Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 07, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | CPLG | |
Entity Registrant Name | COREPOINT LODGING INC. | |
Entity Central Index Key | 1,707,178 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 59,613,393 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Real estate | ||
Land | $ 738 | $ 739 |
Buildings and improvements | 2,772 | 2,706 |
Furniture, fixtures, and other equipment | 385 | 363 |
Gross operating real estate | 3,895 | 3,808 |
Less accumulated depreciation | (1,502) | (1,425) |
Net operating real estate | 2,393 | 2,383 |
Construction in progress | 74 | 75 |
Total real estate, net | 2,467 | 2,458 |
Cash and cash equivalents | 80 | 141 |
Accounts receivable, net | 49 | 42 |
Other assets | 55 | 32 |
Assets from discontinued operations | 280 | |
Total Assets | 2,651 | 2,953 |
Liabilities: | ||
Debt, net | 1,032 | 992 |
Mandatorily redeemable preferred shares | 15 | |
Accounts payable and accrued expenses | 83 | 65 |
Other liabilities | 8 | 9 |
Deferred tax liabilities | 213 | |
Liabilities from discontinued operations | 846 | |
Total Liabilities | 1,138 | 2,125 |
Commitments and Contingencies | ||
Equity: | ||
Common Stock, $0.01 par value; 1,000,000,000 and 2,000,000,000 shares authorized at June 30, 2018 and December 31, 2017, respectively; 59,687,447 and 66,239,037 shares issued as of June 30, 2018 and December 31, 2017, respectively; and 59,576,383 and 58,672,998 shares outstanding as of June 30, 2018 and December 31, 2017, respectively | 1 | 1 |
Additional paid-in-capital | 973 | 1,181 |
Retained Earnings (accumulated deficit) | 539 | (144) |
Treasury stock at cost, 111,064 shares at June 30, 2018 and 7,566,039 shares at December 31, 2017 | (3) | (212) |
Accumulated other comprehensive loss | (1) | |
Noncontrolling interests | 3 | 3 |
Total Equity | 1,513 | 828 |
Total Liabilities and Equity | $ 2,651 | $ 2,953 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Statement Of Financial Position [Abstract] | ||
Preferred Stock, par value | $ 0.01 | $ 0.01 |
Preferred Stock, shares authorized | 50,000,000 | 100,000,000 |
Preferred Stock, shares outstanding | 15,000 | 0 |
Common Stock, par value | $ 0.01 | $ 0.01 |
Common Stock, shares authorized | 1,000,000,000 | 2,000,000,000 |
Common Stock, shares issued | 59,687,447 | 66,239,037 |
Common Stock, shares outstanding | 59,576,383 | 58,672,998 |
Treasury stock, shares | 111,064 | 7,566,039 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
REVENUES: | ||||
Revenues | $ 233 | $ 225 | $ 429 | $ 429 |
OPERATING EXPENSES: | ||||
Property tax, insurance and other | 17 | 10 | 35 | 27 |
Management and royalty fees | 9 | 9 | ||
Corporate general and administrative | 39 | 19 | 63 | 38 |
Depreciation and amortization | 39 | 34 | 76 | 68 |
Other, net | 3 | (1) | 2 | (3) |
Total Operating Expenses | 235 | 180 | 429 | 362 |
Operating Income (Loss) | (2) | 45 | 67 | |
OTHER INCOME (EXPENSES): | ||||
Interest expense | (18) | (12) | (31) | (24) |
Other income, net | 4 | 4 | ||
Loss on extinguishment of debt | (10) | (10) | ||
Total Other Expenses, net | (24) | (12) | (37) | (24) |
Income (loss) from Continuing Operations Before Income Taxes | (26) | 33 | (37) | 43 |
Income tax expense | (2) | (14) | (1) | (19) |
Income (loss) from Continuing Operations, net of tax | (28) | 19 | (38) | 24 |
Loss from Discontinued Operations, net of tax | (20) | (2) | (25) | (6) |
Net Income (loss) attributable to CorePoint Lodging stockholders | $ (48) | $ 17 | $ (63) | $ 18 |
Earnings (loss) per share: | ||||
Basic and diluted from continuing operations | $ (0.48) | $ 0.32 | $ (0.65) | $ 0.41 |
Basic and diluted from discontinued operations | (0.34) | (0.03) | (0.43) | (0.10) |
Basic and diluted earnings (loss) per share | $ (0.82) | $ 0.29 | $ (1.08) | $ 0.31 |
Rooms [Member] | ||||
REVENUES: | ||||
Revenues | $ 228 | $ 221 | $ 420 | $ 421 |
OPERATING EXPENSES: | ||||
Cost of good or service | 98 | 89 | 185 | 174 |
Other [Member] | ||||
REVENUES: | ||||
Revenues | 5 | 4 | 9 | 8 |
OPERATING EXPENSES: | ||||
Cost of good or service | $ 30 | $ 29 | $ 59 | $ 58 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
NET INCOME (LOSS) | $ (48) | $ 17 | $ (63) | $ 18 |
Cash flow hedge adjustment, net of tax | 3 | 3 | 2 | |
Gain on termination of cash flow hedge | (3) | (3) | ||
Comprehensive net income (loss) attributable to CorePoint Lodging's Stockholders | $ (48) | $ 17 | $ (63) | $ 20 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($) $ in Millions | Total | Common Stock [Member] | Treasury Stock [Member] | Additional Paid in Capital [Member] | Retained Earnings (Accumulated Deficit) [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interests [Member] |
Beginning Balance at Dec. 31, 2017 | $ 828 | $ 1 | $ (212) | $ 1,181 | $ (144) | $ (1) | $ 3 |
Beginning Balance, shares at Dec. 31, 2017 | 58,672,998 | 58,672,998 | |||||
Net income (loss) | $ (63) | (63) | |||||
Equity-based compensation | 6 | 6 | |||||
Equity-based compensation, shares | 1,063,311 | ||||||
Repurchase of common stock | Pre Spin-Off [Member] | (2) | $ (48,862) | (2) | ||||
Repurchase of common stock | Post Spin-Off [Member] | (3) | (111,064) | (3) | ||||
Retirement of treasury shares | 214 | (214) | |||||
Cash flow hedge adjustment | 4 | 4 | |||||
Gain on termination of cash flow hedge | (3) | $ (3) | |||||
Reorganization and separation from La Quinta Holdings Inc | 746 | 746 | |||||
Ending Balance at Jun. 30, 2018 | $ 1,513 | $ 1 | $ (3) | $ 973 | $ 539 | $ 3 | |
Ending Balance, shares at Jun. 30, 2018 | 59,576,383 | 59,576,383 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (63) | $ 18 |
Adjustment to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 79 | 72 |
Amortization of other assets | 1 | |
Gain (loss) related to casualty disasters | 2 | (3) |
Loss on extinguishment of debt | 17 | |
Amortization of deferred costs | 4 | 3 |
Equity-based compensation expense | 6 | 8 |
Deferred tax (benefit) expense | (1) | 8 |
Provision for doubtful accounts | 1 | 1 |
Changes in assets and liabilities: | ||
Accounts receivable | 9 | (2) |
Other assets | (14) | (10) |
Accounts payable and accrued expenses | (18) | (10) |
Other liabilities | (1) | 5 |
Net cash provided by operating activities | 22 | 90 |
Cash flows from investing activities: | ||
Capital expenditures | (94) | (105) |
Lenders escrow | (15) | |
Insurance proceeds on casualty disasters | 7 | 5 |
Proceeds from sale of assets | 4 | 22 |
Payment of franchise incentives | (1) | |
Net cash used in investing activities | (98) | (79) |
Cash flows from financing activities: | ||
Proceeds from debt | 1,060 | |
Repayment of debt | (1,005) | (9) |
Debt issuance costs | (29) | |
Issuance of mandatorily redeemable preferred shares | 15 | |
Proceeds on termination of cash flow hedge | 3 | |
Purchase of treasury stock | (5) | (1) |
Reorganization and separation from La Quinta Holdings Inc. | (23) | |
Net cash provided by (used in) financing activities | 15 | (10) |
Increase (decrease) in cash and cash equivalents | (61) | 1 |
Cash and cash equivalents at the beginning of the period | 141 | 161 |
Cash and cash equivalents at the end of the period | 80 | $ 162 |
Interest Rate Cap | ||
Cash flows from financing activities: | ||
Payment for interest rate cap | $ (1) |
Organization and Basis of Prese
Organization and Basis of Presentation | 6 Months Ended |
Jun. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Organization and Business CorePoint Lodging Inc., a Maryland corporation (“we,” “us,” “our,” “CorePoint Lodging” or the “Company”) is a nationwide lodging real estate company, primarily serving the upper mid-scale and mid-scale segments, with a portfolio of select service hotels located in the United States (“U.S.”). The following table sets forth the number of owned and joint venture hotels as of June 30, 2018 and December 31, 2017 respectively: June 30, 2018 December 31, 2017 # of hotels # of rooms # of hotels # of rooms Owned (1) 315 40,300 316 40,400 Joint Venture 1 200 1 200 Totals 316 40,500 317 40,600 (1) As of June 30, 2018 and December 31, 2017, two and three of the owned hotels, respectively, were classified as assets held for sale. For U.S. federal income tax purposes, we intend to elect to be taxed as a real estate investment trust (“ REIT”), effective May 31, 2018. We are currently, and expect to continue to be, organized and operated in a REIT qualified manner. As a REIT, the Company is generally not subject to federal corporate income tax on the portion of its net income that is currently distributed to its shareholders. To maintain our REIT status, we are required to meet several requirements as provided by the Internal Revenue Code of 1986, as amended (the “Code”). These include that the Company cannot operate or manage its hotels. Therefore, the REIT leases the hotel properties to CorePoint TRS L.L.C., the Company's wholly owned taxable REIT subsidiary ("TRS"), which engages third-party eligible independent contractors to manage the hotels. CorePoint TRS L.L.C. is subject to federal, state and local income taxes. Also, to maintain REIT status, we must distribute annually at least 90% of our “REIT taxable income”, as defined by the Code, to our shareholders. We intend to meet our distribution requirements effective for 2018 as required by the Code. Our Spin-Off from La Quinta Holdings Inc. On January 18, 2017, La Quinta Holdings Inc., a Delaware corporation. (“LQH Parent,” and together with its consolidated subsidiaries, “LQH”) announced its intention to pursue the possibility of separating its real estate business from its franchise and management business, including the spin-off of its real estate ownership business into an independent, publicly traded company. The spin-off of CorePoint Lodging was made as part of a plan approved by LQH Parent’s board of directors to spin off LQH’s real estate business into a stand-alone, publicly traded company prior to the merger of LQH Parent with a wholly owned subsidiary of Wyndham Worldwide Corporation, a Delaware corporation (“Wyndham Worldwide”). The completion of the spin-off, followed by the completion of the merger, occurred on May 30, 2018. For additional discussion of the spin-off and related transactions, see Note 3. Notwithstanding the legal form of the spin-off, for accounting and financial reporting purposes, LQH Parent is presented as being spun-off from CorePoint (a “reverse spin”). This presentation is in accordance with generally accepted accounting principles in the U.S. (“GAAP”), specifically Financial Account Standards Board (“FASB”) statement “Spinoff and Reverse Spinoffs”, and is primarily a result of the relative significance of CorePoint’s business to LQH’s business, as measured in terms of revenues, profits, and assets. Therefore, CorePoint Lodging Inc. is considered the divesting entity and treated as the “accounting successor,” and LQH Parent is the “accounting spinnee” and “accounting predecessor” for consolidated financial reporting purposes. In accordance with FASB statement “ Presentation of Financial Statements – Discontinued Operations” Interim Unaudited Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with LQH’s consolidated financial statements and notes thereto for the years ended December 31, 2017, 2016 and 2015, which are included in our Information Statement filed as Exhibit 99.1 to our Registration Statement on Form 10 (the “Form 10”), which the Securities and Exchange Commission (the “SEC”) declared effective on May 8, 2018. Subsequent to May 30, 2018, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company. The historical unaudited condensed consolidated financial statements through May 30, 2018 represent the financial position and results of operations of entities that have historically been under common control of the accounting predecessor, LQH Parent. The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated balance sheet as of June 30, 2018 and condensed consolidated statements of operations, comprehensive income, cash flows and equity for the periods ended June 30, 2018 and 2017 have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our consolidated financial position as of June 30, 2018 and December 31, 2017, and our consolidated results of operations and cash flows for the periods ended June 30, 2018 and 2017. The accompanying condensed consolidated financial statements include the accounts of the Company, as well as its wholly-owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our shareholders. All intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. Reclassifications Certain line items on the condensed consolidated balance sheet as of December 31, 2017 and the condensed consolidated statements of operations for the three and six months ended June 30, 2017 have been reclassified to conform to the current period presentation. These reclassifications had no impact on our net income (loss) or financial position and were made in order to conform to presentations consistent with other REIT peers and reflect the results of discontinued operations. See Note 3 for additional information. |
Significant Accounting Policies
Significant Accounting Policies and Recently Issued Accounting Standards | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies and Recently Issued Accounting Standards | NOTE 2. SIGNIFICANT ACCOUNTING POLICIES AND RECENTLY ISSUED ACCOUNTING STANDARDS Investment in Real Estate Property and equipment are stated at cost less accumulated depreciation computed using a straight-line method over the estimated useful life of each asset. Property and equipment consists of the following, along with associated estimated useful lives: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years We periodically review the useful lives of our long-lived assets based on current assessments of the remaining utility of our assets. Such changes are accounted for prospectively and would either increase or decrease depreciation expense in the accompanying condensed consolidated statements of operations. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third party contract labor, professional design and construction costs, including associated materials, and other direct and indirect costs, such as sales and use tax and interest costs, incurred during the redevelopment and renovation period. The capitalization period begins when the activities related to development have begun and ceases when the project is substantially complete and the assets are held available for use or occupancy. Once a redevelopment project is substantially complete and the associated assets are ready for intended use, costs related to the redevelopment project are no longer capitalized. Normal maintenance and repair costs are expensed as incurred. When depreciable property is retired or disposed, the related cost and accumulated depreciation or amortization is removed from the in the accompanying statements of operations. Impairment of Real Estate Related Assets If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. We did not record any impairment loss for the three and six months ended June 30, 2018 and 2017. Assets Held for Sale For sales of real estate or assets classified as held for sale, we evaluate whether the disposition will have a major effect on our operations and financial results and will therefore qualify as a strategic shift. If the disposition represents a strategic shift, it will be classified as discontinued operations in our consolidated statements of operations for all periods presented. If the disposition does not represent a strategic shift, it will be presented in continuing operations in our consolidated statements of operations. We classify hotels as held for sale when certain criteria are met, in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. As of June 30, 2018 and December 31, 2017, we had two and three hotels held for sale, respectively. Cash and Cash Equivalents We consider all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of highly liquid investments that are stated at cost, which approximates fair market value. Certain balances in cash and cash equivalents exceed the Federal Deposit Insurance Corporation limit of $250,000; however, we believe credit risk related to these deposits is minimal. Accounts Receivable Accounts receivable primarily consists of receivables due from hotel guests, credit card companies and insurance settlements. Accounts receivable are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on historical experience, the length of time receivables are past due, and the general economy. We provide an allowance for doubtful accounts, after considering factors that might affect the collection of accounts receivable, including historical losses and the ability of the party to meet its obligations to us. Deferred Debt Issuance Costs Deferred debt issuance costs include legal and bank issuance costs incurred in connection with issuance of debt, including costs associated with the issuance of our credit facilities, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense over the term of the debt and are included as a component of interest expense. When debt is paid prior to its scheduled maturity date or the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on early extinguishment of debt. Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or pay to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, we use the accounting guidance that establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort. Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“cash flow hedge”), a hedge of the fair value of a recognized asset or liability (“fair value hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge or net investment hedge are recorded in the condensed consolidated statements of comprehensive income (loss) until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the condensed consolidated statements of cash flows. On a quarterly basis, we assess the effectiveness of our designated hedges in offsetting the variability in the cash flows or fair values of the hedged assets or obligations via use of a statistical regression and hypothetical derivative approach. We discontinue hedge accounting prospectively when the derivative is not highly effective as a hedge, the underlying hedged transaction is no longer probable, or the hedging instrument expires, is sold, terminated or exercised. Revenue Recognition We adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, Newly Adopted Accounting Standards Our revenues primarily consist of operating lease revenues from room rentals, and, to a lesser extent, restaurants, billboards and cell towers, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Revenue related to operating leases with a term in excess of one year are recognized on a straight-line basis over the life of the respective lease agreement. Other revenues include revenues generated by the incidental support of hotel operations for hotels and are recognized under the revenue accounting standard as the service obligation is completed. Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors. Stock-based compensation expense associated with these awards is recognized in general and administrative expenses in our consolidated statements of operations. We measure stock-based compensation at the estimated fair value on the grant date and recognize the amortization of stock-based compensation expense over the requisite service period. Fair value is determined based on grant date fair value. We recognize forfeitures as they occur. Income Taxes We are organized in conformity with, and operate in a manner that will allow us to elect to be taxed as, a REIT, for U.S. federal income tax purposes beginning with our tax year ending December 31, 2018 and we expect to continue to be organized and operate so as to qualify as a REIT. To qualify as a REIT, we must continually satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. To the extent we qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income taxes has been included in our accompanying condensed consolidated financial statements for purposes of determining the annualized effective tax rate applied to the six months ended June 30, 2018 related to our REIT activities. We are, and will continue to be, subject to U.S. federal income tax on taxable sales of built-in gain property (representing property with an excess of fair value over tax basis held by us on May 30, 2018) during the five-year period following our election to be taxed as a REIT. In addition, we may be subject to state and local taxes and non-U.S. income tax on foreign held REIT activities. Further, our taxable REIT subsidiaries are generally subject to U.S. federal, state and local, and foreign income taxes (as applicable). Through May 30, 2018, LQH Parent will file a federal income tax return, as well as certain state tax returns where we filed on a combined basis, and foreign tax filings, as applicable. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Tax Act contains several key tax provisions that affected us, including a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation is expected over the next 12 months, we consider the deferred tax re-measurements and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the one year measurement period permitted by SAB 118. Concentrations of Credit Risk and Business Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents. We utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We also monitor the credit-worthiness of our customers and financial institutions before extending credit or making investments. Lodging operations are particularly sensitive to adverse economic and competitive conditions and trends, which could adversely affect the Company’s business, financial condition, and results of operations. Geographic concentrations, which potentially subject us to concentrations of business risk, relate primarily to locations of hotels and the revenue recognized in various states within the U.S. We have a concentration of hotels operating in Texas, Florida and California. The percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2018 and 2017 are as follows: For the six months ended June 30, 2018 June 30, 2017 Texas 23 % 21 % Florida 15 % 19 % California 10 % 10 % Total 48 % 50 % Segment Reporting Our hotels have similar economic characteristics and customers across all geographic locations, and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker, the Company's Chief Executive Officer, reviews our financial information on an aggregated basis. As a result, we have concluded that we have one . Principal Components of Expenses Rooms — These expenses include hotel expenses of housekeeping, reservation systems, room and breakfast supplies and front desk costs. Other departmental and support These expenses include labor and other expenses that constitute non-room operating expenses, including parking, telecommunications, on-site administrative departments, sales and marketing, recurring repairs and maintenance and utility expenses. Property tax, insurance and other These expenses consist primarily of real and personal property taxes, other local taxes, ground rent, equipment rent and insurance. Management and royalty fees — Management fees represent fees paid to third parties and are computed as a percentage of gross revenue. Royalty fees are generally computed as a percentage of rooms revenues. In connection with the spin-off, we entered into new management and franchise agreements, refer to Note 9, “Commitments and Contingencies” for additional information. Corporate general and administrative — These expenses include off-site general and administrative expenses, consisting primarily of compensation, contract labor expense for our corporate staff, professional fees, travel expenses, and office administrative and related expenses. Other, net — These expenses include losses incurred resulting from property damage or destruction caused by any sudden, unexpected or unusual event such as a hurricane. Impairment losses are non-cash expenses that are recognized when circumstances indicate that the carrying value of a long-lived asset is not recoverable. An impairment loss is recognized for the excess of the carrying value over the fair value of the asset. Newly Issued Accounting Standards In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. This guidance updates ASU 2016-02 Leases and provides entities an additional, optional transition method of initially applying the new lease standard at the adoption date and recognizing cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with comparative periods continuing to be presented in accordance with current GAAP. Previously, ASU 2018-02 required the new standard to be adopted on a modified retrospective basis. The Company is currently evaluating which option to elect. In June 2018, the FASB issued ASU 2018-07, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company accounts for its share-based payments to members of its board of directors in the same manner as share-based payments to its employees. Other than to members of our board of directors, the Company does not award share-based payments to any nonemployees. The guidance is effective for periods beginning after December 15, 2018. Early adoption is In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The guidance will apply to our trade receivables, notes receivable, net investments in leases and any other future financial assets that have the contractual right to receive cash that we may acquire in the future. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), regarding the accounting for leases for both lessees and lessors. In July 2018, ASU 2016-02 was amended, providing another transition method by allowing companies to initially apply the new lease standard in the year of adoption and not the earliest comparative period. The lease standard amendment also provided a practical expedient for an accounting policy election for lessors, by class of underlying asset, to not separate nonlease components from the associated lease components, similar to the practical expedient provided for lessees. The lessor practical expedient is only available if the timing and pattern of transfer are the same for the nonlease and lease components and the lease components, if accounted for separately, would be classified as an operating lease. Lessees will need to recognize on their balance sheet a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, adjusted for any initial direct costs of the lease, lease incentives or early lease payments, where applicable. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line rent expense (similar to current operating leases) while finance leases will result in interest and amortization expense (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. The new standard may be adopted using a modified retrospective transition and provides for certain practical expedients. We are evaluating the impact of ASU 2016-02 on our consolidated financial statements, where we believe the primary impact as a lessee will relate to leases where we are the ground lessee. Under current lessor accounting, a real estate lease could only be a sales-type lease if ownership of the real estate was transferred to the lessee. With the adoption of ASU 2016-02, there will no longer be an exclusion for real estate leases, where the same classification guidance applies as with all other leases. We are currently evaluating how this guidance would apply to lessor classification. If, as lessor, our real estate leases would be classified as sales-type leases, the real estate asset would be eliminated, a net investment asset would be recognized generally equal to the present value of the minimum lease payments plus the unguaranteed residual value and a selling profit or loss recorded. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is primarily consistent with the Company’s existing policies. In light of the recently issued lease standard amendment and the new practical expedients, we continue to evaluate the impact of the new leasing standard. We plan to adopt the new standard effective January 1, 2019. Newly Adopted Accounting Standards Effective January 1, 2018, we adopted FASB Topic 606. The revised guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded prior revenue recognition guidance, including industry-specific revenue guidance. The revised guidance replaced most existing revenue and real estate sale recognition guidance in GAAP. The standard specifically excludes lease contracts, which is our primary recurring revenue source; however, our revenue accounting for incidental hotel revenue will follow the revised guidance. We adopted the new standard using the modified retrospective transition method, where financial statement presentations prior to the date of adoption are not adjusted. Transactions that were not closed as of the adoption date were adjusted to reflect the new standard where we recorded a net reduction to opening retained earnings of approximately $15 million, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606 , which relates primarily to our discontinued operations . Effective January 1, 2018, we adopted FASB ASU 2017-05, which requires the derecognition of a business in accordance with ASC 810, Consolidations, including instances in which the business is considered in substance real estate. In cases where a controlling interest in real estate was sold but a noncontrolling interest is retained, we may record a gain or loss related to both the sold and retained interests. The adoption of this standard did not have an impact on our condensed consolidated financial statements, but depending on future transactions, may in the future. Effective January 1, 2018, we adopted FASB ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which provides guidance from the SEC allowing for the recognition of provisional amounts in the financial statements as a result of the Tax Act that was signed into law in December 2017. The guidance allows for a measurement period of up to one year from the enactment date to finalize the accounting related to the Tax Act. The Company has applied and continues to apply the guidance in this update within its financial statements. Effective January 1, 2018, we adopted FASB ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Act from accumulated other comprehensive income into retained earnings. The adoption of this statement did not have a material effect on our financial statements. Effective January 1, 2018, we adopted FASB ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. This update clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. The adoption of this statement did not have a material effect on our financial statements. Effective January 1, 2018 we adopted FASB ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance for evaluating whether certain transactions are to be accounted for as an acquisition (or disposal) of either a business or an asset. This standard is applied on a prospective basis. The adoption of this statement did not have a material effect on our financial statements. From time to time, new accounting standards are issued by FASB or other standards setting bodies, which we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. |
Discontinued Operations
Discontinued Operations | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Discontinued Operations | NOTE 3. DISCONTINUED OPERATIONS As discussed in Note 1, LQH Parent completed the separation of its real estate business, CorePoint, from the franchise and management business. The spin-off of CorePoint was made as part of a plan approved by LQH Parent’s board of directors to spin off LQH’s real estate business into a stand-alone, publicly traded company prior to the merger of LQH Parent with a wholly owned subsidiary of Wyndham Worldwide. To complete the spin-off, LQH Parent distributed to its stockholders all of the outstanding shares of CorePoint common stock. Each holder of LQH Parent common stock received one share of CorePoint common stock for each share of LQH Parent common stock held by such holder as of 5:00 p.m., Eastern Time, on the record date, after giving effect to a reverse stock split, whereby each share of the common stock of LQH Parent (par value $0.01) was reclassified and combined into one half of a share of the common stock of LQH Parent (par value $0.02) (the “Reverse Stock Split”). Immediately following the spin-off, pursuant to the terms of the merger agreement LQH Parent became a wholly-owned subsidiary of Wyndham Worldwide and each share of LQH Parent common stock (after giving effect to the Reverse Stock Split) was converted into the right to receive $16.80 per share in cash (after giving effect to the Reverse Stock Split), without interest. The merger consideration is in addition to the shares of CorePoint common stock that the LQH Parent stockholders received in the distribution, as described above. Wyndham Worldwide repaid $715 million of LQH Parent’s debt net of cash and set aside a reserve of $240 million for estimated taxes expected to be incurred in connection with the spin-off. The completion of the spin-off, followed by the completion of the merger, occurred on May 30, 2018. Immediately following the spin-off, LQH Parent did not own any shares of any class of CorePoint outstanding common stock. In connection with the spin-off, CorePoint had entered into a Separation and Distribution Agreement (the “Separation and Distribution Agreement”) in January 2018 and entered into several other agreements with LQH Parent prior to consummation of the spin-off. These agreements set forth the principal transactions required to effect CorePoint’s separation from LQH and provide for the allocation between CorePoint and LQH Parent of various assets, liabilities, rights and obligations (including employee benefits, intellectual property, insurance and tax-related assets and liabilities) and govern the relationship between CorePoint and LQH after completion of the spin-off. These agreements include, among others: • an Employee Matters Agreement, dated January 7, 2018, between LQH and CorePoint, which governs certain obligations of LQH and CorePoint with respect to current and former LQH employees, including certain compensation and benefits obligations, the treatment of certain equity awards, and the allocation of certain employee-related assets and liabilities between LQH and CorePoint; • a Tax Matters Agreement, dated May 30, 2018, between LQH and CorePoint, which governs LQH’s and CorePoint’s respective rights, responsibilities and obligations with respect to tax liabilities, tax attributes, the preparation and filing of tax returns, tax contests, and certain other tax matters, including a two-way adjustment to the extent LQH’s estimated tax liability as a result of the spin-off and related transactions is greater or less than an agreed-upon reserve amount set forth in the Tax Matters Agreement; • Hotel Management Agreements and Franchise Agreements governing the ongoing relationship between LQH, as operator of CorePoint’s hotels, and CorePoint as the owner of such hotels; and • a Transition Services Agreement, dated May 30, 2018, between LQH and CorePoint, pursuant to which each party will provide certain services to the other party for an interim period following the spin-off. Notwithstanding the legal form of the spin-off, for accounting and financial reporting purposes, LQH Parent is presented as being spun-off from CorePoint (a “reverse spin”). This presentation is in accordance with GAAP and is primarily a result of the relative significance of CorePoint’s business to LQH’s business, as measured in terms of revenues, profits, and assets. Therefore, CorePoint Lodging Inc. is considered the divesting entity and treated as the “accounting successor,” and LQH Parent is the “accounting spinnee” and “accounting predecessor” for financial reporting purposes. In accordance with ASC 205-20 Presentation of Financial Statements – Discontinued Operations Because the separation was a spin-off among shareholders, for financial statement presentation, there is no gain or loss on the separation of the disposed net assets and liabilities. Rather, the carrying amounts of the net assets and liabilities of the Company’s former hotel franchise and hotel management accounts are removed at their historical cost with an offsetting amount to stockholders’ equity. As of June 30, 2018, the Company recorded a $746 million adjustment in stockholders’ equity from the spin-off. The amount recognized will be impacted in future reporting periods as the amount recorded is preliminary pending the finalization of various items including the final determination of the tax liabilities associated with the transaction and the settlement of other remaining considerations with Wyndham Worldwide. As these matters are finalized pursuant to the transaction agreements, the Company will record an adjustment to its cash balance with an offsetting amount to stockholders’ equity. Additionally, as the spin-off was a taxable spin, Wyndham Worldwide reserved $240 million to cover the tax payment for the spin transaction. Any residual amount of the reserve above the tax payment will be remitted to the Company. As these tax valuations are completed and the estimates are refined and finalized, the impact of the reorganization and separation from La Quinta Holdings Inc. on stockholders’ equity will be adjusted. Results of Discontinued Operations The following table summarizes the results of the hotel franchise and hotel management business which are presented as discontinued operations (in millions). For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues $ 25 $ 38 $ 58 $ 69 OPERATING EXPENSES General, administrative and marketing 36 30 64 58 Depreciation and amortization 2 2 4 4 Total Operating Expenses 38 32 68 62 Operating Income (Loss) (13 ) 6 (10 ) 7 OTHER EXPENSES: Interest expense (6 ) (9 ) (15 ) (17 ) Loss on extinguishment of debt (7 ) — (7 ) — Total Other Expenses (13 ) (9 ) (22 ) (17 ) Loss Before Income Taxes (26 ) (3 ) (32 ) (10 ) Income tax benefit 6 1 7 4 Loss from Discontinued Operations, net of tax $ (20 ) $ (2 ) $ (25 ) $ (6 ) The following table presents the carrying amounts of the major classes of assets and liabilities of LQH Parent that were included in discontinued operations as of December 31, 2017: December 31, 2017 (in millions) ASSETS Assets: Total real estate, net $ 49 Intangible assets, net of accumulated amortization 171 Accounts receivable 24 Other assets 36 Total Assets $ 280 LIABILITIES AND EQUITY Liabilities: Debt, net $ 696 Accounts payable and accrued expenses 109 Other liabilities 21 Deferred tax liabilities 20 Total Liabilities $ 846 In connection with the spin-off, CorePoint made a cash payment to LQH Parent of approximately $1.002 billion (the “Cash Payment”), immediately prior to and as a condition of the spin-off. The Cash Payment was to facilitate the repayment of part of LQH Parent’s existing debt. In addition, simultaneously with the closing of the merger, Wyndham Worldwide repaid, or caused to be repaid, on behalf of LQH Parent, LQH Parent’s existing Term Facility (as defined below). As permitted under GAAP, the Company has elected not to adjust the condensed consolidated statements of cash flows for the six months ended June 30, 2018 and June 30, 2017 to exclude cash flows attributable to discontinued operations. As such, the following table presents selected financial information of LQH Parent included in the condensed consolidated statements of cash flows: For the Six months ended June 30, June 30, 2018 June 30, 2017 (in millions) Non-cash items included in net income (loss): Depreciation and amortization $ 4 $ 4 Amortization of deferred costs 1 1 Loss on extinguishment of debt 7 — Equity based compensation expense 4 4 Investing activities: Capital expenditures $ 11 $ 12 |
Investments In Real Estate
Investments In Real Estate | 6 Months Ended |
Jun. 30, 2018 | |
Real Estate Investments [Abstract] | |
Investments In Real Estate | NOTE 4. INVESTMENTS IN REAL ESTATE Depreciation and amortization expense related to property and equipment was $39 million and $34 million for the three months ended June 30, 2018 and 2017 respectively. Depreciation and amortization expense related to property and equipment was $76 and $68 million for the six months ended June 30, 2018 and 2017, respectively. Construction in progress includes capitalized costs for ongoing projects that have not yet been put into service. |
Other Assets
Other Assets | 6 Months Ended |
Jun. 30, 2018 | |
Other Assets [Abstract] | |
Other Assets | NOTE 5. OTHER ASSETS Other assets include the following as of June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 (in millions) Assets held for sale $ 5 $ 9 Lenders escrow 15 — Intangible assets 5 5 Other assets 30 18 Total other assets $ 55 $ 32 As of December 31, 2017, three hotels were classified as assets held for sale. The sale of these assets does not represent a major strategic shift and does not qualify for discontinued operations reporting. During the first quarter of 2018, one of these hotels was sold for $4 million, net of transaction costs, resulting in a gain of $1 million. Subsequent to the end of the second quarter of 2018, one of these hotels was sold for $2 million, net of transaction costs. The remaining hotel is expected to be sold before the end of 2018. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | NOTE 6. DEBT Debt as of June 30, 2018 and December 31, 2017 was as follows: June 30, 2018 December 31, 2017 (in millions) CMBS Facility $ 1,035 $ — Revolving Facility 25 — Term Facility — 1,003 1,060 1,003 Less deferred debt issuance costs and original issue discount (28 ) (11 ) Total debt, net (1) $ 1,032 $ 992 (1) As of June 30, 2018 and December 31, 2017, the 30 day United States dollar London Interbank Offering Rate (“LIBOR”) was 2.09% and 1.56%, respectively. As of June 30, 2018, the interest rate, maturity date and principal payments on the CMBS Facility (as defined below) and Term Facility (defined below) were as follows: • The interest rate for the CMBS Facility through June 30, 2018 was LIBOR with a floor of 0.0% plus a spread of 2.75%. Interest expense on the CMBS Facility for the three and six months ended June 30, 2018 was approximately $6 million. Included in the CMBS Facility, as of June 30, 2018 is the deduction of debt issuance costs of $28 million, net of amortization. As of June 30, 2018, we had $5 million in accrued interest included within accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet. • The interest rate for the Revolving Facility is, at the option of the CorePoint Revolver Borrower, either at a base rate plus a margin of 3.5% or LIBOR rate plus a margin of 4.5%. • In connection with the consummation of the merger, on May 30, 2018, all outstanding amounts under the Term Facility were repaid in full. • The interest rate for the Term Facility from January 1, 2018 to March 6, 2018, was LIBOR with a floor of 1.0% plus a spread of 2.75%. As of March 6, 2018, the rate increased to LIBOR with a floor of 1.0% plus a spread of 3.0% for the period from March 6, 2018 to May 30, 2018. Included in the Term Facility as of December 31, 2017 is an unamortized original issue discount of $3 million. Interest expense on the Term Facility for the three and six months ended June 30, 2018 was approximately $8 million and $19 million, respectively. Interest expense on the Term Facility for the three and six months ended June 30, 2017 was approximately $10 million and $21 million, respectively. Included in the Term Facility, as of December 31 ,2017 is the deduction of debt issuance costs of $8 million, net of amortization. As of December 31, 2017, we had $9 million in accrued interest included within accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. Extinguishment of debt In connection with the spin-off and merger, on May 30, 2018, we entered into the CMBS Loan Agreement and used the proceeds to repay or discharge existing loans (“Term Facility”) related to the properties covered by the facility. During the six months ended June 30, 2018, we recorded a $10 million loss related to the extinguishment of the Term Facility. The losses included the write-off of unamortized debt issuance costs and original issuance discount. CMBS Facility On May 30, 2018, certain indirect wholly-owned subsidiaries of CorePoint (collectively, the “CorePoint CMBS Borrower”), CorePoint TRS L.L.C (the “Operating Lessee”), and CorePoint Operating Partnership L.P. (the “CorePoint OP”) entered into a Loan Agreement (the “CMBS Loan Agreement”), pursuant to which the CorePoint CMBS Borrower borrowed an aggregate principal amount of $1.035 billion under a secured mortgage loan secured primarily by mortgages for 307 owned and ground leased hotels, an excess cash flow pledge for seven owned and ground leased hotels and other collateral customary for mortgage loans of this type (the “CMBS Facility”). The proceeds from the CMBS Facility were used to facilitate the repayment of part of LQH Parent’s existing debt. In addition, simultaneously with the closing of the merger, Wyndham repaid, or caused to be repaid, on behalf of LQH Parent, LQH Parent’s existing Term Facility. As long as LIBOR is able to be determined, the CMBS Facility bears interest at a rate equal to the sum of (i) one-month LIBOR (rounded to the nearest 1/1000th of a percent subject to a floor of 0.00%) and (ii) 2.75% per annum for the first 5 years of the term, 2.90% for the 6th year of the term and 3.00% for the 7th year of the term. The CMBS Facility is pre-payable in whole or in part subject to payment of (i) in the case of prepayments (other than in certain enumerated cases) made prior to or on the December 2019 payment date (provided that with respect to any prepayment made after the payment date in November 2019, but prior to the December 2019 payment date, the amount of the spread maintenance payment shall be zero), a spread maintenance premium and in certain cases third party LIBOR breakage costs, and (ii) all accrued interest through the date of prepayment prior to a securitization and through the end of the applicable accrual period following a securitization. Notwithstanding the above, the CorePoint CMBS Borrowers are permitted to prepay the CMBS Facility by an amount not to exceed 20% of the original principal balance of the CMBS Facility, in the aggregate without payment of any spread maintenance premium. CorePoint OP delivered a customary non-recourse guaranty in connection with the CMBS Facility. Under such guaranty, (i) CorePoint OP will agree to indemnify the lender for certain losses arising out of customary “bad-boy” acts of CorePoint OP and its affiliates, including the CorePoint CMBS Borrower and (ii) the CMBS Facility will become fully recourse to CorePoint OP upon the occurrence of certain bankruptcy events capped at 10% of the then outstanding principal balance of the CMBS Facility. With respect to environmental matters, the CMBS Facility is recourse to the CorePoint CMBS Borrower only, provided that the required environmental insurance is delivered to the lender. The CMBS Facility includes certain customary affirmative and negative covenants and events of default, including, among other things, restrictions on the ability of the CorePoint CMBS Borrower to incur additional debt and transfer, pledge or assign certain equity interests or its assets, and covenants requiring the CorePoint CMBS Borrower to exist as “special purpose entities,” maintain certain ongoing reserve funds and comply with other customary obligations for commercial mortgage-backed securities loan financings. As of June 30, 2018, the Company is in compliance with these covenants. At the closing of the CMBS Facility, the CorePoint CMBS Borrower deposited in the loan servicer’s account approximately $15 million in upfront reserves for property improvement and environmental remediation, which funds may be periodically disbursed to the CorePoint CMBS Borrower throughout the term of the loan to cover such costs. In addition, revenues to be distributed to the CorePoint CMBS Borrower will be required to be deposited first into a segregated account under the control of the CMBS Facility lender (the “Clearing Account”). All cash in the Clearing Account will be transferred to an account under the control of the Operating Lessee as long as (i) there is no event of default under the loan or (ii) the debt yield for the CMBS Facility (calculated based on the outstanding principal balance of the CMBS Facility) does not fall below (x) 12.33% for the first five years of the CMBS Facility loan term or (y) 12.83% for the sixth and seventh years of the CMBS Facility loan term, in each case for two consecutive calendar quarters. Upon the occurrence and continuation of either (i) or (ii) above, all cash in the Clearing Accounts will be transferred to an account under the control of the lender to be applied to payment of all monthly amounts due under the CMBS Facility loan documents including, but not limited to, debt service for the CMBS Facility and the Revolving Facility, agent fees and expenses, required ongoing reserves, property operating expenses, sales and use taxes and custodial fees. The remaining funds will be deposited into an excess cash flow account, also under the control of the lender, which funds will be available to the CorePoint CMBS Borrower, provided there is no event of default under the loan for payment of, among other things, various operating expenses and dividends, distributions and redemptions sufficient to maintain certain tax-preferential treatment for the CorePoint CMBS Borrower. As required by, and in connection with CorePoint Lodging’s entry into the CMBS Loan Agreement (defined below), we entered into an interest rate cap agreement on May 30, 2018 with a notional amount of $1.035 billion and a LIBOR rate cap of 3.25% that expires on July 15, 2020 (the “Interest Rate Cap Agreement”). The Interest Rate Cap Agreement is for a period equal to the existing term of the CMBS Facility and has a notional amount equal to or greater than the then outstanding principal balance of the CMBS Facility. The Company did not designate the interest rate cap as a hedge. Revolving Facility Also on May 30, 2018, the CorePoint Revolver Borrower and CorePoint OP entered into the Revolver Credit Agreement providing for the $150 million Revolving Facility, of which $25 million was drawn upon consummation of the spin-off. The Revolving Facility will mature on May 30, 2020, with an election to extend the maturity for one additional year subject to certain conditions, including that the maturity of the CMBS Facility be extended to a date no earlier than the maturity of the Revolving Facility. The interest under the Revolving Facility will be, at the option of the CorePoint Revolver Borrower, either at a base rate plus a margin of 3.50% or a LIBOR rate plus a margin of 4.50%. With respect to base rate loans, interest will be payable at the end of each quarter. With respect to LIBOR loans, interest will be payable at the end of the selected interest period but no less frequently than quarterly. Additionally, there is a commitment fee payable at the end of each quarter equal to 0.50% of unused commitments under the Revolving Facility and customary letter of credit fees. The Revolving Facility contains customary representations and warranties, affirmative and negative covenants and defaults. The Revolving Facility also contains a maximum total net leverage ratio financial covenant and minimum interest coverage ratio financial covenant, in each case, tested as of the last day of any fiscal quarter in which borrowings under the Revolving Facility and outstanding letters of credit exceed 10% of the aggregate commitments of the Revolving Facility. As of June 30, 2018, the Company is in compliance with these covenants. The obligations under the Revolving Facility are unconditionally and irrevocably guaranteed by CorePoint OP, and, subject to certain exceptions, each of the CorePoint Revolver Borrower’s existing and future domestic subsidiaries that own equity interests in any CorePoint CMBS Borrower (collectively, the “Revolver Subsidiary Guarantors”). The CorePoint Revolver Borrower’s obligations under the Revolving Facility and any hedging or cash management obligations are secured by (i) a perfected first-lien pledge of all equity interests in the CorePoint Revolver Borrower, all equity interests in any Revolver Subsidiary Guarantor and, subject to certain exceptions, all equity interests in certain CorePoint CMBS Borrowers and (ii) a perfected first-priority security interest in the CorePoint Revolver Borrower’s conditional controlled deposit account. |
Preferred Stock
Preferred Stock | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Preferred Stock | NOTE 7. PREFERRED STOCK In connection with La Quinta’s internal reorganization prior to the spin-off, the Company issued 15,000 shares of Cumulative Redeemable Series A Preferred Stock, par value $0.01 per share (the “Series A preferred stock”), to La Quinta Intermediate Holdings, L.L.C., a wholly owned subsidiary of La Quinta. Such securities were issued in reliance on the exemption contained in Section 4(a)(2) of the Securities Act, as a transaction by an issuer not involving a public offering. La Quinta Intermediate Holdings, L.L.C. privately sold all of the Series A preferred stock to an unrelated third-party investor immediately prior to the completion of the spin-off. On May 30, 2018, the Company filed with the State Department of Assessments and Taxation of Maryland Articles Supplementary (the “Articles Supplementary”) regarding certain rights of the shares of the Series A preferred stock. The Series A preferred stock has an aggregate liquidation preference of $15 million, plus any accrued and unpaid dividends thereon. We pay a cash dividend on the Series A preferred stock equal to 13% per annum, payable quarterly. If either our leverage ratio exceeds 7.5 to 1.0 as of the last day of any fiscal quarter, or if an event of default occurs (or has occurred and has not been cured) with respect to the Series A preferred stock, we will be required to pay a cash dividend on the Series A preferred stock equal to 15% per annum. Our dividend rate on the Series A preferred stock will increase to 16.5% per annum if, at any time, we are both in breach of the leverage ratio covenant and an event of default occurs (or has occurred and has not been cured) with respect to the Series A preferred stock. The Series A preferred stock are senior to our common stock with respect to dividends and with respect to dissolution, liquidation or winding up of the Company. Holders of Series A preferred stock generally have no voting rights. However, the Articles Supplementary provided that, without the prior consent of the holders of a majority of the outstanding shares of Series A preferred stock, we are prohibited from (i) issuing any capital stock ranking senior to or on parity with the Series A preferred stock, (ii) authorizing or issuing any additional shares of Series A preferred stock, (iii) amending our charter in any manner that would adversely affect the Series A preferred stock, or (iv) entering into, amending or altering any provision of any agreement in a manner that could reasonably be expected to be material and adverse to the Series A preferred stock. The holders of the Series A preferred stock also have exclusive voting rights on any amendment to our charter that would alter the contract rights of only the Series A preferred stock. If we are either (a) in arrears on the payment of dividends that were due on the Series A preferred stock on six or more quarterly dividend payment dates, whether or not such dates are consecutive, or (b) in default of our obligations to redeem the preferred stock on the tenth anniversary of its issuance or following a change of control, the preferred shareholders may designate a representative to attend meetings of our board of directors as a non-voting observer until all unpaid preferred stock dividends have either been paid or declared with an amount sufficient for payment set aside for payment, or the shares required to be redeemed have been redeemed, as applicable. The Series A preferred stock is mandatorily redeemable by us upon the tenth anniversary of the date of issuance. Beginning on the seventh anniversary of the issuance of the Series A preferred stock, we may redeem the outstanding Series A preferred stock for an amount equal to its aggregate liquidation preference, plus any accrued but unpaid dividends. The holders of the Series A preferred stock may also require us to redeem the Series A preferred stock upon a change of control of the Company for an amount equal to its aggregate liquidation preference plus any accrued and unpaid dividends thereon (and a premium if the change of control occurs prior to the seventh anniversary of the issuance of the Series A preferred stock). Shares of the Series A preferred stock may not be transferred until the date that is six months after the date of issuance of the Series A preferred stock and then only in tranches having an aggregate liquidation value of at least $2.5 million. On August 13, 2018, the Company filed with the State Department of Assessments and Taxation of Maryland Articles of Amendment (the “Articles of Amendment”) to the Articles Supplementary for the Series A preferred stock, to, among other things, remove the consent right of holders of shares of the Series A preferred stock over designations or issuances by us of any class or series of our stock ranking on parity with the Series A preferred stock, and instead provide such holders with certain preemptive rights over issuances of such parity stock. As required under the Articles Supplementary, the holders of a majority of the Series A preferred stock approved the Articles of Amendment. Due to the fact that the preferred stock is mandatorily redeemable by us, it is classified as a liability on the accompanying condensed consolidated balance sheet as of June 30, 2018. Dividends on these preferred shares are classified as interest expense in the accompanying condensed consolidated statements of operations. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | NOTE 8. FAIR VALUE MEASUREMENTS The carrying amount and estimated fair values of our financial assets and liabilities were as follows: June 30, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value (in millions) Debt - CMBS Facility (1)(2) $ 1,007 $ 1,007 $ — $ — Debt - Revolver (1) 25 25 — — Interest rate caps (3) 1 1 — — Debt - Term Facility (1)(4)(2) — — 992 1,007 Interest rate swaps (3) — — 1 1 Mandatorily redeemable preferred shares (1) 15 15 — — (1) Classified as Level 3 under the fair value hierarchy. (2) Carrying amount includes deferred debt issuance costs of $28 million as of June 30, 2018. (3) Classified as Level 2 under the fair value hierarchy. (4) Carrying amount includes deferred debt issuance costs of $14 million as of December 31, 2017. We believe the carrying amounts of our cash and cash equivalents and lenders escrow approximated fair value as of June 30, 2018 and December 31, 2017, as applicable. Our estimates of the fair values were determined using available market information and valuation methods appropriate in the circumstances. Considerable judgment is necessary to interpret market data and develop estimated fair values. Proper placement of fair value measurements within the valuation hierarchy is considered each reporting period. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The fair values of interest rate swaps and interest cap are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each instrument. This analysis reflects the contractual terms of the agreements, including the period to maturity, and uses observable market-based inputs, including forward interest rate curves. We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. We estimate the fair value of our debt and mandatorily redeemable preferred stock by using discounted cash flow analysis based on current market inputs for similar types of arrangements. The primary sensitivity in these calculations is based on the selection of appropriate discount rates. Fluctuations in these assumptions will result in different estimates of fair value. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 9. COMMITMENTS AND CONTINGENCIES Hotel Management and Operating License Agreements Management Fees On May 30, 2018, the Company entered into management agreements with La Quinta Management L.L.C (“LQM”), whereby it pays a fee equal to 5% of total gross revenues, as defined, which is classified as management and royalty fees in the accompanying condensed consolidated statements of operations. LQM generally has sole responsibility for all activities necessary for the operation of the hotels, including establishing room rates, processing reservations and promoting and publicizing the hotels. LQM also provides all employees for the hotels, prepares reports, budgets and projections, and provides other administrative and accounting support services to the hotels. We have consultative and limited approval rights with respect to certain actions of LQM, including entering into long-term or high value contracts, engaging in certain actions relating to legal proceedings, approving the operating budget, making certain capital expenditures and the hiring of certain management personnel. We are also responsible for reimbursing LQM for certain costs incurred by LQM during the fulfillment of their duties, such as payroll costs for certain employees and other costs that the manager incurs to operate the hotels. The term of the management agreements is 20 years, subject to two renewals of five years each, at the LQM’s option. Franchise Fees In connection with the spin-off, we entered into franchise agreements with La Quinta Franchising LLC (“LQ Franchising”). Pursuant to the franchise agreements, we were granted a limited, non-exclusive license to use our franchisor’s brand names, marks and system in the operation of our hotels. The franchisor also may provide us with a variety of services and benefits, including centralized reservation systems, participation in customer loyalty programs, national advertising, marketing programs and publicity designed to increase brand awareness, as well as training of personnel. In return, we are required to operate franchised hotels consistent with the applicable brand standards. As of June 30, 2018, 315 of our franchise agreements were with LQ Franchising. In the second quarter of 2018, one hotel transitioned to a Baymont branded hotel. Our franchise agreements require that we pay a 5% royalty fee on gross rooms revenue. The royalty fee is included within management and royalty fees in the accompanying condensed consolidated statements of operations. In addition to the royalty fee, the LQ Franchising agreement includes a reservation fee of 2% of gross room revenues, a marketing fee of 2.5% of gross room revenues, a loyalty program fee of 5% of eligible room night revenue, and other miscellaneous ancillary fees. The Baymont franchise agreement includes a reservation fee of 1.5% of gross room revenues, a marketing fee of 2% of gross room revenues, a loyalty program fee of 5% of eligible room night revenue, and other miscellaneous ancillary fees. Reservation fees are included within room expense in the accompanying condensed consolidated statements of operations. The marketing fee and loyalty program fees are included within other departmental and support in the accompanying condensed consolidated statements of operations. Litigation We are a party to a number of pending claims and lawsuits arising in the normal course of business, including proceedings involving tort and other general liability claims, workers’ compensation and other employee claims and intellectual property claims. We do not consider our ultimate liability with respect to any such claims or lawsuits, or the aggregate of such claims and lawsuits, to be material in relation to our condensed consolidated financial condition, results of operations or our cash flows taken as a whole. We maintain general and other liability insurance; however, certain costs of defending lawsuits, such as those below the retention or insurance deductible amount, are not covered by or are only partially covered by insurance policies, and our insurance carriers could refuse to cover certain claims in whole or in part. We regularly evaluate our ultimate liability costs with respect to such claims and lawsuits. We accrue costs from litigation as they become probable and estimable. Tax Contingencies We are subject to regular audits by federal and state tax authorities. These audits may result in additional tax liabilities. The Internal Revenue Service (“IRS”) is currently auditing the tax returns of La Quinta Corporation, one of our former REITs, and BRE/LQ Operating Lessee Inc., one of our former taxable REIT subsidiaries, in each case for the tax years ended December 31, 2010 and 2011. We received a draft notice of proposed adjustment from the IRS on January 9, 2014, and the notice of proposed adjustment was issued to us on June 2, 2014. We submitted a timely response to the notice of proposed adjustment and, on July 7, 2014, we received an IRS 30-Day Letter proposing to impose a 100% tax on the REIT totaling $158 million for the periods under audit in which the IRS has asserted that the rent charged for these periods under the lease of hotel properties from the REIT to the taxable REIT subsidiary exceeded an arm’s length rent. In addition, the IRS proposed to eliminate $89 million of net operating loss carryforwards for the taxable REIT subsidiary for the tax years 2006 through 2009; however, in an IRS rebuttal received on September 26, 2014, the IRS conceded its proposed adjustment on this point was incorrect. We disagree with the IRS’ position with respect to rents charged by the REIT to its taxable REIT subsidiary and have appealed the proposed tax and adjustments to the IRS Appeals Office. In determining amounts payable by our taxable REIT subsidiary under the lease, we engaged a third party to prepare a transfer pricing study contemporaneous with the lease which concluded that the lease terms were consistent with an arm’s length rent as required by relevant provisions of the Code and applicable Treasury Regulations. Attorneys and others representing the Company conducted preliminary discussions regarding the appeal with the IRS Appeals Office team on March 31, 2015 and April 1, 2015. In response to a supplemental analysis submitted by the IRS economist to IRS Appeals Office and provided to us on August 18, 2015, we submitted responses dated September 3, 2015 and October 1, 2015. Our most recent meeting with the IRS Appeals Office team occurred on January 25, 2017. In November 2017, IRS Appeals returned the matter to IRS Examination for further factual development. We believe the IRS transfer pricing methodologies applied in the audits contain flaws and that the IRS proposed tax and adjustments are inconsistent with the U.S. federal tax laws related to REITs. We have concluded that the positions reported on our tax returns under audit by the IRS are, based on their technical merits, more-likely-than-not to be sustained upon examination. Accordingly, as of June 30, 2018, we have not established any reserves related to this proposed adjustment or any other issues reflected on the returns under examination. If, however, we are unsuccessful in challenging the IRS, an excise tax would be imposed on the REIT equal to 100% of the excess rent and we could owe additional income taxes, interest and penalties, which could adversely affect our financial condition, results of operations and cash flow and the price of our common stock. Such adjustments could also give rise to additional state income taxes. On November 25, 2014, we were notified that the IRS intended to examine the tax returns of the same entities subject to the 2010 and 2011 audit in each case for the tax years ended December 31, 2012 and 2013. We have received several draft notices of proposed adjustment proposing a transfer-pricing related assessment of approximately $18 million for 2013 and adjustments to our net operating losses for the years 2006 through 2009. The IRS has since indicated that it will not pursue the transfer-pricing adjustment. On August 8, 2017, the IRS issued a 30-Day Letter, in which it is proposed to disallow net operating loss carryovers originating in tax years 2006-2011 or, in the alternative, tax years 2006-2009, depending upon the outcome of the 2010-2011 examination discussed above. On September 26, 2017, we furnished a timely protest to the IRS exam team. They have since indicated that they intend to furnish a rebuttal to our protest, at which time the matter will be referred to the IRS Appeals Office. Based on our analysis of the NOL notice, we believe the IRS NOL disallowances applied in the 2012-2013 audit contain the same flaws present in the 2010-2011 audit and that the IRS proposed NOL adjustments are inconsistent with the U.S. federal tax laws related to REITs. We have concluded that the positions reported on our tax returns under audit by the IRS are, based on their technical merits, more-likely-than-not to be sustained upon examination. Accordingly, as of June 30, 2018, we have not established any reserves related to this proposed adjustment or any other issues reflected on the returns under examination. Purchase Commitments As of June 30, 2018, we had approximately $19 million of purchase commitments related to certain continuing redevelopment and renovation projects and other commitments. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10. INCOME TAXES The Company intends to elect REIT status with the filing of its tax return for the period May 31, 2018 through December 31, 2018. To qualify as a REIT, the Company must meet a number of organizational, operational, and distribution requirements. As a REIT, the Company is generally not subject to federal corporate income taxes on the portion of its net income that is currently distributed to its shareholders. To the extent the Company does not distribute 100% of its taxable income for any year in which it has elected REIT status, the Company will be subject to income tax on the undistributed taxable income. It is the Company’s current intention to adhere to these requirements and maintain the Company’s qualification for taxation as a REIT, including the requirement to distribute its taxable income. If the Company fails to qualify for taxation as a REIT in any taxable year, it will be subject to federal income taxes at regular corporate rates and may not be able to qualify as a REIT for the four taxable years subsequent to the year of an uncured REIT qualification failure. Even if the Company qualifies for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income. In addition, taxable income from non-REIT activities managed through the Company's TRS is subject to federal, state and local income taxes at normal corporate rates. The Company recorded a provision for federal, state and foreign income tax expense of approximately $2 million and $14 million for the three months ended June 30, 2018 and 2017, respectively. The Company recorded a provision for federal, state and foreign income tax expense of approximately $1 million and $19 million for the six months ended June 30, 2018 and 2017, respectively. The provision for the three and six month periods ended June 30, 2018 and 2017 differs from the statutory federal tax rates of 21% and 35%, respectively, primarily due to the impact of state income taxes, the impact of certain costs relating to the separation of our franchise and management business from our owned real estate assets that are not deductible for income tax purposes, and the impact on the determination of the annualized effective tax rate as a result of the election of REIT status. |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-Based Compensation | NOTE 11. EQUITY-BASED COMPENSATION We recognize the cost of services received in an equity-based payment transaction with an employee as services are received and record either a corresponding increase in equity or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. The measurement objective for these equity awards is the estimated fair value at the grant date of the equity instruments that we are obligated to issue when employees have rendered the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation cost for an award classified as an equity instrument is recognized ratably over the requisite service period. The requisite service period is the period during which an employee is required to provide service for an award to vest. We recognize forfeitures as they occur. In connection with the spin-off, the Company entered an agreement with LQH Parent to modify all outstanding awards granted to the employees of LQH Parent. Under the agreement, holders of LQH restricted stock awards and LQH restricted stock units received restricted shares and restricted stock units of CorePoint common stock. Holders of LQH performance share units received CorePoint restricted stock awards. Share-based compensation awards of employees remaining at La Quinta were adjusted in accordance with the anti-dilution provisions of the La Quinta Incentive Plan with the intent to preserve the intrinsic value of the original awards. The adjustments were determined by comparing the fair value of such awards immediately prior to the spin-offs to the fair value of such awards immediately after the spin-offs. Equity awards that were adjusted generally remain subject to the same vesting, expiration and other terms and conditions as applied to the awards immediately prior to the spin-offs. Treatment of LQH Parent Outstanding Equity Awards With respect to LQH Parent equity-based compensation awards that were outstanding under the LQH Incentive Plan on the distribution date, the Employee Matters Agreement entered into with LQH Parent, generally provides that, as of the separation, holders of such awards will be entitled to receive CorePoint equity-based compensation awards in amounts based on the distribution ratio. Generally, all such CorePoint equity-based compensation awards (except for the LQH PSUs, as described below) retain the same terms and vesting conditions as the original LQH Parent equity-based compensation awards to which such awards relate. Treatment of LQH RSAs. At the spin-off, each holder of an LQH RSA received a number of restricted shares of CorePoint common stock (each, a “CPLG RSA”) calculated by multiplying (i) the number of LQH RSAs subject to each grant by (ii) the distribution ratio, rounded up to the nearest whole share. The CPLG RSAs are subject to the same terms and conditions from and following the spin-off as the terms and conditions applicable to the corresponding LQH RSAs immediately prior to the spin-off and will vest subject to continued employment with LQH or CorePoint, as applicable. Treatment of LQH RSUs . At the spin-off, each holder of an LQH RSU received a number of restricted stock units of CorePoint common stock (each, a “CPLG RSU”) calculated by multiplying (i) the number of LQH RSUs subject to each grant by (ii) the distribution ratio, rounded up to the nearest whole share. The CPLG RSUs are subject to the same terms and conditions from and following the spin-off as the terms and conditions applicable to the corresponding LQH RSUs immediately prior to the spin-off and will vest subject to continued service with LQH or CorePoint, as applicable. Treatment of LQH PSUs. Immediately prior to the spin-off, each ongoing Performance Period (as defined in the applicable LQH PSU grant notice) relating to each then-outstanding LQH PSU was terminated, and the LQH PSUs were bifurcated into (i) a number of LQH PSUs (expressed as a dollar value) calculated by multiplying (A) the target number of LQH PSUs (expressed as a dollar value) granted to the applicable holder by (B) a fraction, the numerator of which equaled the number of completed fiscal quarters between the commencement of the Performance Period applicable to such LQH PSU and the distribution date, and the denominator of which equaled the number of fiscal quarters in the Performance Period applicable to such LQH PSUs (the “Completed Period PSUs”), and (ii) a number of LQH PSUs (expressed as a dollar value) equal to the original target number of LQH PSUs awarded (expressed as a dollar value), less the number of corresponding Completed Period PSUs (expressed as a dollar value) (the “Remaining PSUs”). Immediately prior to the spin-off, (i) a number of Completed Period PSUs (expressed as a dollar value) were deemed earned, based on the greater of (x) the level of achievement of applicable measures based on actual performance through the last completed fiscal quarter ending on or before the distribution date and (y) satisfaction of the applicable criteria at target levels, and (ii) a number of Remaining PSUs (expressed as a dollar value) were deemed earned based on satisfaction of the applicable criteria at target levels (in each case expressed as a dollar value and collectively, the “Banked PSUs”). Performance-based vesting with respect to the Banked PSUs was removed, and instead Banked PSUs will vest, subject to the holder’s continued employment with LQH or CorePoint, as applicable, through the last date of the original Performance Period to which such Banked PSUs relate. Any Completed Period PSU or Remaining PSU that was not earned as of the spin-off was forfeited without consideration as of such time. Immediately prior to the spin-off, each Banked PSU were, by virtue of the spin-off, converted into a number of LQH RSAs equal to (i) the dollar value of such Banked PSU, divided by (ii) the Beginning Share Price (as such term is defined in the applicable LQH PSU grant notice) applicable to such Banked PSU, which LQH RSAs will be subject to the same vesting terms as the Banked PSU to which such LQH RSAs relate. Such converted LQH RSAs will be subject to the same treatment as set forth above with respect to LQH RSAs. Continued Vesting. Following the spin-off, a grantee who has outstanding equity-based compensation awards under the LQH Incentive Plan and/or replacement equity-based compensation awards under our Omnibus Incentive Plan will be considered to have been employed by LQH or CorePoint, as applicable, prior to the spin-off, and to the extent such grantee continues to be employed by either LQH or CorePoint following the spin-off, after the spin-off, for purposes of (i) vesting and (ii) determining the date of termination of employment as it applies to any such award. Neither the transfer of employment to CorePoint nor the spin-off will constitute a “termination” under the LQH Incentive Plan. The compensation expense related to the grants made under the LQH Incentive Plan and/or replacement equity-based compensation award for the employees of LQH post the spin-off date is incurred by LQH. The compensation expense related to the grants made under the LQH Incentive Plan and/or replacement equity-based compensation award for the employees of CorePoint is incurred by CorePoint. For the three and six months ended June 30, 2018, we recognized $1 million and $2 million, respectively, of equity-based compensation expense in continuing operations. For the three and six months ended June 30, 2017, we recognized $2 million and $4 million, respectively, of equity-based compensation expense in continuing operations. For the three and six months ended June 30, 2018, we recognized $1 million and $4 million, respectively, of equity-based compensation expense in discontinued operations. For the three and six months ended June 30, 2017, we recognized $2 million and $4 million, respectively, of equity-based compensation expense in discontinued operations. The following table summarizes the activity of our RSAs during the six months ended June 30, 2018: Number of Shares Weighted-Average Grant Date Fair Value Unvested at January 1, 2018 512,117 $ 25.90 Granted 633,241 27.89 Conversion of the performance units upon completion of the spin-off 423,510 27.92 Vested (421,123 ) 26.41 Forfeited (5,737 ) 27.45 Unvested at June 30, 2018 1,142,008 $ 27.59 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 12. RELATED PARTY TRANSACTIONS LQH Parent As discussed in Note 3, CorePoint entered into the Separation and Distribution Agreement in January 2018 and entered into several other agreements with LQH Parent prior to consummation of the spin-off. These agreements set forth the principal transactions required to effect CorePoint Lodging’s separation from LQH and provide for the allocation between CorePoint and LQH Parent of various assets, liabilities, rights and obligations (including employee benefits, intellectual property, insurance and tax-related assets and liabilities) and govern the relationship between CorePoint Lodging and La Quinta after completion of the spin-off. These agreements also include arrangements with respect to transitional services to be provided by LQH Parent to CorePoint Lodging. In addition, prior to the spin-off, CorePoint Lodging entered into agreements, including long-term hotel management and franchise agreements for each of its hotels, with LQH that have either not existed historically, or that may be on different terms than the terms of the arrangement or agreements that existed prior to the spin-off. In connection with the spin-off, CorePoint made the Cash Payment to LQH Parent of approximately $1.002 billion, immediately prior to and as a condition of the spin-off. The Cash Payment was to facilitate the repayment of part of LQH Parent’s existing debt. In addition, simultaneously with the closing of LQH Parent’s merger with a subsidiary of Wyndham Worldwide, Wyndham Worldwide repaid, or caused to be repaid, on behalf of LQH Parent, LQH Parent’s existing Term Facility. Other Related Parties Prior to April 14, 2014, LQH and predecessor entities were owned and controlled by Blackstone Real Estate Partners IV L.P. and affiliates (“BREP IV”) and Blackstone Real Estate Partners V L.P. and affiliates (“BREP V”). BREP IV and BREP V are affiliates of The Blackstone Group L.P. (collectivity, the “Funds” or “Blackstone”). As of June 30, 2018, Blackstone beneficially owned approximately 30.0% of our shares of common stock outstanding. As of June 30, 2018, approximately $518 million of the aggregate principal amount of our CMBS Facility was held by affiliates of Blackstone. As of December 31, 2017, approximately $82 million of the aggregate principal amount of LQH’s Term Facility was held by affiliates of Blackstone. In connection with the consummation of LQH Parent’s merger with a subsidiary of Wyndham Worldwide, on May 30, 2018, all outstanding amounts under LQH’s Term Facility were repaid in full. We also purchase products and services from entities affiliated with or owned by Blackstone in the ordinary course of operating our business. The fees paid for these products and services were approximately $2 million during the three months ended June 30, 2017. The fees paid for these products and services were approximately $1 million and $2 million during the six months ended June 30, 2018 and 2017, respectively. |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Disclosures of Cash Flow Information | NOTE 13. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Supplemental cash flow information for the six months ended June 30, 2018 and 2017 is summarized below: For the Six Months Ended June 30, 2018 2017 (in millions) Supplemental cash flow information: Interest paid during the period $ 54 $ 39 Income taxes paid during the period, net of refunds 1 4 Supplemental non-cash disclosure: Capital expenditures included in accounts payable 5 19 Cash flow hedge adjustment, net of tax 1 2 Receivable for capital assets damaged by casualty disasters 3 4 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | NOTE 14. EARNINGS PER SHARE Basic (loss) earnings per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding. Diluted earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of shares of the Company’s common stock outstanding plus other potentially dilutive securities, except when the effect would be anti-dilutive. Dilutive securities include equity-based awards issued under long-term incentive plans, as discussed in Note 11. The two-class method is an earnings allocation formula that determines EPS for each class of common stock and participating securities according to dividends or dividend equivalents and participation rights in undistributed earnings in periods when we have net income. The mandatorily redeemable preferred shares are considered participating securities and would be subject to the two-class method, as these shares have rights to earnings that otherwise would have been available to common shareholder. The income from continuing operations would be impacted by the amount of dividends declared in the current period and the amount of any unpaid cumulative dividends. As there was a loss for the three and six months ended June 30, 2018, the impact of the mandatorily redeemable preferred shares dividends would be anti-dilutive. As described in Note 1, on May 30, 2018, LQH Parent stockholders of record as of 5:00 p.m. Eastern time, on May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the Reverse Stock Split. Basic and diluted net income (loss) per share for the three and six months ended June 30, 2018 is calculated using the weighted average number of basic, dilutive and anti-dilutive common shares outstanding during the periods, as adjusted for the one-to-two distribution ratio. The following table sets forth the computation of basic and diluted earnings (loss) per share: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except per share data) Numerator: Income (loss) from Continuing Operations, net of tax $ (28 ) $ 19 $ (38 ) $ 24 Loss on Discontinued Operations, net of tax (20 ) (2 ) (25 ) (6 ) Net income (loss) attributable to CorePoint Lodging's stockholders $ (48 ) $ 17 $ (63 ) $ 18 Denominator: Weighted average number of shares outstanding, basic 58.3 57.9 58.2 58.0 Weighted average number of shares outstanding, diluted 58.3 58.2 58.2 58.2 Basic and diluted earnings (loss) per share from continuing operations $ (0.48 ) $ 0.32 $ (0.65 ) $ 0.41 Basic and diluted loss from discontinued operations (0.34 ) (0.03 ) (0.43 ) (0.10 ) Basic and diluted (loss) earnings per share $ (0.82 ) $ 0.29 $ (1.08 ) $ 0.31 For the three and six month periods ended June 30, 2018, approximately 0.7 million shares and 0.6 million shares, respectively, were excluded from the computation of diluted shares, as their impact would have been anti-dilutive. For the three and six month periods ended June 30, 2017, approximately 0.4 million shares and 0.3 million shares, respectively, were excluded from the computation of diluted shares, as their impact would have been anti-dilutive. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 15. SUBSEQUENT EVENTS On August 6, 2018, the Company announced that its Board of Directors declared a cash dividend of $0.067 per share of common stock with respect to the second quarter of 2018. This dividend is payable on September 14, 2018 to stockholders of record as of the close of business on August 30, 2018. On August 2, 2018, we repaid the $25 million previously drawn on the Revolving Facility. |
Significant Accounting Polici23
Significant Accounting Policies and Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Our Spin-Off from La Quinta Holdings Inc. | Our Spin-Off from La Quinta Holdings Inc. On January 18, 2017, La Quinta Holdings Inc., a Delaware corporation. (“LQH Parent,” and together with its consolidated subsidiaries, “LQH”) announced its intention to pursue the possibility of separating its real estate business from its franchise and management business, including the spin-off of its real estate ownership business into an independent, publicly traded company. The spin-off of CorePoint Lodging was made as part of a plan approved by LQH Parent’s board of directors to spin off LQH’s real estate business into a stand-alone, publicly traded company prior to the merger of LQH Parent with a wholly owned subsidiary of Wyndham Worldwide Corporation, a Delaware corporation (“Wyndham Worldwide”). The completion of the spin-off, followed by the completion of the merger, occurred on May 30, 2018. For additional discussion of the spin-off and related transactions, see Note 3. Notwithstanding the legal form of the spin-off, for accounting and financial reporting purposes, LQH Parent is presented as being spun-off from CorePoint (a “reverse spin”). This presentation is in accordance with generally accepted accounting principles in the U.S. (“GAAP”), specifically Financial Account Standards Board (“FASB”) statement “Spinoff and Reverse Spinoffs”, and is primarily a result of the relative significance of CorePoint’s business to LQH’s business, as measured in terms of revenues, profits, and assets. Therefore, CorePoint Lodging Inc. is considered the divesting entity and treated as the “accounting successor,” and LQH Parent is the “accounting spinnee” and “accounting predecessor” for consolidated financial reporting purposes. In accordance with FASB statement “ Presentation of Financial Statements – Discontinued Operations” |
Interim Unaudited Financial Information | Interim Unaudited Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information or footnotes required by GAAP for complete annual financial statements. Although we believe the disclosures made are adequate to prevent the information presented from being misleading, these financial statements should be read in conjunction with LQH’s consolidated financial statements and notes thereto for the years ended December 31, 2017, 2016 and 2015, which are included in our Information Statement filed as Exhibit 99.1 to our Registration Statement on Form 10 (the “Form 10”), which the Securities and Exchange Commission (the “SEC”) declared effective on May 8, 2018. Subsequent to May 30, 2018, the accompanying unaudited condensed consolidated financial statements include the accounts of the Company. The historical unaudited condensed consolidated financial statements through May 30, 2018 represent the financial position and results of operations of entities that have historically been under common control of the accounting predecessor, LQH Parent. The results for the interim periods shown in this report are not necessarily indicative of future financial results. The accompanying condensed consolidated balance sheet as of June 30, 2018 and condensed consolidated statements of operations, comprehensive income, cash flows and equity for the periods ended June 30, 2018 and 2017 have not been audited by our independent registered public accounting firm. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, including normal recurring items, necessary to present fairly our consolidated financial position as of June 30, 2018 and December 31, 2017, and our consolidated results of operations and cash flows for the periods ended June 30, 2018 and 2017. The accompanying condensed consolidated financial statements include the accounts of the Company, as well as its wholly-owned subsidiaries and any consolidated variable interest entities (“VIEs”). We recognize noncontrolling interests for the proportionate share of operations for ownership interests not held by our shareholders. All intercompany transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates. |
Reclassifications | Reclassifications Certain line items on the condensed consolidated balance sheet as of December 31, 2017 and the condensed consolidated statements of operations for the three and six months ended June 30, 2017 have been reclassified to conform to the current period presentation. These reclassifications had no impact on our net income (loss) or financial position and were made in order to conform to presentations consistent with other REIT peers and reflect the results of discontinued operations. See Note 3 for additional information. |
Investment in Real Estate | Investment in Real Estate Property and equipment are stated at cost less accumulated depreciation computed using a straight-line method over the estimated useful life of each asset. Property and equipment consists of the following, along with associated estimated useful lives: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years We periodically review the useful lives of our long-lived assets based on current assessments of the remaining utility of our assets. Such changes are accounted for prospectively and would either increase or decrease depreciation expense in the accompanying condensed consolidated statements of operations. We capitalize expenditures that increase the overall value of an asset or extend an asset’s life, typically associated with hotel refurbishment, renovation, and major repairs. Such costs primarily include third party contract labor, professional design and construction costs, including associated materials, and other direct and indirect costs, such as sales and use tax and interest costs, incurred during the redevelopment and renovation period. The capitalization period begins when the activities related to development have begun and ceases when the project is substantially complete and the assets are held available for use or occupancy. Once a redevelopment project is substantially complete and the associated assets are ready for intended use, costs related to the redevelopment project are no longer capitalized. Normal maintenance and repair costs are expensed as incurred. When depreciable property is retired or disposed, the related cost and accumulated depreciation or amortization is removed from the in the accompanying statements of operations. |
Impairment of Real Estate Related Assets | Impairment of Real Estate Related Assets If events or circumstances indicate that the carrying amount of a property may not be recoverable, we make an assessment of the property’s recoverability by comparing the carrying amount of the asset to our estimate of the aggregate undiscounted future operating cash flows expected to be generated over the holding period of the asset including its eventual disposition. If the carrying amount exceeds the aggregate undiscounted future operating cash flows, we recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property. We did not record any impairment loss for the three and six months ended June 30, 2018 and 2017. |
Assets Held for Sale | Assets Held for Sale For sales of real estate or assets classified as held for sale, we evaluate whether the disposition will have a major effect on our operations and financial results and will therefore qualify as a strategic shift. If the disposition represents a strategic shift, it will be classified as discontinued operations in our consolidated statements of operations for all periods presented. If the disposition does not represent a strategic shift, it will be presented in continuing operations in our consolidated statements of operations. We classify hotels as held for sale when certain criteria are met, in accordance with GAAP. At that time, we present the assets and obligations associated with the real estate held for sale separately in our consolidated balance sheet, and we cease recording depreciation and amortization expense related to that asset. Real estate held for sale is reported at the lower of its carrying amount or its estimated fair value less estimated costs to sell. As of June 30, 2018 and December 31, 2017, we had two and three hotels held for sale, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all cash on hand, demand deposits with financial institutions, and short-term highly liquid investments with original maturities of three months or less to be cash equivalents. Cash and cash equivalents consist of highly liquid investments that are stated at cost, which approximates fair market value. Certain balances in cash and cash equivalents exceed the Federal Deposit Insurance Corporation limit of $250,000; however, we believe credit risk related to these deposits is minimal. |
Accounts Receivable | Accounts Receivable Accounts receivable primarily consists of receivables due from hotel guests, credit card companies and insurance settlements. Accounts receivable are carried at estimated collectable amounts. We periodically evaluate our receivables for collectability based on historical experience, the length of time receivables are past due, and the general economy. We provide an allowance for doubtful accounts, after considering factors that might affect the collection of accounts receivable, including historical losses and the ability of the party to meet its obligations to us. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs Deferred debt issuance costs include legal and bank issuance costs incurred in connection with issuance of debt, including costs associated with the issuance of our credit facilities, and are presented as a direct reduction from the carrying amount of debt. These debt issuance costs are deferred and amortized to expense over the term of the debt and are included as a component of interest expense. When debt is paid prior to its scheduled maturity date or the underlying terms are materially modified, the remaining carrying value of deferred debt issuance costs, along with certain other payments to lenders, is included in loss on early extinguishment of debt. |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or pay to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. In evaluating the fair value of both financial and non-financial assets and liabilities, we use the accounting guidance that establishes a fair value hierarchy, which prioritizes the inputs used in measuring fair value into three broad levels, which are as follows: • Level 1—Quoted prices in active markets for identical assets or liabilities. • Level 2—Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Valuations in this category are inherently less reliable than quoted market prices due to the degree of subjectivity involved in determining appropriate methodologies and the applicable underlying observable market assumptions. • Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. These inputs cannot be validated by readily determinable market data and generally involve considerable judgment by management. We use the highest level of observable market data if such data is available without undue cost and effort. |
Derivative Instruments | Derivative Instruments We use derivative instruments as part of our overall strategy to manage our exposure to market risks associated with fluctuations in interest rates. We regularly monitor the financial stability and credit standing of the counterparties to our derivative instruments. We do not enter into derivative financial instruments for trading or speculative purposes. We record all derivatives at fair value. On the date the derivative contract is entered, we designate the derivative as one of the following: a hedge of a forecasted transaction or the variability of cash flows to be paid (“cash flow hedge”), a hedge of the fair value of a recognized asset or liability (“fair value hedge”), or an undesignated hedge instrument. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge or net investment hedge are recorded in the condensed consolidated statements of comprehensive income (loss) until they are reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair value of a derivative that is qualified, designated and highly effective as a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in current period earnings. Cash flows from designated derivative financial instruments are classified within the same category as the item being hedged in the condensed consolidated statements of cash flows. On a quarterly basis, we assess the effectiveness of our designated hedges in offsetting the variability in the cash flows or fair values of the hedged assets or obligations via use of a statistical regression and hypothetical derivative approach. We discontinue hedge accounting prospectively when the derivative is not highly effective as a hedge, the underlying hedged transaction is no longer probable, or the hedging instrument expires, is sold, terminated or exercised. |
Revenue Recognition | Revenue Recognition We adopted Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, Newly Adopted Accounting Standards Our revenues primarily consist of operating lease revenues from room rentals, and, to a lesser extent, restaurants, billboards and cell towers, which are accounted for under GAAP in accordance with lease accounting standards. Room revenue is recognized as earned on a daily basis, net of customer incentive discounts, cash rebates, and refunds. Revenue related to operating leases with a term in excess of one year are recognized on a straight-line basis over the life of the respective lease agreement. Other revenues include revenues generated by the incidental support of hotel operations for hotels and are recognized under the revenue accounting standard as the service obligation is completed. |
Equity-Based Compensation | Equity-Based Compensation We have a stock-based incentive award plan for our employees and directors. Stock-based compensation expense associated with these awards is recognized in general and administrative expenses in our consolidated statements of operations. We measure stock-based compensation at the estimated fair value on the grant date and recognize the amortization of stock-based compensation expense over the requisite service period. Fair value is determined based on grant date fair value. We recognize forfeitures as they occur. |
Income Taxes | Income Taxes We are organized in conformity with, and operate in a manner that will allow us to elect to be taxed as, a REIT, for U.S. federal income tax purposes beginning with our tax year ending December 31, 2018 and we expect to continue to be organized and operate so as to qualify as a REIT. To qualify as a REIT, we must continually satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. To the extent we qualify as a REIT, we generally will not be subject to U.S. federal income tax on taxable income generated by our REIT activities that we distribute to our stockholders. Accordingly, no provision for U.S. federal income taxes has been included in our accompanying condensed consolidated financial statements for purposes of determining the annualized effective tax rate applied to the six months ended June 30, 2018 related to our REIT activities. We are, and will continue to be, subject to U.S. federal income tax on taxable sales of built-in gain property (representing property with an excess of fair value over tax basis held by us on May 30, 2018) during the five-year period following our election to be taxed as a REIT. In addition, we may be subject to state and local taxes and non-U.S. income tax on foreign held REIT activities. Further, our taxable REIT subsidiaries are generally subject to U.S. federal, state and local, and foreign income taxes (as applicable). Through May 30, 2018, LQH Parent will file a federal income tax return, as well as certain state tax returns where we filed on a combined basis, and foreign tax filings, as applicable. On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. The Tax Act contains several key tax provisions that affected us, including a reduction of the corporate income tax rate to 21% effective January 1, 2018, among others. We are required to recognize the effect of the tax law changes in the period of enactment, such as re-measuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets and liabilities. In December 2017, the SEC staff issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allows us to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation is expected over the next 12 months, we consider the deferred tax re-measurements and other items to be incomplete due to the forthcoming guidance and our ongoing analysis of final year-end data and tax positions. We expect to complete our analysis within the one year measurement period permitted by SAB 118. |
Concentrations of Credit Risk and Business Risk | Concentrations of Credit Risk and Business Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash and cash equivalents. We utilize financial institutions that we consider to be of high credit quality and consider the risk of default to be minimal. We also monitor the credit-worthiness of our customers and financial institutions before extending credit or making investments. Lodging operations are particularly sensitive to adverse economic and competitive conditions and trends, which could adversely affect the Company’s business, financial condition, and results of operations. Geographic concentrations, which potentially subject us to concentrations of business risk, relate primarily to locations of hotels and the revenue recognized in various states within the U.S. We have a concentration of hotels operating in Texas, Florida and California. The percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2018 and 2017 are as follows: For the six months ended June 30, 2018 June 30, 2017 Texas 23 % 21 % Florida 15 % 19 % California 10 % 10 % Total 48 % 50 % |
Segment Reporting | Segment Reporting Our hotels have similar economic characteristics and customers across all geographic locations, and our service offerings and delivery of services are provided in a similar manner, using the same types of facilities and similar technologies. Our chief operating decision maker, the Company's Chief Executive Officer, reviews our financial information on an aggregated basis. As a result, we have concluded that we have one . |
Principal Components of Expenses | Principal Components of Expenses Rooms — These expenses include hotel expenses of housekeeping, reservation systems, room and breakfast supplies and front desk costs. Other departmental and support These expenses include labor and other expenses that constitute non-room operating expenses, including parking, telecommunications, on-site administrative departments, sales and marketing, recurring repairs and maintenance and utility expenses. Property tax, insurance and other These expenses consist primarily of real and personal property taxes, other local taxes, ground rent, equipment rent and insurance. Management and royalty fees — Management fees represent fees paid to third parties and are computed as a percentage of gross revenue. Royalty fees are generally computed as a percentage of rooms revenues. In connection with the spin-off, we entered into new management and franchise agreements, refer to Note 9, “Commitments and Contingencies” for additional information. Corporate general and administrative — These expenses include off-site general and administrative expenses, consisting primarily of compensation, contract labor expense for our corporate staff, professional fees, travel expenses, and office administrative and related expenses. Other, net — These expenses include losses incurred resulting from property damage or destruction caused by any sudden, unexpected or unusual event such as a hurricane. Impairment losses are non-cash expenses that are recognized when circumstances indicate that the carrying value of a long-lived asset is not recoverable. An impairment loss is recognized for the excess of the carrying value over the fair value of the asset. |
Newly Issued and Adopted Accounting Standards | Newly Issued Accounting Standards In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements. This guidance updates ASU 2016-02 Leases and provides entities an additional, optional transition method of initially applying the new lease standard at the adoption date and recognizing cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, with comparative periods continuing to be presented in accordance with current GAAP. Previously, ASU 2018-02 required the new standard to be adopted on a modified retrospective basis. The Company is currently evaluating which option to elect. In June 2018, the FASB issued ASU 2018-07, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, most of the guidance on such payments to nonemployees would be aligned with the requirements for share-based payments granted to employees. The Company accounts for its share-based payments to members of its board of directors in the same manner as share-based payments to its employees. Other than to members of our board of directors, the Company does not award share-based payments to any nonemployees. The guidance is effective for periods beginning after December 15, 2018. Early adoption is In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. The guidance affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The guidance will apply to our trade receivables, notes receivable, net investments in leases and any other future financial assets that have the contractual right to receive cash that we may acquire in the future. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), regarding the accounting for leases for both lessees and lessors. In July 2018, ASU 2016-02 was amended, providing another transition method by allowing companies to initially apply the new lease standard in the year of adoption and not the earliest comparative period. The lease standard amendment also provided a practical expedient for an accounting policy election for lessors, by class of underlying asset, to not separate nonlease components from the associated lease components, similar to the practical expedient provided for lessees. The lessor practical expedient is only available if the timing and pattern of transfer are the same for the nonlease and lease components and the lease components, if accounted for separately, would be classified as an operating lease. Lessees will need to recognize on their balance sheet a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability will be equal to the present value of lease payments. The asset will be based on the liability, adjusted for any initial direct costs of the lease, lease incentives or early lease payments, where applicable. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Operating leases will result in straight-line rent expense (similar to current operating leases) while finance leases will result in interest and amortization expense (similar to current capital leases). Classification will be based on criteria that are largely similar to those applied in current lease accounting. The new standard may be adopted using a modified retrospective transition and provides for certain practical expedients. We are evaluating the impact of ASU 2016-02 on our consolidated financial statements, where we believe the primary impact as a lessee will relate to leases where we are the ground lessee. Under current lessor accounting, a real estate lease could only be a sales-type lease if ownership of the real estate was transferred to the lessee. With the adoption of ASU 2016-02, there will no longer be an exclusion for real estate leases, where the same classification guidance applies as with all other leases. We are currently evaluating how this guidance would apply to lessor classification. If, as lessor, our real estate leases would be classified as sales-type leases, the real estate asset would be eliminated, a net investment asset would be recognized generally equal to the present value of the minimum lease payments plus the unguaranteed residual value and a selling profit or loss recorded. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is primarily consistent with the Company’s existing policies. In light of the recently issued lease standard amendment and the new practical expedients, we continue to evaluate the impact of the new leasing standard. We plan to adopt the new standard effective January 1, 2019. Newly Adopted Accounting Standards Effective January 1, 2018, we adopted FASB Topic 606. The revised guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded prior revenue recognition guidance, including industry-specific revenue guidance. The revised guidance replaced most existing revenue and real estate sale recognition guidance in GAAP. The standard specifically excludes lease contracts, which is our primary recurring revenue source; however, our revenue accounting for incidental hotel revenue will follow the revised guidance. We adopted the new standard using the modified retrospective transition method, where financial statement presentations prior to the date of adoption are not adjusted. Transactions that were not closed as of the adoption date were adjusted to reflect the new standard where we recorded a net reduction to opening retained earnings of approximately $15 million, net of tax, as of January 1, 2018 due to the cumulative impact of adopting ASC 606 , which relates primarily to our discontinued operations . Effective January 1, 2018, we adopted FASB ASU 2017-05, which requires the derecognition of a business in accordance with ASC 810, Consolidations, including instances in which the business is considered in substance real estate. In cases where a controlling interest in real estate was sold but a noncontrolling interest is retained, we may record a gain or loss related to both the sold and retained interests. The adoption of this standard did not have an impact on our condensed consolidated financial statements, but depending on future transactions, may in the future. Effective January 1, 2018, we adopted FASB ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118, which provides guidance from the SEC allowing for the recognition of provisional amounts in the financial statements as a result of the Tax Act that was signed into law in December 2017. The guidance allows for a measurement period of up to one year from the enactment date to finalize the accounting related to the Tax Act. The Company has applied and continues to apply the guidance in this update within its financial statements. Effective January 1, 2018, we adopted FASB ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220). The guidance in ASU 2018-02 allows an entity to elect to reclassify the stranded tax effects related to the Tax Act from accumulated other comprehensive income into retained earnings. The adoption of this statement did not have a material effect on our financial statements. Effective January 1, 2018, we adopted FASB ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. This update clarifies the changes to terms or conditions of a share-based payment award that require an entity to apply modification accounting. The adoption of this statement did not have a material effect on our financial statements. Effective January 1, 2018 we adopted FASB ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which provides guidance for evaluating whether certain transactions are to be accounted for as an acquisition (or disposal) of either a business or an asset. This standard is applied on a prospective basis. The adoption of this statement did not have a material effect on our financial statements. From time to time, new accounting standards are issued by FASB or other standards setting bodies, which we adopt as of the specified effective date. Unless otherwise discussed, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial statements upon adoption. |
Significant Accounting Polici24
Significant Accounting Policies and Recently Issued Accounting Standards (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Property and Equipment Estimated Useful Life | Property and equipment consists of the following, along with associated estimated useful lives: Buildings and improvements 5 to 40 years Furniture, fixtures and other equipment 2 to 10 years |
Summary of Percentages of Total Revenues Excluding Revenue from Discontinued Operations | The percentages of our total revenues, excluding revenue from discontinued operations, from these states for the six months ended June 30, 2018 and 2017 are as follows: For the six months ended June 30, 2018 June 30, 2017 Texas 23 % 21 % Florida 15 % 19 % California 10 % 10 % Total 48 % 50 % |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Discontinued Operations And Disposal Groups [Abstract] | |
Summary of Hotel Franchise and Hotel Management Business Presented as Discontinued Operations | The following table summarizes the results of the hotel franchise and hotel management business which are presented as discontinued operations (in millions). For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 Revenues $ 25 $ 38 $ 58 $ 69 OPERATING EXPENSES General, administrative and marketing 36 30 64 58 Depreciation and amortization 2 2 4 4 Total Operating Expenses 38 32 68 62 Operating Income (Loss) (13 ) 6 (10 ) 7 OTHER EXPENSES: Interest expense (6 ) (9 ) (15 ) (17 ) Loss on extinguishment of debt (7 ) — (7 ) — Total Other Expenses (13 ) (9 ) (22 ) (17 ) Loss Before Income Taxes (26 ) (3 ) (32 ) (10 ) Income tax benefit 6 1 7 4 Loss from Discontinued Operations, net of tax $ (20 ) $ (2 ) $ (25 ) $ (6 ) |
Summary of Carrying Amounts of Major Classes of Assets and Liabilities Included in Discontinued Operations | The following table presents the carrying amounts of the major classes of assets and liabilities of LQH Parent that were included in discontinued operations as of December 31, 2017: December 31, 2017 (in millions) ASSETS Assets: Total real estate, net $ 49 Intangible assets, net of accumulated amortization 171 Accounts receivable 24 Other assets 36 Total Assets $ 280 LIABILITIES AND EQUITY Liabilities: Debt, net $ 696 Accounts payable and accrued expenses 109 Other liabilities 21 Deferred tax liabilities 20 Total Liabilities $ 846 |
Summary of Selected Financial Information of LQH Parent Included in Condensed Consolidated Statements of Cash Flows | As such, the following table presents selected financial information of LQH Parent included in the condensed consolidated statements of cash flows: For the Six months ended June 30, June 30, 2018 June 30, 2017 (in millions) Non-cash items included in net income (loss): Depreciation and amortization $ 4 $ 4 Amortization of deferred costs 1 1 Loss on extinguishment of debt 7 — Equity based compensation expense 4 4 Investing activities: Capital expenditures $ 11 $ 12 |
Other Assets (Tables)
Other Assets (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Other Assets [Abstract] | |
Schedule of Other Assets | Other assets include the following as of June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 (in millions) Assets held for sale $ 5 $ 9 Lenders escrow 15 — Intangible assets 5 5 Other assets 30 18 Total other assets $ 55 $ 32 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Long-Term Debt | Debt as of June 30, 2018 and December 31, 2017 was as follows: June 30, 2018 December 31, 2017 (in millions) CMBS Facility $ 1,035 $ — Revolving Facility 25 — Term Facility — 1,003 1,060 1,003 Less deferred debt issuance costs and original issue discount (28 ) (11 ) Total debt, net (1) $ 1,032 $ 992 (1) As of June 30, 2018 and December 31, 2017, the 30 day United States dollar London Interbank Offering Rate (“LIBOR”) was 2.09% and 1.56%, respectively. As of June 30, 2018, the interest rate, maturity date and principal payments on the CMBS Facility (as defined below) and Term Facility (defined below) were as follows: • The interest rate for the CMBS Facility through June 30, 2018 was LIBOR with a floor of 0.0% plus a spread of 2.75%. Interest expense on the CMBS Facility for the three and six months ended June 30, 2018 was approximately $6 million. Included in the CMBS Facility, as of June 30, 2018 is the deduction of debt issuance costs of $28 million, net of amortization. As of June 30, 2018, we had $5 million in accrued interest included within accounts payable and accrued expenses in the accompanying condensed consolidated balance sheet. • The interest rate for the Revolving Facility is, at the option of the CorePoint Revolver Borrower, either at a base rate plus a margin of 3.5% or LIBOR rate plus a margin of 4.5%. • In connection with the consummation of the merger, on May 30, 2018, all outstanding amounts under the Term Facility were repaid in full. • The interest rate for the Term Facility from January 1, 2018 to March 6, 2018, was LIBOR with a floor of 1.0% plus a spread of 2.75%. As of March 6, 2018, the rate increased to LIBOR with a floor of 1.0% plus a spread of 3.0% for the period from March 6, 2018 to May 30, 2018. Included in the Term Facility as of December 31, 2017 is an unamortized original issue discount of $3 million. Interest expense on the Term Facility for the three and six months ended June 30, 2018 was approximately $8 million and $19 million, respectively. Interest expense on the Term Facility for the three and six months ended June 30, 2017 was approximately $10 million and $21 million, respectively. Included in the Term Facility, as of December 31 ,2017 is the deduction of debt issuance costs of $8 million, net of amortization. As of December 31, 2017, we had $9 million in accrued interest included within accounts payable and accrued expenses in the accompanying condensed consolidated balance sheets. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities | The carrying amount and estimated fair values of our financial assets and liabilities were as follows: June 30, 2018 December 31, 2017 Carrying Amount Fair Value Carrying Amount Fair Value (in millions) Debt - CMBS Facility (1)(2) $ 1,007 $ 1,007 $ — $ — Debt - Revolver (1) 25 25 — — Interest rate caps (3) 1 1 — — Debt - Term Facility (1)(4)(2) — — 992 1,007 Interest rate swaps (3) — — 1 1 Mandatorily redeemable preferred shares (1) 15 15 — — (1) Classified as Level 3 under the fair value hierarchy. (2) Carrying amount includes deferred debt issuance costs of $28 million as of June 30, 2018. (3) Classified as Level 2 under the fair value hierarchy. (4) Carrying amount includes deferred debt issuance costs of $14 million as of December 31, 2017. |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Activity of RSAs | The following table summarizes the activity of our RSAs during the six months ended June 30, 2018: Number of Shares Weighted-Average Grant Date Fair Value Unvested at January 1, 2018 512,117 $ 25.90 Granted 633,241 27.89 Conversion of the performance units upon completion of the spin-off 423,510 27.92 Vested (421,123 ) 26.41 Forfeited (5,737 ) 27.45 Unvested at June 30, 2018 1,142,008 $ 27.59 |
Supplemental Disclosures of C30
Supplemental Disclosures of Cash Flow Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Supplemental Cash Flow Elements [Abstract] | |
Summary of Supplemental Cash Flow Information | Supplemental cash flow information for the six months ended June 30, 2018 and 2017 is summarized below: For the Six Months Ended June 30, 2018 2017 (in millions) Supplemental cash flow information: Interest paid during the period $ 54 $ 39 Income taxes paid during the period, net of refunds 1 4 Supplemental non-cash disclosure: Capital expenditures included in accounts payable 5 19 Cash flow hedge adjustment, net of tax 1 2 Receivable for capital assets damaged by casualty disasters 3 4 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Numerators and Denominators Used for Computation of Basic and Diluted (Loss) Earnings Per Share | The following table sets forth the computation of basic and diluted earnings (loss) per share: For the Three Months Ended June 30, For the Six Months Ended June 30, 2018 2017 2018 2017 (in millions, except per share data) Numerator: Income (loss) from Continuing Operations, net of tax $ (28 ) $ 19 $ (38 ) $ 24 Loss on Discontinued Operations, net of tax (20 ) (2 ) (25 ) (6 ) Net income (loss) attributable to CorePoint Lodging's stockholders $ (48 ) $ 17 $ (63 ) $ 18 Denominator: Weighted average number of shares outstanding, basic 58.3 57.9 58.2 58.0 Weighted average number of shares outstanding, diluted 58.3 58.2 58.2 58.2 Basic and diluted earnings (loss) per share from continuing operations $ (0.48 ) $ 0.32 $ (0.65 ) $ 0.41 Basic and diluted loss from discontinued operations (0.34 ) (0.03 ) (0.43 ) (0.10 ) Basic and diluted (loss) earnings per share $ (0.82 ) $ 0.29 $ (1.08 ) $ 0.31 |
Organization and Basis of Pre32
Organization and Basis of Presentation - Summary of Number of Owned and Joint Venture Hotels (Detail) | Jun. 30, 2018HotelRoom | Dec. 31, 2017HotelRoom |
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 316 | 317 |
Number of rooms | Room | 40,500 | 40,600 |
Owned [Member] | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 315 | 316 |
Number of rooms | Room | 40,300 | 40,400 |
Joint Venture [Member] | ||
Real Estate Properties [Line Items] | ||
Number of hotels | Hotel | 1 | 1 |
Number of rooms | Room | 200 | 200 |
Organization and Basis of Pre33
Organization and Basis of Presentation - Summary of Number of Owned and Joint Venture Hotels (Parenthetical) (Detail) - Hotel | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Number of hotels held for sale | 2 | 3 |
Organization and Basis of Pre34
Organization and Basis of Presentation - Additional Information (Detail) | 6 Months Ended |
Jun. 30, 2018 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Spin-off date | May 30, 2018 |
Significant Accounting Polici35
Significant Accounting Policies and Recently Issued Accounting Standards - Summary of Property and Equipment (Detail) | 6 Months Ended |
Jun. 30, 2018 | |
Buildings and Improvements [Member] | Minimum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Property and equipment, estimated useful life | 5 years |
Buildings and Improvements [Member] | Maximum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Property and equipment, estimated useful life | 40 years |
Furniture, Fixtures and Other Equipment [Member] | Minimum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Property and equipment, estimated useful life | 2 years |
Furniture, Fixtures and Other Equipment [Member] | Maximum [Member] | |
Summary Of Significant Accounting Policies [Line Items] | |
Property and equipment, estimated useful life | 10 years |
Significant Accounting Polici36
Significant Accounting Policies and Recently Issued Accounting Standards - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)HotelSegment | Jun. 30, 2017USD ($) | Dec. 31, 2017Hotel | Jan. 01, 2018USD ($) | |
Summary Of Significant Accounting Policies [Line Items] | ||||||
Loss on impairment of real estate assets | $ 0 | $ 0 | $ 0 | $ 0 | ||
Number of hotels held for sale | Hotel | 2 | 3 | ||||
Federal Deposit Insurance Corporation limit | 250,000 | $ 250,000 | ||||
Income tax provision (benefits) | $ 2,000,000 | $ 14,000,000 | $ 1,000,000 | $ 19,000,000 | ||
Corporate income tax rate | 21.00% | 35.00% | 21.00% | 35.00% | ||
Number of reportable business segment | Segment | 1 | |||||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Decrease in retained earnings | $ (15,000,000) | |||||
REIT [Member] | ||||||
Summary Of Significant Accounting Policies [Line Items] | ||||||
Income tax provision (benefits) | $ 0 |
Significant Accounting Polici37
Significant Accounting Policies and Recently Issued Accounting Standards - Summary of Percentages of Total Revenues Excluding Revenue from Discontinued Operations (Detail) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Summary Of Significant Accounting Policies [Line Items] | ||
Percentages of revenues | 48.00% | 50.00% |
Texas | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentages of revenues | 23.00% | 21.00% |
Florida | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentages of revenues | 15.00% | 19.00% |
California | ||
Summary Of Significant Accounting Policies [Line Items] | ||
Percentages of revenues | 10.00% | 10.00% |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Detail) - USD ($) | May 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||
Stockholders' equity, reverse stock split | On May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the Reverse Stock Split. | ||
Common Stock, par value | $ 0.01 | $ 0.01 | $ 0.01 |
LQH Parent [Member] | |||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||
Stockholders' equity, reverse stock split | Each holder of LQH Parent common stock received one share of CorePoint common stock for each share of LQH Parent common stock. | ||
Common Stock, par value | 0.02 | ||
Disposal group including discontinued operation merger consideration per share | $ 16.80 | ||
Disposal group including discontinued operation, consideration, repayment of debt | $ 715,000,000 | ||
Disposal group including discontinued operation, reserve for estimated taxes | $ 240,000,000 | $ 240,000,000 | |
Gain or loss on separation of disposed net assets and liabilities | 0 | ||
Adjustment in stockholders’ equity | 746,000,000 | ||
Cash payment in connection with spin-off | $ 1,002,000,000 |
Discontinued Operations - Summa
Discontinued Operations - Summary of Hotel Franchise and Hotel Management Business Presented as Discontinued Operations (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
OTHER EXPENSES: | ||||
Loss on extinguishment of debt | $ (10) | $ (10) | ||
Loss from Discontinued Operations, net of tax | (20) | $ (2) | (25) | $ (6) |
Discontinued Operations [Member] | ||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | ||||
Revenues | 25 | 38 | 58 | 69 |
OPERATING EXPENSES | ||||
General, administrative and marketing | 36 | 30 | 64 | 58 |
Depreciation and amortization | 2 | 2 | 4 | 4 |
Total Operating Expenses | 38 | 32 | 68 | 62 |
Operating Income (Loss) | (13) | 6 | (10) | 7 |
OTHER EXPENSES: | ||||
Interest expense | (6) | (9) | (15) | (17) |
Loss on extinguishment of debt | (7) | (7) | ||
Total Other Expenses | (13) | (9) | (22) | (17) |
Loss Before Income Taxes | (26) | (3) | (32) | (10) |
Income tax benefit | 6 | 1 | 7 | 4 |
Loss from Discontinued Operations, net of tax | $ (20) | $ (2) | $ (25) | $ (6) |
Discontinued Operations - Sum40
Discontinued Operations - Summary of Carrying Amounts of Major Classes of Assets and Liabilities Included in Discontinued Operations (Detail) $ in Millions | Dec. 31, 2017USD ($) |
Assets: | |
Total Assets | $ 280 |
Liabilities: | |
Total Liabilities | 846 |
LQH Parent [Member] | Discontinued Operations [Member] | |
Assets: | |
Total real estate, net | 49 |
Intangible assets, net of accumulated amortization | 171 |
Accounts receivable | 24 |
Other assets | 36 |
Total Assets | 280 |
Liabilities: | |
Debt, net | 696 |
Accounts payable and accrued expenses | 109 |
Other liabilities | 21 |
Deferred tax liabilities | 20 |
Total Liabilities | $ 846 |
Discontinued Operations - Sum41
Discontinued Operations - Summary of Selected Financial Information of LQH Parent Included in Condensed Consolidated Statements of Cash Flows (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Non-cash items included in net income (loss): | ||
Depreciation and amortization | $ 79 | $ 72 |
Amortization of deferred costs | 4 | 3 |
Loss on extinguishment of debt | (17) | |
Equity-based compensation expense | 6 | 8 |
Investing activities: | ||
Capital expenditures | 94 | 105 |
LQH Parent [Member] | Discontinued Operations [Member] | ||
Non-cash items included in net income (loss): | ||
Depreciation and amortization | 4 | 4 |
Amortization of deferred costs | 1 | 1 |
Loss on extinguishment of debt | 7 | |
Equity-based compensation expense | 4 | 4 |
Investing activities: | ||
Capital expenditures | $ 11 | $ 12 |
Investments In Real Estate - Ad
Investments In Real Estate - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Service [Member] | ||||
Real Estate Properties [Line Items] | ||||
Depreciation and amortization expense | $ 39 | $ 34 | $ 76 | $ 68 |
Other Assets - Schedule of Othe
Other Assets - Schedule of Other Assets (Detail) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Other Assets [Abstract] | ||
Assets held for sale | $ 5 | $ 9 |
Lenders escrow | 15 | |
Intangible assets | 5 | 5 |
Other assets | 30 | 18 |
Total other assets | $ 55 | $ 32 |
Other Assets - Additional Infor
Other Assets - Additional Information (Detail) $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | |
Aug. 13, 2018USD ($)Hotel | Mar. 31, 2018USD ($)Hotel | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017Hotel | |
Other Assets [Line Items] | |||||
Number of hotels classified as assets held for sale | Hotel | 3 | ||||
Number of hotels sold | Hotel | 1 | ||||
Proceeds from sale of hotel | $ | $ 4 | $ 4 | $ 22 | ||
Gain on sale of hotels | $ | $ 1 | ||||
Subsequent Event [Member] | |||||
Other Assets [Line Items] | |||||
Number of hotels sold | Hotel | 1 | ||||
Proceeds from sale of hotel | $ | $ 2 |
Debt - Schedule of Long-Term De
Debt - Schedule of Long-Term Debt (Detail) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | $ 1,060 | $ 1,003 |
Less deferred debt issuance costs and original issue discount | (28) | (11) |
Total debt, net | 1,032 | 992 |
CMBS Facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | 1,035 | |
Total debt, net | 1,007 | |
Term Facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | 1,003 | |
Total debt, net | $ 992 | |
Revolving Facility [Member] | ||
Debt Instrument [Line Items] | ||
Debt before deferred debt issuance costs and original issue discount | 25 | |
Total debt, net | $ 25 |
Debt - Schedule of Long-Term 46
Debt - Schedule of Long-Term Debt (Parenthetical) (Detail) - USD ($) $ in Millions | Mar. 06, 2018 | Jul. 31, 2015 | Apr. 14, 2014 | Mar. 06, 2018 | Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | May 30, 2018 |
CMBS Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, floor interest rate | 0.00% | |||||||||
Debt instrument, basis spread on variable rate | 2.75% | |||||||||
Interest expense | $ 6 | $ 6 | ||||||||
Debt issuance costs net of amortization | 28 | 28 | ||||||||
Accrued interest | 5 | |||||||||
Term Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 3.00% | 2.75% | ||||||||
Interest expense | $ 8 | $ 10 | $ 19 | $ 21 | ||||||
Debt issuance costs net of amortization | $ 8 | |||||||||
Accrued interest | 9 | |||||||||
Unamortized long-term debt reduction | $ 3 | |||||||||
LIBOR [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, interest rate | 2.09% | 1.56% | ||||||||
LIBOR [Member] | CMBS Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, floor interest rate | 0.00% | 0.00% | ||||||||
LIBOR [Member] | Core Point Revolver Borrower | Revolving Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 4.50% | 4.50% | ||||||||
LIBOR [Member] | Term Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, floor interest rate | 1.00% | 1.00% | ||||||||
Base Rate [Member] | Core Point Revolver Borrower | Revolving Facility [Member] | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument, basis spread on variable rate | 3.50% | 3.50% |
Debt - Additional Information (
Debt - Additional Information (Detail) | May 30, 2018USD ($)HotelExtension | Jul. 31, 2015 | Apr. 14, 2014 | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) |
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 10,000,000 | $ 10,000,000 | |||
CMBS Loan Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate notional amount | $ 1,035,000,000 | ||||
LIBOR floor percentage | 3.25% | ||||
Interest rate swap agreement expiration date | Jul. 15, 2020 | ||||
Revolving Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Unused commitment fee percentage | 0.50% | ||||
Revolving Facility [Member] | Core Point Borrower L L C [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior secured credit facility | $ 150,000,000 | ||||
Line of credit facility maturity date | May 30, 2020 | ||||
Revolving credit facility, drawn amount | $ 25,000,000 | ||||
Line of credit facility extended expiration period | 1 year | ||||
Revolving Facility [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Unused commitment fee percentage | 10.00% | ||||
CMBS Loan Agreement [Member] | |||||
Debt Instrument [Line Items] | |||||
Loss on extinguishment of debt | $ 10,000,000 | ||||
CMBS Facility [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, description of variable rate basis | one-month LIBOR | ||||
Debt instrument, floor interest rate | 0.00% | ||||
Debt instrument, basis spread on variable rate | 2.75% | ||||
Debt instrument prepayment description | (i) in the case of prepayments (other than in certain enumerated cases) made prior to or on the December 2019 payment date (provided that with respect to any prepayment made after the payment date in November 2019, but prior to the December 2019 payment date, the amount of the spread maintenance payment shall be zero), a spread maintenance premium and in certain cases third party LIBOR breakage costs, and (ii) all accrued interest through the date of prepayment prior to a securitization and through the end of the applicable accrual period following a securitization. | ||||
Debt instrument prepayment amount percentage | 10.00% | ||||
Upfront reserve deposited for lender | $ 15,000,000 | ||||
CMBS Facility [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, floor interest rate | 0.00% | 0.00% | |||
CMBS Facility [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument prepayment amount, percentage | 20.00% | ||||
CMBS Facility [Member] | First Five Years Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.75% | ||||
CMBS Facility [Member] | First Five Years Term Loan | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument Yield Percentage | 12.33% | ||||
CMBS Facility [Member] | Sixth Year Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 2.90% | ||||
CMBS Facility [Member] | Sixth Year Term Loan | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument Yield Percentage | 12.83% | ||||
CMBS Facility [Member] | Seventh Year Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 3.00% | ||||
CMBS Facility [Member] | Seventh Year Term Loan | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt Instrument Yield Percentage | 12.83% | ||||
CMBS Facility [Member] | CorePoint CMBS Borrower [Member] | Commercial Mortgage Backed Securities [Member] | Secured Mortgage [Member] | |||||
Debt Instrument [Line Items] | |||||
Aggregate principal amount of debt | $ 1,035,000,000 | ||||
Number of owned and ground leased hotels whose mortgages are used to secure mortgage loan | Hotel | 307 | ||||
Number of owned and ground leased hotels for which excess cash flow pledge is made | Hotel | 7 | ||||
Debt instrument initial term | 2 years | ||||
Debt instrument, number of extension options | Extension | 5 | ||||
Debt instrument each extension option period | 12 months | ||||
CMBS Facility [Member] | CorePoint CMBS Borrower [Member] | Commercial Mortgage Backed Securities [Member] | Secured Mortgage [Member] | Minimum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument extension period at lender option | 30 days | ||||
CMBS Facility [Member] | CorePoint CMBS Borrower [Member] | Commercial Mortgage Backed Securities [Member] | Secured Mortgage [Member] | Maximum [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument extension period at lender option | 120 days | ||||
Core Point Revolver Borrower | Revolving Facility [Member] | Base Rate [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 3.50% | 3.50% | |||
Core Point Revolver Borrower | Revolving Facility [Member] | LIBOR [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, basis spread on variable rate | 4.50% | 4.50% |
Preferred Stock - Additional In
Preferred Stock - Additional Information (Detail) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Class Of Stock [Line Items] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Series A Preferred Stock [Member] | ||
Class Of Stock [Line Items] | ||
Aggregate liquidation preference, value | $ 15,000,000 | |
Payment of cash dividend on preferred stock percentage per annum | 13.00% | |
Preferred stock leverage ratio, increase percentage | 7.50% | |
Preferred stock leverage ratio, decrease percentage | 1.00% | |
Percentage of preferred stock cash dividend required to pay if event of default occurs | 15.00% | |
Percentage of preferred stock leverage ratio increase if an event of default occurs | 16.50% | |
La Quinta Intermediate Holdings | Series A Preferred Stock [Member] | ||
Class Of Stock [Line Items] | ||
Number of shares issued | 15,000 | |
Preferred stock, par value | $ 0.01 | |
La Quinta Intermediate Holdings | Series A Preferred Stock [Member] | Minimum [Member] | ||
Class Of Stock [Line Items] | ||
Aggregate liquidation preference, value | $ 2,500,000 |
Fair Value Measurements - Carry
Fair Value Measurements - Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities (Detail) - USD ($) $ in Millions | Jun. 30, 2018 | Dec. 31, 2017 |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | $ 1,032 | $ 992 |
Interest rate caps, carrying amount | 1 | |
Interest rate swaps, carrying amount | 1 | |
Debt, fair value | 25 | |
Interest rate caps, fair value | 1 | |
Interest rate swaps, fair value | 1 | |
Term Facility [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | 992 | |
Debt, fair value | $ 1,007 | |
CMBS Facility [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | 1,007 | |
Debt, fair value | 1,007 | |
Mandatorily Redeemable Preferred Shares [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | 15 | |
Debt, fair value | 15 | |
Revolving Facility [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt, net | $ 25 |
Fair Value Measurements - Car50
Fair Value Measurements - Carrying Amount and Estimated Fair Values of Financial Assets and Liabilities (Parenthetical) (Detail) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
CMBS Facility [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt issuance cost net | $ 28 | |
Term Facility [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt issuance cost net | $ 14 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) $ in Millions | May 30, 2018RenewalOption | Jul. 07, 2014USD ($) | Jun. 30, 2018USD ($)HotelRenewalOption | Jun. 30, 2018USD ($)RenewalOptionFranchise |
Commitments And Contingencies [Line Items] | ||||
Purchase commitments | $ 19 | $ 19 | ||
Internal Revenue Service (IRS) [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Notice of taxable adjustment from IRS | $ 158 | |||
Operating Loss Carryforwards | $ 89 | |||
Tax rate impose on REIT, federal and state tax authorities | 100.00% | 100.00% | ||
Internal Revenue Service (IRS) [Member] | Tax Year 2013 [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Proposed adjustment to transfer-pricing related assessment | $ 18 | |||
La Quinta Management L.L.C [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Management and royalty fees as percentage of total gross revenues | 5.00% | |||
Management agreement date | May 30, 2018 | |||
Management agreement term for managing hotel | 20 years | |||
Number hotel management agreement renewal options available | RenewalOption | 2 | |||
Hotel management agreements, renewal period | 5 years | |||
La Quinta Franchising LLC [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Number of franchise agreements | Franchise | 315 | |||
Percentage of royalty fee on gross rooms revenue | 5.00% | |||
Franchise agreement term for managing hotel | 20 years | |||
Number of franchise renewal options available | RenewalOption | 1 | 1 | ||
Franchise agreements renewal period | 10 years | |||
Percentage of reservation fee based on hotels gross room revenue | 2.00% | |||
Percentage of marketing fee based on hotels gross room revenues | 2.50% | |||
Percentage of loyalty program fee based on hotels room night revenue and other miscellaneous ancillary fees | 5.00% | |||
Baymont [Member] | ||||
Commitments And Contingencies [Line Items] | ||||
Number of hotels transferred | Hotel | 1 | |||
Percentage of reservation fee based on hotels gross room revenue | 1.50% | |||
Percentage of marketing fee based on hotels gross room revenues | 2.00% | |||
Percentage of loyalty program fee based on hotels room night revenue and other miscellaneous ancillary fees | 5.00% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Percentage of taxable income not distributed for any year elected as REIT status that subject to income tax | 100.00% | |||
Provision for federal, state and foreign income tax expense | $ 2 | $ 14 | $ 1 | $ 19 |
Income tax federal statutory rate | 21.00% | 35.00% | 21.00% | 35.00% |
Equity-Based Compensation - Add
Equity-Based Compensation - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Continuing Operations [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Equity-based compensation expense recognized | $ 1 | $ 2 | $ 2 | $ 4 |
Discontinued Operations [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Equity-based compensation expense recognized | $ 1 | $ 2 | $ 4 | $ 4 |
Equity-Based Compensation - Sum
Equity-Based Compensation - Summary of Activity of RSAs (Detail) - RSAs [Member] | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Number of Shares | |
Unvested at January 1, 2018 | shares | 512,117 |
Granted | shares | 633,241 |
Conversion of the performance units upon completion of the spin-off | shares | 423,510 |
Vested | shares | (421,123) |
Forfeited | shares | (5,737) |
Unvested at June 30, 2018 | shares | 1,142,008 |
Weighted-Average Grant Date Fair Value | |
Unvested at January 1, 2018 | $ / shares | $ 25.90 |
Granted | $ / shares | 27.89 |
Conversion of the performance units upon completion of the spin-off | $ / shares | 27.92 |
Vested | $ / shares | 26.41 |
Forfeited | $ / shares | 27.45 |
Unvested at June 30, 2018 | $ / shares | $ 27.59 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions | May 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 |
Previously Managed Hotels [Member] | |||||
Related Party Transaction [Line Items] | |||||
Purchase products and services from affiliates | $ 2 | $ 1 | $ 2 | ||
Blackstone [Member] | |||||
Related Party Transaction [Line Items] | |||||
Percentage of holdings' shares of common stock outstanding | 30.00% | ||||
Affiliates of Black Stone [Member] | Senior Secured Term Loan Facility [Member] | |||||
Related Party Transaction [Line Items] | |||||
Senior secured credit facility | $ 518 | $ 82 | |||
La Quinta Holdings Inc. and Wyndham Worldwide Merger Agreement [Member] | |||||
Related Party Transaction [Line Items] | |||||
Merger and separation agreement of cash payment | $ 1,002 |
Supplemental Disclosures of C56
Supplemental Disclosures of Cash Flow Information - Summary of Supplemental Cash Flow Information (Detail) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Supplemental cash flow information: | ||
Interest paid during the period | $ 54 | $ 39 |
Income taxes paid during the period, net of refunds | 1 | 4 |
Supplemental non-cash disclosure: | ||
Capital expenditures included in accounts payable | 5 | 19 |
Cash flow hedge adjustment, net of tax | 1 | 2 |
Receivable for capital assets damaged by casualty disasters | $ 3 | $ 4 |
Earnings Per Share - Additional
Earnings Per Share - Additional Information (Detail) shares in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018shares | Jun. 30, 2017shares | Jun. 30, 2018shares | Jun. 30, 2017shares | |
Earnings Per Share [Abstract] | ||||
Reverse stock split, description | On May 18, 2018, received one share of CorePoint common stock for each share of LQH Parent common stock held after giving effect to the Reverse Stock Split. | |||
Distribution ratio | 0.5 | 0.5 | ||
Anti-dilutive securities excluded from computation of diluted shares | 0.7 | 0.4 | 0.6 | 0.3 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of Numerators and Denominators Used for Computation of Basic and Diluted (Loss) Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||||
Income (loss) from Continuing Operations, net of tax | $ (28) | $ 19 | $ (38) | $ 24 |
Loss on Discontinued Operations, net of tax | (20) | (2) | (25) | (6) |
Net Income (loss) attributable to CorePoint Lodging stockholders | $ (48) | $ 17 | $ (63) | $ 18 |
Denominator: | ||||
Weighted average number of shares outstanding, basic | 58.3 | 57.9 | 58.2 | 58 |
Weighted average number of shares outstanding, diluted | 58.3 | 58.2 | 58.2 | 58.2 |
Basic and diluted from continuing operations | $ (0.48) | $ 0.32 | $ (0.65) | $ 0.41 |
Basic and diluted from discontinued operations | (0.34) | (0.03) | (0.43) | (0.10) |
Basic and diluted (loss) earnings per share | $ (0.82) | $ 0.29 | $ (1.08) | $ 0.31 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | Aug. 02, 2018 | Jun. 30, 2018 | Aug. 06, 2018 |
Subsequent Event [Line Items] | |||
Dividends payable, declared date | Aug. 6, 2018 | ||
Dividends declared, payable date | Sep. 14, 2018 | ||
Dividends payable, date of record | Aug. 30, 2018 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Cash dividends declared, per share | $ 0.067 | ||
Subsequent Event [Member] | Revolving Facility [Member] | |||
Subsequent Event [Line Items] | |||
Repayments of previously drawn credit facility | $ 25 |