Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 30, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2021 | |
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 | 216,238,328 | |
Entity Central Index Key | 0001295810 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
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 | Mar. 31, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 320,275 | $ 368,406 |
Restricted cash | 44,982 | 47,733 |
Accounts receivable, net | 13,163 | 8,566 |
Prepaid expenses and other current assets | 11,434 | 10,440 |
Total current assets | 389,854 | 435,145 |
Investment in hotel properties, net | 2,439,963 | 2,461,498 |
Finance lease right-of-use asset, net | 45,814 | 46,182 |
Operating lease right-of-use assets, net | 25,196 | 26,093 |
Deferred financing costs, net | 3,879 | 4,354 |
Other assets, net | 11,968 | 12,445 |
Total assets | 2,916,674 | 2,985,717 |
Current liabilities: | ||
Accounts payable and accrued expenses | 34,292 | 37,326 |
Accrued payroll and employee benefits | 13,435 | 15,392 |
Dividends and distributions payable | 3,207 | 3,208 |
Other current liabilities | 31,013 | 32,606 |
Current portion of notes payable, net | 2,295 | 2,261 |
Total current liabilities | 84,242 | 90,793 |
Notes payable, less current portion, net | 741,922 | 742,528 |
Finance lease obligation, less current portion | 15,569 | 15,569 |
Operating lease obligations, less current portion | 28,649 | 29,954 |
Other liabilities | 14,679 | 17,494 |
Total liabilities | 885,061 | 896,338 |
Commitments and contingencies (Note 11) | ||
Equity | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 216,175,084 shares issued and outstanding at March 31, 2021 and 215,593,401 shares issued and outstanding at December 31, 2020 | 2,162 | 2,156 |
Additional paid in capital | 2,585,455 | 2,586,108 |
Retained earnings | 860,454 | 913,766 |
Cumulative dividends and distributions | (1,646,593) | (1,643,386) |
Total stockholders' equity | 1,991,478 | 2,048,644 |
Noncontrolling interest in consolidated joint venture | 40,135 | 40,735 |
Total equity | 2,031,613 | 2,089,379 |
Total liabilities and equity | 2,916,674 | 2,985,717 |
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 | Mar. 31, 2021 | Dec. 31, 2020 |
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) | 216,175,084 | 215,593,401 |
Common stock, shares outstanding (in shares) | 216,175,084 | 215,593,401 |
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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
REVENUES | ||
Revenues | $ 50,633 | $ 191,212 |
OPERATING EXPENSES | ||
Advertising and promotion | 4,875 | 12,462 |
Repairs and maintenance | 5,545 | 10,049 |
Utilities | 4,151 | 5,842 |
Franchise costs | 991 | 5,336 |
Property tax, ground lease and insurance | 14,661 | 20,051 |
Other property-level expenses | 10,477 | 28,845 |
Corporate overhead | 7,177 | 7,394 |
Depreciation and amortization | 30,770 | 36,746 |
Impairment losses | 115,366 | |
Total operating expenses | 98,071 | 331,860 |
Interest and other income (loss) | (379) | 2,306 |
Interest expense | (7,649) | (17,507) |
Gain on extinguishment of debt | 222 | |
Loss before income taxes | (55,244) | (155,849) |
Income tax provision, net | (43) | (6,670) |
NET LOSS | (55,287) | (162,519) |
Loss from consolidated joint venture attributable to noncontrolling interest | 1,975 | 458 |
Preferred stock dividends | (3,207) | (3,207) |
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (56,519) | $ (165,268) |
Basic and diluted per share amounts: | ||
Basic and diluted loss attributable to common stockholders per common share (in dollars per share) | $ (0.26) | $ (0.75) |
Basic and diluted weighted average common shares outstanding (in shares) | 214,438 | 221,036 |
Room | ||
REVENUES | ||
Revenues | $ 34,219 | $ 127,400 |
OPERATING EXPENSES | ||
Expenses | 11,640 | 44,245 |
Food and beverage | ||
REVENUES | ||
Revenues | 4,971 | 47,990 |
OPERATING EXPENSES | ||
Expenses | 5,979 | 41,760 |
Other operating | ||
REVENUES | ||
Revenues | 11,443 | 15,822 |
OPERATING EXPENSES | ||
Expenses | $ 1,805 | $ 3,764 |
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, 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 | (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, 2020 | $ 115,000 | $ 75,000 | $ 2,156 | 2,586,108 | 913,766 | (1,643,386) | 40,735 | 2,089,379 | ||||
Beginning Balance (in shares) at Dec. 31, 2020 | 4,600,000 | 3,000,000 | 215,593,401 | |||||||||
Increase (Decrease) in Stockholders' Equity | ||||||||||||
Amortization of deferred stock compensation | 2,869 | 2,869 | ||||||||||
Issuance of restricted common stock, net | $ 6 | (3,522) | (3,516) | |||||||||
Issuance of restricted common stock, net (in shares) | 581,683 | |||||||||||
Preferred stock dividends and dividends payable | $ (1,998) | $ (1,998) | $ (1,209) | $ (1,209) | ||||||||
Contribution from noncontrolling interest | 1,375 | 1,375 | ||||||||||
Net loss | (53,312) | (1,975) | (55,287) | |||||||||
Ending Balance at Mar. 31, 2021 | $ 115,000 | $ 75,000 | $ 2,162 | $ 2,585,455 | $ 860,454 | $ (1,646,593) | $ 40,135 | $ 2,031,613 | ||||
Ending Balance (in shares) at Mar. 31, 2021 | 4,600,000 | 3,000,000 | 216,175,084 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Common stock distributions and distributions payable, per share (in dollars per share) | $ 0.05 | |
Series E Cumulative Redeemable Preferred Stock | ||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.434375 | 0.434375 |
Series F Cumulative Redeemable Preferred Stock | ||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.403125 | $ 0.403125 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (55,287) | $ (162,519) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Bad debt expense | 16 | 318 |
Loss on sale of assets | 70 | |
Gain on extinguishment of debt | (222) | |
Noncash interest on derivatives | (869) | 6,080 |
Depreciation | 30,760 | 36,736 |
Amortization of franchise fees and other intangibles | 10 | 10 |
Amortization of deferred financing costs | 735 | 699 |
Amortization of deferred stock compensation | 2,752 | 2,207 |
Impairment losses | 115,366 | |
Deferred income taxes, net | 7,415 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,613) | 11,757 |
Prepaid expenses and other assets | (776) | (247) |
Accounts payable and other liabilities | (8,463) | (12,226) |
Accrued payroll and employee benefits | (1,957) | (7,860) |
Operating lease right-of-use assets and obligations | (331) | (261) |
Net cash used in operating activities | (38,175) | (2,525) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Disposition deposit | 3,500 | |
Acquisition of hotel property | (346) | |
Renovations and additions to hotel properties and other assets | (6,526) | (17,016) |
Net cash used in investing activities | (6,526) | (13,862) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repurchases of outstanding common stock | (103,894) | |
Repurchases of common stock for employee tax obligations | (3,516) | (3,992) |
Proceeds from credit facility | 300,000 | |
Payments on notes payable | (832) | (1,898) |
Dividends and distributions paid | (3,208) | (135,872) |
Distributions to noncontrolling interest | (2,000) | |
Contribution from noncontrolling interest | 1,375 | |
Net cash (used in) provided by financing activities | (6,181) | 52,344 |
Net (decrease) increase in cash and cash equivalents and restricted cash | (50,882) | 35,957 |
Cash and cash equivalents and restricted cash, beginning of period | 416,139 | 864,973 |
Cash and cash equivalents and restricted cash, end of period | 365,257 | 900,930 |
Supplemental Disclosure of Cash Flow Information | ||
Cash and cash equivalents | 320,275 | 847,445 |
Restricted cash | 44,982 | 53,485 |
Cash and cash equivalents and restricted cash, end of period | 365,257 | 900,930 |
Cash paid for interest | 10,696 | 13,091 |
Cash (refunds) paid for income taxes, net | (28) | 77 |
Operating cash flows used for operating leases | 1,664 | 1,875 |
Changes in operating lease right-of-use assets | 897 | 897 |
Changes in operating lease obligations | (1,228) | (1,158) |
Changes in operating lease right-of-use assets and lease obligations, net | (331) | (261) |
Supplemental Disclosure of Noncash Investing and Financing Activities | ||
Accrued renovations and additions to hotel properties and other assets | 5,402 | 9,382 |
Amortization of deferred stock compensation - construction activities | 117 | 117 |
Dividends and distributions payable | 3,207 | $ 13,984 |
Hilton Times Square | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Gain on extinguishment of debt | $ (200) |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021, the Company had interests in 17 hotels (the “17 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”) 6 Crestline Hotels & Resorts 2 Highgate Hotels L.P. and an affiliate 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 March 31, 2021 17 In March 2020, the novel coronavirus (“COVID-19”) cancellations, corporate and government travel restrictions and an unprecedented decline in hotel demand. As a result of these cancellations, restrictions and the health concerns related to COVID-19, the Company determined that it was in t temporarily suspend operations at 14 of the 17 Hotels, 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 April 1, 2021 Renaissance Westchester April 4, 2020 The Company is unable to predict when its remaining temporarily suspended hotel will resume its operations, or if those hotels that have resumed operations will be temporarily suspended again. The extent of the effects of the pandemic on the Company’s business and the hotel industry at large, however, will ultimately depend on future developments, including, but not limited to, the duration and severity of the pandemic, how quickly and successfully effective vaccines and therapies are distributed and administered, as well as 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 | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020, and for the three months ended March 31, 2021 and 2020, 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 year ended December 31, 2020, filed with the Securities and Exchange Commission on February 12, 2021. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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. 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 per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2021 2020 Numerator: Net loss $ (55,287) $ (162,519) Loss from consolidated joint venture attributable to noncontrolling interest 1,975 458 Preferred stock dividends (3,207) (3,207) Distributions paid on unvested restricted stock compensation — (69) Numerator for basic and diluted loss attributable to common stockholders $ (56,519) $ (165,337) Denominator: Weighted average basic and diluted common shares outstanding 214,438 221,036 Basic and diluted loss attributable to common stockholders per common share $ (0.26) $ (0.75) 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 months ended March 31, 2021 and 2020, 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. In addition, restricted cash as of March 31, 2021 and December 31, 2020 includes $11.1 million and $11.6 million, respectively, held in escrow related to certain current and potential employee-related obligations in accordance with the assignment-in-lieu agreement between the Company and the mortgage holder of one of the Company’s former hotels (see Note 11). 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 either the sale is completed or subject to the terms of the related purchase and sale agreement. 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 of the assets 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 one or more discounted cash flow analyses 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 own the hotel and the estimated proceeds from the disposition of the hotel. When multiple cash flow analyses are prepared, a probability is assigned to each cash flow analysis based upon the estimated likelihood of each scenario occurring. 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 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, no hotels were impaired during the first quarter of 2021. 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. The Company has elected to not separate lease components from nonlease components, resulting in the Company accounting for lease and nonlease components as one single lease component. 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, no operating lease ROU assets were impaired during the first quarter of 2021. 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 March 31, 2021 and December 31, 2020, 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 the previously agreed upon daily rate. 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 typically recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is generally the period in which 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. The revenue is recognized when 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 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 from customers at its hotels at the time of purchase, which 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): March 31, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 7,336 $ 8,110 Contract liabilities (2) $ 16,985 $ 16,815 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. During the three months ended March 31, 2021 and 2020, the Company recognized approximately $0.8 million and $10.2 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 one single reportable segment, hotel ownership. New Accounting Standards and Accounting Changes 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 | 3 Months Ended |
Mar. 31, 2021 | |
Investment in Hotel Properties | |
Investment in Hotel Properties | 3. Investment in Hotel Properties Investment in hotel properties, net consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Land $ 571,212 $ 571,212 Buildings and improvements 2,527,654 2,523,750 Furniture, fixtures and equipment 432,493 431,918 Intangible assets 21,192 21,192 Franchise fees 743 743 Construction in progress 19,933 15,831 Investment in hotel properties, gross 3,573,227 3,564,646 Accumulated depreciation and amortization (1,133,264) (1,103,148) Investment in hotel properties, net $ 2,439,963 $ 2,461,498 |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Derivatives | 3 Months Ended |
Mar. 31, 2021 | |
Fair Value Measurements and Interest Rate Derivatives | |
Fair Value Measurements and Interest Rate Derivatives | 4. Fair Value Measurements and Interest Rate Derivatives Fair Value Measurements As of March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020, 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 following table presents the Company’s assets measured at fair value on a recurring and nonrecurring basis at March 31, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 March 31, 2021 (unaudited): Interest rate cap derivative $ — $ — $ — $ — Total assets measured at fair value at March 31, 2021 $ — $ — $ — $ — December 31, 2020: Renaissance Westchester (1) $ 14,125 $ — $ 14,125 $ — Interest rate cap derivative — — — — Total assets measured at fair value at December 31, 2020 $ 14,125 $ — $ 14,125 $ — (1) The fair market value of the Renaissance Westchester is included in investment in hotel properties, net on the Company’s consolidated balance sheet at December 31, 2020. The following table presents the Company’s liabilities measured at fair value on a recurring and nonrecurring basis at March 31, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 March 31, 2021 (unaudited): Interest rate swap derivatives $ 4,841 $ — $ 4,841 $ — Total liabilities measured at fair value at March 31, 2021 $ 4,841 $ — $ 4,841 $ — December 31, 2020: Interest rate swap derivatives $ 5,710 $ — $ 5,710 $ — Total liabilities measured at fair value at December 31, 2020 $ 5,710 $ — $ 5,710 $ — Interest Rate Derivatives The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at March 31, 2021 (unaudited) and December 31, 2020 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional March 31, December 31, Hedged Debt Type Rate Index Date Date Amount 2021 2020 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 $ — $ — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (1,759) (2,100) $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (3,082) (3,610) $ (4,841) $ (5,710) (1) The fair values of the cap agreement and both swap agreements are included in other assets, net and other liabilities, respectively, on the accompanying consolidated balance sheets as of both March 31, 2021 and December 31, 2020. Noncash changes in the fair values of the Company’s interest rate derivatives resulted in (decreases) increases to interest expense for the three months ended March 31, 2021 and 2020 as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Noncash interest on derivatives $ (869) $ 6,080 Fair Value of Debt As of both March 31, 2021 and December 31, 2020, 70.6% 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 March 31, 2021 (unaudited) and December 31, 2020 were as follows (in thousands): March 31, 2021 December 31, 2020 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 747,113 $ 715,580 $ 747,945 $ 715,042 (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 | 3 Months Ended |
Mar. 31, 2021 | |
Other Assets. | |
Other Assets | 5. Other Assets Other assets, net consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Property and equipment, net $ 6,510 $ 6,767 Deferred rent on straight-lined third-party tenant leases 2,636 2,819 Other receivables 2,596 2,633 Other 226 226 Total other assets, net $ 11,968 $ 12,445 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable | |
Notes Payable | 6. Notes Payable Notes payable consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 4.15% ; maturing at dates ranging from December 11, 2024 through January 6, 2025 . The notes are collateralized by first deeds of trust on two hotel properties at both March 31, 2021 and December 31, 2020. $ 137,113 $ 137,945 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points, resulting in effective interest rates of 1.163% and 1.192% as of March 31, 2021 and December 31, 2020, respectively; matures on December 9, 2021 with two one-year options to extend, which the Company intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, 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 3.941% . Matures on September 3, 2022 . 85,000 85,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, 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 4.203% . Matures on January 31, 2023 . 100,000 100,000 Unsecured Series A Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.94% . Matures on January 10, 2026 . 90,000 90,000 Unsecured Series B Senior Notes requiring semi-annual payments of interest only, bearing interest at 6.04 %. Matures on January 10, 2028 . 115,000 115,000 Total notes payable $ 747,113 $ 747,945 Current portion of notes payable $ 3,339 $ 3,305 Less: current portion of deferred financing costs (1,044) (1,044) Carrying value of current portion of notes payable $ 2,295 $ 2,261 Notes payable, less current portion $ 743,774 $ 744,640 Less: long-term portion of deferred financing costs (1,852) (2,112) Carrying value of notes payable, less current portion $ 741,922 $ 742,528 Certain of the Company’s loan agreements contain cash trap provisions that may be triggered if the performance of the hotels securing the loans decline. In January 2021, these provisions were triggered for the loans secured by the Embassy Suites La Jolla and the JW Marriott New Orleans. As of March 31, 2021, the Company had no amount outstanding on the revolving portion of its credit facility, with $500.0 million of capacity available for additional borrowing under the facility. The Company’s ability to draw on the revolving portion of the credit facility may be subject to the Company’s compliance with various financial covenants on its secured and unsecured debt. The Company is subject to various financial covenants on its secured and unsecured debt. In July and December 2020, the Company completed amendments to its unsecured debt, consisting of its revolving credit facility, term loans and senior notes (the “Unsecured Debt Amendments”). Among other provisions, the Unsecured Debt Amendments include a waiver of required financial covenants through the end of the first quarter of 2022, with quarterly testing resuming for the period ending March 31, 2022. The Company can elect to terminate the covenant relief period early, subject to the achievement of the original financial covenants at the end of any quarterly measurement period. Interest Expense Total interest incurred and expensed on the notes payable and finance lease obligation was as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Interest expense on debt and finance lease obligation $ 7,783 $ 10,728 Noncash interest on derivatives (869) 6,080 Amortization of deferred financing costs 735 699 Total interest expense $ 7,649 $ 17,507 |
Other Current Liabilities and O
Other Current Liabilities and Other Liabilities | 3 Months Ended |
Mar. 31, 2021 | |
Other Current Liabilities and Other Liabilities | |
Other Current Liabilities and Other Liabilities | 7. Other Current Liabilities and Other Liabilities Other Current Liabilities Other current liabilities consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Property, sales and use taxes payable $ 9,826 $ 10,134 Accrued interest 3,999 6,914 Advance deposits 14,583 13,341 Management fees payable 355 169 Other 2,250 2,048 Total other current liabilities $ 31,013 $ 32,606 Other Liabilities Other liabilities consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Deferred revenue $ 6,767 $ 7,911 Interest rate swap derivatives 4,841 5,710 Other 3,071 3,873 Total other liabilities $ 14,679 $ 17,494 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2021 | |
Leases | |
Leases | 8. Leases The Company has both finance and operating leases for ground, building, office and airspace leases, maturing in dates ranging from 2028 through 2097, including expected renewal options. Including all renewal options available to the Company, the lease maturity date extends to 2147. Leases were included on the Company’s consolidated balance sheets as follows (in thousands): March 31, December 31, 2021 2020 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (12,985) (12,617) Right-of-use asset, net $ 45,814 $ 46,182 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,569 15,569 Total lease obligation $ 15,570 $ 15,570 Remaining lease term 77 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 25,196 $ 26,093 Accounts payable and accrued expenses $ 5,105 $ 5,028 Lease obligations, less current portion 28,649 29,954 Total lease obligations $ 33,754 $ 34,982 Weighted average remaining lease term, including reasonably certain extension options (1) 7 years Weighted average discount rate 5.1 % (1) The weighted average remaining term including all available extension options is approximately 35 years . The components of lease expense were as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Finance lease cost: Amortization of right-of-use asset $ 368 $ 368 Interest on lease obligation 351 351 Operating lease cost 1,320 1,729 Variable lease cost (1) — 713 Total lease cost $ 2,039 $ 3,161 (1) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 9. 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. As of March 11, 2021, the Series E preferred stock is 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. As of March 31, 2021, no shares have been redeemed. 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 2021, the Company’s board of directors reauthorized the Company’s existing stock repurchase program, allowing the Company to acquire up to $500.0 million of the Company’s common and preferred stock. The 2021 stock repurchase program has no stated expiration date. As of March 31, 2021, the Company has not repurchased any common or preferred stock under the 2021 stock repurchase program. Future repurchases will depend on various factors, including the Company’s capital needs, restrictions under its various financing agreements and the price of the Company’s common and preferred stock. In February 2017, the Company entered into separate “At the Market” Agreements (the “ATM Agreements”) with each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, J.P. Morgan Securities LLC and Wells Fargo Securities, LLC. In accordance with the terms of the ATM Agreements, the Company may from time to time offer and sell shares of its common stock having an aggregate offering price of up to $300.0 million. In February 2020, the board of directors reauthorized the Company’s ATM Agreements, or new similar agreements, allowing the Company to issue common stock up to an aggregate offering amount of $300.0 million. No shares of common stock were issued under the ATM Agreements during the three months ended March 31, 2021, and as of March 31, 2021, the Company has $300.0 million available for sale under the ATM Agreements. |
Long-Term Incentive Plan
Long-Term Incentive Plan | 3 Months Ended |
Mar. 31, 2021 | |
Long-Term Incentive Plan | |
Long-Term Incentive Plan | 10. 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 months ended March 31, 2021 and 2020 were as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Amortization expense, including forfeitures $ 2,752 $ 2,207 Capitalized compensation cost (1) $ 117 $ 117 (1) 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. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. 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 months ended March 31, 2021 and 2020 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Basic management fees $ 1,303 $ 5,391 Incentive management fees — — Total basic and incentive management fees $ 1,303 $ 5,391 License and Franchise Agreements The Company has entered into license and franchise agreements related to certain of its hotels. The license and franchise agreements require the Company to, among other things, pay monthly fees that are calculated based on specified percentages of certain revenues. The license and franchise agreements generally contain specific standards for, and restrictions and limitations on, the operation and maintenance of the hotels which are established by the franchisors to maintain uniformity in the system created by each such franchisor. Such standards generally regulate the appearance of the hotel, quality and type of goods and services offered, signage and protection of trademarks. Compliance with such standards may from time to time require the Company to make significant expenditures for capital improvements. Total license and franchise fees incurred by the Company during the three months ended March 31, 2021 and 2020 were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Franchise assessments (1) $ 868 $ 4,418 Franchise royalties (2) 123 918 Total franchise costs $ 991 $ 5,336 (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 March 31, 2021, 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 March 31, 2021 totaled $23.4 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 March 31, 2021, 12 of the 17 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 4 30 % 32 % Florida 2 11 % 19 % Hawaii 1 6 % 17 % Illinois 3 13 % 5 % Massachusetts 2 16 % 13 % Other In accordance with the assignment-in-lieu agreement executed in December 2020 between the Company and the mortgage holder of the Hilton Times Square, the Company was required to retain approximately $11.6 million related to certain current and potential employee-related obligations (the “potential obligation”), which was included in restricted cash on the accompanying consolidated balance sheet at December 31, 2020. During the first quarter of 2021, $0.5 million was paid to the hotel’s employees and an additional $0.2 million was paid to the Company in April 2021 due to a reassessment of the potential obligation, resulting in $11.1 million remaining in restricted cash on the accompanying consolidated balance sheet at March 31, 2021, and a $0.2 million gain on extinguishment of debt recognized during the three months ended March 31, 2021. The reassessed potential obligation will continue to be held in escrow until it is resolved. The accompanying consolidated balance sheets include other current liabilities of $10.9 million and $11.6 million as of March 31, 2021 and December 31, 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 March 31, 2021, the Company had $0.3 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 the letters of credit in the event of a contractual default by the Company relating to each respective obligation. No draws have been made through March 31, 2021. 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 | 3 Months Ended |
Mar. 31, 2021 | |
Subsequent Event | |
Subsequent Events | 12. Subsequent Event On April 22, 2021, the Company purchased the fee-simple interest in the Montage Healdsburg, located in California, for $265.0 million, excluding closing costs. The acquisition was funded through the issuance of 2,650,000 shares of Series G Cumulative Redeemable Preferred Stock (the “Series G preferred stock”) with an aggregate liquidation preference of $66.3 million, as well as $198.8 million of cash on hand. The Series G preferred stock, which is callable at the liquidation preference plus accrued and unpaid dividends by the Company at any time, will accrue dividends at an initial rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s investment in the hotel. The Series G preferred stock is not convertible into any other security. The hotel will continue to be managed by Montage Hotels and Resorts. The Company is currently evaluating the accounting for this acquisition, including assessing the fair values of the assets acquired and the liabilities assumed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of March 31, 2021 and December 31, 2020, and for the three months ended March 31, 2021 and 2020, 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 year ended December 31, 2020, filed with the Securities and Exchange Commission on February 12, 2021. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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. 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 per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2021 2020 Numerator: Net loss $ (55,287) $ (162,519) Loss from consolidated joint venture attributable to noncontrolling interest 1,975 458 Preferred stock dividends (3,207) (3,207) Distributions paid on unvested restricted stock compensation — (69) Numerator for basic and diluted loss attributable to common stockholders $ (56,519) $ (165,337) Denominator: Weighted average basic and diluted common shares outstanding 214,438 221,036 Basic and diluted loss attributable to common stockholders per common share $ (0.26) $ (0.75) 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 months ended March 31, 2021 and 2020, 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. In addition, restricted cash as of March 31, 2021 and December 31, 2020 includes $11.1 million and $11.6 million, respectively, held in escrow related to certain current and potential employee-related obligations in accordance with the assignment-in-lieu agreement between the Company and the mortgage holder of one of the Company’s former hotels (see Note 11). 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 either the sale is completed or subject to the terms of the related purchase and sale agreement. |
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 of the assets 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 one or more discounted cash flow analyses 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 own the hotel and the estimated proceeds from the disposition of the hotel. When multiple cash flow analyses are prepared, a probability is assigned to each cash flow analysis based upon the estimated likelihood of each scenario occurring. 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 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, no hotels were impaired during the first quarter of 2021. 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. The Company has elected to not separate lease components from nonlease components, resulting in the Company accounting for lease and nonlease components as one single lease component. 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, no operating lease ROU assets were impaired during the first quarter of 2021. |
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 March 31, 2021 and December 31, 2020, 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 the previously agreed upon daily rate. 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 typically recognized as revenue in the period the Company determines it is probable that a significant reversal in the amount of revenue recognized will not occur, which is generally the period in which 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. The revenue is recognized when 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 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 from customers at its hotels at the time of purchase, which 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): March 31, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 7,336 $ 8,110 Contract liabilities (2) $ 16,985 $ 16,815 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. During the three months ended March 31, 2021 and 2020, the Company recognized approximately $0.8 million and $10.2 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 one single reportable segment, hotel ownership. |
New Accounting Standards and Accounting Changes | New Accounting Standards and Accounting Changes 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) | 3 Months Ended |
Mar. 31, 2021 | |
Organization and Description of Business | |
Schedule of number of hotels managed by each third-party manager | As of March 31, 2021, the Company had interests in 17 hotels (the “17 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”) 6 Crestline Hotels & Resorts 2 Highgate Hotels L.P. and an affiliate 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 March 31, 2021 17 |
Schedule of hotels whose operations have been temporarily suspended due to COVID-19 | In March 2020, the novel coronavirus (“COVID-19”) cancellations, corporate and government travel restrictions and an unprecedented decline in hotel demand. As a result of these cancellations, restrictions and the health concerns related to COVID-19, the Company determined that it was in t temporarily suspend operations at 14 of the 17 Hotels, 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 April 1, 2021 Renaissance Westchester April 4, 2020 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of contract assets and liabilities | Trade receivables and contract liabilities consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 7,336 $ 8,110 Contract liabilities (2) $ 16,985 $ 16,815 (1) Trade receivables are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in either other current liabilities or other liabilities on the accompanying consolidated balance sheets. |
Schedule of computation of basic and diluted (loss) earnings per common share | The following table sets forth the computation of basic and diluted loss per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2021 2020 Numerator: Net loss $ (55,287) $ (162,519) Loss from consolidated joint venture attributable to noncontrolling interest 1,975 458 Preferred stock dividends (3,207) (3,207) Distributions paid on unvested restricted stock compensation — (69) Numerator for basic and diluted loss attributable to common stockholders $ (56,519) $ (165,337) Denominator: Weighted average basic and diluted common shares outstanding 214,438 221,036 Basic and diluted loss attributable to common stockholders per common share $ (0.26) $ (0.75) |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | Investment in hotel properties, net consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Land $ 571,212 $ 571,212 Buildings and improvements 2,527,654 2,523,750 Furniture, fixtures and equipment 432,493 431,918 Intangible assets 21,192 21,192 Franchise fees 743 743 Construction in progress 19,933 15,831 Investment in hotel properties, gross 3,573,227 3,564,646 Accumulated depreciation and amortization (1,133,264) (1,103,148) Investment in hotel properties, net $ 2,439,963 $ 2,461,498 |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 March 31, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 March 31, 2021 (unaudited): Interest rate cap derivative $ — $ — $ — $ — Total assets measured at fair value at March 31, 2021 $ — $ — $ — $ — December 31, 2020: Renaissance Westchester (1) $ 14,125 $ — $ 14,125 $ — Interest rate cap derivative — — — — Total assets measured at fair value at December 31, 2020 $ 14,125 $ — $ 14,125 $ — (1) The fair market value of the Renaissance Westchester is included in investment in hotel properties, net on the Company’s consolidated balance sheet at December 31, 2020. |
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 March 31, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 March 31, 2021 (unaudited): Interest rate swap derivatives $ 4,841 $ — $ 4,841 $ — Total liabilities measured at fair value at March 31, 2021 $ 4,841 $ — $ 4,841 $ — December 31, 2020: Interest rate swap derivatives $ 5,710 $ — $ 5,710 $ — Total liabilities measured at fair value at December 31, 2020 $ 5,710 $ — $ 5,710 $ — |
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 March 31, 2021 (unaudited) and December 31, 2020 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional March 31, December 31, Hedged Debt Type Rate Index Date Date Amount 2021 2020 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 $ — $ — $85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (1,759) (2,100) $100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (3,082) (3,610) $ (4,841) $ (5,710) (1) The fair values of the cap agreement and both swap agreements are included in other assets, net and other liabilities, respectively, on the accompanying consolidated balance sheets as of both March 31, 2021 and December 31, 2020. |
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 months ended March 31, 2021 and 2020 as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Noncash interest on derivatives $ (869) $ 6,080 |
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 March 31, 2021 (unaudited) and December 31, 2020 were as follows (in thousands): March 31, 2021 December 31, 2020 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 747,113 $ 715,580 $ 747,945 $ 715,042 (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) | 3 Months Ended |
Mar. 31, 2021 | |
Other Assets. | |
Schedule of other assets | Other assets, net consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Property and equipment, net $ 6,510 $ 6,767 Deferred rent on straight-lined third-party tenant leases 2,636 2,819 Other receivables 2,596 2,633 Other 226 226 Total other assets, net $ 11,968 $ 12,445 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Notes payable requiring payments of interest and principal, with fixed rates ranging from 4.12% to 4.15% ; maturing at dates ranging from December 11, 2024 through January 6, 2025 . The notes are collateralized by first deeds of trust on two hotel properties at both March 31, 2021 and December 31, 2020. $ 137,113 $ 137,945 Note payable requiring payments of interest only, bearing a blended rate of one-month LIBOR plus 105 basis points, resulting in effective interest rates of 1.163% and 1.192% as of March 31, 2021 and December 31, 2020, respectively; matures on December 9, 2021 with two one-year options to extend, which the Company intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, 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 3.941% . Matures on September 3, 2022 . 85,000 85,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, 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 4.203% . Matures on January 31, 2023 . 100,000 100,000 Unsecured Series A Senior Notes requiring semi-annual payments of interest only, bearing interest at 5.94% . Matures on January 10, 2026 . 90,000 90,000 Unsecured Series B Senior Notes requiring semi-annual payments of interest only, bearing interest at 6.04 %. Matures on January 10, 2028 . 115,000 115,000 Total notes payable $ 747,113 $ 747,945 Current portion of notes payable $ 3,339 $ 3,305 Less: current portion of deferred financing costs (1,044) (1,044) Carrying value of current portion of notes payable $ 2,295 $ 2,261 Notes payable, less current portion $ 743,774 $ 744,640 Less: long-term portion of deferred financing costs (1,852) (2,112) Carrying value of notes payable, less current portion $ 741,922 $ 742,528 |
Schedule of interest expense | Total interest incurred and expensed on the notes payable and finance lease obligation was as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Interest expense on debt and finance lease obligation $ 7,783 $ 10,728 Noncash interest on derivatives (869) 6,080 Amortization of deferred financing costs 735 699 Total interest expense $ 7,649 $ 17,507 |
Other Current Liabilities and_2
Other Current Liabilities and Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Other Current Liabilities and Other Liabilities | |
Schedule of other current liabilities | Other current liabilities consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Property, sales and use taxes payable $ 9,826 $ 10,134 Accrued interest 3,999 6,914 Advance deposits 14,583 13,341 Management fees payable 355 169 Other 2,250 2,048 Total other current liabilities $ 31,013 $ 32,606 |
Schedule of other liabilities | Other liabilities consisted of the following (in thousands): March 31, December 31, 2021 2020 (unaudited) Deferred revenue $ 6,767 $ 7,911 Interest rate swap derivatives 4,841 5,710 Other 3,071 3,873 Total other liabilities $ 14,679 $ 17,494 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Leases | |
Schedule of supplemental balance sheet information related to leases | Leases were included on the Company’s consolidated balance sheets as follows (in thousands): March 31, December 31, 2021 2020 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (12,985) (12,617) Right-of-use asset, net $ 45,814 $ 46,182 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,569 15,569 Total lease obligation $ 15,570 $ 15,570 Remaining lease term 77 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 25,196 $ 26,093 Accounts payable and accrued expenses $ 5,105 $ 5,028 Lease obligations, less current portion 28,649 29,954 Total lease obligations $ 33,754 $ 34,982 Weighted average remaining lease term, including reasonably certain extension options (1) 7 years Weighted average discount rate 5.1 % (1) The weighted average remaining term including all available extension options is approximately 35 years . |
Lease costs | The components of lease expense were as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Finance lease cost: Amortization of right-of-use asset $ 368 $ 368 Interest on lease obligation 351 351 Operating lease cost 1,320 1,729 Variable lease cost (1) — 713 Total lease cost $ 2,039 $ 3,161 (1) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds. |
Long-Term Incentive Plan (Table
Long-Term Incentive Plan (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
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 months ended March 31, 2021 and 2020 were as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Amortization expense, including forfeitures $ 2,752 $ 2,207 Capitalized compensation cost (1) $ 117 $ 117 (1) 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. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies | |
Schedule of basic and incentive management fees | Total basic and incentive management fees incurred by the Company during the three months ended March 31, 2021 and 2020 were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Basic management fees $ 1,303 $ 5,391 Incentive management fees — — Total basic and incentive management fees $ 1,303 $ 5,391 |
Schedule of license and franchise costs | Total license and franchise fees incurred by the Company during the three months ended March 31, 2021 and 2020 were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2021 2020 Franchise assessments (1) $ 868 $ 4,418 Franchise royalties (2) 123 918 Total franchise costs $ 991 $ 5,336 (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 March 31, 2021, 12 of the 17 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 4 30 % 32 % Florida 2 11 % 19 % Hawaii 1 6 % 17 % Illinois 3 13 % 5 % Massachusetts 2 16 % 13 % |
Organization and Description _3
Organization and Description of Business (Details) | 3 Months Ended |
Mar. 31, 2021property | |
Organization and Description of Business | |
Number of hotels owned by the Company | 17 |
Number of hotels reopened after being temporarily suspended due to COVID-19 | 13 |
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 | 6 |
Crestline Hotels & Resorts | |
Organization and Description of Business | |
Number of hotels owned by the Company | 2 |
Highgate Hotels L.P. and an affiliate | |
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 |
Date operations reopened after being temporarily suspended due to COVID-19 | Apr. 1, 2021 |
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 - (Details) | 3 Months Ended | ||
Mar. 31, 2021USD ($)property | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | |
Investments in Hotel Properties | |||
Number of hotels impaired | property | 0 | ||
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 | 0 | ||
Revenue Recognition | |||
Trade receivables, net | $ 7,336,000 | $ 8,110,000 | |
Contract liabilities | 16,985,000 | $ 16,815,000 | |
Deferred revenue recognized | $ 800,000 | $ 10,200,000 | |
Segment Reporting | |||
Number of operating segments | 1 | ||
Hilton San Diego Bayfront | |||
Stockholders' Equity Attributable to Noncontrolling Interest | |||
Noncontrolling interest percentage in Hilton San Diego Bayfront | 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 | |||
Segment Reporting | |||
Secured Debt | $ 220,000,000 | ||
Hilton Times Square | |||
Restricted Cash | |||
Restricted Cash | $ 11,100,000 | $ 11,600,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Net loss | $ (55,287) | $ (162,519) |
Loss from consolidated joint venture attributable to noncontrolling interest | 1,975 | 458 |
Preferred stock dividends | (3,207) | (3,207) |
Distributions paid on unvested restricted stock compensation | (69) | |
Numerator for basic and diluted loss attributable to common stockholders | $ (56,519) | $ (165,337) |
Denominator: | ||
Weighted average basic and diluted common shares outstanding (in shares) | 214,438 | 221,036 |
Basic and diluted loss attributable to common stockholders per common share (in dollars per share) | $ (0.26) | $ (0.75) |
Investment in Hotel Propertie_2
Investment in Hotel Properties (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Investment in Hotel Properties | ||
Land | $ 571,212 | $ 571,212 |
Buildings and improvements | 2,527,654 | 2,523,750 |
Furniture, fixtures and equipment | 432,493 | 431,918 |
Intangible assets | 21,192 | 21,192 |
Franchise fees | 743 | 743 |
Construction in progress | 19,933 | 15,831 |
Investment in hotel properties, gross | 3,573,227 | 3,564,646 |
Accumulated depreciation and amortization | (1,133,264) | (1,103,148) |
Investment in hotel properties, net | $ 2,439,963 | $ 2,461,498 |
Fair Value Measurements and I_3
Fair Value Measurements and Interest Rate Derivatives - Fair Value Measurements (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Liabilities: | ||
Interest rate derivative liabilities | $ 4,841 | $ 5,710 |
Level 2 | ||
Assets: | ||
Total assets | 14,125 | |
Liabilities: | ||
Total liabilities | 4,841 | 5,710 |
Level 2 | Interest Rate Swap | ||
Liabilities: | ||
Interest rate derivative liabilities | 4,841 | 5,710 |
Level 2 | Renaissance Westchester | ||
Assets: | ||
Asset measured at fair value | 14,125 | |
Total at the end of the period | ||
Assets: | ||
Total assets | 14,125 | |
Liabilities: | ||
Total liabilities | 4,841 | 5,710 |
Total at the end of the period | Interest Rate Swap | ||
Liabilities: | ||
Interest rate derivative liabilities | $ 4,841 | 5,710 |
Total at the end of the period | Renaissance Westchester | ||
Assets: | ||
Asset measured at fair value | $ 14,125 |
Fair Value Measurements and I_4
Fair Value Measurements and Interest Rate Derivatives - Interest Rate Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Interest Rate Derivatives | |||
Estimated Fair Value of Liabilities | $ (4,841) | $ (5,710) | |
Fair value of interest rate derivatives | (4,841) | $ (5,710) | |
Noncash interest on derivatives | $ (869) | $ 6,080 | |
$85.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | |
$100.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | |
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 | Dec. 9, 2020 | |
Interest rate derivative maturity date | Dec. 15, 2021 | Dec. 15, 2021 | |
Notional amount | $ 220,000 | ||
Interest Rate Swap | Not designated as hedging instrument | $85.0 million term loan | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | |
Effective date | Oct. 29, 2015 | Oct. 29, 2015 | |
Interest rate derivative maturity date | Sep. 2, 2022 | Sep. 2, 2022 | |
Notional amount | $ 85,000 | ||
Estimated Fair Value of Liabilities | $ (1,759) | $ (2,100) | |
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 | Jan. 29, 2016 | |
Interest rate derivative maturity date | Jan. 31, 2023 | Jan. 31, 2023 | |
Notional amount | $ 100,000 | ||
Estimated Fair Value of Liabilities | $ (3,082) | $ (3,610) | |
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) | 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 | 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 | one-month LIBOR | |
London Interbank Offered Rate (LIBOR) | Interest Rate Swap | Not designated as hedging instrument | $100.0 million term loan | |||
Interest Rate Derivatives | |||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Fair Value Measurements and I_5
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Percentage of Debt Bearing Fixed Interest Rates | 70.60% | 70.60% |
Total notes payable | $ 747,113 | $ 747,945 |
Level 3 | ||
Fair value of debt | $ 715,580 | $ 715,042 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Other assets, net | ||
Property and equipment, net | $ 6,510 | $ 6,767 |
Deferred rent on straight-lined third-party tenant leases | 2,636 | 2,819 |
Other receivables | 2,596 | 2,633 |
Other | 226 | 226 |
Total other assets, net | $ 11,968 | $ 12,445 |
Notes Payable (Details)
Notes Payable (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021USD ($)property | Dec. 31, 2020USD ($)property | |
Notes Payable | ||
Total notes payable | $ 747,113 | $ 747,945 |
Current portion of notes payable | 3,339 | 3,305 |
Less: current portion of deferred financing costs | (1,044) | (1,044) |
Current portion of notes payable, net | 2,295 | 2,261 |
Notes payable, less current portion | 743,774 | 744,640 |
Less: long-term portion of deferred financing costs | (1,852) | (2,112) |
Carrying value of notes payable, less current portion | $ 741,922 | $ 742,528 |
Notes payable maturing in various years | ||
Notes Payable | ||
Number of hotels provided as collateral | property | 2 | 2 |
Total notes payable | $ 137,113 | $ 137,945 |
Notes payable maturing in various years | Minimum | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 4.12% | 4.12% |
Debt maturity date | Dec. 11, 2024 | Dec. 11, 2024 |
Notes payable maturing in various years | Maximum | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 4.15% | 4.15% |
Debt maturity date | Jan. 6, 2025 | Jan. 6, 2025 |
Hilton San Diego Bayfront mortgage | ||
Notes Payable | ||
Debt maturity date | Dec. 9, 2021 | Dec. 9, 2021 |
Number of hotels provided as collateral | property | 1 | 1 |
Number of extension periods available for secured debt | 2 | 2 |
Term of extension period for secured debt | 1 year | 1 year |
Total interest rate, including effect of derivative | 1.163% | 1.192% |
Total notes payable | $ 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% |
$85.0 million term loan | ||
Notes Payable | ||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 |
Total interest rate, including effect of derivative | 3.941% | 3.941% |
Fixed rate under interest rate swap agreement | 1.591% | 1.591% |
Total notes payable | $ 85,000 | $ 85,000 |
$85.0 million term loan | Not designated as hedging instrument | Interest Rate Swap | ||
Notes Payable | ||
Derivative, Notional Amount | $ 85,000 | |
Fixed rate under interest rate swap agreement | 1.591% | 1.591% |
$85.0 million term loan | Not designated as hedging instrument | Interest Rate Swap | London Interbank Offered Rate (LIBOR) | ||
Notes Payable | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
$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% | 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 |
Total interest rate, including effect of derivative | 4.203% | 4.203% |
Fixed rate under interest rate swap agreement | 1.853% | 1.853% |
Total notes payable | $ 100,000 | $ 100,000 |
$100.0 million term loan | Not designated as hedging instrument | Interest Rate Swap | ||
Notes Payable | ||
Derivative, Notional Amount | $ 100,000 | |
Fixed rate under interest rate swap agreement | 1.853% | 1.853% |
$100.0 million term loan | Not designated as hedging instrument | Interest Rate Swap | London Interbank Offered Rate (LIBOR) | ||
Notes Payable | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
$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% | 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% |
Series A Senior Notes | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 5.94% | 5.94% |
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 |
Total notes payable | $ 90,000 | $ 90,000 |
Series B Senior Notes | ||
Notes Payable | ||
Fixed interest rate (as a percent) | 6.04% | 6.04% |
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 |
Total notes payable | $ 115,000 | $ 115,000 |
Notes payable - Narrative (Deta
Notes payable - Narrative (Details) - Unsecured revolving credit facility | Mar. 31, 2021USD ($) |
Unsecured Debt | |
Outstanding balance on credit facility | $ 0 |
Remaining borrowing capacity available | $ 500,000,000 |
Notes Payable - Interest Expens
Notes Payable - Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Interest Expense | ||
Interest expense on debt and finance lease obligation | $ 7,783 | $ 10,728 |
Noncash interest on derivatives | (869) | 6,080 |
Amortization of deferred financing costs | 735 | 699 |
Total interest expense | $ 7,649 | $ 17,507 |
Other Current Liabilities and_3
Other Current Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Other Current Liabilities | ||
Property, sales and use taxes payable | $ 9,826 | $ 10,134 |
Accrued interest | 3,999 | 6,914 |
Advance deposits | 14,583 | 13,341 |
Management fees payable | 355 | 169 |
Other | 2,250 | 2,048 |
Total other current liabilities | 31,013 | 32,606 |
Other Liabilities | ||
Deferred revenue | 6,767 | 7,911 |
Interest rate derivative liabilities | 4,841 | 5,710 |
Other | 3,071 | 3,873 |
Total other liabilities | $ 14,679 | $ 17,494 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Finance Lease | ||
Finance lease right-of-use asset, net | $ 45,814 | $ 46,182 |
Finance lease obligation, current | $ 1 | $ 1 |
Accounts payable and accrued expenses | Accounts payable and accrued expenses | Accounts payable and accrued expenses |
Finance lease obligation, less current portion | $ 15,569 | $ 15,569 |
Total finance lease obligation | $ 15,570 | 15,570 |
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 | $ 25,196 | 26,093 |
Operating lease obligations, current | $ 5,105 | $ 5,028 |
Accounts payable and accrued expenses | Accounts payable and accrued expenses | Accounts payable and accrued expenses |
Operating lease obligations, less current portion | $ 28,649 | $ 29,954 |
Total operating lease obligations | $ 33,754 | 34,982 |
Weighted average remaining operating lease term | 7 years | |
Weighted average operating lease discount rate | 5.10% | |
Weighted average remaining operating lease term including all available extensions | 35 years | |
Buildings and improvements | ||
Finance Lease | ||
Finance lease, right-of-use asset, gross | $ 58,799 | 58,799 |
Finance lease, right-of-use asset, accumulated amortization | (12,985) | (12,617) |
Finance lease right-of-use asset, net | $ 45,814 | $ 46,182 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Lease Cost | ||
Amortization of right-of-use asset | $ 368 | $ 368 |
Interest on lease obligation | 351 | 351 |
Operating lease cost | 1,320 | 1,729 |
Variable lease cost | 713 | |
Total lease cost | $ 2,039 | $ 3,161 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 | May 31, 2016 | Mar. 31, 2016 | Mar. 31, 2021 |
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 | $ 25 | |
Redemption price (in dollars per share) | $ 25 | ||||
Number of shares redeemed (in shares) | 0 | ||||
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 | $ 25 | |
Redemption price (in dollars per share) | $ 25 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 31, 2021 | Feb. 28, 2021 | Feb. 29, 2020 | Feb. 28, 2017 | |
Maximum | Share Repurchase Program | ||||
Stockholders' equity | ||||
Stock Repurchase Program, maximum amount authorized for repurchase | $ 500 | |||
Common Stock | Share Repurchase Program | ||||
Stockholders' equity | ||||
Repurchase Program, number of shares repurchased (in shares) | 0 | |||
Common Stock | At The Market | ||||
Stockholders' equity | ||||
ATM Program, maximum amount authorized for issuance | $ 300 | $ 300 | ||
ATM Program, number of shares sold or issued (in shares) | 0 | |||
ATM Program, remaining amount authorized for issuance | $ 300 | |||
Preferred Stock | Share Repurchase Program | ||||
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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Compensation Expense and Forfeitures | ||
Capitalized compensation cost related to shares issued to design and construction employees | $ 117 | $ 117 |
Restricted Shares | ||
Compensation Expense and Forfeitures | ||
Amortization Expense, including forfeitures | 2,752 | 2,207 |
Capitalized compensation cost related to shares issued to design and construction employees | $ 117 | $ 117 |
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 | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Basic and incentive management fees incurred | ||
Other property-level expenses | $ 10,477 | $ 28,845 |
License and Franchise Agreements | ||
Franchise assessments | 868 | 4,418 |
Franchise royalties | 123 | 918 |
Franchise costs | 991 | 5,336 |
Basic management fees | ||
Basic and incentive management fees incurred | ||
Other property-level expenses | 1,303 | 5,391 |
Total basic and incentive management fees | ||
Basic and incentive management fees incurred | ||
Other property-level expenses | $ 1,303 | $ 5,391 |
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 | $ 23,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details) $ in Thousands | Mar. 31, 2021USD ($)property | Mar. 31, 2021USD ($)property | Mar. 31, 2021USD ($)property | Dec. 31, 2020USD ($) |
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 17 | 17 | 17 | |
Other | ||||
Gain on extinguishment of debt | $ 222 | |||
Term of unsecured environmental indemnities | 0 years | |||
Damage limitation of unsecured environmental indemnities | $ 0 | |||
Hilton Times Square | ||||
Other | ||||
Loss contingency accrued balance | $ 10,900 | 10,900 | $ 10,900 | $ 11,600 |
Loss contingency payment | 500 | |||
Loss contingency increase (decrease) | (200) | |||
Restricted Cash | $ 11,100 | 11,100 | $ 11,100 | $ 11,600 |
Gain on extinguishment of debt | 200 | |||
Percentage of total rooms | California | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 30.00% | |||
Percentage of total rooms | Florida | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 11.00% | |||
Percentage of total rooms | Hawaii | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 6.00% | |||
Percentage of total rooms | Illinois | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 13.00% | |||
Percentage of total rooms | Massachusetts | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 16.00% | |||
Percentage of total revenue generated by hotels | California | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 32.00% | |||
Percentage of total revenue generated by hotels | Florida | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 19.00% | |||
Percentage of total revenue generated by hotels | Hawaii | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 17.00% | |||
Percentage of total revenue generated by hotels | Illinois | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 5.00% | |||
Percentage of total revenue generated by hotels | Massachusetts | ||||
Concentration of Risk | ||||
Concentration risk (as a percent) | 13.00% | |||
Financial standby letter of credit | ||||
Other | ||||
Outstanding irrevocable letters of credit | $ 300 | 300 | $ 300 | |
Payments on credit facility | $ 0 | |||
Hotel owned by the Company | California | ||||
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 4 | 4 | 4 | |
Hotel owned by the Company | Florida | ||||
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 2 | 2 | 2 | |
Hotel owned by the Company | Hawaii | ||||
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 1 | 1 | 1 | |
Hotel owned by the Company | Illinois | ||||
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 3 | 3 | 3 | |
Hotel owned by the Company | Massachusetts | ||||
Concentration of Risk | ||||
Number of hotels owned by the Company | property | 2 | 2 | 2 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event [Member] - Montage Healdsburg $ in Millions | Apr. 22, 2021USD ($)shares |
Business Combination, Description [Abstract] | |
Purchase price of acqured entity | $ 265 |
Cash paid to acquire entity | $ 198.8 |
Series G Cumulative Redeemable Preferred Stock | |
Business Combination, Description [Abstract] | |
Preferred Stock, Shares Issued | shares | 2,650,000 |
Value of preferred stock issued to acquire entity | $ 66.3 |