Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2024 | May 01, 2024 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
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 | 15 Enterprise, Suite 200 | |
Entity Address, City or Town | Aliso Viejo | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92656 | |
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 | 203,674,398 | |
Entity Central Index Key | 0001295810 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Stock | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | SHO | |
Security Exchange Name | NYSE | |
Series 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 | Mar. 31, 2024 | Dec. 31, 2023 |
ASSETS | ||
Investment in hotel properties, net | $ 2,588,849 | $ 2,585,279 |
Operating lease right-of-use assets, net | 11,619 | 12,755 |
Cash and cash equivalents | 400,678 | 426,403 |
Restricted Cash | 70,317 | 67,295 |
Accounts receivable, net | 36,694 | 31,206 |
Prepaid expenses and other assets, net | 33,943 | 26,383 |
Total assets | 3,142,100 | 3,149,321 |
LIABILITIES | ||
Debt, net of unamortized deferred financing costs | 814,410 | 814,559 |
Operating lease obligations, current and noncurrent | 15,588 | 16,735 |
Accounts payable and accrued expenses | 48,078 | 48,410 |
Dividends and distributions payable | 18,243 | 29,965 |
Other liabilities | 84,485 | 73,014 |
Total liabilities | 980,804 | 982,683 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Common stock, $0.01 par value, 500,000,000 shares authorized, 203,674,398 shares issued and outstanding at March 31, 2024 and 203,479,585 shares issued and outstanding at December 31, 2023 | 2,037 | 2,035 |
Additional paid in capital | 2,416,085 | 2,416,417 |
Distributions in excess of retained earnings | (538,076) | (533,064) |
Total stockholders' equity | 2,161,296 | 2,166,638 |
Total equity | 2,161,296 | 2,166,638 |
Total liabilities and stockholders' equity | 3,142,100 | 3,149,321 |
Series G Cumulative Redeemable Preferred Stock | ||
Stockholders' equity: | ||
Cumulative Redeemable Preferred Stock | 66,250 | 66,250 |
Series H Cumulative Redeemable Preferred Stock | ||
Stockholders' equity: | ||
Cumulative Redeemable Preferred Stock | 115,000 | 115,000 |
Series I Cumulative Redeemable Preferred Stock | ||
Stockholders' equity: | ||
Cumulative Redeemable Preferred Stock | $ 100,000 | $ 100,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
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) | 203,674,398 | 203,479,585 |
Common stock, shares outstanding (in shares) | 203,674,398 | 203,479,585 |
Series G Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 2,650,000 | 2,650,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 2,650,000 | 2,650,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | $ 25 |
Series H Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.125% | 6.125% |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 4,600,000 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,600,000 | 4,600,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | $ 25 |
Series I Cumulative Redeemable Preferred Stock | ||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 5.70% | 5.70% |
Preferred stock, Cumulative Redeemable Preferred Stock, shares issued (in shares) | 4,000,000 | 4,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 4,000,000 | 4,000,000 |
Preferred stock, Cumulative Redeemable Preferred Stock, liquidation preference (in dollars per share) | $ 25 | $ 25 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
REVENUES | ||
Revenues | $ 217,166 | $ 243,443 |
OPERATING EXPENSES | ||
Advertising and promotion | 12,132 | 13,022 |
Repairs and maintenance | 8,710 | 9,446 |
Utilities | 5,944 | 7,092 |
Franchise costs | 4,205 | 3,918 |
Property tax, ground lease and insurance | 18,925 | 19,233 |
Other property-level expenses | 27,623 | 31,777 |
Corporate overhead | 7,518 | 8,468 |
Depreciation and amortization | 29,040 | 32,342 |
Total operating expenses | 199,907 | 218,654 |
Interest and other income | 5,453 | 541 |
Interest expense | (11,010) | (13,794) |
Gain on sale of assets | 457 | |
Gain (loss) on extinguishment of debt, net | 21 | 9,909 |
Income before income taxes | 12,180 | 21,445 |
Income tax benefit (provision), net | 855 | (358) |
Net Income | 13,035 | 21,087 |
Preferred stock dividends | (3,683) | (3,768) |
Income Attributable to Common Stockholders | $ 9,352 | $ 17,319 |
Basic and diluted per share amounts: | ||
Basic income attributable to common stockholders per common share (in dollars per share) | $ 0.05 | $ 0.08 |
Diluted income attributable to common stockholders per common share (in dollars per share) | $ 0.05 | $ 0.08 |
Basic weighted average common shares outstanding (in shares) | 202,631 | 207,035 |
Diluted weighted average common shares outstanding (in shares) | 202,958 | 207,282 |
Room | ||
REVENUES | ||
Revenues | $ 135,815 | $ 152,438 |
OPERATING EXPENSES | ||
Expenses | 35,551 | 39,064 |
Food and beverage | ||
REVENUES | ||
Revenues | 61,339 | 70,812 |
OPERATING EXPENSES | ||
Expenses | 44,315 | 48,535 |
Other operating | ||
REVENUES | ||
Revenues | 20,012 | 20,193 |
OPERATING EXPENSES | ||
Expenses | $ 5,944 | $ 5,757 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Series G Cumulative Redeemable Preferred Stock Distributions in excess of retained earnings | Series G Cumulative Redeemable Preferred Stock | Series H Cumulative Redeemable Preferred Stock Distributions in excess of retained earnings | Series H Cumulative Redeemable Preferred Stock | Series I Cumulative Redeemable Preferred Stock Distributions in excess of retained earnings | Series I Cumulative Redeemable Preferred Stock | Preferred Stock | Common Stock | Additional Paid In Capital | Distributions in excess of retained earnings | Total |
Beginning Balance at Dec. 31, 2022 | $ 281,250 | $ 2,093 | $ 2,465,595 | $ (663,977) | $ 2,084,961 | ||||||
Beginning Balance (in shares) at Dec. 31, 2022 | 11,250,000 | 209,320,447 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Amortization of deferred stock compensation | 2,545 | 2,545 | |||||||||
Issuance of restricted common stock, net | $ 1 | (3,349) | (3,348) | ||||||||
Issuance of restricted common stock, net (in shares) | 55,970 | ||||||||||
Forfeiture of restricted common stock (in shares) | (1,435) | ||||||||||
Common stock distributions declared | (10,449) | (10,449) | |||||||||
Preferred stock dividends declared | $ (582) | $ (582) | $ (1,761) | $ (1,761) | $ (1,425) | $ (1,425) | |||||
Repurchases of outstanding common stock | $ (20) | (18,606) | (18,626) | ||||||||
Repurchases of outstanding common stock (in shares) | (1,964,923) | ||||||||||
Net Income | 21,087 | 21,087 | |||||||||
Ending Balance at Mar. 31, 2023 | $ 281,250 | $ 2,074 | 2,446,185 | (657,107) | 2,072,402 | ||||||
Ending Balance (in shares) at Mar. 31, 2023 | 11,250,000 | 207,410,059 | |||||||||
Beginning Balance at Dec. 31, 2023 | $ 281,250 | $ 2,035 | 2,416,417 | (533,064) | 2,166,638 | ||||||
Beginning Balance (in shares) at Dec. 31, 2023 | 11,250,000 | 203,479,585 | |||||||||
Increase (Decrease) in Stockholders' Equity | |||||||||||
Amortization of deferred stock compensation | 2,887 | 2,887 | |||||||||
Issuance of restricted common stock, net | $ 2 | (3,219) | (3,217) | ||||||||
Issuance of restricted common stock, net (in shares) | 194,813 | ||||||||||
Common stock distributions declared | (14,364) | (14,364) | |||||||||
Preferred stock dividends declared | $ (497) | $ (497) | $ (1,761) | $ (1,761) | $ (1,425) | $ (1,425) | |||||
Net Income | 13,035 | 13,035 | |||||||||
Ending Balance at Mar. 31, 2024 | $ 281,250 | $ 2,037 | $ 2,416,085 | $ (538,076) | $ 2,161,296 | ||||||
Ending Balance (in shares) at Mar. 31, 2024 | 11,250,000 | 203,674,398 |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Common stock distributions declared per share (in dollars per share) | $ 0.07 | $ 0.05 |
Series G Cumulative Redeemable Preferred Stock | ||
Preferred stock dividends declared per share (in dollars per share) | 0.187500 | 0.219536 |
Series H Cumulative Redeemable Preferred Stock | ||
Preferred stock dividends declared per share (in dollars per share) | 0.382813 | 0.382813 |
Series I Cumulative Redeemable Preferred Stock | ||
Preferred stock dividends declared per share (in dollars per share) | $ 0.356250 | $ 0.356250 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net Income | $ 13,035 | $ 21,087 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Bad debt expense (recovery) | 80 | (58) |
Gain on sale of assets | (457) | |
(Gain) loss on extinguishment of debt, net | (21) | (9,909) |
Noncash interest on derivatives, net | (2,042) | 1,832 |
Depreciation | 28,782 | 32,214 |
Amortization of franchise fees and other intangibles | 258 | 110 |
Amortization of deferred financing costs | 739 | 545 |
Amortization of deferred stock compensation | 2,770 | 2,427 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (5,568) | 264 |
Prepaid expenses and other assets | (6,400) | (5,604) |
Accounts payable and other liabilities | 7,319 | 4,392 |
Operating lease right-of-use assets and obligations | (11) | (52) |
Net cash provided by operating activities | 38,484 | 47,248 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Renovations and additions to hotel properties and other assets | (27,664) | (22,474) |
Net cash used in investing activities | (27,664) | (22,474) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repurchases of outstanding common stock | (18,626) | |
Repurchases of common stock for employee tax obligations | (3,217) | (3,348) |
Payments on notes payable | (537) | (524) |
Dividends and distributions paid | (29,769) | (13,981) |
Net cash used in financing activities | (33,523) | (36,479) |
Net decrease in cash and cash equivalents and restricted cash | (22,703) | (11,705) |
Cash and cash equivalents and restricted cash, beginning of period | 493,698 | 157,206 |
Cash and cash equivalents and restricted cash, end of period | 470,995 | 145,501 |
Supplemental Disclosure of Cash Flow Information | ||
Cash and cash equivalents | 400,678 | 96,386 |
Restricted cash | 70,317 | 49,115 |
Total cash and cash equivalents and restricted cash shown on the consolidated statements of cash flows | 470,995 | 145,501 |
Cash paid for interest | 15,306 | 14,127 |
Cash paid for income taxes, net | 3,137 | 40 |
Operating cash flows used for operating leases | 1,360 | 1,409 |
Changes in operating lease right-of-use assets | 1,136 | 1,088 |
Changes in operating lease obligations | (1,147) | (1,140) |
Changes in operating lease right-of-use assets and lease obligations, net | (11) | (52) |
Supplemental Disclosure of Noncash Investing and Financing Activities | ||
Accrued renovations and additions to hotel properties and other assets | 14,512 | 15,382 |
Operating lease right-of-use asset obtained in exchange for operating lease obligation | 2,163 | |
Amortization of deferred stock compensation - construction activities | 117 | 118 |
Dividends and distributions payable | $ 18,243 | $ 14,231 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2024 | |
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, invests in hotels where it can add value through capital investment, hotel repositioning and asset management. In addition, the Company seeks to capitalize on its portfolio’s embedded value and balance sheet strength to actively recycle past investments into new growth and value creation opportunities in order to deliver strong stockholder returns and superior per share net asset value growth. As a REIT, certain tax laws limit the amount of “non-qualifying” income the Company can earn, including income derived directly from the operation of hotels. The Company leases all of its hotels to its TRS Lessee, which in turn enters into long-term management agreements with third parties to manage the operations of the Company’s hotels, in transactions that are intended to generate qualifying income. As of March 31, 2024 and 2023, the Company owned 14 and 15 hotels, respectively. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023, 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, 2023, filed with the Securities and Exchange Commission on February 23, 2024. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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), which include the Company’s time-based restricted stock awards, are considered participating securities and are included in the computation of earnings per share. Basic earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, including shares of the Company’s performance-based restricted stock units for which all necessary conditions have been satisfied except for the passage of time. Diluted earnings 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 time-based unvested restricted stock awards and performance-based restricted stock units, using the more dilutive of either the two-class method or the treasury stock method. The Company’s performance-based restricted stock units are considered for computing diluted net income per common share as of the beginning of the period in which all necessary conditions have been satisfied and the only remaining vesting condition is a service vesting condition. The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2024 2023 Numerator: Net income $ 13,035 $ 21,087 Preferred stock dividends (3,683) (3,768) Distributions paid to participating securities (65) (52) Undistributed income allocated to participating securities — (40) Numerator for basic and diluted income attributable to common stockholders $ 9,287 $ 17,227 Denominator: Weighted average basic common shares outstanding 202,631 207,035 Unvested restricted stock units 327 247 Weighted average diluted common shares outstanding 202,958 207,282 Basic income attributable to common stockholders per common share $ 0.05 $ 0.08 Diluted income attributable to common stockholders per common share $ 0.05 $ 0.08 In its calculation of diluted earnings per share, the Company excluded 929,928 and 1,039,023 anti-dilutive unvested time-based restricted stock awards for the three months ended March 31, 2024 and 2023, respectively (see Note 10). The Company also had unvested performance-based restricted stock units as of March 31, 2024 and 2023 that are not considered participating securities as the awards contain forfeitable rights to dividends or dividend equivalents. The performance-based restricted stock units were granted based on either target market condition thresholds or pre-determined stock price targets. Based on the Company’s common stock performance, the Company excluded 188,004 anti-dilutive performance-based restricted stock units from its calculations of diluted earnings per share for the three months ended March 31, 2024 and 2023 (see Note 10). Restricted Cash Restricted cash primarily includes reserves for operating expenses and capital expenditures required by certain of the Company’s management, franchise and debt agreements. At times, restricted cash also includes hotel acquisition or disposition-related earnest money held in escrow reserves pending completion of the associated transaction. In addition, restricted cash as of March 31, 2024 and December 31, 2023 included $0.1 million and $0.2 million, respectively, held in escrow related to certain current and potential employee-related obligations at one of the Company’s former hotels and $0.2 million held as collateral for certain letters of credit as of both March 31, 2024 and December 31, 2023 (see Note 11). 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 years to forty years for buildings and improvements and three years to twelve years for FF&E. 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 fifteen years to twenty 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 investments in hotel properties to be held and used by the Company whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors the Company considers when assessing whether impairment indicators exist include, but are not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositionings, significant changes in the manner in which the Company uses the asset, physical damage to the property due to unforeseen events such as natural disasters, and other market and economic conditions. Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. The Company performs a fair value assessment using valuation techniques such as discounted cash flows and comparable sale transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The Company’s judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, revenue per available room and margins, as well as specific market and economic conditions. Based on the Company’s review, no hotels were impaired during the three months ended March 31, 2024 and 2023. 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. Leases The Company determines if a contract is a lease at inception. Leases with an initial term of twelve 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 twelve 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. 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. 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 ROU assets were impaired during the three months ended March 31, 2024 and 2023. 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. The revenue is recognized when the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. Additionally, the Company collects sales, use, occupancy and other similar taxes from customers at its hotels at the time of purchase, which are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency. Trade receivables and contract liabilities consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Trade receivables, net (1) $ 17,016 $ 14,431 Contract liabilities (2) $ 61,650 $ 45,432 (1) Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in other liabilities on the accompanying consolidated balance sheets. During the three months ended March 31, 2024 and 2023, the Company recognized approximately $20.2 million and $27.5 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 November 2023, the FASB issued Accounting Standards Update No. 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Segment Reporting In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
Investment in Hotel Properties
Investment in Hotel Properties | 3 Months Ended |
Mar. 31, 2024 | |
Investment in Hotel Properties | |
Investment in Hotel Properties | 3. Investment in Hotel Properties Investment in hotel properties, net consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Land $ 614,112 $ 614,112 Buildings and improvements 2,602,467 2,587,278 Furniture, fixtures and equipment 410,696 407,861 Intangible assets 42,187 42,187 Construction in progress 75,672 61,247 Investment in hotel properties, gross 3,745,134 3,712,685 Accumulated depreciation and amortization (1,156,285) (1,127,406) Investment in hotel properties, net $ 2,588,849 $ 2,585,279 |
Fair Value Measurements and Int
Fair Value Measurements and Interest Rate Derivatives | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements and Interest Rate Derivatives | |
Fair Value Measurements and Interest Rate Derivatives | 4. Fair Value Measurements and Interest Rate Derivatives Fair Value Measurements As of March 31, 2024 and December 31, 2023, the carrying amount of certain financial instruments, including cash and cash equivalents, restricted cash, accounts receivable and accounts payable and accrued expenses were representative of their fair values due to the short-term maturity of these instruments. A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows: Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. As of both March 31, 2024 and December 31, 2023, 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. Fair Value of Debt As of March 31, 2024 and December 31, 2023, 51.1% and 51.2%, respectively, of the Company’s outstanding debt had fixed interest rates, including the effects of interest rate swap derivatives. The Company uses Level 3 measurements to estimate the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates. The Company’s principal balances and fair market values of its consolidated debt as of March 31, 2024 (unaudited) and December 31, 2023 were as follows (in thousands): March 31, 2024 December 31, 2023 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 818,512 $ 806,482 $ 819,050 $ 805,212 (1) The principal balance of debt is presented before any unamortized deferred financing costs. (2) Due to prevailing market conditions and the current uncertain economic environment, 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. Interest Rate Derivatives The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at March 31, 2024 (unaudited) and December 31, 2023 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional March 31, December 31, Hedged Debt Type Rate Index Date Date Amount 2024 2023 Term Loan 1 Swap 3.675 % CME Term SOFR March 17, 2023 March 17, 2026 $ 75,000 $ 1,150 $ 417 Term Loan 1 Swap 3.931 % CME Term SOFR September 14, 2023 September 14, 2026 $ 100,000 908 (401) $ 2,058 $ 16 (1) The fair values of the swap derivative assets were included in prepaid expenses and other assets, net on the accompanying consolidated balance sheets as of March 31, 2024 and December 31, 2023. The fair value of the swap derivative liability was included in other liabilities on the accompanying consolidated balances sheet as of December 31, 2023. Noncash changes in the fair values of the Company’s interest rate derivatives resulted in a (decrease) increase to interest expense for the three months ended March 31, 2024 and 2023 as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Noncash interest on derivatives, net $ (2,042) $ 1,832 |
Prepaid Expenses and Other Asse
Prepaid Expenses and Other Assets | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses and Other Assets. | |
Prepaid Expenses and Other Assets | 5. Prepaid Expenses and Other Assets Prepaid expenses and other assets, net consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Prepaid expenses $ 14,316 $ 8,123 Inventory 9,381 9,185 Deferred financing costs 3,276 3,627 Property and equipment, net 2,937 3,120 Interest rate derivatives 2,058 417 Deferred rent on straight-lined third-party tenant leases 618 552 Liquor licenses 930 930 Other 427 429 Total prepaid expenses and other assets, net $ 33,943 $ 26,383 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosures | |
Notes Payable | 6. Notes Payable Notes payable consisted of the following (in thousands): Balance Outstanding as of March 31, 2024 March 31, December 31, Rate Type Interest Rate Maturity Date 2024 2023 (unaudited) Mortgage Loans JW Marriott New Orleans Fixed 4.15 % December 11, 2024 $ 73,512 $ 74,050 Unsecured Corporate Credit Facilities Term Loan 1 Fixed (1) 5.25 % July 25, 2027 $ 175,000 $ 175,000 Term Loan 2 Variable (2) 6.76 % January 25, 2028 175,000 175,000 Term Loan 3 Variable (3) 6.77 % May 1, 2025 225,000 225,000 Total unsecured corporate credit facilities $ 575,000 $ 575,000 Unsecured Senior Notes Series A Fixed 4.69 % January 10, 2026 $ 65,000 $ 65,000 Series B Fixed 4.79 % January 10, 2028 105,000 105,000 Total unsecured senior notes $ 170,000 $ 170,000 Total debt $ 818,512 $ 819,050 Unamortized deferred financing costs (4,102) (4,491) Debt, net of unamortized deferred financing costs $ 814,410 $ 814,559 (1) Term Loan 1 is subject to two interest rate swap derivatives (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rate on the term loan was 5.25% at both March 31, 2024 and December 31, 2023. (2) Term Loan 2’s variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 6.76% and 6.77% at March 31, 2024 and December 31, 2023, respectively. (3) Term Loan 3’s variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. The effective interest rates on the term loan were 6.77% and 6.81% at March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, the Company had no amount outstanding on its credit facility, with $500.0 million of capacity available for borrowing under the facility. The Company’s ability to draw on the credit facility is subject to the Company’s compliance with various financial covenants. Interest Expense Total interest incurred and expensed on the Company’s debt was as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Interest expense on debt $ 12,313 $ 11,417 Noncash interest on derivatives, net (2,042) 1,832 Amortization of deferred financing costs 739 545 Total interest expense $ 11,010 $ 13,794 |
Other Liabilities
Other Liabilities | 3 Months Ended |
Mar. 31, 2024 | |
Other Liabilities [Abstract] | |
Other Liabilities | 7. Other Liabilities Other Liabilities Other liabilities consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Advance deposits $ 61,650 $ 45,432 Property, sales and use taxes payable 10,070 6,903 Accrued interest 3,353 6,346 Deferred rent 2,383 2,711 Income taxes payable 76 2,860 Interest rate derivative — 401 Management fees payable 1,125 1,321 Other 5,828 7,040 Total other liabilities $ 84,485 $ 73,014 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
Leases | 8. Leases As of both March 31, 2024 and December 31, 2023, the Company had operating leases for ground, office, equipment and airspace leases with maturity dates ranging from 2025 through 2097, excluding renewal options. Including renewal options available to the Company, the lease maturity date extends to 2147. Operating leases were included on the Company’s consolidated balance sheets as follows (in thousands): March 31, December 31, 2024 2023 (unaudited) Right-of-use assets, net $ 11,619 $ 12,755 Lease obligations $ 15,588 $ 16,735 Weighted average remaining lease term 29 years Weighted average discount rate 5.4 % The components of lease expense were as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Operating lease cost $ 1,352 $ 1,359 Variable lease cost (1) 2,135 2,086 Sublease income (2) (297) (297) Total lease cost $ 3,190 $ 3,148 (1) Several of the Company’s hotels pay percentage rent, which is calculated on operating revenues above certain thresholds. (2) Sublease income is included in corporate overhead in the accompanying consolidated statements of operations for the three months ended March 31, 2024 and 2023. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Stockholders’ Equity 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 Cumulative Redeemable Preferred Stock (“Series G preferred stock”) to the hotel’s seller as partial payment of the hotel. The Series G preferred stock, which is callable at its $25.00 redemption price plus accrued and unpaid dividends by the Company at any time, initially accrued dividends at a rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort. In January 2024, the annual dividend rate increased to the greater of 3.0% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort. The Company expects the annual dividend rate will increase in the second half of 2024 to the greater of 4.5% or the rate equal to the Montage Healdsburg’s annual net operating income yield on the Company’s total investment in the resort. 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 Stock Repurchase Program Details of the Company’s repurchases were as follows (dollars in thousands): Three Months Ended March 31, 2024 2023 Number of common shares repurchased — 1,964,923 Cost, including fees and commissions $ — $ 18,626 Number of preferred shares repurchased — — As of March 31, 2024, $454.7 million remains available for repurchase under the stock repurchase program. Future repurchases will depend on various factors, including the Company’s capital needs and restrictions under its various financing agreements, as well as the price of the Company’s common and preferred stock. ATM Agreements |
Incentive Award Plan
Incentive Award Plan | 3 Months Ended |
Mar. 31, 2024 | |
Incentive Award Plan | |
Incentive Award Plan | 10. Incentive Award Plan The Company’s Incentive Award Plan (the “Plan”) provides for granting discretionary awards to employees, consultants and non-employee directors. The awards may be made in the form of options, restricted stock awards, dividend equivalents, stock payments, restricted stock units, other incentive awards, LTIP units or share appreciation rights. Should a stock grant be forfeited prior to its vesting, the shares covered by the stock grant are added back to the Plan 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 Plan. Restricted shares and units are measured at fair value on the date of grant and amortized as compensation expense over the relevant requisite service period or derived service period. The Company has elected to account for forfeitures as they occur. As of both March 31, 2024 and 2023, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Amortization expense, including forfeitures $ 2,770 $ 2,427 Capitalized compensation cost (1) $ 117 $ 118 (1) The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels. Restricted Stock Awards The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock award activity for the three months ended March 31, 2024: Weighted-Average Grant Date Number of Shares Fair Value Unvested at January 1, 2024 1,032,266 $ 11.11 Granted 369,075 $ 10.76 Vested (471,413) $ 11.20 Unvested at March 31, 2024 929,928 $ 10.93 Restricted Stock Units The Company’s restricted stock units are performance-based restricted shares that generally vest based on the Company’s total relative shareholder return and the achievement of pre-determined stock price targets during performance periods ranging from three years to five years . The following is a summary of non-vested restricted stock unit activity, at target performance, for the three months ended March 31, 2024: Weighted-Average Target Number Grant Date of Shares Fair Value Unvested at January 1, 2024 1,076,160 $ 10.69 Granted 475,746 $ 11.50 Vested (119,732) $ 11.21 Forfeited (50,100) $ 11.21 Unvested at March 31, 2024 1,382,074 $ 10.90 The restricted stock units granted during the first three months of 2024 vest based on the Company’s total relative shareholder return following a three year performance period. The number of shares that may become vested ranges from zero to 200% of the amount granted. The grant date fair values of the restricted stock units were determined using a Monte Carlo simulation model with the following assumptions: Expected volatility 31.0 % Dividend yield (1) — Risk-free rate 4.34 % Expected term 3 years (1) Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Commitments and Contingencies | 11. Commitments and Contingencies Management Agreements Management agreements with the Company’s third-party hotel managers currently require the Company to pay between 2.0% 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 management and incentive management fees were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Basic management fees $ 5,974 $ 6,728 Incentive management fees 3,029 3,527 Total basic and incentive management fees $ 9,003 $ 10,255 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 were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Franchise assessments (1) $ 3,882 $ 3,611 Franchise royalties 323 307 Total franchise costs $ 4,205 $ 3,918 (1) Includes advertising, reservation and frequent guest program assessments. Renovation and Construction Commitments At March 31, 2024, the Company had various contracts outstanding with third parties in connection with the ongoing renovations of certain of its hotels. The remaining commitments under these contracts at March 31, 2024 totaled $85.4 million. Concentration of Risk The concentration of the Company’s hotels in California, Florida and Hawaii exposes the Company’s business to economic and severe weather conditions, competition and real and personal property tax rates unique to these locales. As of March 31, 2024, our hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Consolidated Number of Hotels Total Rooms Revenue California 5 39 % 44 % Florida 3 19 % 15 % Hawaii 1 8 % 17 % 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”), of which the Company was relieved of $11.4 million as of December 31, 2023. In the first quarter of 2024, the Company was relieved of an additional $0.1 million of the potential obligation. The remaining potential obligation is reassessed at the end of every quarter, resulting in a total gain on extinguishment of debt of $21,000, which is included on the accompanying consolidated statement of operations for the three months ended March 31, 2024. As of March 31, 2024 and December 31, 2023, restricted cash on the accompanying consolidated balance sheets included $0.1 million and $0.2 million, respectively, which will continue to be held in escrow until the potential obligation is resolved. The potential obligation balances of $0.1 million and $0.2 million were included in accounts payable and accrued expenses on the accompanying consolidated balance sheets as of March 31, 2024 and December 31, 2023, respectively. The Company has provided customary unsecured indemnities to certain lenders, including in particular, environmental indemnities. The Company has performed due diligence on the potential environmental risks, including obtaining an independent environmental review from outside environmental consultants. These indemnities obligate the Company to reimburse the indemnified parties for damages related to certain environmental matters. There is no term or damage limitation on these indemnities; however, if an environmental matter arises, the Company could have recourse against other previous owners or a claim against its environmental insurance policies. At March 31, 2024, 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 March 31, 2024. The letters of credit are collateralized with $0.2 million held in a restricted bank account owned by the Company, which is included in restricted cash on the accompanying consolidated balance sheets as of both March 31, 2024 and December 31, 2023. The Company is subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business, regarding the operation of its hotels, its managers and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, the Company believes that the aggregate identifiable amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on its financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events | |
Subsequent Events | 12. Subsequent Event On April 23, 2024 , the Company acquired the Hyatt Regency San Antonio Riverwalk for a contractual purchase price of $230.0 million. The acquisition was funded from available cash, including a portion of the proceeds received from the Company’s sale of the Boston Park Plaza in October 2023. In connection with the acquisition, the Company entered into an agreement with the Hyatt Corporation to provide for management of the hotel. Pursuant to the terms of the management agreement, the Hyatt Corporation will contribute $8.0 million of key money, subject to certain terms and conditions. The Company is currently evaluating the accounting for this acquisition, including assessing the fair values of the assets acquired and the liabilities assumed. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements as of March 31, 2024 and December 31, 2023, and for the three months ended March 31, 2024 and 2023, 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, 2023, filed with the Securities and Exchange Commission on February 23, 2024. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024. 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), which include the Company’s time-based restricted stock awards, are considered participating securities and are included in the computation of earnings per share. Basic earnings attributable to common stockholders per common share is computed based on the weighted average number of shares of common stock outstanding during each period, including shares of the Company’s performance-based restricted stock units for which all necessary conditions have been satisfied except for the passage of time. Diluted earnings 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 time-based unvested restricted stock awards and performance-based restricted stock units, using the more dilutive of either the two-class method or the treasury stock method. The Company’s performance-based restricted stock units are considered for computing diluted net income per common share as of the beginning of the period in which all necessary conditions have been satisfied and the only remaining vesting condition is a service vesting condition. The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2024 2023 Numerator: Net income $ 13,035 $ 21,087 Preferred stock dividends (3,683) (3,768) Distributions paid to participating securities (65) (52) Undistributed income allocated to participating securities — (40) Numerator for basic and diluted income attributable to common stockholders $ 9,287 $ 17,227 Denominator: Weighted average basic common shares outstanding 202,631 207,035 Unvested restricted stock units 327 247 Weighted average diluted common shares outstanding 202,958 207,282 Basic income attributable to common stockholders per common share $ 0.05 $ 0.08 Diluted income attributable to common stockholders per common share $ 0.05 $ 0.08 In its calculation of diluted earnings per share, the Company excluded 929,928 and 1,039,023 anti-dilutive unvested time-based restricted stock awards for the three months ended March 31, 2024 and 2023, respectively (see Note 10). The Company also had unvested performance-based restricted stock units as of March 31, 2024 and 2023 that are not considered participating securities as the awards contain forfeitable rights to dividends or dividend equivalents. The performance-based restricted stock units were granted based on either target market condition thresholds or pre-determined stock price targets. Based on the Company’s common stock performance, the Company excluded 188,004 anti-dilutive performance-based restricted stock units from its calculations of diluted earnings per share for the three months ended March 31, 2024 and 2023 (see Note 10). |
Restricted Cash | Restricted Cash Restricted cash primarily includes reserves for operating expenses and capital expenditures required by certain of the Company’s management, franchise and debt agreements. At times, restricted cash also includes hotel acquisition or disposition-related earnest money held in escrow reserves pending completion of the associated transaction. In addition, restricted cash as of March 31, 2024 and December 31, 2023 included $0.1 million and $0.2 million, respectively, held in escrow related to certain current and potential employee-related obligations at one of the Company’s former hotels and $0.2 million held as collateral for certain letters of credit as of both March 31, 2024 and December 31, 2023 (see Note 11). |
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 years to forty years for buildings and improvements and three years to twelve years for FF&E. 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 fifteen years to twenty 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 investments in hotel properties to be held and used by the Company whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Factors the Company considers when assessing whether impairment indicators exist include, but are not limited to, hotel disposition strategy and hold period, a significant decline in operating results not related to renovations or repositionings, significant changes in the manner in which the Company uses the asset, physical damage to the property due to unforeseen events such as natural disasters, and other market and economic conditions. Recoverability of assets that will continue to be used is measured by comparing the carrying amount of the asset to the related total future undiscounted net cash flows. If an asset’s carrying value is not recoverable through those cash flows, the asset is considered to be impaired. The impairment is measured by the difference between the asset’s carrying amount and its fair value. The Company performs a fair value assessment using valuation techniques such as discounted cash flows and comparable sale transactions in the market to estimate the fair value of the hotel and, if appropriate and available, current estimated net sales proceeds from pending offers. The Company’s judgment is required in determining the discount rate, terminal capitalization rate, the estimated growth of revenues and expenses, revenue per available room and margins, as well as specific market and economic conditions. Based on the Company’s review, no hotels were impaired during the three months ended March 31, 2024 and 2023. 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. |
Leases | Leases The Company determines if a contract is a lease at inception. Leases with an initial term of twelve 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 twelve 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. 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. 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 ROU assets were impaired during the three months ended March 31, 2024 and 2023. |
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. The revenue is recognized when the goods or services are provided to the customer at the amount the Company expects to be entitled to in exchange for those goods or services. For ancillary services provided by third parties, the Company assesses whether it is the principal or the agent. If the Company is the principal, revenue is recognized based upon the gross sales price. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. Additionally, the Company collects sales, use, occupancy and other similar taxes from customers at its hotels at the time of purchase, which are not included in revenue. The Company records a liability upon collection of such taxes from the customer, and relieves the liability when payments are remitted to the applicable governmental agency. Trade receivables and contract liabilities consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Trade receivables, net (1) $ 17,016 $ 14,431 Contract liabilities (2) $ 61,650 $ 45,432 (1) Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in other liabilities on the accompanying consolidated balance sheets. During the three months ended March 31, 2024 and 2023, the Company recognized approximately $20.2 million and $27.5 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 November 2023, the FASB issued Accounting Standards Update No. 2023-07, “ Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures Segment Reporting In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “ Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Summary of Significant Accounting Policies | |
Schedule of contract assets and liabilities | Trade receivables and contract liabilities consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Trade receivables, net (1) $ 17,016 $ 14,431 Contract liabilities (2) $ 61,650 $ 45,432 (1) Trade receivables, net are included in accounts receivable, net on the accompanying consolidated balance sheets. (2) Contract liabilities consist of advance deposits and are included in other liabilities on the accompanying consolidated balance sheets. |
Schedule of computation of basic and diluted earnings per common share | The following table sets forth the computation of basic and diluted earnings per common share (unaudited and in thousands, except per share data): Three Months Ended March 31, 2024 2023 Numerator: Net income $ 13,035 $ 21,087 Preferred stock dividends (3,683) (3,768) Distributions paid to participating securities (65) (52) Undistributed income allocated to participating securities — (40) Numerator for basic and diluted income attributable to common stockholders $ 9,287 $ 17,227 Denominator: Weighted average basic common shares outstanding 202,631 207,035 Unvested restricted stock units 327 247 Weighted average diluted common shares outstanding 202,958 207,282 Basic income attributable to common stockholders per common share $ 0.05 $ 0.08 Diluted income attributable to common stockholders per common share $ 0.05 $ 0.08 |
Investment in Hotel Properties
Investment in Hotel Properties (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | Investment in hotel properties, net consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Land $ 614,112 $ 614,112 Buildings and improvements 2,602,467 2,587,278 Furniture, fixtures and equipment 410,696 407,861 Intangible assets 42,187 42,187 Construction in progress 75,672 61,247 Investment in hotel properties, gross 3,745,134 3,712,685 Accumulated depreciation and amortization (1,156,285) (1,127,406) Investment in hotel properties, net $ 2,588,849 $ 2,585,279 |
Fair Value Measurements and I_2
Fair Value Measurements and Interest Rate Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Measurements and Interest Rate Derivatives | |
Schedule of principal values and estimated fair values of debt | The Company’s principal balances and fair market values of its consolidated debt as of March 31, 2024 (unaudited) and December 31, 2023 were as follows (in thousands): March 31, 2024 December 31, 2023 Carrying Amount (1) Fair Value (2) Carrying Amount (1) Fair Value (2) Debt $ 818,512 $ 806,482 $ 819,050 $ 805,212 (1) The principal balance of debt is presented before any unamortized deferred financing costs. (2) Due to prevailing market conditions and the current uncertain economic environment, 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. |
Schedule of interest rate derivatives | The Company’s interest rate derivatives, which are not designated as effective cash flow hedges, consisted of the following at March 31, 2024 (unaudited) and December 31, 2023 (in thousands): Estimated Fair Value of Assets (Liabilities) (1) Strike / Capped Effective Maturity Notional March 31, December 31, Hedged Debt Type Rate Index Date Date Amount 2024 2023 Term Loan 1 Swap 3.675 % CME Term SOFR March 17, 2023 March 17, 2026 $ 75,000 $ 1,150 $ 417 Term Loan 1 Swap 3.931 % CME Term SOFR September 14, 2023 September 14, 2026 $ 100,000 908 (401) $ 2,058 $ 16 (1) The fair values of the swap derivative assets were included in prepaid expenses and other assets, net on the accompanying consolidated balance sheets as of March 31, 2024 and December 31, 2023. The fair value of the swap derivative liability was included in other liabilities on the accompanying consolidated balances sheet as of December 31, 2023. |
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 a (decrease) increase to interest expense for the three months ended March 31, 2024 and 2023 as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Noncash interest on derivatives, net $ (2,042) $ 1,832 |
Prepaid Expenses and Other As_2
Prepaid Expenses and Other Assets (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Prepaid Expenses and Other Assets. | |
Schedule of prepaid expenses and other assets, net | Prepaid expenses and other assets, net consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Prepaid expenses $ 14,316 $ 8,123 Inventory 9,381 9,185 Deferred financing costs 3,276 3,627 Property and equipment, net 2,937 3,120 Interest rate derivatives 2,058 417 Deferred rent on straight-lined third-party tenant leases 618 552 Liquor licenses 930 930 Other 427 429 Total prepaid expenses and other assets, net $ 33,943 $ 26,383 |
Notes Payable (Tables)
Notes Payable (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Debt Disclosures | |
Schedule of notes payable | Notes payable consisted of the following (in thousands): Balance Outstanding as of March 31, 2024 March 31, December 31, Rate Type Interest Rate Maturity Date 2024 2023 (unaudited) Mortgage Loans JW Marriott New Orleans Fixed 4.15 % December 11, 2024 $ 73,512 $ 74,050 Unsecured Corporate Credit Facilities Term Loan 1 Fixed (1) 5.25 % July 25, 2027 $ 175,000 $ 175,000 Term Loan 2 Variable (2) 6.76 % January 25, 2028 175,000 175,000 Term Loan 3 Variable (3) 6.77 % May 1, 2025 225,000 225,000 Total unsecured corporate credit facilities $ 575,000 $ 575,000 Unsecured Senior Notes Series A Fixed 4.69 % January 10, 2026 $ 65,000 $ 65,000 Series B Fixed 4.79 % January 10, 2028 105,000 105,000 Total unsecured senior notes $ 170,000 $ 170,000 Total debt $ 818,512 $ 819,050 Unamortized deferred financing costs (4,102) (4,491) Debt, net of unamortized deferred financing costs $ 814,410 $ 814,559 (1) Term Loan 1 is subject to two interest rate swap derivatives (see Note 4). The variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rate on the term loan was 5.25% at both March 31, 2024 and December 31, 2023. (2) Term Loan 2’s variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. In May 2023, the pricing grid was reduced by 0.02% to a range of 1.33% to 2.18% as the Company achieved the 2022 sustainability performance metric specified in the Second Amended Credit Agreement. The reduction in the pricing grid will be evaluated annually and is subject to the Company’s continued ability to satisfy its sustainability metric. The effective interest rates on the term loan were 6.76% and 6.77% at March 31, 2024 and December 31, 2023, respectively. (3) Term Loan 3’s variable interest rate is based on a pricing grid with a range of 1.35% to 2.20% , depending on the Company’s leverage ratios, plus SOFR and a 0.10% adjustment. The effective interest rates on the term loan were 6.77% and 6.81% at March 31, 2024 and December 31, 2023, respectively. |
Schedule of interest expense | Total interest incurred and expensed on the Company’s debt was as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Interest expense on debt $ 12,313 $ 11,417 Noncash interest on derivatives, net (2,042) 1,832 Amortization of deferred financing costs 739 545 Total interest expense $ 11,010 $ 13,794 |
Other Liabilities (Tables)
Other Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Other Liabilities [Abstract] | |
Schedule of other liabilities | Other liabilities consisted of the following (in thousands): March 31, December 31, 2024 2023 (unaudited) Advance deposits $ 61,650 $ 45,432 Property, sales and use taxes payable 10,070 6,903 Accrued interest 3,353 6,346 Deferred rent 2,383 2,711 Income taxes payable 76 2,860 Interest rate derivative — 401 Management fees payable 1,125 1,321 Other 5,828 7,040 Total other liabilities $ 84,485 $ 73,014 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Leases | |
Schedule of supplemental balance sheet information related to leases | Operating leases were included on the Company’s consolidated balance sheets as follows (in thousands): March 31, December 31, 2024 2023 (unaudited) Right-of-use assets, net $ 11,619 $ 12,755 Lease obligations $ 15,588 $ 16,735 Weighted average remaining lease term 29 years Weighted average discount rate 5.4 % |
Lease costs | March 31, December 31, 2024 2023 (unaudited) Right-of-use assets, net $ 11,619 $ 12,755 Lease obligations $ 15,588 $ 16,735 Weighted average remaining lease term 29 years Weighted average discount rate 5.4 % |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Stockholders' Equity | |
Schedule of repurchases of common and preferred stock | Details of the Company’s repurchases were as follows (dollars in thousands): Three Months Ended March 31, 2024 2023 Number of common shares repurchased — 1,964,923 Cost, including fees and commissions $ — $ 18,626 Number of preferred shares repurchased — — |
Incentive Award Plan (Tables)
Incentive Award Plan (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Schedule of amortization expense and forfeitures related to restricted shares | As of both March 31, 2024 and 2023, the Company’s issued and outstanding awards consisted of both time-based and performance-based restricted stock grants. The Company’s amortization expense, including forfeitures related to restricted shares was as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Amortization expense, including forfeitures $ 2,770 $ 2,427 Capitalized compensation cost (1) $ 117 $ 118 (1) The Company capitalizes compensation costs related to restricted shares granted to certain employees whose work is directly related to the Company’s capital investment in its hotels. |
Restricted Stock [Member] | |
Schedule of non-vested restricted stock grant activity | The Company’s restricted stock awards are time-based restricted shares that generally vest over periods ranging from three years to five years from the date of grant. The following is a summary of non-vested restricted stock award activity for the three months ended March 31, 2024: Weighted-Average Grant Date Number of Shares Fair Value Unvested at January 1, 2024 1,032,266 $ 11.11 Granted 369,075 $ 10.76 Vested (471,413) $ 11.20 Unvested at March 31, 2024 929,928 $ 10.93 |
Performance Shares [Member] | |
Schedule of non-vested restricted stock grant activity | The Company’s restricted stock units are performance-based restricted shares that generally vest based on the Company’s total relative shareholder return and the achievement of pre-determined stock price targets during performance periods ranging from three years to five years . The following is a summary of non-vested restricted stock unit activity, at target performance, for the three months ended March 31, 2024: Weighted-Average Target Number Grant Date of Shares Fair Value Unvested at January 1, 2024 1,076,160 $ 10.69 Granted 475,746 $ 11.50 Vested (119,732) $ 11.21 Forfeited (50,100) $ 11.21 Unvested at March 31, 2024 1,382,074 $ 10.90 |
Schedule of share based payment award performance awards valuation assumptions | The restricted stock units granted during the first three months of 2024 vest based on the Company’s total relative shareholder return following a three year performance period. The number of shares that may become vested ranges from zero to 200% of the amount granted. The grant date fair values of the restricted stock units were determined using a Monte Carlo simulation model with the following assumptions: Expected volatility 31.0 % Dividend yield (1) — Risk-free rate 4.34 % Expected term 3 years (1) Dividend equivalents are assumed to be reinvested in shares of the Company’s common stock and dividend equivalents will only be paid to the extent the award vests. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies | |
Schedule of basic and incentive management fees | Total basic management and incentive management fees were included in other property-level expenses on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Basic management fees $ 5,974 $ 6,728 Incentive management fees 3,029 3,527 Total basic and incentive management fees $ 9,003 $ 10,255 |
Schedule of license and franchise costs | Total license and franchise fees were included in franchise costs on the Company’s consolidated statements of operations as follows (unaudited and in thousands): Three Months Ended March 31, 2024 2023 Franchise assessments (1) $ 3,882 $ 3,611 Franchise royalties 323 307 Total franchise costs $ 4,205 $ 3,918 (1) Includes advertising, reservation and frequent guest program assessments. |
Schedule of hotel geographic concentration of risk | As of March 31, 2024, our hotels were geographically concentrated as follows (unaudited): Trailing 12-Month Percentage of Total Consolidated Number of Hotels Total Rooms Revenue California 5 39 % 44 % Florida 3 19 % 15 % Hawaii 1 8 % 17 % |
Organization and Description _2
Organization and Description of Business (Details) - property | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Organization and Description of Business | ||
Number of hotels owned by the Company | 14 | 15 |
Sunstone Hotel Partnership, LLC | ||
Organization and Description of Business | ||
Controlling interest owned (as a percent) | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - (Details) | 3 Months Ended | |||
Mar. 31, 2024 USD ($) property | Mar. 31, 2023 USD ($) property | Dec. 31, 2023 USD ($) | Dec. 31, 2020 USD ($) | |
Restricted Cash | ||||
Restricted Cash | $ 70,317,000 | $ 67,295,000 | ||
Investments in Hotel Properties | ||||
Number of hotels impaired | property | 0 | 0 | ||
Leases | ||||
Leases Initial Maximum Term Not Recorded On Balance Sheet | 12 months | |||
Leases Initial Minimum Term Recorded Right Of Use Assets | 12 months | |||
Number of hotels with operating lease right-of-use asset impairment | property | 0 | 0 | ||
Revenue Recognition | ||||
Trade receivables, net | $ 17,016,000 | 14,431,000 | ||
Contract liabilities | 61,650,000 | 45,432,000 | ||
Deferred revenue recognized | $ 20,200,000 | $ 27,500,000 | ||
Segment Reporting | ||||
Number of operating segments | 1 | 1 | ||
Financial standby letter of credit | ||||
Restricted Cash | ||||
Restricted Cash | $ 200,000 | 200,000 | ||
Franchise fees | Minimum | ||||
Investments in Hotel Properties | ||||
Estimated useful life | 15 years | |||
Franchise fees | Maximum | ||||
Investments in Hotel Properties | ||||
Estimated useful life | 20 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 Times Square | ||||
Restricted Cash | ||||
Restricted Cash | $ 100,000 | $ 200,000 | $ 11,600,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Numerator: | ||
Net Income | $ 13,035 | $ 21,087 |
Preferred stock dividends | (3,683) | (3,768) |
Distributions paid to participating securities | (65) | (52) |
Undistributed income allocated to participating securities | (40) | |
Numerator for basic and diluted income (loss) attributable to common stockholders | $ 9,287 | $ 17,227 |
Denominator: | ||
Weighted average basic common shares outstanding (in shares) | 202,631,000 | 207,035,000 |
Unvested restricted stock units (in shares) | 327,000 | 247,000 |
Weighted average diluted common shares outstanding (in shares) | 202,958,000 | 207,282,000 |
Basic income attributable to common stockholders per common share (in dollars per share) | $ 0.05 | $ 0.08 |
Diluted income attributable to common stockholders per common share (in dollars per share) | $ 0.05 | $ 0.08 |
Restricted Stock [Member] | ||
Denominator: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 929,928 | 1,039,023 |
Performance Shares [Member] | ||
Denominator: | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 188,004 | 188,004 |
Investment in Hotel Propertie_2
Investment in Hotel Properties (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Investment in Hotel Properties | ||
Land | $ 614,112 | $ 614,112 |
Buildings and improvements | 2,602,467 | 2,587,278 |
Furniture, fixtures and equipment | 410,696 | 407,861 |
Intangible assets | 42,187 | 42,187 |
Construction in progress | 75,672 | 61,247 |
Investment in hotel properties, gross | 3,745,134 | 3,712,685 |
Accumulated depreciation and amortization | (1,156,285) | (1,127,406) |
Investment in hotel properties, net | $ 2,588,849 | $ 2,585,279 |
Fair Value Measurements and I_3
Fair Value Measurements and Interest Rate Derivatives - Fair Value of Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Percentage of Debt Bearing Fixed Interest Rates | 51.10% | 51.20% |
Debt, Long-Term and Short-Term, Combined Amount | $ 818,512 | $ 819,050 |
Level 3 | ||
Fair value of debt | $ 806,482 | $ 805,212 |
Fair Value Measurements and I_4
Fair Value Measurements and Interest Rate Derivatives - Interest Rate Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Interest Rate Derivatives | |||
Fair value of interest rate derivatives, net | $ 2,058 | $ 16 | |
Fair values of derivative assets | 2,058 | 417 | |
Noncash interest on derivatives, net | $ (2,042) | $ 1,832 | |
Interest Rate Swap Derivative TL1 Swap1 Member | Not designated as hedging instrument | Term loan #1 | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 3.675% | ||
Interest rate, description of reference rate | CME Term SOFR | ||
Interest rate derivative effective date | Mar. 17, 2023 | ||
Interest rate derivative maturity date | Mar. 17, 2026 | ||
Notional amount | $ 75,000 | ||
Fair values of derivative assets | $ 1,150 | 417 | |
Interest Rate Swap Derivative TL1 Swap2 Member | Not designated as hedging instrument | Term loan #1 | |||
Interest Rate Derivatives | |||
Fixed rate under interest rate swap agreement | 3.931% | ||
Interest rate, description of reference rate | CME Term SOFR | ||
Interest rate derivative effective date | Sep. 14, 2023 | ||
Interest rate derivative maturity date | Sep. 14, 2026 | ||
Notional amount | $ 100,000 | ||
Fair values of derivative liabilities | $ (401) | ||
Fair values of derivative assets | $ 908 |
Prepaid Expenses and Other As_3
Prepaid Expenses and Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Prepaid Expenses and Other Assets, Net Unclassified [Abstract] | ||
Prepaid expenses | $ 14,316 | $ 8,123 |
Inventory | 9,381 | 9,185 |
Deferred financing costs | 3,276 | 3,627 |
Property and equipment, net | 2,937 | 3,120 |
Interest rate derivative assets | 2,058 | 417 |
Deferred rent on straight-lined third-party tenant leases | 618 | 552 |
Liquor licenses | 930 | 930 |
Other assets | 427 | 429 |
Prepaid expenses and other assets, net | $ 33,943 | $ 26,383 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | ||
May 31, 2023 | Apr. 30, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Notes Payable | ||||||
Debt, Long-Term and Short-Term, Combined Amount | $ 818,512,000 | $ 818,512,000 | $ 819,050,000 | |||
Unamortized deferred financing costs | (4,102,000) | (4,102,000) | (4,491,000) | |||
Debt, net of unamortized deferred financing costs | 814,410,000 | $ 814,410,000 | $ 814,559,000 | |||
Interest Expense | ||||||
Interest expense, debt, excluding amortization | 12,313,000 | $ 11,417,000 | ||||
Noncash interest on derivatives, net | (2,042,000) | 1,832,000 | ||||
Amortization of deferred financing costs | 739,000 | 545,000 | ||||
Total interest expense | $ 11,010,000 | $ 13,794,000 | ||||
JW Marriott New Orleans Mortgage | ||||||
Notes Payable | ||||||
Debt maturity date | Dec. 11, 2024 | Dec. 11, 2024 | ||||
Fixed interest rate (as a percent) | 4.15% | 4.15% | ||||
Outstanding balance of secured debt | $ 73,512,000 | $ 73,512,000 | $ 74,050,000 | |||
Unsecured Term Loans | ||||||
Notes Payable | ||||||
Outstanding balance of unsecured debt | $ 575,000,000 | $ 575,000,000 | $ 575,000,000 | |||
Term loan #1 | ||||||
Notes Payable | ||||||
Debt maturity date | Jul. 25, 2027 | Jul. 25, 2027 | ||||
Increase (decrease) in interest rate (as a percent) | (0.02%) | |||||
Number of interest rate swap derivative agreements | 2 | 2 | 2 | |||
Outstanding balance of unsecured debt | $ 175,000,000 | $ 175,000,000 | $ 175,000,000 | |||
Line of Credit Facility, Interest Rate at Period End | 5.25% | 5.25% | 5.25% | |||
Term loan #1 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||||
Notes Payable | ||||||
Interest rate, description of reference rate | SOFR | SOFR | ||||
Interest rate added to base rate (as a percent) | 0.10% | 0.10% | ||||
Term loan #1 | Minimum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | 1.33% | |||
Term loan #1 | Maximum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | 2.18% | |||
Term loan #2 | ||||||
Notes Payable | ||||||
Debt maturity date | Jan. 25, 2028 | Jan. 25, 2028 | ||||
Increase (decrease) in interest rate (as a percent) | (0.02%) | |||||
Outstanding balance of unsecured debt | $ 175,000,000 | $ 175,000,000 | $ 175,000,000 | |||
Line of Credit Facility, Interest Rate at Period End | 6.76% | 6.76% | 6.77% | |||
Term loan #2 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||||
Notes Payable | ||||||
Interest rate, description of reference rate | SOFR | SOFR | ||||
Interest rate added to base rate (as a percent) | 0.10% | 0.10% | ||||
Term loan #2 | Minimum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | 1.33% | |||
Term loan #2 | Maximum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | 2.18% | |||
Term loan #3 | ||||||
Notes Payable | ||||||
Debt maturity date | May 01, 2025 | May 01, 2025 | ||||
Outstanding balance of unsecured debt | $ 225,000,000 | $ 225,000,000 | $ 225,000,000 | |||
Line of Credit Facility, Interest Rate at Period End | 6.77% | 6.77% | 6.81% | |||
Term loan #3 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | ||||||
Notes Payable | ||||||
Interest rate, description of reference rate | SOFR | SOFR | ||||
Interest rate added to base rate (as a percent) | 0.10% | 0.10% | ||||
Term loan #3 | Minimum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 1.35% | 1.35% | ||||
Term loan #3 | Maximum | ||||||
Notes Payable | ||||||
Interest rate added to base rate (as a percent) | 2.20% | 2.20% | ||||
Senior Notes | ||||||
Notes Payable | ||||||
Outstanding balance of unsecured debt | $ 170,000,000 | $ 170,000,000 | $ 170,000,000 | |||
Series A Senior Notes | ||||||
Notes Payable | ||||||
Debt maturity date | Jan. 10, 2026 | Jan. 10, 2026 | ||||
Fixed interest rate (as a percent) | 4.69% | 4.69% | ||||
Outstanding balance of unsecured debt | $ 65,000,000 | $ 65,000,000 | $ 65,000,000 | |||
Series B Senior Notes | ||||||
Notes Payable | ||||||
Debt maturity date | Jan. 10, 2028 | Jan. 10, 2028 | ||||
Fixed interest rate (as a percent) | 4.79% | 4.79% | ||||
Outstanding balance of unsecured debt | $ 105,000,000 | $ 105,000,000 | $ 105,000,000 | |||
Senior unsecured revolving credit facility | ||||||
Notes Payable | ||||||
Outstanding indebtedness under credit facility | 0 | 0 | ||||
Maximum borrowing capacity for unsecured revolving credit facility | $ 500,000,000 | $ 500,000,000 |
Other Liabilities (Details)
Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Other Liabilities | ||
Advance deposits | $ 61,650 | $ 45,432 |
Property, sales and use taxes payable | 10,070 | 6,903 |
Accrued interest | 3,353 | 6,346 |
Deferred rent | 2,383 | 2,711 |
Income taxes payable | 76 | 2,860 |
Derivative Liability | 401 | |
Management fees payable | 1,125 | 1,321 |
Other | 5,828 | 7,040 |
Total other liabilities | $ 84,485 | $ 73,014 |
Leases - Supplemental Balance S
Leases - Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2024 | Dec. 31, 2023 | |
Operating Leases | |||
Operating lease right-of-use assets, net | $ 11,619 | $ 12,755 | |
Operating lease obligations | $ 15,588 | $ 16,735 | |
Weighted average remaining operating lease term | 29 years | ||
Weighted average operating lease discount rate | 5.40% | ||
Operating lease right-of-use asset obtained in exchange for operating lease obligation | $ 2,163 |
Leases - Components of Lease Co
Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Leases | ||
Operating lease cost | $ 1,352 | $ 1,359 |
Variable lease cost | 2,135 | 2,086 |
Sublease income | (297) | (297) |
Total lease cost | $ 3,190 | $ 3,148 |
Stockholders' Equity - Preferre
Stockholders' Equity - Preferred Stock (Details) - $ / shares | 1 Months Ended | 6 Months Ended | |||||
Mar. 31, 2024 | Dec. 31, 2023 | Jul. 31, 2021 | May 31, 2021 | Apr. 30, 2021 | Dec. 31, 2024 | Jun. 30, 2024 | |
Series G Cumulative Redeemable Preferred Stock | |||||||
Stockholders' equity | |||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 2,650,000 | 2,650,000 | |||||
Liquidation preference (in dollars per share) | $ 25 | $ 25 | |||||
Series G Cumulative Redeemable Preferred Stock | Montage Healdsburg | |||||||
Stockholders' equity | |||||||
Redemption price (in dollars per share) | $ 25 | ||||||
Number of shares of preferred stock issued (in shares) | 2,650,000 | ||||||
Series G Cumulative Redeemable Preferred Stock | Maximum | Montage Healdsburg | |||||||
Stockholders' equity | |||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 4.50% | 3% | |||||
Series H Cumulative Redeemable Preferred Stock | |||||||
Stockholders' equity | |||||||
Preferred stock, Cumulative Redeemable Preferred Stock, dividend rate (as a percent) | 6.125% | 6.125% | 6.125% | ||||
Redemption price (in dollars per share) | $ 25 | ||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 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 | ||||
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% | 5.70% | ||||
Redemption price (in dollars per share) | $ 25 | ||||||
Preferred stock, Cumulative Redeemable Preferred Stock, shares outstanding (in shares) | 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 | ||||
Preferred stock redemption date | Jul. 16, 2026 |
Stockholders' Equity - Common S
Stockholders' Equity - Common Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Feb. 28, 2023 | |
Share Repurchase Program | |||
Stockholders' equity | |||
Repurchase Program, number of shares repurchased (in shares) | 1,964,923 | ||
Repurchase Program, value of shares repurchased | $ 18,626 | ||
Repurchase Program, remaining authorized capacity | $ 454,700 | ||
Maximum | Share Repurchase Program | |||
Stockholders' equity | |||
Stock Repurchase Program, maximum amount authorized for repurchase | $ 500,000 | ||
Common Stock | At The Market | |||
Stockholders' equity | |||
ATM Program, number of shares sold or issued (in shares) | 0 | 0 | |
ATM Program, remaining amount authorized for issuance | $ 300,000 | ||
Common Stock | Maximum | At The Market | |||
Stockholders' equity | |||
ATM Program, maximum amount authorized for issuance | $ 300,000 |
Incentive Award Plan (Details)
Incentive Award Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Compensation Expense and Forfeitures | ||
Capitalized compensation cost | $ 117 | $ 118 |
Restricted Shares and Performance awards | ||
Compensation Expense and Forfeitures | ||
Amortization expense, including forfeitures | 2,770 | 2,427 |
Capitalized compensation cost | $ 117 | $ 118 |
Incentive Award Plan Restricted
Incentive Award Plan Restricted Stock Awards (Details) - Restricted Stock [Member] | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Non-Vested Stock Grants, Number of Shares | |
Outstanding at the beginning of the period (in shares) | shares | 1,032,266 |
Granted (in shares) | shares | 369,075 |
Vested (in shares) | shares | (471,413) |
Outstanding at the end of the period (in shares) | shares | 929,928 |
Non-Vested Stock Grants, Weighted Average Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 11.11 |
Granted (in dollars per share) | $ / shares | 10.76 |
Vested (in dollars per share) | $ / shares | 11.20 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.93 |
Minimum | |
Incentive Award Plan | |
Vesting period | 3 years |
Maximum | |
Incentive Award Plan | |
Vesting period | 5 years |
Incentive Award Plan Restrict_2
Incentive Award Plan Restricted Stock Units (Details) | 3 Months Ended |
Mar. 31, 2024 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Method Used | Monte Carlo simulation model |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 31% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 4.34% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions, Expected Term | 3 years |
Performance Shares [Member] | |
Non-Vested Stock Grants, Number of Shares | |
Outstanding at the beginning of the period (in shares) | shares | 1,076,160 |
Granted (in shares) | shares | 475,746 |
Vested (in shares) | shares | (119,732) |
Forfeited (in shares) | shares | (50,100) |
Outstanding at the end of the period (in shares) | shares | 1,382,074 |
Non-Vested Stock Grants, Weighted Average Price | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 10.69 |
Granted (in dollars per share) | $ / shares | 11.50 |
Vested (in dollars per share) | $ / shares | 11.21 |
Forfeited (in dollars per share) | $ / shares | 11.21 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 10.90 |
Performance Shares [Member] | Minimum | |
Incentive Award Plan | |
Vesting period | 3 years |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage | 0% |
Performance Shares [Member] | Maximum | |
Incentive Award Plan | |
Vesting period | 5 years |
Share-Based Compensation Arrangement by Share-Based Payment Award, Award Vesting Rights, Percentage | 200% |
Commitments and Contingencies -
Commitments and Contingencies - Management Fees, Franchise Costs and Renovation Commitments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Basic and incentive management fees incurred | ||
Other property-level expenses | $ 27,623 | $ 31,777 |
License and Franchise Agreements | ||
Franchise assessments | 3,882 | 3,611 |
Franchise royalties | 323 | 307 |
Franchise costs | 4,205 | 3,918 |
Basic management fees | ||
Basic and incentive management fees incurred | ||
Other property-level expenses | 5,974 | 6,728 |
Incentive management fees | ||
Basic and incentive management fees incurred | ||
Other property-level expenses | 3,029 | 3,527 |
Total basic and incentive management fees | ||
Basic and incentive management fees incurred | ||
Other property-level expenses | $ 9,003 | $ 10,255 |
Minimum | ||
Management Agreements | ||
Basic management fees (as a percent) | 2% | |
Maximum | ||
Management Agreements | ||
Basic management fees (as a percent) | 3% | |
Renovation and Construction Commitments | ||
Renovation and Construction Commitments | ||
Remaining construction commitments | $ 85,400 |
Commitments and Contingencies_2
Commitments and Contingencies - Other Commitments and Concentration of Risk (Details) | 3 Months Ended | 12 Months Ended | 36 Months Ended | ||
Mar. 31, 2024 USD ($) property | Mar. 31, 2023 USD ($) property | Mar. 31, 2024 USD ($) property | Dec. 31, 2023 USD ($) | Dec. 31, 2020 USD ($) | |
Concentration of Risk | |||||
Number of hotels owned by the Company | property | 14 | 15 | 14 | ||
Other | |||||
Restricted Cash | $ 70,317,000 | $ 70,317,000 | $ 67,295,000 | ||
Gain on extinguishment of debt | $ 21,000 | $ 9,909,000 | |||
Term of unsecured environmental indemnities | 0 years | ||||
Damage limitation of unsecured environmental indemnities | $ 0 | ||||
Hilton Times Square | |||||
Other | |||||
Loss contingency accrued balance | 100,000 | 100,000 | 200,000 | ||
Loss contingency payment | 100,000 | 11,400,000 | |||
Loss contingency increase (decrease) | (21,000) | ||||
Restricted Cash | 100,000 | $ 100,000 | 200,000 | $ 11,600,000 | |
Gain on extinguishment of debt | $ 21,000 | ||||
Number of rooms | Geographic Concentration Risk [Member] | California | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 39% | ||||
Number of rooms | Geographic Concentration Risk [Member] | Florida | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 19% | ||||
Number of rooms | Geographic Concentration Risk [Member] | Hawaii | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 8% | ||||
Revenue generated by hotels | Geographic Concentration Risk [Member] | California | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 44% | ||||
Revenue generated by hotels | Geographic Concentration Risk [Member] | Florida | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 15% | ||||
Revenue generated by hotels | Geographic Concentration Risk [Member] | Hawaii | |||||
Concentration of Risk | |||||
Concentration risk (as a percent) | 17% | ||||
Financial standby letter of credit | |||||
Other | |||||
Restricted Cash | $ 200,000 | $ 200,000 | $ 200,000 | ||
Outstanding irrevocable letters of credit | 200,000 | $ 200,000 | |||
Payments on credit facility | $ 0 | ||||
Hotel owned by the Company | Geographic Concentration Risk [Member] | California | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | property | 5 | 5 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Florida | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | property | 3 | 3 | |||
Hotel owned by the Company | Geographic Concentration Risk [Member] | Hawaii | |||||
Concentration of Risk | |||||
Number of hotels owned by the Company | property | 1 | 1 |
Subsequent Events (Details)
Subsequent Events (Details) - Hyatt Regency San Antonio Riverwalk $ in Millions | Apr. 23, 2024 USD ($) |
Asset Acquisition Abstract | |
Asset Acquisition, Effective Date of Acquisition | Apr. 23, 2024 |
Asset Acquisition, Price of Acquisition, Expected | $ 230 |
Asset acquisition incentive | $ 8 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Mar. 31, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |