Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 02, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
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 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 Common Stock, Shares Outstanding | 215,635,550 | |
Entity Central Index Key | 0001295810 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
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 | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 461,288 | $ 816,857 |
Restricted cash | 42,346 | 48,116 |
Accounts receivable, net | 4,624 | 35,209 |
Prepaid expenses and other current assets | 14,500 | 13,550 |
Total current assets | 522,758 | 913,732 |
Investment in hotel properties, net | 2,621,476 | 2,872,353 |
Finance lease right-of-use asset, net | 46,549 | 47,652 |
Operating lease right-of-use assets, net | 39,489 | 60,629 |
Deferred financing costs, net | 3,686 | 2,718 |
Other assets, net | 12,824 | 21,890 |
Total assets | 3,246,782 | 3,918,974 |
Current liabilities: | ||
Accounts payable and accrued expenses | 44,162 | 35,614 |
Accrued payroll and employee benefits | 15,747 | 25,002 |
Dividends and distributions payable | 3,208 | 135,872 |
Other current liabilities | 36,562 | 46,955 |
Current portion of notes payable, net | 188,096 | 82,109 |
Total current liabilities | 287,775 | 325,552 |
Notes payable, less current portion, net | 743,545 | 888,954 |
Finance lease obligation, less current portion | 15,569 | 15,570 |
Operating lease obligations, less current portion | 45,939 | 49,691 |
Other liabilities | 25,909 | 18,136 |
Total liabilities | 1,118,737 | 1,297,903 |
Commitments and contingencies (Note 12) | ||
Equity | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 215,635,550 shares issued and outstanding at September 30, 2020 and 224,855,351 shares issued and outstanding at December 31, 2019 | 2,156 | 2,249 |
Additional paid in capital | 2,584,005 | 2,683,913 |
Retained earnings | 951,765 | 1,318,455 |
Cumulative dividends and distributions | (1,640,178) | (1,619,779) |
Total stockholders' equity | 2,087,748 | 2,574,838 |
Noncontrolling interest in consolidated joint venture | 40,297 | 46,233 |
Total equity | 2,128,045 | 2,621,071 |
Total liabilities and equity | 3,246,782 | 3,918,974 |
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 | Sep. 30, 2020 | Dec. 31, 2019 |
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) | 215,635,550 | 224,855,351 |
Common stock, shares outstanding (in shares) | 215,635,550 | 224,855,351 |
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 | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
REVENUES | ||||
Revenues | $ 28,910 | $ 281,639 | $ 230,546 | $ 842,215 |
OPERATING EXPENSES | ||||
Advertising and promotion | 3,895 | 13,285 | 20,447 | 40,998 |
Repairs and maintenance | 6,075 | 10,632 | 21,499 | 31,107 |
Utilities | 4,170 | 7,458 | 13,238 | 20,656 |
Franchise costs | 663 | 8,606 | 6,337 | 24,024 |
Property tax, ground lease and insurance | 20,800 | 21,880 | 59,975 | 62,842 |
Other property-level expenses | 9,528 | 30,913 | 47,109 | 97,768 |
Corporate overhead | 6,582 | 7,395 | 22,414 | 22,989 |
Depreciation and amortization | 33,005 | 37,573 | 104,290 | 110,484 |
Impairment losses | 133,466 | |||
Total operating expenses | 107,476 | 239,346 | 554,628 | 716,117 |
Interest and other income | 139 | 3,762 | 2,751 | 13,497 |
Interest expense | (12,742) | (13,259) | (43,199) | (43,401) |
Gain on sale of assets | 189 | 189 | ||
Loss on extinguishment of debt | (210) | (210) | ||
(Loss) income before income taxes | (91,190) | 32,796 | (364,551) | 96,194 |
Income tax benefit (provision), net | 83 | 749 | (6,575) | 1,185 |
NET (LOSS) INCOME | (91,107) | 33,545 | (371,126) | 97,379 |
Loss (income) from consolidated joint venture attributable to noncontrolling interest | 1,816 | (2,508) | 4,436 | (6,062) |
Preferred stock dividends | (3,208) | (3,208) | (9,622) | (9,622) |
(LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (92,499) | $ 27,829 | $ (376,312) | $ 81,695 |
Basic and diluted per share amounts: | ||||
Basic and diluted (loss) income attributable to common stockholders per common share (in dollars per share) | $ (0.43) | $ 0.12 | $ (1.74) | $ 0.36 |
Basic and diluted weighted average common shares outstanding (in shares) | 214,257 | 224,530 | 216,498 | 226,369 |
Room | ||||
REVENUES | ||||
Revenues | $ 16,266 | $ 200,242 | $ 147,535 | $ 580,835 |
OPERATING EXPENSES | ||||
Expenses | 13,715 | 52,514 | 65,037 | 152,606 |
Food and beverage | ||||
REVENUES | ||||
Revenues | 2,109 | 61,366 | 50,312 | 206,183 |
OPERATING EXPENSES | ||||
Expenses | 7,748 | 44,928 | 54,533 | 140,149 |
Other operating | ||||
REVENUES | ||||
Revenues | 10,535 | 20,031 | 32,699 | 55,197 |
OPERATING EXPENSES | ||||
Expenses | $ 1,295 | $ 4,162 | $ 6,283 | $ 12,494 |
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, 2018 | $ 115,000 | $ 75,000 | $ 2,282 | $ 2,728,684 | $ 1,182,722 | $ (1,440,202) | $ 47,685 | $ 2,711,171 | ||||
Beginning 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 | 2,221 | 2,221 | ||||||||||
Issuance of restricted common stock, net | $ 4 | (4,439) | (4,435) | |||||||||
Issuance of restricted common stock, net (in shares) | 345,132 | |||||||||||
Forfeiture of restricted common stock (in shares) | (3,932) | |||||||||||
Common stock distributions and distributions payable | (11,429) | (11,429) | ||||||||||
Preferred stock dividends and dividends payable | $ (1,998) | $ (1,998) | $ (1,209) | $ (1,209) | ||||||||
Distributions to noncontrolling interest | (1,950) | (1,950) | ||||||||||
Net (loss) income | 16,317 | 1,599 | 17,916 | |||||||||
Ending Balance at Mar. 31, 2019 | $ 115,000 | $ 75,000 | $ 2,286 | 2,726,466 | 1,199,039 | (1,454,838) | 47,334 | 2,710,287 | ||||
Ending Balance (in shares) at Mar. 31, 2019 | 4,600,000 | 3,000,000 | 228,587,447 | |||||||||
Beginning 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 | ||||
Beginning Balance (in shares) at Dec. 31, 2018 | 4,600,000 | 3,000,000 | 228,246,247 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net (loss) income | 97,379 | |||||||||||
Ending Balance at Sep. 30, 2019 | $ 115,000 | $ 75,000 | $ 2,249 | 2,681,754 | 1,274,039 | (1,483,907) | 48,384 | 2,712,519 | ||||
Ending Balance (in shares) at Sep. 30, 2019 | 4,600,000 | 3,000,000 | 224,861,978 | |||||||||
Beginning Balance at Mar. 31, 2019 | $ 115,000 | $ 75,000 | $ 2,286 | 2,726,466 | 1,199,039 | (1,454,838) | 47,334 | 2,710,287 | ||||
Beginning Balance (in shares) at Mar. 31, 2019 | 4,600,000 | 3,000,000 | 228,587,447 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 3,002 | 3,002 | ||||||||||
Issuance of restricted common stock, net (in shares) | 51,840 | |||||||||||
Common stock distributions and distributions payable | (11,411) | (11,411) | ||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,209) | (1,209) | ||||||||
Distributions to noncontrolling interest | (788) | (788) | ||||||||||
Repurchases of outstanding common stock | $ (4) | (5,731) | (5,735) | |||||||||
Repurchases of outstanding common stock (in shares) | (432,464) | |||||||||||
Net (loss) income | 43,963 | 1,955 | 45,918 | |||||||||
Ending Balance at Jun. 30, 2019 | $ 115,000 | $ 75,000 | $ 2,282 | 2,723,737 | 1,243,002 | (1,469,456) | 48,501 | 2,738,066 | ||||
Ending Balance (in shares) at Jun. 30, 2019 | 4,600,000 | 3,000,000 | 228,206,823 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 2,249 | 2,249 | ||||||||||
Common stock distributions and distributions payable | (11,243) | (11,243) | ||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,210) | (1,210) | ||||||||
Distributions to noncontrolling interest | (2,625) | (2,625) | ||||||||||
Repurchases of outstanding common stock | $ (33) | (44,232) | (44,265) | |||||||||
Repurchases of outstanding common stock (in shares) | (3,344,845) | |||||||||||
Net (loss) income | 31,037 | 2,508 | 33,545 | |||||||||
Ending Balance at Sep. 30, 2019 | $ 115,000 | $ 75,000 | $ 2,249 | 2,681,754 | 1,274,039 | (1,483,907) | 48,384 | 2,712,519 | ||||
Ending Balance (in shares) at Sep. 30, 2019 | 4,600,000 | 3,000,000 | 224,861,978 | |||||||||
Beginning 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 | ||||
Beginning Balance (in shares) at Dec. 31, 2019 | 4,600,000 | 3,000,000 | 224,855,351 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 2,324 | 2,324 | ||||||||||
Issuance of restricted common stock, net | $ 4 | (3,996) | (3,992) | |||||||||
Issuance of restricted common stock, net (in shares) | 456,219 | |||||||||||
Forfeiture of restricted common stock (in shares) | (355) | |||||||||||
Common stock distributions and distributions payable | (10,777) | (10,777) | ||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,209) | (1,209) | ||||||||
Distributions to noncontrolling interest | (2,000) | (2,000) | ||||||||||
Repurchases of outstanding common stock | $ (98) | (103,796) | (103,894) | |||||||||
Repurchases of outstanding common stock (in shares) | (9,770,081) | |||||||||||
Net (loss) income | (162,061) | (458) | (162,519) | |||||||||
Ending Balance at Mar. 31, 2020 | $ 115,000 | $ 75,000 | $ 2,155 | 2,578,445 | 1,156,394 | (1,633,763) | 43,775 | 2,337,006 | ||||
Ending Balance (in shares) at Mar. 31, 2020 | 4,600,000 | 3,000,000 | 215,541,134 | |||||||||
Beginning 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 | ||||
Beginning Balance (in shares) at Dec. 31, 2019 | 4,600,000 | 3,000,000 | 224,855,351 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Net (loss) income | (371,126) | |||||||||||
Ending Balance at Sep. 30, 2020 | $ 115,000 | $ 75,000 | $ 2,156 | 2,584,005 | 951,765 | (1,640,178) | 40,297 | 2,128,045 | ||||
Ending Balance (in shares) at Sep. 30, 2020 | 4,600,000 | 3,000,000 | 215,635,550 | |||||||||
Beginning Balance at Mar. 31, 2020 | $ 115,000 | $ 75,000 | $ 2,155 | 2,578,445 | 1,156,394 | (1,633,763) | 43,775 | 2,337,006 | ||||
Beginning Balance (in shares) at Mar. 31, 2020 | 4,600,000 | 3,000,000 | 215,541,134 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 3,193 | 3,193 | ||||||||||
Issuance of restricted common stock, net | $ 1 | (1) | ||||||||||
Issuance of restricted common stock, net (in shares) | 94,416 | |||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,209) | (1,209) | ||||||||
Contribution from noncontrolling interest | 500 | 500 | ||||||||||
Net (loss) income | (115,338) | (2,162) | (117,500) | |||||||||
Ending Balance at Jun. 30, 2020 | $ 115,000 | $ 75,000 | $ 2,156 | 2,581,637 | 1,041,056 | (1,636,970) | 42,113 | 2,219,992 | ||||
Ending Balance (in shares) at Jun. 30, 2020 | 4,600,000 | 3,000,000 | 215,635,550 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 2,368 | 2,368 | ||||||||||
Preferred stock dividends and dividends payable | $ (1,998) | $ (1,998) | $ (1,210) | $ (1,210) | ||||||||
Net (loss) income | (89,291) | (1,816) | (91,107) | |||||||||
Ending Balance at Sep. 30, 2020 | $ 115,000 | $ 75,000 | $ 2,156 | $ 2,584,005 | $ 951,765 | $ (1,640,178) | $ 40,297 | $ 2,128,045 | ||||
Ending Balance (in shares) at Sep. 30, 2020 | 4,600,000 | 3,000,000 | 215,635,550 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | |
Common stock distributions and distributions payable, per share (in dollars per share) | $ 0.05 | $ 0.05 | $ 0.05 | $ 0.05 | ||
Series E Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.434375 | $ 0.434375 | 0.434375 | 0.434375 | 0.434375 | 0.434375 |
Series F Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.403125 | $ 0.403125 | $ 0.403125 | $ 0.403125 | $ 0.403125 | $ 0.403125 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net (loss) income | $ (91,107) | $ 33,545 | $ (371,126) | $ 97,379 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Bad debt expense | 305 | 405 | ||
Gain on sale of assets | (189) | |||
Loss on extinguishment of debt | 210 | 210 | ||
Noncash interest on derivatives and finance lease obligations, net | (762) | 1,155 | 5,534 | 6,908 |
Depreciation | 104,259 | 110,416 | ||
Amortization of franchise fees and other intangibles | 31 | 68 | ||
Amortization of deferred financing costs | 892 | 698 | 2,288 | 2,094 |
Amortization of deferred stock compensation | 7,509 | 7,168 | ||
Impairment losses | 133,466 | |||
Deferred income taxes, net | 7,415 | (246) | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | 30,173 | (10,700) | ||
Prepaid expenses and other assets | 75 | (1,744) | ||
Accounts payable and other liabilities | 2,923 | 2,449 | ||
Accrued payroll and employee benefits | (9,255) | (3,045) | ||
Operating lease right-of-use assets and obligations | (923) | (523) | ||
Net cash (used in) provided by operating activities | (87,305) | 210,629 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Proceeds from sale of assets | 76,855 | |||
Acquisition of hotel property | (1,296) | (193) | ||
Acquisition of intangible asset | (102) | |||
Renovations and additions to hotel properties and other assets | (44,043) | (75,277) | ||
Payment for interest rate derivative | (111) | |||
Net cash provided by (used in) investing activities | 31,303 | (75,470) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Repurchases of outstanding common stock | (103,894) | (50,000) | ||
Repurchases of common stock for employee tax obligations | (3,992) | (4,435) | ||
Proceeds from credit facility | 300,000 | |||
Payments on credit facility | (300,000) | |||
Payments on notes payable | (40,190) | (5,770) | ||
Payments of deferred financing costs | (2,698) | |||
Dividends and distributions paid | (153,063) | (155,715) | ||
Distributions to noncontrolling interest | (2,000) | (5,363) | ||
Contribution from noncontrolling interest | 500 | |||
Net cash used in financing activities | (305,337) | (221,283) | ||
Net decrease in cash and cash equivalents and restricted cash | (361,339) | (86,124) | ||
Cash and cash equivalents and restricted cash, beginning of period | 776,245 | 864,973 | 862,369 | |
Cash and cash equivalents and restricted cash, end of period | 503,634 | 776,245 | 503,634 | 776,245 |
Supplemental Disclosure of Cash Flow Information | ||||
Cash and cash equivalents | 461,288 | 730,039 | 461,288 | 730,039 |
Restricted cash | 42,346 | 46,206 | 42,346 | 46,206 |
Cash and cash equivalents and restricted cash, end of period | 503,634 | 776,245 | 503,634 | 776,245 |
Cash paid for interest | 34,118 | 36,703 | ||
Cash paid for income taxes, net | 18 | 354 | ||
Supplemental Disclosure of Noncash Investing and Financing Activities | ||||
Accrued renovations and additions to hotel properties and other assets | 7,195 | 8,149 | ||
Amortization of deferred stock compensation - construction activities | 376 | 304 | ||
Dividends and distributions payable | $ 3,208 | $ 14,451 | $ 3,208 | $ 14,451 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, 2020, the Company had interests in 19 hotels (the “19 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”) 7 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 September 30, 2020 19 The novel coronavirus (“COVID-19”) In response to the COVID-19 pandemic, the Company temporarily suspended operations at the following 15 hotels during the nine months ended September 30, 2020, 12 of which have since resumed operations: Hotel Suspension Date Resumption Date Oceans Edge Resort & Marina March 22, 2020 June 4, 2020 Embassy Suites Chicago April 1, 2020 July 1, 2020 Marriott Boston Long Wharf March 12, 2020 July 7, 2020 Hilton New Orleans St. Charles March 28, 2020 July 13, 2020 Hyatt Centric Chicago Magnificent Mile April 6, 2020 July 13, 2020 JW Marriott New Orleans March 28, 2020 July 14, 2020 Hilton San Diego Bayfront March 23, 2020 August 11, 2020 Renaissance Washington DC March 26, 2020 August 24, 2020 Hyatt Regency San Francisco March 22, 2020 October 1, 2020 Renaissance Orlando at SeaWorld® March 20, 2020 October 1, 2020 The Bidwell Marriott Portland March 27, 2020 October 5, 2020 Wailea Beach Resort March 25, 2020 November 1, 2020 Hilton Garden Inn Chicago Downtown/Magnificent Mile March 27, 2020 Hilton Times Square June 30, 2020 Renaissance Westchester April 4, 2020 The Company is unable to predict when any of its remaining hotels with temporarily suspended operations will resume their operations, or if those hotels that have resumed operations will be temporarily suspended again. The extent of the effects of the COVID-19 pandemic on the Company’s business and the hotel industry at large is significant and highly uncertain, and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the development, distribution, and administration of a successful vaccine or therapy, and the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, 2020 and 2019, 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 accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission. In the Company’s opinion, the interim financial statements presented herein reflect all adjustments, consisting solely of normal and recurring adjustments, which are necessary to fairly present the interim financial statements. These financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 19, 2020. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. 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 three and nine months ended September 30, 2020. 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 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. 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, 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 (loss) earnings per common share (unaudited and in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net (loss) income $ (91,107) $ 33,545 $ (371,126) $ 97,379 Loss (income) from consolidated joint venture attributable to noncontrolling interest 1,816 (2,508) 4,436 (6,062) Preferred stock dividends (3,208) (3,208) (9,622) (9,622) Distributions paid on unvested restricted stock compensation — (61) (69) (183) Undistributed income allocated to unvested restricted stock compensation — (89) — (257) Numerator for basic and diluted (loss) income attributable to common stockholders $ (92,499) $ 27,679 $ (376,381) $ 81,255 Denominator: Weighted average basic and diluted common shares outstanding 214,257 224,530 216,498 226,369 Basic and diluted (loss) income attributable to common stockholders per common share $ (0.43) $ 0.12 $ (1.74) $ 0.36 The Company’s unvested restricted shares associated with its long-term incentive plan have been excluded from the above calculation of earnings per share for the three and nine months ended September 30, 2020 and 2019, as their inclusion would have been anti-dilutive. Restricted Cash Restricted cash is comprised of reserve accounts for debt service, interest reserves, seasonality reserves, capital replacements, ground leases, property taxes and hotel-generated cash that is held in an account for the benefit of a lender. These restricted funds are subject to disbursement approval based on in-place agreements and policies by certain of the Company’s lenders and/or hotel managers. Restricted cash may also include earnest money received from a buyer or potential buyer of one of the Company’s hotels and held in escrow until the sale is completed. 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 consolidated 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 over 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. The Company evaluates its long-lived assets to determine if there are indicators of impairment on a quarterly basis. 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 judgment is required in determining the appropriate 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, three hotels were impaired during the first nine months of 2020 (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. Finance and Operating Leases 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 right-of-use (“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. 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 Company. 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. 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. 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. 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. Based on the Company’s review, the operating lease right-of-use asset at one hotel was impaired during the first nine months of 2020 (see Note 5). 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 both September 30, 2020 and December 31, 2019, 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. 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 and other occupancy based fees are 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. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill their contracted minimum number of room nights or minimum food and beverage spending requirements, are generally recognized as revenue in the period these fees are collected. 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): September 30, December 31, 2020 2019 (unaudited) Trade receivables, net (1) $ 4,499 $ 21,201 Contract liabilities (2) $ 15,587 $ 18,498 (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. The Company did not recognize any revenue related to its outstanding contract liabilities during the three months ended September 30, 2020. During the nine months ended September 30, 2020, and the three and nine months ended September 30, 2019, the Company recognized approximately $10.2 million, $1.0 million and $16.3 million, respectively, in revenue related to its outstanding contract liabilities. 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 June 2016, the FASB issued Accounting Standards Update No. 2016-13, “ Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In March 2020, the FASB issued Accounting Standards Update No. 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Investment in Hotel Properties
Investment in Hotel Properties | 9 Months Ended |
Sep. 30, 2020 | |
Investment in Hotel Properties | |
Investment in Hotel Properties | 3. Investment in Hotel Properties Investment in hotel properties, net for the 19 Hotels consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Land $ 581,426 $ 601,181 Buildings and improvements 2,707,102 2,950,534 Furniture, fixtures and equipment 464,588 506,754 Intangible assets 25,111 32,610 Franchise fees 743 743 Construction in progress 39,026 40,639 Investment in hotel properties, gross 3,817,996 4,132,461 Accumulated depreciation and amortization (1,196,520) (1,260,108) Investment in hotel properties, net $ 2,621,476 $ 2,872,353 During the first quarter of 2020, the Company wrote down its investment in hotel properties and recorded impairment losses of $89.4 million on the Hilton Times Square and $5.2 million on the Renaissance Westchester (see Note 5). In addition, during the first quarter of 2020, the Company |
Disposal
Disposal | 9 Months Ended |
Sep. 30, 2020 | |
Disposal Group | |
Disposal | 4. Disposal The Company sold the Renaissance Harborplace in July 2020, for net proceeds of $76.9 million, and recorded a net gain of $0.2 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. |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Derivatives | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, 2020 and December 31, 2019, 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 September 30, 2020 and December 31, 2019, the Company measured its interest rate derivatives 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. The Company sold the Renaissance Harborplace in July 2020 (see Note 4). During the second quarter of 2020, the Company recorded an impairment loss of $18.1 million related to this hotel as the fair value less costs to sell was lower than the carrying value of the hotel. The impairment loss was determined using Level 2 measurements, consisting of the third-party offer price less estimated costs to sell the hotel, and is included in impairment losses on the Company’s consolidated statements of operations for the nine months ended September 30, 2020. During the first quarter of 2020, the Company identified indicators of impairment at the Hilton Times Square and the Renaissance Westchester related to deteriorating profitability exacerbated by the effects of the COVID - To determine the impairment loss for the Hilton Times Square, 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 a market participant’s holding period. The valuation approach included significant unobservable inputs, including revenue growth projections and prevailing market multiples. To determine the impairment loss for the Renaissance Westchester, the Company used Level 2 measurements to estimate the fair value of the hotel, using appraisal techniques to estimate its market value. The Company concluded that the estimated fair value of each hotel was less than its carrying value, resulting in the Company recording impairment charges of $107.9 million on the Hilton Times Square and $5.2 million on the Renaissance Westchester, which are included in impairment losses on the Company’s consolidated statements of operations for the nine months ended September 30, 2020. The $107.9 million impairment on the Hilton Times Square is comprised of an $89.4 million write down of the Company’s investment in hotel properties, net (see Note 3), and an $18.5 million write down of the Company’s operating lease right-of-use assets, net (see Note 9). The $5.2 million impairment on the Renaissance Westchester consisted solely of a $5.2 million write down of the Company’s investment in hotel properties, net (see Note 3). Following these first quarter 2020 impairments, as of March 31, 2020, the fair market values of the Hilton Times Square and the Renaissance Westchester were $61.3 million and $29.5 million, respectively. The following table presents the Company’s assets measured at fair value on a recurring and nonrecurring basis at September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2020 (unaudited): Interest rate cap derivatives $ 1 $ — $ 1 $ — Total assets measured at fair value at September 30, 2020 $ 1 $ — $ 1 $ — December 31, 2019: Renaissance Harborplace (1) $ 96,725 $ — $ — $ 96,725 Total assets measured at fair value at December 31, 2019 $ 96,725 $ — $ — $ 96,725 (1) The fair market value of the Renaissance Harborplace is included in investment in hotel properties, net on the Company’s consolidated balance sheet at December 31, 2019. The following table presents the Company’s liabilities measured at fair value on a recurring and nonrecurring basis at September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2020 (unaudited): Interest rate swap derivatives $ 6,505 $ — $ 6,505 $ — Total liabilities measured at fair value at September 30, 2020 $ 6,505 $ — $ 6,505 $ — 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 $ — Interest Rate Derivatives The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at September 30, 2020 (unaudited) and December 31, 2019 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional September 30, December 31, Hedged Debt Type Rate Index Date Date Amount 2020 2019 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR November 10, 2017 December 9, 2020 $ 220,000 $ — $ — Hilton San Diego Bayfront Cap (2) 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 1 — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (2,429) (132) $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (4,076) (949) $ (6,504) $ (1,081) (1) The fair values of both cap agreements and both swap agreements are included in other assets, net and other liabilities, respectively, on the accompanying consolidated balance sheets as of both September 30, 2020 and December 31, 2019. (2) In April 2020, the Company purchased a new interest rate cap agreement for $0.1 million related to the existing loan secured by the Hilton San Diego Bayfront. The new cap agreement, whose terms are substantially the same as the terms under the prior cap agreement, effectively extends the cap agreement’s maturity date to December 15, 2021. Noncash changes in the fair values of the Company’s interest rate derivatives resulted in (decreases) increases to interest expense for the three and nine months ended September 30, 2020 and 2019 as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Noncash interest on derivatives $ (762) $ 1,098 5,534 $ 6,740 Fair Value of Debt As of September 30, 2020 and December 31, 2019, 76.5% and 77.4%, 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 September 30, 2020 (unaudited) and December 31, 2019 were as follows (in thousands): September 30, 2020 December 31, 2019 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value Debt $ 934,673 $ 899,548 $ 974,863 $ 976,012 (1) The principal balance of debt is presented before any unamortized deferred financing costs. (2) Due to prevailing market conditions and the uncertain economic environment caused by the COVID-19 pandemic, actual interest rates could vary materially from those estimated, which would result in variances in the Company’s calculations of the fair market value of its debt. |
Other Assets
Other Assets | 9 Months Ended |
Sep. 30, 2020 | |
Other Assets. | |
Other Assets | 6. Other Assets Other assets, net consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Property and equipment, net $ 7,014 $ 7,642 Deferred rent on straight-lined third-party tenant leases 2,879 3,542 Deferred income tax assets, net (1) — 7,415 Interest rate cap derivatives 1 — Other receivables 2,623 2,984 Other 307 307 Total other assets, net $ 12,824 $ 21,890 (1) During the first quarter of 2020, the Company recorded a full valuation allowance on its deferred income tax assets, net. The Company can no longer be assured that it will be able to realize these assets due to uncertainties regarding how long the COVID-19 pandemic will last or what the long-term impact will be on the Company’s hotel operations. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable | |
Notes Payable | 7. Notes Payable Notes payable consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 5.95% ; maturing at dates ranging from November 1, 2020 through January 6, 2025 . The notes are collateralized by first deeds of trust on four hotel properties at both September 30, 2020 and December 31, 2019. $ 324,673 $ 329,863 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points; initial maturity on December 9, 2020 with notice provided to the lender of intent to exercise the first available one -year extension ; two additional one-year options to extend remain, which the Company also 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, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 3.791% . Matures on September 3, 2022 . (1) 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, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.853% , resulting in an effective interest rate of 4.053 %. Matures on January 31, 2023 . (1) 100,000 100,000 Unsecured Series A Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.69% . Matures on January 10, 2026 . (2) 90,000 120,000 Unsecured Series B Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.79% . Matures on January 10, 2028 . (2) 115,000 120,000 Total notes payable $ 934,673 $ 974,863 Current portion of notes payable $ 189,189 $ 83,975 Less: current portion of deferred financing costs (1,093) (1,866) Carrying value of current portion of notes payable $ 188,096 $ 82,109 Notes payable, less current portion $ 745,484 $ 890,888 Less: long-term portion of deferred financing costs (1,939) (1,934) Carrying value of notes payable, less current portion $ 743,545 $ 888,954 (1) As described below, the Company entered into the Unsecured Debt Amendments (as defined below) in July 2020. As part of the amendments, a 25 -basis point LIBOR floor was added for the remaining term of the term loan facilities and interest was increased to 220 basis points, the high point of the agreed upon range. After the Covenant Relief Period (as defined below), interest will revert back to the original terms of the pricing grid with a range of 135 to 220 basis points, depending on the Company’s leverage ratios. The effective interest rate of the $85.0 million term loan increased from 2.941% to 3.791% , and the effective interest rate of the $100.0 million term loan increased from 3.203% to 4.053% , in each case at December 31, 2019 and September 30, 2020, respectively. (2) As described below, the Company entered into the Unsecured Debt Amendments (as defined below) in July 2020. As part of the amendments, the annual interest rate on both of the senior notes increased by 1.00% . As a result, the interest rate of the Series A Senior Notes increased from 4.69% to 5.69% , and the interest rate of the Series B Senior Notes increased from 4.79% to 5.79% , in each case at December 31, 2019 and September 30, 2020, respectively. After the Covenant Relief Period (as defined below), the interest rates on the senior notes will decrease by 0.25% until the Company’s leverage ratio is below 5.0 x. The Company has not made its debt payments for the $77.2 million loan secured by the Hilton Times Square since April 2020; although the Company continues to accrue interest expense on the debt, including $1.7 million in default interest and penalties accrued as of September 30, 2020. While the Company is required to record such default interest and penalties, recovery by the lender of these expenses is non-recourse to the Company, and the Company does not intend to pay the default interest and penalties as part of the ultimate resolution with the lender. The loan matures on November 1, 2020 , and is included in current portion of notes payable on the Company’s consolidated balance sheets as of September 30, 2020 and December 31, 2019. In addition, the hotel’s ground leases require monthly payments be paid to the respective landlords, which the Company has not made since March 2020 (see Notes 8 and 9). As such, the Company has received default notices from its lender and landlords, and is working with the lender to explore various options in advance of the November 2020 debt maturity, which could include a negotiated transfer of the hotel to the lender or its landlords or a discounted payoff of the loan. In March 2020, the Company drew $300.0 million under the revolving portion of its credit facility as a precautionary measure to increase the Company’s cash position and preserve financial flexibility. In June 2020 and August 2020, the Company repaid $250.0 million and $11.2 million, respectively, of the outstanding credit facility balance after determining that it had sufficient cash on hand in addition to access to its credit facility. Also in August 2020, the Company used a portion of the proceeds it received from the sale of the Renaissance Harborplace to repay $38.8 million of the outstanding credit facility balance as stipulated in the amended agreements to its unsecured debt described below. As of September 30, 2020, the Company has no amount outstanding under the credit facility. In July 2020, the Company completed amendments to its unsecured debt, consisting of its revolving credit facility, term loans and senior notes (the “Unsecured Debt Amendments”). The Unsecured Debt Amendments were deemed to be debt modifications and accounted for accordingly. Key terms of the Unsecured Debt Amendments include: ● Waiver of required financial covenants through the end of the first quarter of 2021, with quarterly testing resuming for the period ending June 30, 2021 (the “Covenant Relief Period”). The Company can elect to terminate the Covenant Relief Period early, subject to the achievement of certain financial covenants; ● Following the end of the Covenant Relief Period, existing financial covenants will be phased-in over the following three quarters to ease compliance; ● Continued payment of existing preferred stock dividends and the ability to issue up to $200.0 million of additional preferred stock, subject to the satisfaction of certain conditions; ● Unlimited ability to fund future acquisitions with proceeds from the issuance of common equity or through the sale of unencumbered hotels; ● Flexibility to invest up to $250.0 million into acquisitions (in addition to acquisitions funded with equity or with hotel sale proceeds) subject to maintaining certain minimum liquidity thresholds; ● Ability to invest up to $110.0 million into capital improvements from May 1, 2020 through the end of the Covenant Relief Period; ● Ability to pay dividends on common stock to the extent required to maintain REIT status and comply with IRS regulations; ● Addition of a 25 -basis point LIBOR floor for the remaining term of the revolving credit facility and term loan facilities. The applicable LIBOR spread for each of the facilities will be fixed during the Covenant Relief Period. In addition, there will be a 1.00% increase in the annual interest rate of the senior notes during the Covenant Relief Period which will decrease by 0.25% following the Covenant Relief Period until the Company’s leverage ratio is below 5.0 x; and ● Addition of certain restrictions and covenants during the Covenant Relief Period including, but not limited to, restrictions on share repurchases, certain required mandatory debt prepayments on asset sales and equity issuances (if funds are not used to purchase assets), and restrictions on the incurrence of new indebtedness. At September 30, 2020, the Company has $500.0 million of capacity available for additional borrowing under the revolving portion of its credit facility. The revolving portion of the amended credit facility matures in April 14, 2023 , but may be extended for two six -month periods to April 14, 2024 , upon the payment of applicable fees and satisfaction of certain customary conditions. In September 2020, the Company repaid $35.0 million of its senior notes, comprising $30.0 million to the Series A note holders and $5.0 million to the Series B note holders, using a portion of the proceeds the Company received from the sale of the Renaissance Harborplace as stipulated in the Unsecured Debt Amendments. In conjunction with the repayments, the Company recorded a $0.2 million loss on extinguishment of debt related to the write-off of deferred financing fees. The Company is subject to various financial covenants on its secured and unsecured debt. Due to COVID-19’s negative impact on the Company’s operations throughout 2020 and its expected impact into 2021, it is possible that the Company may not meet the terms of its unsecured debt financial covenants once such covenants are effective again in 2021. As of November 1, 2020, operations at three of the 19 Hotels remain suspended due to COVID-19, with the remainder operating at reduced capacities. The Company’s future liquidity will depend on the gradual return of guests, particularly group business, to its hotels and the stabilization of demand throughout its portfolio. The Company is currently working with its lenders to extend the Covenant Relief Period, however, there is no assurance that the Company will be able to obtain an extension in a timely manner, or on acceptable terms. If the Company is unable to obtain an extension of the Covenant Relief Period and is not able to satisfy the financial covenants following the end of the existing waiver period, the lenders of its unsecured debt may require the Company to repay the loans, which could raise doubt about the Company’s ability to continue as a going concern. Interest Expense Total interest incurred and expensed on the notes payable was as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest expense on debt and finance lease obligations (1) $ 12,612 $ 11,406 $ 35,377 $ 34,399 Noncash interest on derivatives and finance lease obligations, net (762) 1,155 5,534 6,908 Amortization of deferred financing costs 892 698 2,288 2,094 Total interest expense $ 12,742 $ 13,259 $ 43,199 $ 43,401 (1) Includes default interest and penalties of $0.9 million and $1.7 million for the three and nine months ended September 30, 2020, respectively, on the loan secured by the Hilton Times Square. As noted above, the Company does not intend to pay the default interest and penalties as part of the ultimate resolution with the lender. |
Other Current Liabilities and O
Other Current Liabilities and Other Liabilities | 9 Months Ended |
Sep. 30, 2020 | |
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): September 30, December 31, 2020 2019 (unaudited) Property, sales and use taxes payable $ 13,971 $ 16,074 Accrued interest 7,462 6,735 Advance deposits 12,845 18,001 Management fees payable 92 1,527 Other 2,192 4,618 Total other current liabilities $ 36,562 $ 46,955 Other Liabilities Other liabilities consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Deferred revenue $ 7,252 $ 5,225 Deferred property taxes payable (1) 8,830 8,887 Interest rate swap derivatives 6,505 1,081 Other 3,322 2,943 Total other liabilities $ 25,909 $ 18,136 (1) Under the terms of a sublease agreement at the Hilton Times Square, sublease rent amounts are considered to be property taxes under a payment-in-lieu of taxes (“PILOT”) program. In accordance with the terms of the sublease agreement, a portion of the property taxes has been deferred, with installments due beginning in 2020 through 2029. At September 30, 2020 and December 31, 2019, an additional $2.2 million and $1.4 million, respectively, of deferred property taxes payable are included in accounts payable and accrued expenses on the Company’s consolidated balance sheets. Under the terms of the sublease agreement, the amount due for current property taxes was adjusted in May 2020 based on the fair market value of the land. While the Company is negotiating with the landlord to agree on the fair market value of the land, the Company is recording property tax expense in accordance with the lease based on 90.0% of the landlord’s estimate of fair value. The sublease agreement requires monthly payments be paid to the landlord, which the Company has not made since March 2020. As such, the Company has received a default notice from the landlord, and a total of $1.2 million in accrued sublease current property taxes is included in accounts payable and accrued expenses on the Company’s consolidated balance sheet as of September 30, 2020 (see Notes 7 and 9). |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Leases | 9. Leases The Company has both finance and operating leases for ground, building, office and air 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): September 30, December 31, 2020 2019 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (12,250) (11,147) Right-of-use asset, net $ 46,549 $ 47,652 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,569 15,570 Total lease obligation $ 15,570 $ 15,571 Remaining lease term 77 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net (1) $ 39,489 $ 60,629 Accounts payable and accrued expenses $ 4,972 $ 4,743 Lease obligations, less current portion 45,939 49,691 Total lease obligations $ 50,911 $ 54,434 Weighted average remaining lease term 25 years Weighted average discount rate 5.4 % (1) During the first quarter of 2020, the Company wrote down its operating lease right-of-use assets, net and recorded an impairment loss of $18.5 million on the Hilton Times Square (see Note 5). The components of lease expense were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of right-of-use asset $ 368 $ 367 $ 1,103 $ 1,103 Interest on lease obligations 351 647 1,053 1,936 Operating lease cost (1) 2,681 1,729 6,751 5,187 Variable lease cost 15 1,958 39 4,878 Total lease cost $ 3,415 $ 4,701 $ 8,946 $ 13,104 (1) Under the terms of the operating lease at the Hilton Times Square, the variable rent amount was adjusted in May 2020 based on the fair market value of the land. While the Company is negotiating with the landlord to agree on the fair market value of the land, the Company is recording operating lease cost in accordance with the lease based on 90.0% of the landlord’s estimate of fair value. The operating lease requires monthly rental payments be paid to the landlord, which the Company has not made since March 2020. As such, the Company has received a default notice from the landlord, and a total of $2.4 million in accrued operating lease rental payments is included in accounts payable and accrued expenses on the Company’s consolidated balance sheet as of September 30, 2020. (see Notes 7 and 8). Supplemental cash flow information related to leases was as follows (unaudited and in thousands): Nine Months Ended September 30, 2020 2019 Operating cash flows used for operating leases $ 4,923 $ 5,365 Changes in operating lease right-of-use assets $ 2,606 $ 2,564 Changes in operating lease obligations (3,529) (3,087) Changes in operating lease right-of-use assets and lease obligations, net $ (923) $ (523) Operating right-of-use assets obtained in exchange for operating lease obligations $ — $ 45,677 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Series E Cumulative Redeemable Preferred Stock In March 2016, the Company issued 4,600,000 shares of its 6.95% Series E Cumulative Redeemable Preferred Stock (“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 6.45% Series F Cumulative Redeemable Preferred Stock (“Series F preferred stock”) with a liquidation preference of $25.00. 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’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. In February 2020, the Company’s board of directors increased the Company’s stock repurchase program to acquire up to an aggregate of $500.0 million of the Company’s common and preferred stock. During the first quarter of 2020, the Company repurchased 9,770,081 shares of its common stock for $103.9 million, including fees and commissions, leaving approximately $400.0 million of remaining authorized capacity under the program. As of September 30, 2020, no shares of the Company’s preferred stock have been repurchased. Due to the negative impact of COVID-19 on the Company’s business, the Company has suspended its stock repurchase program in order to preserve additional liquidity. Future repurchases will depend on various factors, including the Company’s capital needs, compliance with its debt covenants, as well as the Company’s common and preferred stock price. |
Long-Term Incentive Plan
Long-Term Incentive Plan | 9 Months Ended |
Sep. 30, 2020 | |
Long-Term Incentive Plan | |
Long-Term Incentive Plan | 11. Long-Term Incentive Plan Restricted shares granted pursuant to the Company’s Long-Term Incentive Plan (“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 three and nine months ended September 30, 2020 and 2019 were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Amortization expense, including forfeitures $ 2,238 $ 2,146 $ 7,509 $ 7,168 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. These capitalized costs totaled $0.1 million during both the three months ended September 30, 2020 and 2019, and $0.4 million and $0.3 million during the nine months ended September 30, 2020 and 2019, respectively. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. 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 that 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 and incentive management fees incurred by the Company during the three and nine months ended September 30, 2020 and 2019 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic management fees $ 624 $ 7,767 $ 6,179 $ 23,404 Incentive management fees — 511 — 6,041 Total basic and incentive management fees $ 624 $ 8,278 $ 6,179 $ 29,445 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. Total license and franchise fees incurred by the Company during the three and nine months ended September 30, 2020 and 2019 were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Franchise assessments (1) $ 555 $ 6,391 $ 5,349 $ 18,005 Franchise royalties (2) 108 2,215 988 6,019 Total franchise costs $ 663 $ 8,606 $ 6,337 $ 24,024 (1) Includes advertising, reservation and frequent guest program assessments. (2) Includes key money received from one of the Company’s franchisors, which the Company is amortizing over the term of the hotel’s franchise agreement. Renovation and Construction Commitments At September 30, 2020, the Company had various contracts outstanding with third parties in connection with the ongoing renovations of certain of its hotel properties. The remaining commitments under these contracts at September 30, 2020 totaled $17.4 million. Concentration of Risk The concentration of the Company’s hotels in California, Florida, 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 September 30, 2020, 13 of the 19 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 5 32 % 35 % Florida 2 10 % 12 % Hawaii 1 5 % 13 % Illinois 3 11 % 6 % Massachusetts 2 15 % 14 % Other The Company incurred $11.3 million and $28.9 million of additional expenses as a result of the COVID-19 outbreak during the third quarter and first nine months of 2020, respectively, related to wages and benefits for furloughed or laid off hotel employees, which included severance of $6.8 million and $8.0 million accrued in the third quarter and first nine months of 2020, respectively. 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 September 30, 2020, 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 September 30, 2020. 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, including any potential COVID-19-related litigation, brought against the Company, however, is subject to significant uncertainties. |
Subsequent Event
Subsequent Event | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Event | |
Subsequent Events | 13. Subsequent Event The debt secured by the Hilton Times Square matured on November 1, 2020 . At this time the debt remains in default and the Company continues to work with its lender to come to a resolution. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of September 30, 2020 and December 31, 2019, and for the three and nine months ended September 30, 2020 and 2019, 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 accompanying interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and in conformity with the rules and regulations of the Securities and Exchange Commission. In the Company’s opinion, the interim financial statements presented herein reflect all adjustments, consisting solely of normal and recurring adjustments, which are necessary to fairly present the interim financial statements. These financial statements should be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 19, 2020. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. 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 three and nine months ended September 30, 2020. 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 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. |
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, 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 (loss) earnings per common share (unaudited and in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net (loss) income $ (91,107) $ 33,545 $ (371,126) $ 97,379 Loss (income) from consolidated joint venture attributable to noncontrolling interest 1,816 (2,508) 4,436 (6,062) Preferred stock dividends (3,208) (3,208) (9,622) (9,622) Distributions paid on unvested restricted stock compensation — (61) (69) (183) Undistributed income allocated to unvested restricted stock compensation — (89) — (257) Numerator for basic and diluted (loss) income attributable to common stockholders $ (92,499) $ 27,679 $ (376,381) $ 81,255 Denominator: Weighted average basic and diluted common shares outstanding 214,257 224,530 216,498 226,369 Basic and diluted (loss) income attributable to common stockholders per common share $ (0.43) $ 0.12 $ (1.74) $ 0.36 The Company’s unvested restricted shares associated with its long-term incentive plan have been excluded from the above calculation of earnings per share for the three and nine months ended September 30, 2020 and 2019, as their inclusion would have been anti-dilutive. |
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 hotel-generated cash that is held in an account for the benefit of a lender. These restricted funds are subject to disbursement approval based on in-place agreements and policies by certain of the Company’s lenders and/or hotel managers. Restricted cash may also include earnest money received from a buyer or potential buyer of one of the Company’s hotels and held in escrow until the sale is completed. |
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 consolidated 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 over 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. The Company evaluates its long-lived assets to determine if there are indicators of impairment on a quarterly basis. 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 judgment is required in determining the appropriate 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, three hotels were impaired during the first nine months of 2020 (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. |
Finance and Operating Leases | Finance and Operating Leases 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 right-of-use (“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. 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 Company. 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. 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. 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. 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. Based on the Company’s review, the operating lease right-of-use asset at one hotel was impaired during the first nine months of 2020 (see Note 5). |
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 both September 30, 2020 and December 31, 2019, 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. |
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 and other occupancy based fees are 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. Cancellation fees and attrition fees, which are charged to groups when they do not fulfill their contracted minimum number of room nights or minimum food and beverage spending requirements, are generally recognized as revenue in the period these fees are collected. 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): September 30, December 31, 2020 2019 (unaudited) Trade receivables, net (1) $ 4,499 $ 21,201 Contract liabilities (2) $ 15,587 $ 18,498 (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. The Company did not recognize any revenue related to its outstanding contract liabilities during the three months ended September 30, 2020. During the nine months ended September 30, 2020, and the three and nine months ended September 30, 2019, the Company recognized approximately $10.2 million, $1.0 million and $16.3 million, respectively, in revenue related to its outstanding contract liabilities. |
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 June 2016, the FASB issued Accounting Standards Update No. 2016-13, “ Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments In March 2020, the FASB issued Accounting Standards Update No. 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting |
Organization and Description _2
Organization and Description of Business (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Organization and Description of Business | |
Schedule of number of hotels managed by each third-party manager | As of September 30, 2020, the Company had interests in 19 hotels (the “19 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”) 7 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 September 30, 2020 19 |
Schedule of hotels whose operations have been temporarily suspended due to COVID-19 | In response to the COVID-19 pandemic, the Company temporarily suspended operations at the following 15 hotels during the nine months ended September 30, 2020, 12 of which have since resumed operations: Hotel Suspension Date Resumption Date Oceans Edge Resort & Marina March 22, 2020 June 4, 2020 Embassy Suites Chicago April 1, 2020 July 1, 2020 Marriott Boston Long Wharf March 12, 2020 July 7, 2020 Hilton New Orleans St. Charles March 28, 2020 July 13, 2020 Hyatt Centric Chicago Magnificent Mile April 6, 2020 July 13, 2020 JW Marriott New Orleans March 28, 2020 July 14, 2020 Hilton San Diego Bayfront March 23, 2020 August 11, 2020 Renaissance Washington DC March 26, 2020 August 24, 2020 Hyatt Regency San Francisco March 22, 2020 October 1, 2020 Renaissance Orlando at SeaWorld® March 20, 2020 October 1, 2020 The Bidwell Marriott Portland March 27, 2020 October 5, 2020 Wailea Beach Resort March 25, 2020 November 1, 2020 Hilton Garden Inn Chicago Downtown/Magnificent Mile March 27, 2020 Hilton Times Square June 30, 2020 Renaissance Westchester April 4, 2020 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of computation of basic and diluted (loss) earnings per common share | The following table sets forth the computation of basic and diluted (loss) earnings per common share (unaudited and in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Numerator: Net (loss) income $ (91,107) $ 33,545 $ (371,126) $ 97,379 Loss (income) from consolidated joint venture attributable to noncontrolling interest 1,816 (2,508) 4,436 (6,062) Preferred stock dividends (3,208) (3,208) (9,622) (9,622) Distributions paid on unvested restricted stock compensation — (61) (69) (183) Undistributed income allocated to unvested restricted stock compensation — (89) — (257) Numerator for basic and diluted (loss) income attributable to common stockholders $ (92,499) $ 27,679 $ (376,381) $ 81,255 Denominator: Weighted average basic and diluted common shares outstanding 214,257 224,530 216,498 226,369 Basic and diluted (loss) income attributable to common stockholders per common share $ (0.43) $ 0.12 $ (1.74) $ 0.36 |
Schedule of contract assets and liabilities | Trade receivables and contract liabilities consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Trade receivables, net (1) $ 4,499 $ 21,201 Contract liabilities (2) $ 15,587 $ 18,498 (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. |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | Investment in hotel properties, net for the 19 Hotels consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Land $ 581,426 $ 601,181 Buildings and improvements 2,707,102 2,950,534 Furniture, fixtures and equipment 464,588 506,754 Intangible assets 25,111 32,610 Franchise fees 743 743 Construction in progress 39,026 40,639 Investment in hotel properties, gross 3,817,996 4,132,461 Accumulated depreciation and amortization (1,196,520) (1,260,108) Investment in hotel properties, net $ 2,621,476 $ 2,872,353 |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2020 (unaudited): Interest rate cap derivatives $ 1 $ — $ 1 $ — Total assets measured at fair value at September 30, 2020 $ 1 $ — $ 1 $ — December 31, 2019: Renaissance Harborplace (1) $ 96,725 $ — $ — $ 96,725 Total assets measured at fair value at December 31, 2019 $ 96,725 $ — $ — $ 96,725 (1) The fair market value of the Renaissance Harborplace is included in investment in hotel properties, net on the Company’s consolidated balance sheet at December 31, 2019. |
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 September 30, 2020 and December 31, 2019 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2020 (unaudited): Interest rate swap derivatives $ 6,505 $ — $ 6,505 $ — Total liabilities measured at fair value at September 30, 2020 $ 6,505 $ — $ 6,505 $ — 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 $ — |
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 September 30, 2020 (unaudited) and December 31, 2019 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional September 30, December 31, Hedged Debt Type Rate Index Date Date Amount 2020 2019 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR November 10, 2017 December 9, 2020 $ 220,000 $ — $ — Hilton San Diego Bayfront Cap (2) 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 1 — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (2,429) (132) $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (4,076) (949) $ (6,504) $ (1,081) (1) The fair values of both cap agreements and both swap agreements are included in other assets, net and other liabilities, respectively, on the accompanying consolidated balance sheets as of both September 30, 2020 and December 31, 2019. (2) In April 2020, the Company purchased a new interest rate cap agreement for $0.1 million related to the existing loan secured by the Hilton San Diego Bayfront. The new cap agreement, whose terms are substantially the same as the terms under the prior cap agreement, effectively extends the cap agreement’s maturity date to December 15, 2021. |
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 (decreases) increases to interest expense for the three and nine months ended September 30, 2020 and 2019 as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Noncash interest on derivatives $ (762) $ 1,098 5,534 $ 6,740 |
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 September 30, 2020 (unaudited) and December 31, 2019 were as follows (in thousands): September 30, 2020 December 31, 2019 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value Debt $ 934,673 $ 899,548 $ 974,863 $ 976,012 (1) The principal balance of debt is presented before any unamortized deferred financing costs. (2) Due to prevailing market conditions and the uncertain economic environment caused by the COVID-19 pandemic, actual interest rates could vary materially from those estimated, which would result in variances in the Company’s calculations of the fair market value of its debt. |
Other Assets (Tables)
Other Assets (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Assets. | |
Schedule of other assets | Other assets, net consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Property and equipment, net $ 7,014 $ 7,642 Deferred rent on straight-lined third-party tenant leases 2,879 3,542 Deferred income tax assets, net (1) — 7,415 Interest rate cap derivatives 1 — Other receivables 2,623 2,984 Other 307 307 Total other assets, net $ 12,824 $ 21,890 (1) During the first quarter of 2020, the Company recorded a full valuation allowance on its deferred income tax assets, net. The Company can no longer be assured that it will be able to realize these assets due to uncertainties regarding how long the COVID-19 pandemic will last or what the long-term impact will be on the Company’s hotel operations. |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 5.95% ; maturing at dates ranging from November 1, 2020 through January 6, 2025 . The notes are collateralized by first deeds of trust on four hotel properties at both September 30, 2020 and December 31, 2019. $ 324,673 $ 329,863 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points; initial maturity on December 9, 2020 with notice provided to the lender of intent to exercise the first available one -year extension ; two additional one-year options to extend remain, which the Company also 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, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 3.791% . Matures on September 3, 2022 . (1) 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, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.853% , resulting in an effective interest rate of 4.053 %. Matures on January 31, 2023 . (1) 100,000 100,000 Unsecured Series A Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.69% . Matures on January 10, 2026 . (2) 90,000 120,000 Unsecured Series B Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.79% . Matures on January 10, 2028 . (2) 115,000 120,000 Total notes payable $ 934,673 $ 974,863 Current portion of notes payable $ 189,189 $ 83,975 Less: current portion of deferred financing costs (1,093) (1,866) Carrying value of current portion of notes payable $ 188,096 $ 82,109 Notes payable, less current portion $ 745,484 $ 890,888 Less: long-term portion of deferred financing costs (1,939) (1,934) Carrying value of notes payable, less current portion $ 743,545 $ 888,954 (1) As described below, the Company entered into the Unsecured Debt Amendments (as defined below) in July 2020. As part of the amendments, a 25 -basis point LIBOR floor was added for the remaining term of the term loan facilities and interest was increased to 220 basis points, the high point of the agreed upon range. After the Covenant Relief Period (as defined below), interest will revert back to the original terms of the pricing grid with a range of 135 to 220 basis points, depending on the Company’s leverage ratios. The effective interest rate of the $85.0 million term loan increased from 2.941% to 3.791% , and the effective interest rate of the $100.0 million term loan increased from 3.203% to 4.053% , in each case at December 31, 2019 and September 30, 2020, respectively. (2) As described below, the Company entered into the Unsecured Debt Amendments (as defined below) in July 2020. As part of the amendments, the annual interest rate on both of the senior notes increased by 1.00% . As a result, the interest rate of the Series A Senior Notes increased from 4.69% to 5.69% , and the interest rate of the Series B Senior Notes increased from 4.79% to 5.79% , in each case at December 31, 2019 and September 30, 2020, respectively. After the Covenant Relief Period (as defined below), the interest rates on the senior notes will decrease by 0.25% until the Company’s leverage ratio is below 5.0 x. |
Schedule of interest expense | Total interest incurred and expensed on the notes payable was as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Interest expense on debt and finance lease obligations (1) $ 12,612 $ 11,406 $ 35,377 $ 34,399 Noncash interest on derivatives and finance lease obligations, net (762) 1,155 5,534 6,908 Amortization of deferred financing costs 892 698 2,288 2,094 Total interest expense $ 12,742 $ 13,259 $ 43,199 $ 43,401 (1) Includes default interest and penalties of $0.9 million and $1.7 million for the three and nine months ended September 30, 2020, respectively, on the loan secured by the Hilton Times Square. As noted above, the Company does not intend to pay the default interest and penalties as part of the ultimate resolution with the lender. |
Other Current Liabilities and_2
Other Current Liabilities and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Other Current Liabilities and Other Liabilities | |
Schedule of other current liabilities | Other current liabilities consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Property, sales and use taxes payable $ 13,971 $ 16,074 Accrued interest 7,462 6,735 Advance deposits 12,845 18,001 Management fees payable 92 1,527 Other 2,192 4,618 Total other current liabilities $ 36,562 $ 46,955 |
Schedule of other liabilities | Other liabilities consisted of the following (in thousands): September 30, December 31, 2020 2019 (unaudited) Deferred revenue $ 7,252 $ 5,225 Deferred property taxes payable (1) 8,830 8,887 Interest rate swap derivatives 6,505 1,081 Other 3,322 2,943 Total other liabilities $ 25,909 $ 18,136 (1) Under the terms of a sublease agreement at the Hilton Times Square, sublease rent amounts are considered to be property taxes under a payment-in-lieu of taxes (“PILOT”) program. In accordance with the terms of the sublease agreement, a portion of the property taxes has been deferred, with installments due beginning in 2020 through 2029. At September 30, 2020 and December 31, 2019, an additional $2.2 million and $1.4 million, respectively, of deferred property taxes payable are included in accounts payable and accrued expenses on the Company’s consolidated balance sheets. Under the terms of the sublease agreement, the amount due for current property taxes was adjusted in May 2020 based on the fair market value of the land. While the Company is negotiating with the landlord to agree on the fair market value of the land, the Company is recording property tax expense in accordance with the lease based on 90.0% of the landlord’s estimate of fair value. The sublease agreement requires monthly payments be paid to the landlord, which the Company has not made since March 2020. As such, the Company has received a default notice from the landlord, and a total of $1.2 million in accrued sublease current property taxes is included in accounts payable and accrued expenses on the Company’s consolidated balance sheet as of September 30, 2020 (see Notes 7 and 9). |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Schedule of supplemental balance sheet information related to leases | Leases were included on the Company’s consolidated balance sheet as follows (in thousands): September 30, December 31, 2020 2019 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (12,250) (11,147) Right-of-use asset, net $ 46,549 $ 47,652 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,569 15,570 Total lease obligation $ 15,570 $ 15,571 Remaining lease term 77 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net (1) $ 39,489 $ 60,629 Accounts payable and accrued expenses $ 4,972 $ 4,743 Lease obligations, less current portion 45,939 49,691 Total lease obligations $ 50,911 $ 54,434 Weighted average remaining lease term 25 years Weighted average discount rate 5.4 % (1) During the first quarter of 2020, the Company wrote down its operating lease right-of-use assets, net and recorded an impairment loss of $18.5 million on the Hilton Times Square (see Note 5). |
Lease costs | The components of lease expense were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Finance lease cost: Amortization of right-of-use asset $ 368 $ 367 $ 1,103 $ 1,103 Interest on lease obligations 351 647 1,053 1,936 Operating lease cost (1) 2,681 1,729 6,751 5,187 Variable lease cost 15 1,958 39 4,878 Total lease cost $ 3,415 $ 4,701 $ 8,946 $ 13,104 (1) Under the terms of the operating lease at the Hilton Times Square, the variable rent amount was adjusted in May 2020 based on the fair market value of the land. While the Company is negotiating with the landlord to agree on the fair market value of the land, the Company is recording operating lease cost in accordance with the lease based on 90.0% of the landlord’s estimate of fair value. The operating lease requires monthly rental payments be paid to the landlord, which the Company has not made since March 2020. As such, the Company has received a default notice from the landlord, and a total of $2.4 million in accrued operating lease rental payments is included in accounts payable and accrued expenses on the Company’s consolidated balance sheet as of September 30, 2020. (see Notes 7 and 8). |
Schedule of supplemental cash flow information related to leases | Supplemental cash flow information related to leases was as follows (unaudited and in thousands): Nine Months Ended September 30, 2020 2019 Operating cash flows used for operating leases $ 4,923 $ 5,365 Changes in operating lease right-of-use assets $ 2,606 $ 2,564 Changes in operating lease obligations (3,529) (3,087) Changes in operating lease right-of-use assets and lease obligations, net $ (923) $ (523) Operating right-of-use assets obtained in exchange for operating lease obligations $ — $ 45,677 |
Long-Term Incentive Plan (Table
Long-Term Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
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 three and nine months ended September 30, 2020 and 2019 were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Amortization expense, including forfeitures $ 2,238 $ 2,146 $ 7,509 $ 7,168 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Commitments and Contingencies | |
Schedule of basic and incentive management fees | Total basic and incentive management fees incurred by the Company during the three and nine months ended September 30, 2020 and 2019 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Basic management fees $ 624 $ 7,767 $ 6,179 $ 23,404 Incentive management fees — 511 — 6,041 Total basic and incentive management fees $ 624 $ 8,278 $ 6,179 $ 29,445 |
Schedule of license and franchise costs | Total license and franchise fees incurred by the Company during the three and nine months ended September 30, 2020 and 2019 were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Franchise assessments (1) $ 555 $ 6,391 $ 5,349 $ 18,005 Franchise royalties (2) 108 2,215 988 6,019 Total franchise costs $ 663 $ 8,606 $ 6,337 $ 24,024 (1) Includes advertising, reservation and frequent guest program assessments. (2) Includes key money received from one of the Company’s franchisors, which the Company is amortizing over the term of the hotel’s franchise agreement. |
Schedule of hotel geographic concentration of risk | As of September 30, 2020, 13 of the 19 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 5 32 % 35 % Florida 2 10 % 12 % Hawaii 1 5 % 13 % Illinois 3 11 % 6 % Massachusetts 2 15 % 14 % |
Organization and Description _3
Organization and Description of Business (Details) - property | 9 Months Ended | |
Sep. 30, 2020 | Nov. 01, 2020 | |
Organization and Description of Business | ||
Number of hotels owned by the Company | 19 | 19 |
Number of hotels held for investment | 19 | |
Number of hotels whose operations have been temporarily suspended due to COVID-19 | 15 | 3 |
Number of hotels reopened after being temporarily suspended due to COVID-19 | 12 | |
Sunstone Hotel Partnership, LLC | ||
Organization and Description of Business | ||
Controlling interest owned (as a percent) | 100.00% | |
Marriott | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 7 | |
Highgate Hotels L.P. and an affiliate | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 3 | |
Crestline Hotels & Resorts | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 2 | |
Hilton Worldwide | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 2 | |
Interstate Hotels & Resorts, Inc | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 2 | |
Davidson Hotels & Resorts | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 1 | |
Hyatt Corporation | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 1 | |
Singh Hospitality, LLC | ||
Organization and Description of Business | ||
Number of hotels owned by the Company | 1 | |
Oceans Edge Resort & Marina | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 22, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jun. 4, 2020 | |
Embassy Suites Chicago | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Apr. 1, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jul. 1, 2020 | |
Marriott Boston Long Wharf | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 12, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jul. 7, 2020 | |
Hilton New Orleans St. Charles | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 28, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jul. 13, 2020 | |
Hyatt Centric Chicago Magnificent Mile | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Apr. 6, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jul. 13, 2020 | |
JW Marriott New Orleans | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 28, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Jul. 14, 2020 | |
Hilton San Diego Bayfront | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 23, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Aug. 11, 2020 | |
Renaissance Washington DC | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 26, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Aug. 24, 2020 | |
Hyatt Regency San Francisco | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 22, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Oct. 1, 2020 | |
Renaissance Orlando at SeaWorld | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 20, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Oct. 1, 2020 | |
The Bidwell Marriott Portland | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 27, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Oct. 5, 2020 | |
Wailea Beach Resort | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 25, 2020 | |
Date operations reopened after being temporarily suspended due to COVID-19 | Nov. 1, 2020 | |
Hilton Garden Inn Chicago Downtown/Magnificent Mile | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Mar. 27, 2020 | |
Hilton Times Square | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Jun. 30, 2020 | |
Renaissance Westchester | ||
Organization and Description of Business | ||
Date operations temporarily suspended due to COVID-19 | Apr. 4, 2020 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||||||
Net (loss) income | $ (91,107) | $ (117,500) | $ (162,519) | $ 33,545 | $ 45,918 | $ 17,916 | $ (371,126) | $ 97,379 |
Loss (income) from consolidated joint venture attributable to noncontrolling interest | 1,816 | (2,508) | 4,436 | (6,062) | ||||
Preferred stock dividends | (3,208) | (3,208) | (9,622) | (9,622) | ||||
Distributions paid on unvested restricted stock compensation | (61) | (69) | (183) | |||||
Undistributed income allocated to unvested restricted stock compensation | (89) | (257) | ||||||
Numerator for basic and diluted (loss) income attributable to common stockholders | $ (92,499) | $ 27,679 | $ (376,381) | $ 81,255 | ||||
Denominator: | ||||||||
Weighted average basic and diluted common shares outstanding (in shares) | 214,257 | 224,530 | 216,498 | 226,369 | ||||
Basic and diluted (loss) income attributable to common stockholders per common share (in dollars per share) | $ (0.43) | $ 0.12 | $ (1.74) | $ 0.36 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Sep. 30, 2020USD ($)property | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Investments in Hotel Properties | |||||
Number of hotels impaired | property | 3 | ||||
Leases | |||||
Leases Initial Maximum Term Not Recorded On Balance Sheet | 12 months | ||||
Leases Initial Minimum Term Recorded Right Of Use Assets | 12 months | ||||
Number of hotels with operating lease right-of-use asset impairment | property | 1 | ||||
Revenue Recognition | |||||
Trade receivables, net | $ 4,499 | $ 4,499 | $ 21,201 | ||
Contract liabilities | 15,587 | 15,587 | $ 18,498 | ||
Deferred revenue recognized | $ 0 | $ 1,000 | $ 10,200 | $ 16,300 | |
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 | ||||
Hilton San Diego Bayfront | |||||
Revenue Recognition | |||||
Secured Debt | $ 220,000 | $ 220,000 |
Investment in Hotel Propertie_2
Investment in Hotel Properties (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020USD ($) | Sep. 30, 2020USD ($)property | Dec. 31, 2019USD ($) | |
Number of hotels held for investment | property | 19 | ||
Land | $ 581,426 | $ 601,181 | |
Buildings and improvements | 2,707,102 | 2,950,534 | |
Furniture, fixtures and equipment | 464,588 | 506,754 | |
Intangible assets | 25,111 | 32,610 | |
Franchise fees | 743 | 743 | |
Construction in progress | 39,026 | 40,639 | |
Investment in hotel properties, gross | 3,817,996 | 4,132,461 | |
Accumulated depreciation and amortization | (1,196,520) | (1,260,108) | |
Investment in hotel properties, net | 2,621,476 | $ 2,872,353 | |
Asset Impairment Charges | |||
Impairment losses | $ 133,466 | ||
Abandoned hotel project | |||
Asset Impairment Charges | |||
Impairment losses | $ 2,300 | ||
Investment in Hotel Properties | Hilton Times Square | |||
Asset Impairment Charges | |||
Impairment losses | 89,400 | ||
Investment in Hotel Properties | Renaissance Westchester | |||
Asset Impairment Charges | |||
Impairment losses | $ 5,200 |
Disposal (Details)
Disposal (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jul. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Sep. 30, 2020 | |
Detail of Disposal | ||||
Impairment losses | $ 133,466 | |||
Gain on sale of assets | $ 189 | $ 189 | ||
Sold, not considered a discontinued operation | Renaissance Harborplace | ||||
Detail of Disposal | ||||
Impairment losses | $ 18,100 | |||
Net proceeds received from sale | $ 76,900 | |||
Gain on sale of assets | $ 200 |
Fair Value Measurements and I_3
Fair Value Measurements and Interest Rate Derivatives - Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Asset Impairment Charges | ||||
Impairment losses | $ 133,466 | |||
Assets: | ||||
Interest rate derivative assets | 1 | |||
Liabilities: | ||||
Interest rate derivative liabilities | 6,505 | $ 1,081 | ||
Hilton Times Square | Investment in Hotel Properties | ||||
Asset Impairment Charges | ||||
Impairment losses | $ 89,400 | |||
Hilton Times Square | Operating Lease Right-Of-Use Asset | ||||
Asset Impairment Charges | ||||
Impairment losses | 18,500 | |||
Renaissance Westchester | Investment in Hotel Properties | ||||
Asset Impairment Charges | ||||
Impairment losses | 5,200 | |||
Level 2 | ||||
Assets: | ||||
Total assets | 1 | |||
Liabilities: | ||||
Total liabilities | 6,505 | 1,081 | ||
Level 2 | Interest Rate Cap | ||||
Assets: | ||||
Interest rate derivative assets | 1 | |||
Level 2 | Interest Rate Swap | ||||
Liabilities: | ||||
Interest rate derivative liabilities | 6,505 | 1,081 | ||
Level 2 | Renaissance Westchester | ||||
Asset Impairment Charges | ||||
Impairment losses | 5,200 | |||
Assets: | ||||
Asset measured at fair value | 29,500 | |||
Level 2 | Renaissance Westchester | Investment in Hotel Properties | ||||
Asset Impairment Charges | ||||
Impairment losses | 5,200 | |||
Level 2 | Renaissance Harborplace | ||||
Asset Impairment Charges | ||||
Impairment losses | $ 18,100 | |||
Level 3 | ||||
Assets: | ||||
Total assets | 96,725 | |||
Level 3 | Hilton Times Square | ||||
Asset Impairment Charges | ||||
Impairment losses | 107,900 | |||
Assets: | ||||
Asset measured at fair value | 61,300 | |||
Level 3 | Hilton Times Square | Investment in Hotel Properties | ||||
Asset Impairment Charges | ||||
Impairment losses | 89,400 | |||
Level 3 | Hilton Times Square | Operating Lease Right-Of-Use Asset | ||||
Asset Impairment Charges | ||||
Impairment losses | $ 18,500 | |||
Level 3 | Renaissance Harborplace | ||||
Assets: | ||||
Asset measured at fair value | 96,725 | |||
Total at the end of the period | ||||
Assets: | ||||
Total assets | 1 | 96,725 | ||
Liabilities: | ||||
Total liabilities | 6,505 | 1,081 | ||
Total at the end of the period | Interest Rate Cap | ||||
Assets: | ||||
Interest rate derivative assets | 1 | |||
Total at the end of the period | Interest Rate Swap | ||||
Liabilities: | ||||
Interest rate derivative liabilities | $ 6,505 | 1,081 | ||
Total at the end of the period | Renaissance Harborplace | ||||
Assets: | ||||
Asset measured at fair value | $ 96,725 |
Fair Value Measurements and I_4
Fair Value Measurements and Interest Rate Derivatives - Interest Rate Derivatives (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Interest Rate Derivatives | ||||||
Estimated Fair Value of Liabilities | $ (6,505) | $ (6,505) | $ (1,081) | |||
Fair value of interest rate derivatives | (6,504) | (6,504) | $ (1,081) | |||
Payment for interest rate derivative | (111) | |||||
Fair values of derivative assets | 1 | 1 | ||||
Noncash interest on derivatives | $ (762) | $ 1,098 | $ 5,534 | $ 6,740 | ||
$85.0 million term loan | ||||||
Interest Rate Derivatives | ||||||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | 1.591% | |||
$100.0 million term loan | ||||||
Interest Rate Derivatives | ||||||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | 1.853% | |||
Interest Rate Cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage | ||||||
Interest Rate Derivatives | ||||||
Strike rate under interest rate cap agreement | 6.00% | 6.00% | ||||
Effective date | Nov. 10, 2017 | |||||
Interest rate derivative maturity date | Dec. 9, 2020 | |||||
Notional amount | $ 220,000 | $ 220,000 | ||||
Hilton San Diego Bayfront new interest rate cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage | ||||||
Interest Rate Derivatives | ||||||
Strike rate under interest rate cap agreement | 6.00% | 6.00% | ||||
Effective date | Dec. 9, 2020 | |||||
Interest rate derivative maturity date | Dec. 15, 2021 | |||||
Notional amount | $ 220,000 | $ 220,000 | ||||
Payment for interest rate derivative | $ (100) | |||||
Fair values of derivative assets | $ 1 | $ 1 | ||||
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% | ||||
Effective date | Oct. 29, 2015 | |||||
Interest rate derivative maturity date | Sep. 2, 2022 | |||||
Notional amount | $ 85,000 | $ 85,000 | ||||
Estimated Fair Value of Liabilities | $ (2,429) | $ (2,429) | $ (132) | |||
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% | ||||
Effective date | Jan. 29, 2016 | |||||
Interest rate derivative maturity date | Jan. 31, 2023 | |||||
Notional amount | $ 100,000 | $ 100,000 | ||||
Estimated Fair Value of Liabilities | $ (4,076) | $ (4,076) | $ (949) | |||
London Interbank Offered Rate (LIBOR) | Hilton San Diego Bayfront mortgage | ||||||
Interest Rate Derivatives | ||||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||||
London Interbank Offered Rate (LIBOR) | Interest Rate Cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage | ||||||
Interest Rate Derivatives | ||||||
Interest rate, description of reference rate | one-month LIBOR | |||||
London Interbank Offered Rate (LIBOR) | Hilton San Diego Bayfront new interest rate cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage | ||||||
Interest Rate Derivatives | ||||||
Interest rate, description of reference rate | one-month LIBOR | |||||
London Interbank Offered Rate (LIBOR) | Interest Rate Swap | Not designated as hedging instrument | $85.0 million term loan | ||||||
Interest Rate Derivatives | ||||||
Interest rate, description of reference rate | one-month LIBOR | |||||
London Interbank Offered Rate (LIBOR) | Interest Rate Swap | Not designated as hedging instrument | $100.0 million term loan | ||||||
Interest Rate Derivatives | ||||||
Interest rate, description of reference rate | one-month LIBOR |
Fair Value Measurements and I_5
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Percentage of Debt Bearing Fixed Interest Rates | 76.50% | 77.40% |
Total notes payable | $ 934,673 | $ 974,863 |
Level 3 | ||
Fair value of debt | $ 899,548 | $ 976,012 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Other assets, net | ||
Property and equipment, net | $ 7,014 | $ 7,642 |
Deferred rent on straight-lined third-party tenant leases | 2,879 | 3,542 |
Deferred income tax assets, net | 7,415 | |
Interest rate derivative assets | 1 | |
Other receivables | 2,623 | 2,984 |
Other | 307 | 307 |
Total other assets, net | $ 12,824 | $ 21,890 |
Notes Payable (Details)
Notes Payable (Details) $ in Thousands | Dec. 31, 2019USD ($)property | Jul. 31, 2020 | Jun. 30, 2021 | Sep. 30, 2020USD ($)property | Dec. 31, 2019USD ($)property |
Notes Payable | |||||
Total notes payable | $ 974,863 | $ 934,673 | $ 974,863 | ||
Current portion of notes payable | 83,975 | 189,189 | 83,975 | ||
Less: current portion of deferred financing costs | (1,866) | (1,093) | (1,866) | ||
Current portion of notes payable, net | 82,109 | 188,096 | 82,109 | ||
Notes payable, less current portion | 890,888 | 745,484 | 890,888 | ||
Less: long-term portion of deferred financing costs | (1,934) | (1,939) | (1,934) | ||
Carrying value of notes payable, less current portion | $ 888,954 | $ 743,545 | $ 888,954 | ||
Notes payable maturing in various years | |||||
Notes Payable | |||||
Number of hotels provided as collateral | property | 4 | 4 | 4 | ||
Total notes payable | $ 329,863 | $ 324,673 | $ 329,863 | ||
Notes payable maturing in various years | Minimum | |||||
Notes Payable | |||||
Fixed interest rate (as a percent) | 4.12% | 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% | 5.95% | ||
Debt maturity date | Jan. 6, 2025 | Jan. 6, 2025 | |||
Hilton San Diego Bayfront mortgage | |||||
Notes Payable | |||||
Debt maturity date | Dec. 9, 2020 | Dec. 9, 2020 | |||
Number of hotels provided as collateral | property | 1 | 1 | 1 | ||
Number of extension periods available for secured debt | 2 | 2 | |||
Term of extension period for secured debt | 1 year | 1 year | |||
Total notes payable | $ 220,000 | $ 220,000 | $ 220,000 | ||
Hilton San Diego Bayfront mortgage | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
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% | |||
Unsecured Term Loans | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | |||
Unsecured Term Loans | Minimum | Base Rate | |||||
Notes Payable | |||||
Debt instrument variable rate floor | 0.25% | ||||
Unsecured Term Loans | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | 2.20% | ||
$85.0 million term loan | |||||
Notes Payable | |||||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 | |||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | 1.591% | ||
Term loan total interest rate, including effect of swap agreement | 2.941% | 3.791% | 2.941% | ||
Total notes payable | $ 85,000 | $ 85,000 | $ 85,000 | ||
$85.0 million term loan | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | |||
$85.0 million term loan | Minimum | Base Rate | |||||
Notes Payable | |||||
Debt instrument variable rate floor | 0.25% | ||||
$85.0 million term loan | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |||
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 | |||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | 1.853% | ||
Term loan total interest rate, including effect of swap agreement | 3.203% | 4.053% | 3.203% | ||
Total notes payable | $ 100,000 | $ 100,000 | $ 100,000 | ||
$100.0 million term loan | Minimum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | |||
$100.0 million term loan | Minimum | Base Rate | |||||
Notes Payable | |||||
Debt instrument variable rate floor | 0.25% | ||||
$100.0 million term loan | Maximum | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | |||
Senior Notes | |||||
Notes Payable | |||||
Increase (decrease) in interest rate (as a percent) | 1.00% | (0.25%) | |||
Leverage ratio | 5 | ||||
Series A Senior Notes | |||||
Notes Payable | |||||
Fixed interest rate (as a percent) | 4.69% | 5.69% | 4.69% | ||
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 | |||
Total notes payable | $ 120,000 | $ 90,000 | $ 120,000 | ||
Series B Senior Notes | |||||
Notes Payable | |||||
Fixed interest rate (as a percent) | 4.79% | 5.79% | 4.79% | ||
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 | |||
Total notes payable | $ 120,000 | $ 115,000 | $ 120,000 | ||
Not designated as hedging instrument | Interest Rate Cap | Hilton San Diego Bayfront mortgage | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate, description of reference rate | one-month LIBOR | ||||
Not designated as hedging instrument | Interest Rate Swap | $85.0 million term loan | |||||
Notes Payable | |||||
Fixed rate under interest rate swap agreement | 1.591% | ||||
Not designated as hedging instrument | Interest Rate Swap | $85.0 million term loan | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate, description of reference rate | one-month LIBOR | ||||
Not designated as hedging instrument | Interest Rate Swap | $100.0 million term loan | |||||
Notes Payable | |||||
Fixed rate under interest rate swap agreement | 1.853% | ||||
Not designated as hedging instrument | Interest Rate Swap | $100.0 million term loan | London Interbank Offered Rate (LIBOR) | |||||
Notes Payable | |||||
Interest rate, description of reference rate | one-month LIBOR |
Notes payable - Narrative (Deta
Notes payable - Narrative (Details) | Sep. 30, 2020USD ($)property | Aug. 28, 2020USD ($) | Aug. 11, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2020USD ($)property | Jul. 31, 2020 | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2021 | Sep. 30, 2020USD ($)property | Sep. 30, 2020USD ($)property | Dec. 31, 2019USD ($) | Jun. 30, 2021USD ($) | Nov. 01, 2020property |
Debt Instruments [Line Items] | ||||||||||||||
Note Payable | $ 934,673,000 | $ 974,863,000 | $ 934,673,000 | $ 934,673,000 | $ 934,673,000 | $ 974,863,000 | ||||||||
Loss on extinguishment of debt | $ 210,000 | 210,000 | ||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Proceeds from credit facility | 300,000,000 | |||||||||||||
Payments on credit facility | $ 300,000,000 | |||||||||||||
Number of hotels whose operations have been temporarily suspended due to COVID-19 | property | 15 | 15 | 15 | 15 | 3 | |||||||||
Number of hotels owned by the Company | property | 19 | 19 | 19 | 19 | 19 | |||||||||
Unsecured revolving credit facility | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Proceeds from credit facility | $ 300,000,000 | |||||||||||||
Payments on credit facility | $ 11,200,000 | $ 38,800,000 | $ 250,000,000 | |||||||||||
Outstanding balance on credit facility | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||||
Debt Covenant Preferred Stock Authorization | $ 200,000,000 | |||||||||||||
Debt Covenant Cash Available For Acquisitions | 250,000,000 | |||||||||||||
Debt covenant cash available for capital improvements | $ 110,000,000 | |||||||||||||
Remaining borrowing capacity available | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | $ 500,000,000 | ||||||||||
Credit facility expiration date | Apr. 14, 2023 | |||||||||||||
Number of credit facility extension periods | 2 | 2 | 2 | 2 | ||||||||||
Term of extension period for unsecured debt | 6 months | |||||||||||||
Credit facility expiration date after extensions | Apr. 14, 2024 | |||||||||||||
$85.0 million term loan | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Note Payable | $ 85,000,000 | $ 85,000,000 | $ 85,000,000 | $ 85,000,000 | $ 85,000,000 | $ 85,000,000 | ||||||||
Term loan total interest rate, including effect of swap agreement | 3.791% | 2.941% | 3.791% | 3.791% | 3.791% | 2.941% | ||||||||
Debt Instrument, Debt Default | ||||||||||||||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 | ||||||||||||
$100.0 million term loan | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Note Payable | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | $ 100,000,000 | ||||||||
Term loan total interest rate, including effect of swap agreement | 4.053% | 3.203% | 4.053% | 4.053% | 4.053% | 3.203% | ||||||||
Debt Instrument, Debt Default | ||||||||||||||
Debt maturity date | Jan. 31, 2023 | Jan. 31, 2023 | ||||||||||||
Senior Notes | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Increase (decrease) in interest rate (as a percent) | 1.00% | (0.25%) | ||||||||||||
Leverage ratio | 5 | |||||||||||||
Payments on unsecured debt | $ 35,000,000 | |||||||||||||
Loss on extinguishment of debt | 200,000 | |||||||||||||
Series A Senior Notes | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Note Payable | $ 90,000,000 | $ 120,000,000 | $ 90,000,000 | $ 90,000,000 | $ 90,000,000 | $ 120,000,000 | ||||||||
Fixed interest rate (as a percent) | 5.69% | 4.69% | 5.69% | 5.69% | 5.69% | 4.69% | ||||||||
Payments on unsecured debt | $ 30,000,000 | |||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 | ||||||||||||
Series B Senior Notes | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Note Payable | $ 115,000,000 | $ 120,000,000 | $ 115,000,000 | $ 115,000,000 | $ 115,000,000 | $ 120,000,000 | ||||||||
Fixed interest rate (as a percent) | 5.79% | 4.79% | 5.79% | 5.79% | 5.79% | 4.79% | ||||||||
Payments on unsecured debt | $ 5,000,000 | |||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 | ||||||||||||
Hilton Times Square mortgage | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Debt default description | The Company has not made its debt payments for the $77.2 million loan secured by the Hilton Times Square since April 2020; although the Company continues to accrue interest expense on the debt, including $1.7 million in default interest and penalties accrued as of September 30, 2020. While the Company is required to record such default interest and penalties, recovery by the lender of these expenses is non-recourse to the Company, and the Company does not intend to pay the default interest and penalties as part of the ultimate resolution with the lender. The loan matures on November 1, 2020, and is included in current portion of notes payable on the Company’s consolidated balance sheets as of September 30, 2020 and December 31, 2019. In addition, the hotel’s ground leases require monthly payments be paid to the respective landlords, which the Company has not made since March 2020 (see Notes 8 and 9). As such, the Company has received default notices from its lender and landlords, and is working with the lender to explore various options in advance of the November 2020 debt maturity, which could include a negotiated transfer of the hotel to the lender or its landlords or a discounted payoff of the loan. | |||||||||||||
Amount of debt in default | $ 77,200,000 | $ 77,200,000 | $ 77,200,000 | $ 77,200,000 | ||||||||||
Default interest expense | $ 900,000 | $ 1,700,000 | ||||||||||||
Debt maturity date | Nov. 1, 2020 | |||||||||||||
London Interbank Offered Rate (LIBOR) | Unsecured Term Loans | Minimum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||||||||||||
London Interbank Offered Rate (LIBOR) | Unsecured Term Loans | Maximum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | 2.20% | |||||||||||
London Interbank Offered Rate (LIBOR) | $85.0 million term loan | Minimum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||||||||||||
London Interbank Offered Rate (LIBOR) | $85.0 million term loan | Maximum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | ||||||||||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||||||||||||
London Interbank Offered Rate (LIBOR) | $100.0 million term loan | Minimum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||||||||||||
London Interbank Offered Rate (LIBOR) | $100.0 million term loan | Maximum | ||||||||||||||
Debt Instrument, Debt Default | ||||||||||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | ||||||||||||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | ||||||||||||
Base Rate | Unsecured Term Loans | Minimum | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Debt instrument variable rate floor | 0.25% | |||||||||||||
Base Rate | Unsecured Term Loans | Unsecured revolving credit facility | Minimum | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Debt instrument variable rate floor | 0.25% | |||||||||||||
Base Rate | $85.0 million term loan | Minimum | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Debt instrument variable rate floor | 0.25% | |||||||||||||
Base Rate | $100.0 million term loan | Minimum | ||||||||||||||
Debt Instruments [Line Items] | ||||||||||||||
Debt instrument variable rate floor | 0.25% |
Notes Payable - Interest Expens
Notes Payable - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Deferred Financing Costs and Losses on Extinguishment of Debt | ||||
Payments of deferred financing costs | $ 2,698 | |||
Loss on extinguishment of debt | $ 210 | 210 | ||
Interest Expense | ||||
Interest expense on debt and finance lease obligations | 12,612 | $ 11,406 | 35,377 | $ 34,399 |
Noncash interest on derivatives and finance lease obligations, net | (762) | 1,155 | 5,534 | 6,908 |
Amortization of deferred financing costs | 892 | 698 | 2,288 | 2,094 |
Total interest expense | 12,742 | $ 13,259 | 43,199 | $ 43,401 |
Hilton Times Square mortgage | ||||
Interest Expense | ||||
Default interest expense | $ 900 | $ 1,700 |
Other Current Liabilities and_3
Other Current Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands | 5 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Other Current Liabilities | ||
Property, sales and use taxes payable | $ 13,971 | $ 16,074 |
Accrued interest | 7,462 | 6,735 |
Advance deposits | 12,845 | 18,001 |
Management fees payable | 92 | 1,527 |
Other | 2,192 | 4,618 |
Total other current liabilities | 36,562 | 46,955 |
Other Liabilities | ||
Deferred revenue | 7,252 | 5,225 |
Deferred property taxes due under PILOT program, noncurrent | 8,830 | 8,887 |
Interest rate derivative liabilities | 6,505 | 1,081 |
Other | 3,322 | 2,943 |
Total other liabilities | $ 25,909 | 18,136 |
Hilton Times Square | ||
Other Liabilities | ||
Variable rate percentage for current property taxes due under PILOT program | 90.00% | |
Deferred property taxes due under PILOT program, current | $ 2,200 | $ 1,400 |
Current property taxes due under PILOT program, current | $ 1,200 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Finance Lease | |||
Finance lease right-of-use asset, net | $ 46,549 | $ 47,652 | |
Finance lease obligation, current | $ 1 | $ 1 | |
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | |
Finance lease obligation, less current portion | $ 15,569 | $ 15,570 | |
Total finance lease obligation | $ 15,570 | 15,571 | |
Weighted average remaining finance lease term | 77 years | ||
Weighted average finance lease discount rate | 9.00% | ||
Operating Leases | |||
Operating lease right-of-use assets, net | $ 39,489 | 60,629 | |
Operating lease obligations, current | $ 4,972 | $ 4,743 | |
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | |
Operating lease obligations, less current portion | $ 45,939 | $ 49,691 | |
Total operating lease obligations | $ 50,911 | 54,434 | |
Weighted average remaining operating lease term | 25 years | ||
Weighted average operating lease discount rate | 5.40% | ||
Asset Impairment Charges | |||
Impairment losses | $ 133,466 | ||
Hilton Times Square | |||
Operating Leases | |||
Operating lease obligations, current | $ 2,400 | ||
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | ||
Operating Lease Right-Of-Use Asset | Hilton Times Square | |||
Asset Impairment Charges | |||
Impairment losses | $ 18,500 | ||
Buildings and improvements | |||
Finance Lease | |||
Finance lease, right-of-use asset, gross | $ 58,799 | 58,799 | |
Finance lease, right-of-use asset, accumulated amortization | (12,250) | (11,147) | |
Finance lease right-of-use asset, net | $ 46,549 | $ 47,652 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Lease Cost | ||||||
Amortization of right-of-use assets | $ 368 | $ 367 | $ 1,103 | $ 1,103 | ||
Interest on lease obligations | 351 | 647 | 1,053 | 1,936 | ||
Operating lease cost | 2,681 | 1,729 | 6,751 | 5,187 | ||
Variable lease cost | 15 | 1,958 | 39 | 4,878 | ||
Total lease cost | 3,415 | $ 4,701 | 8,946 | $ 13,104 | ||
Operating lease obligations, current | $ 4,972 | $ 4,972 | $ 4,972 | $ 4,743 | ||
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | ||
Hilton Times Square | ||||||
Lease Cost | ||||||
Operating lease variable rent percentage | 90.00% | |||||
Operating lease obligations, current | $ 2,400 | $ 2,400 | $ 2,400 | |||
Accounts payable and accrued expenses | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent | us-gaap:AccountsPayableAndOtherAccruedLiabilitiesCurrent |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash Payments on Lease Obligations | ||
Operating cash flows used for operating leases | $ 4,923 | $ 5,365 |
Changes in operating assets and liabilities: | ||
Changes in operating lease right-of-use assets | 2,606 | 2,564 |
Changes in operating lease obligations | (3,529) | (3,087) |
Operating lease right-of-use assets and liabilities | $ (923) | (523) |
Right-Of-Use Assets Obtained in Exchange for Lease Obligations | ||
Operating leases | $ 45,677 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - $ / shares | Sep. 30, 2020 | Dec. 31, 2019 | May 31, 2016 | Mar. 31, 2016 |
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% | 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% | 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) - Share Repurchase Program - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Sep. 30, 2020 | Feb. 29, 2020 | Feb. 28, 2017 | |
Stockholders' equity | ||||
Repurchase Program, remaining authorized capacity | $ 400 | |||
Maximum | ||||
Stockholders' equity | ||||
Stock Repurchase Program, maximum amount authorized for repurchase | $ 500 | $ 300 | ||
Common Stock | ||||
Stockholders' equity | ||||
Repurchase Program, number of shares repurchased (in shares) | 9,770,081 | |||
Repurchase Program, value of shares repurchased | $ 103.9 | |||
Preferred Stock | ||||
Stockholders' equity | ||||
Repurchase Program, number of shares repurchased (in shares) | 0 |
Long-Term Incentive Plan (Detai
Long-Term Incentive Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Compensation Expense and Forfeitures | ||||
Capitalized compensation cost related to shares issued to design and construction employees | $ 376 | $ 304 | ||
Restricted Shares | ||||
Compensation Expense and Forfeitures | ||||
Amortization Expense, including forfeitures | $ 2,238 | $ 2,146 | 7,509 | 7,168 |
Capitalized compensation cost related to shares issued to design and construction employees | $ 100 | $ 100 | $ 400 | $ 300 |
Restricted Shares | Minimum | ||||
Long-Term Incentive Plan | ||||
Vesting period | 3 years |
Commitments and Contingencies -
Commitments and Contingencies - Management Fees, Franchise Costs and Renovation Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic and incentive management fees incurred | ||||
Other property-level expenses | $ 9,528 | $ 30,913 | $ 47,109 | $ 97,768 |
License and Franchise Agreements | ||||
Franchise assessments | 555 | 6,391 | 5,349 | 18,005 |
Franchise royalties | 108 | 2,215 | 988 | 6,019 |
Franchise costs | 663 | 8,606 | 6,337 | 24,024 |
Basic management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 624 | 7,767 | 6,179 | 23,404 |
Incentive management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 511 | 6,041 | ||
Total basic and incentive management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 624 | $ 8,278 | $ 6,179 | $ 29,445 |
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 | $ 17,400 | $ 17,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details) $ in Thousands | Sep. 30, 2020USD ($)property | Sep. 30, 2020USD ($)property | Sep. 30, 2020USD ($)property | Sep. 30, 2020USD ($)property | Nov. 01, 2020property |
Concentration of Risk | |||||
Number of hotels held for investment | 19 | 19 | 19 | 19 | |
Number of hotels owned by the Company | 19 | 19 | 19 | 19 | 19 |
Other | |||||
Wages, benefits and severance for furloughed or terminated employees | $ | $ 11,300 | $ 28,900 | |||
Severance costs | $ | 6,800 | $ 8,000 | |||
Term of unsecured environmental indemnities | 0 years | ||||
Damage limitation of unsecured environmental indemnities | $ | $ 0 | ||||
Payments on credit facility | $ | 300,000 | ||||
Percentage of total rooms | California | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 32.00% | ||||
Percentage of total rooms | Florida | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 10.00% | ||||
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) | 15.00% | ||||
Percentage of total revenue generated by hotels | California | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 35.00% | ||||
Percentage of total revenue generated by hotels | Florida | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 12.00% | ||||
Percentage of total revenue generated by hotels | Hawaii | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 13.00% | ||||
Percentage of total revenue generated by hotels | Illinois | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 6.00% | ||||
Percentage of total revenue generated by hotels | Massachusetts | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 14.00% | ||||
Financial standby letter of credit | |||||
Other | |||||
Outstanding irrevocable letters of credit | $ | $ 400 | $ 400 | 400 | $ 400 | |
Payments on credit facility | $ | $ 0 | ||||
Hotel owned by the Company | California | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | 5 | 5 | 5 | 5 | |
Hotel owned by the Company | Florida | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | 2 | 2 | 2 | 2 | |
Hotel owned by the Company | Hawaii | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | 1 | 1 | 1 | 1 | |
Hotel owned by the Company | Illinois | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | 3 | 3 | 3 | 3 | |
Hotel owned by the Company | Massachusetts | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | 2 | 2 | 2 | 2 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event [Member] - Hilton Times Square mortgage | Nov. 01, 2020 |
Debt Instrument, Debt Default | |
Debt default description | The debt secured by the Hilton Times Square matured on November 1, 2020. At this time the debt remains in default and the Company continues to work with its lender to come to a resolution. |
Debt maturity date | Nov. 1, 2020 |