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What changed in Xenia Hotels & Resorts, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Xenia Hotels & Resorts, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+333 added−336 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-27)

Top changes in Xenia Hotels & Resorts, Inc.'s 2024 10-K

333 paragraphs added · 336 removed · 279 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

35 edited+6 added−6 removed72 unchanged
Biggest changeThe ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our hotels where such removal is readily achievable. We believe that our hotels are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA.
Biggest changeAmericans with Disabilities Act Our hotels must comply with applicable provisions of the Americans with Disabilities Act (the "ADA"), to the extent that such hotels are "public accommodations" as defined by the ADA. The ADA may require removal of structural barriers to access by persons with disabilities in certain public areas of our hotels where such removal is readily achievable.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
The 2023 Revolving Line of Credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
Insurance We, or our third-party management companies, carry commercial general liability, commercial property including extended coverage and business interruption, terrorism, cyber risk and umbrella liability coverage on all of our hotels and earthquake, wind, flood, hurricane and environmental coverage on hotels in areas where we believe such coverage is warranted, in each case with deductibles and limits of liability that we believe are adequate.
Insurance We, or our third-party management companies, carry commercial general liability, commercial property including extended coverage and business interruption, terrorism, cyber risk and umbrella liability coverage on all of our hotels and earthquake, wind, flood, hurricane, wildfire and environmental coverage on hotels in areas where we believe such coverage is warranted, in each case with deductibles and limits of liability that we believe are adequate.
Our hotels incur costs to comply with these laws and regulations and could be subject to fines and penalties for noncompliance. Some of our hotels contain asbestos-containing building materials. We believe that the asbestos is appropriately contained in accordance with current environmental regulations and that we have no need for any immediate remediation or current plans to remove the asbestos.
Our hotels incur costs to comply with these laws and regulations and could be subject to fines and penalties for noncompliance. Some of our hotels have asbestos-containing building materials. We believe that the asbestos is appropriately contained in accordance with current environmental regulations and that we have no need for any immediate remediation or current plans to remove the asbestos.
Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares.
Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. The Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares.
We are also committed to cultivating our employees through training and development, including leadership training, professional certifications, continuing education and professional memberships, performance management through annual performance reviews and feedback, health and wellness programs and team-building programs. We have also been recognized as one of America's Most Responsible Companies by Newsweek.
We are also committed to cultivating our employees through training and development, including leadership training, professional certifications, continuing education and professional memberships, performance management through annual performance reviews and periodic feedback, health and wellness programs and team-building programs. We have also been recognized as one of America's Most Responsible Companies by Newsweek.
These principles continuously serve as a reminder to uphold an inclusive, respectful and tolerant work culture; and to always demonstrate the highest standards of professional conduct. We do not tolerate discrimination in any form and believe equal employment opportunity is a fundamental principle.
These principles continuously serve as a reminder to uphold an inclusive, respectful and tolerant work culture; and to always demonstrate the 6 highest standards of professional conduct. We do not tolerate discrimination in any form and believe equal employment opportunity is a fundamental principle.
In order for the income from our hotel operations to constitute "rents from real property" for purposes of the gross income tests required for REIT qualification, we cannot directly or indirectly operate any of our hotels. Accordingly, we lease each of our 5 hotels, and intend to lease any hotels we acquire in the future, to our TRS lessees.
In order for the income from our hotel operations to constitute "rents from real property" for purposes of the gross income tests required for REIT qualification, we cannot directly or indirectly operate any of our hotels. Accordingly, we lease each of our hotels, and intend to lease any hotels we acquire in the future, to our TRS lessees.
The following chart shows our structure as of December 31, 2023: (1) Ownership percentages include vested and unvested LTIP partnership units which may or may not vest based on the passage of time and meeting certain market-based performance objectives. 1 Business Objectives and Growth Strategies Our objective is to allocate capital in order to invest primarily in a high-quality diversified portfolio of uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States.
The following chart shows our structure as of December 31, 2024: (1) Ownership percentages include vested and unvested LTIP partnership units which may or may not vest based on the passage of time and meeting certain market-based performance objectives. 1 Business Objectives and Growth Strategies Our objective is to allocate capital in order to invest primarily in a high-quality diversified portfolio of uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States.
Hotel Employees All persons employed in the day-to-day operations of our hotels are employees of our third-party managers. Employees at certain of our third-party managed hotels are covered by collective bargaining agreements that are subject to review and 6 renewal on a regular basis.
Hotel Employees All persons employed in the day-to-day operations of our hotels are employees of our third-party managers. Employees at certain of our third-party managed hotels are covered by collective bargaining agreements that are subject to review and renewal on a regular basis.
We pursue both new or recently constructed assets that require limited capital investment, as well as more mature and complex properties with opportunities for our dedicated asset and project management teams to create value through more active operational oversight and targeted capital expenditures. • Drive Growth Through Aggressive Asset Management, In-House Project Management and Strategic Capital Investment.
We pursue both new or recently constructed assets that require limited capital investment, as well as more mature and complex properties with opportunities for our dedicated asset and project management teams to create value through more active operational oversight and targeted capital expenditures. • Drive Growth Through Proactive Asset Management, In-House Project Management and Strategic Capital Investment.
Our management team’s extensive industry experience across multiple brands and management companies coupled with our integrated asset management and project management teams enable us to identify and implement value-add strategies and to prudently invest capital in our assets to optimize operating results while leveraging best practices across our portfolio. - Aggressive Asset Management.
Our management team’s extensive industry experience across multiple brands and management companies coupled with our integrated asset management and project management teams enable us to identify and implement value-add strategies and to prudently invest capital in our assets to optimize operating results while leveraging best practices across our portfolio. - Proactive Asset Management.
In a stable macroeconomic environment, our revenues and operating income have historically been highest in the second quarter of the year followed by the first, third and fourth quarters. Cyclicality The lodging industry is cyclical and generally its growth or contraction follows the overall economy.
In a stable macroeconomic environment, our revenues and operating income have historically been highest in the second quarter of the year followed by the first, fourth and third quarters, respectively. 4 Cyclicality The lodging industry is cyclical and generally its growth or contraction follows the overall economy.
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “2023 Revolving Line of Credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023 (the "2023 Credit Agreement"), by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto.
Subject to market conditions, we intend to repay amounts outstanding under our revolving line of credit and/or other debt from time to time with proceeds from periodic common and preferred equity issuances, long-term debt financings, sale of assets and cash flows from operations. Competition The U.S. lodging industry is highly competitive.
Subject to market conditions, we intend to repay amounts outstanding under our credit facility and/or other debt from time to time with proceeds from periodic common and preferred equity issuances, long-term debt financings, sale of assets and cash flows from operations. Competition The U.S. lodging industry is highly competitive.
The SEC maintains a website that contains reports, proxy and other information that we have filed with the SEC. The SEC website can be found at http://www.sec.gov. 7
The SEC maintains a website that contains reports, proxy and other information that we have filed with the SEC. The SEC website can be found at https://www.sec.gov. 7
Our debt includes a revolving line of credit, corporate credit facility term loans, the Senior Notes, mortgage loans collateralized by certain of our hotel properties, or leasehold interests under the ground leases on our hotel properties and may include other types of private and public debt in the future.
Our debt includes a revolving credit facility, corporate credit facility term loans, the Senior Notes (as defined below), mortgage loans collateralized by certain of our hotel properties, or leasehold interests under the ground leases on our hotel properties and may include other types of private and public debt in the future.
Human Capital Corporate Employees As of December 31, 2023, we had 45 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are guided by our core values, which include civility, ethics and integrity, and a commitment to quality.
Human Capital Corporate Employees As of December 31, 2024, we had 46 employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are guided by our core values, which include civility, ethics and integrity, and a commitment to quality.
The remaining 3.6% of the Operating Partnership Units are owned by the other limited partners comprised of certain of our executive officers and current or former members of our Board of Directors and includes vested and unvested long-term incentive plan ("LTIP") partnership units.
The remaining 4.2% of the Operating Partnership Units are owned by the other limited partners comprised of certain of our executive officers and current or former members of our Board of Directors and includes vested and unvested long-term incentive plan ("LTIP") partnership units.
The Company's subsidiaries generally consist of limited liability companies ("LLCs"), limited partnerships ("LPs") and our TRS. The effects of all inter-company transactions are eliminated. As of December 31, 2023, the Company owned 32 lodging properties with a total of 9,514 rooms. The Company’s principal executive offices are located at 200 S.
The Company's subsidiaries generally consist of limited liability companies ("LLCs"), limited partnerships ("LPs") and our TRS. The effects of all inter-company transactions are eliminated. As of December 31, 2024, the Company owned 31 lodging properties with a total of 9,408 rooms. The Company’s principal executive offices are located at 200 S.
As of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization. We may also issue new equity or debt and use the proceeds from such issuances to acquire assets, make capital improvements that yield attractive risk-adjusted returns on investment, or for general corporate purposes.
As of December 31, 2024, the Company had approximately $117.9 million remaining under its share repurchase authorization. We may also issue new equity or debt and use the proceeds from such issuances to acquire assets, make capital improvements that yield attractive risk-adjusted returns on investment, or for general corporate purposes.
We own and control 100% of the sole general partner of our Operating Partnership and own, directly or indirectly, approximately 96.4% of the Operating Partnership Units in our Operating Partnership, with the remaining 3.6% owned by certain of our executive officers and current or former members of our Board of Directors.
We own and control 100% of the sole general partner of our Operating Partnership and own, directly or indirectly, approximately 95.8% of the Operating Partnership Units in our Operating Partnership, with the remaining 4.2% owned by certain of our executive officers and current or former members of our Board of Directors.
Our weighted-average debt maturity as of December 31, 2023 was 3.2 years for our mortgage loans, 3.3 years for our corporate credit facility term loans, the Senior Notes, and revolving line of credit and 3.3 years for all debt. Our total debt had a weighted-average interest rate of 5.47%.
Our weighted-average debt maturity as of December 31, 2024 was 2.2 years for our mortgage loans, 4.6 years for our corporate credit facility term loans, the Senior Notes, and revolving credit facility and 4.3 years for all debt. Our total debt had a weighted-average interest rate of 5.54%.
We believe that hotels, which are predominately affiliated with leading brands, such as our portfolio of hotels, will enjoy the competitive advantages associated with operating under such brands, which includes strong health, safety and cleanliness protocols, and are important to our customers.
We believe that hotels, which are predominately affiliated with leading brands, such as our portfolio of hotels, will enjoy the competitive advantages associated with operating under such brands, which includes the competitive strength of reservation systems and loyalty programs, and are important to our customers.
As of December 31, 2023, we had a total of $223.1 million of cash on hand, including $58.4 million of restricted cash primarily set aside to maintain our hotels.
As of December 31, 2024, we had a total of $78.2 million of cash on hand, including $65.4 million of restricted cash primarily set aside to maintain our hotels.
We had $200 million available for issuance under the ATM Agreement as of December 31, 2023. We may issue equity under this program or other equity issuance programs if we determine that shares can be sold at an attractive price and there is a compelling use for such proceeds.
We may issue equity under this program or other equity issuance programs if we determine that shares can be sold at an attractive price and there is a compelling use for such proceeds.
As of December 31, 2023, the Company collectively owned 96.4% of the common limited partnership units issued by the Operating Partnership ("Operating Partnership Units").
As of December 31, 2024, the Company collectively owned 95.8% of the common limited partnership units issued by the Operating Partnership ("Operating Partnership Units").
Regulations General Our hotels are subject to various U.S. federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements.
Regulations General Our hotels are subject to various U.S. federal, state and local laws, ordinances and regulations, including regulations relating to common areas and fire and safety requirements. We believe that each of our hotels has the necessary permits and approvals to operate its business.
Our Tax Status We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") for U.S. federal income tax purposes, beginning with our short taxable year that commenced on January 5, 2015 and ended on February 3, 2015.
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from guests or employees at our hotels and others if property damage or health concerns arise. 5 Our Tax Status We elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the "Code") for U.S. federal income tax purposes, beginning with our short taxable year that commenced on January 5, 2015 and ended on February 3, 2015.
However, non-compliance with the ADA could result in substantial capital expenditures, imposition of fines and/or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one and we will continue to assess our hotels and to make alterations as appropriate in this respect.
The obligation to make readily achievable accommodations is an ongoing one and we will continue to assess our hotels and to make alterations as appropriate in this respect.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10-basis point credit spread adjustment and a zero basis point floor.
The Revolving Credit Facility’s interest rate is based, at the Company's option, on a pricing grid with a range of (i) 145 to 275 basis points over the applicable adjusted term SOFR rate or (ii) 45 to 175 basis points over the applicable alternative base rate, in each case as determined by the Company’s leverage ratio.
From time to time, we may also seek to create value for our stockholders by opportunistically repurchasing shares of our common stock at valuations we believe are attractive.
In accordance with the Amended and Restated Credit Agreement, the remaining proceeds may be used by the Company to refinance other indebtedness and for general working capital purposes. From time to time, we may also seek to create value for our stockholders by opportunistically repurchasing shares of our common stock at valuations we believe are attractive.
The 2023 Term Loans mature in March 2026, can be extended up to an additional year and bear interest rates consistent with the pricing grid on the revolving line of credit.
The 2024 Term Loans each mature in November 2028, can be extended up to two additional six-month periods, and bear interest rates consistent with the pricing grid on the Revolving Credit Facility. The proceeds of the 2024 Initial Term Loan were used to refinance the Operating Partnership’s previously outstanding term loans under the 2023 Credit Agreement.
From time to time, we may sell shares under the ATM program pursuant to an Equity Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC, Robert W. Baird & Co. Incorporated, 3 Jefferies LLC, KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc. to raise capital when we believe conditions are advantageous.
Incorporated, Jefferies LLC, KeyBanc Capital Markets Inc. and Raymond James & Associates, Inc. to raise capital when we believe conditions are advantageous. We had $200 million available for issuance under the ATM Agreement as of December 31, 2024.
We maintain an At-The-Market ("ATM") program available for selling common stock with an aggregate gross offering price of up to $200 million. In August 2023, the then existing registration statement expired and as a result, the Company wrote off accumulated offering costs of $1.2 million and filed a new registration statement.
We maintain an At-The-Market ("ATM") program available for selling common stock with an aggregate gross offering price of up to $200 million. From time to time, we may sell shares under the ATM program pursuant to an Equity Distribution Agreement ("ATM Agreement") with Wells Fargo Securities, LLC, Robert W. Baird & Co.
Removed
Proceeds from future revolving line of credit borrowings may be used for working capital, general corporate or other purposes permitted by the 2023 Credit Agreement. The revolving line of credit matures in January 2027 and can be extended up to an additional year.
Added
In November 2024, XHR LP amended and restated the 2023 Credit Agreement to replace the credit facilities outstanding thereunder with a new $825 million senior unsecured credit facility comprised of a $500 million revolving line of credit (the “Revolving Credit Facility”), a $225 million term loan (the “2024 Initial Term Loan”), and a $100 million delayed draw term loan commitment (the “2024 Delayed Draw Term Loan” and, together with the 2024 Initial Term Loan, the "2024 Term Loans"), pursuant to an amended and restated revolving credit and term loan agreement with a syndicate of bank lenders, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto (the “Amended and Restated Credit Agreement”).
Removed
Additionally, in January 2023, we amended the mortgage loan collateralized by Andaz Napa to update the variable index from one-month LIBOR to Term SOFR, increase the credit spread, increase the principal amount to $55 million and extend the maturity date through January 2028.
Added
A portion of the revolving loan commitments under the Amended and Restated Credit Agreement is available for the issuance of letters of credit in an amount not to exceed $25 million.
Removed
We believe that each of our hotels has the necessary permits and approvals to operate its business. 4 Americans with Disabilities Act Our hotels must comply with applicable provisions of the Americans with Disabilities Act (the "ADA"), to the extent that such hotels are "public accommodations" as defined by the ADA.
Added
The Amended and Restated Credit Agreement provides the Operating Partnership with the option to request an uncommitted increase in the revolving loan commitments and/or add an uncommitted term loan in an aggregate principal amount of $300 million. The Revolving Credit Facility matures in November 2028 and can be extended up to two additional six-month periods.
Removed
In addition, the presence of significant mold or other airborne contaminants could expose us to liability from guests or employees at our hotels and others if property damage or health concerns arise.
Added
As of December 31, 2024, the Company had an outstanding balance of $10 million on the Revolving Credit Facility with remaining availability of $490 million and no amounts had been funded under the 2024 Delayed Draw Term Loan commitment. In May 2021, we issued $500 million of 4.875% Senior Notes due in 2029 (the "2021 Senior Notes").
Removed
We maintain policies and programs that provide the framework for fostering and supporting a diverse and inclusive work environment which contribute to the overall corporate culture at Xenia, leading to the recruitment, retention, and growth of a qualified and successful workforce.
Added
In November 2024, we issued $400 million of 6.625% Senior Notes due 2030 (the "2024 Senior Notes" and together with the 2021 Senior Notes, the "Senior Notes") at a price equal to 100% of face value and used the net proceeds, together with cash on hand, to redeem in full the outstanding $464.7 million aggregate principal of 6.375% Senior Notes due 2025 issued by the Company in 2020 (the "2020 Senior Notes"). 3 In January 2025, we borrowed the $100 million available on the 2024 Delayed Draw Term Loan and used a portion of the borrowings to repay the full amount outstanding under the Revolving Credit Facility.
Removed
As of December 31, 2023, 33% of our corporate workforce identified as women and 40% as underrepresented ethnic and racial groups. Further, 73% of our corporate workforce were 40 years of age or older with an average age of 48.
Added
We believe that our hotels are in substantial compliance with the ADA and that we will not be required to make substantial capital expenditures to address the requirements of the ADA. However, non-compliance with the ADA could result in substantial capital expenditures, imposition of fines and/or an award of damages to private litigants.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

91 edited+7 added−10 removed378 unchanged
Biggest changeThere is no assurance that our hedging strategy will achieve our objectives. We may be subject to costs, such as transaction fees or breakage costs, if we terminate these arrangements. To the extent that we use derivative financial instruments to hedge against interest rate fluctuations, we will be exposed to credit risk, basis risk and legal enforceability risks.
Biggest changeOur actual hedging decisions will be determined in light of the facts and circumstances existing at the time of the hedge and may differ from our currently anticipated hedging strategy. There is no assurance that our hedging strategy will achieve our objectives. We may be subject to costs, such as transaction fees or breakage costs, if we terminate these arrangements.
In addition, our hotels will be subject to various operating risks common to the lodging industry, many of which are beyond our control, including, among others, the following: • changes in general macroeconomic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets, inflationary pressures, rising interest rates and changes in consumer confidence levels; 9 • outbreaks of pandemic or contagious diseases, such as COVID-19 (including new variants), norovirus, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu), Ebola, Zika virus, or other similar viruses, or fear of such outbreaks; • war, geopolitical conflicts, other political conditions or uncertainty, terrorist activities or threats, mass casualty events, protests and heightened travel security measures instituted in response to these events; • natural disasters, such as earthquakes, tsunamis, tornadoes, hurricanes, typhoons, floods, droughts, wildfires, and extreme weather events, some of which may become more frequent and intense as a result of climate change, and man-made disasters, such as oil spills, terrorist attacks, and nuclear incidents; • chronic changes in physical conditions, such as sea-level rise or changes in temperature or precipitation patterns, which may impact the operating conditions of our hotels or other infrastructure we rely on; • delayed delivery or any material reduction or prolonged interruption of public utilities and services, including water and electric power; • decreased corporate or government travel-related budgets and spending and cancellations and/or government shutdowns or closures, deferrals or renegotiations of group business due to adverse changes in general economic conditions and/or changes in laws and regulations; • decreased demand for business-related travel due to innovations in business-related technology, such as for virtual meetings and/or conferences, ongoing corporate travel restrictions, and/or a permanent shift to work-from-home or flex arrangements; • changes in the desirability of particular locations or travel patterns of customers; • increasing awareness around sustainability, the impact of air travel on climate change and the impact of over-tourism; • low consumer confidence, high levels of unemployment or depressed real estate prices; • supply competition from other hotels and alternative accommodations in the markets in which we operate; • overbuilding of hotels in the markets in which we operate, which results in increased supply and will adversely affect occupancy and revenues at our hotels; • requirements for periodic capital reinvestment to repair and upgrade hotels; • increases in operating costs due to inflation and other factors, including wages and benefits, that may not be offset by increased room rates; • change in interest rates and the availability, cost and terms of financing; • the financial condition and general business condition of the airline, automotive and other transportation-related industries and its impact on travel; • decreased airline capacities and routes and reductions in inbound foreign travel; • oil prices and travel costs; • increases in the cost of imported goods and materials, including those used for hotel renovations and other projects, due to changes in international tariffs and/or supply chain disruptions and/or shortages due to reductions in international imports; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • government regulations which limit or prohibit hotels and resorts from charging certain types of bundled fees such as resort or destination amenity fees; and • risks generally associated with the ownership of hotels and real estate, as we discuss in detail below. 10 These factors, and the reputational repercussions of these factors, can materially adversely affect, and from time to time have adversely affected, individual hotels, particular regions and our business, financial condition, results of operations, and/or our ability to make distributions to our stockholders.
In addition, our hotels will be subject to various operating risks common to the lodging industry, many of which are beyond our control, including, among others, the following: • changes in general macroeconomic conditions, including the severity and duration of any downturn in the U.S. or global economy and financial markets, inflationary pressures, rising interest rates and changes in consumer confidence levels; 9 • outbreaks of pandemic or contagious diseases, such as COVID-19 (including new variants), norovirus, avian flu, severe acute respiratory syndrome (SARS), H1N1 (swine flu), Ebola, Zika virus, or other similar viruses, or fear of such outbreaks; • war, geopolitical conflicts, other political conditions or uncertainty, terrorist activities or threats, mass casualty events, protests and heightened travel security measures instituted in response to these events; • natural disasters, such as hurricanes, wildfires, earthquakes, tornadoes, floods, droughts, tsunamis, typhoons, and extreme weather events, some of which may become more frequent and intense as a result of climate change, and man-made disasters, such as oil spills, terrorist attacks, and nuclear incidents; • chronic changes in physical conditions, such as sea-level rise or changes in temperature or precipitation patterns, which may impact the operating conditions of our hotels or other infrastructure we rely on; • delayed delivery or any material reduction or prolonged interruption of public utilities and services, including water and electric power; • decreased corporate or government travel-related budgets and spending and cancellations and/or government shutdowns or closures, deferrals or renegotiations of group business due to adverse changes in general economic conditions and/or changes in laws and regulations; • decreased demand for business-related travel due to innovations in business-related technology, such as for virtual meetings and/or conferences, ongoing corporate travel restrictions, and/or a permanent shift to work-from-home or flex arrangements; • changes in the desirability of particular locations or travel patterns of customers; • increasing awareness around sustainability, the impact of air travel on climate change and the impact of over-tourism; • low consumer confidence, high levels of unemployment or depressed real estate prices; • supply competition from other hotels and alternative accommodations in the markets in which we operate; • overbuilding of hotels in the markets in which we operate, which results in increased supply and will adversely affect occupancy and revenues at our hotels; • requirements for periodic capital reinvestment to repair and upgrade hotels; • increases in operating costs due to inflation and other factors, including wages and benefits, that may not be offset by increased room rates; • change in interest rates and the availability, cost and terms of financing; • the financial condition and general business condition of the airline, automotive and other transportation-related industries and its impact on travel; • decreased airline capacities and routes and reductions in inbound foreign travel; • oil prices and travel costs; • increases in the cost of imported goods and materials, including those used for hotel renovations and other projects, due to changes in international tariffs and/or supply chain disruptions and/or shortages due to reductions in international imports; • statements, actions or interventions by governmental officials related to travel and corporate travel-related activities and the resulting negative public perception of such travel and activities; • government regulations which limit or prohibit hotels and resorts from charging certain types of bundled fees such as resort or destination amenity fees; and • risks generally associated with the ownership of hotels and real estate, as we discuss in detail below. 10 These factors, and the reputational repercussions of these factors, can materially adversely affect, and from time to time have adversely affected, individual hotels, particular regions and our business, financial condition, results of operations, and/or our ability to make distributions to our stockholders.
Hurricanes, earthquakes, tsunamis, tornadoes, droughts, wildfires, and other man-made or natural disasters, as well as the spread or fear of the spread of contagious diseases in locations where we own significant properties and from which we draw a large number of guests, could cause a decline in the level of business and leisure travel in certain regions or as a whole and reduce the demand for lodging, which may adversely affect our financial condition and operating performance.
Hurricanes, wildfires, earthquakes, tornadoes, droughts, tsunamis, and other man-made or natural disasters, as well as the spread or fear of the spread of contagious diseases in locations where we own significant properties and from which we draw a large number of guests, could cause a decline in the level of business and leisure travel in certain regions or as a whole and reduce the demand for lodging, which may adversely affect our financial condition and operating performance.
In addition, our hotels may be subject to the effects of adverse acts of nature, such as winter storms, hailstorms, strong winds, tropical storms, hurricanes, wildfires, earthquakes, tornadoes, and tsunamis which have in the past caused flooding and other property damage to our hotels in specific geographic locations, including in the Texas, California and Florida markets.
In addition, our hotels may be subject to the effects of adverse acts of nature, such as hurricanes, wildfires, winter storms, hailstorms, strong winds, tropical storms, earthquakes, tornadoes, and tsunamis which have in the past caused flooding and other property damage to our hotels in specific geographic locations, including in the Texas, California and Florida markets.
To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal corporate income tax on our undistributed taxable income.
We face risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires, as well as efforts to mitigate or adapt to climate change, any of which could have a material adverse effect on our properties, operations and business.
We face risks associated with natural disasters and the physical effects of climate change, which may include more frequent or severe storms, hurricanes, wildfires, flooding, rising sea levels, shortages of water, and droughts, as well as efforts to mitigate or adapt to climate change, any of which could have a material adverse effect on our properties, operations and business.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent and/or severe storms, hurricanes, flooding, freeze events, heatwaves, rising sea levels, shortages of water, droughts and wildfires, any of which could have a material adverse effect on our properties, operations and business.
We are subject to the risks associated with natural disasters and the physical effects of climate change, which may include more frequent and/or severe storms, hurricanes, wildfires, flooding, freeze events, heatwaves, rising sea levels, shortages of water and droughts, any of which could have a material adverse effect on our properties, operations and business.
Certain provisions of the Maryland General Corporation Law, or "MGCL", may have the effect of deterring a third-party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% 31 or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super majority stockholder voting requirements on these combinations; and • "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Certain provisions of the Maryland General Corporation Law, or "MGCL", may have the effect of deterring a third-party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock, including: • "business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested stockholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the stockholder becomes an interested stockholder, and thereafter impose fair price and/or super majority stockholder voting requirements on these combinations; and • "control share" provisions that provide that "control shares" of our company (defined as voting shares that, when aggregated with other shares controlled by the stockholder, entitle the stockholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding control shares) have no voting rights except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
Incurring debt could subject us to many risks, including the risks that: • our cash flows from operations may be insufficient to make required payments of principal and interest; • our debt and resulting maturities may increase our vulnerability to adverse economic and industry conditions; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing cash available for distribution to our stockholders, funds available for operations and capital expenditures, future business opportunities or other purposes; • the terms of any refinancing may not be in the same amount or on terms as favorable as the terms of the existing debt being refinanced; • we may be obligated to repay the debt pursuant to guarantee obligations; and • the use of leverage could adversely affect our ability to raise capital from other sources or to make distributions to our stockholders and could adversely affect the market price of our common stock.
Incurring debt could subject us to many risks, including the risks that: • our cash flows from operations may be insufficient to make required payments of principal and interest; • our debt and resulting maturities may increase our vulnerability to adverse economic and industry conditions; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing cash available for distribution to our stockholders, funds available for operations and capital expenditures, future business opportunities or other purposes; • the terms of any refinancing may not be in the same amount or on terms as favorable as the terms of the existing debt being refinanced; • we may be obligated to repay the debt pursuant to guarantee obligations; and 20 • the use of leverage could adversely affect our ability to raise capital from other sources or to make distributions to our stockholders and could adversely affect the market price of our common stock.
Under current law, any income that we generate from transactions intended to hedge our interest rate or currency risks will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if (i) the instrument hedges risk of interest rate or currency fluctuations on indebtedness incurred or to be incurred to carry or acquire real estate assets, (ii) the instrument hedges risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, or (iii) the instrument was entered into to “offset” certain instruments described in clauses (i) or (ii) of this sentence and certain other requirements are satisfied and such instrument is properly identified under applicable Treasury Regulations.
Under current law, any income that we generate from transactions intended to hedge our interest rate or currency risks will be 27 excluded from gross income for purposes of the REIT 75% and 95% gross income tests if (i) the instrument hedges risk of interest rate or currency fluctuations on indebtedness incurred or to be incurred to carry or acquire real estate assets, (ii) the instrument hedges risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests, or (iii) the instrument was entered into to “offset” certain instruments described in clauses (i) or (ii) of this sentence and certain other requirements are satisfied and such instrument is properly identified under applicable Treasury Regulations.
These covenants place restrictions on, among other things, our ability to incur additional indebtedness, incur liens on assets, enter into new types of businesses, engage in mergers, liquidations or 22 consolidations, sell assets, make restricted payments (including the payment of dividends and other distributions), enter into negative pledges or limitations on the ability of subsidiaries to make certain distributions or to guarantee the indebtedness under the credit agreements, engage in certain transactions with affiliates, enter into sale and leaseback transactions, make investments and capital expenditures, acquire real estate assets, enter into speculative hedging transactions, change our fiscal year and make certain payments and prepayments with respect to subordinated debt.
These covenants place restrictions on, among other things, our ability to incur additional indebtedness, incur liens on assets, enter into new types of businesses, engage in mergers, liquidations or consolidations, sell assets, make restricted payments (including the payment of dividends and other distributions), enter into negative pledges or limitations on the ability of subsidiaries to make certain distributions or to guarantee the indebtedness under the credit agreements, engage in certain transactions with affiliates, enter into sale and leaseback transactions, make investments and capital expenditures, acquire real estate assets, enter into speculative hedging transactions, change our fiscal year and make certain payments and prepayments with respect to subordinated debt.
In addition, our failure to comply with these covenants, as well as our inability to make required payments under the credit agreements or any future debt agreement, could cause an event of default under the credit agreements, which, if not waived, could result in the termination of the financing commitments under the credit agreement governing our revolving line of credit and corporate credit facility term loans and the acceleration of the maturity of the outstanding indebtedness thereunder, or could cause an event of default under such future debt agreement, which could result in the acceleration of the debt and require us to repay such debt with capital obtained from other sources, which may not be available to us or may be available only on unattractive terms.
In addition, our failure to comply with these covenants, as well as our inability to make required payments under the credit agreements or any future debt agreement, could cause an event of default under the credit agreements, which, if not waived, could result in the termination of the financing commitments under the credit agreement governing our revolving credit facility and corporate credit facility term loans and the acceleration of the maturity of the outstanding indebtedness thereunder, or could cause an event of default under such future debt agreement, which could result in the acceleration of the debt and require us to repay such debt with capital obtained from other sources, which may not be available to us or may be available only on unattractive terms.
In addition, the credit agreements contain, and any future debt agreements may contain, cross-default provisions with respect to certain other recourse and non-recourse indebtedness and contain certain other events of default which would similarly, in each case, give the lenders under the credit agreements the right to terminate such financing commitments and accelerate the maturity of such indebtedness under the credit agreements or give the lenders under such other agreement the right to declare a default on its debt and to enforce remedies, including acceleration of the maturity of such debt upon the occurrence of a default under such other indebtedness.
In addition, the credit agreements contain, and any future debt agreements may contain, cross-default provisions with respect to certain other recourse and non-recourse indebtedness and contain certain other events of default which would similarly, in each case, give the lenders under the credit agreements the 22 right to terminate such financing commitments and accelerate the maturity of such indebtedness under the credit agreements or give the lenders under such other agreement the right to declare a default on its debt and to enforce remedies, including acceleration of the maturity of such debt upon the occurrence of a default under such other indebtedness.
As permitted by Maryland law, we have elected, by resolution of our Board of Directors, to opt out of the business combination provisions of the MGCL, provided that such business combination has been approved by our Board of Directors (including a majority of directors who are not affiliated with the interested stockholder), and, pursuant to a provision in our bylaws, to exempt any acquisition of our stock from the control share provisions of the MGCL.
As permitted by Maryland law, we have elected, by resolution of our Board of Directors, to opt out of the business combination provisions of the MGCL, provided that such business combination has been approved by our Board of Directors (including a 31 majority of directors who are not affiliated with the interested stockholder), and, pursuant to a provision in our bylaws, to exempt any acquisition of our stock from the control share provisions of the MGCL.
Our Board of Directors may authorize our senior management team to follow broad investment guidelines and has approved certain investment and financing guidelines, and as a result, we expect that our senior management team will have latitude, and in some instances, certain levels of discretion and authority in determining the assets that are proper investments for us, as well 33 as the individual investment decisions, and how we finance such investments.
Our Board of Directors may authorize our senior management team to follow broad investment guidelines and has approved certain investment and financing guidelines, and as a result, we expect that our senior management team will have latitude, and in some instances, certain levels of discretion and authority in determining the assets that are proper investments for us, as well as the individual investment decisions, and how we finance such investments.
Refer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. • We may be adversely affected by various operating risks common to the lodging industry, including a dependence on business travel and tourism. • Risks related to natural or man-made disasters, weather and climate-related events, contagious diseases, such as the COVID-19 pandemic, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our financial condition and results of operations. • Difficult economic conditions may continue to adversely affect the hotel industry. • The lodging industry is highly cyclical in nature. • Changes in distribution channels, including the increasing use of intermediaries by consumers and companies may adversely affect our profitability. • The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. • We have a concentration of hotels in Texas, California, and Florida, which exposes our business to the effects of regional events and occurrences. • Our long-term growth depends in part on successfully identifying and consummating acquisitions of additional hotels and the failure to make such acquisitions could materially impede our growth. • We may be subject to unknown or contingent liabilities related to recently acquired hotels and the hotels that we may acquire in the future or hotels recently divested or that we may divest in the future. • The acquisition and/or disposition of a hotel or a portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the acquisition and/or disposition. • Many real estate costs and certain hotel operating costs are fixed, even if revenue from our hotels decreases. • The land underlying three of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected. • Several of our hotels are subject to condominium regimes or master associations with conditions, covenants, and restrictions placed on our properties; therefore, we are subject to risks associated with this type of real estate ownership. • We will not recognize any increase in the value of the land subject to our ground leases and may only receive a portion of compensation paid in any eminent domain proceeding with respect to the hotel. • Any difficulties in obtaining capital necessary to make required periodic capital expenditures and renovation of our hotels could materially and adversely affect our financial condition and results of operations. • We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ or may employ unionized labor. • We are dependent on the performance of the third-party hotel management companies and could be materially and adversely affected if such third-party managers do not properly manage our hotels or act in our best interests. • Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability. • Contractual and other disagreements with or involving third-party hotel management companies and franchisors could make us liable to them or result in litigation costs or other expenses. • If third-party hotel managers and/or franchisors consolidate through merger and acquisition transactions, we may experience undefined and unknown costs related to the integration of processes and systems. • If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses. • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur. • Our organizational documents have no limitation on the amount of indebtedness we may incur.
Refer to the following pages of this section for additional details regarding these summarized risk factors and other additional risk factors identified by the Company. • We may be adversely affected by various operating risks common to the lodging industry, including a dependence on business travel and tourism. • Risks related to natural or man-made disasters, weather and climate-related events, contagious diseases, such as the COVID-19 pandemic, terrorist activity, and war could reduce the demand for lodging, which may adversely affect our financial condition and results of operations. • An adverse change in economic conditions may negatively affect the lodging industry. • The lodging industry is highly cyclical in nature. • Changes in distribution channels, including the increasing use of intermediaries by consumers and companies may adversely affect our profitability. • The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. • We have a concentration of hotels in Texas, California, and Florida, which exposes our business to the effects of regional events and occurrences. • Our long-term growth depends in part on successfully identifying and consummating acquisitions of additional hotels and the failure to make such acquisitions could materially impede our growth. • We may be subject to unknown or contingent liabilities related to recently acquired hotels and the hotels that we may acquire in the future or hotels recently divested or that we may divest in the future. • The acquisition and/or disposition of a hotel or a portfolio of hotels is typically subject to contingencies, risks and uncertainties, any of which may cause us to be unsuccessful in completing the acquisition and/or disposition. • Many real estate costs and certain hotel operating costs are fixed, even if revenue from our hotels decreases. • The land underlying three of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected. • Several of our hotels are subject to condominium regimes or master associations with conditions, covenants, and restrictions placed on our properties; therefore, we are subject to risks associated with this type of real estate ownership. • We will not recognize any increase in the value of the land subject to our ground leases and may only receive a portion of compensation paid in any eminent domain proceeding with respect to the hotel. • Any difficulties in obtaining capital necessary to make required periodic capital expenditures and renovation of our hotels could materially and adversely affect our financial condition and results of operations. • We are subject to risks associated with the employment of hotel personnel, particularly with hotels that employ or may employ unionized labor. • We are dependent on the performance of the third-party hotel management companies and could be materially and adversely affected if such third-party managers do not properly manage our hotels or act in our best interests. • Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability. • Contractual and other disagreements with or involving third-party hotel management companies and franchisors could make us liable to them or result in litigation costs or other expenses. • If third-party hotel managers and/or franchisors consolidate through merger and acquisition transactions, we may experience undefined and unknown costs related to the integration of processes and systems. • If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses. • Volatility in the financial markets and challenging economic conditions could adversely affect our ability to secure debt financing on attractive terms and our ability to service any future indebtedness that we may incur. • Our organizational documents have no limitation on the amount of indebtedness we may incur.
We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter into with any third-party. In the event we terminate a management or franchise agreement early and the manager or franchisor considers such termination to have been wrongful, they may seek damages.
We cannot predict the outcome of any arbitration or litigation, the effect of any negative judgment against us or the amount of any settlement that we may enter 17 into with any third-party. In the event we terminate a management or franchise agreement early and the manager or franchisor considers such termination to have been wrongful, they may seek damages.
In addition, we expect to finance future acquisitions through a combination of borrowings under our revolving line of credit and corporate credit facility term loans, our mortgage loans, the use of retained cash flows and offerings of equity and debt securities, which may not be available on advantageous terms, or at all.
In addition, we expect to finance future acquisitions through a combination of borrowings under our revolving credit facility and corporate credit facility term loans, our mortgage loans, the use of retained cash flows and offerings of equity and debt securities, which may not be available on advantageous terms, or at all.
Additionally, our business is exposed to risks associated with societal efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand. For example, some state and local governments 35 have adopted, or considered adopting, restrictions on water use or GHG emissions.
Additionally, our business is exposed to risks associated with societal efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand. For example, some state and local governments have adopted, or considered adopting, restrictions on water use or GHG emissions.
The COVID-19 pandemic resulted in significant disruption and additional risks to our business, the lodging, hospitality, and travel industries, and the global economy. While our business has recovered compared to pre-COVID-19 pandemic results in 2019, potential concerns about public health either related to COVID-19 or otherwise may impact travel demand and consumer confidence in the future.
The COVID-19 pandemic resulted in significant disruption and additional risks to our business, the lodging, hospitality, and travel industries, and the global economy. While our business has mostly recovered compared to pre-COVID-19 pandemic results in 2019, potential concerns about public health either related to COVID-19 or otherwise may impact travel demand and consumer confidence in the future.
For example, an investment in real estate cannot generally be quickly sold, and we cannot predict whether we will be able to sell any hotel we desire to for the price or on the terms set by us or acceptable to us, or the length of time needed to find a willing purchaser and to close the sale of the hotel.
For example, an investment in real estate cannot generally be quickly sold, and we cannot predict whether we will be able to sell any hotel we desire to for the price or on the terms set by us 13 or acceptable to us, or the length of time needed to find a willing purchaser and to close the sale of the hotel.
We may also borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our REIT taxable income, subject to certain adjustments, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for U.S. 21 federal income tax purposes.
We may also borrow money for other purposes to, among other things, satisfy the requirement that we distribute at least 90% of our REIT taxable income, subject to certain adjustments, or as is otherwise necessary or advisable to assure that we continue to qualify as a REIT for U.S. federal income tax purposes.
In order for such rent to qualify as "rents from real property" for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, financing arrangements, joint ventures or some other type of arrangement.
In order 25 for such rent to qualify as "rents from real property" for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and not be treated as service contracts, financing arrangements, joint ventures or some other type of arrangement.
In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential losses. We may not have adequate coverage for such losses, which could materially and adversely affect our revenues and profitability as well as limit or slow our future growth.
In such instances, we may be required to provide other financial support, either through financial assurances or self-insurance, to cover 36 potential losses. We may not have adequate coverage for such losses, which could materially and adversely affect our revenues and profitability as well as limit or slow our future growth.
Any increases would cause our cash flow and our operating results to decrease. If we are unable to offset these decreases with sufficient revenue across our portfolio, it could materially and adversely affect our 16 results of operations and profitability and our ability to pay distributions and to service our indebtedness could be materially and adversely affected.
Any increases would cause our cash flow and our operating results to decrease. If we are unable to offset these decreases with sufficient revenue across our portfolio, it could materially and adversely affect our results of operations and profitability and our ability to pay distributions and to service our indebtedness could be materially and adversely affected.
The loss of services of our senior management team, or any difficulty attracting and retaining other talented and experienced personnel, could adversely affect our ability to source potential investment opportunities, our relationship with global and national hotel brands and other industry participants and the execution of our business strategy.
The loss of services of our senior management team, or any 33 difficulty attracting and retaining other talented and experienced personnel, could adversely affect our ability to source potential investment opportunities, our relationship with global and national hotel brands and other industry participants and the execution of our business strategy.
In addition, unless we can purchase a fee interest in the underlying land and improvements or extend the terms of these leases before their expiration, as to which no assurance can be given, we will lose our right to operate these properties and our interest in the improvements upon expiration of the leases.
In addition, unless we can purchase a fee interest in the underlying land and improvements or extend the terms of these leases before their expiration, as to which no assurance can be 14 given, we will lose our right to operate these properties and our interest in the improvements upon expiration of the leases.
In addition, our TRS, and any other TRS we form, will be subject to regular corporate U.S. federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders. Failure to make required distributions would subject us to U.S. federal corporate income tax.
In addition, our TRS, and any other TRS we form, will be subject to regular corporate U.S. federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders. 24 Failure to make required distributions would subject us to U.S. federal corporate income tax.
If any of the foregoing were to occur, it could materially and adversely affect our business and financial condition. 17 Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability.
If any of the foregoing were to occur, it could materially and adversely affect our business and financial condition. Restrictive covenants in certain of our hotel management and franchise agreements contain provisions limiting or restricting the sale of our hotels, which could materially and adversely affect our profitability.
Failure by us, or any hotel management company that we engage, to maintain these standards or other terms and conditions could result in a franchise license being canceled or the franchisor requiring us to undertake a costly property improvement 18 program.
Failure by us, or any hotel management company that we engage, to maintain these standards or other terms and conditions could result in a franchise license being canceled or the franchisor requiring us to undertake a costly property improvement program.
Additionally, we cannot assure you that the amount of hurricane, windstorm, 12 earthquake, flood or other casualty insurance maintained for these hotels from time to time would entirely cover damages caused by any such event.
Additionally, we cannot assure you that the amount of hurricane, wildfire, windstorm, earthquake, flood or other casualty insurance maintained for these hotels from time to time would entirely cover 12 damages caused by any such event.
Some of our hotels routinely 34 handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals and cleaning solvents for on-site dry cleaners).
Some of our hotels routinely handle and use hazardous or regulated substances and wastes as part of their operations, which substances and wastes are subject to regulation (e.g., swimming pool chemicals and cleaning solvents for on-site dry cleaners).
The credit agreement governing our revolving line of credit and our corporate credit facility term loans as well as the indentures governing our Senior Notes contain customary covenants with which we must comply, which limit the discretion of management with respect to certain business matters.
The credit agreement governing our revolving credit facility and our corporate credit facility term loans as well as the indentures governing our Senior Notes contain customary covenants with which we must comply, which limit the discretion of management with respect to certain business matters.
Finally, legal enforceability risks encompass general contractual risks including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract, increasing the risk that we may not realize the benefits of these instruments.
Finally, legal enforceability 23 risks encompass general contractual risks including the risk that the counterparty will breach the terms of, or fail to perform its obligations under, the derivative contract, increasing the risk that we may not realize the benefits of these instruments.
Our Board of Directors may not grant an 28 exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT.
Our Board of Directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of 9.8% of the value of our outstanding shares would result in our failing to qualify as a REIT.
Furthermore, with respect to certain non- 27 U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.
Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.
Thus, common stockholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock. 30 Your percentage ownership in us may be diluted in the future.
Thus, common stockholders bear the risk that our future issuances of debt or equity securities or our incurrence of other borrowings will negatively affect the market price of our common stock. Your percentage ownership in us may be diluted in the future.
However, we cannot assure you that we will remain 24 qualified as a REIT or that we will not be required to rely on a REIT "savings clause." If we were to rely on a REIT "savings clause", we would have to pay a penalty tax, which could be material.
However, we cannot assure you that we will remain qualified as a REIT or that we will not be required to rely on a REIT "savings clause." If we were to rely on a REIT "savings clause", we would have to pay a penalty tax, which could be material.
Inflation, changes 36 in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed.
Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace or renovate a hotel after it has been damaged or destroyed.
Increases in interest rates will increase our interest costs. If interest rates are higher when we refinance our loans, our expenses will increase, thereby reducing our cash flow and the amount available for distribution to you.
Increases in interest rates will increase our interest costs. If 21 interest rates are higher when we refinance our loans, our expenses will increase, thereby reducing our cash flow and the amount available for distribution to you.
Furthermore, if one or more of the analysts who do cover us downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or our industry, the price of our common stock could decline.
Furthermore, if one or more of the analysts who do cover us 30 downgrade our stock or our industry, or the stock of any of our competitors, or publish inaccurate or unfavorable research about our business or our industry, the price of our common stock could decline.
We may not be able to make distributions in the future or may need to consider various funding sources to cover any shortfall, including borrowing under the revolving line of credit, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable share dividends.
We may not be able to make distributions in the future or may need to consider various funding sources to cover any shortfall, including borrowing under the revolving credit facility, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable share dividends.
As a result, our ability to fund capital expenditures or hotel redevelopment through retained earnings may be restricted. Consequently, we may have to draw down on our revolving line of credit, enter into new loans or rely upon the availability of new financing arrangements or equity capital to fund capital improvements.
As a result, our ability to fund capital expenditures or hotel redevelopment through retained earnings may be restricted. Consequently, we may have to draw down on our revolving credit facility, enter into new loans or rely upon the availability of new financing arrangements or equity capital to fund capital improvements.
Our continued ability to borrow under the revolving line of credit and any other credit facility that we may obtain will be subject to compliance with these covenants and our ability to meet these covenants will be adversely affected if U.S. lodging fundamentals do not continue to improve when and to the extent that we expect.
Our continued ability to borrow under the revolving credit facility and any other credit facility that we may obtain will be subject to compliance with these covenants and our ability to meet these covenants will be adversely affected if U.S. lodging fundamentals do not continue to improve when and to the extent that we expect.
We have limited 19 contractual ability to require our third-party management companies to implement new or enhanced cyber-security platforms.
We have limited contractual ability to require our third-party management companies to implement new or enhanced cyber-security platforms.
We lease the land underlying three of our hotels and/or meeting facilities from third-parties as of December 31, 2023. Two of these hotels are subject to ground leases that cover all of the land underlying the respective hotel, and the third is subject to a ground lease that covers a portion of the land.
We lease the land underlying three of our hotels and/or meeting facilities from third-parties as of December 31, 2024. Two of these hotels are subject to ground leases that cover all of the land underlying the respective hotel, and the third is subject to a ground lease that covers a portion of the land.
We believe that we qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2023, and we intend to continue operating in such a manner.
We believe that we qualified to be taxed as a REIT for U.S. federal income tax purposes for our taxable year ended December 31, 2024, and we intend to continue operating in such a manner.
Furthermore, if our relationship with Marriott and/or Hyatt were to deteriorate or terminate as a result of disputes regarding the management of our hotels or for other reasons, Marriott and/or Hyatt could, under certain circumstances, terminate our current franchise licenses with them or decline to provide franchise licenses for hotels that we may acquire in the future.
Furthermore, if our relationship with Marriott and/or Hyatt were to deteriorate or terminate as a result of disputes regarding the management of our hotels or for other reasons, Marriott and/or Hyatt could, under certain circumstances, terminate our current agreements with them or decline to provide agreements for hotels that we may acquire in the future.
We have a concentration of hotels in Texas, California and Florida. Specifically, as of December 31, 2023, approximately 23%, 20%, and 12% of rooms in our portfolio were located in Texas, California and Florida, respectively.
We have a concentration of hotels in Texas, California and Florida. Specifically, as of December 31, 2024, approximately 23%, 20%, and 12% of rooms in our portfolio were located in Texas, California and Florida, respectively.
We reserved 9,000,000 shares of our common stock for issuance or transfer pursuant to awards under the Plan, which may be amended from time to time and may increase the number of shares of our common stock for issuance. For a more detailed description of the Plan, see "Part III-Item 12.
We reserved 11,750,000 shares of our common stock for issuance or transfer pursuant to awards under the Plan, which may be amended from time to time and may increase the number of shares of our common stock for issuance. For a more detailed description of the Plan, see "Part III-Item 12.
Risks Related to Our Business and Strategy The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. In our portfolio, 23 of the 32 hotels that we owned as of December 31, 2023 operate under brands owned by Marriott and Hyatt.
Risks Related to Our Business and Strategy The majority of our hotels operate under the Marriott and Hyatt brand families; therefore, we are subject to risks associated with concentrating our portfolio in two brand families. In our portfolio, 23 of the 31 hotels that we owned as of December 31, 2024 operate under brands owned by Marriott and Hyatt.
Accordingly, we only own a long-term leasehold or similar interest in all or a portion of these three hotels. The average remaining term of the ground leases, assuming no renewal options are exercised, is approximately 35 years. Assuming all renewal options are exercised, the average remaining term is 68 years.
Accordingly, we only own a long-term leasehold or similar interest in all or a portion of these three hotels. The average remaining term of the ground leases, assuming no renewal options are exercised, is approximately 34 years. Assuming all renewal options are exercised, the average remaining term is 67 years.
The factors that could impact our hotels and the value of an investment in us are: • risks associated with the possibility that cost increases for labor and other operating costs will outpace revenue increases and that in the event of an economic slowdown, the high proportion of fixed costs will make it difficult to reduce costs to the extent required to offset declining revenues; • changes in tax laws and property taxes, or an increase in the assessed valuation of a property for real estate tax purposes; • adverse changes in the federal, state or local laws and regulations applicable to us, including those affecting zoning, fuel and energy consumption, water and environmental restrictions, and the related costs of compliance; • changing market demographics; • an inability to acquire and finance real estate assets on favorable terms, if at all; • the ongoing need for owner funded capital improvements and expenditures to maintain or upgrade hotels; • fluctuations in real estate values or potential impairments in the value of our assets; • acts of God, such as earthquakes, floods, hurricanes, wildfires or other uninsured losses; • war, political conditions or civil unrest, terrorist activities or threats, mass casualty events and heightened travel security measures instituted in response to these events, pandemics; and • changes in interest rates and availability, cost and terms of financing. 14 Operational Risks The land underlying three of our hotels and/or meeting facilities is subject to a ground lease; if we are found to be in breach of a ground lease or are unable to renew a ground lease, we could be materially and adversely affected.
The factors that could impact our hotels and the value of an investment in us are: • risks associated with the possibility that cost increases for labor and other operating costs will outpace revenue increases and that in the event of an economic slowdown, the high proportion of fixed costs will make it difficult to reduce costs to the extent required to offset declining revenues; • changes in tax laws and property taxes, or an increase in the assessed valuation of a property for real estate tax purposes; • adverse changes in the federal, state or local laws and regulations applicable to us, including those affecting zoning, fuel and energy consumption, water and environmental restrictions, and the related costs of compliance; • changing market demographics; • an inability to acquire and finance real estate assets on favorable terms, if at all; • the ongoing need for owner funded capital improvements and expenditures to maintain or upgrade hotels; • fluctuations in real estate values or potential impairments in the value of our assets; • acts of God, such as hurricanes, wildfires, earthquakes, floods or other uninsured losses; • war, political conditions or civil unrest, terrorist activities or threats, mass casualty events and heightened travel security measures instituted in response to these events, pandemics; and • changes in interest rates and availability, cost and terms of financing.
We own 96.4% of the Operating Partnership Units and the remaining 3.6% of the Operating Partnership Units are owned by the other limited partners comprised of our executive officers and current or former members of our Board of Directors. However, in connection with our future acquisition of properties or otherwise, we may issue Operating Partnership Units to third-parties.
We own 95.8% of the Operating Partnership Units and the remaining 4.2% of the Operating Partnership Units are owned by the other limited partners comprised of our executive officers and current or former members of our Board of Directors. However, in connection with our future acquisition of properties or otherwise, we may issue Operating Partnership Units to third-parties.
If the fair value of a derivative contract is negative, we owe the counterparty, which creates a risk that we may not be able to pay such amounts.
If the fair value of a derivative contract is positive, the counterparty owes us, which creates credit risk for us. If the fair value of a derivative contract is negative, we owe the counterparty, which creates a risk that we may not be able to pay such amounts.
Credit spreads for major sources of capital widened significantly during the U.S. credit crisis as investors demanded a higher risk premium. Over the past twelve months, the Federal Reserve has raised interest rates to combat inflation which has negatively impacted the credit market as well as the capital markets.
Credit spreads for major sources of capital widened significantly during the U.S. credit crisis as investors demanded a higher risk premium. During 2022 and 2023, the Federal Reserve raised interest rates to combat inflation which negatively impacted the credit market as well as the capital markets.
Any one or more of these events may reduce the overall demand for hotel rooms or limit the prices we can obtain for them, both of which could adversely affect our profits and financial results. Difficult economic conditions may continue to adversely affect the hotel industry.
Any one or more of these events may reduce the overall demand for hotel rooms or limit the prices we can obtain for them, both of which could adversely affect our profits and financial results. An adverse change in economic conditions may negatively affect the lodging industry.
Our acquisition, redevelopment, repositioning, renovation and re-branding activities are subject to various risks, any of which could, among other things, result in disruptions to our hotel operations, strain management resources and materially and adversely affect our results of operations and profitability as well as limit or slow our future growth.
Accordingly, if we lose one or more franchise licenses or brand management agreements, it could materially and adversely affect our results of operations and profitability as well as limit or slow our future growth. 18 Our acquisition, redevelopment, repositioning, renovation and re-branding activities are subject to various risks, any of which could, among other things, result in disruptions to our hotel operations, strain management resources and materially and adversely affect our results of operations and profitability as well as limit or slow our future growth.
Thus, our Board of Directors could authorize us to issue shares of preferred stock with terms and conditions that could subordinate the rights of the holders of our common stock or shares of preferred stock or common stock that could have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common stock.
Thus, our Board of Directors could authorize us to issue shares of preferred stock with terms and conditions that could subordinate the rights of the holders of our common stock or shares of preferred stock or common stock that could have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction such as a merger, tender offer or sale of all or substantially all of our assets, that might provide a premium price for holders of our common stock. 32 Our conflict of interest policy may not be successful in eliminating the influence of future conflicts of interest that may arise between us and our directors, officers and employees.
Ownership of hotels is a capital intensive business that requires significant capital expenditures to operate, maintain and renovate properties. Access to the capital that we need to maintain and renovate existing properties and to acquire new properties is critical to the continued growth of our business and revenues and to remain competitive.
Access to the capital that we need to maintain and renovate existing properties and to acquire new properties is critical to the continued growth of our business and revenues and to remain competitive.
This competition increases as investments in real estate become increasingly attractive relative to other forms of investment. As a result of such competition, we may be unable to acquire certain hotels that we deem attractive, or the purchase price may be significantly elevated or other terms may be substantially more onerous.
As a result of such competition, we may be unable to acquire certain hotels that we deem attractive, or the purchase price may be significantly elevated or other terms may be substantially more onerous.
The credit agreements also contain financial covenants relating to our maximum total leverage ratio, maximum secured leverage ratio, maximum secured recourse leverage ratio, minimum fixed charge coverage ratio, minimum consolidated tangible net worth, minimum unsecured interest coverage ratio, maximum unencumbered leverage ratio, and set a minimum number of unencumbered properties we must own and a minimum value for such unencumbered properties.
The credit agreements also contain financial covenants relating to our maximum total leverage ratio, maximum secured leverage ratio, maximum secured recourse leverage ratio, minimum fixed charge coverage ratio, minimum consolidated tangible net worth, minimum unsecured interest coverage ratio and maximum unencumbered leverage ratio.
Certain of our third-party hotel management companies, including Marriott, Hilton and Kimpton, and various other vendors used by our third-party hotel management companies have publicly released statements disclosing cyber-attacks and/or unauthorized access to their guest reservation, point-of-sale systems, and other sensitive databases, some of which have or may have impacted our hotels and the guests that have used our hotels' services and amenities.
As a result, such incidents could have a material impact on our business and adversely affect our financial condition, financial reporting abilities, and results of operations. 19 Certain of our third-party hotel management companies, including Marriott, Hilton and Kimpton, and various other vendors used by our third-party hotel management companies have publicly released statements disclosing cyber-attacks and/or unauthorized access to their guest reservation, point-of-sale systems, and other sensitive databases, some of which have or may have impacted our hotels and the guests that have used our hotels' services and amenities.
Specifically, the value of collateral securing any loan investment we may make could decrease below the outstanding principal amounts of such loans, requiring us to pledge more collateral. 20 Our organizational documents have no limitation on the amount of indebtedness we may incur.
Specifically, the value of collateral securing any loan investment we may make could decrease below the outstanding principal amounts of such loans, requiring us to pledge more collateral. Our organizational documents have no limitation on the amount of indebtedness we may incur. As a result, we may become highly leveraged in the future, which could materially and adversely affect us.
These broad market fluctuations may adversely affect the trading price of our common stock. 29 Significant sales of our common stock, or the perception that significant sales of such shares could occur, may cause the price of our common stock to decline significantly.
Significant sales of our common stock, or the perception that significant sales of such shares could occur, may cause the price of our common stock to decline significantly.
Even if a substantial number of issuances or sales of shares of our common stock are not affected, the mere perception of the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future.
Even if a substantial number of issuances or sales of shares of our common stock are not affected, the mere perception of the possibility of these sales could depress the market price of our common stock and have a negative effect on our ability to raise capital in the future. 29 In addition, anticipated downward pressure on our common stock price due to actual or anticipated issuances or sales of common stock could cause some institutions or individuals to engage in short sales of our common stock, which may itself cause the price of our common stock to decline.
Management, Franchising and Development Risks We are dependent on the performance of the third-party hotel management companies that manage the operations of each of our hotels and could be materially and adversely affected if such third-party managers do not properly manage our hotels or otherwise act in our best interests.
Further, we may incur costs related to claims for which we have appropriate third-party indemnity, but such third-parties fail to fulfill their contractual obligations. 16 Management, Franchising and Development Risks We are dependent on the performance of the third-party hotel management companies that manage the operations of each of our hotels and could be materially and adversely affected if such third-party managers do not properly manage our hotels or otherwise act in our best interests.
As a result, we may become highly leveraged in the future, which could materially and adversely affect us. Our business strategy contemplates the use of both non-recourse secured and unsecured debt to finance long-term growth and we may use recourse debt in the future.
Our business strategy contemplates the use of both non-recourse secured and unsecured debt to finance long-term growth and we may use recourse debt in the future.
When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants.
In addition, third-parties may seek recovery from owners or operators for personal injury associated with exposure to asbestos-containing building materials. 34 When excessive moisture accumulates in buildings or on building materials, mold growth may occur, particularly if the moisture problem remains undiscovered or is not addressed over a period of time. Some molds may produce airborne toxins or irritants.
Thus, we may be contractually obligated to purchase a property even if we are unable to secure financing for the acquisition. In this event, we may choose to close on the property by using cash on hand, which would result in less cash available for our operations, for distributions to stockholders and for servicing our indebtedness.
In this event, we may choose to close on the property by using cash on hand, which would result in less cash available for our operations, for distributions to stockholders and for servicing our indebtedness. Alternatively, we may choose not to close on the acquisition of the property and default on the purchase contract.
Thus, compliance with the REIT requirements may hinder our ability to make, and, in certain cases, maintain ownership of, certain attractive investments. We may face risks in connection with Section 1031 Exchanges. From time to time, we dispose of properties in transactions that are intended to qualify as like-kind exchanges pursuant to Section 1031 of the Code ("Section 1031 Exchanges").
Thus, compliance with the REIT requirements may hinder our ability to make, and, in certain cases, maintain ownership of, certain attractive investments. 26 We may face risks in connection with Section 1031 Exchanges.
Expectations regarding voluntary ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain offerings, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations.
Expectations regarding voluntary ESG initiatives and disclosures may result in increased costs (including but not limited to increased costs related to compliance, stakeholder engagement, contracting and insurance), changes in demand for certain offerings, enhanced compliance or disclosure obligations, or other adverse impacts to our business, financial condition, or results of operations. 35 While we may at times engage in voluntary initiatives (such as voluntary disclosures, certifications, or goals, among others) or commitments to improve the ESG profile of our company and/or offerings, such initiatives or achievement of such commitments may be costly and may not have the desired effect.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company.
Stock markets in general have experienced volatility that has often been unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our common stock.
Our operating risks include decreases in hotel revenues and increases in hotel operating expenses, including but not limited to the increases in wage and benefit costs, repair and maintenance expenses, energy costs, insurance costs and other operating expenses, which would adversely affect our TRS lessees’ ability to pay us rent due under the leases. 25 Increases in these operating expenses can have a significant adverse impact on our financial condition, results of operations, the market price of our common shares and our ability to make distributions to our stockholders.
Our operating risks include decreases in hotel revenues and increases in hotel operating expenses, including but not limited to the increases in wage and benefit costs, repair and maintenance expenses, energy costs, insurance costs and other operating expenses, which would adversely affect our TRS lessees’ ability to pay us rent due under the leases.
Although we intend to monitor future acquisitions and improvements of properties, REIT provisions of the Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied. 26 Complying with REIT requirements may force us to forgo and/or liquidate otherwise attractive investment opportunities.
We believe that the hotels that are leased to our TRS lessees are qualified lodging facilities. Although we intend to monitor future acquisitions and improvements of properties, REIT provisions of the Code provide only limited guidance for making determinations under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied.
To hedge against interest rate fluctuations, we may use derivative financial instruments that may be costly and ineffective. To the extent consistent with maintaining our qualification as a REIT, from time to time, we may use derivative financial instruments to hedge exposure to changes in interest rates on loans secured by our assets.
To the extent consistent with maintaining our qualification as a REIT, from time to time, we may use derivative financial instruments to hedge exposure to changes in interest rates on loans secured by our assets. Derivative instruments may include interest rate swap contracts, interest rate cap or floor contracts, futures or forward contracts, options or repurchase agreements.
If we are forced to spend larger amounts of cash from operating activities than anticipated to operate, maintain or renovate existing properties, then our ability to use cash for other purposes, including acquisitions of new properties, could be limited and our profits could be reduced.
Our ability to access additional capital could also be limited by the terms of our corporate credit facilities and the indentures governing the Senior Notes, which restricts our ability to incur debt under certain circumstances. 15 If we are forced to spend larger amounts of cash from operating activities than anticipated to operate, maintain or renovate existing properties, then our ability to use cash for other purposes, including acquisitions of new properties, could be limited and our profits could be reduced.
Anyone who acquires shares in violation of the ownership limit or the other restrictions on transfer in our charter bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of our shares falls between the date of purchase and the date of redemption or sale. 32 Our charter permits our Board of Directors to issue preferred stock on terms that may subordinate the rights of the holders of our current common stock or discourage a third-party from acquiring us.
Anyone who acquires shares in violation of the ownership limit or the other restrictions on transfer in our charter bears the risk of suffering a financial loss when the shares are redeemed or sold if the market price of our shares falls between the date of purchase and the date of redemption or sale.
We may finance all or a portion of the purchase price for properties that we acquire. However, to ensure that our offers are as competitive as possible, we do not expect to enter into contracts to purchase property that include financing contingencies.
However, to ensure that our offers are as competitive as possible, we do not expect to enter into contracts to purchase property that include financing contingencies. Thus, we may be contractually obligated to purchase a property even if we are unable to secure financing for the acquisition.
Revisions in U.S. federal tax laws and interpretations thereof could cause us to change our investments and commitments, which could also affect the tax considerations of an investment in our stock. We cannot predict the long-term effect of any future law changes on REITs and their stockholders, and we and our stockholders could be adversely affected by any such change.
Revisions in U.S. federal tax laws and interpretations thereof could cause us to change our investments and commitments, which could also affect the tax considerations of an investment in our stock.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs noted above, given our status as a REIT, we do not have actual or contractual access to the systems or information maintained by the property operators, managers and franchisors and we must rely on such operators’, managers’ and franchisors' programs and processes to protect the properties in which we invest.
Biggest changeRisk Factors - Technology and Information Systems Risks." As noted above, given our status as a REIT, we do not have actual or contractual access to the systems or information maintained by the property operators, managers and franchisors and we must rely on such operators’, managers’ and franchisors' programs and processes to protect the properties in which we invest.
Key elements of our corporate-level cybersecurity risk management program include the following: • risk assessments designed to help identify material cybersecurity risks to our critical corporate network systems and corporate information; • a security function principally responsible for managing at the corporate-level (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our corporate security controls; • a cybersecurity awareness training of our corporate employees, incident response personnel, and senior management; • cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents that impact Xenia’s corporate systems and information; and • a third-party risk management process for key service providers, suppliers, and vendors that support our corporate functions based on our assessment of their respective risk profiles.
Key elements of our corporate-level cybersecurity risk management program include the following: • risk assessments designed to help identify material cybersecurity risks to our critical corporate network systems and corporate information; • a security function principally responsible for managing at the corporate-level (1) our cybersecurity risk assessment processes, (2) our security controls, and (3) our response to cybersecurity incidents; • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our corporate security controls; • a cybersecurity awareness training of our corporate employees, incident response personnel, and senior management; • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents that impact Xenia’s corporate systems and information; and • a third-party risk management process for key service providers, suppliers, and vendors that support our corporate functions based on our assessment of their respective risk profiles.
Board members receive presentations on cybersecurity topics from our enterprise risk management committee ("ERMC") and internal information technology security staff as part of the Board of Directors’s continuing education on topics that impact public companies.
Board members receive presentations on cybersecurity topics from our enterprise risk management committee ("ERMC") and internal information technology security staff as part of the Board of Directors’ continuing education on topics that impact public companies.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our corporate operations, business strategy, results of operations, or financial condition.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our corporate operations, business strategy, results of operations, or financial condition. See "Part I-Item 1A.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe following table sets forth our brand affiliations as of December 31, 2023: Number of Hotels Number of Rooms Percentage of Total Rooms Marriott Autograph Collection 4 471 5.0 % Marriott 3 1,452 15.2 % Renaissance 1 522 5.5 % The Ritz-Carlton 2 570 6.0 % W 1 346 3.6 % Westin 2 875 9.2 % Subtotal 13 4,236 44.5 % Hyatt Andaz 3 451 4.7 % Hyatt Centric 1 120 1.3 % Hyatt Regency 4 2,375 25.0 % Park Hyatt 1 327 3.4 % The Unbound Collection 1 119 1.3 % Subtotal 10 3,392 35.7 % Fairmont 2 730 7.7 % Kimpton 4 637 6.7 % Loews 1 285 3.0 % Hilton - Waldorf Astoria 1 127 1.3 % Total branded 31 9,407 98.9 % Independent 1 107 1.1 % Total portfolio 32 9,514 100 % 40 Our Hotels The following table provides a list of our portfolio as of December 31, 2023 (1) : Hotel Rooms Year Acquired/Opened State Brand Affiliation Hotel Management Company (2) Chain Scale Segment (3) Andaz Napa (4) 141 2013 CA Hyatt Hyatt L Andaz San Diego 159 2013 CA Hyatt Hyatt L Andaz Savannah 151 2013 GA Hyatt Hyatt L Bohemian Hotel Savannah Riverfront, Autograph Collection 75 2012 GA Marriott Kessler UU Fairmont Dallas 545 2011 TX Fairmont Accor L Fairmont Pittsburgh 185 2018 PA Fairmont Accor L Grand Bohemian Hotel Charleston, Autograph Collection 50 2015 SC Marriott Kessler UU Grand Bohemian Hotel Mountain Brook, Autograph Collection 99 2015 AL Marriott Kessler UU Grand Bohemian Hotel Orlando, Autograph Collection (4) 247 2012 FL Marriott Kessler UU Hyatt Centric Key West Resort & Spa 120 2013 FL Hyatt Hyatt UU Hyatt Regency Grand Cypress 779 2017 FL Hyatt Hyatt UU Hyatt Regency Portland at the Oregon Convention Center 600 2019 OR Hyatt Hyatt UU Hyatt Regency Santa Clara (5) 505 2013 CA Hyatt Hyatt UU Hyatt Regency Scottsdale Resort & Spa at Gainey Ranch 491 2017 AZ Hyatt Hyatt UU Kimpton Canary Hotel Santa Barbara 97 2015 CA Kimpton Kimpton UU Kimpton Hotel Monaco Salt Lake City 225 2013 UT Kimpton Kimpton UU Kimpton Hotel Palomar Philadelphia 230 2015 PA Kimpton Kimpton UU Kimpton RiverPlace Hotel 85 2015 OR Kimpton Kimpton UU Loews New Orleans Hotel 285 2013 LA Loews Loews L Lorien Hotel & Spa 107 2013 VA Independent Davidson I Marriott Dallas Downtown 416 2010 TX Marriott Marriott UU Marriott San Francisco Airport Waterfront (4) 688 2012 CA Marriott Marriott UU Marriott Woodlands Waterway Hotel & Convention Center (5) 348 2007 TX Marriott Marriott UU Park Hyatt Aviara Resort, Golf Club & Spa 327 2018 CA Hyatt Hyatt L Renaissance Atlanta Waverly Hotel & Convention Center 522 2012 GA Marriott Renaissance UU Royal Palms Resort & Spa, The Unbound Collection by Hyatt 119 2017 AZ Hyatt Hyatt L The Ritz-Carlton, Denver 205 2018 CO Marriott Marriott L The Ritz-Carlton, Pentagon City (5) 365 2017 VA Marriott Marriott L W Nashville 346 2022 TN Marriott Marriott L Waldorf Astoria Atlanta Buckhead 127 2018 GA Hilton Waldorf Astoria L Westin Galleria Houston 469 2013 TX Marriott Westin UU Westin Oaks Houston at the Galleria 406 2013 TX Marriott Westin UU (1) Includes only the hotels in our portfolio as of December 31, 2023.
Biggest changeThe following table sets forth our brand affiliations as of December 31, 2024: Number of Hotels Number of Rooms Percentage of Total Rooms Marriott Autograph Collection 4 472 5.0 % Marriott 3 1,452 15.4 % Renaissance 1 522 5.5 % The Ritz-Carlton 2 570 6.1 % W 1 346 3.7 % Westin 2 875 9.3 % Subtotal 13 4,237 45.0 % Hyatt Andaz 3 451 4.8 % Grand Hyatt 1 491 5.2 % Hyatt Centric 1 120 1.3 % Hyatt Regency 3 1,884 20.0 % Park Hyatt 1 327 3.5 % The Unbound Collection 1 119 1.3 % Subtotal 10 3,392 36.1 % Fairmont 2 730 7.8 % Kimpton 4 637 6.8 % Loews 1 285 3.0 % Hilton - Waldorf Astoria 1 127 1.3 % Total portfolio 31 9,408 100 % 40 Our Hotels The following table provides a list of our portfolio as of December 31, 2024 (1) : Hotel Rooms Year Acquired/Opened State Brand Affiliation Hotel Management Company (2) Chain Scale Segment (3) Andaz Napa (4) 141 2013 CA Hyatt Hyatt L Andaz San Diego 159 2013 CA Hyatt Hyatt L Andaz Savannah 151 2013 GA Hyatt Hyatt L Bohemian Hotel Savannah Riverfront, Autograph Collection 75 2012 GA Marriott Kessler UU Fairmont Dallas 545 2011 TX Fairmont Accor L Fairmont Pittsburgh 185 2018 PA Fairmont Accor L Grand Bohemian Hotel Charleston, Autograph Collection 50 2015 SC Marriott Kessler UU Grand Bohemian Hotel Mountain Brook, Autograph Collection 99 2015 AL Marriott Kessler UU Grand Bohemian Hotel Orlando, Autograph Collection (4) 248 2012 FL Marriott Kessler UU Grand Hyatt Scottsdale Resort 491 2017 AZ Hyatt Hyatt L Hyatt Centric Key West Resort & Spa 120 2013 FL Hyatt Hyatt UU Hyatt Regency Grand Cypress 779 2017 FL Hyatt Hyatt UU Hyatt Regency Portland at the Oregon Convention Center 600 2019 OR Hyatt Hyatt UU Hyatt Regency Santa Clara (5) 505 2013 CA Hyatt Hyatt UU Kimpton Canary Hotel Santa Barbara 97 2015 CA Kimpton Kimpton UU Kimpton Hotel Monaco Salt Lake City 225 2013 UT Kimpton Kimpton UU Kimpton Hotel Palomar Philadelphia 230 2015 PA Kimpton Kimpton UU Kimpton RiverPlace Hotel 85 2015 OR Kimpton Kimpton UU Loews New Orleans Hotel 285 2013 LA Loews Loews L Marriott Dallas Downtown 416 2010 TX Marriott Marriott UU Marriott San Francisco Airport Waterfront (4) 688 2012 CA Marriott Marriott UU Marriott Woodlands Waterway Hotel & Convention Center (5) 348 2007 TX Marriott Marriott UU Park Hyatt Aviara Resort, Golf Club & Spa 327 2018 CA Hyatt Hyatt L Renaissance Atlanta Waverly Hotel & Convention Center 522 2012 GA Marriott Renaissance UU Royal Palms Resort & Spa, The Unbound Collection by Hyatt 119 2017 AZ Hyatt Hyatt L The Ritz-Carlton, Denver 205 2018 CO Marriott Marriott L The Ritz-Carlton, Pentagon City (5) 365 2017 VA Marriott Marriott L W Nashville 346 2022 TN Marriott Marriott L Waldorf Astoria Atlanta Buckhead 127 2018 GA Hilton Waldorf Astoria L Westin Galleria Houston 469 2013 TX Marriott Westin UU Westin Oaks Houston at the Galleria 406 2013 TX Marriott Westin UU (1) Includes only the hotels in our portfolio as of December 31, 2024.
We also pay certain accounting services fees to the management companies in a majority of the agreements. Our management agreements for brand-managed hotels also typically require the maintenance of furniture, fixtures and equipment replacement reserves ("FF&E reserves") generally ranging between 3% and 5% of hotel revenues to be used for capital expenditures to maintain the quality of the hotels.
We also pay certain accounting services fees to the management companies in a majority of the agreements. Our management agreements for brand-managed hotels also typically require the maintenance of furniture, fixtures and equipment replacement reserves ("FF&E reserves") generally ranging between 2% and 5% of hotel revenues to be used for capital expenditures to maintain the quality of the hotels.
To ensure our compliance, the franchise agreements specify that we must make the hotel available for quality inspections by the franchisor. We are also required to participate in the applicable loyalty rewards program for each brand. Term Our franchise agreements have initial terms of 20 years, with an average remaining initial term of approximately nine years.
To ensure our compliance, the franchise agreements specify that we must make the hotel available for quality inspections by the franchisor. We are also required to participate in the applicable loyalty rewards program for each brand. Term Our franchise agreements have initial terms of 20 years, with an average remaining initial term of approximately eight years.
Properties - Our Principal Agreements- Ground Leases" for more information. 41 Our Principal Agreements Hotel Management and Franchise Agreements In order to maintain our qualification as a REIT, we cannot directly or indirectly operate any of our hotels. We lease each of our 32 hotels to TRS lessees, which in turn engage property managers to manage our hotels.
Properties - Our Principal Agreements- Ground Leases" for more information. 41 Our Principal Agreements Hotel Management and Franchise Agreements In order to maintain our qualification as a REIT, we cannot directly or indirectly operate any of our hotels. We lease each of our 31 hotels to TRS lessees, which in turn engage property managers to manage our hotels.
Term The majority of our management agreements for brand-managed hotels contain an initial term of between 10 to 30 years and have an average remaining term of approximately 14 years, assuming no renewal options are exercised by the management company. These agreements generally allow for one or more renewal periods at the option of the management company.
Term The majority of our management agreements for brand-managed hotels contain an initial term of between 10 to 30 years and have an average remaining term of approximately 13 years, assuming no renewal options are exercised by the management company. These agreements generally allow for one or more renewal periods at the option of the management company.
Ground Leases The following table summarizes the remaining primary term, renewal rights, purchase rights and monthly base rent as of December 31, 2023 associated with land underlying our hotels and meeting facilities that we lease from third-parties: Property Current Lease Term Expiration Renewal Rights / Purchase Rights Current Monthly Minimum or Base Rent (1) Base Rent Increases at Renewal Lease Type Ground Lease: Entire Property Hyatt Regency Santa Clara April 30, 2035 4 x 10 years, 1 x 9 years (2) $68,904 (3) Increases if lessee exercises its option to expand at which time base rent will be increased by $800 for each additional hotel room in excess of 500 Triple Net The Ritz-Carlton, Pentagon City May 7, 2040 2 x 25 years $53,375 Fair market rent adjustment at commencement of lease renewal Triple Net Ground Lease: Partial Property Convention Center at Marriott Woodlands Waterway Hotel & Convention Center June 30, 2100 No renewal rights $12,544 (3) Not applicable Triple Net (1) In addition to minimum rent, the Company may owe percentage rent.
Ground Leases The following table summarizes the remaining primary term, renewal rights, purchase rights and monthly base rent as of December 31, 2024 associated with land underlying our hotels and meeting facilities that we lease from third-parties: Property Current Lease Term Expiration Renewal Rights / Purchase Rights Current Monthly Minimum or Base Rent (1) Base Rent Increases at Renewal Lease Type Ground Lease: Entire Property Hyatt Regency Santa Clara April 30, 2035 4 x 10 years, 1 x 9 years (2) $68,904 (3) Increases if lessee exercises its option to expand at which time base rent will be increased by $800 for each additional hotel room in excess of 500 Triple Net The Ritz-Carlton, Pentagon City May 7, 2040 2 x 25 years $53,375 Fair market rent adjustment at commencement of lease renewal Triple Net Ground Lease: Partial Property Convention Center at Marriott Woodlands Waterway Hotel & Convention Center June 30, 2100 No renewal rights $13,097 (3) Not applicable Triple Net (1) In addition to minimum rent, the Company may owe percentage rent.
Term The management agreements for our franchised hotels generally contain initial terms between 15 and 20 years with an average remaining initial term of approximately six years. None of these agreements contemplate a renewal or extension of the initial term or can be extended without our consent.
Term The management agreements for our franchised hotels generally contain initial terms between 15 and 20 years with an average remaining initial term of approximately five years. None of these agreements contemplate a renewal or extension of the initial term or can be extended without our consent.
Of our brand-managed hotels, approximately 42% of our brand-managed hotels (by room count as of December 31, 2023) are managed by Marriott and its affiliates, approximately 38% are managed by Hyatt and the remainder are managed by management companies affiliated with a variety of other brands.
Of our brand-managed hotels, approximately 42% of our brand-managed hotels (by room count as of December 31, 2024) are managed by Marriott and its affiliates, approximately 38% are managed by Hyatt and the remainder are managed by management companies affiliated with a variety of other brands.
In particular, Hyatt Regency Santa Clara incurs percentage rent based on a percentage of rooms revenue and ballroom receipts, which exceeded the minimum base rent for the years ended December 31, 2023, 2022 and 2021.
In particular, Hyatt Regency Santa Clara incurs percentage rent based on a percentage of rooms revenue and ballroom receipts, which exceeded the minimum base rent for the years ended December 31, 2024, 2023 and 2022.
The Ritz-Carlton, Pentagon City incurs the greater of (i) minimum base rent or (ii) five percent (5%) of rooms revenues and, for the years ended December 31, 2023, 2022 and 2021, percentage rent exceeded minimum base rent.
The Ritz-Carlton, Pentagon City incurs the greater of (i) minimum base rent or (ii) five percent (5%) of rooms revenues and, for the years ended December 31, 2024, 2023 and 2022, percentage rent exceeded minimum base rent.
(3) "L" refers to Luxury, "UU" refers to Upper Upscale and "I" refers to Independent as defined by STR. (4) These properties are subject to mortgage debt as of December 31, 2023. (5) These hotels are subject to a ground lease that covers all or part of the land underlying the hotel. See "Part I-Item 2.
(3) "L" refers to Luxury and "UU" refers to Upper Upscale as defined by STR. (4) These properties are subject to mortgage debt as of December 31, 2024. (5) These hotels are subject to a ground lease that covers all or part of the land underlying the hotel. See "Part I-Item 2.
Item 2. Properties We lease our corporate headquarters located at 200 S. Orange Avenue, Suite 2700, Orlando, Florida 32801. Hotel Properties As of December 31, 2023, we owned a portfolio of 32 hotels and resorts across 14 states.
Item 2. Properties We lease our corporate headquarters located at 200 S. Orange Avenue, Suite 2700, Orlando, Florida 32801. Hotel Properties As of December 31, 2024, we owned a portfolio of 31 hotels and resorts across 14 states.
Approximately 5% of our portfolio (by room count as of December 31, 2023) are also operated under distinct franchise agreements, which we refer to as "franchised hotels." Approximately 94% of our portfolio (by room count as of December 31, 2023) are operated pursuant to a management agreement, which we refer to as "brand-managed hotels." Below is a general overview of the management and franchise agreements for our hotels, summarizing the principal terms found in each type of agreement.
Approximately 5% of our portfolio (by room count as of December 31, 2024) are also operated under distinct franchise agreements, which we refer to as "franchised hotels." Approximately 95% of our portfolio (by room count as of December 31, 2024) are operated pursuant to a management agreement, which we refer to as "brand-managed hotels." Below is a general overview of the management and franchise agreements for our hotels, summarizing the principal terms found in each type of agreement.
(3) The base rent for each year is adjusted based on a calculation tied to the Consumer Price Index for the Convention Center at Marriott Woodlands Waterway Hotel & Convention Center and for a portion of the leased square footage at Hyatt Regency Santa Clara.
(3) The base rent is adjusted periodically based on a calculation tied to the Consumer Price Index for the Convention Center at Marriott Woodlands Waterway Hotel & Convention Center and for a portion of the leased square footage at Hyatt Regency Santa Clara.
The monthly minimum or base rent in this chart is for the period from January 1, 2023 through December 31, 2023.
The monthly minimum or base rent in this chart is for the period from January 1, 2024 through December 31, 2024.
The average remaining term of our management agreements assuming the exercise of all renewal options is approximately 27 years.
The average remaining term of our management agreements assuming the exercise of all renewal options is approximately 26 years.
Our Brand Affiliations Our portfolio of hotels primarily operates under premium brands, with approximately 80.2% of our rooms operating under Marriott or Hyatt brands.
Our Brand Affiliations Our portfolio of hotels primarily operates under premium brands, with approximately 81.1% of our rooms operating under Marriott or Hyatt brands.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeContact information can be found on the "Investor Relations" page of our website under "Investor Information." In addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions and our Board of Directors could change our distribution policy in the future. 46 Common Stock The Company paid the following dividend on common stock during the year ended December 31, 2023 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 March 31, 2023 March 31, 2023 April 14, 2023 $0.10 June 30, 2023 June 30, 2023 July 14, 2023 $0.10 September 30, 2023 September 29, 2023 October 13, 2023 $0.10 December 31, 2023 December 29, 2023 January 12, 2024 The Company paid the following dividend on common stock during the year ended December 31, 2022 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 September 30, 2022 September 30, 2022 October 14, 2022 $0.10 December 31, 2022 December 30, 2022 January 13, 2023 (1) For income tax purposes, dividends paid per share on our common stock in 2022 and 2023 were 100% taxable as ordinary income.
Biggest changeIn addition, our charter allows us to issue preferred stock that could have a preference over our common stock as to distributions and our Board of Directors could change our distribution policy in the future. 46 Common Stock The Company paid the following dividend on common stock during the year ended December 31, 2024 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.12 March 31, 2024 March 28, 2024 April 15, 2024 $0.12 June 30, 2024 June 28, 2024 July 15, 2024 $0.12 September 30, 2024 September 30, 2024 October 15, 2024 $0.12 December 31, 2024 December 31, 2024 January 15, 2025 The Company paid the following dividend on common stock during the year ended December 31, 2023 (1) : Dividend per Share/Unit For the Quarter Ended Record Date Payable Date $0.10 March 31, 2023 March 31, 2023 April 14, 2023 $0.10 June 30, 2023 June 30, 2023 July 14, 2023 $0.10 September 30, 2023 September 29, 2023 October 13, 2023 $0.10 December 31, 2023 December 29, 2023 January 12, 2024 (1) For income tax purposes, dividends paid per share on our common stock in 2023 and 2024 were 100% taxable as ordinary income.
Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares.
Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. The Repurchase Program may be suspended or discontinued at any time and does not obligate the Company to acquire any particular amount of shares.
To maintain our qualification as a REIT, we must distribute to our stockholders an amount at least equal to: i. 90% of our REIT taxable income, determined before the deduction for dividends paid and excluding any net capital gain (which does not necessarily equal net income as calculated in accordance with Generally Accepted Accounting Principles ("GAAP")); plus ii. 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less iii. any excess non-cash income (as determined under the Code).
To maintain our qualification as a REIT, we must distribute to our stockholders an amount at least equal to: i. 90% of our REIT taxable income, determined before the deduction for dividends paid and excluding any net capital gain (which does not necessarily equal net income as calculated in accordance with U.S. generally accepted accounting principles ("GAAP")); plus ii. 90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code; less iii. any excess non-cash income (as determined under the Code).
To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any shortfall, including borrowing under our revolving line of credit, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable common stock dividends.
To the extent that our cash available for distribution is less than the amount required to be distributed under the REIT provisions of the Code, we may consider various funding sources to cover any shortfall, including borrowing under our revolving credit facility, selling certain of our assets or using a portion of the net proceeds we receive from future offerings of equity, equity-related or debt securities or declaring taxable common stock dividends.
Total return values were calculated assuming a $100 investment on December 31, 2018 with reinvestment of all dividends in (i) our common shares, (ii) the DJUSHL REIT Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Index.
Total return values were calculated assuming a $100 investment on December 31, 2019 with reinvestment of all dividends in (i) our common shares, (ii) the DJUSHL REIT Index, (iii) the Russell 2000 Index and (iv) the FTSE NAREIT Equity Index.
The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2018 to the NYSE closing price per share on December 31, 2023, with the cumulative total return on the Dow Jones U.S.
The following graph provides a comparison of the cumulative total return on our common shares from December 31, 2019 to the NYSE closing price per share on December 31, 2024, with the cumulative total return on the Dow Jones U.S.
Also as of February 26, 2024, there were 14 holders (other than our Company) of our Operating Partnership Units comprising certain of our executive officers and current or former members of our Board of Directors, which includes, with respect to such executive officers, unvested long-term incentive plan partnership units ("LTIP Units").
Also as of February 21, 2025, there were 13 holders (other than our Company) of our Operating Partnership Units comprising certain of our executive officers and current or former members of our Board of Directors, which includes, with respect to such executive officers, unvested long-term incentive plan partnership units ("LTIP Units").
Shareholder Information As of February 26, 2024, there were 10,352 holders of record of our outstanding common stock. This stockholder figure does not include a substantially greater number of "street name" holders, or beneficial holders, of our common stock whose shares are held by banks, brokers and other financial institutions.
Shareholder Information As of February 21, 2025, there were 9,665 holders of record of our outstanding common stock. This stockholder figure does not include a substantially greater number of "street name" holders, or beneficial holders, of our common stock whose shares are held by banks, brokers and other financial institutions.
LTIP Units may or may not vest based on the passage of time and meeting certain market-based performance objectives. Of the 3,782,000 LTIP Units outstanding at December 31, 2023, 1,621,802 units had vested and were eligible for redemption. Subject to certain restrictions, our Operating Partnership Units are redeemable for cash or, at our election, for our common shares.
LTIP Units may or may not vest based on the passage of time and meeting certain market-based performance objectives. Of the 4,496,674 LTIP Units outstanding at December 31, 2024, 1,911,731 units had vested and were eligible for redemption. Subject to certain restrictions, our Operating Partnership Units are redeemable for cash or, at our election, for our common shares.
During the year ended December 31, 2022, 1,912,794 shares were repurchased under the Repurchase Program, at a weighted-average price of $14.74 per share for an aggregate purchase price of $28.2 million. No shares were purchased as part of the Repurchase Program during the year ended December 31, 2021.
During the year ended December 31, 2022, 1,912,794 shares were repurchased under the Repurchase Program, at a weighted-average price of $14.74 per share for an aggregate purchase price of $28.2 million. As of December 31, 2024, the Company had approximately $117.9 million remaining under its share repurchase authorization.
To change the method used to receive distributions a stockholder may contact the Company or its transfer agent, Computershare, to obtain a Xenia Change of Distribution Election form.
To change the method used to receive distributions a stockholder may contact the Company or its transfer agent, Computershare, to obtain a Xenia Change of Distribution Election form. Contact information can be found on the "Investors" page of our website under "Resources - Investor Contacts".
The following table sets forth information regarding the Company's repurchases of shares of its common stock pursuant to its Repurchase Program during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Weighted- Average Price Paid Per Share Total Numbers of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Program (in thousands) October 1 to October 31, 2023 849,762 $ 11.77 849,762 $ 72,722 November 1 to November 30, 2023 700,602 $ 11.93 700,602 $ 164,367 December 1 to December 31, 2023 2,347,413 $ 13.05 2,347,413 $ 133,735 Total 3,897,777 $ 12.57 3,897,777 48
The following table sets forth information regarding the Company's repurchases of shares of its common stock pursuant to its Repurchase Program during the quarter ended December 31, 2024: 48 Period Total Number of Shares Purchased Weighted- Average Price Paid Per Share Total Numbers of Shares Purchased as Part of Publicly Announced Plans Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Program (in thousands) October 1 to October 31, 2024 — $ — — $ 125,534 November 1 to November 30, 2024 515,876 $ 14.83 515,876 $ 117,885 December 1 to December 31, 2024 — $ — — $ 117,885 Total 515,876 $ 14.83 515,876 49
The total return values do not include any dividends declared, but not paid, during the period. 47 The actual returns shown on the graph above are as follows: Value of Investment at December 31, Name 2018 2019 2020 2021 2022 2023 Xenia Hotels & Resorts, Inc. $ 100.00 $ 132.57 $ 97.23 $ 115.85 $ 84.87 $ 90.53 DJUSHL REIT Index 100.00 109.70 73.24 87.06 81.38 99.96 Russell 2000 Index 100.00 123.72 146.44 166.50 130.60 150.31 FTSE NAREIT Equity Index 100.00 121.07 107.12 148.87 108.64 118.37 Recent Sales of Unregistered Securities None.
The total return values do not include any dividends declared, but not paid, during the period. 47 The actual returns shown on the graph above are as follows: Value of Investment at December 31, Name 2019 2020 2021 2022 2023 2024 Xenia Hotels & Resorts, Inc. $ 100.00 $ 73.34 $ 87.38 $ 64.02 $ 68.29 $ 77.05 DJUSHL REIT Index 100.00 66.77 79.36 74.18 91.12 82.00 Russell 2000 Index 100.00 118.36 134.57 105.56 121.49 133.66 FTSE NAREIT Equity Index 100.00 88.48 122.96 89.74 97.77 102.23 Recent Sales of Unregistered Securities None.
Removed
As of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization.
Added
During the year ended December 31, 2024, 1,130,846 shares were repurchased under the Repurchase Program, at a weighted-average price of $14.02 per share for an aggregate purchase price of $15.8 million.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeCash used in financing activities for the year ended December 31, 2023 was attributed to (i) the repurchase of common stock totaling $132.7 million, (ii) the repayment of the prior corporate credit facility term loan maturing in 2024 totaling $125.0 million, (iii) the repayment of mortgage debt totaling $99.5 million, (iv) the payment of $44.6 million in dividends, (v) the expenditure of $34.9 million for the repurchase and retirement of $35.3 million aggregate principal of 6.375% 2020 Senior Notes, (vi) the payment of loan fees and issuance costs of $5.6 million, (vii) principal payments of mortgage debt totaling $3.3 million, (viii) the redemption of Operating Partnership Units for common stock and cash of $1.4 million and (ix) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.6 million, which was partially offset (y) by proceeds from the 2023 Term Loans totaling $225.0 million and (z) proceeds from the amendment of one mortgage loan of $0.4 million.
Biggest changeFinancing • Cash used in financing activities was $135.0 million and $222.1 million for the years ended December 31, 2024 and 2023, respectively. • Cash used in financing activities for the year ended December 31, 2024 was attributed to (i) the payoff of $464.7 million aggregate principal of the 2020 Senior Notes, (ii) the repayment of the prior corporate credit facility term loans totaling $225.0 million, (iii) the repurchase of common stock totaling $15.9 million, (iv) the payment of $47.9 million in dividends, (v) the payment of loan fees and issuance costs of $12.1 million in connection with the new senior unsecured credit facility and the issuance of the 2024 Senior Notes, (vi) principal payments of mortgage debt totaling $3.4 million, (vii) the redemption of Operating Partnership Units of $0.7 million and (viii) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.4 million, which was partially offset (x) by $400.0 million in proceeds from the issuance of the 2024 Senior Notes and (y) proceeds from the 2024 Initial Term Loan of $225.0 million and (z) proceeds from a $10 million draw on the Revolving Credit Facility. • Cash used in financing activities for the year ended December 31, 2023 was attributed to (i) the repurchase of common stock totaling $132.7 million, (ii) the repayment of the prior corporate credit facility term loan totaling $125.0 million, (iii) the repayment of mortgage debt totaling $99.5 million, (iv) the payment of $44.6 million in dividends, (v) the expenditure of $34.9 million for the repurchase and retirement of $35.3 million aggregate principal of the 2020 Senior Notes, (vi) the payment of loan fees and issuance costs of $5.6 million, (vii) principal payments of mortgage debt totaling $3.3 million, (viii) the redemption of Operating Partnership Units of $1.4 million and (ix) shares redeemed to satisfy tax withholding on vested share-based compensation of $0.6 million, which was partially offset (y) by proceeds from the 2023 Term Loans totaling $225.0 million and (z) proceeds from the amendment of one mortgage loan of $0.4 million.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
The 2023 Revolving Line of Credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
The 2023 Delayed Draw Term Loan was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024.
The 2023 Delayed Draw Term Loan was funded on January 17, 2023 and was used to repay in full the mortgage loan collateralized by Renaissance Atlanta Waverly Hotel & Convention Center that was due August 2024.
Occupancy and the type of customer staying at the hotel are major drivers of food and beverage expense (i.e., 50 catered functions generally are more profitable than on-property food and beverage outlet sales), which correlates closely with food and beverage revenue. • Other direct expenses - These expenses primarily include labor and other costs associated with other revenues, such as parking and other guest services. • Other indirect expenses - These expenses primarily include hotel costs associated with general and administrative, state sales and excise taxes, sales and marketing, information technology and telecommunications, repairs and maintenance and utility costs. • Management and franchise fees - Base management fees are computed as a percentage of gross revenue.
Occupancy and the type of customer staying at the hotel are major drivers of food and beverage expense (i.e., catered functions generally are more profitable than on-property food and beverage outlet sales), which correlates closely with food and beverage revenue. • Other direct expenses - These expenses primarily include labor and other costs associated with other revenues, such as parking and other guest services. • Other indirect expenses - These expenses primarily include hotel costs associated with general and administrative, state sales and excise taxes, sales and marketing, information technology and telecommunications, repairs and maintenance and utility costs. • Management and franchise fees - Base management fees are computed as a percentage of gross revenue.
We believe that the presentation of FFO provides useful supplemental information to investors regarding our operating performance by excluding the effect of real estate depreciation and amortization, gains or losses from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance.
We believe that the presentation of FFO provides useful supplemental information to investors 60 regarding our operating performance by excluding the effect of real estate depreciation and amortization, gains or losses from sales for real estate, impairments of real estate assets, extraordinary items and the portion of these items related to unconsolidated entities, all of which are based on historical cost accounting and which may be of lesser significance in evaluating current performance.
Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. This Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any particular amount of shares.
Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The Repurchase Program does not have an expiration date. The Repurchase Program may be suspended or discontinued at any time and does not obligate us to acquire any particular amount of shares.
We anticipate that our interest rate hedges will be highly effective because the terms of the derivative instruments closely match the terms of the related hedged debt agreements. As such, periodic changes in the fair value of these derivatives are expected to be reflected in other comprehensive income (loss) in our consolidated financial statements.
We anticipate that our interest rate hedges will be highly effective because the terms of the derivative instruments closely match the terms of the related hedged debt agreements. As such, periodic changes in the fair value of these derivatives are expected to be reflected in other comprehensive income in our consolidated financial statements.
Identifiable assets include land, land improvements, building and building improvements, furniture, fixtures and equipment, inventory and identifiable intangible assets or liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements assumed in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date.
Identifiable assets include land, land improvements, buildings and building improvements, furniture, fixtures and equipment, inventory and identifiable intangible assets or liabilities. Identifiable intangible assets or liabilities typically arise from contractual arrangements assumed in connection with the transaction, including terms that are above or below market compared to an estimated market agreement at the acquisition date.
Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and comprehensive income (loss), include interest expense, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
Our reconciliations to the most comparable GAAP financial measures, and our consolidated statements of operations and comprehensive income, include interest expense, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
Refer to "Non-GAAP Financial Measures" for the definition of these financial measures, a description of how they are useful to investors as key supplemental measures of our operating performance and the reconciliation of these non-GAAP financial measures to net income (loss) attributable to common stock and unit holders.
Refer to "Non-GAAP Financial Measures" for the definition of these financial measures, a description of how they are useful to investors as key supplemental measures of our operating performance and the reconciliation of these non-GAAP financial measures to net income attributable to common stock and unit holders.
Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy. 51 Factors that May Affect Results of Operations The principal factors affecting our operating results include overall demand for hotel rooms compared to the supply of available hotel rooms, economic conditions, and the ability of our third-party management companies to increase or maintain revenues while controlling expenses. • Demand and economic conditions - Consumer demand for lodging, especially business travel, is closely linked to the performance of the overall economy and is sensitive to business and personal discretionary spending levels.
Thus, changes in ADR have a more significant impact on operating margins than changes in occupancy. 52 Factors that May Affect Results of Operations The principal factors affecting our operating results include overall demand for hotel rooms compared to the supply of available hotel rooms, economic conditions, and the ability of our third-party management companies to increase or maintain revenues while controlling expenses. • Demand and economic conditions - Consumer demand for lodging, especially business travel, is closely linked to the performance of the overall economy and is sensitive to business and personal discretionary spending levels.
These costs as a percentage of revenue can increase based on increases in salaries, wages and benefits, as well as on the level of service and amenities that are provided. • Food and beverage expenses - These expenses primarily include food, beverage and associated labor costs.
These costs as a percentage of revenue can increase based on increases in salaries, wages and benefits, as well as on the level of service and amenities that are provided. 51 • Food and beverage expenses - These expenses primarily include food, beverage and associated labor costs.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. 62 Liquidity and Capital Resources We expect to meet our short-term liquidity requirements from cash on hand, cash flow from hotel operations, use of our unencumbered asset base, asset dispositions, borrowings under our revolving line of credit, and proceeds from various capital market transactions, including issuances of debt and equity securities.
We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure. 62 Liquidity and Capital Resources We expect to meet our short-term liquidity requirements from cash on hand, cash flow from hotel operations, use of our unencumbered asset base, asset dispositions, borrowings under our revolving credit facility, and proceeds from various capital market transactions, including issuances of debt and equity securities.
To the extent we are able to successfully improve the performance of our portfolio, we believe this will result in increased operating cash flows. Additionally, we may meet our long-term liquidity requirements through additional borrowings, the issuance of equity and debt securities, which may not be available on advantageous terms or at all, and/or proceeds from the sales of hotels.
To the extent we are able to successfully improve the performance of our portfolio, we believe this will result in increased operating cash flows. Additionally, we may meet our long-term liquidity requirements through additional borrowings, the issuance of equity and debt securities, which may not be available on advantageous terms or at all, and/or proceeds from the sale of hotels.
Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on financial position or results of operations. All of our significant accounting policies are disclosed in the notes to our consolidated financial statements in "Part IV.
Actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on financial position or results of operations. All of our significant accounting policies are disclosed in the notes to our consolidated financial statements in "Part IV-Item 15.
Luxury and upper upscale hotels generally have higher fixed costs than other types of hotels due to the services and amenities provided to guests.
Luxury and upper upscale hotels generally have higher fixed costs than other types of hotels due to the level of services and amenities provided to guests.
Most of the agreements require that we reserve this cash in separate accounts. To the extent that the FF&E reserves are not available or adequate to cover the cost of the renovation, we may fund a portion of the renovation with cash on hand, borrowings from our revolving line of credit and/or other sources of available liquidity.
Most of the agreements require that we reserve this cash in separate accounts. To the extent that the FF&E reserves are not available or adequate to cover the cost of the renovation, we may fund a portion of the renovation with cash on hand, borrowings from our revolving credit facility and/or other sources of available liquidity.
We consider the following policies critical because they require the most difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our 52 reported financial results.
We consider the following policies critical because they require the most difficult, subjective and complex judgments and include estimates about matters that are inherently uncertain, involve various assumptions, require management judgment, and because they are important for understanding and evaluating our 53 reported financial results.
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
In January 2023, XHR LP (the "Borrower") entered into a $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “2023 Revolving Line of Credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023 (the "2023 Credit Agreement"), by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto.
The revolving line of credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities outstanding under the prior agreement, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior credit facilities were released.
The 2023 Revolving Line of Credit and the 2023 Initial Term Loan refinanced in full the then existing corporate credit facilities, and as a result of such refinancing, the then existing pledges of equity of certain subsidiaries securing obligations under the Company's prior corporate credit facilities were released.
Derivative instruments are subject to fair value reporting at each 67 reporting date and the increase or decrease in fair value is recorded in net income (loss) or accumulated other comprehensive income, based on the applicable hedge accounting guidance.
Derivative instruments are subject to fair value reporting at each reporting date and the increase or decrease in fair value is recorded in net income or accumulated other comprehensive income based on the applicable hedge accounting guidance.
Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton, The Kessler Collection and Davidson. We plan to grow our business through a differentiated acquisition strategy, aggressive asset management and capital investment in our properties.
Our hotels are primarily operated and/or licensed by industry leaders such as Marriott, Hyatt, Fairmont, Kimpton, Loews, Hilton, and The Kessler Collection. We plan to grow our business through a differentiated acquisition strategy, proactive asset management and capital investment in our properties.
In January 2023, XHR LP (the "Borrower") entered into a new $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “revolving line of credit”), a $125 million initial term loan (the "2023 Initial Term Loan) and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023, by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto (the “2023 Credit Agreement”).
Corporate Credit Facilities In January 2023, XHR LP (the "Borrower") entered into a $675 million senior unsecured credit facility comprised of a $450 million revolving line of credit (the “2023 Revolving Line of Credit”), a $125 million initial term loan (the "2023 Initial Term Loan") and a $100 million delayed draw term loan (the “2023 Delayed Draw Term Loan” and, together with the 2023 Initial Term Loan, the "2023 Term Loans") pursuant to a Revolving Credit and Term Loan Agreement, dated as of January 10, 2023 (the "2023 Credit Agreement"), by and among the Borrower, JPMorgan Chase Bank, N.A., as administrative agent, and the lenders and other parties party thereto.
We also seek properties that exhibit an opportunity for us to enhance operating performance through aggressive asset management and targeted capital investment.
We also seek properties that exhibit an opportunity for us to enhance operating performance through proactive asset management and targeted capital investment.
Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the consolidated statements of operations and comprehensive income (loss). Market Outlook The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP, which increased at an annual rate of approximately 2.5% during 2023, according to the U.S.
Corporate costs directly associated with our executive offices, personnel and other administrative costs are reflected as general and administrative expenses on the consolidated statements of operations and comprehensive income. Market Outlook The U.S. lodging industry has historically exhibited a strong correlation to U.S. GDP, which increased at an annual rate of approximately 2.8% during 2024, according to the U.S.
The following represents our acquisitions activity for the year ended December 31, 2022 (in thousands, except number of rooms): Property Location Date No. of Rooms Net Purchase Price W Nashville Nashville, TN 03/2022 346 $ 328,500 No hotels were acquired during the years ended December 31, 2023 and 2021.
The following details our acquisitions activity for the year ended December 31, 2022 (in thousands, except number of rooms): Property Location Date No. of Rooms Net Purchase Price W Nashville Nashville, TN 03/2022 346 $ 328,500 No hotels were acquired during the years ended December 31, 2024 and 2023.
Overview Xenia is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of December 31, 2023, we owned 32 hotels and resorts, comprising 9,514 rooms across 14 states.
Overview Xenia is a self-advised and self-administered REIT that invests primarily in uniquely positioned luxury and upper upscale hotels and resorts with a focus on the top 25 lodging markets as well as key leisure destinations in the United States ("U.S."). As of December 31, 2024, we owned 31 hotels and resorts, comprising 9,408 rooms across 14 states.
(3) For hotels disposed of during the period, operating results and statistics are only included through the date of the respective disposition.
(3) For hotels sold during the period, operating results and statistics are only included through the date of the respective disposition.
Comparison of the year ended December 31, 2022 to the year ended December 31, 2021 This information is contained in "Part II - Item 7.
Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 This information is contained in "Part II-Item 7.
In May 2021, we issued $500 million of 4.875% Senior Notes due in 2029 (the "2021 Senior Notes" and together with the 2020 Senior Notes, the "Senior Notes").
In May 2021, we issued $500 million of 4.875% Senior Notes due in 2029 (the "2021 Senior Notes" and together with the 2024 Senior Notes, the "Senior Notes").
As of December 31, 2023, we had six interest rate swaps with an aggregate notional amount of $280.0 million.
As of December 31, 2024, we had six interest rate swaps with an aggregate notional amount of $280.0 million.
We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense, operating results from properties that are sold and other items we believe do not represent recurring operations.
We further adjust FFO for certain additional items that are not in Nareit’s definition of FFO such as terminated transaction and pre-opening expenses, amortization of debt origination costs and share-based compensation, non-cash ground rent and straight-line rent expense and other items we believe do not represent recurring operations.
Ground lease expense Ground lease expense increased $0.2 million, or 8.0%, to $3.0 million for the year ended December 31, 2023 from $2.8 million for the year ended December 31, 2022, which was primarily attributable to an increase in percentage rent in 2023, which is based on revenues at certain hotels with ground leases, compared to 2022.
Ground lease expense Ground lease expense increased $0.2 million, or 5.4%, to $3.2 million for the year ended December 31, 2024 from $3.0 million for the year ended December 31, 2023, which was primarily attributable to an increase in percentage rent in 2024, which is based on revenues at certain hotels with ground leases, compared to 2023.
If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so, or the amount of such charges may be inaccurate. 53 Results of Operations Operating Results Overview Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 4.1% to $169.46 for the year ended December 31, 2023, compared to $162.75 for the year ended December 31, 2022.
If we misjudge or estimate incorrectly or if future operating profitability, market or industry factors differ from our expectations, we may record an impairment charge which is inappropriate, fail to record a charge when we should have done so, or the amount of such charges may be inaccurate. 54 Results of Operations Operating Results Overview Our total portfolio RevPAR, which includes the results of hotels sold or acquired for the period of ownership by the Company, increased 1.7% to $172.36 for the year ended December 31, 2024, compared to $169.46 for the year ended December 31, 2023.
Loss on extinguishment of debt The loss on extinguishment of debt of $1.2 million for year ended December 31, 2023 was primarily attributable to the write-off of certain unamortized debt issuance costs associated with the prior revolving credit facility, which was refinanced with the revolving line of credit in January 2023, as well as the early repayments of the corporate credit facility term loan that was due to mature in September 2024 and one mortgage loan.
Additionally, $1.8 million of fees were expensed in connection with the new credit facility. 59 The loss on extinguishment of debt of $1.2 million for the year ended December 31, 2023 primarily attributable to the write-off of certain unamortized debt issuance costs associated with the prior revolving credit facility, which was refinanced with the 2023 revolving line of credit in January 2023, as well as the early repayments of the corporate credit facility term loan that was due to mature in September 2024 and one mortgage loan.
We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flows from operations. As of December 31, 2023 and 2022, we had a total of $49.7 million and $46.3 million, respectively, of FF&E reserves.
We have been and will continue to be prudent with respect to our capital spending, taking into account our cash flows from operations. As of December 31, 2024 and 2023, we had a total of $58.9 million and $49.7 million, respectively, of FF&E reserves.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 2, 2023, and is incorporated herein by reference.
Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 27, 2024, and is incorporated herein by reference.
The discontinuation of hedge accounting could result in future changes in the fair market values of hedges and/or a portion or all of the $2.4 million balance of accumulated other comprehensive income as of December 31, 2023 to be recognized on the consolidated statements of operations and comprehensive income (loss) through net income (loss).
The discontinuation of hedge accounting could result in future changes in the fair market values of hedges and/or a portion or all of the $0.9 million balance of accumulated other comprehensive income as of December 31, 2024 to be recognized on the consolidated statements of operations and comprehensive income through net income.
Our weighted-average debt maturity as of December 31, 2023 was 3.2 years for our mortgage loans, 3.3 years for our corporate credit facility term loans, the Senior Notes, and revolving line of credit and 3.3 years for all debt.
Our weighted-average debt maturity as of December 31, 2024 was 2.2 years for our mortgage loans, 4.6 years for our corporate credit facility term loans, the Senior Notes, and revolving credit facility and 4.3 years for all debt.
(7) During the year ended December 31, 2023, the Company repurchased in the open market and retired $35.3 million aggregate principal of its 6.375% 2020 Senior Notes due August 2025. (8) Includes loan premiums, discounts and deferred financing costs, net of accumulated amortization.
During the year ended December 31, 2023, the Company repurchased in the open market and retired $35.3 million aggregate principal of the 2020 Senior Notes. (8) Includes loan premiums, discounts and deferred financing costs, net of accumulated amortization.
In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million.
Capital Markets We maintain an ATM program pursuant to the ATM Agreement. In accordance with the terms of the ATM Agreement, the Company may from time to time offer and sell shares of its common stock having an aggregate gross offering price of up to $200 million.
Cash used in investing activities for the year ended December 31, 2023 was attributed to $120.9 million in capital improvements at our hotel properties, which was partially offset by $1.6 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis and $0.5 million of proceeds from property insurance.
Investing • Cash used in investing activities was $108.2 million and $118.8 million for the years ended December 31, 2024 and 2023, respectively. 67 • Cash used in investing activities for the year ended December 31, 2024 was attributed to $140.6 million in capital improvements at our hotel properties, which was partially offset by net proceeds of $29.1 million from the sale of Lorien Hotel & Spa, $3.1 million of proceeds from property insurance and $0.2 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis. • Cash used in investing activities for the year ended December 31, 2023 was attributed to $120.9 million in capital improvements at our hotel properties, which was partially offset by $1.6 million of performance guaranty payments received that were recorded as a reduction in the respective hotel's cost basis and $0.5 million of proceeds from property insurance.
Debt as of December 31, 2023 and December 31, 2022 consisted of the following (dollars in thousands): Rate Type Rate (1) Maturity Date December 31, 2023 December 31, 2022 Mortgage Loans Renaissance Atlanta Waverly Hotel & Convention Center Fixed (2) — % 8/14/2024 $ — $ 99,590 Grand Bohemian Hotel Orlando, Autograph Collection Fixed 4.53 % 3/1/2026 54,522 55,685 Marriott San Francisco Airport Waterfront Fixed 4.63 % 5/1/2027 108,111 110,153 Andaz Napa Fixed (3) 5.72 % 1/19/2028 55,000 54,560 Total Mortgage Loans 4.88 % (4) $ 217,633 $ 319,988 Corporate Credit Facilities Corporate Credit Facility Term Loan $125M Variable (5) — % 9/13/2024 — 125,000 2023 Initial Term Loan Fixed (5) 5.50 % 3/1/2026 $ 125,000 — 2023 Delayed Draw Term Loan Fixed (5) 5.50 % 3/1/2026 $ 100,000 — Revolving Credit Facility Variable (6) — % 2/28/2024 $ — — Revolving Line of Credit (2023) Variable (6) 7.11 % 1/11/2027 $ — — Total Corporate Credit Facilities $ 225,000 $ 125,000 2020 Senior Notes $500M (7) Fixed 6.38 % 8/15/2025 464,747 500,000 2021 Senior Notes $500M Fixed 4.88 % 6/1/2029 500,000 500,000 Loan premiums, discounts and unamortized deferred financing costs, net (8) (12,474) (15,883) Total Debt, net of loan premiums, discounts and unamortized deferred financing costs 5.47 % (4) $ 1,394,906 $ 1,429,105 (1) The rates shown represent the annual interest rates as of December 31, 2023.
Debt as of December 31, 2024 and December 31, 2023 consisted of the following (dollars in thousands): Rate Type Rate (1) Maturity Date December 31, 2024 December 31, 2023 Mortgage Loans Grand Bohemian Hotel Orlando, Autograph Collection Fixed 4.53 % 3/1/2026 53,306 54,522 Marriott San Francisco Airport Waterfront Fixed 4.63 % 5/1/2027 105,972 108,111 Andaz Napa Fixed (2) 5.72 % 1/19/2028 55,000 55,000 Total Mortgage Loans 4.88 % (3) $ 214,278 $ 217,633 Corporate Credit Facilities (4) 2023 Initial Term Loan Fixed — % 3/1/2026 — 125,000 2023 Delayed Draw Term Loan Fixed — % 3/1/2026 — 100,000 2024 Initial Term Loan Fixed (5) 5.65 % 11/3/2028 225,000 — 2024 Delayed Draw Term Loan Variable 6.24 % 11/3/2028 — — Revolving Line of Credit (2023) Variable (6) — % 1/11/2027 — — Revolving Credit Facility (2024) Variable (6) 6.39 % 11/3/2028 10,000 — Total Corporate Credit Facilities $ 235,000 $ 225,000 2020 Senior Notes $500M (7) Fixed 6.38 % 8/15/2025 — 464,747 2021 Senior Notes $500M Fixed 4.88 % 6/1/2029 500,000 500,000 2024 Senior Notes $400M (7) Fixed 6.63 % 5/15/2030 400,000 — Loan premiums, discounts and unamortized deferred financing costs, net (8) (14,575) (12,474) Total Debt, net of loan premiums, discounts and unamortized deferred financing costs 5.54 % (3) $ 1,334,703 $ 1,394,906 (1) The rates shown represent the annual interest rates as of December 31, 2024.
As of December 31, 2021, the Company owned 34 lodging properties with a total of 9,659 rooms. 54 The following represents the disposition details for the properties sold in the years ended December 31, 2022 and 2021 (in thousands, except number of rooms): Property Date No. of Rooms Gross Sale Price Kimpton Hotel Monaco Chicago 01/2022 191 $ 36,000 Bohemian Hotel Celebration, Autograph Collection 10/2022 115 $ 27,750 Kimpton Hotel Monaco Denver 12/2022 189 $ 69,750 Total for the year ended December 31, 2022 495 $ 133,500 Marriott Charleston Town Center 11/2021 352 $ 5,000 Total for the year ended December 31, 2021 352 $ 5,000 No hotels were sold during the year ended December 31, 2023.
As of December 31, 2023 and 2022, the Company owned 32 lodging properties with a total of 9,514 and 9,508 rooms, respectively. 55 The following represents the disposition details for the properties sold in the years ended December 31, 2024 and 2022 (in thousands, except number of rooms): Property Date No. of Rooms Gross Sale Price Lorien Hotel & Spa 07/2024 107 $ 30,000 Total for the year ended December 31, 2024 107 $ 30,000 Kimpton Hotel Monaco Chicago 01/2022 191 $ 36,000 Bohemian Hotel Celebration, Autograph Collection 10/2022 115 $ 27,750 Kimpton Hotel Monaco Denver 12/2022 189 $ 69,750 Total for the year ended December 31, 2022 495 $ 133,500 No hotels were sold during the year ended December 31, 2023.
We may redeem the 2021 Senior Notes prior to June 1, 2024 at a make-whole price. After June 1, 2024, we may also redeem the Senior Notes at certain redemption prices that decline ratably to par.
We may redeem the 2024 Senior Notes prior to May 15, 2027 at a make-whole price. On or after May 15, 2027, we may redeem the 2024 Senior Notes at certain redemption prices that decline ratably to par.
During the year ended December 31, 2022, 1,912,794 shares were repurchased under the Repurchase Program, at a weighted-average price of $14.74 per share for an aggregate purchase price of $28.2 million. No shares were purchased as part of the Repurchase Program during the year ended December 31, 2021.
During the year ended December 31, 2022, 1,912,794 shares were repurchased under the Repurchase Program, at a weighted-average price of $14.74 per share for an aggregate purchase price of $28.2 million. As of December 31, 2024, the Company had approximately $117.9 million remaining under its share repurchase authorization.
The restricted cash as of December 31, 2023 primarily consisted of $49.7 million related to FF&E reserves as required per the terms of our management and franchise agreements, $7.1 million in deposits made for capital projects and cash held in restricted escrows of $1.5 million primarily for real estate taxes and mortgage escrows.
The restricted cash as of December 31, 2024 primarily consisted of $58.9 million related to FF&E reserves as required per the terms of our management and franchise agreements, $2.7 million in an interest-bearing escrow account held with a lender, $1.7 million in deposits made for capital projects and cash held in restricted escrows of $2.0 million primarily for real estate taxes and mortgage escrows.
We may also redeem a portion of the Senior Notes with proceeds from certain equity offerings or certain support received from government authorities in connection with the COVID-19 global pandemic, subject to certain conditions.
On or after June 1, 2024, we may redeem the 2021 Senior Notes at certain redemption prices that decline ratably to par. We may also redeem a portion of the 2021 Senior Notes with proceeds from certain equity offerings or certain support received from government authorities in connection with the COVID-19 global pandemic, subject to certain conditions.
The increase in our total portfolio RevPAR for the year ended December 31, 2023 compared to the same period in 2022 was driven by increases in both occupancy and ADR.
The increase in our total portfolio RevPAR for the year ended December 31, 2024 compared to the same period in 2023 was driven by an increase in occupancy partially offset by a decrease in ADR.
Liquidity As of December 31, 2023, we had $164.7 million of consolidated cash and cash equivalents and $58.4 million of restricted cash and escrows.
Liquidity As of December 31, 2024, we had $78.2 million of consolidated cash and cash equivalents and $65.4 million of restricted cash and escrows.
We believe that our cash position, short-term investments, cash from operations, borrowing capacity under our revolving credit facility, and access to the capital markets, including pursuant to our ATM program, will be adequate to meet all of our funding requirements and capital deployment objectives both in the short-term and long-term. 63 Debt and Loan Covenants As of December 31, 2023, our outstanding total debt was $1.4 billion and had a weighted-average interest rate of 5.47%.
We believe that our cash position, short-term investments, cash from operations, borrowing capacity under our revolving credit facility, and access to the capital markets, including pursuant to our ATM program, will be adequate to meet all of our funding requirements and capital deployment objectives both in the short-term and long-term.
Airline crews have historically been typical generators of contract demand at some of our hotels. Additionally, contract rates may be utilized by hotels that are located in markets that are experiencing consistently lower levels of demand.
Contract business refers to blocks of rooms sold to a specific company for an extended period of time at significantly discounted rates. Airline crews have historically been typical generators of contract demand at some of our hotels. Additionally, contract rates may be utilized by hotels that are located in markets that are experiencing consistently lower levels of demand.
Portfolio Composition As of December 31, 2023 and 2022, the Company owned 32 lodging properties with a total of 9,514 and 9,508 rooms, respectively.
Portfolio Composition As of December 31, 2024, the Company owned 31 lodging properties with a total of 9,408 rooms.
As of December 31, 2023, $200 million of common stock remained available for sale under the ATM Agreement.
No shares were sold under the ATM Agreement during the year ended December 31, 2024. As of December 31, 2024, $200 million of common stock remained available for sale under the ATM Agreement.
These gains on insurance recovery are included in other income (loss) on the consolidated statements of operations and comprehensive income (loss) for the periods then ended. (3) Loan related costs included amortization of debt premiums, discounts and deferred loan origination costs. (4) During the year ended December 31, 2022, we recorded hurricane-related repair and cleanup costs of $1.3 million.
These gains on insurance recovery are included in other income on the consolidated statements of operations and comprehensive income for the periods then ended. (2) Loan related costs include amortization of debt premiums, discounts and deferred loan origination costs.
These swaps fix the variable interest rate on one mortgage loan to daily SOFR through the end of 2026 and fix the variable interest rate on the 2023 Term Loans to one-month SOFR through the middle of the first quarter of 2025. The 2023 Term Loans spread may vary, as it is determined by our leverage ratio.
These swaps fix the variable interest rate on one mortgage loan to daily SOFR through the end of 2026 and fix the variable interest rate on the 2024 Initial Term Loan to one-month SOFR through the middle of the first quarter of 2025.
As of December 31, 2023, we had $200 million available for sale under the ATM Agreement.
No shares were sold under the ATM Agreement during the years ended December 31, 2024, 2023 and 2022. As of December 31, 2024, we had $200 million available for sale under the ATM Agreement.
Nareit defines EBITDAre as EBITDA plus or minus losses and gains on the disposition of depreciated property, including gains or losses on change of control, plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates. 59 We further adjust EBITDAre to exclude the impact of non-controlling interests in consolidated entities other than our Operating Partnership Units because our Operating Partnership Units may be redeemed for common stock.
Nareit defines EBITDAre as EBITDA plus or minus losses and gains on the disposition of depreciated property, including gains or losses on change of control, plus impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity's share of EBITDAre of unconsolidated affiliates.
Adjusted EBITDAre and Adjusted FFO attributable to common stock and unit holders decreased 2.0% and 4.0%, respectively, for the year ended December 31, 2023 compared to 2022. The decreases during the year ended December 31, 2023 were primarily attributable to a reduction in operating income primarily attributable to normalizing leisure demand and renovation disruption.
Adjusted EBITDAre and Adjusted FFO attributable to common stock and unit holders decreased 5.8% and 2.9%, respectively, for the year ended December 31, 2024 compared to 2023. The decrease during the year ended December 31, 2024 was primarily attributable to a reduction in operating income related to normalizing leisure demand and disruption from renovations, particularly at Grand Hyatt Scottsdale Resort.
During the years ended December 31, 2023, 2022 and 2021, the Company incurred unused commitment fees of approximately $1.4 million each year. During the years ended December 31, 2023 and 2022, the Company did not incur interest expense on the revolving line of credit. During the year ended December 31, 2021, the Company incurred interest expense of $1.9 million.
During the year ended December 31, 2024, the Company incurred minimal interest on the revolving credit facility. During the years ended December 31, 2023 and 2022, the Company did not incur interest expense on the then-applicable revolving line of credit.
Additionally, during the year ended December 31, 2021, we recorded Texas winter storm-related repair and cleanup costs of $0.4 million at two hotels. 61 The following is a reconciliation of net income (loss) to FFO and Adjusted FFO for the years ended December 31, 2023, 2022, and 2021 (in thousands): Year Ended December 31, 2023 2022 2021 Net income (loss) $ 19,874 $ 57,630 $ (146,615) Adjustments: Depreciation and amortization related to investment properties 131,675 132,204 128,984 Impairment of investment properties (1) — — 28,899 (Gain) loss on sale of investment property — (27,286) 75 FFO attributable to common stock and unit holders $ 151,549 $ 162,548 $ 11,343 Reconciliation to Adjusted FFO Gain on insurance recoveries (2) (535) (3,550) — Loss on extinguishment of debt 1,189 294 1,356 Terminated transaction costs — — 1 Loan related costs, net of adjustment related to non-controlling interests (3) 4,915 5,260 5,952 Amortization of share-based compensation expense 13,168 11,411 11,615 Non-cash ground rent and straight-line rent expense (75) 44 118 Other non-recurring expenses (4) — 1,309 1,622 Adjusted FFO attributable to common stock and unit holders $ 170,211 $ 177,316 $ 32,007 (1) During the year ended December 31, 2021, we recognized impairment charges of $12.6 million and $15.7 million related to Marriott Charleston Town Center and Kimpton Hotel Monaco Chicago, respectively, which were attributed to their respective net book value exceeding the undiscounted cash flows over a shortened hold period.
During the year ended December 31, 2022, we recorded $1.3 million of repair and clean up costs related to property damage sustained at one property. 61 The following is a reconciliation of net income to FFO and Adjusted FFO for the years ended December 31, 2024, 2023, and 2022 (in thousands): Year Ended December 31, 2024 2023 2022 Net income $ 16,870 $ 19,874 $ 57,630 Adjustments: Depreciation and amortization related to investment properties 128,408 131,675 132,204 Gain on sale of investment property (1,628) — (27,286) FFO attributable to common stock and unit holders $ 143,650 $ 151,549 $ 162,548 Reconciliation to Adjusted FFO Gain on insurance recoveries (1) (4,428) (535) (3,550) Loss on extinguishment of debt 3,850 1,189 294 Loan related costs, net of adjustment related to non-controlling interests (2) 5,361 4,915 5,260 Amortization of share-based compensation expense 13,658 13,168 11,411 Non-cash ground rent and straight-line rent expense (435) (75) 44 Other non-recurring expenses (3) 3,686 — 1,309 Adjusted FFO attributable to common stock and unit holders $ 165,342 $ 170,211 $ 177,316 (1) During the years ended December 31, 2024, 2023, and 2022, we recorded $4.4 million, $0.5 million, and $3.6 million, respectively, of insurance proceeds in excess of recognized losses related to casualty losses at certain properties.
We may also elect to use cash to buy back our common stock in the future under the Repurchase Program. 66 Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022 The table below presents summary cash flow information for the consolidated statements of cash flows (in thousands): Year Ended December 31, 2023 2022 Net cash provided by operating activities $ 198,065 $ 187,129 Net cash used in investing activities (118,752) (265,393) Net cash used in financing activities (222,148) (110,057) Net decrease in cash and cash equivalents and restricted cash $ (142,835) $ (188,321) Cash and cash equivalents and restricted cash, at beginning of year 365,910 554,231 Cash and cash equivalents and restricted cash, at end of year $ 223,075 $ 365,910 Operating • Cash provided by operating activities was $198.1 million and $187.1 million for the years ended December 31, 2023 and 2022, respectively.
Comparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 The table below presents summary cash flow information for the consolidated statements of cash flows (in thousands): Year Ended December 31, 2024 2023 Net cash provided by operating activities $ 163,720 $ 198,065 Net cash used in investing activities (108,246) (118,752) Net cash used in financing activities (134,967) (222,148) Net decrease in cash and cash equivalents and restricted cash $ (79,493) $ (142,835) Cash and cash equivalents and restricted cash, at beginning of year 223,075 365,910 Cash and cash equivalents and restricted cash, at end of year $ 143,582 $ 223,075 Operating • Cash provided by operating activities was $163.7 million and $198.1 million for the years ended December 31, 2024 and 2023, respectively.
Comparison of the year ended December 31, 2023 to the year ended December 31, 2022 Operating Information The following table sets forth certain operating information for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 Change Number of properties at January 1 32 34 (2) Properties acquired — 1 (1) Properties disposed — (3) (3) Number of properties at December 31 32 32 — Number of rooms at January 1 9,508 9,659 (151) Rooms in properties acquired or added to portfolio upon completion of property improvements (1) 6 346 (340) Rooms in properties disposed or combined during property improvements (2) — (497) 497 Number of rooms at December 31 9,514 9,508 6 Portfolio Statistics: Occupancy (3) 65.1 % 62.9 % 220 bps ADR (3) $ 260.40 $ 258.76 0.6% RevPAR (3) $ 169.46 $ 162.75 4.1% Hotel operating income (in thousands) (4) $ 321,673 $ 325,332 (1.1)% (1) During the year ended December 31, 2023, we added three newly created rooms at both The Ritz-Carlton, Denver and Marriott Woodlands Waterway Hotel & Convention Center.
Comparison of the year ended December 31, 2024 to the year ended December 31, 2023 Operating Information The following table sets forth certain operating information for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 Change Number of properties at January 1 32 32 — Properties acquired — — — Properties disposed (1) — 1 Number of properties at December 31 31 32 (1) Number of rooms at January 1 9,514 9,508 6 Rooms in properties acquired or added to portfolio upon completion of property improvements (1) 1 6 (5) Rooms in properties disposed or combined during property improvements (2) (107) — (107) Number of rooms at December 31 9,408 9,514 (106) Portfolio Statistics: Occupancy (3) 67.4 % 65.1 % 230 bps ADR (3) $ 255.62 $ 260.40 (1.8)% RevPAR (3) $ 172.36 $ 169.46 1.7% Hotel operating income (in thousands) (4) $ 308,633 $ 321,673 (4.1)% (1) During the year ended December 31, 2024, we added one newly created room at Grand Bohemian Hotel Orlando, Autograph Collection.
Corporate and Other Expenses Corporate and other expenses consist of the following (in thousands): Year Ended December 31, 2023 2022 Change % Change Depreciation and amortization $ 132,023 $ 132,648 $ (625) (0.5) % Real estate taxes, personal property taxes and insurance 50,491 44,388 6,103 13.7 % Ground lease expense 3,016 2,793 223 8.0 % General and administrative expenses 37,219 34,250 2,969 8.7 % Gain on business interruption insurance (218) (2,487) 2,269 91.2 % Other operating expenses 1,530 1,070 460 43.0 % Impairment and other losses — 1,278 (1,278) (100.0) % Total corporate and other expenses $ 224,061 $ 213,940 $ 10,121 4.7 % Depreciation and amortization Depreciation and amortization expense decreased $0.6 million, or 0.5%, to $132.0 million for the year ended December 31, 2023 from $132.6 million for the year ended December 31, 2022.
Corporate and Other Expenses Corporate and other expenses consist of the following (in thousands): Year Ended December 31, 2024 2023 Change % Change Depreciation and amortization $ 128,749 $ 132,023 $ (3,274) (2.5) % Real estate taxes, personal property taxes and insurance 53,140 50,491 2,649 5.2 % Ground lease expense 3,179 3,016 163 5.4 % General and administrative expenses 36,245 37,219 (974) (2.6) % Gain on business interruption insurance (2,338) (218) (2,120) (972.5) % Other operating expenses 2,303 1,530 773 50.5 % Impairment and other losses 520 — 520 100.0 % Total corporate and other expenses $ 221,798 $ 224,061 $ (2,263) (1.0) % Depreciation and amortization Depreciation and amortization expense decreased $3.3 million, or 2.5%, to $128.7 million for the year ended December 31, 2024 from $132.0 million for the year ended December 31, 2023.
The variable index for the corporate credit facilities is Term SOFR, subject to a 10 basis point credit spread adjustment and a zero basis point floor, as further described below. (2) This mortgage loan was repaid in full in January 2023.
The variable index for the corporate credit facilities is Term SOFR, subject to a 10 basis point credit spread adjustment and a zero basis point floor, as further described below under "Corporate Credit Facilities." (2) A variable interest loan for which the interest rate has been fixed with an interest rate swap to Term SOFR through January 1, 2027.
Sources and Uses of Cash Our principal sources of cash are cash flows from operations, borrowings under debt financings including draws on our revolving line of credit and from various types of equity offerings or the sale of our hotels.
During the years ended December 31, 2024 and 2023, we made total capital expenditures of $140.6 million and $120.9 million, respectively. Sources and Uses of Cash Our principal sources of cash are cash flows from operations, borrowings under debt financings including draws on our revolving credit facility and from various types of equity offerings or the sale of our hotels.
As of December 31, 2023, we were in compliance with all debt covenants, current on all loan payments and not otherwise in default under the revolving line of credit, corporate credit facility term loans, remaining mortgage loans or Senior Notes. 65 Derivatives We continuously monitor and evaluate the level of floating rate debt exposure that we have and will continue to use interest rate hedges to limit it as we determine appropriate.
As of December 31, 2024, we were in compliance with all other debt covenants, current on all loan payments and not otherwise in default under the revolving credit facility, corporate credit facility term loans, remaining mortgage loans or Senior Notes.
These gains on insurance recovery are included in other income (loss) on the consolidated statements of operations and comprehensive income (loss) for the periods then ended. (3) During the year ended December 31, 2022, we recorded hurricane-related repair and cleanup costs of $1.3 million.
These gains on insurance recovery are included in other income on the consolidated statements of operations and comprehensive income for the periods then ended.
Refer to the "Results of Operations" section for further discussion of our operating results for the years ended December 31, 2023 and 2022. Investing • Cash used in investing activities was $118.8 million and $265.4 million for the years ended December 31, 2023 and 2022, respectively.
Refer to the "Results of Operations" section for further discussion of our operating results for the years ended December 31, 2024 and 2023.
During the year ended December 31, 2021, we recorded estimated hurricane-related repair and cleanup costs of $1.1 million related to the damage sustained at Loews New Orleans Hotel during Hurricane Ida.
During the year ended December 31, 2022, we recorded $1.3 million of repair and clean up costs related to property damage sustained at one property.
As of December 31, 2023, the Company had approximately $133.7 million remaining under its share repurchase authorization. Off-Balance Sheet Arrangements As of December 31, 2023, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties. The remaining commitments under these contracts at December 31, 2023 totaled $67.8 million.
Off-Balance Sheet Arrangements As of December 31, 2024, we had various contracts outstanding with third-parties in connection with the renovation of certain of our hotel properties.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10-basis point credit spread adjustment and a zero basis point floor.
The Revolving Credit Facility’s interest rate is based, at the Company's option, on a pricing grid with a range of (i) 145 to 275 basis points over the applicable adjusted term SOFR rate or (ii) 45 to 175 basis points over the applicable alternative base rate, in each case as determined by the Company’s leverage ratio.
The interest rate on the revolving line of credit is based on a pricing grid with a range of 145 to 275 basis points over the applicable Term SOFR rate as determined by the Company’s leverage ratio, subject to a 10 basis point credit spread adjustment and a zero basis point floor.
The Revolving Credit Facility’s interest rate is based, at the Company's option, on a pricing grid with a range of (i) 145 to 275 basis points over the applicable adjusted term SOFR rate or (ii) 45 to 175 basis points over the applicable alternative base rate, in each case as determined by the Company’s leverage ratio.
Gain on business interruption insurance Gain on business interruption insurance was $0.2 million for the year ended December 31, 2023, which was attributed to insurance proceeds for a portion of lost income associated with cancellations at Fairmont Pittsburgh due to power outages during certain portions of December 2022 and January 2023.
Gain on business interruption insurance was $0.2 million for the for the year ended December 31, 2023, which was attributed to insurance proceeds for a portion of lost income associated with cancellations due to a power outage. 58 Other operating expenses Other operating expenses increased $0.8 million, or 50.5%, to $2.3 million for the year ended December 31, 2024 from $1.5 million for the year ended December 31, 2023.
Our principal uses of cash are asset acquisitions, capital investments, routine debt service and debt repayments, operating costs, corporate expenses and dividends.
Our principal uses of cash are asset acquisitions, capital investments, routine debt service and debt repayments, operating costs, corporate expenses and dividends. We may also elect to use cash to buy back our common stock in the future under the Repurchase Program.
In addition, the unemployment rate decreased slightly to 3.7% in December 2023 compared to 3.8% in September 2023 and increased from 3.6% in June 2023. As operating results continued to gain strength following the COVID-19 pandemic, overall industry lodging demand increased 1.1% and new hotel supply increased by 0.5% during the year ended December 31, 2023 compared to 2022.
In addition, the unemployment rate remained flat at 4.1% in December 2024 compared to September 2024 and June 2024. Overall industry lodging demand increased 0.5% and new hotel supply increased by 0.5% during the year ended December 31, 2024 compared to 2023.
In addition, during the year ended December 31, 2023, we recognized a $1.1 million lease termination fee, a gain on insurance recovery of $0.5 million associated with hurricane-related damage sustained at Loews New Orleans Hotel and $0.5 million of interest related to federal tax refunds which was partially offset by loan issuance costs.
Also, during the year ended December 31, 2023, the Company recognized a $1.1 million lease termination fee, a gain on insurance recovery of $0.5 million associated with a casualty loss at one property, $0.5 million of interest related to federal tax refunds and $1.6 million of loan costs in connection with the refinancing of the prior corporate credit facility.
Income tax expense Income tax expense decreased $0.8 million, or 34.4%, to $1.4 million for the year ended December 31, 2023 from $2.2 million for the year ended December 31, 2022.
Income tax benefit (expense) Income tax benefit (expense) changed $5.2 million, or 358.5%, to an income tax benefit of $3.7 million for the year ended December 31, 2024 from $1.4 million for the year ended December 31, 2023.
Capital Expenditures and Reserve Funds We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. Routine capital expenditures are administered by the property management companies. However, we have approval rights over the capital expenditures as part of the annual budget process for each of our properties.
The remaining commitments under these contracts at December 31, 2024 totaled $47.6 million. 66 Capital Expenditures and Reserve Funds We maintain each of our properties in good repair and condition and in conformity with applicable laws and regulations, franchise agreements and management agreements. Routine capital expenditures are administered by the property management companies.
Net income decreased 65.5% for the year ended December 31, 2023 compared to 2022, which was primarily attributed to: • no gain or loss on the sale of investment properties in 2023 compared to a $27.3 million gain on the sale of investment properties in 2022; • a $7.0 million reduction in operating income; • a $5.5 million reduction in hotel operating income attributed to the three hotels sold in 2022; • a $3.0 million increase in corporate general and administrative expenses; • a $2.3 million increase in interest expense; • a $2.3 million reduction in business interruption proceeds; • a $0.9 million increase in loss on extinguishment of debt; and • a $0.5 million increase in other operating expenses.
Net income decreased 15.1% for the year ended December 31, 2024 compared to 2023, which was primarily attributed to: • a $15.2 million reduction in hotel operating income for our 31-comparable hotels; • a $2.7 million increase in loss on extinguishment of debt; • a $0.8 million increase in other operating expenses; • a $0.5 million increase in impairment and other losses; • a $0.5 million reduction in other income; and • a $0.5 million reduction in hotel operating income attributed to the sale of Lorien Hotel & Spa in July 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor debt obligations outstanding as of December 31, 2023, the following table presents principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands): 2024 2025 2026 2027 2028 Thereafter Total Fair Value Maturing debt (1) : Fixed rate debt (2) $ 3,355 $ 469,178 $ 55,381 $ 101,386 $ — $ 500,000 $ 1,129,300 $ 1,094,684 Variable rate debt — — 225,000 1,002 52,078 — 278,080 271,000 Total $ 3,355 $ 469,178 $ 280,381 $ 102,388 $ 52,078 $ 500,000 $ 1,407,380 $ 1,365,684 Weighted-average interest rate on debt: Fixed rate debt (2) 4.59% 6.36% 4.56% 4.63% —% 4.88% 5.45% 5.75% Variable rate debt —% —% 5.50% 5.72% 5.72% —% 5.54% 7.44% (1) The debt maturity excludes net mortgage loan discounts, premiums and unamortized deferred loan costs of $12.5 million as of December 31, 2023.
Biggest changeFor debt obligations outstanding as of December 31, 2024, the following table presents principal repayments and related weighted-average interest rates by contractual maturity dates (in thousands): 2025 2026 2027 2028 2029 Thereafter Total Fair Value Maturing debt (1) : Fixed rate debt (2) $ 4,431 $ 55,381 $ 101,386 $ — $ 500,000 $ 400,000 $ 1,061,198 $ 1,033,256 Variable rate debt — — 1,002 277,078 — — 278,080 271,979 Revolving Credit Facility — — — 10,000 — — 10,000 9,602 Total $ 4,431 $ 55,381 $ 102,388 $ 287,078 $ 500,000 $ 400,000 $ 1,349,278 $ 1,314,837 Weighted-average interest rate on debt: Fixed rate debt (2) 4.83% 4.56% 4.63% —% 4.88% 6.63% 5.49% 5.82% Variable rate debt —% —% 5.72% 5.69% —% —% 5.69% 7.04% Revolving Credit Facility —% —% —% 6.39% —% —% 6.39% 7.04% (1) The debt maturity excludes net mortgage loan discounts, premiums and unamortized deferred loan costs of $14.6 million as of December 31, 2024.
As of December 31, 2023, all of our variable rate debt was fixed by interest rate swaps and, as a result, an increase or decrease of 1% in market interest rates would not have an impact on our interest expense, future earnings or cash flows through the date of the earliest maturity of our interest rate hedges, which is mid-February 2025.
As of December 31, 2023, all of our variable rate debt was fixed by interest rate swaps and, as a result, an increase or decrease of 1% in market interest rates would not have an impact on our interest expense, future earnings or cash flows through the date of the earliest maturity of our interest rate hedges, which was mid-February 2025.
Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties' financial condition, including their credit ratings, and entering into agreements with counterparties based on established credit limit policies.
Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. We maintain credit policies with regard to our counterparties that we believe reduce overall credit risk. These policies include evaluating and monitoring our counterparties' financial condition, including 69 their credit ratings, and entering into agreements with counterparties based on established credit limit policies.
We maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our 68 outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.
We maintain risk management control systems to monitor interest rate cash flow risk attributable to both of our outstanding or forecasted debt obligations as well as our potential offsetting hedge positions.
(2) Includes all fixed rate debt and all variable rate debt that was swapped to fixed rates as of December 31, 2023. Item 8. Financial Statements and Supplementary Data See Index to Financial Statements on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
(2) Includes all fixed rate debt and all variable rate debt that was swapped to fixed rates as of December 31, 2024. Item 8. Financial Statements and Supplementary Data See Index to Financial Statements on page F-1. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.
If market rates of interest on all of the variable rate debt as of December 31, 2022 permanently increased or decreased by 1%, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $2.8 million per annum.
If market rates of interest on all of our variable rate debt as of December 31, 2024 permanently increased or decreased by 1%, the increase or decrease in interest expense on the variable rate debt would increase or decrease future earnings and cash flows by approximately $0.1 million per annum.

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