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What changed in Summit Hotel Properties, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Summit Hotel Properties, Inc.'s 2022 and 2023 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 2023 report.

+254 added−272 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-27)

Top changes in Summit Hotel Properties, Inc.'s 2023 10-K

254 paragraphs added · 272 removed · 204 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

61 edited+17 added−17 removed39 unchanged
Biggest changeMore broadly, maintaining our current positive trend in business and group travel, geopolitical stability, moderating inflation, a normalized labor market, and maintaining a high-quality portfolio aligned with evolving guest preferences are important for continued growth in our operating results. 4 The key elements of our strategy that we believe will allow us to create long-term value include the following: Focus on Lodging Properties with Efficient Operating Models .
Biggest changeThe key elements of our strategy that we believe will allow us to create long-term value include the following: Focus on Lodging Properties with Efficient Operating Models . We focus on lodging properties with efficient operating models that are predominantly in the Upscale segment of the lodging industry, as defined by Smith Travel Research ("STR").
In January and March 2022, the Operating Partnership and the GIC Joint Venture closed on a transaction with NewcrestImage Holdings, LLC, a Delaware limited liability company, and NewcrestImage Holdings II, LLC, a Delaware limited liability company (together, “NewcrestImage”), to purchase from NewcrestImage a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, two parking structures containing 1,002 spaces, and various financial incentives for an aggregate purchase price of $822.0 million (the "NCI Transaction").
In January and March 2022, the Operating Partnership and the GIC Joint Venture closed on a transaction with NewcrestImage Holdings, LLC, a Delaware limited liability company, and NewcrestImage Holdings II, LLC, a Delaware limited liability company (together, “NewcrestImage”), to purchase from NewcrestImage a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces and various financial incentives for an aggregate purchase price of $822.0 million (the "NCI Transaction").
We believe that our lodging properties are particularly popular with frequent travelers who seek to stay in properties operating under Marriott, Hilton, Hyatt, or IHG brands, which offer strong loyalty rewards programs. • Enhanced Diversification and Lower Capital Requirements .
We believe that our lodging properties are particularly popular with frequent travelers who seek to stay in properties operating under Marriott, Hilton, Hyatt, or IHG brands, which offer strong loyalty rewards programs. • Lower Capital Requirements and Enhanced Diversification .
Our lodging properties incur costs, and in certain situations, may be required to limit operations, to comply with these environmental, health and safety laws and regulations and if these regulatory requirements are not met or unforeseen events result in the discharge of dangerous or toxic substances at our lodging properties, we could be subject to fines and penalties for non-compliance with applicable laws and material liability from third parties for harm to the environment, damage to real property or personal injury or death.
Our lodging properties incur costs, and in certain situations, may be required to limit operations, to comply with these environmental, health and safety laws and regulations and if these regulatory requirements are not met or unforeseen events result in the discharge of dangerous or toxic substances at our lodging properties, we could be subject to fines and penalties for non-compliance with applicable laws and material liability from third parties for harm to the environment, damage to real property, personal injury, or death.
Lodging properties in the northern U.S. tend to have higher occupancy rates during the summer months. Regulation Our lodging properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to accessibility, fire and safety requirements. We believe each of our lodging properties has the necessary permits and approvals to operate its business.
Lodging properties in the northern U.S. tend to have higher occupancy rates during the summer months. 6 Regulation Our lodging properties are subject to various covenants, laws, ordinances and regulations, including regulations relating to accessibility, fire and safety requirements. We believe each of our lodging properties has the necessary permits and approvals to operate its business.
Competition could adversely affect our occupancy rates, our ADR and our RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make, which may reduce our profitability. Seasonality Certain segments of the lodging industry are seasonal in nature.
Competition could adversely affect our occupancy rates, our ADR and our RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not make, which may reduce our profitability. Seasonality Certain segments of the lodging industry are seasonal in nature.
We may, however, generate "rents from real property" through leasing our lodging properties to taxable REIT subsidiaries ("TRSs"), subject to certain conditions. A TRS is a fully taxable corporate subsidiary of a REIT that jointly elects with the REIT to be treated as a TRS of that REIT. Accordingly, all of our lodging properties are leased to our TRS Lessees.
We may, however, generate "rents from real property" through leasing our lodging properties to our TRSs, subject to certain conditions. A TRS is a fully taxable corporate subsidiary of a REIT that jointly elects with the REIT to be treated as a TRS of that REIT. Accordingly, all of our lodging properties are leased to our TRS Lessees.
The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized in June 2010. We focus on owning lodging properties with efficient operating models that generate strong margins and investment returns.
The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized on June 30, 2010. We focus on owning lodging properties with efficient operating models that generate strong margins and investment returns.
We also expect to generate these improvements in returns with our proactive asset management approach and by investing in our lodging properties to enhance their quality and attractiveness, increase their long-term value and generate more favorable returns on our invested capital. 5 Selectively Develop Lodging Properties .
We also expect to generate these improvements in returns with our proactive asset management approach and by investing in our lodging properties to enhance their quality and attractiveness, increase their long-term value and generate more favorable returns on our invested capital. Selectively Develop Lodging Properties .
None of the Phase I environmental site assessments of the lodging properties in our portfolio revealed any past or present environmental condition that we believe could have a material adverse effect on our business, financial position or results of operations.
None of the Phase I environmental site assessments of the lodging properties in our portfolio revealed any past or present environmental condition that we believe could have a material adverse effect on our business, consolidated financial position, or results of operations.
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, financial position or results of operations.
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, consolidated financial position, or results of operations.
This competition may increase the bargaining power of property owners seeking to sell, reduce the number of suitable investment opportunities available to us and increase the cost of acquiring targeted lodging properties. 6 The lodging industry is highly competitive.
This competition may increase the bargaining power of property owners seeking to sell, reduce the number of suitable investment opportunities available to us, and increase the cost of acquiring targeted lodging properties. The lodging industry is highly competitive.
The current trend in our business is for business and leisure travelers to occupy lodging properties relatively consistently throughout the year, but decreases in business travel occur during summer and the winter holidays. The lodging industry is also seasonal based upon geography. Lodging properties in the southern U.S. tend to have higher occupancy rates during the winter months.
The current trend in our business is for corporate, group and leisure travelers to occupy lodging properties relatively consistently throughout the year, but decreases in business travel occur during summer and the winter holidays. The lodging industry is also seasonal based upon geography. Lodging properties in the southern U.S. tend to have higher occupancy rates during the winter months.
The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate in this respect. Environmental, Health and Safety Matters Our lodging properties and undeveloped land parcels are subject to various federal, state and local environmental laws that impose liability for contamination.
The obligation to make readily achievable accommodations is ongoing, and we will continue to assess our properties and to make alterations as appropriate in this respect. Environmental, Health and Safety Matters Our lodging properties and undeveloped land parcels are subject to various federal, state and local environmental laws that impose liability for contamination.
Our Financing Strategy We rely on cash generated through operations, working capital, borrowings under our senior revolving and term loan facility (the "2018 Senior Credit Facility"), term debt, repayment of notes receivable, proceeds from the issuance of common and preferred securities, the strategic sale of lodging properties, contributions from our joint venture partners, and the release of restricted cash upon satisfaction of the usage requirements to finance our business.
Our Financing Strategy We rely on cash generated through operations, working capital, borrowings under our senior revolving and term loan facility (the "2023 Senior Credit Facility"), term debt, repayment of notes receivable, proceeds from the issuance of convertible securities, proceeds from the issuance of common and preferred securities, the strategic sale of lodging properties, contributions from our joint venture partners, and the release of restricted cash upon satisfaction of the usage requirements to finance our business.
We may also issue Common Units or Preferred Units of the Operating Partnership in connection with acquisitions. The 2018 Senior Credit Facility is comprised of a $400.0 million revolver (the "$400 Million Revolver") and a $200.0 million term loan facility (the $200 Million Term Loan").
We may also issue Common Units or Preferred Units of the Operating Partnership in connection with acquisitions. The 2023 Senior Credit Facility is comprised of a $400.0 million revolver (the "$400 Million Revolver") and a $200.0 million term loan facility (the $200 Million Term Loan").
Our target brands deliver consistently high-quality guest accommodations with value-oriented pricing that we believe appeals to a wide range of customers, including business, group and leisure travelers.
Our target brands deliver consistently high-quality guest accommodations with value-oriented pricing that we believe appeals to a wide range of customers, including business transient, group, leisure and government travelers.
We generally target lodging facilities with efficient operating models that meet one or more of the following acquisition criteria: • potential for strong risk-adjusted returns and are located in the top 50 MSAs and other select destination markets; • operate under leading franchise brands, which may include but are not limited to brands owned by Marriott, Hilton, Hyatt, and IHG; • located in close proximity to multiple demand generators, such as corporate offices and headquarters, retail centers, airports, state capitols, convention centers, universities, and leisure attractions, with a diverse source of potential guests, including corporate, government and leisure travelers; • located in markets with barriers to entry due to lengthy or challenging real estate entitlement processes or other factors; • can be acquired at a discount to replacement cost; and • provide an opportunity to add value through operating efficiencies, revenue management and asset management expertise, repositioning, renovating or rebranding.
We generally target lodging facilities with efficient operating models that meet one or more of the following acquisition criteria: • potential for strong risk-adjusted returns and are located in the top 50 MSAs and other select destination markets; • operate under leading franchise brands, which may include but are not limited to brands owned by Marriott, Hilton, Hyatt, and IHG, as well as select independent lodging properties that meet our investment criteria; • located in close proximity to multiple demand generators, such as corporate offices and headquarters, retail centers, airports, state capitols, convention centers, universities, and leisure attractions, with a diverse source of potential guests, including business transient, group, leisure, and government travelers; • located in markets with barriers to entry due to lengthy or challenging real estate entitlement processes or other factors; • can be acquired at a discount to replacement cost; and • provide an opportunity to add value through operating efficiencies, revenue management and asset management expertise, repositioning, renovating or rebranding.
Additionally, we have expanded charitable engagement with our community through the Summit Foundation, our 501(c)(3) nonprofit organization, and have broadened our social programs to enhance connectivity among our employees, partners and stakeholders to better enable us to champion an environment of diversity and inclusivity.
Additionally, we have expanded charitable engagement with our community through the Summit Foundation, our 501(c)(3) nonprofit organization, and have broadened our social programs to enhance connectivity among our employees, business partners, and other stakeholders to better enable us to champion an environment of diversity and inclusion.
All reports that we have filed with the Securities and Exchange Commission (“SEC”) including this Annual Report on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K, can be obtained free of charge from the SEC’s website at www.sec.gov or through our website.
All reports that we have filed with the SEC including this Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K, can be obtained free of charge from the SEC’s website at www.sec.gov or through our website.
Environmental, Social and Governance (ESG) Matte rs Our ongoing commitment to our environment, our communities and our stakeholders is an important part of our core responsibility to be more sustainable, inclusive and equitable.
Environmental, Social and Governance ("ESG") Matters Our ongoing commitment to our environment, our communities and our stakeholders is an important part of our core responsibility to be more sustainable, inclusive and equitable.
Our employees have multiple avenues available through which concerns or inappropriate behavior can be reported, including a confidential hotline. All concerns or reports of inappropriate behavior are promptly investigated with appropriate action taken to address such concerns or behavior.
Our employees have multiple avenues available through which concerns or inappropriate behavior can be reported, including a confidential hotline. Any concerns or reports of inappropriate behavior would be promptly investigated with appropriate action taken to address such concerns or behavior.
As of December 31, 2022, 86% of our guestrooms were located in the top 50 metropolitan statistical areas (“MSAs”), 91% were located within the top 100 MSAs and 15,323 of our guestrooms operated under premium franchise brands owned by Marriott® International, Inc. (“Marriott”), Hilton® Worldwide (“Hilton”), Hyatt® Hotels Corporation (“Hyatt”), and InterContinental® Hotels Group (“IHG”).
As of December 31, 2023, 86% of our guestrooms were located in the top 50 metropolitan statistical areas (“MSAs”), 90% were located within the top 100 MSAs, and over 99% of our guestrooms operated under premium franchise brands owned by Marriott® International, Inc. (“Marriott”), Hilton® Worldwide (“Hilton”), Hyatt® Hotels Corporation (“Hyatt”), and InterContinental® Hotels Group (“IHG”).
To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure, including: • Subsidized medical, dental and vision insurance; • Life and disability insurance; • Stock grant program; • 401(k) savings and retirement plan with Company Safe Harbor contribution; • Paid family leave; and • Employee education programs We believe that our compensation and employee benefits are competitive and allow us to attract and retain skilled employees throughout our Company.
To attract and retain top talent, we have designed our compensation and benefits programs to provide a balanced and effective reward structure, including: • Subsidized medical, dental and vision insurance; • Life and disability insurance; • Stock grant program; • 401(k) savings and retirement plan with Company Safe Harbor contribution; • Paid family leave; and • Employee education programs.
Human Capital Resources As of February 10, 2023, we had 74 full-time corporate employees. None of our corporate employees is represented by a labor union or covered by a collective bargaining agreement.
Human Capital Resources As of February 9, 2024, we had 78 full-time corporate employees. None of our corporate employees is represented by a labor union or covered by a collective bargaining agreement.
Beginning in March 2020, we experienced the negative effects of the novel coronavirus, designated as COVID-19 (“COVID-19”) and its variants (collectively, the "Pandemic"), which had a significant negative effect on the U.S. and global economies, including a rapid and sharp decline in all forms of travel, both domestic and international, and a significant decline in lodging demand.
Effects of COVID-19 Pandemic Beginning in March 2020, we experienced the adverse effects of the COVID-19 pandemic (the "Pandemic"), which had a significant negative effect on the U.S. and global economies, including a rapid and sharp decline in all forms of travel, both domestic and international, and a significant decline in lodging demand.
Our approach to creating value includes the following: • Selectively allocate capital which includes, among other things, capital investment, growth initiatives and other strategic transactions, such as the NCI Transaction, which was completed in January 2022; • Evolving our portfolio by selling assets with lower operating margins, RevPAR growth opportunities or risk-adjusted return profiles and purchasing assets with higher operating margins, RevPAR growth opportunities or risk-adjusted return profiles; and • Intensive asset management.
Our approach to creating value includes the following: • Strategically allocate capital which includes, among other things, capital investment, growth initiatives and other strategic transactions; • Evolving our portfolio by selling assets with lower operating margins, RevPAR growth opportunities or risk-adjusted return profiles and purchasing assets with higher operating margins, RevPAR growth opportunities or risk-adjusted return profiles; and • Intensive asset and revenue management.
Item 1. Business. Unless the context otherwise requires, all references to “we,” “us,” “our,” or the “Company” refer to Summit Hotel Properties, Inc. and its consolidated subsidiaries. Overview Summit Hotel Properties, Inc. is a self-managed lodging property investment company that was organized in June 2010 and completed its initial public offering in February 2011.
Item 1. Business. Unless the context otherwise requires, all references to “we,” “us,” “our,” or the “Company” refer to Summit Hotel Properties, Inc. and its consolidated subsidiaries. Overview Summit Hotel Properties, Inc. is a self-managed lodging property investment company that was organized on June 30, 2010 as a Maryland corporation.
At December 31, 2022, our portfolio consisted of 103 lodging properties with a total of 15,334 guestrooms located in 24 states. We own our properties fee simple, except for seven hotel properties which are subject to ground leases. As of December 31, 2022, we own 100% of the outstanding equity interests in 61 of 103 of our lodging properties.
At December 31, 2023, our portfolio consisted of 100 lodging properties with a total of 14,912 guestrooms located in 24 states. We own our properties fee simple, except for six hotel properties which are subject to ground leases. As of December 31, 2023, we own 100% of the outstanding equity interests in 56 of our lodging properties.
We have elected to be taxed as a REIT for federal income tax purposes. To qualify as a REIT, we cannot operate or manage our lodging properties. Accordingly, all of our lodging properties are leased to our taxable REIT subsidiaries ("TRS Lessees").
We have elected to be taxed as a REIT for federal income tax purposes. To qualify as a REIT, we cannot operate or manage our lodging properties. Accordingly, all of our lodging properties are leased to our taxable REIT subsidiaries ("TRS Lessees" or "TRSs") and managed by professional third-party property management companies.
NewcrestImage owns all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units (Liquidation preference $25 per unit) of the Operating Partnership ("Series Z Preferred Units"), which was issued as part of the NCI Transaction.
NewcrestImage Holdings, LLC owns all of the issued and outstanding 5.25% Series Z Cumulative Perpetual Preferred Units (Liquidation preference $25 per unit) of the Operating Partnership ("Series Z Preferred Units"), which was issued as part of the NCI Transaction (as defined under Part 1 - Item 1. " Our Financing Strategy" below).
We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions. Available Information Our Internet website is located at www.shpreit.com.
Individuals who identify as traditionally underrepresented races or ethnicities constituted approximately 22% of our workforce. We intend to continue using a combination of targeted recruiting, talent development and internal promotion strategies to expand the diversity of our employee base across all roles and functions. Available Information Our Internet website is located at www.shpreit.com.
In addition, some of our properties may be near or adjacent to other properties that have contained or currently contain storage tanks containing petroleum products or conducted or currently conduct operations which use other hazardous or toxic substances.
In addition, some of our properties may be near or adjacent to other properties that have contained or currently contain storage tanks containing petroleum products or conducted or currently conduct operations which use other hazardous or toxic substances. Releases from these adjacent or surrounding properties could affect our properties and we may be liable for any associated cleanup.
Through a wholly-owned subsidiary, we are the sole general partner of the Operating Partnership. At December 31, 2022, we owned, directly and indirectly, approximately 87.0% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding Series E and Series F preferred units of limited partnership interest.
At December 31, 2023, we owned, directly and indirectly, approximately 87% of the Operating Partnership’s issued and outstanding common units of limited partnership interest (“Common Units”), and all of the Operating Partnership’s issued and outstanding Series E and Series F preferred units of limited partnership interests.
During the year ended December 31, 2022, the GIC Joint Venture entered into a $410.0 million senior secured term loan facility (the “GIC Joint Venture Term Loan”) secured by the 27 lodging properties and two parking garages acquired in the NCI Transaction and assumed a PACE loan totaling $6.5 million.
In connection with the NCI Transaction, on January 13, 2022, our GIC Joint Venture entered into a $410.0 million senior secured term loan facility (the “GIC Joint Venture Term Loan”) secured by the 27 lodging properties and two parking garages acquired in the NCI Transaction and assumed a Property Assessed Clean Energy (" PACE") loan totaling $6.5 million.
In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to, the potential transmission of infectious diseases such as COVID-19, the existence of mold and other airborne contaminants above regulatory thresholds, the registration, maintenance and operation of our boilers and storage tanks, the supply of potable water to our guests, air emissions from emergency generators, storm water and wastewater discharges, protection of natural resources, asbestos, lead-based paint, and waste management.
The Phase I environmental site assessments were completed at various times and material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future; and future laws, ordinances or regulations may impose material additional environmental liability. 7 In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to, the potential transmission of infectious diseases, the existence of mold and other airborne contaminants above regulatory thresholds, the registration, maintenance and operation of our boilers and storage tanks, the supply of potable water to our guests, air emissions from emergency generators, storm water and wastewater discharges, protection of natural resources, asbestos, lead-based paint, and waste management.
We are committed to maintaining a work culture that treats all employees fairly and with respect, promotes inclusivity and provides equal opportunities for advancement based on merit. Our workforce diversity has increased during the year ended December 31, 2022.
We are committed to maintaining a work culture that treats all employees fairly and with respect, promotes inclusivity and provides equal opportunities for advancement based on merit. Our workforce diversity has increased during the year ended December 31, 2023. Of the 78 full-time corporate employees employed by us at February 9, 2024, women constituted approximately 45% of our workforce.
Lodging properties with efficient operating models generally require less capital to acquire, build, and maintain on an absolute and a per-key basis, than lodging properties in the full-service and Luxury segments of the industry.
Lodging properties with efficient operating models generally require less capital to acquire, build, and maintain on an absolute and a per-key basis, than lodging properties in the full-service segment of the industry. As a result, we can diversify our investment capital into ownership of a larger number of lodging properties than we could in the full-service segment.
In some cases, the Phase I environmental site assessments were conducted by another entity such as a lender, and we may not have the authority to rely on such reports.
These assessments do not generally include soil sampling, subsurface investigations or comprehensive asbestos surveys. In some cases, the Phase I environmental site assessments were conducted by another entity such as a lender, and we may not have the authorization to rely on such reports.
If contamination is discovered on our properties, environmental laws also may impose restrictions on the manner in which our property may be used or our businesses may be operated, and these restrictions may require substantial expenditures.
In addition, environmental liens may be created on contaminated sites in favor of the government for damages and costs it incurs to address contamination. If contamination is discovered on our properties, environmental laws also may impose restrictions on the manner in which our property may be used or our businesses may be operated, and these restrictions may require substantial expenditures.
See “ Note 5 – Debt ” to the Consolidated Financial Statements for additional information. Our GIC Joint Venture also operates with borrowings under a $200 million credit facility (the "Joint Venture Credit Facility").
See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. 5 Our GIC Joint Venture also operates with borrowings under a $200.0 million credit facility (the "GIC Joint Venture Credit Facility").
The Joint Venture Credit Facility is comprised of a $125.0 million revolving credit facility (the “$125 Million Revolver”) and a $75.0 million term loan (the “$75 Million Term Loan”).
The GIC Joint Venture Credit Facility is comprised of a $125.0 million revolving credit facility (the “$125 Million Revolver”) and a $75.0 million term loan (the “$75 Million Term Loan”). In September 2023, we recast the GIC Joint Venture Facility to extend the maturities of the $125 Million Revolver and the $75 Million Term Loan to September 2028.
The GIC Joint Venture was formed in July 2019 with GIC, Singapore’s sovereign wealth fund, to acquire assets that align with the Company’s current investment strategy and criteria.
The Brickell Joint Venture owns two lodging properties, and the Onera Joint Venture owns one lodging property. The GIC Joint Venture was formed in July 2019 with GIC to acquire assets that align with the Company’s current investment strategy and criteria.
Because these laws also impose liability on persons who owned a property at the time it became contaminated, we could incur cleanup costs or other environmental liabilities even after we sell properties.
Because these laws also impose liability on persons who owned a property at the time it became contaminated, we could incur cleanup costs or other environmental liabilities even after we sell properties. Contamination at, on, under or emanating from our properties also may expose us to liability to private parties for costs of remediation, personal injury, death or property damage.
See "Part II – Item 8 . – Financial Statements and Supplementary Data – Note 2 – Basis of Presentation and Significant Accounting Policies " to our Consolidated Financial Statements. Our corporate offices are located at 13215 Bee Cave Parkway, Suite B-300, Austin, TX 78738. Our telephone number is (512) 538-2300. Our website is www.shpreit.com .
We have one reportable segment as defined by generally accepted accounting principles (“GAAP”). See "Part II – Item 8 . – Financial Statements and Supplementary Data – Note 2 – Basis of Presentation and Significant Accounting Policies " to our Consolidated Financial Statements. 3 Our corporate offices are located at 13215 Bee Cave Parkway, Suite B-300, Austin, TX 78738.
We focus on lodging properties with efficient operating models that are predominantly in the Upscale segment of the lodging industry, as defined by Smith Travel Research ("STR"). We believe that our focus on this segment provides us the opportunity to achieve strong, risk-adjusted returns across multiple lodging cycles for several reasons, including: • RevPAR Growth .
We believe that our focus on this segment provides us the opportunity to achieve strong, risk-adjusted returns across multiple lodging cycles for several reasons, including: • RevPAR Growth .
We own a 51% controlling interest in 39 lodging properties through a joint venture with the sovereign wealth fund of Singapore (the "GIC Joint Venture"), and two 90% equity interests in separate joint ventures (the "Brickell Joint Venture" and the "Onera Joint Venture"). The Brickell Joint Venture owns two lodging properties and the Onera Joint Venture owns one lodging property.
We own a 51% controlling interest in 41 lodging properties through a joint venture with USFI G-Peak Pte. Ltd. ("GIC"), a private limited company incorporated in the Republic of Singapore (the "GIC Joint Venture"), and two 90% equity interests in separate joint ventures (the "Brickell Joint Venture" and the "Onera Joint Venture").
Our properties are typically located in markets with multiple demand generators such as corporate offices and headquarters, retail centers, airports, state capitols, convention centers, universities, and leisure attractions.
Our properties are typically located in markets with multiple demand generators such as corporate offices and headquarters, retail centers, airports, state capitols, convention centers, universities, and leisure attractions. See "Part II - Item 8. – Financial Statements and Supplementary Data – Note 3 - Investments in Lodging Property, net " for further information.
Since establishing our Corporate Responsibility program in 2017, we have built upon our sustainability objectives, from tracking metrics related to our consumption, waste, recycling and greenhouse gas emissions, to setting measurable, science-aligned reduction targets for energy, water and carbon, and to committing to improve the efficiency of our buildings and promote sustainable operations through our energy management program.
Since establishing our Corporate Responsibility program in 2017, we have built upon our sustainability objectives, including tracking metrics related to our energy and water consumption and greenhouse gas emissions. We have also established science-aligned reduction targets for emissions and water usage.
We believe in the benefits of strategically investing capital in our properties to ensure they are in good physical condition and facilitate market leading financial performance. We believe these investments produce attractive returns, and we intend to continue to invest capital to upgrade our lodging properties with strategic renovations and property improvement plans. External Growth Through Acquisitions.
Capitalize on Investments in Our Lodging Properties . We believe in the benefits of strategically investing capital in our properties to ensure they are in good physical condition and facilitate market leading financial performance.
Our lodging properties are generally operated with fewer employees than full-service lodging properties that offer more amenities including more extensive food and beverage options; when coupled with our market share premium, we have been able to generate higher operating margins and cash flows with less volatility. • Broad Customer Base .
Our lodging properties are generally operated with fewer employees than full-service lodging properties, which enables our assets to generate higher operating margins and cash flows with less volatility. • Broad Customer Base .
The information contained on, or accessible through, our website is not incorporated by reference into this report and should not be considered a part of this report. Business Strategy Our portfolio consists of lodging properties in desirable locations with efficient operating models.
Our telephone number is (512) 538-2300. Our website is www.shpreit.com . The information contained on, or accessible through, our website is not incorporated by reference into this report and should not be considered a part of this report.
Releases from these adjacent or surrounding properties could affect our properties and we may be liable for any associated cleanup. 7 Independent environmental consultants conducted Phase I environmental site assessments on all of our properties prior to acquisition and we intend to conduct Phase I environmental site assessments on properties we acquire in the future.
Independent environmental consultants conducted Phase I environmental site assessments on all of our properties prior to acquisition and we intend to conduct Phase I environmental site assessments on properties we acquire in the future. Phase I site assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed properties and surrounding properties.
We frequently benchmark our compensation and benefits package against those in both our industry and in similar disciplines. We have established social programs with the goal of promoting a culture of unity and collaboration among our various departments through career and personal development opportunities designed to inspire all of those involved.
We have established social programs with the goal of promoting a culture of unity and collaboration among our various departments through career and personal development opportunities designed to inspire all of those involved. Our career and personal development focus on four main principles: (1) communication and teamwork; (2) networking and mentorship; (3) leadership development; and (4) work-life balance.
As of December 31, 2022, we had $1.5 billion in outstanding indebtedness, including $676.3 million related to our joint ventures. Our pro rata debt taking into consideration only our portion of our joint venture debt was $1.2 billion at December 31, 2022.
Our pro rata debt taking into consideration only our portion of our joint venture debt was $1.1 billion at December 31, 2023.
The GIC Joint Venture Term Loan will mature on January 13, 2026 and can be extended for one 12-month period at the Company’s option, subject to certain conditions.
The GIC Joint Venture Term Loan has an initial maturity date of January 2026 and can be extended for a single 12-month period at the GIC Joint Venture's option, subject to certain contains. As such, the GIC Joint Venture Term Loan has a fully extended maturity date of January 2027.
Our long-term leverage approach is to maintain conservative debt levels with high coverage ratios to allow us the flexibility to withstand various economic cycles and to position us for growth when accretive opportunities arise. Our debt includes, and may include in the future, debt secured by stock pledges, mortgage debt secured by lodging properties and unsecured debt.
See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. Our long-term leverage approach is to maintain conservative debt levels with high coverage ratios to allow us the flexibility to withstand various economic cycles and to position us for growth when opportunities arise that meet our investment criteria.
For more information on these and our other sustainability practices, including environmental and social metrics and results, please see our current sustainability report available on our website at https://www.shpreit.com/responsibility. Tax Status REIT Election We have elected to be taxed as a REIT under Sections 856 through 859 of the IRC, commencing with our short taxable year ended December 31, 2011.
For more information on these and our other sustainability practices, including environmental and social metrics and results, please see our current sustainability report available on our website at https://www.shpreit.com/responsibility/about.
As such, we experienced a substantial decline in our revenues, profitability and cash flows from operations during the years ended December 31, 2020 and 2021.
As such, we experienced a substantial decline in our revenues, profitability and cash flows from operations from the onset of the Pandemic and into the first quarter of 2022. We began to experience a recovery in our business in the first quarter of 2022, which accelerated in the second quarter of 2022 and thereafter.
We believe that our lodging properties are positioned for long-term demand growth as travel recovers to levels more in-line with pre-Pandemic demand. • Stable Cash Flow Potential .
We believe that our lodging properties are positioned for long-term demand growth supported by the characteristics of our portfolio and its ability to appeal to evolving guests preferences. • Stable Cash Flow .
During the year ended December 31, 2022, we expanded the number of our lodging properties with electric vehicle charging stations and green certifications, and we established science-aligned targets to reduce our greenhouse gas emissions by 30% by the year 2025.
Over the past few years, we have expanded the number of our lodging properties with smart building technologies, electric vehicle charging stations, and green certifications. We reduced our greenhouse gas emissions by 15% from our 2019 baseline year by reducing our energy consumption by 7% and increasing the percentage of our electricity sourced from renewable energy by 6%.
Removed
In June 2022, the Operating Partnership exercised an option to acquire a 90% equity interest in the AC Hotel by Marriott and Element Miami Brickell Hotel in Miami, FL (together the "AC/Element Hotel") based on a gross option exercise price of $89.0 million (the "Brickell Transaction").
Added
Substantially all of our assets are held by, and all of our operations are conducted through, the Operating Partnership. Through a wholly-owned subsidiary, we are the sole general partner of the Operating Partnership.
Removed
We own a 90% equity interest in the AC/Element Hotel through our equity interest in the Brickell Joint Venture.
Added
As a result, we experienced significant improvement in lodging demand during the years ended December 31, 2023 and 2022 led by strong leisure travel and more recently, growth in business transient and group travel. Business Strategy Our portfolio consists of lodging properties in desirable locations with efficient operating models.
Removed
In October 2022, the Company entered into the Onera Joint Venture with the Onera Opportunity Fund I LP ("Onera"), developers of alternative accommodation properties, with the acquisition of a 90% equity interest in the Onera Joint Venture for $5.2 million in cash, plus additional contingent consideration limited to a maximum of $1.8 million, payable to the seller based on performance of the property for the 12-month period ending July 31, 2023.
Added
We believe these investments produce attractive returns, and we intend to continue to invest capital to upgrade our lodging properties with strategic renovations, property improvement plans, and return on discretionary investments. 4 External Growth Through Acquisitions.
Removed
The Onera Joint Venture has a 100% fee simple interest in real property and improvements located in Fredericksburg, Texas consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site in the future.
Added
We entered into the 2023 Senior Credit Facility during the year ended December 31, 2023, which amended and restated in its entirety our prior senior credit facility and included fully extended maturities for the $400 Million Revolver and $200 Million Term Loan to June 2028.
Removed
See "Part II - Item 8. – Financial Statements and Supplementary Data – Note 3 - Investments in Lodging Property, net " for further information. 3 Substantially all of our assets are held by, and all of our operations are conducted through, our operating partnership, Summit Hotel OP, LP (the “Operating Partnership”).
Added
See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information. In February 2024, the Company successfully completed a new $200 million senior unsecured term loan financing (the “2024 Term Loan”).
Removed
All of our lodging properties are operated pursuant to property management agreements between our TRS Lessees and professional third-party property management companies that are not affiliated with us. We have one reportable segment as defined by generally accepted accounting principles (“GAAP”).
Added
The 2024 Term Loan provides for a fully extended maturity date of February 2029 and interest rate pricing ranging from 135 basis points to 235 basis points over the applicable adjusted term Secured Overnight Financing Rate (“SOFR”).
Removed
However, our operations have recovered to levels that are near pre-Pandemic levels for the year ended December 31, 2022 as a result of significant improvement in our business, driven primarily by leisure travel and to a lesser extent modest improvement in other demand segments, including corporate and group travel.
Added
Proceeds from the 2024 Term Loan financing along with advances on our $400 Million Revolver were used to repay in full the Company’s $225 million 2018 Term Loan (as defined under "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ”) that was scheduled to mature in February 2025.
Removed
We anticipate that continued improvement in operating trends will be dependent on sustained strength in leisure travel and improvement in business and group travel.
Added
As a result of the 2024 Term Loan financing, the Company has significantly reduced its debt maturities until 2026 and has an average length to maturity of approximately 3.6 years. Other terms of the agreement are similar to the Company’s previous 2018 Term Loan.
Removed
As a result, we can diversify our investment capital into ownership of a larger number of lodging properties than we could in the Upper-upscale or Luxury segments. Capitalize on Investments in Our Lodging Properties .
Added
See "Part II - Item 8. - Financial Statements and Supplementary Data - Note 6 – Debt ” for further information.
Removed
We entered into modifications of our 2018 Senior Credit Facility during the years ended December 31, 2020 and 2021, which included a waiver of covenants through March 31, 2022.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+11 added−10 removed143 unchanged
Biggest changeSummary of Risk Factors Risks Related to Our Business • Risks related to achieving revenue and net income growth • Risks related to acquisitions • Risks of taxable gains as a result of lodging property dispositions • Risks related to our third-party property management companies • Risks related to lodging property management and franchise agreements • Risks related to outstanding indebtedness including our ability to hedge our interest rate exposure • Risks related to retaining key personnel • Risks related to cyber security • Risks related to uninsured and underinsured losses • Risks related to the management of our joint ventures • Risks related to inflation • Risks related to credit financing that we may provide to borrowers Risks Related to the Lodging Industry • Risks related to the outbreak of the Coronavirus and its variants, or an outbreak of other highly infectious or contagious diseases • Risks related to adverse changes in economic conditions • Risks related to competition from other lodging properties and alternative accommodations • Risks inherent to the ownership of lodging properties and the markets in which we operate • Risks related to lodging property development and other capital expenditures • Risks related to changes in consumer trends and preferences Risks Related to the Real Estate Industry and Real Estate-Related Investments • Risks related to the illiquidity of real estate investments • Risks related to compliance with the laws, regulations and covenants that apply to our lodging properties • Risks related to right-of-use assets on which certain of our lodging properties are located • Risks related to adverse changes in income and property tax rates or amendments to tax regimes that increase our state and local tax liabilities 10 Risks Related to Our Organization and Structure • Risks related to our fiduciary duties as the general partner of our Operating Partnership • Risks related to the provisions of our charter • Risks related to the provisions of Maryland law • Risks related to the limited rights of our stockholders • Risks related to actions taken by our board of directors • Risks related to being a holding company with no direct operations • Risks related to maintaining an effective system of internal controls Risks Related to Ownership of Our Securities • Risks related to the continued listing of our securities on a nationally-recognized exchange • Risks related to expected distributions • Risks related to stock price volatility • Risks related to the issuance of debt or equity securities Risks Related to Our Status as a REIT • Risks related to compliance with REIT regulations • Risks related to our TRS structure, including increased tax liabilities and operating costs • Risks that transactions with our TRSs are not conducted on arm’s-length terms • Risks that the management companies of our lodging properties may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities” • Risks that the 100% prohibited transactions tax may limit our ability to dispose of our properties • Risks related to adverse legislative or regulatory tax changes • Risks related to our REIT distribution requirements • Risks that our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes • Risks that stockholders may be restricted from acquiring or transferring certain amounts of our stock • Risks that the IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs Risks Related to Environmental, Social and Governance Factors • Risks related to climate change and the environment • Risks related to organized labor • Risks related to our ESG program The following risk factors address the material risks concerning our business.
Biggest changeSummary of Risk Factors Risks Related to Our Business • Risks related to achieving revenue and net income growth • Risks related to financing, including the risk of leverage and the corresponding risk of default on our existing indebtedness and potential inability to refinance or extend the maturities of our existing indebtedness; • Risks related to acquisitions • Risks of taxable gains as a result of lodging property dispositions • Risks related to our third-party property management companies • Risks related to lodging property management and franchise agreements • Risks related to increased interest rates or continued high rates of interest, and our ability to hedge our interest rate exposure • Risks related to retaining key personnel • Risks related to organized labor • Risks related to the effect on our business or guest confidence from a data breach or significant disruption of property operator information technology networks as a result of cyber-attacks that are greater than insurance coverages or indemnities from service providers • Risks related to uninsured and underinsured losses • Risks related to the management of our joint ventures • Risks related to inflation • Risks related to credit financing that we may provide to borrowers • Risks related to global, national, regional and local economic and geopolitical conditions and events, including wars or potential hostilities, such as terrorist attacks that may affect travel Risks Related to the Lodging Industry • Risks related to infectious disease outbreaks or pandemics • Risks related to adverse changes in economic conditions • Risks related to competition from other lodging properties and alternative accommodations • Risks inherent to the ownership of lodging properties and the markets in which we operate • Risks related to lodging property development and other capital expenditures • Risks related to changes in consumer trends and preferences 10 Risks Related to the Real Estate Industry and Real Estate-Related Investments • Risks related to the illiquidity of real estate investments • Risks related to compliance with the laws, regulations and covenants that apply to our lodging properties • Risks related to right-of-use assets on which certain of our lodging properties are located • Risks related to adverse changes in income and property tax rates or amendments to tax regimes that increase our state and local tax liabilities Risks Related to Our Organization and Structure • Risks related to our fiduciary duties as the general partner of our Operating Partnership • Risks related to the provisions of our charter • Risks related to the provisions of Maryland law • Risks related to the limited rights of our stockholders • Risks related to actions taken by our board of directors • Risks related to being a holding company with no direct operations • Risks related to maintaining an effective system of internal controls Risks Related to Ownership of Our Securities • Risks related to the continued listing of our securities on a nationally-recognized exchange • Risks related to expected distributions • Risks related to stock price volatility • Risks related to the issuance of debt or equity securities Risks Related to Our Status as a REIT • Risks related to compliance with REIT regulations • Risks related to our TRS structure, including increased tax liabilities and operating costs • Risks that transactions with our TRSs are not conducted on arm's-length terms • Risks that the management companies of our lodging properties may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities” • Risks that the 100% prohibited transactions tax may limit our ability to dispose of our properties • Risks related to adverse legislative or regulatory tax changes • Risks related to our REIT distribution requirements • Risks that our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes • Risks that stockholders may be restricted from acquiring or transferring certain amounts of our stock • Risks that the IRS could determine that certain payments we have received in the nature of liquidated damages may not be ignored for purposes of the gross income tests applicable to REITs Risks Related to Environmental, Social and Governance Factors • Risks related to environmental uncertainties and natural disasters • Risks related to our ability to continue to manage our ESG program to achieve expected social, environment and governance objectives and goals 11 The following risk factors address the material risks concerning our business.
Incurring mortgages, equity pledges and other secured debt obligations increases our risk of property losses because defaults on secured indebtedness may result in foreclosure actions initiated by lenders and ultimately our loss of the lodging property securing such loans or of the entities whose equity is pledged to secure such loans, which would include a loss of all of such entity's assets.
Incurring mortgages, equity pledges and other secured debt obligations increases our risk of property losses because defaults on secured indebtedness may result in foreclosure actions initiated by lenders and ultimately our loss of the lodging property securing such loans or the entities whose equity is pledged to secure such loans, which would include a loss of all of such entity's assets.
By contrast, our lodging properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following: • relatively short-duration occupancies; • dependence on business and commercial travelers and tourism; • over-building of lodging properties in our markets, which could adversely affect occupancy and revenue at the lodging properties we acquire; • increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs, including increased real estate and personal property taxes, due to inflation and other factors that may not be offset by increased guestroom rates; • potential increases in labor costs at our lodging properties, including as a result of unionization of the labor force, and increasing health care insurance expense; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; • adverse effects of international, national, regional and local economic and market conditions; and • unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, travel-related environmental concerns including water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes.
By contrast, our lodging properties are subject to various operating risks common to the lodging industry, many of which are beyond our control, including the following: • relatively short-duration occupancies; • dependence on business and commercial travelers and tourism; • over-building of lodging properties in our markets, which could adversely affect occupancy and revenue at the lodging properties we acquire; • increases in energy costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists; • increases in operating costs, including increased real estate and personal property taxes and insurance costs due to inflation and other factors that may not be offset by increased guestroom rates; • potential increases in labor costs at our lodging properties, including as a result of unionization of the labor force, and increasing health care insurance expense; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances; • adverse effects of international, national, regional and local economic and market conditions; and • unforeseen events beyond our control, such as instability in the national, European or global economy, terrorist attacks, travel-related health concerns including pandemics and epidemics, travel-related environmental concerns including water contamination and air pollution, political instability, regional hostilities, increases in fuel prices, imposition of taxes or surcharges by regulatory authorities and travel-related accidents and unusual weather patterns, including natural disasters such as hurricanes.
In addition, existing requirements may change and future requirements may require us to make significant unanticipated expenditures. These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. We have fixed obligations related to right-of-use assets on which certain of our lodging properties are located.
In addition, existing requirements may change and future requirements may require us to make significant unanticipated expenditures. These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We have fixed obligations related to right-of-use assets on which certain of our lodging properties are located.
As a result, our managers may in the future make decisions regarding competing lodging facilities that are not or would not be in our best interest. 13 Certain of our lodging properties are managed by affiliates of the franchisors for such lodging properties. In these situations, the management agreement and the franchise agreement are typically combined into one document.
As a result, our managers may in the future make decisions regarding competing lodging facilities that are not or would not be in our best interest. Certain of our lodging properties are managed by affiliates of the franchisors for such lodging properties. In these situations, the management agreement and the franchise agreement are typically combined into one document.
See “Part II — Item 7A . — Quantitative and Qualitative Disclosures about Market Risk .” These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. We hedge our interest rate exposure to manage our exposure to interest rate volatility, however, such arrangements may adversely affect us.
See “Part II — Item 7A . — Quantitative and Qualitative Disclosures about Market Risk .” These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We hedge our interest rate exposure to manage our exposure to interest rate volatility, however, such arrangements may adversely affect us.
To the extent we develop lodging properties or acquire lodging properties under development, we cannot provide assurance that any development project will be completed on time or within budget. Our inability to complete a project on time or within budget could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
To the extent we develop lodging properties or acquire lodging properties under development, we cannot provide assurance that any development project will be completed on time or within budget. Our inability to complete a project on time or within budget could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
These laws regarding ACM may impose fines and penalties on building owners, employers and operators for failure to comply with these requirements or expose us to third-party liability. These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
These laws regarding ACM may impose fines and penalties on building owners, employers and operators for failure to comply with these requirements or expose us to third-party liability. These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
The failure or inability of Aimbridge to satisfy its obligations to us or effectively and efficiently operate our lodging properties could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. Our lodging properties may be clustered geographically increasing business risks based on adverse market conditions.
The failure or inability of Aimbridge to satisfy its obligations to us or effectively and efficiently operate our lodging properties could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Our lodging properties may be clustered geographically increasing business risks based on adverse market conditions.
When successful, a like-kind exchange enables us to defer the taxable gain on the asset sold. Our inability to defer the taxable gain resulting from the sales of certain lodging properties, could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
When successful, a like-kind exchange enables us to defer the taxable gain on the asset sold. Our inability to defer the taxable gain resulting from the sales of certain lodging properties, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Economic weakness could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate. The lodging industry is highly competitive.
Economic weakness could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We experience a high level of competition from other hotels and alternative accommodations in the markets in which we operate. The lodging industry is highly competitive.
If we cease to be a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders. 26 We are a holding company with no direct operations.
If we cease to be a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on the total return to our stockholders. We are a holding company with no direct operations.
Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed lodging properties. These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed lodging properties. These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Any failure of our management companies to provide quality services and amenities or maintain a quality brand name and reputation could have a negative effect on their ability to operate our lodging properties and could have a material adverse effect on our financial position, results of operations and cash flows.
Any failure of our management companies to provide quality services and amenities or maintain a quality brand name and reputation could have a negative effect on their ability to operate our lodging properties and could have a material adverse effect on our consolidated financial position, results of operations and cash flows.
As a result of any of the foregoing, our hedging transactions, which are intended to limit losses and exposure to interest rate volatility, could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
As a result of any of the foregoing, our hedging transactions, which are intended to limit losses and exposure to interest rate volatility, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
If demand does not continue to increase as the economy grows, or if there is a slowdown in the general economy resulting in weakening demand, our operating results and growth prospects could be adversely affected.
If demand does not continue to increase as the economy grows, or if there is a slowdown in the general economy or a recession resulting in weakening demand, our operating results and growth prospects could be adversely affected.
As a result, any slowdown in economic growth or an economic downturn could adversely affect our future results of operations and our growth prospects. 11 Our expenses may not decrease if our revenue decreases.
As a result, any slowdown in economic growth or an economic downturn could adversely affect our future results of operations and our growth prospects. Our expenses may not decrease if our revenue decreases.
Our inability to complete lodging property acquisitions on favorable terms or at all, could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Our inability to complete lodging property acquisitions on favorable terms or at all, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
As a result, our financial position, results of operations and our ability to service debt and make distributions to stockholders are dependent on the ability of our management companies to operate our lodging properties successfully.
As a result, our consolidated financial position, results of operations and our ability to service debt and make distributions to stockholders are dependent on the ability of our management companies to operate our lodging properties successfully.
If the magnitude of such unknown liabilities is high, they could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
If the magnitude of such unknown liabilities is high, they could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
The real estate market is also affected by many factors that are beyond our control, including: • adverse changes in international, national, regional and local economic and market conditions; • changes in interest rates and in the availability, cost and terms of debt financing; • governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances and any changes thereto; • the ongoing need for capital improvements, particularly in older structures, that may require us to periodically close or partially close our assets for renovation and expend funds to correct defects or to make improvements before an asset can be sold; • changes in operating expenses; and • civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism, environmental uncertainties, or outbreaks of highly infectious diseases or pandemics, such as COVID-19.
The real estate market is also affected by many factors that are beyond our control, including: • adverse changes in international, national, regional and local economic and market conditions; • changes in interest rates and in the availability, cost and terms of debt financing; • governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with laws and regulations, fiscal policies and ordinances and any changes thereto; • the ongoing need for capital improvements, particularly in older structures, that may require us to periodically close or partially close our assets for renovation and expend funds to correct defects or to make improvements before an asset can be sold; • changes in operating expenses; and • civil unrest, acts of God, including earthquakes, floods and other natural disasters, which may result in uninsured losses, and acts of war or terrorism, environmental uncertainties, or outbreaks of highly infectious diseases or pandemics.
If the amount of sales made through Internet intermediaries increases significantly, guestroom revenue may flatten or decrease, which could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 22 Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.
If the amount of sales made through Internet intermediaries increases significantly, guestroom revenue may flatten or decrease, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Consumer trends and preferences, particularly with respect to younger generations, could change away from select-service lodging properties.
We have entered into six interest rate swaps having an aggregate notional amount of $600.0 million at December 31, 2022, to hedge against interest rate increases on certain of our outstanding variable-rate indebtedness. In the future, we may manage our exposure to interest rate volatility by using hedging arrangements, such as interest rate swaps, caps, and collars.
We have entered into six interest rate swaps having an aggregate notional amount of $600.0 million at December 31, 2023, to hedge against interest rate increases on certain of our outstanding variable-rate indebtedness. In the future, we may manage our exposure to interest rate volatility by using hedging arrangements, such as interest rate swaps, caps, and collars.
We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities. We may assume existing liabilities in connection with the acquisition of lodging properties, some of which may be unknown or unquantifiable on the acquisition date.
We may assume existing liabilities in connection with the acquisition of lodging properties, some of which may be unknown or unquantifiable on the acquisition date.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 14 We are required to expend funds to maintain franchisor operating standards and we may experience a loss of a franchise license or a decline in the value of a franchise brand.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We are required to expend funds to maintain franchisor operating standards and we may experience a loss of a franchise license or a decline in the value of a franchise brand.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 16 Secured debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in any lodging property subject to mortgage debt or equity pledges.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Secured debt obligations expose us to the possibility of foreclosure, which could result in the loss of our investment in any lodging property subject to mortgage debt or equity pledges.
Our lodging properties are also subject to regulations intended to address the risk of highly infectious diseases, such as COVID-19, which can restrict certain activities of our lodging properties and result in increased costs. In addition, federal and state laws and regulations, including laws such as the ADA, impose further restrictions on our operations.
Our lodging properties are also subject to regulations intended to address the risk of highly infectious diseases which can restrict certain activities of our lodging properties and result in increased costs. In addition, federal and state laws and regulations, including laws such as the ADA, impose further restrictions on our operations.
Our ability to successfully integrate newly acquired lodging properties or achieve expected operating performance is subject to the following risks: • we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in us paying too much for lodging properties in new markets or not have the lodging properties achieve their maximum potential; • market conditions may result in lower-than-expected occupancy and guestroom rates; • we may acquire lodging properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the lodging properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the lodging properties; • we may need to spend more than anticipated amounts to make necessary improvements or renovations to our newly acquired lodging properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of lodging properties, into our existing operations; and • the inability of our acquired lodging properties to meet our operating performance expectations could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Our ability to successfully integrate newly acquired lodging properties or achieve expected operating performance is subject to the following risks: • we may not possess the same level of familiarity with the dynamics and market conditions of any new markets that we may enter, which could result in us paying too much for lodging properties in new markets or not have the lodging properties achieve their maximum potential; • market conditions may result in lower-than-expected occupancy and guestroom rates; • we may acquire lodging properties without any recourse, or with only limited recourse, for liabilities, whether known or unknown, such as cleanup of environmental contamination, claims by tenants, vendors or other persons against the former owners of the lodging properties and claims for indemnification by general partners, directors, officers and others indemnified by the former owners of the lodging properties; • we may need to spend more than anticipated amounts to make necessary improvements or renovations to our newly acquired lodging properties; • we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of lodging properties, into our existing operations; and • the inability of our acquired lodging properties to meet our operating performance expectations could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 13 We may assume liabilities in connection with the acquisition of lodging properties, including unknown liabilities.
The loss of services from any of the members of our management team, and our inability to find suitable replacements on a timely basis, could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. We could incur uninsured and underinsured losses.
The loss of services from any of the members of our management team, and our inability to find suitable replacements on a timely basis, could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 18 We could incur uninsured and underinsured losses.
We have not experienced any cyber incidents that we believe to be material or that could have a material adverse effect on the business, financial condition and results of operations of the Company. Any of these items could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
We have not experienced any cyber incidents that we believe to be material or that could have a material adverse effect on the business, consolidated financial position and results of operations of the Company. Any of these items could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 21 We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We have significant ongoing needs to make capital expenditures at our lodging properties, which require us to devote funds to these purposes.
It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all, and we may not have sufficient borrowing capacity on our 2018 Senior Credit Facility to repay any amounts that we are unable to refinance.
It may be difficult to refinance or extend the maturity of such loans on terms acceptable to us, or at all, and we may not have sufficient borrowing capacity on our 2023 Senior Credit Facility to repay any amounts that we are unable to refinance.
As such, we are subject to credit financing risk in the case of a borrower default. These conditions could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
As such, we are subject to credit financing risk in the case of a borrower default. These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
Our lodging properties are primarily located in the top 50 MSAs and 91% are located within the top 100 MSAs. In certain regions, we have lodging properties that are concentrated geographically, which may increase business risks based on adverse market conditions.
Our lodging properties are primarily located in the top 50 MSAs and 90% are located within the top 100 MSAs. In certain regions, we have lodging properties that are concentrated geographically, which may increase business risks based on adverse market conditions.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. Development of lodging properties is subject to timing, budgeting and other risks.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 22 Development of lodging properties is subject to timing, budgeting and other risks.
The spread of highly infectious or contagious diseases could cause severe disruptions in air and other forms of travel that reduce the number of guests visiting our lodging properties. This could disrupt our operations and we could experience a material adverse effect on our business, financial condition, results of operations and cash flows.
The spread of highly infectious or contagious diseases could cause severe disruptions in air and other forms of travel that reduce the number of guests visiting our lodging properties. This could disrupt our operations and we could experience a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
In addition, the Pandemic has increased cybersecurity risk as a result of global remote working dynamics for our customers, employees and third-party providers that present additional opportunities for threat actors to engage in social engineering and to exploit vulnerabilities in non-corporate networks.
In addition, the Pandemic caused a shift to remote work and has increased cybersecurity risk as a result of global remote working dynamics for our customers, employees and third-party providers that present additional opportunities for threat actors to engage in social engineering and to exploit vulnerabilities in non-corporate networks.
Risks Related to the Lodging Industry The outbreak of any highly infectious or contagious diseases, could adversely affect the number of guests visiting our lodging properties and disrupt our operations, resulting in a material adverse effect on our business, financial condition, results of operations and cash flows.
Risks Related to the Lodging Industry The outbreak of any highly infectious or contagious diseases, could adversely affect the number of guests visiting our lodging properties and disrupt our operations, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. An increase in interest rates would increase our interest costs on our variable rate debt and could have broader effects on the cost of capital for real estate companies and real estate asset values.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 17 An increase in interest rates would increase our interest costs on our variable rate debt and continued high rates of interest on our variable rate debt could have broader effects on the cost of capital for real estate companies and real estate asset values.
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, assets or results of operations. Certain lodging properties we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”).
We are aware of no past or present environmental liability for non-compliance with environmental, health and safety laws and regulations that we believe would have a material adverse effect on our business, consolidated financial position, or results of operations. 24 Certain lodging properties we currently own or those we acquire in the future contain, may contain, or may have contained, asbestos-containing material (“ACM”).
Our board of directors has the ability to revoke our REIT qualification without stockholder approval. Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT.
At December 31, 2022, our interest rate swaps were in an asset position totaling $16.8 million (see "Part II – Item 8. – Financial Statements and Supplementary Data – Note 8 – Derivative Financial Instruments and Hedging "). 17 Our success depends on key personnel whose continued service is not guaranteed.
At December 31, 2023, our interest rate swaps were in an asset position totaling $14.0 million (see "Part II – Item 8. – Financial Statements and Supplementary Data – Note 8 – Derivative Financial Instruments and Hedging "). Our success depends on key personnel whose continued service is not guaranteed.
Also, as of December 31, 2022, seven of our lodging properties are subject to third-party ground leases which generally require periodic increases in rent payments.
Also, as of December 31, 2023, six of our lodging properties are subject to third-party ground leases which generally require periodic increases in rent payments.
We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, financial condition, results of operations and cash flows.
These conditions could have a material adverse effect on our business, consolidated financial position, results of operations and cash flows. 20 We may provide mezzanine financing to developers or seller financing in connection with the disposition of a lodging property which exposes us to credit financing risk in the case of a borrower default, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows.
As a result, any appreciated personal property that is transferred in connection with a Section 1031 Exchange of real property will cause gain to be recognized, and such gain is generally treated as non-qualifying income for the REIT 95% and 75% gross income tests.
As a result, any appreciated personal property that is transferred in connection with a Section 1031 Exchange of real property will cause gain to be recognized, and such gain is generally treated as non-qualifying income for the REIT 95% and 75% gross income tests. Any such non-qualifying income could have an adverse effect on our REIT status.
Our business is sensitive to the willingness and ability of our customers to travel. The outbreak of any highly infectious or contagious diseases, such as COVID-19 and its variants, may result in decreases in travel to and from, and economic activity in, areas in which we operate, and may adversely affect the number of guests that visit our lodging properties.
Our business is sensitive to the willingness and ability of our customers to travel. The outbreak of any highly infectious or contagious diseases or a pandemic may result in decreases in travel to and from, and economic activity in, areas in which we operate, and may adversely affect the number of guests that visit our lodging properties.
In addition, there are no restrictions in our charter or bylaws that limit the amount or percentage of indebtedness that we may incur or restrict the form in which our indebtedness will be incurred (including recourse or non-recourse debt or cross-collateralized debt). 15 A substantial level of indebtedness could have adverse consequences for our business, results of operations and financial position because it could, among other things: • require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, capital expenditures and other general corporate purposes, including to pay dividends on our common stock and our preferred stock as currently contemplated or necessary to satisfy the requirements for qualification as a REIT; • increase our vulnerability to general adverse economic and industry conditions and limit our flexibility in planning for, or reacting to, changes in our business and our industry; • limit our ability to borrow additional funds or refinance indebtedness on favorable terms or at all to expand our business or ease liquidity constraints; and • place us at a competitive disadvantage relative to competitors that have less indebtedness.
A substantial level of indebtedness could have adverse consequences for our business, consolidated financial position and results of operations because it could, among other things: • require us to dedicate a substantial portion of our cash flow from operations to make principal and interest payments on our indebtedness, thereby reducing our cash flow available to fund working capital, capital expenditures and other general corporate purposes, including to pay dividends on our common stock and our preferred stock as currently contemplated or necessary to satisfy the requirements for qualification as a REIT; • increase our vulnerability to general adverse economic and industry conditions and limit our flexibility in planning for, or reacting to, changes in our business and our industry; • limit our ability to borrow additional funds or refinance indebtedness on favorable terms or at all to expand our business or ease liquidity constraints; and • place us at a competitive disadvantage relative to competitors that have less indebtedness.
In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated.
In addition, our charter limits the liability of our directors and officers to us and our stockholders for money damages, except for liability resulting from: • actual receipt of an improper benefit or profit in money, property or services; or • active and deliberate dishonesty by the director or officer that was established by a final judgment as being material to the cause of action adjudicated. 26 Our charter authorizes us to indemnify our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law.
Risks Related to Our Organization and Structure Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest. We, through our wholly-owned subsidiary that serves as the sole general partner of our Operating Partnership, have fiduciary duties to our Operating Partnership’s limited partners, the discharge of which may conflict with the interests of our stockholders.
We, through our wholly-owned subsidiary that serves as the sole general partner of our Operating Partnership, have fiduciary duties to our Operating Partnership’s limited partners, the discharge of which may conflict with the interests of our stockholders.
Thus, a substantial portion of our revenues is generated by lodging properties managed by Aimbridge. This significant concentration of operational risk in one management company makes us more vulnerable economically than if our management was more evenly diversified among several management companies.
As of December 31, 2023, Aimbridge Hospitality or its affiliates (“Aimbridge”) managed 61 of our 100 lodging properties. Thus, a substantial portion of our revenues is generated by lodging properties managed by Aimbridge. This significant concentration of operational risk in one management company makes us more vulnerable economically than if our management was more evenly diversified among several management companies.
Although we believe that we will be able to refinance or extend the maturity of these loans, or will have the capacity to repay them, if necessary, using draws under our 2018 Senior Credit Facility, there can be no assurance that our 2018 Senior Credit Facility will be available to repay such maturing debt, as draws under our 2018 Senior Credit Facility are subject to certain use restrictions and limitations based upon our unencumbered assets and certain financial covenants.
Although we believe that we will be able to refinance or extend the maturity of these loans, or will have the capacity to repay them, if necessary, using draws under our 2023 Senior Credit Facility, there can be no assurance that our 2023 Senior Credit Facility will be available to repay such maturing debt, as draws under our 2023 Senior Credit Facility are subject to certain use restrictions and limitations based upon our unencumbered assets and certain financial covenants. 16 These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock.
Furthermore, persons who sent waste to a waste disposal facility, such as a landfill or an incinerator, may be liable for costs associated with cleanup of that facility. 23 In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to the registration, maintenance and operation of our boilers and storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew, and waste management.
In addition, our lodging properties (including our real property, operations and equipment) are subject to various federal, state and local environmental, health and safety regulatory requirements that address a wide variety of issues, including, but not limited to the registration, maintenance and operation of our boilers and storage tanks, air emissions from emergency generators, storm water and wastewater discharges, asbestos, lead-based paint, mold and mildew, and waste management.
If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
If states and localities in which we own material amounts of property or conduct material amounts of business make changes to their tax rates or tax regimes that increase our state and local tax liabilities, such increases could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 25 Risks Related to Our Organization and Structure Our fiduciary duties as the general partner of our Operating Partnership could create conflicts of interest.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company. As of December 31, 2022, Aimbridge Hospitality or its affiliates (“Aimbridge”) managed 62 of our 103 lodging properties.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 14 The management of a large number of lodging properties in our portfolio is currently concentrated with one property management company.
In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries, including the Convertible Notes (defined below under "Part II. -
We also rely on distributions from our Operating Partnership to meet any of our obligations, including tax liabilities on taxable income allocated to us from our Operating Partnership (which might make distributions to us that do not equal the tax on such allocated taxable income). 27 In addition, because we are a holding company, stockholders’ claims will be structurally subordinated to all existing and future liabilities and obligations (whether or not for borrowed money) of our Operating Partnership and its subsidiaries, including the Convertible Notes (defined below under "Part II. -
Management cannot predict the extent to which disruptions in travel as a result of infectious disease outbreaks, such as COVID-19 and its variants, will have a material adverse effect on our business, financial condition, results of operations and cash flows.
Management cannot predict the extent to which disruptions in travel as a result of infectious disease outbreaks will have a material adverse effect on our business, consolidated financial position, results of operations and cash flows. Economic conditions may adversely affect the lodging industry.
Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make. These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make.
Because our lodging properties are concentrated with a limited number of franchise brands, a loss of all of the licenses for a particular franchise could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Because our lodging properties are concentrated with a limited number of franchise brands, a loss of all of the licenses for a particular franchise could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 15 Negative publicity related to one of the franchise brands or the general decline of a brand also may adversely affect the underlying value of our lodging properties or result in a reduction in business.
A typical office property owner, for example, has long-term leases with third-party tenants, which provide a relatively stable long-term stream of revenue.
Lodging properties have different economic characteristics than many other real estate assets. A typical office property owner, for example, has long-term leases with third-party tenants, which provide a relatively stable long-term stream of revenue.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. We could incur significant costs related to government regulation and litigation over environmental, health and safety matters. Our lodging properties and development land parcels are subject to various federal, state and local environmental laws that impose liability for contamination.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. We could incur significant costs related to government regulation and litigation over environmental, health and safety matters.
Portions of our information technology infrastructure or the information technology infrastructure of our third-party property managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.
Any of these events could adversely affect our financial results, stock price and reputation, result in misstated financial reports and subject us to potential litigation and liability. 19 Portions of our information technology infrastructure or the information technology infrastructure of our third-party property managers and franchisors also may experience interruptions, delays or cessations of service or produce errors in connection with systems integration or migration work that takes place from time to time.
An event of default that is not timely cured could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 24 The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.
The states and localities in which we own material amounts of property or conduct material business operations could raise their income and property tax rates or amend their tax regimes in a manner that increases our state and local tax liabilities.
Our board of directors may amend or revise these and other policies and guidelines from time to time without the vote or consent of our stockholders. Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. Our board of directors has the ability to revoke our REIT qualification without stockholder approval.
However, our board of directors may by resolution elect to opt into the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt into the control share provisions of the MGCL in the future. 25 Our rights and the rights of our stockholders to take action against our directors and officers are limited.
In addition, pursuant to a provision in our bylaws, we have opted out of the control share provisions of the MGCL. However, our board of directors may by resolution elect to opt into the business combination provisions of the MGCL and we may, by amendment to our bylaws, opt into the control share provisions of the MGCL in the future.
Additionally, if the United States experiences a recession, we would have to manage our costs and capital investments accordingly, which could adversely affect our near-term growth. These conditions could have a material adverse effect on our business, financial conditions, results of operations and cash flows.
Additionally, if the United States experiences a significant economic downturn, we would have to manage our costs and capital investments accordingly, which could adversely affect our near-term growth.
In addition, sophisticated hardware and operating system software and applications that we and our third-party property managers or franchisors may procure from outside companies may contain defects in design or manufacture, including “bugs” and other problems that could unexpectedly interfere with our internal operations or the operations at our lodging properties. 18 The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential business at our lodging properties.
The costs to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and efforts to address these problems may not be successful and could result in interruptions, delays, cessation of service and loss of existing or potential business at our lodging properties.
If any of the above risks are realized, it could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. 19 Inflation may affect consumer confidence which could reduce consumer demand for lodging, and may increase our operating costs, resulting in a material adverse effect on our business, financial condition, results of operations and cash flows.
Inflation may affect consumer confidence which could reduce consumer demand for lodging, and may increase our operating costs, resulting in a material adverse effect on our business, consolidated financial position, results of operations and cash flows. Our business is generally correlated to certain macroeconomic trends.
As our portfolio is concentrated in select-service hotels, significant consumer shifts in preferences away from select-service hotels could adversely affect our financial position, results of operations, and cash flows or the market price of our stock.
As our portfolio is concentrated in select-service hotels, significant consumer shifts in preferences away from select-service hotels could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 23 Risks Related to the Real Estate Industry and Real Estate-Related Investments Illiquidity of real estate investments could significantly impede our ability to respond to adverse changes in the performance of our lodging properties or to adjust our portfolio in response to changes in economic and other conditions.
These conditions could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks. The agreements governing our indebtedness contain covenants that place restrictions on us and our subsidiaries.
The agreements governing our indebtedness place restrictions on us and our subsidiaries, reducing operational flexibility and creating default risks. The agreements governing our indebtedness contain covenants that place restrictions on us and our subsidiaries.
Any of our efforts to reduce operating costs also could adversely affect the future growth of our business and the value of our lodging properties. We may be unable to complete acquisitions that would grow our business.
Any of our efforts to reduce operating costs also could adversely affect the future growth of our business and the value of our lodging properties. Actions by organized labor could have a material adverse effect on our business.
Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate. Lodging properties have different economic characteristics than many other real estate assets.
These conditions could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 21 Our operating results and ability to make distributions to our stockholders may be adversely affected by the risks inherent to the ownership of lodging properties and the markets in which we operate.
Any such non-qualifying income could have an adverse effect on our REIT status. 12 We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.
We may fail to successfully integrate acquired lodging properties or achieve expected operating performance.
All of our long-term debt existing as of December 31, 2022 is secured by mortgages on our lodging properties and related assets or pledges of the equity in our TRS Lessee subsidiaries, the subsidiaries that own our lodging properties, or both.
A portion of our long-term debt existing as of December 31, 2023 is secured by mortgages on our lodging properties.
Our business is generally correlated to certain macroeconomic trends. During the year ended December 31, 2022, the U.S. economy has experienced the highest rate of inflation in the past 40 years.
During the year ended December 31, 2022 and thereafter, the U.S. economy has experienced a high rate of inflation, which has moderated during the year ended December 31, 2023 but still remains above historical levels.
Removed
Negative publicity related to one of the franchise brands or the general decline of a brand also may adversely affect the underlying value of our lodging properties or result in a reduction in business.
Added
We believe that unions are generally becoming increasingly active about organizing workers at lodging properties in certain locations and in some cases are demanding changes to work rules or conditions that are potentially more costly to owners. Union activity in markets in which we own lodging properties can increase our operating costs even if our hotels are not unionized.
Removed
Any of these events could adversely affect our financial results, stock price and reputation, result in misstated financial reports and subject us to potential litigation and liability.
Added
If the workers at our lodging properties unionize in the future or if there is unionization activity in a market in which we own a lodging property, we could incur a significant increase in administrative, labor and legal expenses, which could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 12 We may be unable to complete acquisitions that would grow our business.
Removed
The Pandemic has disrupted and may continue to disrupt our business, which could further materially adversely affect our operations, financial position and results of operations. The Pandemic materially adversely affected and may continue to materially adversely affect our financial position and results of operations.
Added
In addition, there are no restrictions in our charter or bylaws that limit the amount or percentage of indebtedness that we may incur or restrict the form in which our indebtedness will be incurred (including recourse or non-recourse debt or cross-collateralized debt).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLodging property information for the year ended December 31, 2022 is as follows: Franchise/Brand Location STR Chain Scale Number of Guestrooms Marriott AC Hotel by Marriott (2)(6) Miami, FL Upscale 156 AC Hotel by Marriott (4)(5) Houston, TX Upscale 195 AC Hotel by Marriott (4)(5) Frisco, TX Upscale 150 AC Hotel by Marriott (4)(5) Oklahoma City, OK Upscale 142 AC Hotel by Marriott (4)(5) Dallas, TX Upscale 128 AC Hotel by Marriott (1) Atlanta, GA Upscale 255 Courtyard by Marriott (4)(5) Grapevine, TX Upscale 181 Courtyard by Marriott (4)(5) Amarillo, TX Upscale 107 Courtyard by Marriott (1) Indianapolis, IN Upscale 297 Courtyard by Marriott (1) Fort Lauderdale, FL Upscale 261 Courtyard by Marriott (1) Nashville, TN Upscale 226 Courtyard by Marriott (1) New Haven, CT Upscale 207 Courtyard by Marriott (1) Fort Worth, TX Upscale 203 Courtyard by Marriott (1) New Orleans (Convention), LA Upscale 202 Courtyard by Marriott (1) Charlotte, NC Upscale 181 Courtyard by Marriott (1) Atlanta (Decatur), GA Upscale 179 Courtyard by Marriott (1) New Orleans (Metairie), LA Upscale 153 Courtyard by Marriott (1) Atlanta (Downtown), GA Upscale 150 Courtyard by Marriott (1) New Orleans (French Quarter), LA Upscale 140 Courtyard by Marriott (1) Kansas City, MO Upscale 123 Courtyard by Marriott (1) Dallas (Arlington), TX Upscale 103 Courtyard by Marriott (4) Pittsburgh, PA Upscale 183 Courtyard by Marriott (4) Phoenix (Scottsdale), AZ Upscale 153 Element (2)(6) Miami, FL Upscale 108 Fairfield Inn & Suites by Marriott (1) Louisville, KY Upper-midscale 140 36 Franchise/Brand Location STR Chain Scale Number of Guestrooms Four Points by Sheraton (2) San Francisco, CA Upscale 101 Marriott (1) Boulder, CO Upper-upscale 165 Residence Inn by Marriott (4)(5) Frisco, TX Upscale 150 Residence Inn by Marriott (4)(5) Dallas, TX Upscale 121 Residence Inn by Marriott (4)(5) Tyler, TX Upscale 119 Residence Inn by Marriott (1) Baltimore (Downtown), MD Upscale 189 Residence Inn by Marriott (1) Cleveland, OH Upscale 175 Residence Inn by Marriott (1) Atlanta, GA Upscale 160 Residence Inn by Marriott (1) Boston (Watertown), MA Upscale 150 Residence Inn by Marriott (1) Baltimore (Hunt Valley), MD Upscale 141 Residence Inn by Marriott (1) New Orleans (Metairie), LA Upscale 120 Residence Inn by Marriott (1) Branchburg, NJ Upscale 101 Residence Inn by Marriott (1) Dallas (Arlington), TX Upscale 96 Residence Inn by Marriott (2)(3) Portland (Portland Airport at Cascade Station), OR Upscale 124 Residence Inn by Marriott (4) Portland (Downtown), OR Upscale 258 Residence Inn by Marriott (4) Portland (Hillsboro), OR Upscale 122 Residence Inn by Marriott (4) Steamboat Springs, CO Upscale 110 SpringHill Suites by Marriott (4)(5) Dallas, TX Upscale 148 SpringHill Suites by Marriott (4)(5) New Orleans, LA Upscale 74 SpringHill Suites by Marriott (1) New Orleans, LA Upscale 208 SpringHill Suites by Marriott (1) Louisville, KY Upscale 198 SpringHill Suites by Marriott (1) Indianapolis, IN Upscale 156 SpringHill Suites by Marriott (1) Nashville, TN Upscale 78 SpringHill Suites by Marriott (4) Phoenix (Scottsdale), AZ Upscale 121 TownePlace Suites by Marriott (4)(5) Grapevine, TX Upper-midscale 120 TownePlace Suites by Marriott (4)(5) New Orleans, LA Upper-midscale 105 Total Marriott (51 hotel properties) 7,933 Hilton Canopy Hotel (4)(5) Frisco, TX Upper-upscale 150 Canopy Hotel (3)(4)(5) New Orleans, LA Upper-upscale 176 DoubleTree (1) San Francisco, CA Upscale 210 Embassy Suites (2)(4) Tucson, AZ Upper-upscale 120 Embassy Suites (3)(4)(5) Amarillo, TX Upper-upscale 226 Hampton Inn & Suites (4)(5) Dallas, TX Upper-midscale 176 Hampton Inn & Suites (1) Baltimore, MD Upper-midscale 116 Hampton Inn & Suites (1) Ventura (Camarillo), CA Upper-midscale 116 Hampton Inn & Suites (1) San Diego (Poway), CA Upper-midscale 108 Hampton Inn & Suites (1)(3) Austin, TX Upper-midscale 209 Hampton Inn & Suites (2) Minneapolis, MN Upper-midscale 211 Hampton Inn & Suites (4)(5) Tampa (Ybor City), FL Upper-midscale 138 Hampton Inn & Suites (4)(5) Silverthorne, CO Upper-midscale 88 Hilton Garden Inn (2)(3)(4) Grapevine, TX Upscale 152 Hilton Garden Inn (4)(5) Longview, TX Upscale 122 Hilton Garden Inn (4)(5) Bryan, TX Upscale 119 Hilton Garden Inn (1) Houston (Energy Corridor), TX Upscale 190 Hilton Garden Inn (1) Boston (Waltham), MA Upscale 148 Hilton Garden Inn (1) Greenville, SC Upscale 120 Hilton Garden Inn (1) Minneapolis (Eden Prairie), MN Upscale 97 Hilton Garden Inn (1)(3) Houston (Galleria), TX Upscale 182 37 Franchise/Brand Location STR Chain Scale Number of Guestrooms Hilton Garden Inn (4)(5) San Jose (Milpitas), CA Upscale 161 Homewood Suites (4)(5) Midland, TX Upscale 118 Homewood Suites (4)(5) Aliso Viejo (Laguna Beach), CA Upscale 129 Homewood Suites (4)(5) Tucson, AZ Upscale 122 Total Hilton (25 hotel properties) 3,704 Hyatt Hyatt House (1) Orlando, FL Upscale 168 Hyatt House (1) Miami, FL Upscale 163 Hyatt House (1) Denver (Englewood), CO Upscale 135 Hyatt Place (4)(5) Oklahoma City, OK Upscale 134 Hyatt Place (4)(5) Plano, TX Upscale 127 Hyatt Place (4)(5) Grapevine, TX Upscale 125 Hyatt Place (4)(5) Lubbock, TX Upscale 125 Hyatt Place (1) Minneapolis, MN Upscale 213 Hyatt Place (1) Chicago (Downtown), IL Upscale 206 Hyatt Place (1) Chicago (Lombard), IL Upscale 151 Hyatt Place (1) Orlando (Convention), FL Upscale 150 Hyatt Place (1) Orlando (Universal), FL Upscale 150 Hyatt Place (1) Denver (Lone Tree), CO Upscale 127 Hyatt Place (1) Phoenix (Scottsdale), AZ Upscale 126 Hyatt Place (1) Denver (Englewood), CO Upscale 126 Hyatt Place (1) Chicago (Hoffman Estates), IL Upscale 126 Hyatt Place (1) Baltimore (Owing Mills), MD Upscale 123 Hyatt Place (1) Long Island (Garden City), NY Upscale 122 Hyatt Place (1)(3) Portland (Portland Airport/Cascade Station), OR Upscale 136 Hyatt Place (2) Phoenix (Mesa), AZ Upscale 152 Total Hyatt (20 hotel properties) 2,885 IHG Holiday Inn Express & Suites (4)(5) Oklahoma City, OK Upper-midscale 124 Holiday Inn Express & Suites (4)(5) Grapevine, TX Upper-midscale 95 Holiday Inn Express & Suites (1) San Francisco, CA Upper-midscale 252 Holiday Inn Express & Suites (1) Minneapolis (Minnetonka), MN Upper-midscale 93 Hotel Indigo (1) Asheville, NC Upper-upscale 116 Staybridge Suites (1) Denver (Glendale), CO Upscale 121 Total IHG (6 hotel properties) 801 Independent Onera (7) Fredericksburg, TX N/A 11 Total Portfolio (103 lodging properties) 15,334 (1) These lodging properties are included in our borrowing base for our senior revolving credit and term loan facilities at December 31, 2022.
Biggest changeLodging property information for the year ended December 31, 2023 is as follows: Franchise/Brand Location STR Chain Scale Number of Guestrooms Marriott AC Hotel by Marriott Atlanta, GA Upscale 255 AC Hotel by Marriott (1) Houston, TX Upscale 195 AC Hotel by Marriott (2) Miami, FL Upscale 156 AC Hotel by Marriott (1) Frisco, TX Upscale 150 AC Hotel by Marriott (1) Oklahoma City, OK Upscale 142 AC Hotel by Marriott (1) Dallas, TX Upscale 128 Courtyard by Marriott Indianapolis, IN Upscale 297 Courtyard by Marriott Fort Lauderdale, FL Upscale 261 Courtyard by Marriott Nashville, TN Upscale 226 Courtyard by Marriott New Haven, CT Upscale 207 Courtyard by Marriott Fort Worth, TX Upscale 203 Courtyard by Marriott New Orleans (Convention), LA Upscale 202 Courtyard by Marriott (1) Pittsburgh, PA Upscale 183 Courtyard by Marriott Charlotte, NC Upscale 181 Courtyard by Marriott (1) Grapevine, TX Upscale 181 Courtyard by Marriott Atlanta (Decatur), GA Upscale 179 Courtyard by Marriott (1) Phoenix (Scottsdale), AZ Upscale 153 Courtyard by Marriott New Orleans (Metairie), LA Upscale 153 Courtyard by Marriott Atlanta (Downtown), GA Upscale 150 Courtyard by Marriott New Orleans (French Quarter), LA Upscale 140 Courtyard by Marriott Kansas City, MO Upscale 123 Courtyard by Marriott (1) Amarillo, TX Upscale 107 Courtyard by Marriott Dallas (Arlington), TX Upscale 103 Element (2) Miami, FL Upscale 108 Fairfield Inn & Suites by Marriott Louisville, KY Upper Midscale 140 Four Points by Sheraton San Francisco, CA Upscale 101 Marriott Boulder, CO Upper Upscale 165 Residence Inn by Marriott (1) Portland (Downtown), OR Upscale 258 Residence Inn by Marriott Baltimore (Downtown), MD Upscale 189 Residence Inn by Marriott Cleveland, OH Upscale 175 Residence Inn by Marriott Atlanta, GA Upscale 160 Residence Inn by Marriott Boston (Watertown), MA Upscale 150 Residence Inn by Marriott (1) Frisco, TX Upscale 150 Residence Inn by Marriott Baltimore (Hunt Valley), MD Upscale 141 Residence Inn by Marriott Portland (Portland Airport at Cascade Station), OR Upscale 124 Residence Inn by Marriott (1) Portland (Hillsboro), OR Upscale 122 Residence Inn by Marriott (1) Dallas, TX Upscale 121 Residence Inn by Marriott New Orleans (Metairie), LA Upscale 120 Residence Inn by Marriott (1) Scottsdale, AZ Upscale 120 Residence Inn by Marriott (1) Tyler, TX Upscale 119 Residence Inn by Marriott (1) Steamboat Springs, CO Upscale 110 Residence Inn by Marriott Branchburg, NJ Upscale 101 Residence Inn by Marriott Dallas (Arlington), TX Upscale 96 SpringHill Suites by Marriott New Orleans, LA Upscale 208 37 Franchise/Brand Location STR Chain Scale Number of Guestrooms SpringHill Suites by Marriott Louisville, KY Upscale 198 SpringHill Suites by Marriott Indianapolis, IN Upscale 156 SpringHill Suites by Marriott (1) Dallas, TX Upscale 148 SpringHill Suites by Marriott (1) Phoenix (Scottsdale), AZ Upscale 121 SpringHill Suites by Marriott Nashville, TN Upscale 78 SpringHill Suites by Marriott (1) New Orleans, LA Upscale 74 TownePlace Suites by Marriott (1) Grapevine, TX Upper Midscale 120 TownePlace Suites by Marriott (1) New Orleans, LA Upper Midscale 105 Total Marriott (52 hotel properties) 8,053 Hilton Canopy Hotel (1) New Orleans, LA Upper Upscale 176 Canopy Hotel (1) Frisco, TX Upper Upscale 150 DoubleTree Brisbane, CA Upscale 210 Embassy Suites (1) Amarillo, TX Upper Upscale 226 Embassy Suites (1) Tucson, AZ Upper Upscale 120 Hampton Inn & Suites Minneapolis, MN Upper Midscale 211 Hampton Inn & Suites Austin, TX Upper Midscale 209 Hampton Inn & Suites (1) Dallas, TX Upper Midscale 176 Hampton Inn & Suites (1) Tampa (Ybor City), FL Upper Midscale 138 Hampton Inn & Suites Ventura (Camarillo), CA Upper Midscale 116 Hampton Inn & Suites Baltimore, MD Upper Midscale 116 Hampton Inn & Suites San Diego (Poway), CA Upper Midscale 108 Hampton Inn & Suites (1) Silverthorne, CO Upper Midscale 88 Hilton Garden Inn Houston (Energy Corridor), TX Upscale 190 Hilton Garden Inn Houston (Galleria), TX Upscale 182 Hilton Garden Inn (1) San Jose (Milpitas), CA Upscale 161 Hilton Garden Inn (1) Grapevine, TX Upscale 152 Hilton Garden Inn Boston (Waltham), MA Upscale 148 Hilton Garden Inn (1) Longview, TX Upscale 122 Hilton Garden Inn Greenville, SC Upscale 120 Hilton Garden Inn (1) Bryan, TX Upscale 119 Homewood Suites (1) Aliso Viejo (Laguna Beach), CA Upscale 129 Homewood Suites (1) Tucson, AZ Upscale 122 Homewood Suites (1) Midland, TX Upscale 118 Total Hilton (24 hotel properties) 3,607 Hyatt Hyatt House Orlando, FL Upscale 168 Hyatt House Miami, FL Upscale 163 Hyatt House Denver (Englewood), CO Upscale 135 Hyatt Place Minneapolis, MN Upscale 213 Hyatt Place Chicago (Downtown), IL Upscale 206 Hyatt Place Phoenix (Mesa), AZ Upscale 152 Hyatt Place Orlando, FL Upscale 151 Hyatt Place Orlando (Universal), FL Upscale 150 Hyatt Place Portland (Portland Airport/Cascade Station), OR Upscale 136 Hyatt Place (1) Oklahoma City, OK Upscale 134 Hyatt Place Denver (Lone Tree), CO Upscale 127 Hyatt Place (1) Plano, TX Upscale 127 Hyatt Place Denver (Englewood), CO Upscale 126 Hyatt Place Phoenix (Scottsdale), AZ Upscale 126 Hyatt Place (1) Grapevine, TX Upscale 125 38 Franchise/Brand Location STR Chain Scale Number of Guestrooms Hyatt Place (1) Lubbock, TX Upscale 125 Hyatt Place Long Island (Garden City), NY Upscale 122 Total Hyatt (17 hotel properties) 2,486 IHG Holiday Inn Express & Suites San Francisco, CA Upper Midscale 252 Holiday Inn Express & Suites (1) Oklahoma City, OK Upper Midscale 124 Holiday Inn Express & Suites (1) Grapevine, TX Upper Midscale 95 Hotel Indigo Asheville, NC Upper Upscale 116 Staybridge Suites Denver (Glendale), CO Upscale 121 Total IHG (5 hotel properties) 708 Other Nordic Lodge (1) Steamboat Springs, CO Independent 47 Onera Escapes (3) Fredericksburg, TX N/A 11 Total Other (2 properties) 58 Total Portfolio (100 lodging properties) 14,912 (1) We own a 51% controlling interest in these lodging properties through our consolidated GIC Joint Venture.
Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest.
Ground rent for the initial lease term was prepaid in full at the time we acquired the leasehold interest.
We do not, and will not, have any ownership or economic interest in any of the property management companies engaged by our TRS Lessees.
We do not, and will not, have any ownership or economic interest in any of the property management companies engaged by our TRS Lessees. 40
Franchisors provide a variety of benefits to franchisees, including centralized reservation systems, national advertising, marketing programs and publicity designed to increase brand awareness, loyalty programs, training of personnel and maintenance of operational quality at lodging properties across the brand system. 39 The terms of our franchise agreements generally range from 10 to 20 years with various extension provisions.
Franchisors provide a variety of benefits to franchisees, including centralized reservation systems, national advertising, marketing programs and publicity designed to increase brand awareness, loyalty programs, training of personnel and maintenance of operational quality at lodging properties across the brand system. The terms of our franchise agreements generally range from 10 to 30 years with various extension provisions.
In addition, some of these franchise agreements require that we deposit into a reserve fund for capital expenditures up to 5% of the lodging property’s gross or room revenues, depending on the franchisor, to ensure that we comply with the franchisors’ standards and requirements. We also pay fees to our franchisors for services such as reservation and information systems.
In addition, some of these franchise agreements require that we deposit into a reserve fund for capital expenditures up to 5% of the lodging property’s gross or room revenues, depending on the franchisor, to ensure that we comply with the franchisors’ standards and requirements. We also pay fees to our franchisors for services related to reservation and information systems.
Each of our franchisors receive franchise fees ranging from 2% to 6% of each lodging property’s room revenue, and some agreements require that we pay marketing fees of up to 4% of room revenue.
Each of our franchisors receive franchise fees ranging from 3% to 6% of each lodging property’s room revenue, and some agreements require that we pay marketing fees of up to 4% of room revenue.
If the option to extend is exercised, monthly ground rent will be charged based on a formula established in the ground lease. • The Hampton Inn & Suites located in Austin (Downtown/Convention Center), TX is subject to a ground lease with an initial lease termination date of May 31, 2050.
If the option to extend is exercised, monthly ground rent will be charged based on a formula established in the ground lease. • The Hampton Inn & Suites located in Austin, TX is subject to a ground lease with an initial lease termination date of May 31, 2050.
Franchise Agreements At December 31, 2022, all except for one of our lodging properties operate under franchise agreements, or similar agreements, that allow for access to reservation systems, with Marriott, Hilton, Hyatt, or IHG. We believe that the public’s perception of the quality associated with a branded lodging property is an important feature in its attractiveness to guests.
Franchise Agreements At December 31, 2023, all except for two of our lodging properties operate under franchise agreements, or similar agreements, that allow for access to reservation systems, with Marriott, Hilton, Hyatt, or IHG. We believe that the public’s perception of the quality associated with a branded lodging property is an important feature in its attractiveness to guests.
Our Lodging Property Operating Agreements Ground Leases At December 31, 2022, seven of our lodging properties are subject to ground lease agreements that cover all of the land underlying the respective lodging property. • The Residence Inn by Marriott located in Portland (Portland Airport at Cascade Station), OR is subject to a ground lease with an initial lease termination date of June 30, 2084 with one option to extend for an additional 14 years.
Our Lodging Property Operating Agreements Ground Leases At December 31, 2023, six of our lodging properties are subject to third-party ground lease agreements that cover all of the land underlying the respective lodging property. • The Residence Inn by Marriott located in Portland (Portland Airport at Cascade Station), OR is subject to a ground lease with an initial lease termination date of June 30, 2084 with one option to extend for an additional 14 years.
Annual ground rent currently is estimated to be $0.4 million, including performance-based incentive rent.
Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent.
Property Management Agreements At December 31, 2022, all of our lodging properties are operated pursuant to property management agreements with professional third-party property management companies as follows: Management Company Number of Properties Number of Guestrooms Affiliates of Aimbridge Hospitality, including Interstate Management Company, LLC 62 9,166 OTO Development, LLC 15 2,164 Stonebridge Realty Advisors, Inc. and affiliates 8 1,143 Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc. 6 973 Crestline Hotels & Resorts, LLC 4 570 White Lodging Services Corporation 2 453 Hersha Hospitality Management 2 338 Concord Hospitality Enterprises 2 264 InterContinental Hotel Group Resources, Inc., an affiliate of IHG 1 252 Blink Data Services, LLC 1 11 Total 103 15,334 Our typical property management agreement requires us to pay a base fee to our property manager calculated as a percentage of total property revenues.
Property Management Agreements At December 31, 2023, all of our lodging properties are operated pursuant to property management agreements with professional third-party property management companies as follows: Management Company Number of Properties Number of Guestrooms Affiliates of Aimbridge Hospitality 61 9,096 OTO Development, LLC 12 1,765 Stonebridge Realty Advisors, Inc. and affiliates 8 1,143 Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc. 6 973 Crestline Hotels & Resorts, LLC 5 617 White Lodging Services Corporation 2 453 Hersha Hospitality Management 2 338 Concord Hospitality Enterprises 2 264 InterContinental Hotel Group Resources, Inc., an affiliate of IHG 1 252 Blink Data Services, LLC 1 11 Total 100 14,912 Our typical property management agreement requires us to pay a base fee to our property manager calculated as a percentage of total property revenues.
Annual ground rent currently is estimated to be $0.2 million. Annual rent is increased every five years with the next adjustment coming in 2024. • The Embassy Suites located in Amarillo (Downtown), TX is subject to a ground lease with an initial lease termination date of October 1, 2095.
Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent. Annual rent is increased every five years with the next adjustment coming in 2028. 39 • The Embassy Suites located in Amarillo, TX is subject to a ground lease with an initial lease termination date of October 1, 2095.
When unique opportunities to develop lodging properties utilizing our own resources arise, we may develop our own lodging properties on occasion. To reduce the risk of incurring a prohibited transaction tax on any sales of our undeveloped land, we may transfer some or all of these land parcels to our TRSs.
To reduce the risk of incurring a prohibited transaction tax on any sales of our undeveloped land, we may transfer some or all of these land parcels to our TRSs.
(7) We own a 90% controlling interest in these lodging properties through our Onera Joint Venture. 38 In addition to our lodging property portfolio, we own two parcels of undeveloped land that are designated as held for sale. The land parcels are generally suitable for the development of new lodging properties or the development of restaurants.
(2) We own a 90% controlling interest in these lodging properties through our consolidated Brickell Joint Venture. (3) We own a 90% controlling interest in this lodging property through our consolidated Onera Joint Venture. In addition to our lodging property portfolio, we own two parcels of undeveloped land that are designated as held for sale.
Our Portfolio According to current chain scales as defined by STR, as of December 31, 2022, six of our lodging properties with a total of 953 guestrooms are categorized as Upper-upscale hotels, 81 of our lodging properties with a total of 12,279 guestrooms are categorized as Upscale hotels and 15 of our lodging properties with a total of 2,091 guestrooms are categorized as Upper-midscale hotels.
Our Portfolio According to current chain scales as defined by STR, as of December 31, 2023, six of our lodging properties with a total of 953 guestrooms are categorized as Upper Upscale hotels, 78 of our lodging properties with a total of 11,903 guestrooms are categorized as Upscale hotels, and 14 of our lodging properties with a total of 1,998 guestrooms are categorized as Upper Midscale hotels.
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We have one lodging asset that is an 11-unit glamping property.
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We have two independent lodging properties with a total of 58 guestrooms.
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(2) These lodging properties are subject to mortgage debt at December 31, 2022.
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The land parcels are generally suitable for the development of new lodging properties or the development of restaurants. When unique opportunities to develop lodging properties utilizing our own resources arise, we may develop our own lodging properties on occasion.
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For additional information concerning our mortgage debt and lenders, see "Part II – Item 7. – Management’s Discussion and Analysis of Financial Condition and Results of Operations – Outstanding Indebtedness ,” and "Part II – Item 8. – Financial Statements and Supplementary Data – Note 6 – Debt. ” (3) These lodging properties are subject to ground leases as described below in “ Our Lodging Property Operating Agreements — Ground Leases .” (4) We own a 51% controlling interest in these lodging properties through our consolidated GIC Joint Venture.
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(5) These lodging properties are included in our borrowing base for our GIC Joint Venture credit and term loan facilities at December 31, 2022. (6) We own a 90% controlling interest in these lodging properties through our Brickell Joint Venture.
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Annual ground rent currently is estimated to be $0.5 million, including performance-based incentive rent. Annual rent is increased every five years with the next adjustment coming in 2023. • The Hilton Garden Inn located in Grapevine (Silver Lake Crossing), TX is subject to a ground lease with an initial lease termination date of September 30, 2064.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. We are involved from time to time in litigation arising in the ordinary course of business; however, there are currently no pending legal actions that we believe would have a material adverse effect on our financial position or results of operations. Item 4. Mine Safety Disclosures. Not applicable. 40 PART II
Biggest changeItem 3. Legal Proceedings. We are involved from time to time in litigation arising in the ordinary course of business; however, there are currently no pending legal actions that we believe would have a material adverse effect on our consolidated financial position or results of operations. Item 4. Mine Safety Disclosures. Not applicable. 41 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDuring the quarter ended March 31, 2022, the Operating Partnership and the GIC Joint Venture closed on the NCI Transaction for the acquisition of a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces, and various financial incentives for an aggregate purchase price of $822.0 million.
Biggest changeDuring the quarter ended March 31, 2022, the Operating Partnership and the GIC Joint Venture closed on the NCI Transaction for the acquisition of a portfolio of 27 lodging properties, containing an aggregate of 3,709 guestrooms, and two parking structures, containing 1,002 spaces, and various financial incentives for an aggregate purchase price of $822.0 million. 44 In May 2022, the GIC Joint Venture completed the sale of the 169-guestroom Hilton Garden Inn San Francisco Airport North in San Francisco, CA for a gross selling price of $75.0 million.
The timing and frequency of distributions will be authorized by our Board of Directors, in its sole discretion, and declared by us based upon a variety of factors deemed relevant by our directors, including financial condition, restrictions under applicable law and loan agreements, capital requirements and the REIT requirements of the IRC.
The timing and frequency of distributions will be authorized by our Board, in its sole discretion, and declared by us based upon a variety of factors deemed relevant by our directors, including financial condition, restrictions under applicable law and loan agreements, capital requirements and the REIT requirements of the IRC.
We are generally restricted from declaring or paying any distributions or setting aside any funds for the payment of distributions on our common stock unless full cumulative distributions on our preferred stock have been declared and either paid or set aside for payment in full for all past distribution periods.
We are generally restricted from declaring or paying any distributions or setting aside any funds for the payment of distributions on our common stock unless all cumulative distributions on our preferred stock have been declared and either paid or set aside for payment in full for all past distribution periods.
In addition, our ADR, occupancy and RevPAR performance is dependent on the continued success of our partners, franchisors and brands. 44 Lodging Property Portfolio Activity We continuously evaluate alternatives to refine our portfolio to drive growth and create value.
In addition, our ADR, occupancy and RevPAR performance is dependent on the continued success of our partners, franchisors and brands. Lodging Property Portfolio Activity We continuously evaluate alternatives to refine our portfolio to drive growth and create value.
These key indicators include: • Occupancy — Occupancy represents the total number of guestrooms occupied divided by the total number of guestrooms available. • Average Daily Rate (ADR) — ADR represents total room revenues divided by the total number of guestrooms occupied. • Revenue Per Available Room (RevPAR ) — RevPAR is the product of ADR and Occupancy.
These key indicators include: • Occupancy — Occupancy represents the total number of guestrooms occupied divided by the total number of guestrooms available. • Average Daily Rate — ADR represents total room revenues divided by the total number of paid occupied guestrooms. • Revenue Per Available Room — RevPAR is the product of ADR and Occupancy.
(or any of our respective subsidiaries) under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. 41 Distribution Information As a REIT, we must distribute annually to our stockholders an amount at least equal to 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain.
(or any of our respective subsidiaries) under the Securities Act, except as shall be expressly set forth by specific reference in such filing. 42 Distribution Information As a REIT, we must distribute annually to our stockholders an amount at least equal to 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gain.
Stockholder Return Performance The following graph compares the five-year cumulative total stockholder return on the common stock of Summit Hotel Properties, Inc. against the cumulative total returns of the Standard & Poor’s Corporation Composite 500 Index and the Dow Jones U.S. Hotels Index.
Stockholder Return Performance The following graph compares the five-year cumulative total stockholder return on our common stock against the cumulative total returns of the Standard & Poor’s Corporation Composite 500 Index and the Dow Jones U.S. Hotels Index.
On June 10, 2022, we formed the Brickell Joint Venture (see "See Part II – Item 8. – Financial Statements and Supplementary Data - Note 9 - Non-controlling Interests and Redeemable Non-controlling Interests ") to facilitate the exercise of our purchase option to acquire a 90% equity interest in the AC/Element Hotel.
In June 2022, we formed the Brickell Joint Venture (see "See Part II – Item 8. – Financial Statements and Supplementary Data - Note 10 - Non-controlling Interests and Redeemable Non-controlling Interests ") to facilitate the exercise of our purchase option to acquire a 90% equity interest in the AC Hotel by Marriott and Element Miami Brickell Hotel in Miami, FL (together the "AC/Element Hotel").
As a result of the negative financial effects of the Pandemic on our business, we suspended the declaration and payment of dividends on our common stock and operating partnership units beginning in the first quarter of 2020.
As a result of the negative financial effects of the Pandemic on our business, we suspended the declaration and payment of dividends and distributions on our common stock and operating partnership units from the first quarter of 2020 until the second quarter of 2022.
We reclassified the properties to Assets held for sale, net at December 31, 2022 and recorded a write-down of $2.9 million in the fourth quarter of 2022 for the excess of the net carrying amount of the portfolio of properties over the expected net selling price less costs to sell.
We reclassified the property in Assets Held for sale, net at December 31, 2023 and recorded a write-down of $4.0 million in the fourth quarter of 2023 for the excess of the net carrying amount of the portfolio of properties over the net selling price less estimated costs to sell.
The graph assumes an initial investment of $100 in the common stock of Summit Hotel Properties, Inc. and in each of the indexes, and also assumes the reinvestment of dividends.
The graph assumes an initial investment of $100 in our common stock and in each of the indexes, and also assumes the reinvestment of dividends.
We reclassified the property to Assets held for sale, net at December 31, 2022 and recorded a write-down of $0.3 million in the fourth quarter of 2022 for the excess of the net carrying amount of the undeveloped land over the expected net selling price less costs to sell.
We have reclassified the property to Assets Held for Sale, net at December 31, 2023 and recorded a write-down of $11.3 million in the fourth quarter of 2023 for the excess of the net carrying amount of the lodging property over its net selling price less estimated costs to sell.
The last reported sale price for our common stock as reported on the NYSE on February 10, 2023 was $8.07 per share. Stockholder Information As of February 10, 2023, our common stock was held of record by 262 holders and there were 106,901,576 shares of our common stock outstanding.
The last reported sale price for our common stock as reported on the NYSE on February 9, 2024 was $6.64 per share. Stockholder Information As of February 9, 2024, our common stock was held of record by 263 holders and there were 107,593,373 shares of our common stock outstanding.
We reclassified the properties to Assets held for sale, net at December 31, 2022 and recorded a write-down of $7.2 million at December 31, 2022 for the excess of the net carrying amount of the properties over the expected net selling price less costs to sell. See “Part II –
We reclassified all three of the properties to Assets Held for sale, net at December 31, 2023 and recorded a write-down of $1.4 million in the fourth quarter of 2023 for the excess of the net carrying amount of one of the lodging properties over its net selling price less estimated costs to sell.
On October 26, 2022, we completed the acquisition of a 90% equity interest in the Onera Joint Venture that owns a high-end glamping property for $5.2 million in cash, plus additional contingent consideration limited to a maximum of $1.8 million, payable to the seller based on performance of the property for the 12-month period ending July 31, 2023.
In October 2022, we completed the acquisition of a 90% equity interest in the Onera Joint Venture that owns an 11-unit glamping property for $5.2 million in cash, plus additional contingent consideration of $1.8 million paid in September 2023.
Hotels Index $ 100.00 $ 86.90 $ 100.69 $ 74.20 $ 84.98 $ 71.92 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing of Summit Hotel Properties, Inc.
Hotels Index $ 100.00 $ 115.88 $ 85.39 $ 97.80 $ 82.76 $ 94.91 This performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing of Summit Hotel Properties, Inc.
Significant changes to our portfolio of properties could have a material effect on our Consolidated Financial Statements. On May 1, 2021, we contributed a portfolio of six lodging properties containing 846 guestrooms to our GIC Joint Venture.
Significant changes to our portfolio of properties could have a material effect on our Consolidated Financial Statements.
In addition, we entered into a purchase and sale agreement with a third-party to sell a 6.0-acre parcel of undeveloped land for $1.3 million.
During the first quarter of 2023, we entered into a purchase and sale agreement with a third-party to sell a 5.99-acre parcel of undeveloped land in San Antonio, TX for $1.3 million. We expect to complete the transaction during the first half of 2024. See “Part II –
In May 2022, the GIC Joint Venture completed the sale of a 169-guestroom Hilton Garden Inn San Francisco Airport North in San Francisco, CA for a gross selling price of $75.0 million. The sale of this property resulted in a net gain of $20.5 million to the GIC Joint Venture.
The sale of this property resulted in a net gain of $20.5 million to the GIC Joint Venture.
The Onera Joint Venture has a 100% fee simple interest in real property and improvements consisting of 11 glamping lodging units and a 6.4-acre parcel of undeveloped land that will be developed as phase two of the lodging site in the future.
The Onera Joint Venture has a 100% fee simple interest in a lodging property consisting of an 11-unit glamping property and a 6.4-acre parcel of land. In May 2023, we completed the sale of four lodging properties for an aggregate gross selling price of $28.1 million.
During the twelve months ended December 31, 2022, we experienced significant improvement in our business, driven primarily by leisure travel and to a lesser extent modest improvement in other demand segments, including business and group travel.
During the year ended December 31, 2023, we experienced a continued recovery from the Pandemic driven increasingly by strong group travel and improvements in business transient demand, in addition to continued strength in leisure travel.
We continue to apply advanced cleaning procedures developed during the Pandemic to all of our lodging properties. Operating Performance Metrics We use a variety of performance indicators and other information to evaluate the financial condition and operating performance of our business.
Based on the trends noted above, we expect positive comparable hotel RevPAR growth for our portfolio for the year ended December 31, 2024. Operating Performance Metrics We use a variety of performance indicators and other information to evaluate the financial condition and operating performance of our business.
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Year Ended Index 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 Summit Hotel Properties, Inc. $ 100.00 $ 67.46 $ 91.00 $ 67.48 $ 73.09 $ 54.58 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 Dow Jones U.S.
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For the Years Ended December 31, Index 2018 2019 2020 2021 2022 2023 Summit Hotel Properties, Inc. $ 100.00 $ 134.90 $ 100.03 $ 108.35 $ 80.91 $ 77.90 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Dow Jones U.S.
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In addition, as a result of the modification of our 2018 Senior Credit Facility, 2017 Term Loan and 2018 Term Loan, we were restricted from declaring and paying dividends on our common stock and Common Units and Preferred Units, other than distributions required to maintain our REIT status, through March 31, 2022 when the financial and other covenant waivers and adjustments under such facilities are no longer effective.
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Commencing for the third quarter of 2022, a $0.04 per share quarterly common dividend and distribution was declared, and increased to $0.06 per share in the second and third quarters of 2023.
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Beginning in August of 2022, we resumed payment of quarterly dividends on our common stock. In both August and November of 2022, we declared and paid dividends of $0.04 per share. Additionally, on January 26, 2023, the Board of Directors declared a $0.04 common dividend payable on February 28, 2023 to holders of record at February 14, 2023.
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A $0.06 per share quarterly common dividend and distribution was declared for the fourth quarter of 2023 and is payable on February 29, 2023 to stockholders and unit holders of record on February 15, 2024. Item 6. [Reserved] 43 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 6. [Reserved] 42 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Industry Trends and Outlook Room-night demand in the U.S. lodging industry is generally correlated to certain macroeconomic trends.
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Industry Trends and Outlook Room-night demand in the U.S. lodging industry is generally correlated to certain macroeconomic trends. Key drivers of lodging demand, and therefore hotel revenues, include changes in GDP, corporate profits, capital investments, and employment. From a cost perspective, elevated inflation has been pervasive since 2022, increasing the cost of salaries, wages, supplies, material, freight, insurance and energy.
Removed
Key drivers of lodging demand include changes in gross domestic product, corporate profits, capital investments, employment and more recently, travel-related health and safety restrictions and concerns. Volatility in the economy and risks arising from global and domestic political or economic conditions may cause slowing economic growth, which would have an adverse effect on lodging demand.
Added
Higher costs from broad inflationary pressures have been partially offset by lodging price increases. While growth rates have decelerated, inflation is still increasing faster than historical norms, which may continue in 2024.
Removed
The global and U.S. economies, and the travel and lodging industries, have experienced a significant downturn as a result of the Pandemic. During the twelve months ended December 31, 2022, we experienced a significant recovery in demand for our lodging properties driven primarily by leisure travel.
Added
From an industry perspective, the year ended December 31, 2023 represented a new high in lodging demand, further evidence that businesses and individual consumers alike are increasingly traveling. Strong room night demand coupled with minimal forecasted growth in supply over the next several years positions the industry for continued growth.
Removed
Business and group demand remain below historical levels and are recovering more slowly; however, we have recently begun to experience an increase in demand related to these segments as the effects of the Pandemic have diminished. Rising inflation was pervasive throughout 2022 increasing the cost of salaries, wages, material, freight, and energy.
Added
The sale included two Hyatt Place hotels in the Chicago area containing a total of 277 guestrooms, a Hilton Garden Inn in the Minneapolis area containing 97 guestrooms, and a Holiday Inn Express & Suites in the Minneapolis area containing 93 guestrooms.
Removed
Higher costs due to general business inflation were partially offset by lodging price increases, which offset the effect of inflation on our operating results. We expect relatively higher inflation to continue in 2023 resulting in higher costs. If customers are unwilling to accept these price increases, inflation could have an adverse effect on our operations and financial condition.
Added
These lodging properties were classified as Assets Held for Sale at December 31, 2022 and their carrying values during the year then ended were reduced by $2.9 million to bring the carrying value of the properties to their net selling price less estimated costs to sell.
Removed
Effects of the Pandemic on Our Business The effects of the Pandemic and the restrictions implemented in response to the Pandemic had a significant negative effect on the U.S. and global economies, including a rapid and sharp decline in all forms of travel, both domestic and international, and a significant decline in demand for lodging.
Added
In June 2023, the GIC Joint Venture acquired the Residence Inn by Marriott located in Scottsdale, AZ containing 120 guestrooms for a purchase price of approximately $29.0 million and the Nordic Lodge located in Steamboat Springs, CO containing 47 guestrooms for a purchase price of approximately $13.7 million.
Removed
These conditions resulted in a substantial decline from pre-Pandemic levels in our revenues, profitability and cash flows from operations during the years ended December 31, 2020 and 2021.
Added
In December 2023, we completed the sale of the 123-guestroom Hyatt Place in Baltimore (Owings Mills), MD for a gross selling price of $8.3 million. The net selling price less costs to sell approximated the net book value of the hotel property on the sale date resulting in a nominal gain that was recorded in the fourth quarter of 2023.
Removed
We anticipate that continued improvement in operating trends will be dependent on sustained strength in leisure travel and an ongoing recovery of business and group travel. More broadly, a return to normalized levels of operations is dependent upon a continuation in the recovery of our business, and maintaining a high-quality portfolio aligned with evolving guest preferences.
Added
During the fourth quarter of 2023, the GIC Joint Venture entered into a purchase and sale agreement with a third-party to sell the 127-guestroom Hyatt Place Dallas (Plano), TX for $10.3 million.
Removed
Management’s Actions in Response to the Effects of the Pandemic on Our Operations We implemented the following actions to mitigate the negative effects of the Pandemic on our consolidated financial position, results of operations and cash flows: Operational Adjustments In response to the rapid decline in demand for room nights and loss of revenues as a result of the Pandemic, we and our property managers evaluated each lodging property in our portfolio and initially adjusted labor and cost structures for lodging properties based on existing market conditions.
Added
We completed the sale of the property on February 15, 2024 under the terms described above. During the first quarter of 2024, we entered into two separate purchase and sale agreements with two unrelated third-parties to sell one individual lodging property and a portfolio of two lodging properties with an aggregate 529-guestrooms for an aggregate selling price of $84.0 million.
Removed
As demand at our lodging properties has increased during the years ended December 31, 2022 and 2021, we have also increased staffing commensurately. Financial Measures and Liquidity Beginning in March 2020, we took significant action to enhance our overall liquidity position in response to the Pandemic’s effect on our financial position, which continued into the year ended December 31, 2022.
Added
We expect to complete the transactions during the first half of 2024. At December 31, 2023, we have a lodging property with 101-guestrooms being marketed for sale.
Removed
On January 12, 2021, we sold $287.5 million aggregate principal amount of our 1.50% convertible senior notes due 2026 (the "Convertible Notes"). 43 On May 1, 2021, we contributed a portfolio of six lodging properties containing 846 guestrooms to the GIC Joint Venture.
Removed
The estimated market value of the portfolio of lodging properties was $172.0 million and GIC contributed $84.3 million in cash for its 49% interest in the GIC Joint Venture after the completion of the transfer of the six lodging properties.
Removed
Net proceeds from the transaction were used to repay $62.5 million of our senior debt and $20.9 million was applied to our Cash and cash equivalents balances. On August 12, 2021, we completed the offering of 4,000,000 Series F preferred shares for net proceeds of $96.6 million, after the underwriting discount and offering-related expenses of $3.4 million.
Removed
On September 4, 2021, using proceeds from the issuance of the Series F preferred shares, we paid $75.0 million to redeem all 3,000,000 of its outstanding 6.45% Series D Cumulative Redeemable Preferred Stock at a redemption price of $25 per share plus accrued and unpaid dividends.
Removed
The remaining net proceeds from the Series F preferred share offering was used to repay $22.0 million of our senior debt.
Removed
See “Part II - Item 7. – Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources ” and “Part II - Item 8. – Financial Statements and Supplementary Data – Note 6 – Debt ,” for additional information.
Removed
Health and Well-being Substantially all of our lodging properties are licensed with national franchise brands, and we have worked closely with our brand partners to develop and implement comprehensive protocols for the safety and well-being of employees and guests to address a broad spectrum of pathogens and viruses, including COVID-19 and variants thereof.
Removed
The estimated market value of the portfolio of lodging properties was $172.0 million and GIC, our GIC Joint Venture partner, paid us $84.3 million in cash to maintain its 49% interest in the GIC Joint Venture after the completion of the transfer of the six lodging properties.
Removed
See "Part II – Item 8. – Financial Statements and Supplementary Data - Note 3 – Investments in Lodging Property, net for additional information." On July 9, 2021, we acquired a 110-room Residence Inn in Steamboat Springs, CO through our GIC Joint Venture for $33.0 million.
Removed
Additionally, on December 21, 2021, through our GIC Joint Venture, we acquired a 120-room Embassy Suites in Tucson, AZ for $25.5 million.
Removed
Subsequent to December 31, 2022, we entered into a purchase and sale agreement with a third-party to sell a portfolio of four lodging properties for $28.1 million.
Removed
Subsequent to December 31, 2022, we also entered into an agreement for the sale of two lodging properties for $50.5 million.

Item 7. Management's Discussion & Analysis

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

26 edited+3 added−7 removed102 unchanged
Biggest changeIf we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; • we could be subject to increased state and local taxes; and • unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Biggest changeFailure to qualify as a REIT could result from a number of situations, including, without limitation: • if the leases of our lodging properties to our TRS Lessees are not respected as true leases for federal income tax purposes; • if our Operating Partnership is treated as a publicly traded partnership taxable as a corporation for federal income tax purposes; • if our existing or future property management companies do not qualify as “eligible independent contractors” or if our lodging properties are not “qualified lodging facilities,” as required by federal income tax law; or • if we fail to meet any of the required REIT qualifications. 30 If we fail to qualify as a REIT in any taxable year, we will face serious tax consequences that will substantially reduce the funds available for distributions to our stockholders because: • we would not be allowed a deduction for dividends paid to stockholders in computing our taxable income and would be subject to federal income tax at regular corporate rates; • we could be subject to increased state and local taxes; and • unless we are entitled to relief under certain federal income tax laws, we could not re-elect REIT status until the fifth calendar year after the year in which we failed to qualify as a REIT.
Our failure to meet the market’s expectations with regard to future earnings and distributions likely would adversely affect the market price of our common and preferred stock. The trading market for our stock may rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts.
Our failure to meet the market’s expectations with regard to future earnings and distributions likely would adversely affect the market price of our common and preferred stock. 29 The trading market for our stock may rely in part on the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts.
In addition, our TRSs are subject to regular corporate federal, state and local taxes. Any of these taxes would decrease cash available for distributions to stockholders. 30 Failure to make required distributions would subject us to federal corporate income tax. We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes.
In addition, our TRSs are subject to regular corporate 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 federal corporate income tax. We intend to operate in a manner so as to qualify as a REIT for federal income tax purposes.
Our efforts may also be at least partially reliant on third-party information, which we do not necessarily, and in some cases cannot, independently verify. Any errors in such information, including estimates and assumptions, may materially and adversely affect our ability to achieve our ESG-related efforts.
Our efforts may also be at least partially reliant on third-party information, which we do not necessarily, and in some cases cannot, independently verify. Any errors in such information, including estimates and assumptions, may materially and adversely affect our ability to achieve our ESG-related goals.
We own approximately 87.0% of the Common Units in the Operating Partnership, all of the issued and outstanding 6.25% Series E Cumulative Redeemable Preferred Units of the Operating Partnership (“Series E Preferred Units”), and all of the issued and outstanding 5.875% Series F Cumulative Redeemable Preferred Units of the Operating Partnership ("Series F Preferred Units").
We own approximately 87% of the Common Units in the Operating Partnership, all of the issued and outstanding 6.25% Series E Cumulative Redeemable Preferred Units of the Operating Partnership (“Series E Preferred Units”), and all of the issued and outstanding 5.875% Series F Cumulative Redeemable Preferred Units of the Operating Partnership ("Series F Preferred Units").
Increases in these operating expenses could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. Our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes.
Increases in these operating expenses could adversely affect our consolidated financial position, results of operations, and cash flows or the market price of our stock. 31 Our Operating Partnership could be treated as a publicly traded partnership taxable as a corporation for federal income tax purposes.
We may be required to fund distributions from working capital, borrowings under our 2018 Senior Credit Facility, proceeds of future stock offerings or a sale of assets to the extent distributions exceed earnings or cash flows from operations. Funding distributions from working capital would restrict our operations.
We may be required to fund distributions from working capital, borrowings under our 2023 Senior Credit Facility, proceeds of future stock offerings or a sale of assets to the extent distributions exceed earnings or cash flows from operations. Funding distributions from working capital would restrict our 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 markets, enhanced compliance or disclosure obligations, or other adverse effects on 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 markets, enhanced compliance or disclosure obligations, or other adverse effects on our business, consolidated financial position, or results of operations.
If we borrow from our 2018 Senior Credit Facility to pay distributions, we would be more limited in our ability to execute our strategy of using our 2018 Senior Credit Facility to fund acquisitions or capital expenditures.
If we borrow from our 2023 Senior Credit Facility to pay distributions, we would be more limited in our ability to execute our strategy of using our 2023 Senior Credit Facility to fund acquisitions or capital expenditures.
If our securities are delisted from the NYSE or another nationally-recognized exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited ability of our stockholders to make transactions in our securities; • additional trading restrictions being placed on us; • reduced liquidity with respect to our securities; • a determination that our common stock is “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future.
If our securities are delisted from the NYSE or another nationally-recognized exchange, we could face significant material adverse consequences, including: • a limited availability of market quotations for our securities; • a limited ability of our stockholders to make transactions in our securities; • additional trading restrictions being placed on us; • reduced liquidity with respect to our securities; • a determination that our common stock is “penny stock,” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for the common stock; • a limited amount of news and analyst coverage; and • a decreased ability to issue additional securities or obtain additional financing in the future. 28 The cash available for distribution may not be sufficient to make distributions at expected levels and we may use borrowed funds or funds from other sources to make distributions.
The exchange of Common Units for common stock, the vesting of any equity-based awards granted to certain directors, executive officers and other employees under the 2011 Equity Incentive Plan, which was amended and restated effective May 13, 2021 (as amended and restated, the “Equity Plan”), the issuance of our common stock or Common Units in connection with lodging property, portfolio or business acquisitions and other issuances of our common stock or Common Units could have an adverse effect on the market price of the shares of our common stock. 29 We may execute future offerings of debt securities, which would be senior to our common and preferred stock upon liquidation, and issuances of equity securities (including Common Units).
The exchange of Common Units for common stock, the vesting of any equity-based awards granted to certain directors, executive officers and other employees under the 2011 Equity Incentive Plan, which was amended and restated effective May 13, 2021 (as amended and restated, the “Equity Plan”), the issuance of our common stock or Common Units in connection with lodging property, portfolio or business acquisitions and other issuances of our common stock or Common Units could have an adverse effect on the market price of the shares of our common stock.
As of February 10, 2023, all 15,976,807 of the Common Units are redeemable and may in the future be converted into shares of our common stock on a one-for-one basis and sold into the public market.
As of February 9, 2024, all 15,948,628 of the Common Units are redeemable and may in the future be converted into shares of our common stock on a one-for-one basis and sold into the public market.
If we and our brand and property management partners fail to properly establish, fail to achieve, or fail to adequately report on our progress toward achieving our sustainability goals and commitments, or are otherwise perceived as having not sufficiently addressed ESG matters, we may be subject to negative publicity that could adversely affect consumer preference for our lodging properties or subject us to enhanced investor or regulator engagement on our ESG initiatives and disclosures, even if such efforts are currently voluntary. 35 Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions.
If we and our brand and property management partners fail to properly establish, fail to achieve, or fail to adequately report on our progress toward achieving our sustainability goals and commitments, or are otherwise perceived as having not sufficiently addressed ESG matters, we may be subject to negative publicity that could adversely affect consumer preference for our lodging properties or subject us to enhanced investor or regulator engagement on our ESG initiatives and disclosures, even if such efforts are currently voluntary.
Also, our Operating Partnership would become subject to federal, state and local income tax, which would reduce significantly the amount of cash available for debt service and for distribution to us. 31 Our current property management companies, or any other property management companies that we may engage in the future may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities.” Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs.
Our current property management companies, or any other property management companies that we may engage in the future may not qualify as “eligible independent contractors,” or our lodging properties may not be considered “qualified lodging facilities.” Rent paid by a lessee that is a “related party tenant” of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs.
There are inherent climate-related risks wherever businesses operate. We are subject to risks associated with natural disasters, including but not limited to storms, flooding, droughts, wildfires, and extreme temperature events. Such disasters may become more frequent or intense as a result of climate change.
We are subject to risks associated with natural disasters, including but not limited to storms, flooding, droughts, wildfires, and extreme temperature events. Such disasters may become more frequent or intense as a result of climate change. Climate change may also result in negative physical effects, including rising sea levels and changes in temperature and precipitation patterns.
The trading prices of equity securities issued by REITs and other real estate companies historically have been affected by changes in market interest rates.
The market price of our stock may be volatile due to numerous circumstances beyond our control. The trading prices of equity securities issued by REITs and other real estate companies historically have been affected by changes in market interest rates.
Additionally, the existence of any material weakness or significant deficiency could require management to devote substantial time and incur significant expense to remediate any such conditions.
Additionally, the existence of any material weakness or significant deficiency could require management to devote substantial time and incur significant expense to remediate any such conditions. There can be no assurance that management will be able to remediate any material weaknesses in a timely manner.
In the event of a successful challenge, we believe that we would be able to maintain our REIT status if we qualified to use a REIT “savings clause” and paid the required penalty. 34 Risks Related to Environmental, Social and Governance Factors Our business is subject to a series of risks arising from climate change.
In the event of a successful challenge, we believe that we would be able to maintain our REIT status if we qualified to use a REIT “savings clause” and paid the required penalty. 34 Risks Related to Environmental, Social and Governance Factors Increasing attention to and evolving expectations for environmental, social and governance ("ESG") matters may increase our costs, harm our reputation, or otherwise adversely affect our business.
Climate change may also result in negative physical effects, including rising sea levels and changes in temperature and precipitation patterns. As a result of the foregoing, we may experience increased costs or decreased availability of certain products which are important to our or our lessees’ operations, including but not limited to insurance, water, and energy.
As a result of the foregoing, we may experience increased costs or decreased availability of certain products which are important to our or our lessees’ operations, including but not limited to insurance, water, and energy. Separately, we have incurred, and in future may continue to incur, costs associated with structural enhancements to our lodging properties to mitigate climate-related effects.
Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry, which could negatively affect our share price as well as our access to and cost of capital.
Certain market participants, including major institutional investors and capital providers, use third-party benchmarks and scores to assess companies’ ESG profiles in making investment or voting decisions. Unfavorable ESG ratings could lead to increased negative investor sentiment towards us or our industry, which could negatively affect our share price as well as our access to and cost of capital.
A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment.
A return of capital is not taxable, but it has the effect of reducing the holder’s adjusted tax basis in its investment. If distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock.
There can be no assurance that management will be able to remediate any material weaknesses in a timely manner. 27 Risks Related to Ownership of Our Securities The New York Stock Exchange (“NYSE”) or another nationally-recognized exchange may not continue to list our securities.
Risks Related to Ownership of Our Securities The New York Stock Exchange (“NYSE”) or another nationally-recognized exchange may not continue to list our securities.
Certain of our customers, suppliers, and business partners may also be subject to similar risks, which could result in additional or augmented risks Item 1B. Unresolved Staff Comments. None.
Certain of our customers, suppliers, and business partners may also be subject to similar risks, which could result in additional or augmented risks Our business is subject to risks that may arise from climate change. There are inherent climate-related risks wherever businesses operate.
Even in situations where we have engaged in mitigation efforts, we may incur significant losses or repair costs or business interruptions that may not be fully covered by insurance. Additionally, our business is exposed to risks associated with efforts to mitigate or respond to climate change, including but not limited to regulatory developments and changes in market demand.
While such costs to-date have not been material, we cannot guarantee that we will not be subject to material costs in future. Even in situations where we have engaged in mitigation efforts, we may incur significant losses or repair costs or business interruptions that may not be fully covered by insurance.
For example, some state and local governments have adopted, or considered adopting, restrictions on water use or GHG emissions. Separately, the SEC has proposed disclosure requirements that would require companies to disclose a range of climate-related information, which may require us to incur substantial monitoring and compliance costs.
Separately, the SEC has proposed disclosure requirements that would require companies to disclose a range of climate-related information, which may require us to incur substantial monitoring and compliance costs. Changes in consumer preferences, whether due to physical climate conditions or environmentally-minded travel considerations, may also result in decreased demand for lodging in certain markets where we operate.
Changes in consumer preferences, whether due to physical climate conditions or environmentally-minded travel considerations, may also result in decreased demand for lodging in certain markets where we operate. These and other risks may reduce demand for our properties or otherwise result in adverse effects on our business, financial condition, and results of operations.
These and other risks may reduce demand for our properties or otherwise result in adverse effects on our business, consolidated financial position, and results of operations. 35 Item 1B. Unresolved Staff Comments. None.
Removed
The cash available for distribution may not be sufficient to make distributions at expected levels and we may use borrowed funds or funds from other sources to make distributions.
Added
We may execute future offerings of debt securities, which would be senior to our common and preferred stock upon liquidation, and issuances of equity securities (including Common Units).
Removed
If distributions exceed the adjusted tax basis of a holder’s shares, they will be treated as gain from the sale or exchange of such stock. 28 The market price of our stock may be volatile due to numerous circumstances beyond our control.
Added
Also, our Operating Partnership would become subject to federal, state and local income tax, which would reduce significantly the amount of cash available for debt service and for distribution to us.
Removed
Failure to qualify as a REIT could result from a number of situations, including, without limitation: • if the leases of our lodging properties to our TRS Lessees are not respected as true leases for federal income tax purposes; • if our Operating Partnership is treated as a publicly traded partnership taxable as a corporation for federal income tax purposes; • if our existing or future property management companies do not qualify as “eligible independent contractors” or if our lodging properties are not “qualified lodging facilities,” as required by federal income tax law; or • if we fail to meet any of the required REIT qualifications.
Added
Additionally, our business is exposed to risks associated with 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.
Removed
Separately, we have incurred, and in future may continue to incur, costs associated with structural enhancements to our lodging properties to mitigate climate-related effects. While such costs to-date have not been material, we cannot guarantee that we will not be subject to material costs in future.
Removed
Actions by organized labor could have a material adverse effect on our business. We believe that unions are generally becoming more aggressive about organizing workers at lodging properties in certain locations and in certain cases are demanding changes to work rules or conditions that are potentially more costly to owners.
Removed
If the workers employed by the third-party property management companies that manage our lodging properties unionize in the future, potential labor activities at any affected lodging property could significantly increase the administrative, labor and legal expenses of the third-party property management company that we have engaged to manage that lodging property, which likely would adversely affect the operating results of the lodging properties.
Removed
If lodging properties in our portfolio are unionized, this could adversely affect our financial position, results of operations, and cash flows or the market price of our stock. Increasing attention to and evolving expectations for environmental, social and governance ("ESG") matters may increase our costs, harm our reputation, or otherwise adversely affect our business.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+4 added−4 removed1 unchanged
Biggest changeAt December 31, 2022 and 2021, we were party to six and four interest rate derivative agreements, respectively, pursuant to which we receive variable-rate payments in exchange for making fixed-rate payments (dollars in thousands): Average Annual Effective Fixed Rate Notional Amount Contract date Effective Date Expiration Date December 31, 2022 December 31, 2021 October 2, 2017 January 29, 2018 January 31, 2023 1.96 % $ 100,000 $ 100,000 October 2, 2017 January 29, 2018 January 31, 2023 1.98 % 100,000 100,000 June 11, 2018 September 28, 2018 September 30, 2024 2.86 % 75,000 75,000 June 11, 2018 December 31, 2018 December 31, 2025 2.92 % 125,000 125,000 July 26, 2022 January 31, 2023 January 31, 2027 2.60 % 100,000 — July 26, 2022 January 31, 2023 January 31, 2029 2.56 % 100,000 — $ 600,000 $ 400,000 At December 31, 2022, after giving effect to our interest rate derivative agreements in effect as of that date, $758.4 million, or 51.8%, of our debt had fixed interest rates and $704.7 million, or 48.2%, had variable interest rates.
Biggest changeAt December 31, 2023 and 2022, we were party to six interest rate derivative agreements pursuant to which we receive variable-rate payments in exchange for making fixed-rate payments (dollars in thousands): Average Annual Effective Fixed Rate Notional Amount Contract date Effective Date Expiration Date December 31, 2023 December 31, 2022 Operating Partnership October 2, 2017 January 29, 2018 January 31, 2023 1.96% $ — $ 100,000 October 2, 2017 January 29, 2018 January 31, 2023 1.98% — 100,000 June 11, 2018 September 28, 2018 September 30, 2024 2.86% 75,000 75,000 June 11, 2018 December 31, 2018 December 31, 2025 2.92% 125,000 125,000 July 26, 2022 January 31, 2023 January 31, 2027 2.60% 100,000 100,000 July 26, 2022 January 31, 2023 January 31, 2029 2.56% 100,000 100,000 Total Operating Partnership 400,000 600,000 GIC Joint Venture March 24, 2023 July 1, 2023 January 13, 2026 3.35% 100,000 — March 24, 2023 July 1, 2023 January 13, 2026 3.35% 100,000 — Total GIC Joint Venture 200,000 — $ 600,000 $ 600,000 At December 31, 2023, after giving effect to our interest rate derivative agreements in effect as of that date, $956.4 million, or 66%, of our debt had fixed interest rates and $489.4 million, or 34%, had variable interest rates.
At December 31, 2022, debt related to our wholly-owned properties coupled with our pro rata share of joint venture debt results in a fixed-rate debt ratio of approximately 65.1% of our total pro rata indebtedness when including the effect of interest rate swaps effective as of that date.
At December 31, 2022, debt related to our wholly-owned properties coupled with our pro rata share of joint venture debt results in a fixed-rate debt ratio of approximately 65% of our total pro rata indebtedness when including the effect of interest rate swaps effective as of that date.
The financial statements and supplementary data required by this item are included on pages F-1 through F-46 of this Annual Report on Form 10-K and are incorporated by reference herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.
The consolidated financial statements and supplementary data required by this item are included on pages F- 1 through F- 55 of this Annual Report on Form 10-K and are incorporated by reference herein.
At December 31, 2021, after giving effect to our interest rate derivative agreements, $842.9 million, or 77.9%, of our debt had fixed interest rates and $238.5 million, or 22.1%, had variable interest rates. As our fixed-rate debts mature, they will become subject to interest rate risk.
At December 31, 2022, after giving effect to our interest rate derivative agreements, $758.4 million, or 51.8%, of our debt had fixed interest rates and $704.7 million, or 48.2%, had variable interest rates.
Our primary interest rate exposure is to SOFR. We primarily use derivative financial instruments to manage interest rate risk. In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.
Our primary interest rate exposure is to SOFR. We primarily use derivative financial instruments to manage interest rate risk.
Removed
As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee, which identified SOFR as its preferred alternative to USD-LIBOR in derivatives and other financial contracts.
Added
At December 31, 2023, debt related to our wholly-owned properties coupled with our pro rata share of joint venture debt results in a fixed-rate debt ratio of approximately 75% of our total pro rata indebtedness when including the effect of interest rate swaps effective as of that date.
Removed
The transition from LIBOR to SOFR or another benchmark interest rate may result in a different calculation of our variable interest rates that are currently indexed to LIBOR. Our 2018 Senior Credit Facility, 2018 Term Loan and GIC Joint Venture Term Loan have each been amended to transition from LIBOR to SOFR.
Added
As our fixed-rate debts mature, they will become subject to interest rate risk. We currently have scheduled payments of principal on debt during the year ended December 31, 2024 totaling approximately $16.9 million.
Removed
As of December 31, 2022, we have three remaining loans that are indexed to LIBOR. Subsequent to December 31, 2022, one of the three remaining LIBOR-based loans was converted to SOFR.
Added
In January 2024, subsidiaries of the GIC Joint Venture that are borrowers under the GIC Joint Venture Term Loan entered into a $100.0 million interest rate swap to fix one-month term SOFR until January 2026. The interest rate swap has an effective date of October 1, 2024 and a termination date of January 13, 2026.
Removed
At December 31, 2022, we have scheduled payments of principal on debt during the year ended December 31, 2023 totaling approximately $2.2 million and no principal maturities until the fourth quarter of 2024 when taking into consideration available extension options. 62 Item 8. Financial Statements and Supplementary Data.
Added
Pursuant to the interest rate swap, we will pay a fixed rate of 3.765% and receive the one-month term SOFR floating rate index. Item 8. Financial Statements and Supplementary Data.

Other INN 10-K year-over-year comparisons