Land | 553,176 |
Bldg. and Impr | 2,272,703 |
Cost Capitalized Subsequent to Acquisition | |
Land | 48,005 |
Bldg. and Impr | 677,831 |
Gross Amount at year end | |
Land | 601,181 |
Bldg. and Impr | 2,950,534 |
Totals | 3,551,715 |
Accum. Depr. | 888,378 |
Boston Park Plaza | Hotel properties | |
Initial costs | |
Land | 58,527 |
Bldg. and Impr | 170,589 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 121,435 |
Gross Amount at year end | |
Land | 58,527 |
Bldg. and Impr | 292,024 |
Totals | 350,551 |
Accum. Depr. | $ 68,966 |
Boston Park Plaza | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Boston Park Plaza | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Embassy Suites Chicago | Hotel properties | |
Initial costs | |
Land | $ 79 |
Bldg. and Impr | 46,886 |
Cost Capitalized Subsequent to Acquisition | |
Land | 6,348 |
Bldg. and Impr | 24,117 |
Gross Amount at year end | |
Land | 6,427 |
Bldg. and Impr | 71,003 |
Totals | 77,430 |
Accum. Depr. | $ 36,438 |
Embassy Suites Chicago | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Embassy Suites Chicago | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Embassy Suites La Jolla | Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | $ 59,213 |
Initial costs | |
Land | 27,900 |
Bldg. and Impr | 70,450 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 16,930 |
Gross Amount at year end | |
Land | 27,900 |
Bldg. and Impr | 87,380 |
Totals | 115,280 |
Accum. Depr. | $ 37,961 |
Embassy Suites La Jolla | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Embassy Suites La Jolla | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Hilton Garden Inn Chicago Downtown/Magnificent Mile | Hotel properties | |
Initial costs | |
Land | $ 14,040 |
Bldg. and Impr | 66,350 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 10,339 |
Gross Amount at year end | |
Land | 14,040 |
Bldg. and Impr | 76,689 |
Totals | 90,729 |
Accum. Depr. | $ 12,839 |
Hilton Garden Inn Chicago Downtown/Magnificent Mile | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hilton Garden Inn Chicago Downtown/Magnificent Mile | Maximum | |
Gross Amount at year end | |
Depr. Life | 50 years |
Hilton New Orleans St. Charles | Hotel properties | |
Initial costs | |
Land | $ 3,698 |
Bldg. and Impr | 53,578 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 9,934 |
Gross Amount at year end | |
Land | 3,698 |
Bldg. and Impr | 63,512 |
Totals | 67,210 |
Accum. Depr. | $ 9,700 |
Hilton New Orleans St. Charles | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hilton New Orleans St. Charles | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Hilton San Diego Bayfront | Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | $ 220,000 |
Initial costs | |
Bldg. and Impr | 424,992 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 22,830 |
Gross Amount at year end | |
Bldg. and Impr | 447,822 |
Totals | 447,822 |
Accum. Depr. | $ 71,541 |
Hilton San Diego Bayfront | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hilton San Diego Bayfront | Maximum | |
Gross Amount at year end | |
Depr. Life | 57 years |
Hilton Times Square | Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | $ 77,686 |
Initial costs | |
Bldg. and Impr | 221,488 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 32,429 |
Gross Amount at year end | |
Bldg. and Impr | 253,917 |
Totals | 253,917 |
Accum. Depr. | $ 115,477 |
Hilton Times Square | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hilton Times Square | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Hyatt Centric Chicago Magnificent Mile | Hotel properties | |
Initial costs | |
Bldg. and Impr | $ 91,964 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | (39,003) |
Gross Amount at year end | |
Bldg. and Impr | 52,961 |
Totals | 52,961 |
Accum. Depr. | $ 18,800 |
Hyatt Centric Chicago Magnificent Mile | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hyatt Centric Chicago Magnificent Mile | Maximum | |
Gross Amount at year end | |
Depr. Life | 40 years |
Hyatt Regency San Francisco | Hotel properties | |
Initial costs | |
Land | $ 116,140 |
Bldg. and Impr | 131,430 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 56,198 |
Gross Amount at year end | |
Land | 116,140 |
Bldg. and Impr | 187,628 |
Totals | 303,768 |
Accum. Depr. | $ 51,226 |
Hyatt Regency San Francisco | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Hyatt Regency San Francisco | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
JW Marriott New Orleans | Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | $ 81,885 |
Initial costs | |
Bldg. and Impr | 73,420 |
Cost Capitalized Subsequent to Acquisition | |
Land | 15,147 |
Bldg. and Impr | 37,658 |
Gross Amount at year end | |
Land | 15,147 |
Bldg. and Impr | 111,078 |
Totals | 126,225 |
Accum. Depr. | $ 24,273 |
JW Marriott New Orleans | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
JW Marriott New Orleans | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Marriott Boston Long Wharf | Hotel properties | |
Initial costs | |
Land | $ 51,598 |
Bldg. and Impr | 170,238 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 70,980 |
Gross Amount at year end | |
Land | 51,598 |
Bldg. and Impr | 241,218 |
Totals | 292,816 |
Accum. Depr. | $ 92,672 |
Marriott Boston Long Wharf | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Marriott Boston Long Wharf | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Marriott Portland | Hotel properties | |
Initial costs | |
Land | $ 5,341 |
Bldg. and Impr | 20,705 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 8,132 |
Gross Amount at year end | |
Land | 5,341 |
Bldg. and Impr | 28,837 |
Totals | 34,178 |
Accum. Depr. | $ 16,338 |
Marriott Portland | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Marriott Portland | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Wailea Beach Resort | Hotel properties | |
Initial costs | |
Land | $ 119,707 |
Bldg. and Impr | 194,137 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 108,342 |
Gross Amount at year end | |
Land | 119,707 |
Bldg. and Impr | 302,479 |
Totals | 422,186 |
Accum. Depr. | $ 48,009 |
Wailea Beach Resort | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Wailea Beach Resort | Maximum | |
Gross Amount at year end | |
Depr. Life | 40 years |
Oceans Edge Resort & Marina | Hotel properties | |
Initial costs | |
Land | $ 92,510 |
Bldg. and Impr | 74,361 |
Cost Capitalized Subsequent to Acquisition | |
Land | 704 |
Bldg. and Impr | 1,832 |
Gross Amount at year end | |
Land | 93,214 |
Bldg. and Impr | 76,193 |
Totals | 169,407 |
Accum. Depr. | $ 5,309 |
Oceans Edge Resort & Marina | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Oceans Edge Resort & Marina | Maximum | |
Gross Amount at year end | |
Depr. Life | 40 years |
Renaissance Harborplace | Hotel properties | |
Initial costs | |
Land | $ 25,085 |
Bldg. and Impr | 102,707 |
Cost Capitalized Subsequent to Acquisition | |
Land | (4,911) |
Bldg. and Impr | 13,002 |
Gross Amount at year end | |
Land | 20,174 |
Bldg. and Impr | 115,709 |
Totals | 135,883 |
Accum. Depr. | $ 48,527 |
Renaissance Harborplace | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Harborplace | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Renaissance Los Angeles Airport | Hotel properties | |
Initial costs | |
Land | $ 7,800 |
Bldg. and Impr | 52,506 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 19,317 |
Gross Amount at year end | |
Land | 7,800 |
Bldg. and Impr | 71,823 |
Totals | 79,623 |
Accum. Depr. | $ 27,674 |
Renaissance Los Angeles Airport | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Los Angeles Airport | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Renaissance Long Beach | Hotel properties | |
Initial costs | |
Land | $ 10,437 |
Bldg. and Impr | 37,300 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 27,088 |
Gross Amount at year end | |
Land | 10,437 |
Bldg. and Impr | 64,388 |
Totals | 74,825 |
Accum. Depr. | $ 26,888 |
Renaissance Long Beach | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Long Beach | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Renaissance Orlando at SeaWorld | Hotel properties | |
Initial costs | |
Bldg. and Impr | $ 119,733 |
Cost Capitalized Subsequent to Acquisition | |
Land | 30,717 |
Bldg. and Impr | 65,394 |
Gross Amount at year end | |
Land | 30,717 |
Bldg. and Impr | 185,127 |
Totals | 215,844 |
Accum. Depr. | $ 76,553 |
Renaissance Orlando at SeaWorld | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Orlando at SeaWorld | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Renaissance Washington DC | Hotel properties | |
Real Estate and Accumulated Depreciation | |
Encmbr | $ 111,079 |
Initial costs | |
Land | 14,563 |
Bldg. and Impr | 132,800 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 47,342 |
Gross Amount at year end | |
Land | 14,563 |
Bldg. and Impr | 180,142 |
Totals | 194,705 |
Accum. Depr. | $ 84,351 |
Renaissance Washington DC | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Washington DC | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Renaissance Westchester | Hotel properties | |
Initial costs | |
Land | $ 5,751 |
Bldg. and Impr | 17,069 |
Cost Capitalized Subsequent to Acquisition | |
Bldg. and Impr | 23,535 |
Gross Amount at year end | |
Land | 5,751 |
Bldg. and Impr | 40,604 |
Totals | 46,355 |
Accum. Depr. | $ 14,836 |
Renaissance Westchester | Minimum | |
Gross Amount at year end | |
Depr. Life | 5 years |
Renaissance Westchester | Maximum | |
Gross Amount at year end | |
Depr. Life | 35 years |
Amended Credit Facility | |
Gross Amount at year end | |
Outstanding indebtedness under credit facility | $ 0 |
Schedule III-Reconciliation of
Schedule III-Reconciliation of Carrying Amounts and Accumulated Depreciation (Details) - Hotel properties - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Reconciliation of land and buildings and improvements | |||
Balance at the beginning of the year | $ 3,595,301 | $ 3,654,623 | $ 3,667,466 |
Acquisitions | 704 | 15,147 | 166,871 |
Improvements | 78,579 | 96,481 | 91,067 |
Impairment loss | (34,888) | (1,797) | (67,345) |
Changes in reporting presentation | (58,799) | 171,675 | (53,047) |
Dispositions | (29,182) | (340,828) | (150,389) |
Balance at the end of the year | 3,551,715 | 3,595,301 | 3,654,623 |
Reconciliation of accumulated depreciation | |||
Balance at the beginning of the year | 815,628 | 776,077 | 803,913 |
Depreciation | 107,949 | 108,175 | 112,176 |
Changes in reporting presentation | (22,249) | 56,872 | (87,427) |
Retirement | (12,950) | (125,496) | (52,585) |
Balance at the end of the year | $ 888,378 | $ 815,628 | $ 776,077 |