Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 02, 2021 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 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 | 219,333,783 | |
Entity Central Index Key | 0001295810 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | SHO | |
Security Exchange Name | NYSE | |
Series H Cumulative Redeemable Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Series H Cumulative Redeemable Preferred Stock, $0.01 par value | |
Trading Symbol | SHO.PRH | |
Security Exchange Name | NYSE | |
Series I Cumulative Redeemable Preferred Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Series I Cumulative Redeemable Preferred Stock, $0.01 par value | |
Trading Symbol | SHO.PRI | |
Security Exchange Name | NYSE |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 179,487 | $ 368,406 |
Restricted cash | 42,124 | 47,733 |
Accounts receivable, net | 28,349 | 8,566 |
Prepaid expenses and other current assets | 18,512 | 10,440 |
Assets held for sale, net | 13,759 | |
Total current assets | 282,231 | 435,145 |
Investment in hotel properties, net | 2,669,169 | 2,461,498 |
Finance lease right-of-use asset, net | 45,079 | 46,182 |
Operating lease right-of-use assets, net | 23,971 | 26,093 |
Deferred financing costs, net | 2,928 | 4,354 |
Other assets, net | 11,217 | 12,445 |
Total assets | 3,034,595 | 2,985,717 |
Current liabilities: | ||
Accounts payable and accrued expenses | 48,740 | 37,326 |
Accrued payroll and employee benefits | 18,057 | 15,392 |
Dividends and distributions payable | 3,112 | 3,208 |
Other current liabilities | 57,129 | 32,606 |
Current portion of notes payable, net | 87,396 | 2,261 |
Liabilities of assets held for sale | 5,490 | |
Total current liabilities | 219,924 | 90,793 |
Notes payable, less current portion, net | 655,713 | 742,528 |
Finance lease obligation, less current portion | 15,568 | 15,569 |
Operating lease obligations, less current portion | 26,432 | 29,954 |
Other liabilities | 14,495 | 17,494 |
Total liabilities | 932,132 | 896,338 |
Commitments and contingencies (Note 12) | ||
Equity | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 219,333,783 shares issued and outstanding at September 30, 2021 and 215,593,401 shares issued and outstanding at December 31, 2020 | 2,193 | 2,156 |
Additional paid in capital | 2,629,148 | 2,586,108 |
Retained earnings | 810,075 | 913,766 |
Cumulative dividends and distributions | (1,660,675) | (1,643,386) |
Total stockholders' equity | 2,061,991 | 2,048,644 |
Noncontrolling interest in consolidated joint venture | 40,472 | 40,735 |
Total equity | 2,102,463 | 2,089,379 |
Total liabilities and equity | 3,034,595 | 2,985,717 |
Series E Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | 115,000 | |
Series F Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | $ 75,000 | |
Series G Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | 66,250 | |
Series H Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | 115,000 | |
Series I Cumulative Redeemable Preferred Stock | ||
Equity | ||
Cumulative Redeemable Preferred Stock | $ 100,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 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) | 219,333,783 | 215,593,401 |
Common stock, shares outstanding (in shares) | 219,333,783 | 215,593,401 |
Series E Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.95% | |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 0 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 0 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | |
Series F Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.45% | |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 0 | 3,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 0 | 3,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | |
Series G Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 2,650,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 2,650,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | |
Series H Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.125% | |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 4,600,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,600,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | |
Series I Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 5.70% | |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 4,000,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,000,000 | 0 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
REVENUES | ||||
Revenues | $ 167,421 | $ 28,910 | $ 335,264 | $ 230,546 |
OPERATING EXPENSES | ||||
Advertising and promotion | 8,883 | 3,895 | 20,800 | 20,447 |
Repairs and maintenance | 10,001 | 6,075 | 22,678 | 21,499 |
Utilities | 6,164 | 4,170 | 14,998 | 13,238 |
Franchise costs | 4,181 | 663 | 7,468 | 6,337 |
Property tax, ground lease and insurance | 17,528 | 20,800 | 47,821 | 59,975 |
Other property-level expenses | 21,633 | 9,528 | 48,177 | 47,109 |
Corporate overhead | 15,422 | 6,582 | 32,066 | 22,414 |
Depreciation and amortization | 32,585 | 33,005 | 96,084 | 104,290 |
Impairment losses | 1,014 | 1,014 | 133,466 | |
Total operating expenses | 181,600 | 107,476 | 416,820 | 554,628 |
Interest and other income (loss) | 2 | 139 | (356) | 2,751 |
Interest expense | (7,983) | (12,742) | (23,697) | (43,199) |
Gain on sale of assets | 189 | 189 | ||
Gain (loss) on extinguishment of debt | 61 | (210) | 371 | (210) |
Loss before income taxes | (22,099) | (91,190) | (105,238) | (364,551) |
Income tax (provision) benefit, net | (25) | 83 | (91) | (6,575) |
NET LOSS | (22,124) | (91,107) | (105,329) | (371,126) |
(Income) loss from consolidated joint venture attributable to noncontrolling interest | (933) | 1,816 | 1,638 | 4,436 |
Preferred stock dividends and redemption charges | (6,287) | (3,208) | (17,289) | (9,622) |
LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ (29,344) | $ (92,499) | $ (120,980) | $ (376,312) |
Basic and diluted per share amounts: | ||||
Basic and diluted loss attributable to common stockholders per common share (in dollars per share) | $ (0.13) | $ (0.43) | $ (0.56) | $ (1.74) |
Basic and diluted weighted average common shares outstanding (in shares) | 217,709 | 214,257 | 215,765 | 216,498 |
Room | ||||
REVENUES | ||||
Revenues | $ 118,061 | $ 16,266 | $ 236,877 | $ 147,535 |
OPERATING EXPENSES | ||||
Expenses | 32,106 | 13,715 | 66,692 | 65,037 |
Food and beverage | ||||
REVENUES | ||||
Revenues | 27,338 | 2,109 | 47,547 | 50,312 |
OPERATING EXPENSES | ||||
Expenses | 27,440 | 7,748 | 49,088 | 54,533 |
Other operating | ||||
REVENUES | ||||
Revenues | 22,022 | 10,535 | 50,840 | 32,699 |
OPERATING EXPENSES | ||||
Expenses | $ 4,643 | $ 1,295 | $ 9,934 | $ 6,283 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Series E Cumulative Redeemable Preferred StockPreferred Stock | Series E Cumulative Redeemable Preferred StockAdditional Paid In Capital | 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 StockAdditional Paid In Capital | Series F Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series F Cumulative Redeemable Preferred Stock | Series G Cumulative Redeemable Preferred StockPreferred Stock | Series G Cumulative Redeemable Preferred StockAdditional Paid In Capital | Series G Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series G Cumulative Redeemable Preferred Stock | Series H Cumulative Redeemable Preferred StockPreferred Stock | Series H Cumulative Redeemable Preferred StockAdditional Paid In Capital | Series H Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series H Cumulative Redeemable Preferred Stock | Series I Cumulative Redeemable Preferred StockPreferred Stock | Series I Cumulative Redeemable Preferred StockAdditional Paid In Capital | Series I Cumulative Redeemable Preferred StockCumulative dividends and distributions | Series I Cumulative Redeemable Preferred Stock | 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 | $ 190,000 | $ 2,249 | $ 2,683,913 | $ 1,318,455 | $ (1,619,779) | $ 46,233 | $ 2,621,071 | ||||||||||||||||||||
Beginning Balance (in shares) at Dec. 31, 2019 | 7,600,000 | 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 | $ 190,000 | $ 2,155 | 2,578,445 | 1,156,394 | (1,633,763) | 43,775 | 2,337,006 | ||||||||||||||||||||
Ending Balance (in shares) at Mar. 31, 2020 | 7,600,000 | 215,541,134 | |||||||||||||||||||||||||
Beginning Balance at Dec. 31, 2019 | $ 190,000 | $ 2,249 | 2,683,913 | 1,318,455 | (1,619,779) | 46,233 | 2,621,071 | ||||||||||||||||||||
Beginning Balance (in shares) at Dec. 31, 2019 | 7,600,000 | 224,855,351 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Net loss | (371,126) | ||||||||||||||||||||||||||
Ending Balance at Sep. 30, 2020 | $ 190,000 | $ 2,156 | 2,584,005 | 951,765 | (1,640,178) | 40,297 | 2,128,045 | ||||||||||||||||||||
Ending Balance (in shares) at Sep. 30, 2020 | 7,600,000 | 215,635,550 | |||||||||||||||||||||||||
Beginning Balance at Mar. 31, 2020 | $ 190,000 | $ 2,155 | 2,578,445 | 1,156,394 | (1,633,763) | 43,775 | 2,337,006 | ||||||||||||||||||||
Beginning Balance (in shares) at Mar. 31, 2020 | 7,600,000 | 215,541,134 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Amortization of deferred stock compensation | 3,193 | 3,193 | |||||||||||||||||||||||||
Issuance of restricted common stock, net | $ 1 | (1) | |||||||||||||||||||||||||
Issuance of restricted common stock, net (in shares) | 94,416 | ||||||||||||||||||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,209) | (1,209) | |||||||||||||||||||||||
Contribution from noncontrolling interest | 500 | 500 | |||||||||||||||||||||||||
Net loss | (115,338) | (2,162) | (117,500) | ||||||||||||||||||||||||
Ending Balance at Jun. 30, 2020 | $ 190,000 | $ 2,156 | 2,581,637 | 1,041,056 | (1,636,970) | 42,113 | 2,219,992 | ||||||||||||||||||||
Ending Balance (in shares) at Jun. 30, 2020 | 7,600,000 | 215,635,550 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Amortization of deferred stock compensation | 2,368 | 2,368 | |||||||||||||||||||||||||
Preferred stock dividends and dividends payable | (1,998) | (1,998) | (1,210) | (1,210) | |||||||||||||||||||||||
Net loss | (89,291) | (1,816) | (91,107) | ||||||||||||||||||||||||
Ending Balance at Sep. 30, 2020 | $ 190,000 | $ 2,156 | 2,584,005 | 951,765 | (1,640,178) | 40,297 | 2,128,045 | ||||||||||||||||||||
Ending Balance (in shares) at Sep. 30, 2020 | 7,600,000 | 215,635,550 | |||||||||||||||||||||||||
Beginning Balance at Dec. 31, 2020 | $ 190,000 | $ 2,156 | 2,586,108 | 913,766 | (1,643,386) | 40,735 | 2,089,379 | ||||||||||||||||||||
Beginning Balance (in shares) at Dec. 31, 2020 | 7,600,000 | 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 | $ 190,000 | $ 2,162 | 2,585,455 | 860,454 | (1,646,593) | 40,135 | 2,031,613 | ||||||||||||||||||||
Ending Balance (in shares) at Mar. 31, 2021 | 7,600,000 | 216,175,084 | |||||||||||||||||||||||||
Beginning Balance at Dec. 31, 2020 | $ 190,000 | $ 2,156 | 2,586,108 | 913,766 | (1,643,386) | 40,735 | 2,089,379 | ||||||||||||||||||||
Beginning Balance (in shares) at Dec. 31, 2020 | 7,600,000 | 215,593,401 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Net loss | (105,329) | ||||||||||||||||||||||||||
Ending Balance at Sep. 30, 2021 | $ 281,250 | $ 2,193 | 2,629,148 | 810,075 | (1,660,675) | 40,472 | 2,102,463 | ||||||||||||||||||||
Ending Balance (in shares) at Sep. 30, 2021 | 11,250,000 | 219,333,783 | |||||||||||||||||||||||||
Beginning Balance at Mar. 31, 2021 | $ 190,000 | $ 2,162 | 2,585,455 | 860,454 | (1,646,593) | 40,135 | 2,031,613 | ||||||||||||||||||||
Beginning Balance (in shares) at Mar. 31, 2021 | 7,600,000 | 216,175,084 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Amortization of deferred stock compensation | 4,784 | 4,784 | |||||||||||||||||||||||||
Issuance of restricted common stock, net | $ (1) | (1,360) | (1,361) | ||||||||||||||||||||||||
Issuance of restricted common stock, net (in shares) | (45,661) | ||||||||||||||||||||||||||
Preferred stock dividends and dividends payable | (1,554) | (1,554) | (1,209) | (1,209) | $ (292) | $ (292) | $ (724) | $ (724) | |||||||||||||||||||
Net proceeds from issuance of common stock | $ 29 | 37,630 | 37,659 | ||||||||||||||||||||||||
Number of shares of common stock issued (in shares) | 2,913,682 | ||||||||||||||||||||||||||
Net issuance of preferred stock in connection with hotel acquisition | $ 66,250 | $ (142) | 66,108 | ||||||||||||||||||||||||
Net issuance of preferred stock in connection with hotel acquisition (in shares) | 2,650,000 | ||||||||||||||||||||||||||
Net proceeds from issuance of preferred stock | $ 115,000 | $ (3,801) | 111,199 | ||||||||||||||||||||||||
Number of shares of preferred stock issued (in shares) | 4,600,000 | ||||||||||||||||||||||||||
Redemption of preferred stock | $ (115,000) | $ 4,016 | $ (4,016) | $ (115,000) | |||||||||||||||||||||||
Redemption of preferred stock (in shares) | (4,600,000) | ||||||||||||||||||||||||||
Net loss | (27,322) | (596) | (27,918) | ||||||||||||||||||||||||
Ending Balance at Jun. 30, 2021 | $ 256,250 | $ 2,190 | 2,626,582 | 833,132 | (1,654,388) | 39,539 | 2,103,305 | ||||||||||||||||||||
Ending Balance (in shares) at Jun. 30, 2021 | 10,250,000 | 219,043,105 | |||||||||||||||||||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||||||||||||||||||
Amortization of deferred stock compensation | 3,289 | 3,289 | |||||||||||||||||||||||||
Forfeiture of restricted common stock | $ (2) | 2 | |||||||||||||||||||||||||
Forfeiture of restricted common stock (in shares) | (235,406) | ||||||||||||||||||||||||||
Preferred stock dividends and dividends payable | (551) | (551) | $ (164) | $ (164) | $ (1,761) | $ (1,761) | $ (1,187) | $ (1,187) | |||||||||||||||||||
Issuance of restricted common stock | $ 5 | (5) | |||||||||||||||||||||||||
Issuance of restricted common stock (in shares) | 526,084 | ||||||||||||||||||||||||||
Net proceeds from issuance of preferred stock | $ 100,000 | $ (3,344) | $ 96,656 | ||||||||||||||||||||||||
Number of shares of preferred stock issued (in shares) | 4,000,000 | ||||||||||||||||||||||||||
Redemption of preferred stock | $ (75,000) | $ 2,624 | $ (2,624) | $ (75,000) | |||||||||||||||||||||||
Redemption of preferred stock (in shares) | (3,000,000) | ||||||||||||||||||||||||||
Net loss | (23,057) | 933 | (22,124) | ||||||||||||||||||||||||
Ending Balance at Sep. 30, 2021 | $ 281,250 | $ 2,193 | $ 2,629,148 | $ 810,075 | $ (1,660,675) | $ 40,472 | $ 2,102,463 | ||||||||||||||||||||
Ending Balance (in shares) at Sep. 30, 2021 | 11,250,000 | 219,333,783 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | 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) | $ 0.337847 | $ 0.434375 | $ 0.434375 | $ 0.434375 | 0.434375 | |
Series F Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.183646 | 0.403125 | $ 0.403125 | $ 0.403125 | $ 0.403125 | $ 0.403125 |
Series G Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | 0.061713 | 0.110259 | ||||
Series H Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | 0.382813 | $ 0.157378 | ||||
Series I Cumulative Redeemable Preferred Stock | ||||||
Preferred stock dividends and dividends payable (in dollars per share) | $ 0.296875 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net loss | $ (22,124) | $ (105,329) | $ (371,126) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
Bad debt expense | 322 | 305 | |
Loss (gain) on sale of assets | 82 | (189) | |
(Gain) loss on extinguishment of debt | (61) | (371) | 210 |
Noncash interest on derivatives | (616) | (2,194) | 5,534 |
Depreciation | 96,053 | 104,259 | |
Amortization of franchise fees and other intangibles | 31 | 31 | |
Amortization of deferred financing costs | 735 | 2,207 | 2,288 |
Amortization of deferred stock compensation | 10,576 | 7,509 | |
Impairment losses | 1,014 | 1,014 | 133,466 |
Deferred income taxes, net | 7,415 | ||
Changes in operating assets and liabilities: | |||
Accounts receivable | (20,241) | 30,173 | |
Prepaid expenses and other assets | (3,228) | 75 | |
Accounts payable and other liabilities | 23,403 | 2,923 | |
Accrued payroll and employee benefits | 7,083 | (9,255) | |
Operating lease right-of-use assets and obligations | (1,004) | (923) | |
Net cash provided by (used in) operating activities | 8,404 | (87,305) | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Proceeds from sale of assets | 76,855 | ||
Acquisition and disposition deposits, net | (3,900) | ||
Acquisition of hotel properties and other assets | (195,706) | (1,398) | |
Renovations and additions to hotel properties and other assets | (41,910) | (44,043) | |
Payment for interest rate derivative | (80) | (111) | |
Net cash (used in) provided by investing activities | (241,596) | 31,303 | |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from preferred stock offerings | 215,000 | ||
Redemptions of preferred stock | (190,000) | ||
Proceeds from common stock offerings | 38,443 | ||
Repurchases of outstanding common stock | (103,894) | ||
Repurchases of common stock for employee tax obligations | (4,877) | (3,992) | |
Proceeds from credit facility | 300,000 | ||
Payments on credit facility | (300,000) | ||
Payments on notes payable | (2,461) | (40,190) | |
Payments of deferred financing costs | (2,698) | ||
Dividends and distributions paid | (10,745) | (153,063) | |
Distributions to noncontrolling interest | (2,000) | ||
Contributions from noncontrolling interest | 1,375 | 500 | |
Net cash provided by (used in) financing activities | 38,664 | (305,337) | |
Net decrease in cash and cash equivalents and restricted cash | (194,528) | (361,339) | |
Cash and cash equivalents and restricted cash, beginning of period | 416,139 | 864,973 | |
Cash and cash equivalents and restricted cash, end of period | 221,611 | 221,611 | 503,634 |
Supplemental Disclosure of Cash Flow Information | |||
Cash and cash equivalents | 179,487 | 179,487 | 461,288 |
Restricted cash | 42,124 | 42,124 | 42,346 |
Cash and cash equivalents and restricted cash, end of period | 221,611 | 221,611 | 503,634 |
Cash paid for interest | 26,629 | 34,118 | |
Cash paid for income taxes, net | 45 | 18 | |
Operating cash flows used for operating leases | 5,077 | 4,923 | |
Changes in operating lease right-of-use assets | 2,804 | 2,606 | |
Changes in operating lease obligations | (3,808) | (3,529) | |
Changes in operating lease right-of-use assets and lease obligations, net | (1,004) | (923) | |
Supplemental Disclosure of Noncash Investing and Financing Activities | |||
Accrued renovations and additions to hotel properties and other assets | 9,932 | 7,195 | |
Issuance of preferred stock in connection with hotel acquisition | 66,250 | ||
Preferred stock redemption charges | 6,640 | ||
Amortization of deferred stock compensation - construction activities | 366 | 376 | |
Dividends and distributions payable | 3,112 | 3,112 | $ 3,208 |
Hilton Times Square | |||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | |||
(Gain) loss on extinguishment of debt | $ (100) | (400) | |
Preferred Stock | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Payment of stock issuance costs | (7,287) | ||
Common Stock | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Payment of stock issuance costs | $ (784) |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 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 September 30, 2021, the Company had interests in 18 hotels, one of which was considered held for sale, leaving 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 (1) Hilton Worldwide 2 Interstate Hotels & Resorts, Inc. 2 Davidson Hotels & Resorts 1 Hyatt Corporation 1 Montage North America, LLC 1 Singh Hospitality, LLC 1 Total hotels owned as of September 30, 2021 18 (1) The Renaissance Westchester was considered held for sale as of September 30, 2021, and subsequently sold on October 15, 2021 (see Note 13). COVID-19 Impact 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 Company’s hotels. As of September 30, 2021, all of the Company’s hotels were open and operating except the Renaissance Westchester (see Note 13). During the first nine months of 2021, leisure demand was the dominant source of business at many of the Company’s hotels, while business transient demand and group demand both improved as compared to 2020, but remained well below pre-pandemic levels. The Company believes that the return of traditional business transient and group business will ultimately depend on the speed of vaccine distribution, the management and control of COVID-19 and its variants, including the Delta variant, and the degree and speed to which business returns. The effects of the COVID-19 pandemic on the hotel industry have been significant and unprecedented, and the Company has limited visibility to predict future operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 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 September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 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 and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net loss $ (22,124) $ (91,107) $ (105,329) $ (371,126) (Income) loss from consolidated joint venture attributable to noncontrolling interest (933) 1,816 1,638 4,436 Preferred stock dividends and redemption charges (6,287) (3,208) (17,289) (9,622) Distributions paid on unvested restricted stock compensation — — — (69) Numerator for basic and diluted loss attributable to common stockholders $ (29,344) $ (92,499) $ (120,980) $ (376,381) Denominator: Weighted average basic and diluted common shares outstanding 217,709 214,257 215,765 216,498 Basic and diluted loss attributable to common stockholders per common share $ (0.13) $ (0.43) $ (0.56) $ (1.74) The Company’s unvested restricted shares associated with its long-term incentive plan have been excluded from the above calculation of earnings per share for the three and nine months ended September 30, 2021 and 2020, as their inclusion would have been anti-dilutive. Restricted Cash Restricted cash is comprised of reserve accounts for debt service, interest, seasonality, capital replacements, ground leases, property taxes and hotel-generated cash that is held in accounts for the benefit of lenders. These restricted funds are subject to disbursement approval based on in-place agreements and policies by certain of the Company’s lenders, ground lessors and/or hotel managers. At times, restricted cash also includes earnest money either paid to a seller or potential seller of a hotel or received from a buyer or potential buyer of one of the Company’s hotels and held in escrow until either the purchase or sale is completed or subject to the terms of the related purchase and sale agreement. In addition, restricted cash as of September 30, 2021 and December 31, 2020 includes $10.6 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 12). Investments in Hotel Properties Investments in hotel properties, including land, buildings, furniture, fixtures and equipment (“FF&E”) and identifiable intangible assets are recorded at their respective relative fair values for an asset acquisition or at their estimated fair values for a business 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. In September 2021, the Company recognized a $1.0 million impairment loss on the Hilton New Orleans St. Charles due to Hurricane Ida-related damage at the hotel (see Note 12). 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 nine months ended September 30, 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 September 30, 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): September 30, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 13,596 $ 8,110 Contract liabilities (2) $ 36,316 $ 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 and nine months ended September 30, 2021, the Company recognized approximately $0.2 million and $1.3 million, respectively, in revenue related to its outstanding contract liabilities. During the three and nine months ended September 30, 2020, the Company recognized zero and approximately $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 | 9 Months Ended |
Sep. 30, 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): September 30, December 31, 2021 2020 (unaudited) Land $ 609,078 $ 571,212 Buildings and improvements 2,723,520 2,523,750 Furniture, fixtures and equipment 452,294 431,918 Intangible assets 34,952 21,192 Franchise fees 654 743 Construction in progress 44,736 15,831 Investment in hotel properties, gross 3,865,234 3,564,646 Accumulated depreciation and amortization (1,196,065) (1,103,148) Investment in hotel properties, net $ 2,669,169 $ 2,461,498 In April 2021, the Company purchased the fee simple interest in the newly-developed 130 -room Montage Healdsburg, California for $265.0 million, excluding acquisition costs and prorations. As part of the purchase price allocation for the Montage Healdsburg, the Company allocated a total of $13.7 million to intangible assets related to the hotel’s residential rental and social membership programs, whereby future owners of the adjacent separately owned Montage Residences Healdsburg will be eligible to participate in an optional rental program as well as become social members of the Montage Healdsburg to access use of the hotel’s facilities. The $13.7 million will be amortized over the life of the related remaining 25-year resort management agreement once the hotel begins to recognize revenue related to the programs. |
Disposal
Disposal | 9 Months Ended |
Sep. 30, 2021 | |
Disposal Group | |
Disposal | 4. Disposal The Company classified the Renaissance Westchester as held for sale at September 30, 2021, and subsequently sold the hotel in October 2021 (see Note 13). The sale did not represent a strategic shift that had a major impact on the Company’s business plan or its primary markets; therefore, the hotel did not qualify as a discontinued operation. The Company classified the assets and liabilities of the Renaissance Westchester as held for sale at September 30, 2021 as follows (in thousands): September 30, 2021 Prepaid expenses and other current assets $ 372 Investment in hotel properties, net 13,321 Other assets, net 66 Assets held for sale, net $ 13,759 Accounts payable and accrued expenses $ 135 Accrued payroll and employee benefits 5,071 (1) Other current liabilities 284 Liabilities of assets held for sale $ 5,490 (1) Accrued payroll and employee benefits includes severance of $4.6 million. |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Derivatives | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements and Interest Rate Derivatives | |
Fair Value Measurements and Interest Rate Derivatives | 5. Fair Value Measurements and Interest Rate Derivatives Fair Value Measurements As of September 30, 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 September 30, 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 September 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2021 (unaudited): Interest rate cap derivatives $ — $ — $ — $ — Total assets measured at fair value at September 30, 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 September 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2021 (unaudited): Interest rate swap derivatives $ 3,436 $ — $ 3,436 $ — Total liabilities measured at fair value at September 30, 2021 $ 3,436 $ — $ 3,436 $ — 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 September 30, 2021 (unaudited) and December 31, 2020 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional September 30, December 31, Hedged Debt Type Rate Index Date Date Amount 2021 2020 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 $ — $ — Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2021 December 15, 2022 $ 220,000 — — $ 85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (1,169) (2,100) $ 100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (2,267) (3,610) $ (3,436) $ (5,710) (1) The fair values of the cap agreements are included in other assets, net on the accompanying consolidated balance sheets as of both September 30, 2021 and December 31, 2020. The fair value of the $85.0 million swap agreement is included in other current liabilities on the accompanying consolidated balance sheets as of September 30, 2021 and in other liabilities as of December 31, 2020. The fair value of the $100.0 million swap agreement is included in other liabilities on the accompanying consolidated balance sheets as of both September 30, 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 and nine months ended September 30, 2021 and 2020 as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Noncash interest on derivatives $ (616) $ (762) $ (2,194) $ 5,534 Fair Value of Debt As of September 30, 2021 and December 31, 2020, 70.5% and 70.6%, respectively, of the Company’s outstanding debt had fixed interest rates, including the effects of interest rate swap agreements. The Company uses Level 3 measurements to estimate the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates. The Company’s principal balances and fair market values of its consolidated debt as of September 30, 2021 (unaudited) and December 31, 2020 were as follows (in thousands): September 30, 2021 December 31, 2020 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 745,484 $ 721,862 $ 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 | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets. | |
Other Assets | 6. Other Assets Other assets, net consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Property and equipment, net $ 6,022 $ 6,767 Deferred rent on straight-lined third-party tenant leases 2,988 2,819 Other receivables 1,840 2,633 Other 367 226 Total other assets, net $ 11,217 $ 12,445 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable | |
Notes Payable | 7. Notes Payable Notes payable consisted of the following (in thousands): September 30, 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 September 30, 2021 and December 31, 2020. $ 135,484 $ 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 1.147% and 1.192% at September 30, 2021 and December 31, 2020, respectively; maturity on December 9, 2021 with notice provided to the lender of intent to exercise second available one-year extension; an additional one-year option to extend remains, which the Company also intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 3.941% . 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 $ 745,484 $ 747,945 Current portion of notes payable $ 88,410 $ 3,305 Less: current portion of deferred financing costs (1,014) (1,044) Carrying value of current portion of notes payable $ 87,396 $ 2,261 Notes payable, less current portion $ 657,074 $ 744,640 Less: long-term portion of deferred financing costs (1,361) (2,112) Carrying value of notes payable, less current portion $ 655,713 $ 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. These provisions were triggered for the loans secured by the Embassy Suites La Jolla and the JW Marriott New Orleans in January 2021 and at the Hilton San Diego Bayfront in May 2021. As of September 30, 2021, a nominal amount of excess cash was held in lockbox accounts for the benefit of the lenders and included in restricted cash on the accompanying consolidated balance sheet. The cash trap provisions triggered on these three loans will remain until the hotels reach profitability levels that terminate the cash traps. As of September 30, 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. In July 2021, the Company amended its Unsecured Debt Amendments, which removed certain restrictions in place during the covenant waiver period ending March 31, 2022. The restrictions removed include the limitation on the aggregate value of unencumbered hotel acquisitions the Company can complete and, provided that an event of default has not occurred, the requirement to prepay the Company’s unsecured debt using net proceeds received from asset sales or equity issuances. 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Interest expense on debt and finance lease obligation $ 7,864 $ 12,612 $ 23,684 $ 35,377 Noncash interest on derivatives (616) (762) (2,194) 5,534 Amortization of deferred financing costs 735 892 2,207 2,288 Total interest expense $ 7,983 $ 12,742 $ 23,697 $ 43,199 |
Other Current Liabilities and O
Other Current Liabilities and Other Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Other Current Liabilities and Other Liabilities | |
Other Current Liabilities and Other Liabilities | 8. Other Current Liabilities and Other Liabilities Other Current Liabilities Other current liabilities consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Property, sales and use taxes payable $ 16,798 $ 10,134 Accrued interest 3,965 6,914 Advance deposits 31,429 13,341 Interest rate swap derivative 1,169 — Management fees payable 655 169 Other 3,113 2,048 Total other current liabilities $ 57,129 $ 32,606 Other Liabilities Other liabilities consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Deferred revenue $ 9,106 $ 7,911 Interest rate swap derivative 2,267 5,710 Other 3,122 3,873 Total other liabilities $ 14,495 $ 17,494 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases | |
Leases | 9. Leases The Company has both finance and operating leases for ground, building, office, equipment and airspace leases, maturing in dates ranging from 2025 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): September 30, December 31, 2021 2020 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (13,720) (12,617) Right-of-use asset, net $ 45,079 $ 46,182 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,568 15,569 Total lease obligation $ 15,569 $ 15,570 Remaining lease term 76 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 23,971 $ 26,093 Accounts payable and accrued expenses $ 5,424 $ 5,028 Lease obligations, less current portion 26,432 29,954 Total lease obligations $ 31,856 $ 34,982 Weighted average remaining lease term, including reasonably certain extension options (1) 6 years Weighted average discount rate 5.1 % (1) The weighted average remaining term including all available extension options is approximately 33 years . The components of lease expense were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Finance lease cost: Amortization of right-of-use asset $ 368 $ 368 $ 1,103 $ 1,103 Interest on lease obligation 351 351 1,053 1,053 Operating lease cost 1,382 2,681 4,068 6,751 Variable lease cost (1) — 15 13 39 Total lease cost $ 2,101 $ 3,415 $ 6,237 $ 8,946 (1) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds . |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 10. Stockholders’ Equity Series E Cumulative Redeemable Preferred Stock In June 2021, the Company redeemed all 4,600,000 shares of its 6.95% Series E Cumulative Redeemable Preferred Stock (“Series E preferred stock”) at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. An additional redemption charge of $4.0 million was recognized related to the original issuance costs of the Series E preferred stock, which were previously included in additional paid in capital. After the redemption date, the Company has no outstanding shares of Series E preferred stock, and all rights of the holders of such shares were terminated. Because the redemption of the Series E preferred stock was a redemption in full, trading of the Series E preferred stock on the New York Stock Exchange ceased on the June 11, 2021 redemption date. Series F Cumulative Redeemable Preferred Stock In August 2021, the Company redeemed all 3,000,000 shares of its 6.45% Series F Cumulative Redeemable Preferred Stock (“Series F preferred stock”) at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. An additional redemption charge of $2.6 million was recognized related to the original issuance costs of the Series F preferred stock, which were previously included in additional paid in capital. After the redemption date, the Company has no outstanding shares of Series F preferred stock, and all rights of the holders of such shares were terminated. Because the redemption of the Series F preferred stock was a redemption in full, trading of the Series F preferred stock on the New York Stock Exchange ceased on the August 12, 2021 redemption date. Series G Cumulative Redeemable Preferred Stock Contemporaneous with the Company’s April 2021 purchase of the Montage Healdsburg, the Company issued 2,650,000 shares of its Series G preferred stock to the hotel’s seller as partial payment of the hotel (see Note 3). The Series G preferred stock, which is callable at its $25.00 liquidation preference plus accrued and unpaid dividends by the Company at any time, accrues 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. Series H Cumulative Redeemable Preferred Stock In May 2021, the Company issued 4,600,000 shares of its 6.125% Series H Cumulative Redeemable Preferred Stock (“Series H preferred stock”) with a liquidation preference of $25.00 . On or after May 24, 2026 , the Series H 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 H preferred stock, the Company may at its option redeem the Series H preferred stock for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. If the Company chooses not to redeem the Series H preferred stock upon the occurrence of a change of control, holders of the Series H preferred stock may convert their preferred shares into shares of the Company’s common stock. Series I Cumulative Redeemable Preferred Stock In July 2021, the Company issued 4,000,000 shares of its 5.70% Series I Cumulative Redeemable Preferred Stock (“Series I preferred stock”) with a liquidation preference of $25.00 . On or after July 16, 2026 , the Series I 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 I preferred stock, the Company may at its option redeem the Series I preferred stock for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date. If the Company chooses not to redeem the Series I preferred stock upon the occurrence of a change of control, holders of the Series I preferred stock may 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 September 30, 2021, the Company has not repurchased any common or preferred stock under the 2021 stock repurchase program. The redemptions of the Series E preferred stock and the Series F preferred stock in June 2021 and August 2021, respectively, were completed through separate authorizations by the Company’s board of directors, leaving $500.0 million remaining for repurchase 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 BofA Securities, Inc., 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 June 2021, the Company issued 2,913,682 shares of common stock under the ATM Agreements for gross proceeds of $38.4 million, leaving $137.0 million available for sale under the ATM Agreements. |
Long-Term Incentive Plan
Long-Term Incentive Plan | 9 Months Ended |
Sep. 30, 2021 | |
Long-Term Incentive Plan | |
Long-Term Incentive Plan | 11. Long-Term Incentive Plan Restricted shares granted pursuant to the Company’s Long-Term Incentive Plan (“LTIP”) generally vest over a period of three years from the date of grant. Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the LTIP and remain available for future issuance. Shares of common stock tendered or withheld to satisfy the grant or exercise price or tax withholding obligations upon the vesting of a stock grant are not added back to the LTIP. Compensation expense related to awards of restricted shares are measured at fair value on the date of grant and amortized over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur. The Company’s amortization expense and forfeitures related to restricted shares for the three and nine months ended September 30, 2021 and 2020 were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amortization expense, including forfeitures (1) $ 3,165 $ 2,238 $ 10,576 $ 7,509 Capitalized compensation cost (2) $ 124 $ 130 $ 366 $ 376 (1) In September 2021, the Company recognized $1.1 million in amortization of deferred stock compensation expense related to the departure of its former Chief Executive Officer. (2) 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 | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Management Agreements Management agreements with the Company’s third-party hotel managers require the Company to pay between 1.75% and 3.0% of total revenue of the managed hotels to the third-party managers each month as a basic management fee. In addition to basic management fees, provided that certain operating thresholds are met, the Company may also be required to pay incentive management fees to certain of its third-party managers. Total basic and incentive management fees incurred by the Company during the three and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Basic management fees $ 4,391 $ 624 $ 8,767 $ 6,179 Incentive management fees 687 — 687 — Total basic and incentive management fees $ 5,078 $ 624 $ 9,454 $ 6,179 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 and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Franchise assessments (1) $ 3,241 $ 555 $ 5,961 $ 5,349 Franchise royalties (2) 940 108 1,507 988 Total franchise costs $ 4,181 $ 663 $ 7,468 $ 6,337 (1) Includes advertising, reservation and frequent guest program assessments. (2) Includes key money received from one of the Company’s franchisors, which the Company is amortizing over the term of the hotel’s franchise agreement. Renovation and Construction Commitments At September 30, 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 September 30, 2021 totaled $68.6 million. Concentration of Risk The concentration of the Company’s hotels in California, Florida, Hawaii, Illinois and Massachusetts exposes the Company’s business to economic and severe weather conditions, competition and real and personal property tax rates unique to these locales. As of September 30, 2021, 13 of the 17 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 5 32 % 34 % Florida 2 11 % 16 % Hawaii 1 6 % 21 % Illinois 3 13 % 5 % Massachusetts 2 17 % 11 % Hurricane Ida During the third quarter of 2021, the Company’s New Orleans hotels were impacted to varying degrees by Hurricane Ida. While both hotels remained open during the storm, they sustained wind-driven damage, rain infiltration and water damage. The Company maintains customary property, casualty, environmental, flood and business interruption insurance at all of its hotels, the coverage of which is subject to certain limitations including higher deductibles in the event of a named storm. The Company is working with its insurers to identify and settle a property damage claim at the Hilton New Orleans St. Charles for portions of the costs related to Hurricane Ida. The Company may also pursue a business interruption insurance claim at the Hilton New Orleans St. Charles. Currently, the Company anticipates that the cost to restore damages at the JW Marriott New Orleans will not exceed the hotel’s deductible. During the third quarter of 2021, the Company incurred Hurricane Ida-related restoration expense of $1.2 million at the Hilton New Orleans St. Charles and $0.4 million at the JW Marriott New Orleans, both of which are included in repairs and maintenance expense in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2021. In addition, the Company wrote-off $1.0 million in assets at the Hilton New Orleans St. Charles due to Hurricane Ida-related damage, which is included in impairment losses in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2021. The Company may incur additional Hurricane Ida-related expenses at both New Orleans hotels in the future, which may exceed the hotels’ deductibles. Any additional expenses will be recognized as incurred and any business interruption recovery will not be recognized until a final settlement has been reached with the Company’s insurers. 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 nine months of 2021, $0.6 million of the potential obligation was paid to the hotel’s employees. In addition, the potential obligation was reassessed at September 30, 2021, resulting in a gain on extinguishment of debt of $0.1 million and $0.4 million recognized during the three and nine months ended September 30, 2021, respectively. As of September 30, 2021, $10.6 million remains in restricted cash on the accompanying consolidated balance sheet, which will continue to be held in escrow until the potential obligation is resolved. Other current liabilities on the accompanying consolidated balance sheets as of September 30, 2021 and December 31, 2020, included the potential obligation balances of $10.6 million and $11.6 million, respectively. The Company has provided customary unsecured indemnities to certain lenders, including in particular, environmental indemnities. The Company has performed due diligence on the potential environmental risks, including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate the Company to reimburse the indemnified parties for damages related to certain environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, the Company could have recourse against other previous owners or a claim against its environmental insurance policies. At September 30, 2021, the Company had $0.2 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 September 30, 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 Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2021 | |
Subsequent Events | |
Subsequent Events | 13. Subsequent Events On October 15, 2021, the Company sold the Renaissance Westchester for a gross sale price of $18.8 million, excluding closing costs. On October 7, 2021, the Company made a non-refundable deposit of earnest money in connection with its agreement to acquire the fee-simple interest in the 85-room Four Seasons Resort Napa Valley. The newly constructed luxury resort recently opened in October 2021, and will be acquired for a gross purchase price of $177.5 million. The acquisition includes nearly 4.5 acres of vineyards and the Elusa Winery along with the inventory of prior wine vintages. The acquisition is expected to be funded through a combination of cash on hand and from borrowings on the Company’s currently undrawn $500.0 million revolving credit facility. The Company expects to close the transaction in the fourth quarter of 2021, but can give no assurances that the acquisition will be completed . On October 18, 2021, the Company entered into an agreement to sell the 340-room Embassy Suites La Jolla for a contractual sale price of $226.7 million. The Company expects the sale to close during the fourth quarter of 2021, subject to customary closing conditions, but the Company can give no assurances that the disposition will be completed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 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 and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net loss $ (22,124) $ (91,107) $ (105,329) $ (371,126) (Income) loss from consolidated joint venture attributable to noncontrolling interest (933) 1,816 1,638 4,436 Preferred stock dividends and redemption charges (6,287) (3,208) (17,289) (9,622) Distributions paid on unvested restricted stock compensation — — — (69) Numerator for basic and diluted loss attributable to common stockholders $ (29,344) $ (92,499) $ (120,980) $ (376,381) Denominator: Weighted average basic and diluted common shares outstanding 217,709 214,257 215,765 216,498 Basic and diluted loss attributable to common stockholders per common share $ (0.13) $ (0.43) $ (0.56) $ (1.74) The Company’s unvested restricted shares associated with its long-term incentive plan have been excluded from the above calculation of earnings per share for the three and nine months ended September 30, 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, seasonality, capital replacements, ground leases, property taxes and hotel-generated cash that is held in accounts for the benefit of lenders. These restricted funds are subject to disbursement approval based on in-place agreements and policies by certain of the Company’s lenders, ground lessors and/or hotel managers. At times, restricted cash also includes earnest money either paid to a seller or potential seller of a hotel or received from a buyer or potential buyer of one of the Company’s hotels and held in escrow until either the purchase or sale is completed or subject to the terms of the related purchase and sale agreement. In addition, restricted cash as of September 30, 2021 and December 31, 2020 includes $10.6 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 12). |
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 their respective relative fair values for an asset acquisition or at their estimated fair values for a business 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. In September 2021, the Company recognized a $1.0 million impairment loss on the Hilton New Orleans St. Charles due to Hurricane Ida-related damage at the hotel (see Note 12). 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 nine months ended September 30, 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 September 30, 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): September 30, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 13,596 $ 8,110 Contract liabilities (2) $ 36,316 $ 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 and nine months ended September 30, 2021, the Company recognized approximately $0.2 million and $1.3 million, respectively, in revenue related to its outstanding contract liabilities. During the three and nine months ended September 30, 2020, the Company recognized zero and approximately $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) | 9 Months Ended |
Sep. 30, 2021 | |
Organization and Description of Business | |
Schedule of number of hotels managed by each third-party manager | As of September 30, 2021, the Company had interests in 18 hotels, one of which was considered held for sale, leaving 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 (1) Hilton Worldwide 2 Interstate Hotels & Resorts, Inc. 2 Davidson Hotels & Resorts 1 Hyatt Corporation 1 Montage North America, LLC 1 Singh Hospitality, LLC 1 Total hotels owned as of September 30, 2021 18 (1) The Renaissance Westchester was considered held for sale as of September 30, 2021, and subsequently sold on October 15, 2021 (see Note 13). |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of contract assets and liabilities | Trade receivables and contract liabilities consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Trade receivables, net (1) $ 13,596 $ 8,110 Contract liabilities (2) $ 36,316 $ 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net loss $ (22,124) $ (91,107) $ (105,329) $ (371,126) (Income) loss from consolidated joint venture attributable to noncontrolling interest (933) 1,816 1,638 4,436 Preferred stock dividends and redemption charges (6,287) (3,208) (17,289) (9,622) Distributions paid on unvested restricted stock compensation — — — (69) Numerator for basic and diluted loss attributable to common stockholders $ (29,344) $ (92,499) $ (120,980) $ (376,381) Denominator: Weighted average basic and diluted common shares outstanding 217,709 214,257 215,765 216,498 Basic and diluted loss attributable to common stockholders per common share $ (0.13) $ (0.43) $ (0.56) $ (1.74) |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | Investment in hotel properties, net consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Land $ 609,078 $ 571,212 Buildings and improvements 2,723,520 2,523,750 Furniture, fixtures and equipment 452,294 431,918 Intangible assets 34,952 21,192 Franchise fees 654 743 Construction in progress 44,736 15,831 Investment in hotel properties, gross 3,865,234 3,564,646 Accumulated depreciation and amortization (1,196,065) (1,103,148) Investment in hotel properties, net $ 2,669,169 $ 2,461,498 |
Disposal (Tables)
Disposal (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
2021 Disposals | Held for sale, not considered a discontinued operation | |
Schedule of assets and liabilities held for sale | The Company classified the assets and liabilities of the Renaissance Westchester as held for sale at September 30, 2021 as follows (in thousands): September 30, 2021 Prepaid expenses and other current assets $ 372 Investment in hotel properties, net 13,321 Other assets, net 66 Assets held for sale, net $ 13,759 Accounts payable and accrued expenses $ 135 Accrued payroll and employee benefits 5,071 (1) Other current liabilities 284 Liabilities of assets held for sale $ 5,490 (1) Accrued payroll and employee benefits includes severance of $4.6 million. |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Derivatives (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2021 (unaudited): Interest rate cap derivatives $ — $ — $ — $ — Total assets measured at fair value at September 30, 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 September 30, 2021 and December 31, 2020 (in thousands): Fair Value Measurements at Reporting Date Total Level 1 Level 2 Level 3 September 30, 2021 (unaudited): Interest rate swap derivatives $ 3,436 $ — $ 3,436 $ — Total liabilities measured at fair value at September 30, 2021 $ 3,436 $ — $ 3,436 $ — 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 September 30, 2021 (unaudited) and December 31, 2020 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional September 30, December 31, Hedged Debt Type Rate Index Date Date Amount 2021 2020 Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2020 December 15, 2021 $ 220,000 $ — $ — Hilton San Diego Bayfront Cap 6.000 % 1-Month LIBOR December 9, 2021 December 15, 2022 $ 220,000 — — $ 85.0 million term loan Swap 1.591 % 1-Month LIBOR October 29, 2015 September 2, 2022 $ 85,000 (1,169) (2,100) $ 100.0 million term loan Swap 1.853 % 1-Month LIBOR January 29, 2016 January 31, 2023 $ 100,000 (2,267) (3,610) $ (3,436) $ (5,710) (1) The fair values of the cap agreements are included in other assets, net on the accompanying consolidated balance sheets as of both September 30, 2021 and December 31, 2020. The fair value of the $85.0 million swap agreement is included in other current liabilities on the accompanying consolidated balance sheets as of September 30, 2021 and in other liabilities as of December 31, 2020. The fair value of the $100.0 million swap agreement is included in other liabilities on the accompanying consolidated balance sheets as of both September 30, 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 and nine months ended September 30, 2021 and 2020 as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Noncash interest on derivatives $ (616) $ (762) $ (2,194) $ 5,534 |
Schedule of principal values and estimated fair values of debt | The Company’s principal balances and fair market values of its consolidated debt as of September 30, 2021 (unaudited) and December 31, 2020 were as follows (in thousands): September 30, 2021 December 31, 2020 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 745,484 $ 721,862 $ 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) | 9 Months Ended |
Sep. 30, 2021 | |
Other Assets. | |
Schedule of other assets | Other assets, net consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Property and equipment, net $ 6,022 $ 6,767 Deferred rent on straight-lined third-party tenant leases 2,988 2,819 Other receivables 1,840 2,633 Other 367 226 Total other assets, net $ 11,217 $ 12,445 |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Notes Payable | |
Schedule of notes payable | Notes payable consisted of the following (in thousands): September 30, 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 September 30, 2021 and December 31, 2020. $ 135,484 $ 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 1.147% and 1.192% at September 30, 2021 and December 31, 2020, respectively; maturity on December 9, 2021 with notice provided to the lender of intent to exercise second available one-year extension; an additional one-year option to extend remains, which the Company also intends to exercise. The note is collateralized by a first deed of trust on one hotel property. 220,000 220,000 Unsecured term loan requiring payments of interest only, with a blended interest rate based on a pricing grid with a range of 135 to 220 basis points, depending on the Company's leverage ratios, plus the greater of one-month LIBOR or 25 basis points. LIBOR has been swapped to a fixed rate of 1.591% , resulting in an effective interest rate of 3.941% . 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 $ 745,484 $ 747,945 Current portion of notes payable $ 88,410 $ 3,305 Less: current portion of deferred financing costs (1,014) (1,044) Carrying value of current portion of notes payable $ 87,396 $ 2,261 Notes payable, less current portion $ 657,074 $ 744,640 Less: long-term portion of deferred financing costs (1,361) (2,112) Carrying value of notes payable, less current portion $ 655,713 $ 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Interest expense on debt and finance lease obligation $ 7,864 $ 12,612 $ 23,684 $ 35,377 Noncash interest on derivatives (616) (762) (2,194) 5,534 Amortization of deferred financing costs 735 892 2,207 2,288 Total interest expense $ 7,983 $ 12,742 $ 23,697 $ 43,199 |
Other Current Liabilities and_2
Other Current Liabilities and Other Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Other Current Liabilities and Other Liabilities | |
Schedule of other current liabilities | Other current liabilities consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Property, sales and use taxes payable $ 16,798 $ 10,134 Accrued interest 3,965 6,914 Advance deposits 31,429 13,341 Interest rate swap derivative 1,169 — Management fees payable 655 169 Other 3,113 2,048 Total other current liabilities $ 57,129 $ 32,606 |
Schedule of other liabilities | Other liabilities consisted of the following (in thousands): September 30, December 31, 2021 2020 (unaudited) Deferred revenue $ 9,106 $ 7,911 Interest rate swap derivative 2,267 5,710 Other 3,122 3,873 Total other liabilities $ 14,495 $ 17,494 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 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): September 30, December 31, 2021 2020 (unaudited) Finance Lease: Right-of-use asset, gross (buildings and improvements) $ 58,799 $ 58,799 Accumulated amortization (13,720) (12,617) Right-of-use asset, net $ 45,079 $ 46,182 Accounts payable and accrued expenses $ 1 $ 1 Lease obligation, less current portion 15,568 15,569 Total lease obligation $ 15,569 $ 15,570 Remaining lease term 76 years Discount rate 9.0 % Operating Leases: Right-of-use assets, net $ 23,971 $ 26,093 Accounts payable and accrued expenses $ 5,424 $ 5,028 Lease obligations, less current portion 26,432 29,954 Total lease obligations $ 31,856 $ 34,982 Weighted average remaining lease term, including reasonably certain extension options (1) 6 years Weighted average discount rate 5.1 % (1) The weighted average remaining term including all available extension options is approximately 33 years . |
Lease costs | The components of lease expense were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Finance lease cost: Amortization of right-of-use asset $ 368 $ 368 $ 1,103 $ 1,103 Interest on lease obligation 351 351 1,053 1,053 Operating lease cost 1,382 2,681 4,068 6,751 Variable lease cost (1) — 15 13 39 Total lease cost $ 2,101 $ 3,415 $ 6,237 $ 8,946 (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) | 9 Months Ended |
Sep. 30, 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 and nine months ended September 30, 2021 and 2020 were as follows (unaudited and in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Amortization expense, including forfeitures (1) $ 3,165 $ 2,238 $ 10,576 $ 7,509 Capitalized compensation cost (2) $ 124 $ 130 $ 366 $ 376 (1) In September 2021, the Company recognized $1.1 million in amortization of deferred stock compensation expense related to the departure of its former Chief Executive Officer. (2) 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) | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Schedule of basic and incentive management fees | Total basic and incentive management fees incurred by the Company during the three and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Basic management fees $ 4,391 $ 624 $ 8,767 $ 6,179 Incentive management fees 687 — 687 — Total basic and incentive management fees $ 5,078 $ 624 $ 9,454 $ 6,179 |
Schedule of license and franchise costs | Total license and franchise fees incurred by the Company during the three and nine months ended September 30, 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 September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Franchise assessments (1) $ 3,241 $ 555 $ 5,961 $ 5,349 Franchise royalties (2) 940 108 1,507 988 Total franchise costs $ 4,181 $ 663 $ 7,468 $ 6,337 (1) Includes advertising, reservation and frequent guest program assessments. (2) Includes key money received from one of the Company’s franchisors, which the Company is amortizing over the term of the hotel’s franchise agreement. |
Schedule of hotel geographic concentration of risk | As of September 30, 2021, 13 of the 17 Hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Number of Hotels Total Rooms Consolidated Revenue California 5 32 % 34 % Florida 2 11 % 16 % Hawaii 1 6 % 21 % Illinois 3 13 % 5 % Massachusetts 2 17 % 11 % |
Organization and Description _3
Organization and Description of Business (Details) | 9 Months Ended |
Sep. 30, 2021property | |
Organization and Description of Business | |
Number of hotels owned by the Company | 18 |
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 |
Montage North America, LLC | |
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 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Investments in Hotel Properties | ||||||
Impairment losses | $ 1,014,000 | $ 1,014,000 | $ 133,466,000 | |||
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 | $ 13,596,000 | 13,596,000 | $ 13,596,000 | $ 8,110,000 | ||
Contract liabilities | $ 36,316,000 | 36,316,000 | 36,316,000 | $ 16,815,000 | ||
Deferred revenue recognized | $ 200,000 | $ 0 | $ 1,300,000 | $ 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% | 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 New Orleans St. Charles | ||||||
Investments in Hotel Properties | ||||||
Impairment losses | $ 1,000,000 | |||||
Hilton San Diego Bayfront | ||||||
Segment Reporting | ||||||
Secured Debt | 220,000,000 | $ 220,000,000 | $ 220,000,000 | |||
Hilton Times Square | ||||||
Restricted Cash | ||||||
Restricted Cash | $ 10,600,000 | $ 10,600,000 | $ 10,600,000 | $ 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 | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||||||
Net loss | $ (22,124) | $ (27,918) | $ (55,287) | $ (91,107) | $ (117,500) | $ (162,519) | $ (105,329) | $ (371,126) |
(Income) loss from consolidated joint venture attributable to noncontrolling interest | (933) | 1,816 | 1,638 | 4,436 | ||||
Preferred stock dividends and redemption charges | (6,287) | (3,208) | (17,289) | (9,622) | ||||
Distributions paid on unvested restricted stock compensation | (69) | |||||||
Numerator for basic and diluted loss attributable to common stockholders | $ (29,344) | $ (92,499) | $ (120,980) | $ (376,381) | ||||
Denominator: | ||||||||
Weighted average basic and diluted common shares outstanding (in shares) | 217,709 | 214,257 | 215,765 | 216,498 | ||||
Basic and diluted loss attributable to common stockholders per common share (in dollars per share) | $ (0.13) | $ (0.43) | $ (0.56) | $ (1.74) |
Investment in Hotel Propertie_2
Investment in Hotel Properties (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Investment in Hotel Properties | ||
Land | $ 609,078 | $ 571,212 |
Buildings and improvements | 2,723,520 | 2,523,750 |
Furniture, fixtures and equipment | 452,294 | 431,918 |
Intangible assets | 34,952 | 21,192 |
Franchise fees | 654 | 743 |
Construction in progress | 44,736 | 15,831 |
Investment in hotel properties, gross | 3,865,234 | 3,564,646 |
Accumulated depreciation and amortization | (1,196,065) | (1,103,148) |
Investment in hotel properties, net | $ 2,669,169 | $ 2,461,498 |
Investment in Hotel Propertie_3
Investment in Hotel Properties - Acquisitions (Details) - Montage Healdsburg $ in Millions | 1 Months Ended |
Apr. 30, 2021USD ($)roomshares | |
Asset Acquisition Abstract | |
Number of rooms in acquired hotel | room | 130 |
Asset acquisition, consideration transferred | $ 265 |
Finite-lived intangible assets acquired | $ 13.7 |
Estimated useful life for finite-lived intangible assets | 25 years |
Series G Cumulative Redeemable Preferred Stock | |
Asset Acquisition Abstract | |
Number of shares of preferred stock issued (in shares) | shares | 2,650,000 |
Asset acquisition, consideration transferred, equity interest issued and issuable | $ 66.3 |
Disposal (Details)
Disposal (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Detail of Amounts Held for Sale | |
Assets held for sale, net | $ 13,759 |
Liabilities of assets held for sale | 5,490 |
Held for sale, not considered a discontinued operation | Renaissance Westchester | |
Detail of Amounts Held for Sale | |
Prepaids and other current assets | 372 |
Investment in hotel properties, net | 13,321 |
Other assets, net | 66 |
Assets held for sale, net | 13,759 |
Accounts payable and accrued expenses | 135 |
Accrued payroll and employee benefits | 5,071 |
Other current liabilities | 284 |
Liabilities of assets held for sale | 5,490 |
Severance cost | $ 4,600 |
Fair Value Measurements and I_3
Fair Value Measurements and Interest Rate Derivatives - Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Level 2 | ||
Assets: | ||
Total assets | $ 14,125 | |
Liabilities: | ||
Total liabilities | $ 3,436 | 5,710 |
Level 2 | Interest Rate Swap | ||
Liabilities: | ||
Interest rate derivative liabilities | 3,436 | 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 | 3,436 | 5,710 |
Total at the end of the period | Interest Rate Swap | ||
Liabilities: | ||
Interest rate derivative liabilities | $ 3,436 | 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 | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Interest Rate Derivatives | |||||
Fair value of interest rate derivatives, net | $ (3,436) | $ (3,436) | $ (5,710) | ||
Payment for interest rate derivative | 80 | $ 111 | |||
Noncash interest on derivatives | $ (616) | $ (762) | $ (2,194) | $ 5,534 | |
$85.0 million term loan | |||||
Interest Rate Derivatives | |||||
Fixed rate under interest rate swap agreement | 1.591% | 1.591% | 1.591% | ||
Notional amount | $ 85,000 | $ 85,000 | $ 85,000 | ||
Fair values of derivative liabilities | $ (1,169) | $ (1,169) | |||
$100.0 million term loan | |||||
Interest Rate Derivatives | |||||
Fixed rate under interest rate swap agreement | 1.853% | 1.853% | 1.853% | ||
Notional amount | $ 100,000 | $ 100,000 | $ 100,000 | ||
Fair values of derivative liabilities | $ (2,267) | $ (2,267) | $ (5,710) | ||
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% | 6.00% | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |||
Interest rate derivative effective date | Dec. 9, 2020 | Dec. 9, 2020 | |||
Interest rate derivative maturity date | Dec. 15, 2021 | Dec. 15, 2021 | |||
Notional amount | $ 220,000 | $ 220,000 | |||
Hilton San Diego Bayfront new interest rate cap | Not designated as hedging instrument | Hilton San Diego Bayfront mortgage | |||||
Interest Rate Derivatives | |||||
Strike rate under interest rate cap agreement | 6.00% | 6.00% | |||
Interest rate, description of reference rate | one-month LIBOR | ||||
Interest rate derivative effective date | Dec. 9, 2021 | ||||
Interest rate derivative maturity date | Dec. 15, 2022 | ||||
Notional amount | $ 220,000 | $ 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% | 1.591% | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |||
Interest rate derivative effective date | Oct. 29, 2015 | Oct. 29, 2015 | |||
Interest rate derivative maturity date | Sep. 2, 2022 | Sep. 2, 2022 | |||
Notional amount | $ 85,000 | $ 85,000 | |||
Fair values of derivative liabilities | $ (1,169) | $ (1,169) | $ (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% | 1.853% | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR | |||
Interest rate derivative effective date | Jan. 29, 2016 | Jan. 29, 2016 | |||
Interest rate derivative maturity date | Jan. 31, 2023 | Jan. 31, 2023 | |||
Notional amount | $ 100,000 | $ 100,000 | |||
Fair values of derivative liabilities | $ (2,267) | $ (2,267) | $ (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 |
Fair Value Measurements and I_5
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Percentage of Debt Bearing Fixed Interest Rates | 70.50% | 70.60% |
Total notes payable | $ 745,484 | $ 747,945 |
Level 3 | ||
Fair value of debt | $ 721,862 | $ 715,042 |
Other Assets (Details)
Other Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other assets, net | ||
Property and equipment, net | $ 6,022 | $ 6,767 |
Deferred rent on straight-lined third-party tenant leases | 2,988 | 2,819 |
Other receivables | 1,840 | 2,633 |
Other | 367 | 226 |
Total other assets, net | $ 11,217 | $ 12,445 |
Notes Payable (Details)
Notes Payable (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021USD ($)property | Dec. 31, 2020USD ($)property | |
Notes Payable | ||
Total notes payable | $ 745,484 | $ 747,945 |
Current portion of notes payable | 88,410 | 3,305 |
Less: current portion of deferred financing costs | (1,014) | (1,044) |
Current portion of notes payable, net | 87,396 | 2,261 |
Notes payable, less current portion | 657,074 | 744,640 |
Less: long-term portion of deferred financing costs | (1,361) | (2,112) |
Carrying value of notes payable, less current portion | $ 655,713 | $ 742,528 |
Notes payable maturing in various years | ||
Notes Payable | ||
Number of hotels provided as collateral | property | 2 | 2 |
Total notes payable | $ 135,484 | $ 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 |
Term of extension period for secured debt | 1 year | 1 year |
Total interest rate, including effect of derivative | 1.147% | 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% |
Hilton San Diego Bayfront mortgage | Not designated as hedging instrument | Interest Rate Cap | ||
Notes Payable | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Derivative, Notional Amount | $ 220,000 | |
$85.0 million term loan | ||
Notes Payable | ||
Debt maturity date | Sep. 3, 2022 | Sep. 3, 2022 |
Derivative, Notional Amount | $ 85,000 | $ 85,000 |
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 | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Derivative, Notional Amount | $ 85,000 | |
Fixed rate under interest rate swap agreement | 1.591% | 1.591% |
$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 |
Derivative, Notional Amount | $ 100,000 | $ 100,000 |
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 | ||
Interest rate, description of reference rate | one-month LIBOR | one-month LIBOR |
Derivative, Notional Amount | $ 100,000 | |
Fixed rate under interest rate swap agreement | 1.853% | 1.853% |
$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 | Sep. 30, 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 | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Deferred Financing Costs and Losses on Extinguishment of Debt | ||||
Payments of deferred financing costs | $ 2,698 | |||
Interest Expense | ||||
Interest expense on debt and finance lease obligation | $ 7,864 | $ 12,612 | $ 23,684 | 35,377 |
Noncash interest on derivatives | (616) | (762) | (2,194) | 5,534 |
Amortization of deferred financing costs | 735 | 892 | 2,207 | 2,288 |
Total interest expense | $ 7,983 | $ 12,742 | $ 23,697 | $ 43,199 |
Other Current Liabilities and_3
Other Current Liabilities and Other Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Other Current Liabilities | ||
Property, sales and use taxes payable | $ 16,798 | $ 10,134 |
Accrued interest | 3,965 | 6,914 |
Advance deposits | 31,429 | 13,341 |
Management fees payable | 655 | 169 |
Other | 3,113 | 2,048 |
Total other current liabilities | 57,129 | 32,606 |
Other Liabilities | ||
Deferred revenue | 9,106 | 7,911 |
Other | 3,122 | 3,873 |
Total other liabilities | 14,495 | 17,494 |
$85.0 million term loan | ||
Other Current Liabilities | ||
Interest rate derivative liabilities | 1,169 | |
Other Liabilities | ||
Interest rate derivative liabilities | 1,169 | |
$100.0 million term loan | ||
Other Current Liabilities | ||
Interest rate derivative liabilities | 2,267 | 5,710 |
Other Liabilities | ||
Interest rate derivative liabilities | $ 2,267 | $ 5,710 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Finance Lease | ||
Finance lease right-of-use asset, net | $ 45,079 | $ 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 | $ 15,568 | $ 15,569 |
Total finance lease obligation | $ 15,569 | 15,570 |
Weighted average remaining finance lease term | 76 years | |
Weighted average finance lease discount rate | 9.00% | |
Operating Leases | ||
Operating lease right-of-use assets, net | $ 23,971 | 26,093 |
Operating lease obligations, current | $ 5,424 | $ 5,028 |
Accounts payable and accrued expenses | Accounts payable and accrued expenses | Accounts payable and accrued expenses |
Operating lease obligations, less current portion | $ 26,432 | $ 29,954 |
Total operating lease obligations | $ 31,856 | 34,982 |
Weighted average remaining operating lease term | 6 years | |
Weighted average operating lease discount rate | 5.10% | |
Weighted average remaining operating lease term including all available extensions | 33 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 | (13,720) | (12,617) |
Finance lease right-of-use asset, net | $ 45,079 | $ 46,182 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Lease Cost | ||||
Amortization of right-of-use asset | $ 368 | $ 368 | $ 1,103 | $ 1,103 |
Interest on lease obligation | 351 | 351 | 1,053 | 1,053 |
Operating lease cost | 1,382 | 2,681 | 4,068 | 6,751 |
Variable lease cost | 15 | 13 | 39 | |
Total lease cost | $ 2,101 | $ 3,415 | $ 6,237 | $ 8,946 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Aug. 31, 2021 | Jul. 31, 2021 | Jun. 30, 2021 | May 31, 2021 | Apr. 30, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Sep. 30, 2021 |
Stockholders' equity | ||||||||||
Preferred stock redemption charges | $ 6,640 | |||||||||
Series E Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares redeemed (in shares) | 4,600,000 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.95% | 6.95% | ||||||||
Redemption price (in dollars per share) | $ 25 | $ 25 | ||||||||
Preferred stock redemption charges | $ 4,000 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 0 | 4,600,000 | 0 | 0 | 0 | 0 | ||||
Liquidation preference (in dollars per share) | $ 25 | |||||||||
Series F Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares redeemed (in shares) | 3,000,000 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.45% | 6.45% | ||||||||
Redemption price (in dollars per share) | $ 25 | |||||||||
Preferred stock redemption charges | $ 2,600 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 0 | 3,000,000 | 0 | 0 | 0 | |||||
Liquidation preference (in dollars per share) | $ 25 | |||||||||
Series G Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 2,650,000 | 0 | 2,650,000 | 2,650,000 | ||||||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | |||||||
Series G Cumulative Redeemable Preferred Stock | Montage Healdsburg | ||||||||||
Stockholders' equity | ||||||||||
Number of shares of preferred stock issued (in shares) | 2,650,000 | |||||||||
Liquidation preference (in dollars per share) | $ 25 | |||||||||
Series H Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.125% | 6.125% | ||||||||
Redemption price (in dollars per share) | $ 25 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,600,000 | 0 | 4,600,000 | 4,600,000 | ||||||
Number of shares of preferred stock issued (in shares) | 4,600,000 | |||||||||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | $ 25 | ||||||
Preferred stock redemption date | May 24, 2026 | |||||||||
Series I Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 5.70% | 5.70% | ||||||||
Redemption price (in dollars per share) | $ 25 | |||||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,000,000 | 0 | 4,000,000 | 4,000,000 | ||||||
Number of shares of preferred stock issued (in shares) | 4,000,000 | |||||||||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | $ 25 | $ 25 | ||||||
Preferred stock redemption date | Jul. 16, 2026 | |||||||||
Preferred Stock | Series E Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares redeemed (in shares) | (4,600,000) | |||||||||
Preferred Stock | Series F Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares redeemed (in shares) | (3,000,000) | |||||||||
Preferred Stock | Series H Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares of preferred stock issued (in shares) | 4,600,000 | |||||||||
Preferred Stock | Series I Cumulative Redeemable Preferred Stock | ||||||||||
Stockholders' equity | ||||||||||
Number of shares of preferred stock issued (in shares) | 4,000,000 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Jun. 30, 2021 | Sep. 30, 2021 | Feb. 28, 2021 | Feb. 28, 2017 | |
Stockholders' equity | ||||
Proceeds from issuance of common stock | $ 38,443 | |||
Share Repurchase Program | ||||
Stockholders' equity | ||||
Repurchase Program, remaining authorized capacity | 500,000 | |||
Maximum | Share Repurchase Program | ||||
Stockholders' equity | ||||
Stock Repurchase Program, maximum amount authorized for repurchase | $ 500,000 | |||
Common Stock | ||||
Stockholders' equity | ||||
Payment of stock offering costs | $ 784 | |||
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 | $ 300,000 | |||
Proceeds from issuance of common stock | $ 38,400 | |||
ATM Program, number of shares sold or issued (in shares) | 2,913,682 | |||
ATM Program, remaining amount authorized for issuance | $ 137,000 | |||
Preferred Stock | ||||
Stockholders' equity | ||||
Payment of stock offering costs | $ 7,287 | |||
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 | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Compensation Expense and Forfeitures | |||||
Capitalized compensation cost related to shares issued to design and construction employees | $ 366 | $ 376 | |||
Restricted Shares | |||||
Compensation Expense and Forfeitures | |||||
Amortization Expense, including forfeitures | $ 3,165 | $ 2,238 | 10,576 | 7,509 | |
Capitalized compensation cost related to shares issued to design and construction employees | $ 124 | $ 130 | $ 366 | $ 376 | |
Restricted Shares | Minimum | |||||
Long-Term Incentive Plan | |||||
Vesting period | 3 years | ||||
Restricted Shares | Former Chief Executive Officer | |||||
Compensation Expense and Forfeitures | |||||
Amortization Expense, including forfeitures | $ 1,100 |
Commitments and Contingencies -
Commitments and Contingencies - Management Fees, Franchise Costs and Renovation Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Basic and incentive management fees incurred | ||||
Other property-level expenses | $ 21,633 | $ 9,528 | $ 48,177 | $ 47,109 |
License and Franchise Agreements | ||||
Franchise assessments | 3,241 | 555 | 5,961 | 5,349 |
Franchise royalties | 940 | 108 | 1,507 | 988 |
Franchise costs | 4,181 | 663 | 7,468 | 6,337 |
Basic management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 4,391 | 624 | 8,767 | 6,179 |
Incentive management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 687 | 687 | ||
Total basic and incentive management fees | ||||
Basic and incentive management fees incurred | ||||
Other property-level expenses | 5,078 | $ 624 | $ 9,454 | $ 6,179 |
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 | $ 68,600 | $ 68,600 |
Commitments and Contingencies_2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details) $ in Thousands | Sep. 30, 2021USD ($)property | Sep. 30, 2021USD ($)property | Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)property | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)property | Dec. 31, 2020USD ($) |
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 18 | 18 | 18 | 18 | 18 | |||
Other | ||||||||
Gain (loss) on extinguishment of debt | $ 61 | $ (210) | $ 371 | $ (210) | ||||
Term of unsecured environmental indemnities | 0 years | |||||||
Damage limitation of unsecured environmental indemnities | $ 0 | |||||||
Payments on credit facility | 300,000 | |||||||
Hurricane Loss Contingency | ||||||||
Impairment losses | 1,014 | 1,014 | $ 133,466 | |||||
Hilton New Orleans St. Charles | ||||||||
Hurricane Loss Contingency | ||||||||
Impairment losses | $ 1,000 | |||||||
Hilton Times Square | ||||||||
Other | ||||||||
Loss contingency accrued balance | $ 10,600 | 10,600 | 10,600 | 10,600 | $ 10,600 | $ 11,600 | ||
Loss contingency payment | 600 | |||||||
Restricted Cash | $ 10,600 | 10,600 | 10,600 | 10,600 | $ 10,600 | $ 11,600 | ||
Gain (loss) on extinguishment of debt | 100 | 400 | ||||||
Percentage of total rooms | Geographic Concentration Risk [Member] | California | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 32.00% | |||||||
Percentage of total rooms | Geographic Concentration Risk [Member] | Florida | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 11.00% | |||||||
Percentage of total rooms | Geographic Concentration Risk [Member] | Hawaii | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 6.00% | |||||||
Percentage of total rooms | Geographic Concentration Risk [Member] | Illinois | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 13.00% | |||||||
Percentage of total rooms | Geographic Concentration Risk [Member] | Massachusetts | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 17.00% | |||||||
Percentage of total revenue generated by hotels | Geographic Concentration Risk [Member] | California | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 34.00% | |||||||
Percentage of total revenue generated by hotels | Geographic Concentration Risk [Member] | Florida | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 16.00% | |||||||
Percentage of total revenue generated by hotels | Geographic Concentration Risk [Member] | Hawaii | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 21.00% | |||||||
Percentage of total revenue generated by hotels | Geographic Concentration Risk [Member] | Illinois | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 5.00% | |||||||
Percentage of total revenue generated by hotels | Geographic Concentration Risk [Member] | Massachusetts | ||||||||
Concentration of Risk | ||||||||
Concentration risk (as a percent) | 11.00% | |||||||
Financial standby letter of credit | ||||||||
Other | ||||||||
Outstanding irrevocable letters of credit | $ 200 | $ 200 | 200 | 200 | $ 200 | |||
Payments on credit facility | $ 0 | |||||||
Hurricane Ida | Hilton New Orleans St. Charles | ||||||||
Hurricane Loss Contingency | ||||||||
Hurricane-related restoration expenses | 1,200 | |||||||
Impairment losses | 1,000 | |||||||
Hurricane Ida | JW Marriott New Orleans | ||||||||
Hurricane Loss Contingency | ||||||||
Hurricane-related restoration expenses | $ 400 | |||||||
Hotel owned by the Company | Geographic Concentration Risk [Member] | California | ||||||||
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 5 | 5 | 5 | 5 | 5 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Florida | ||||||||
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 2 | 2 | 2 | 2 | 2 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Hawaii | ||||||||
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 1 | 1 | 1 | 1 | 1 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Illinois | ||||||||
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 3 | 3 | 3 | 3 | 3 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Massachusetts | ||||||||
Concentration of Risk | ||||||||
Number of hotels owned by the Company | property | 2 | 2 | 2 | 2 | 2 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 3 Months Ended | ||
Dec. 31, 2021USD ($)aroom | Oct. 15, 2021USD ($) | Sep. 30, 2021USD ($) | |
Unsecured revolving credit facility | |||
Business Combination, Description | |||
Remaining borrowing capacity available | $ 500 | ||
Subsequent Event [Member] | Four Seasons Resort Napa Valley | |||
Business Combination, Description | |||
Number of rooms acquired | room | 85 | ||
Purchase price of acqured entity | $ 177.5 | ||
Subsequent Event [Member] | Four Seasons Resort Napa Valley | Unsecured revolving credit facility | |||
Business Combination, Description | |||
Remaining borrowing capacity available | $ 500 | ||
Subsequent Event [Member] | Elusa Winery | |||
Business Combination, Description | |||
Area of Land (in acres) | a | 4.5 | ||
Subsequent Event [Member] | Disposal group, not considered a discontinued operation | Renaissance Westchester | |||
Disposal Group | |||
Gross sale price of hotel | $ 18.8 | ||
Subsequent Event [Member] | Disposal group, not considered a discontinued operation | Embassy Suites La Jolla | |||
Disposal Group | |||
Gross sale price of hotel | $ 226.7 | ||
Number of rooms sold | room | 340 |